ILR State Liability Rankings Remarks

AS PREPARED FOR DELIVERY

Release of the 2006 Harris Poll State Liability Rankings
Remarks by Tom Donohue
President and CEO, U.S. Chamber of Commerce
St. Louis, MO

March 27, 2006

Good morning.  I'm Tom Donohue, the President and CEO of the United States Chamber of Commerce. 

I'm pleased to be here today and I want to start by introducing our press conference participants.  We're honored to have with us:

• Lieutenant Governor Peter Kinder of Missouri;
• Mr. John Bachmann, Senior Partner of Edward Jones and Past Chairman and Chairman of the Executive Committee of the U.S. Chamber;
• Mr. Humphrey Taylor, Chairman of the highly-regarded research firm, Harris Interactive;
• Mr. Dan Mehan, President of the Missouri Chamber of Commerce and Industry;
• and Mr. Doug Whitley, President of the Illinois Chamber.

 
Welcome, gentlemen, and thank you all for joining us today.

In 1998, the Chamber founded the Institute for Legal Reform to stop the steady stream of frivolous lawsuits clogging our courts and to help restore fairness and balance to our nation's judicial system. 

Eight years later, ILR is the nation's leading legal reform advocacy group.  Today we can point to a number of significant victories in Congress, the courts and the states. 

ILR led the fight in Washington for federal class action reform that will help stop the litigation landslide that is driving up prices for consumers, eliminating jobs and crippling companies. 

We're on the ground in problem states and jackpot jurisdictions, where the laws are either inadequate or are not being applied fairly and we've seen many state in the past few years pass good legal reform packages.

We're also running voter education and public awareness campaigns about the impact of lawsuit abuse to help get these states- and their courts- back on track to a fair and balanced legal system. 

But there's still quite a ways to go before we can rid our courts of lawsuit abuse and correct the deep flaws in our legal system.  One of the key weapons in our arsenal is the annual State Liability Systems Ranking Study.

Since the inception of the study, it has become the benchmark against which businesses, elected officials, the media and other opinion leaders measure their state's legal climate. 

They want to see how they stack up against other states, and also how well – or poorly – the system is serving employers, workers and consumers. 

In 2006, for the fifth consecutive year, Delaware's state liability system is ranked number one. Nebraska, Virginia, Iowa and Connecticut round out the top five.

After hanging on at 49th for four years, West Virginia dropped to number 50 in 2006.  Despite Governor Manchin's commitment to improving the state's business climate, the legislature has failed time and again to pass meaningful reforms.  Now their inaction has translated into a last place ranking.   

We've also seen a lot of upward movement in the poll this year, most notably by those states that rode the legal reform wave that swept through the states last spring and passed solid reform legislation.   

Mississippi, which ranked last for four years in a row, has moved up to number 48, thanks to a great legal reform package passed under the leadership of Governor Barbour in 2004.  The state supreme court in Mississippi has also done its part by cracking down on abuses of the state's legal system. 

Ohio, Georgia, Florida, California and Texas all have shown increases in their 2006 rankings, thanks to a variety of legal reforms passed by these states in the last several years. 

If you're wondering why we're here in St. Louis today for the national release of our poll, it's because one state that truly stands out in this year's poll is Missouri.

In just one year, Missouri has risen five places to number 35.   

The reason?  Last spring, under the leadership of Governor Matt Blunt and Lieutenant Governor Peter Kinder, who you'll hear from shortly, Missouri enacted one of the most comprehensive legal reform packages in the country at a time when it was needed most. 

A year ago, Missouri was in the bottom ten, ranked at number 40.  It had fallen 11 places since our inaugural poll in 2002, when Missouri ranked 29th.  Recognizing the serious damage that a reputation for lawsuit abuse can do to a state economy, to jobs and to employers, Gov. Blunt took on this tough issue.   

Today, thanks to the comprehensive reforms passed by the legislature, Missouri's employers and workers are in a better position to compete.  These new laws keep speculative trial lawyers from shopping around the state for the friendliest courts in which to sue. 

No longer can defendants be held liable for more than their fair share in lawsuits simply because they have "deep pockets."  And businesses now have a measure of predictability when it comes to litigation costs, thanks to the enactment of caps on punitive and non-economic damages. 

The playing field in Missouri has been leveled, and the state's five point jump shows that the businesses we surveyed from across America know it. 

