Divided legislative committee advances Arkansas tort reform amendment

A proposed constitutional amendment to enact tort reform was given the go-ahead by a divided Senate State Agencies and Government Affairs Committee Tuesday, despite the objections of Chief Justice Dan Kemp and the Arkansas Bar Association.

The committee chose to recommend the amendment over eight others to the full Senate. If approved there and by the House, it would be presented to the voters in November 2018.

Thirty-one proposed amendments were filed between the House and Senate. The Arkansas Constitution gives the Legislature the ability to refer three proposed amendments, but under rules adopted this year, the House and Senate each will originate one, with a third possible with a two-thirds vote of both chambers.

As expected, the tort reform provision, Senate Joint Resolution 8 by Sen. Missy Irvin, R-Mountain View, was the one voted out of committee. It received a yes vote from five of the eight committee members, the minimum number needed. Voting for the proposed amendment were Irvin; the committee’s chair, Sen. Eddie Joe Williams, R-Cabot; its vice-chair, Sen. Gary Stubblefield, R-Branch; Sen. Bart Hester, R-Cave Springs; and Sen. Trent Garner, R-El Dorado. Not voting for it were Sen. Terry Rice, R-Waldon; Sen. David Wallace, R-Leachville; and Sen. Bryan King, R-Green Forest.

Of the three who did not vote yes, King had expressed outright opposition to the measure when it was discussed earlier in the day. Rice had expressed concern about a provision authorizing legislators to adopt rules for the Supreme Court. Asked afterward about his not voting for the amendment, he said, “Wasn’t ready to vote.” Wallace said he was concerned about that same issue and said the proposed amendment’s caps on punitive and noneconomic damages are too low.

“Separation of powers are an important part of our Constitution. I’m not sure where we’re going with that,” he said. “It’s not an easy vote for me.”

SJR 8 includes the following provisions.

• It would cap punitive damages in wrongful death and injury cases at $250,000 or three times the compensatory damage for each claimant, whichever is greater. An exception would be created for intentional conduct. Legislators could vote to increase the cap with a two-thirds vote but could not vote to decrease it.

• Non-economic damages in wrongful death and injury cases would be capped at $250,000 per claimant, with a maximum of $500,000 allowed for the combined beneficiaries of a decedent if the action results in death. As with the punitive damages cap, legislators could vote to increase but not decrease the cap with a two-thirds majority.

• Lawyers’ contingency fees in civil actions would be capped at 33 1/3% of the net recovery, with legislators establishing the process for calculating and adjusting the fee and setting penalties.

• Legislators would be authorized to adopt rules of pleading, practice and procedure for the courts, and would approve, amend or repeal those rules for the Arkansas Supreme Court. If the Legislature and the Supreme Court’s rules conflict, the Legislature’s rules would control.

In presenting the resolution, Sen. Irvin pointed to Arkansas’ ranking of 41st in terms of the state’s overall lawsuit climate by the U.S. Chamber Institute for Legal Reform. She said numerous states have instituted caps similar to those contained in the bill; Sen. Garner said California set similar caps in 1975.

“We know that right now we are a big hole right in the middle of every single state around us that has gone down this exact path,” Irvin said.

Irvin, whose family operates a medical clinic in Mountain View, said malpractice rates are reducing the availability of medical providers. Her local hospital was once forced to scramble to find an insurance carrier after its previous carrier left the state.

The amendment is supported by a variety of business and healthcare related associations under the umbrella of the Arkansas State Chamber of Commerce. That organization’s president and CEO, Randy Zook, presented a letter that includes the participation of The Poultry Federation, Arkansas Farm Bureau, the Arkansas Medical Society, and numerous other groups. Zook told legislators the amendment would make Arkansas more competitive.

“Right now we are more vulnerable than any state that borders us to limitless, meritless lawsuits and settlements against our job creators,” he said.

