Mississippi Curbs Big Jury Awards

JACKSON, Miss. —  It is one of the poorest states in the nation, but in recent years Mississippi has developed a reputation for granting exorbitant awards to plaintiffs who sued in its courts.

The state is now moving to curb those lawsuits through a sweeping set of legal reforms signed into law Tuesday by Gov. Ronnie Musgrove and hailed by business leaders as a big step in reversing depictions of Mississippi as a breeding ground for frivolous lawsuits.

The state becomes the latest of several dozen to clamp down on huge damage verdicts in recent years, and the new law is expected to prompt similar legislation elsewhere.

Critics said the awards had spiraled out of control in Mississippi because the state’s jurors -- many of them poor -- tend to favor consumers in claims against big companies.

Trial lawyers, who oppose the reforms, said the change would put the public at greater risk because big businesses would be less accountable.

The measure, which caps punitive damages in product liability cases and establishes other restrictions, won approval in the state Legislature last week following an 83-day special session that was devoted to overhauling the state’s civil justice system.

The tort reform package came after an intensive campaign by business groups portraying Mississippi as the capital of “jackpot justice” for having doled out huge awards in lawsuits against chemical and pharmaceutical companies, among others.

One of the most vociferous critics was the U.S. Chamber of Commerce, which took out full-page advertisements in newspapers statewide calling for reforms in Mississippi’s system. A poll of company lawyers that was commissioned by the chamber rated Mississippi’s liability system the most hostile in the country toward businesses that are sued.

In October, Musgrove signed a separate measure setting limits on damages in medical malpractice cases. It was concern over doctors and insurers leaving the state to escape high malpractice costs that led to the effort to reform the rest of the civil justice system.

“What we have signed is something that will give a fair, level playing field to our system in Mississippi,” Musgrove said during a bill-signing ceremony Tuesday in the rotunda of the state Capitol. “A message has been sent to the rest of the world about doing business in Mississippi. This is a good place to do business.”

In approving the changes, Mississippi joins 45 states that have enacted some form of tort reform since the mid-1980s, according to the American Tort Reform Assn., which backs changes in the way liability cases are handled. Pointing to a patchwork of rules at the state level, reform advocates are pushing for federal laws over how civil liability lawsuits are handled.

The changes in Mississippi are likely to spur remaining states to act, say tort reform supporters. Among states where the issue is expected to come up are Ohio and Nevada.

“There is no doubt that this legislation in Mississippi sends a signal to the other states that when elected officials hear both sides of the issue, tort reform gets passed. We expect that other states will enact tort reform legislation in coming months,” said Mike Hotra, spokesman for the tort reform association.

Tort reform was the year’s hottest political issue in Mississippi, and the state served as the battlefield in a high-profile proxy war between business interests and trial attorneys. Besides the debate here in the capital, the two sides also poured hundreds of thousands of dollars into a race for a seat on the state’s Supreme Court. Incumbent Chuck McRae, portrayed by detractors as too sympathetic to plaintiffs, lost after a campaign that attracted massive contributions from outside the state.

Business groups lauded the civil justice reform package as a step toward creating a fairer system for handling liability cases and establishing a climate friendlier to business.

“We had become the poster child of a bad civil justice system,” said Bill Yates, a construction company owner who chairs the Mississippi Economic Council, the state’s chamber of commerce. “And this, I do believe, tells the nation we are trying to get our ship in shape.”

Among the changes is a system of graduated limits on punitive damages -- those aimed at punishing wrongdoing -- that caps judgments against the biggest companies at $20 million. The smallest firms -- those whose net worth is $50 million or less -- could be ordered to pay no more than 4%, or up to $2 million, in punitive damages.

In addition, the new law protects retailers from being held liable for selling defective products they did not design or produce. The package also places tighter controls on where lawsuits can be filed and, in cases where there is more than one defendant, makes the damages a defendant must pay proportional to its share of blame for non-economic losses. There is no cap on noneconomic damages, such as pain and suffering.

The reforms, which go into effect Jan. 1, are coming under fire from trial lawyers, who accused Mississippi’s leaders of creating a legal system that will allow big companies to act with impunity by making it potentially less expensive to put the public at risk in pursuit of profits.

“Reform is a misnomer,” said David Baria, a Jackson attorney who is president of the Mississippi Trial Lawyers Assn. “To cap punitive damages is to say to corporate America that they can injure or kill people and be held less accountable than in the majority of states in this country.”

Baria said the state’s politicians fell prey to a powerful public relations campaign that convinced them that broad reforms were needed, when flaws could have been fixed through minor modifications. “The Legislature of Mississippi said, ‘It’s more important to make Mississippi business-friendly than to make it a place where businesses are accountable,’ ” Baria said.

Mississippi became the target of reform efforts after a string of big-money judgments. The state has seen seven verdicts of $100 million or more in as many years, among them a $150-million judgment in favor of five plaintiffs who sued the maker of the diet drug fen-phen after they reported health problems related to the drug. A $500-million judgment against a Canadian funeral home company in 1995 was later settled for about $175 million. A $150-million award last year to six men who sued asbestos makers is under appeal.

Critics have accused plaintiffs’ lawyers of choosing Mississippi as the spot for suing out-of-state companies because its jurors -- many of them poor -- have proved sympathetic toward consumers in claims against big corporations. But in the process, Mississippi business owners also have been named as co-defendants in what reform advocates characterized as a ploy by plaintiffs to get their cases tried in Mississippi. In rural Jefferson County, the number of plaintiffs in mass lawsuits exceeded the number of people living there.

Business leaders complained that outsized judgments scared investors away from sinking money into the state.

Musgrove said the new law will help him market the state, which two years ago landed a Nissan plant that will employ about 5,000 automobile workers when it is built north of Jackson.

Legal reform had been on Mississippi’s agenda before, but it gained new urgency this year as a result of the lobbying campaign and the looming prospect of an explosive issue during statewide elections next year. Musgrove, a Democrat, summoned lawmakers to the extra session in September, initially to tackle the malpractice issue, which had become a cause of widespread concern as physicians and insurers left for more hospitable states.

The medical malpractice law limits pain and suffering awards to $500,000 until 2011, when it increases to $750,000. The figure rises to $1 million in 2017. The law also requires that lawsuits be filed in the county where the alleged malpractice occurred. After weeks of deadlock, weary lawmakers reached agreement three days before Thanksgiving on the civil law reforms, after a special session that cost $1.6 million and was among the longest in state history.

The battle may not be over. Business advocates are expected to seek more limits when the Legislature reconvenes next year. The trial lawyers are bracing for a new round.. “These guys have a multiyear plan and they will be back for additional measures that provide them less accountability,” Baria said.

*

Times researcher Lynn Marshall contributed to this story.