This is all good news for Missouri's business owners and working families. 

The Chamber takes a lot of heat for being tough on states, but when a state does the right thing, we're also one of the first to stand up and recognize them for it.

For the sake of all Missourians, we're pleased to recognize the hard work of Governor Blunt, Lieutenant Governor Kinder and the state legislature for doing the right thing and passing meaningful legal reform legislation.

There is another reason that we've asked you to join us here in St. Louis today.  Unfortunately, our new rankings do not give every state cause for celebration. 

As it flows past St. Louis, the Mississippi River is less than half a mile wide, but what lies on the other side may as well be a world away when we're comparing legal climates. 

Illinois has long been synonymous with phrases like "court shopping,"  "lawsuit abuse" and "jackpot justice." 

This embarrassing reputation is due in large part to three jurisdictions ranked by survey respondents among the 25 worst in the country for legal fairness –Madison County, St. Clair County and Chicago.   

Plaintiffs' attorneys come from far and wide to file cases in these "jackpot jurisdictions" because they know their best chance of winning a major jury award or extorting a huge settlement is in these courts. 

·When a state has a reputation for an unfair legal system, not only is the cause of justice hindered, but economic growth and development are stunted.  This is costly to everyone in the state – workers, employers, consumers and families.

As I referenced moments ago, the perceived fairness of a state's courts more often than not factors into the decisions of employers when it comes to where to expand or invest. 

Companies simply don't want to do business in places where they think they'll be targeted for frivolous lawsuits, or worse, where they don't think they'll get a fair trial if they are sued.  Can you blame them? 

There is a glimmer of hope for Illinois.  In this year's Harris Poll, the Land of Lincoln showed a very modest improvement in its ranking, moving up one place from last year to 45th. 

This step up can be explained by two factors.  First, the Illinois Supreme Court has done its part to weed out lawsuits that don't belong in Illinois and to apply the law as intended.  Three key rulings issued by the court in the latter half of 2005 have been widely recognized by the business community as a sign of renewed fairness and balance.  

It should be noted, however, that if trial court judges in places like Madison County would apply the laws as intended, and if reasonable venue rules were enacted, these cases never would have made it to the supreme court.  

The Illinois state legislature also passed a medical liability reform bill last summer, which Governor Blagojevich [Blah-goy-ah-vitch] reluctantly signed, after first claiming he would only sign a bill that included caps on damages over his dead body. 

Our message today for Illinois is one of both encouragement and warning.  We welcome the progress made in the past year, but the governor and legislature owe it to Illinoisans to finish the job. 

One narrowly focused law and a supreme court backstopping bad decisions by the lower courts does not undo the damage wrought by years of court shopping and abuse by the plaintiffs' bar.

Governor Blagojevich and the legislature should take a page from Missouri's book: pass comprehensive legal reform.

To help advance the fight for legal reform in Illinois, in other states, and in Washington, D.C., we're launching a national advertising campaign to further spotlight our Harris Poll findings and the costly effects of lawsuit abuse in the states.  

Our ads- which you see displayed behind me- will appear in the Wall Street Journal, the New York Times, The Washington Post, the Washington Times, USA Today and a number of other publications. 

You will also see our Illinois ad running in papers across the state this week and our Missouri ad will run tomorrow in the St. Louis Post-Dispatch. 

We will also be running radio ads in target markets, including Springfield and MetroEast Illinois, West Virginia and Madison, Wisconsin.

The overarching goal of our campaign is to make sure that elected officials, the media and legal reform supporters have an accurate picture of just how serious the problems with their courts are and motivate them to do something about it. 

America's ability to compete in a global economy has never been more questioned than it is today.  There are a multitude of contributing factors, and America's litigation explosion is most definitely one of them.      

The good news is, though, as Missouri has shown, we can take steps to rein in excessive and abusive litigation.  The time has come for others to follow their lead and pass meaningful legal reform.  The costs of inaction are simply too great. 

I would now like to turn the podium over to Mr.  Bachmann. 

Now in his remarkable 47th year at Edward Jones, John has been a leading – and more importantly, effective – advocate for Missouri business and for American business at large.  He has a keen interest in legal reform, understanding first hand how litigation can suffocate an otherwise prosperous company and how a state's legal environment weighs into critical business decisions.

Please join me in welcoming John Bachmann.