Sen. King, however, pointed out that the U.S. Chamber Institute for Legal Reform ranked three of Arkansas’ neighbors, Missouri, Mississippi and Louisiana, worse than it ranked Arkansas, while Texas ranked only one spot higher at 40. In response, Sen. Hester said the rankings measure the totality of a state’s lawsuit climate, not just what would be affected by the amendment.

The provision regarding the Arkansas Supreme Court’s rules drew the opposition of Chief Justice Dan Kemp. He testified that provision violates the separation of powers doctrine and asked how members of the House and Senate would feel if the Supreme Court made rules for them. He said court rules are created through a slow and meticulous process.

Irvin along with Garner, who was one of the measure’s 14 Senate co-sponsors, said many states give legislators varying levels of control over those rules. Sen. Williams pointed out that Congress has control over some of the U.S. Supreme Court’s rules and said Arkansas did not codify that the Arkansas Supreme Court wrote its own rules until voters passed Amendment 80 in 2000.

However, Scott Trotter, a private attorney, said the Arkansas Supreme Court inherently determined the rules prior to the passage of that amendment. In one exchange, Hester asked Trotter why lawyers trust jurors to make the right decisions in civil cases but don’t trust voters who would decide the amendment’s fate in an election. Trotter said supporters of the amendment will have more resources in a campaign, arguing, “I don’t think it will be a level playing field for the voters to make an informed decision.”

Hester replied, “I would agree it will be the people versus the trial lawyers.”

Also testifying against the bill was Denise Hoggard, president of the Arkansas Bar Association, who said limiting contingency fees would hurt only those Arkansans who cannot afford to pay lawyers on an hourly basis. She said it would take decisions away from jurors.

“This is government regulation … against those people who need access to the best lawyers while leaving open and unregulated those attorneys who have clients who can afford to pay unlimited amounts,” she said.

John Alter, past president of the Arkansas Rice Growers Association, spoke against the amendment on behalf of the association. He said small family farms under the amendment would not have the resources to compete with large corporations in a legal dispute. He referenced a case that began in 2006 when Bayer CropScience co-mingled genetically modified and non-GMO rice, shutting Arkansas farmers out of the European Union market and causing financial effects that linger today.

“We have to seriously consider the reality of how a small family farmer can have the ability to fight such financial monsters,” he said of the challenges facing large corporations.

Members of the committee considered eight other proposed amendments, but four died for lack of a motion and four received less than the required five votes.

Those included the following.

• Senate Joint Resolution 1 by Sen. Jim Hendren, R-Gravette, would have ended the fiscal session that occurs every even-numbered year. King and Hester voted for it.

• SJR 3 by Sen. Blake Johnson, R-Corning, would have given public school districts, along with the state, the responsibility for maintaining “a general, suitable and efficient system of free public schools.” That requirement is solely a state responsibility under the Arkansas Constitution. It died for a lack of motion.

• SJR 4 by Sen. Jeremy Hutchinson, R-Little Rock, would have created a process for appointing rather than electing Supreme Court justices. It died for a lack of motion.

• SJR 5 by Sen. Alan Clark, R-Lonsdale, defined the Legislature as the sole evaluator of whether the public school system complies with the Arkansas Constitution. Stubblefield, King and Wallace raised their hands, but Williams, the chairman, only counted two votes.

• SJR 6 by King would have required voters to present a form of photo identification at the polls. King and Stubblefield voted for it.

• SJR 10 by Sen. Linda Collins-Smith, R-Pocahontas, would have required a three-fourths majority for the Legislature to refer constitutional amendments to the voters and would have required a three-fifths majority of voters for enactment. King and Stubblefield voted for it.

• SJR 13 by Sen. Bruce Maloch, D-Magnolia, would have required the losing party to pay the opposing party’s attorney’s fees and litigation costs if the lawsuit is “not well grounded in law or fact,” and would have allowed the Legislature to set limits on punitive damages of at least five times the compensatory damages awarded all defendants.

• SJR 14 by Sen. Keith Ingram, D-West Memphis, would have allowed incorporated towns to hold elections to levy a tax for police and firefighter retirement expenses. Larger cities already have that ability under the Constitution.