The U.S. is in an era of unprecedented fiscal and economic competition among the fifty states. Even relatively well-governed states can’t sit back and be complacent while other states are passing reforms to become more attractive to employers and investment.
In Louisiana, Gov. Bobby Jindal (R) has signed into law some of the most innovative and pro-growth reforms the nation has seen in recent years – such as providing parents with school choice through the country’s second largest education voucher program, criminal justice reforms that save taxpayer dollars by emphasizing rehabilitation over incarceration for non-violent offenders, and pension reform that increased the solvency of the state employee retirement system. The Pelican State’s legislature convened its 2014 session this week, and while lawmakers can’t take up tax issues this year (Louisiana has a unique system in which fiscal issues can only be taken up in odd number years), Gov. Jindal & state legislators are tackling tort reform, with a package of bills pending that will, if passed, make the state more economically competitive and serve as a boon to businesses and taxpayers.
Louisiana has long had a bad reputation as a top destination for trial lawyers to venue-shop for dubious class action lawsuits, and fertile ground for bogus legacy claims that have hindered the state’s crucial oil & gas industry. This is not without real consequences. It has been estimated that excessive litigation costs Louisiana families more than $9,000 per year. The American Tort Reform Foundation (ATRF) ranks Louisiana as the nation’s second worse judicial hellhole, behind only California.
This year, a series of bills have been introduced to address the problems plaguing the state’s legal system. In particular, legislation has been introduced that would lower the monetary threshold at which defendants are eligible for a jury trial, crack down on legacy lawsuit abuse targeting oil and natural gas producers, mitigate asbestos litigation fraud & abuse, and discourage lawsuit abuse by requiring those who file frivolous suits to cover the defendants’ legal costs.
In his opening remarks to the legislature this week, Gov. Jindal laid down a marker:
We will be supporting efforts by a number of legislators and business leaders who have expressed concerns about recent litigation, its impact on economic development and the need to create a more business friendly environment in the legal system. We’ve done a lot of things to make Louisiana a great place to do business. We’ve cut taxes, cut government spending, reformed our ethics code, and improved our education system. But, we also need to make sure we have a predictable, fair, legal environment in Louisiana.”
ATRF summarizes the 2013 actions by the state’s attorney general that served as an impetus to pass much needed tort reform in 2014:
Louisiana’s ethically-challenged Attorney General James ‘Buddy’ Caldwell continues to hire his political patrons among the plaintiffs’ bar to sue – supposedly on behalf of the state – hapless out-of-state corporations with deep pockets, whether they be energy producers, prescription drug makers or other easy marks. In addition to his office’s controversial authorization of a levee board’s no-bid hiring of contingency-fee lawyers to sue 100 or so oil, gas and pipeline companies in what may prove to be the mother of all legacy lawsuits, Caldwell routinely skirts state law that precludes him and other state officials from entering contingency-fee agreements.”
In order to rectify this situation, legislation has been introduced to bring transparency and accountability to the process through which the Attorney General’s office awards outside legal contracts.
According to Melissa Landry, Executive Director of Louisiana Lawsuit Abuse (LLA), a non-partisan citizen watchdog group dedicated to stopping lawsuit abuse, “use of private contingency fee lawyers by the state Attorney General’s Office has increased significantly in recent years, in spite of a ruling from the Louisiana Supreme Court which clearly states that the Attorney General has no authority to engage contingency-fee lawyers on the state’s behalf: ‘under the separation of powers doctrine, unless the attorney general has been expressly granted the power in the constitution to pay outside counsel contingency fees from state funds, or the legislature has enacted such a statute, then he has no such power.’ (Meredith v. Ieyoub)”
photo credit: Ed Bierman Louisiana Supreme Court photo credit: Ed Bierman
Louisiana Supreme Courtphoto credit: Ed Bierman
“Perhaps even more troubling than this apparent violation of the spirit, if not the letter of the law,” Landry adds, “is that numerous investigations and public records requests have revealed many of the privately contracted attorneys representing the Attorney General are political contributors who were selected without the benefit of an open public-bid process.”
Tort reform won’t just benefit companies who are harassed and targeted by frivolous, baseless, and expensive lawsuits; it will provide relief to Louisiana taxpayers. Stephen Waguespack, head of the Louisiana Association of Business & Industry, recently explained how it is not just employers but individuals and families across the state that bear the burden of the state’s flawed legal system and the costs it imposes on society.
You’re paying,” Waguespack recently told a meeting of Louisiana citizens about who foots the bill for the increased costs that come from lawsuit abuse. “You’re paying when you’re driving your car. You’re paying when you insure your house. You’re paying when you go to the store and buy goods and services. And it’s holding us back as we compete for jobs and investment.”
photo credit: thepipe26 Louisiana Capitol Building photo credit: thepipe26
Louisiana Capitol Buildingphoto credit: thepipe26
According to ATRF, the “incestuous nature of Louisiana’s litigious political culture” is preventing the state from reaching its full economic potential. The good news is that Gov. Jindal and members of the Republican-controlled state house are committed to fixing the problems facing the state’s legal system before adjourning the 2014 legislative session this summer.
Once again, as we are seeing in Louisiana and elsewhere, while lawmakers on Capitol Hill are unable to address the challenges facing the nation, governors and state legislators are stepping up, passing reforms to solve their own problems and putting themselves, in spite of the harmful edicts coming out of the White House, in the best position to compete regionally, nationally, and globally.
Follow Patrick on Twitter @PatrickMGleason
Footnotes:
[1] For more information on the progress of the Louisiana tort reform bills in the coming weeks and months, visit the LLA’s website. For the latest legislative & political news from Louisiana, visit The Hayride.
[2] To watch a recent interview in which Harold Kim, Executive Vice President of the U.S. Chamber of Commerce’s Institute for Legal Reform, explains why tort reform is so needed in Louisiana, click here.
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