BATON ROUGE — Louisiana’s litigation laws continue to play a role in how the state is perceived by business leaders across the country.
In Chief Executive magazine’s annual CEO survey comparing state business climates, Louisiana ranked 37th. It was a bad showing this year, especially after the Pelican state cracked the top-10 just a year ago.
The report cites the state’s budget crisis as the likeliest factor that made Louisiana fall the farthest compared to other states in 2016. It also includes an anonymous comment by a surveyed CEO showing the newest economic outlook isn’t the only thing responsible for Louisiana’s poor reputation among business executives.
“The Louisiana litigation environment is awful; tort and legacy liability litigation appears to be a major industry,” a CEO was quoted as saying.
Louisiana Economic Development Secretary Don Pierson told the Louisiana Record that nothing significant has changed in the state's legal climate in the last year, which would indicate other factors, like the budget, are the cause of the state's fall from seventh place in 2015.
Still, it's a common and longstanding complaint. Business and industry groups, as well as legal reform advocates in Louisiana have said the state's litigation laws negatively impact business — and changes to litigation laws would, too.
Melissa Landry, executive director of the Louisiana Lawsuit Abuse Watch, told the Record that the rankings reinforce the state’s reputation as a “judicial hellhole,” referencing a list generated by the American Tort Reform Association. and suggested that the legal and economic climates are intertwined in the state.
“Bad lawsuits cost good jobs,” she said. “Until we get serious about passing common sense legal reforms, excessive civil litigation will continue to be one of the the largest impediments to creating jobs and expanding opportunities in Louisiana.”
Economists guess lawsuit abuse cost 50,000 jobs in Louisiana each year, Landry said.
While it doesn’t account for every lawsuit against an employer, she said meritless cases motivated by money have an effect on the state’s economy because they increase business costs. It’s not just higher costs to defend against litigation. It includes time spent away from business and lost opportunities to invest in new equipment or new staff.
“The costs are very real," Landry said. "Simply put, the more time and money employers spend on litigation, the less time and money they can spend on job creation."
That’s why LLAW and others, including business and industry groups, want legal reform. In 2014, state legislators attempted to get rid of the threshold for requesting a jury trial in civil suits. Louisiana has the highest threshold, requiring citizens to file a suit for at least $50,000 in damages.
Groups supporting tort reform also have cited venue shopping and campaign contributions as problems to address.
“Personal injury trial lawyers routinely abuse our courts with meritless claims, seeking jackpots instead of justice,” Landry said. “These job-killing practices are fueled by the dangerous combination of activist judges and permissive laws that seem to incentivize reckless lawsuits.”
Though the Chief Executive survey does not go into detail on business leaders’ opinions of the state’s legal climate, another survey published in September does. The report by the U.S. Chamber Institute for Legal Reform highlights that businesses weigh that climate when making important decisions, including where to locate and do business.
The survey asks corporate attorneys to grade state judicial systems in 10 areas, touching on venue requirements, treatment of different types of litigation, judges, evidence, discovery, damages and juries. Louisiana ranked among the bottom five states in each category. Louisiana ranks 49th — just above West Virginia — and it hasn’t budged from that spot in at least seven of the survey’s 10 years.
Landry said plaintiffs' attorneys have demonstrated they’re willing to spend a lot of money to keep the system from changing. LLAW research found that plaintiffs attorneys quadrupled their contributions to legislative candidates between 2008 and 2014 — a time when calls for reform had increased. These attorneys also donate to judicial and executive campaigns.
“In fact, one law firm spent over $1.5 million on the governor’s race last year and established a super-PAC to pump more than $300,000 into Justice Jeff Hughes’ successful campaign for the Louisiana Supreme Court in 2012,” she said. “If campaign cash is the measure of political clout, there’s no question trial lawyers are the most highly influential special interest group in Louisiana."
Contributions to judicial campaigns bring another kind of influence to the surface, Dane Ciolino, a legal ethics expert and professor at Loyola University New Orleans School of Law, told the Record.
“There is a perception that judges who accept large contributions from plaintiffs' lawyers lean toward finding liability and awarding damages,” Ciolino said.
Whether this poses an actual problem is hard to say, he added. Take, for example, a recent $51 million verdict for the family of a woman who was severely injured by a tractor-trailer truck in New Orleans East.
“It’s easy to make a story out of a $51 million verdict, but we don’t really know much more about the case outside the staggering number," he said. It’s hard to evaluate. It’s kind of hard to evaluate the merits of that case or any case."
But the large verdicts add to the reality of major campaign contributions by lawyers who obviously want the state to be favorable to them.
“There’s no way empirically to evaluate whether the perception is based on reality," Ciolino said. "That’s the way democracy works. They’re giving money to candidates ... and are some of the leading donors. That’s not a value judgment. That’s the way democracy works. Arguably, it shouldn’t work that way with one branch, namely the judicial. That’s why many jurisdictions don’t elect their judges.”