Glenn Hamer

This week I want to share with you the latest goings on in the Arizona Chamber of Commerce and Industry’s efforts to advance a key civil justice reform.

The state Senate on February 28 passed Senate Bill 1336, the Chamber’s top tort reform priority.

The legislation is very straightforward. It simply says that manufacturers and service providers who produce their product or service in accordance with all applicable federal and state standards should not be held liable for punitive damages in product liability cases.

In other words, if you follow the rules you shouldn’t be punished.

The bill passed the Senate 19-11. The next step in the process would usually be a hearing in the House Judiciary Committee.

Here’s an excerpt of a letter the Arizona Chamber and over 20 other chambers of commerce from around the state sent this week to Rep. Eddie Farnsworth, the Judiciary Committee chairman:

It is patently unfair for a business to be held liable for punitive damages despite that business having strictly followed all applicable health and safety standards. SB 1336 addresses this concern by protecting law abiding businesses from punitive damage claims in product liability cases.

When businesses decide where to expand and invest, there are a number of factors that go into that decision, including a state’s legal environment. States are more competitive in the battle for jobs when they have an environment that allows job creators to concentrate on innovation and expansion, not on looking over their shoulder in anticipation of the next legal action. We’d rather business spend their dollars on hiring new employees, not on hiring an army of lawyers.

SB 1336 helps facilitate economic growth by exempting manufacturers and sellers from punitive damages when their product was designed and manufactured according to the license or approval terms of a government agency. By deferring to agency decisions, SB 1336 establishes consistent safety standards and strongly incentivizes compliance from Arizona businesses.

The bill only affects punitive damages, not compensatory damages. The bill simply tells manufacturers that if they play by the rules, then they shouldn’t be punished.

This year presents a unique opportunity to continue to bolster Arizona’s reputation as a leader in civil justice reform. Please support SB 1336.

  • Arizona Chamber of Commerce and Industry East Valley Chambers of Commerce Alliance
  • Greater Phoenix Chamber of Commerce Tempe Chamber of Commerce
  • Chandler Chamber of Commerce Apache Junction Chamber of Commerce
  • Gilbert Chamber of Commerce Mesa Chamber of Commerce
  • Queen Creek Chamber of Commerce Greater Scottsdale Chamber of Commerce
  • Prescott Chamber of Commerce Sedona Chamber of Commerce
  • Wickenburg Chamber of Commerce Northern Pima Chamber of Commerce
  • Prescott Valley Chamber of Commerce Yuma Chamber of Commerce
  • Marana Chamber of Commerce Green Valley Chamber of Commerce
  • Lake Havasu City Chamber of Commerce Nogales-Santa Cruz County Chamber of Commerce
  • Pinetop-Lakeside Chamber of Commerce South Mountain – Laveen Chamber of Commerce
  • Tucson Metropolitan Chamber of Commerce Flagstaff Chamber of Commerce
  • Buckeye Valley Chamber of Commerce Southwest Valley Chamber of Commerce

From Yuma to Prescott, Flagstaff to Tucson, the state’s business community has spoken with one voice and declared that our state’s legal environment is critical to our ability to attract jobs.

Our competitor states around the country know this; the manufacturing-heavy state of Ohio in 2004 passed a law that most similarly resembles SB 1336. In fact, five states don’t even allow plaintiffs to pursue punitive damages.

Make no mistake: This bill makes clear that if a manufacturer fraudulently receives certification to put a product on the market, then that bad actor should by all means be subject to paying punitive damages.

But the folks that follow the rules shouldn’t be forced into higher settlements by plaintiffs’ attorneys employing the threat of punitive damages.

The concept contained in SB 1336 is sound policy, and one that is supported by the American Legislative Exchange Council and the American Tort Reform Association. The bill deserves a hearing and the Legislature’s support.

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry