May 10, 1999

Birmingham Business Journal

Business backs tort reform legislation

By Mark Kelly

Depending on who's talking, the need for tort reform in Alabama is a major stumbling block to efforts to attract new business or a handy means of promoting a political agenda."

State lawmakers are expected to a dress the question of ton reform - caps on large, punitive damage verdicts and other measures aimed at curbing so-called lawsuit abuse during the few days left in the current legislative session, although prospects of action remain uncertain.

"Time is getting critical," said John McMillan, chairman of the Alabama Civil Justice Reform Committee.

A 300-member coalition of businesses and business- related organizations and associations, McMillan's group planned a major push for tort reform during the 1999 legislative session. But the coalition has been stymied by delays, because of a Senate dispute over operating rules and lawmakers' preoccupation with the lottery.

"Alabama has needed tort reform for a long time," said McMillan, also executive vice president of the Alabama Forestry Association. "The trial lawyers and their allies have beat it back time and again, while other states do what they need to do to make themselves attractive to new industry."

Alabama Power Co. President Elmer Harris said fear of being hit with high punitive damage awards discourages businesses from moving to Alabama.

"Getting some limitations on damage awards is absolutely an economic development issue," Harris said. "Some of the judgments awarded in Alabama are ridiculous."

But Alabama Trial Lawyers Association President Greg Breedlove said Alabama's civil liability laws are "not at all out of line" with those of surrounding states.

In fact, as one of only three states where a plaintiff must prove that absolute liability for damages lies with the defendant, Alabama already lays claim to some of the nation's toughest tort laws, he said.

There is absolutely no need for legislative tort reform in Alabama," Breedlove said. "We have a system in place where the defendant is given multiple opportunities to appeal and have damages overturned or substantially reduced. Beyond the fact that the system works well, it seems ill- advised to allow the Legislature to tinker with what should be a judicial concern."

Of the more than 42,000 civil lawsuits filed in Alabama in 1997, only three had jury verdicts of $ 1 million or more, Breedlove said, adding that the occasional large verdict attracts disproportionate attention.

But such attention creates lasting unfavorable impressions among businesses considering Alabama for expansion or relocation, Harris said.

"There may be only a very few large verdicts," Harris acknowledged. "And it's true that many of the larger damage awards are ultimately reduced. Unfortunately, word of that doesn't seem to get around as effectively as word of some of the more outrageous verdicts does."

According to Breedlove, the argument that lawsuit abuse hampers economic growth is refuted by recognition from national sources such as Dun & Bradstreet, which earlier this year ranked Alabama third in the nation in business start-ups.

"When you look at that, and at things like Honda announcing that they're going to bring 1,000 or more jobs to Alabama, you realize that tort reform is not a real issue," he said.

But national rankings and high-profile business announcements don't tell the whole story, McMillan countered.

"My question is, how many jobs has not doing tort reform cost us," McMillan said. "If you believe The Wall Street Journal and other reputable publications that have quoted corporate decision-makers as saying this issue works against Alabama, you've got to admit it's something that needs to be addressed."

Whether that will happen before the end of the current legislative session is open to question, as both houses struggle to make time for a seven-bill tort package highlighted by a measure limiting punitive damage awards to three times compensatory damages.

"If it doesn't happen this year, we'll be back until it does," McMillan said. "In the meantime, the trial lawyers will have won again."

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