UPDATE: House committee passes tort reform proposal, with higher damage caps | Arkansas Blog

Friday, February 24, 2017

UPDATE: House committee passes tort reform proposal, with higher damage caps

Posted By on Fri, Feb 24, 2017 at 12:46 AM

click to enlarge AT ODDS: Rep. Bob Ballinger (right) presented SJR 8 to the committee today and found resistance from fellow Republican Rep. Doug House. - BRIAN CHILSON
  • BRIAN CHILSON
  • AT ODDS: Rep. Bob Ballinger (right) presented SJR 8 to the committee today and found resistance from fellow Republican Rep. Doug House.

After adjournment of the House of Representatives today, a committee took up Senate Joint Resolution 8, the proposed "tort reform" amendment to the Arkansas Constitution which passed the Senate a week ago.

Despite opposition from some lawmakers and the chief justice of the Arkansas Supreme Court, the House State Agencies committee approved an amended version of the measure on a roll call vote, 14-3. It next heads to the full House.

SJR 8 originally contained a $250,000 cap on the noneconomic damages that may be awarded to a claimant in a civil suit, but an amendment introduced today by Rep. Bob Ballinger (R-Hindsville) raised that cap to $500,000. The original legislation capped punitive damages at either $250,000 or three times the amount of compensatory damages, with an exception for cases in which a defendant intentionally harmed the claimant. Ballinger's amendment raised the punitive cap to $500,000 as well. Under Ballinger's modification, attorney contingency fees would be capped at 33 1/3 percent of net recovery, as in the original SJR 88

SJR 8 also proposes giving the legislature authority over rule-making in the judicial branch, a power that the state Supreme Court now holds. Ballinger's amendment removed the original resolution's mandate that the court explicitly seek legislative review for every rule change, but it still gives the legislature final say by allowing it to modify, repeal or create rules of pleading, practice and procedure within the court system. Ballinger today brushed off concerns about the separation of powers, arguing that policymaking authority properly rests with the legislative branch. Before the passage of Amendment 80 in 2000, he said, the legislature had such power.

Rep. Douglas House (R-North Little Rock) spoke against SJR 8, even as amended. "If you brought up something to limit the Second Amendment, the right to carry arms, everybody would be up in arms," he said towards the end of the meeting. "But the Seventh Amendment, which is also part of the Bill of Rights, so many people are willing to throw it in the trash can and limit the recovery. ... Juries are the triers of fact. They’re the ones that determine what damages should be recovered." The right to a trial by jury dates back to the Magna Carta, he argued, and is enshrined within the U.S. Constitution and the Arkansas Constitution. "So basically, we’re saying ‘Listen you can have a jury trial if you want to, but you’re just going to get $500,000.’ That’s exactly what it says."

Ballinger told the committee that the "jury system is a great system. … However, we limit the jury all the time. Almost everything we do down here when we pass a bill would limit a jury. If it’s a civil matter, if it deals with contracts … a jury would be limited by the laws we pass." SJR 8, he said, was simply "setting policy," the domain of the legislature. Ballinger also pointed out that the caps on monetary damages can be changed by a two-thirds vote of the legislature in the future.

Rep. Warwick Sabin (D-Little Rock) questioned whether SJR 8 nonetheless was effectively "setting the monetary limits in stone," considering the resistance that would likely be encountered if a future legislature tries to raise those caps (and considering the 2/3rds supermajority in both chambers that would be required). "Every major corporate entity in the state, and the state Chamber [of Commerce] wants this, and they employ lobbyists and the average citizen does not employ lobbyists, [so] the idea that the legislature could muster the ability to overcome a strong lobbying push ... to me seems pretty steep," Sabin said. A letter presented to the State Agencies committee today was signed by a long list of major business interests urging passage of SJR 8.

Ballinger disagreed that the limits on damages were unlikely to be raised in the future. "The cap is not what’s attractive to me about it," he said. "What’s attractive to me about it is that we can have the policy debates that it takes to be able to effectuate the policy that the citizens ask us to do."

Chief Justice Dan Kemp of the Supreme Court told lawmakers he was not speaking against the bill in its entirety, just the portion that would seize judicial rulemaking authority for the legislature. "If the Supreme Court proposed a constitutional amendment that the court should make the rules of the House and Senate, you would find that proposition unacceptable, and I agree with you," Kemp said. Legislators were unconvinced, with some telling Kemp that the U.S. Congress has oversight over judicial rulemaking at the U.S. Supreme Court.

Denise Hoggard, president of the Arkansas Bar Association, testified against the bill. By capping damages and limiting contingency fees, she said, the measure would shut out "working poor" and other Arkansans "who cannot afford hourly rates" of attorneys. "One person out of every four [in the state] is at 125 percent of the [federal poverty level]" she noted. "What SJR 8 does is take away the opportunity for folks to hire the lawyer of their choosing," she said, by "economically limiting the types of cases that lawyers will chose to invest their time into. ... It adversely affects the fair administration of justice."

Randy Zook, the head of the Arkansas State Chamber of Commerce, asked for a yes vote. He told legislators SJR 8 was about "creating a climate in Arkansas that enhances the health of our economy." Zook noted the diverse business interests committed to limiting their liability in lawsuits: "The manufacturing sector, trucking, poultry, the Farm Bureau, hospitals, doctors nursing homes … just about every sector in Arkansas is on that list." According to one list, he said, Arkansas ranks 41st "in terms of the perceptions of our legal climate." He claimed the bill would raise the state's competitive standing for businesses.

The bill's most forceful opponent today was Rep. House. He gave the example of an automaker aware of a deadly flaw in its product,  but that makes a calculated business decision to let its insurance cover those costs. Punitive damages in such a case would be sharply limited, House said.

"Some people in this world just hurt all the time, from the date of their injury to the day they die," House said. "Well, just $500,000 — sorry you feel so bad, sorry you hurt so bad, just go on about your life, take your pills. Would you take $500,000 if I was sitting here cleaning my pistol and I shot your privates off, so you couldn’t have a sex life? Especially you young folks — $500,000, no sex, rest of your life. Sorry, feel real bad about that. But that’s the limits.

"I cannot think of a more horrible path to take than abandoning the jury system where 12 people in our community decide what’s right, what’s fair, what’s just in each individual case," House declared.

Ballinger said that in the case of a person with long-term injuries, "there’s going to be a lot of medical bills. There is an opportunity to get a lot of punitive damages there ... Any trial lawyer worth his salt is going to get a big verdict out of that one. ... My point is that justice finds a way and it’s going to get done." Limiting damage awards is necessary, he insisted.

"Now, what we have to do is … to find a way to set policy so people can feel like there’s some sort of limitation, so that every single day they don’t have to worry about being driven out of business."

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