Alabama was the original “tort hell.” It was so named in a 1996 Forbes Magazine piece often credited with coining the term. Alabama was the home of the infamous BMW v. Gore case in whicha court awarded $2 million in punitive damages for a botched $600 paint job on a car.
As recently as 1999, Alabamans were embarrassed by a $581 million punitive-damages award over a $1,200 dispute about a home satellite dish.
Today, while Alabama remains far from a lawsuit defendant’s notion of paradise, the combination of new lawsuit abuse reform laws and more reform-friendly Supreme Court justices has brought the state’s court system into far greater balance. And, at least in part because of those changes, the state as a whole is experiencing significant progress.
The state legislature passed lawsuit-abuse reforms in 1987, but the plaintiff-friendly state high court ruled them all unconstitutional. But new reforms approved in 1999 were upheld by more business-friendly justices elected by fed-up voters in 1998, 2000 and 2002.
Result: A 2004 paper by Cumberland School of Law professor Michael DeBow detailed what it called a “fairer and more predictable civil justice system.” Alabama’s rankings have improved steadily in indexes compiled by business-friendly groups like the American Tort Reform Association and the Pacific Research Institute.
And the Alabama Supreme Court last fall reversed all but $52 million (plus interest) of what had been an $11.9 billion windfall for the state government in a suit against Exxon.
Alabama’s economy began booming just after its new Supreme Court majority took office in 2001, with the state besting the national unemployment average significantly: 0.4 percent better in March of 2002, 0.6 percent better in 2003 and at least a full percentage point better in each of the last four March measurements.
Plus, Alabama is a safer place to work: Workplace injuries and illnesses dropped from 7.5 per 100 workers in 1999 to 4.7 per 100 in 2006. Apparently, lawsuit-abuse reform isn’t so dangerous after all.
