Sometimes a state can curb lawsuit abuse not by changing its laws, but by changing who interprets them.
That’s the message of a March 2008 paper by business professors Martin Grace and J. Tyler Leverty. They note that 27 percent of state lawsuit-abuse reforms between 1985 to 2006 were declared unconstitutional by state supreme courts. They report that only when businesses are confident that reforms will stick will insurance premiums start to drop.
Missouri, for instance, has been cited by many reformers as a legislative success story, but the American Tort Reform Association’s annual “Judicial Hellholes” report last year gave the Missouri Supreme Court a special “dishonorable mention.”
The reason is because it awarded status for a class-action lawsuit for children allegedly exposed to lead but who couldn’t actually show signs of injury. This “no injury” standard breaks new ground for leniency and invites massive lawsuit abuse.
Conversely, Illinois’ Madison County was an ATRA “hellhole” of long standing, but two new judges, Ann Callis and Daniel Stack, have combined to knock the county off the ATRA list thanks to four years of “declining numbers of lawsuits, fewer class actions, dismissals of out-of-state asbestos cases and [other] positive changes.”
Wisconsin, meanwhile, has been whipsawed by state Supreme Court changes. A group called the Judicial Evaluation Institute rated three Wisconsin high court judges as “restraining the spread of liability” more often than not, while three tended to “expand civil liability” and one was in the middle.
After Judge Diane Sykes was appointed to a federal appeals court, however, Gov. James Doyle appointed the liberal Louis Butler — and tort hell broke loose. In one case, the court suddenly decided that a nearly 30-year-old state cap on pain and injury damages was unconstitutional; in another, it created a new form of collective liability by allowing a lead-paint claim to go forward even against manufacturing companies that may not have made the paint that sickened the plaintiff years ago.
Appalled, Wisconsin voters struck back. Butler was defeated in his April bid for re-election — the first time since 1967that an incumbent Wisconsin Supreme Court justice has been ousted.
