Sunday, November 28, 2004

Ohio tort law debate: Reform or Restriction?

By John Byczkowski              -       Reprinted from the Cincinnati Enquirer

n October 2003, Gov. Bob Taft brought his tort reform bandwagon to Cincinnati. He headlined an event on the loading dock at Joe Lasita & Sons Inc., a small Queensgate food service company, to build support for new laws to limit frivolous lawsuits and big jury awards.

"A fair and effective civil justice system is an essential part of promoting and sustaining an attractive business climate in Ohio," Taft said. "I urge the House to act immediately to pass Senate Bill 80 in its entirety, as introduced."

Jerry Lasita, vice president of the company, said he doesn't know why Taft chose his business.

But Lasita has seen the insurance bill on his fleet of trucks double in the past five years, and is typical of small-business people who believe that somewhere out there lurks the lawsuit from hell, the one that will put them out of business.

He points to produce wholesaler Castellini Co. of Wilder. That company is being sued by Chi Chi's restaurants for selling allegedly tainted green onions, which were linked to illnesses that killed four people and sickened about 600 others near Pittsburgh last year.

A big lawsuit like that "could destroy a business," Lasita said.

It looks like Taft's bandwagon, driven by such concerns from businesspeople, may reach its terminus in December. Ohio has lost 25 percent of its manufacturing jobs during the past four years, and a push is on to restore its attractiveness as a business location. Tort reform is seen as a key in creating a jobs-friendly environment.

"We're competing against the other 49 states, and especially the Southern states, where the courts provide a much more stable and predictable system than we have here," said Randy Leffler of the Ohio Manufacturers Association. His group is joined by many other business groups - including the Ohio Chamber of Commerce and the Ohio chapter of the National Federation of Independent Businesses - in leading the charge for tort reform.

SB 80, which has been approved by the Senate and awaits companion action in the House, sets caps on money awarded for pain and suffering and for punitive damages. It also caps the amount lawyers can be paid in contingency fees and changes other rules around liability and determination of awards.

Ty Pine, director of the NFIB-Ohio, which represents about 36,000 small businesses, said 90 percent of his members want tort reform.

"Lawsuits happen. The personal injury lawyers and plaintiffs know they can manipulate the system, manipulate business owners into paying out awards, whether or not the claim is legitimate," he said.

"Ohio is lagging the rest of the country," Taft said last week, "and we need to send a strong message to business and to manufacturers that we're serious in Ohio, we're trying to improve our business climate, (and) we're going to get a handle on excessive litigation costs."

Taft is unlikely to get SB 80 on the books intact. In the past 15 years, the Ohio Supreme Court declared two other attempts at tort reform unconstitutional. Proponents of SB 80 hope the Supreme Court is now more business-friendly.

Yet Rep. Bill Seitz, a Green Township Republican who chairs the House Civil and Commercial Law Committee, isn't sure the court will be friendly enough.

"I believe that the bill the Senate passed is somewhat seriously flawed, and that the rough edges need to be worked out if we are to have a hope of having it declared constitutional," he said.

Seitz said he opposes setting award caps at arbitrary levels. "Most people would find a limit of $500,000 for pain and suffering for the most horribly disfigured people to be shockingly low," he said. "People who are horribly disfigured for life, can you really say those toughest cases are deserving of no more than a half million dollars?"

Little Ohio evidence

Despite horror stories of businesses being threatened with multimillion-dollar lawsuits, there's little evidence Ohio has a problem with runaway jury awards.

"I would say that according to what information (business people) are getting from the press and from insurance companies, their fears are probably rational, but the information they're getting is irrational" said Rick Topper, a plaintiff's lawyer in Columbus and a member of the board of the Ohio Academy of Trial Lawyers, which opposes tort reform.

Million-dollar jury awards just aren't that common, he said. "Most of the verdicts are much less than that. Cincinnati has historically low verdicts. Columbus has historically low verdicts," he said. "Juries (in Ohio) have been very conservative."

According to the latest data available from Jury Verdict Research, a service based in Horsham, Pa., jury awards in Ohio were below national averages from 1996 though 2002. The data show:

• The median compensatory award - which includes economic and non-economic damages - was $15,000 in Ohio. That's less than half the national median of $37,054 and less than any surrounding state. Kentucky's median was $37,060.

• Just 3 percent of jury awards in Ohio contained punitive damages. The national average is 4 percent.

• Million-dollar awards are less common in Ohio than nationally. Just 6 percent of all jury verdicts topped $1 million in Ohio, compared to 12 percent nationally.

Rep. W. Scott Oelslager a Canton Republican who is chairman of the House Judiciary Committee, said the lack of evidence of a runaway-jury problem in Ohio was one reason why a previous attempt at tort reform was declared unconstitutional in 1991.

Oelslager, a legislator since 1985, said he's heard debates on tort reform a dozen times.

"With that experience, I knew that most of the time the debate on both sides centered on anecdotal evidence - very bad, worst-case-scenario stories," pumping up fears of economic disaster if Ohio didn't reform its civil justice system.

So Oelslager held 15 hearings on tort reform and surveyed judges, the state Department of Insurance and others who might know where in Ohio juries are giving away millions. He asked for examples of businesses that had been bankrupted by jury awards. The result? Nothing. "There clearly is no systematic runaway jury problem in the state of Ohio," he said.

"Is there a smoking gun out there? No," Taft conceded. "Is there plenty of circumstantial evidence from people who are paying the bills that this is a huge burden? Yes." He points out that asbestos litigation bankrupted several Ohio companies. Although a separate bill addressed that problem, "the next asbestos is just waiting to happen out there," he said.

Lawmakers leaning

The momentum in the Legislature seems to be swinging toward passage of a bill in some form.

"There are some in the Legislature who feel very strongly philosophically that we need a change. That's why we're in the process of trying to work out something," Oelslager said.

Seitz agrees there's pressure to get a bill done. "There is such an alliance of people that want this bill - the chamber, the NFIB, the Ohio Chemistry Technology Council, the Business Roundtable. It goes on and on," he said. "They want it; the Senate passed it." He also said the Senate might not consider any House bills unless important Senate bills make progress.

"I think parts of the legislation are certainly needed. I think it's difficult to justify the constitutionality of other parts of it," he said. "Tort reform is a subject that has bedeviled the Ohio General Assembly for some time, and I'd like to see us get it as right as we can get it and put it past us because we do have all these other issues for next year" - including worker's comp reform, business tax reform, and a $5 billion state budget deficit.

Seitz said he believes many of SB 80's provisions violate Ohio constitutional guarantees allowing citizens to seek redress through the courts and to have juries determine remedies. There's also the matter of the "modern courts" amendment, approved by voters in 1968, which gives the power to regulate the courts to the Ohio Supreme Court, not the Legislature.

The Legislature in 2002 capped awards in medical malpractice cases, and legal challenges to those caps are working their way through the state courts. Seitz said in the current tort reform effort, he'd prefer to set rules requiring judges to review damage awards along specific criteria and wait to see whether the Supreme Court upholds the malpractice award caps.

Supreme Court involved

So the attention shifts to the Supreme Court. "This court now is a very different court" than the one that last threw out tort reform in 1999, said former Appeals Court Judge Marianne Bettman, now a visiting professor of tort law at the University of Cincinnati. "There are a majority of judges who consider themselves less activist, more conservative, more deferential to the Legislature." But activism may not be the issue. Instead, declaring who has domain over the rules of courts might be. "Courts get very prickly about their constitutional turf," she said. "I don't see it as a liberal/conservative issue. I see it as a real turf issue."

That challenge, if it materializes, is several years down the road. First, there has to be a bill, and there's plenty of confidence one will emerge in December. "We expect it to pass here in the lame duck session and have the governor sign it," said Pine of the NFIB.

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