Glenn Hamer
Two bills last week took one more step down the path to bolstering our state’s reputation for enjoying a legal environment that is welcoming to business. One bill got the headlines, but they’re both an important component of Arizona’s ongoing civil justice reform efforts.
The Senate Committee on Economic Development and Jobs Creation passed S.B. 1336, a bill introduced by Sen. Al Melvin that creates protection for manufacturers, service providers and sellers of products from punitive damage claims when their product was made, delivered and marketed in compliance with a state or federal law or regulation.
Without a “regulatory compliance defense” in Arizona, judges and juries may determine standards of care that differ from agency regulations. This bill addresses that problem by ensuring that the state’s civil justice system lines up with regulatory decisions.
Punitive damages should be reserved only for those defendants who intend to injure, defraud or consciously disregard a substantial risk of significant harm. We shouldn’t be looking for ways to punish businesses that are following government regulatory requirements.
To be clear, when this bill becomes law plaintiffs will still have the ability to pursue punitive damages against manufacturers. If there’s a manufacturer that is playing fast and loose with state or federal regulations and is putting users in harm’s way, then throw the book at them.
This bill also does not put any limits on compensatory damages. Defendants can still be held liable for pain and suffering, lost work time, medical bills and the loss of any future earnings.
Many states across the country, including Wisconsin, Ohio, Louisiana, Nebraska, Washington, Montana, New Hampshire and Texas, have limited or eliminated the award of punitive damages. Arizona can join these states in bringing down the rising cost of doing business by eliminating punitive damage claims against defendant manufacturers or sellers that comply with federal and state safety standards and regulations.
States are more competitive in the battle for jobs when they have an environment that allows job creators to concentrate on innovation and expansion rather than looking over their shoulder in anticipation of another legal action. We want businesses spending their dollars on hiring new employees rather than hiring an army of lawyers.
While Sen. Melvin’s bill was the one getting the headlines this week, another bill took a step towards enhancing Arizona’s legal environment.
Sen. Adam Driggs’ S.B. 1142 passed the Senate and is now headed to the House. This legislation modifies when a juror is eligible to begin receiving money from the Arizona Lengthy Trial Fund. Under current law, jurors do not begin receiving replacement or supplemental earnings until the fourth day of service, which places a hardship on potential jurors who can’t miss work. This results in juries composed mostly of retirees and the unemployed. Under Sen. Driggs’ bill, though, these funds can be distributed on the first day of service, which will hopefully improve the quality of Arizona’s jury pool.
Arizona has been a leader in jury service reform dating back to the early 1990s and Sen. Driggs’ bill is an improvement over Arizona’s already outstanding Jury Patriotism Act, which allowed jurors to be paid out of the Lengthy Trial Fund for those jurors who served more than five days.
There are more encouraging tort reform bills in the pipeline. Rep. Kimberly Yee continues to strengthen her tort reformer bona fides with her introduction of H.B. 2837, which would treat so-called lawsuit lenders – companies that lend money to plaintiffs in hopes getting a bigger return following a winning lawsuit – like any other lender by capping its interest rates at no more than 36 percent. These loans can force plaintiffs to drag out litigation in hopes of getting a big enough settlement to pay off loan principal and interest, interjecting an unwelcome new element into the relationship between plaintiffs, defendants, their attorneys and the court.
State leaders around the country recognize the link between the legal climate and the economic climate. It’s not a coincidence that Texas has advanced an ambitious civil justice reform agenda and has led the nation in job creation over the past 10 years. Arizona leaders should be applauded for embracing a pro-jobs legal agenda that is poised to make employers take notice of our state as a great place to set up shop.
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce & Industry
