I just returned from sunny Ft. Lauderdale where I attended the American Tort Reform Association’s annual meeting. It was great to spend a few days with individuals from 41 states around the country who are so committed to the cause of civil justice reform.
Since 1986, ATRA has been the only national organization exclusively dedicated to reforming the civil justice system, working to ensure that America’s courtrooms are venues of greater fairness, increased predictability and efficiency.
The year 2011 has been one of ATRA’s best in its over 25-year history. We are living in a golden age of legal reform, made possible in many cases by the 2010 elections of governors and legislatures committed to knocking down barriers to job creation. In states around the country, governors and legislatures are pushing back against the powerful trial attorney lobby and its job-killing agenda that makes it more difficult for businesses to grow and prosper.
A state’s legal environment is as critical to a state’s ability to attract and grow jobs as its tax, regulatory, and labor environments. As Wisconsin Gov. Scott Walker said when he signed a tort reform package into law in January, “Improving Wisconsin’s litigation climate is vital to reviving our economy.”
Under the reform-minded and pro-jobs leadership of Gov. Jan Brewer, Arizona has been one of the state’s at the forefront of legal reform.
In 2011 the governor signed into law H.B. 2423, a bill introduced by Rep. Kimberly Yee that increases transparency in the contracts between the government and outside attorneys in order to ensure that the state’s hired legal help is not running up a big tab on the taxpayers’ dime. Similar efforts in other states have been stymied, so Arizona’s accomplishments in this arena are a testament to the hard work of the governor, the Legislature and Attorney General Tom Horne.
Arizona in 2011 also saw passage of S.B. 1212, a bill by Sen. Al Melvin that improves the appeals process in Arizona by placing monetary caps on appeal bonds and establishing a reasonable pre and post-judgment interest rate. At the conclusion of a trial, the plaintiff or defendant has the right to appeal the judgment. But to stay the execution of the judgment and protect assets from collection, a defendant must post an appeal bond. Those bonds are usually set at a level equal to the full amount of the judgment, so in cases with large judgments, a defendant could be forced to cease operations or liquidate assets in order to post the bond. To stave off bankruptcy, defendants often seek a settlement, effectively cutting them off from the appeals process and their full due process. Prior to the bill becoming law Arizona legal environment was ripe for plaintiffs’ attorneys seeking large judgments based on the hope of forcing settlements rather than on a case’s merits.
The cost of appealing a judgment is not limited to the appeal bond. Plaintiffs in Arizona who win favorable verdicts are usually entitled to recover interest on the damages awarded. Some of this is in the form of post-judgment interest, which is meant to compensate a plaintiff for the loss of the use of the money while a defendant appeals a judgment. Plaintiffs may also be awarded pre-judgment interest, which is calculated from the time harm is suffered, rather than the time damages are awarded by a court. S.B. 1212 replaces the flat 10 percent pre and post-judgment interest rate on damages with a rate that is equal to the prime rate plus 1 percent, capped at 10 percent. I can tell you from talking to my colleagues from across the country that tying the pre and post-judgment interest rate to the prime rate plus 1 percent is a trailblazing move.
We also saw the Arizona Supreme Court in 2011 amend the Arizona Rule of Evidence 702 to ensure that the admission of expert testimony or scientific evidence follows the Daubert standard rather than the Frye standard. Under Daubert, which is the standard for considering evidence in federal courts and in 37 other states, scientific evidence that hasn’t been subject to peer review or that isn’t the product of reliable principles and methods cannot be submitted. By reducing the opportunities for junk science to find its way into Arizona courtrooms and by discouraging fishing expedition lawsuits, Daubert puts Arizona on a more even footing with other states around the country.
The progress gained in 2011 builds on past legal reform successes in Arizona. For example, we’ve increased the burden of proof required to sue emergency room doctors for malpractice from a “preponderance of evidence” to “clear and convincing,” making our state more attractive to these valuable medical professionals.
Arizona has also increased the qualifications for expert witnesses who testify in medical malpractice cases, again helping the state to be better positioned to compete for sought after physicians.
Looking ahead, the Arizona Chamber of Commerce and Industry will continue to press for more commonsense legal reforms that make Arizona better able to grow our economy. Such reforms include preventing plaintiffs from seeking punitive damages from manufacturers on top of compensatory damages if the defendant has met federal and state guidelines in the development of a product.
In some states around the country, trial attorneys have made doing business a constant struggle. Reflecting on what I learned at the conference, I’m reminded of how fortunate we are to live in a state where the governor and Legislature are so committed to fostering an environment where businesses can concentrate on growth and new initiatives rather than dodging questionable lawsuits.
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry