Billings, Montana Chamber Legal Reform Speech by Thomas J. Donohue

On: Chamber Legal Reform
To: Billings, Montana 
From: Thomas J. Donohue
Date: September 30, 2004
 

Billings, Montana
September 30, 2004

Thank you, Don, for that kind introduction and also for your service to the U.S. Chamber as a member of our board of directors. You can all be proud of how Don represents Montana business interests in Washington.

Special thanks also the Billings Chamber and the Montana Chamber Foundation for having me here today. And congratulations to Butch Ott, who, as you know, is retiring after 18 years at the helm of the Billings Chamber.

It's great to be back in Montana.

I spoke at the Montana Economic Development Summit in Great Falls in the summer of 2001 as a guest of Senator Baucus.

I may not look like a typical Westerner – I suppose Irishmen from Queens, New York, rarely do – but I truly do enjoy it out here. My son lives in Colorado, so I'm out this way quite often.

That reminds me of a saying I've heard – "Montana. It's everything Colorado thinks it is." I don't think my son would appreciate that line, but I thought you might.

Anyway, the U.S. Chamber enjoys a strong working relationship with both the Billings and Montana state chambers, as well as with Montana's congressional delegation.

We work closely with Senator Baucus on a number of important business issues that pass through the Senate Finance Committee, including free trade deals and, most recently, the legislation that extended some of the Bush tax cuts, including those aimed at business.

With Senator Baucus's support, and that of Senator Burns and Congressman Rehberg (REE-BERG), Congress passed that bill last week.

We could spend this time talking about taxes, or energy, or transportation, or any number of issues in which the Chamber is involved.

But I've decided to focus my remarks on one of our top priorities – reforming a runaway legal system in which the trial bar is in the driver's seat.

Frivolous lawsuits are raising prices for hard-working Americans, crippling companies, eliminating jobs, forcing doctors to quit and medical clinics to close, and clogging our courts so that people with legitimate claims are being denied their day in court.

And, I regret to tell you, Montana is a major contributor to all that is wrong with our legal system.

Every year for the past three years, the U.S. Chamber has released the Harris State Liability Rankings.

Based on the perceptions of more than 1,400 surveyed corporate attorneys, Harris ranks the liability environments of all 50 states.

Since we started releasing this poll in 2002, it has become the primary benchmark by which business owners, elected officials, the media, and other opinion leaders measure their state's legal environment and see firsthand how good – or bad – that environment is for businesses and consumers.

Montana has dropped like a rock in our rankings – from number 28 last year to a disappointing number 43 this year.

The state ranks particularly poor in overall treatment of tort and contract litigation, timeliness of court action, and overall impartiality of judges.

Montana's legal system is one of the most unfair, abusive legal systems in the country – and without immediate action to reform the civil justice system, it's only going to get worse.

How could this be, you might ask, if the state enacted legal reforms as recently as last year?

Yes, the Montana legislature did pass reforms to the state's civil justice system, but, quite frankly, it did not go far enough.

The cap on punitive damages does not apply to class action suits.

The $250,000 cap on noneconomic damages only applies in medical malpractice cases.

And the state applies joint and several liability to any party that is more than 50% at fault. These limited reforms are little more than a bump in the road for trial lawyers.

So what impact is Montana's poor ranking having on the state? Well, we know that it deters economic development here.

An overwhelming 80% of respondents in our poll report that the litigation environment in a state could affect important business decisions at their company, such as where to locate or do business.

In other words, businesses from around the country may be avoiding Montana largely because of your poor legal climate.

So why is the U.S. Chamber concerned about Montana's courts? Because what happens here doesn't happen in a vacuum. Rather, what happens in Montana's courts greatly impacts the national business climate.

Lawyers from around the country flock to places like Montana to file lawsuits against employers located far, far away.

In fact, most of the damage inflicted on our legal system is occurring in a select few states and jurisdictions.

That's why we do these rankings – to shine the light of day on problem states and jurisdictions so that individuals and businesses can demand change from their politicians and fairness from their courts.

So what can you, the business community, do to help improve Montana's ranking?

You can help educate the public on the importance of demanding a civil justice system that is simpler, fairer, and faster for everyone.

We've learned that simply informing people of where their state ranks is a strong agent of change.

Though Montana's legal environment is poor and getting worse, I wouldn't be here if we didn't think change was possible.

Our success in other states gives us confidence that we can succeed here.

For example, earlier this year, Mississippi Governor Haley Barbour signed comprehensive legal reform legislation – a victory the Wall Street Journal called "a case study in how to break the power of the trial lawyer lobby."

And our success isn't limited to Mississippi. Last year, Texas Governor Rick Perry also signed into law comprehensive reform legislation.

Since that victory, Texas' stock has already begun to rise in our Harris rankings, doctors are returning to the state, and the Governor is using the reforms to lure economic development.

And a recent Texas Hospital Association survey shows that, since the legislation took effect, lawsuits against hospitals have plummeted from an average of 160 per month to 54 a month.

In Montana, it's up to your state legislators to protect consumers and employers by passing tougher legal reform. And it's up to Montana's judges to restore fairness and commonsense to your courts.

The business community in Montana must step up and play the role of legal reform advocate, just like the Chamber is doing on a national scale.

Our Institute for Legal Reform — working closely with our Litigation Center, the Chamber lobbying and policy team, and many good partners in Washington and across the country – is successfully challenging the trial bar on all fronts.

It is providing the strong leadership that the business community has so desperately needed.

We have already had some success in federal legislation – such as stopping trial lawyer efforts to gut securities litigation reform or exploit the 9-11 terrorist attacks through massive lawsuits.

We have advanced class action reform in Congress – passing it in the House and securing the support of a majority of senators.
We have also succeeded in bringing asbestos litigation reform far closer to a solution than it has ever been in the past.

We are not there yet, in part because the business community itself has not reached a consensus on the best approach.

As I've already mentioned, some of our most important achievements have been on the state level, where we have seen meaningful legal reform and a shift in the philosophical composition of state Supreme Courts.

Another critical component of our legal reform strategy has been to continue and expand the aggressive work of the National Chamber Litigation Center, which has effectively fought abusive class actions and most importantly, has been a leader in the recent successful efforts to rein in excessive punitive damages awards.

In last year's landmark State Farm case, in which we participated, the U.S. Supreme Court set strict guidelines for punitive damages.

Since then, the Litigation Center has entered a number of other punitive damages cases to ensure the implementation of those guidelines. These cases have already saved the companies involved more than $470 million.

Our legal reform program also includes a strong research function. Why is this important? Because the trial bar is constantly seeking out new opportunities for lawsuits. They research the law, develop novel legal approaches, train lawyers, and provide the seed capital to fund new cottage industries.

Business stood by and watched this happen in asbestos and tobacco. Then we saw it happening with lead paint, guns, and securities.

Mold and fast food came next – but in these cases at least, ILR sponsored and funded major research, which has helped level the playing field.

And on October 14, at our 2004 Legal Reform Summit, we will examine two new emerging issues – the budding cozy relationships between state attorneys general and the plaintiffs bar, and the new wave of securities class actions that has hit Wall Street in recent years.

Finally, we have rolled out an aggressive voter education campaign.

Traditionally, the Chamber has not issued endorsements in presidential elections. It will maintain this policy in 2004.

Yet the extraordinary circumstances surrounding this election have compelled the Chamber to support two important initiatives to place legal reform issues in the front of voters' minds.

First, the Chamber is joining others in supporting a new "527" political organization called the November Fund, which aims to shine a spotlight on the critical issue of lawsuit abuse.

The November Fund will aggressively communicate the truth about trial lawyers, as well as John Edwards' career as a personal injury attorney, and the role trial lawyers would play in a Kerry-Edwards administration.

The business community's concerns about Senator Edwards are not partisan or personal – they are based on his record, his philosophy, and his cozy relationship with the trial bar.

In addition to the 527 group, the Chamber is also going to run its own voter education program in 6-10 key states.

We're going to do our best to connect the dots for voters so they understand the link between the devastating effects of lawsuit abuse – and the risks of putting John Edwards steps away from the Oval Office.

Last month, the Chamber also launched a South Dakota statewide education campaign designed to inform voters about Senate Minority Leader Tom Daschle's anti-business political agenda in Washington – an agenda that is vastly different from the needs of the state.

The initial ads focused on Senator Daschle's obstruction of legal reform – namely medical liability reform. As we all know, he has stood in the way of several other legal reform efforts, including class action reform.

We are going to make sure that South Dakota voters know that Senator Daschle stands with the trial lawyers instead of South Dakota's needs, and that he continues to block legislative reforms that would spur business investment, grow the economy, create jobs and improve access to health care.

It's important to note that these Chamber efforts are completely independent of ILR's ongoing activities.

Here's the bottom line: For the first time, the business community is challenging America's litigation explosion in a comprehensive and coordinated way.

For the first time, our adversaries know they have a real fight on their hands.

For the first time, business can point to more than just minor successes around the edges, but also to fundamental changes in the legal landscape across the nation.

So where do we go from here? We must begin by recognizing the compelling truth that our adversaries are as tough as they have ever been.

Maybe even more so because now they have been challenged. They are organized. They are relentless. They have unlimited funds and they retain impressive political clout.

And they have the advantage of surprise – they always have the potential to surprise us by embarking down a new avenue of legal attack on legitimate companies.

That is why the ILR, the Litigation Center, and all the other assets the Chamber has put into legal reform will continue to grow.

We will continue to educate the public on the importance of a fair and balanced legal system.

We must develop web-based approaches and other grassroots strategies to rally support for legal reform legislation and candidates, especially as more traditional avenues such as television advertising become more restricted.

There are hundreds of millions of dollars, indeed billions, to be recovered and saved through a strong post-State Farm program to limit punitive damage awards – so we must expand our work in that arena.

We must ensure that small business in America understands that legal reform is their fight too – it's not just about the big companies.

The Chamber recently released a study on the huge impact that frivolous litigation is having on smaller companies – somewhere north of $88 billion.

We must also understand that the trial bar is ceaseless in its own efforts to look high and low for new litigation opportunities.

There's global forum shopping, whereby lawyers are bringing cases to courts in this country thanks to our lenient laws and compliant juries. Some are using the Alien Tort Statute to sue global companies here for abuses in the countries in which they do business.

The debate over global warming may also move into the courtroom as lawyers bring suit against companies who allegedly contribute to climate change.

There is almost no limit to the ingenuity of some of these lawyers. As I'm sure the entrepreneurs in the room would agree, you almost have to admire it!

Ladies and gentlemen, there is no greater threat to the future of American business than the relatively small but powerful group of trial lawyers that are sucking the vitality out of business.

They destroy good jobs and companies, raise the cost of health care and goods, and enrich themselves at the expense of all others, including the truly injured.

This isn't something that's happening someplace else. It's happening right here in Montana. So let's work together to make the system fairer and more balanced for everyone.

Thank you very much.