By James T. Hammond
Published July 27, 2011
Gov. Nikki Haley signed changes to South Carolina civil litigation laws on Tuesday, including a $2 million cap on punitive damages that she said was long overdue.
According to the S.C. Chamber of Commerce, which had sought the changes, the new law includes a cap on punitive damages modeled after the state of Florida. The legislation caps punitive damages greater than $500,000 or three times the compensatory damages awarded.
However, if the court finds a defendant is motivated primarily by financial gain or a defendant’s actions rise to the level of felony charges, then the award can be increased to the greater of $2 million or four times compensatory damages.
If it is proven the defendant intended to harm the claimant, was convicted of a felony arising out of the same act or acted under the influence of drugs or alcohol, there is no cap for punitive damages.
S.C. Chamber of Commerce President Otis Rawl said passage of the tort reform law was his organization’s No. 1 priority this year. The changes in the law were not everything the chamber wanted, Rawl said, but he added that the legislation was a good compromise.
“We were the only state in the Southeast without a punitive damages cap,” said Rawl, adding that until now, that status had been a competitive disadvantage in recruiting new businesses to the state.
Haley agreed that the lack of such a provision hurt recruiting of industries.
“It automatically became a topic of conversation,” Haley said. “This was very simple. This was a vote either for business or for trial lawyers.”
Haley said tort reform remains a work in progress. She wants provisions added to the law that would require losers in civil litigation to pay the costs of the trial.
She said she thinks the changes create a “fair balance in our state,” while still permitting citizens their day in court.
Harry Lightsey, a Columbia attorney who worked for passage of the civil litigation changes, said the tort reform bill was the culmination of efforts that began in 2003.
“In 2003, Hampton County was recognized as a litigation hell hole,” Lightsey said, referring to a South Carolina county that had become notorious for its generous civil lawsuit awards to plaintiffs.
“Businesses large and small came together to change that,” Lightsey said, adding, “the governor was the difference-maker this year.”
Haley also said the new law represented a just compromise between two extremes.
“The House had a $350,000 cap on punitive damages. I’d like to have seen that happen,” Haley said. “But the original Senate version had no cap at all.”
Louis Gossett, president of the S.C. Manufacturers Alliance, said tort reform remains a work in progress.
“We’re always going to be working on this,” Gossett said. “We’d like loser-pay. What tort reform is about is certainty; it’s about stability. There is a place for litigation in our society. But there must be consequences for frivolous acts.”
As far as who decides what is frivolous, Gossett said, “That’s a good question. Probably the General Assembly and the courts.”
Not all tort-related wishes come true
by Caitlin Coakley: Published: July 1st, 2011
Looking back on the past legislative session, attorneys mostly see just one bill: HB 3375, the S.C. Fairness in Civil Justice Act – commonly called the tort reform bill.
Pushed by business groups and conservatives in the legislature, the bill imposes caps on punitive damages to be awarded in tort cases, with some exceptions. It gave Mike Hemlepp, executive director of the South Carolina Association for Justice, a big case of heartburn. As part of an organization that represents trial lawyers, Hemlepp said that he and his group are, on principal, opposed to tort reform and caps of any kind.“We trust juries,” he said. “Anything that interferes with a jury’s ability to make a judgment, we are opposed to it.”
But with the bill signed into law, Hemlepp is less venomous and more resigned to the new laws. Despite his fundamental opposition to the goal of the bill, he recognizes that the lawyers his organization represents could have gotten off a lot worse.
On the other side of the issue, the defense attorneys say the new law is a good start, but wasn’t as effective as it could have been. Gray Culbreath, president of the South Carolina Defense Trial Attorneys’ Association, said that the bill is a good one, “as a matter of perspective.”
“We have caps now, and we didn’t have any before,” he said. “There is a belief that something’s better than nothing.”
Those mixed feelings are perhaps a reflection of the compromise between the bill introduced in the House of Representatives and the bill that passed the Senate. The House’s original hill was much stricter: a $350,000 across-the-board cap on punitive damages with no exemptions.
But by the time the bill hit the governor’s desk, the punitive-damage caps were more fluid: $500,000 or no more than three times the compensatory damages for most cases, rising to $2 million or four times compensatory damages in cases where the jury ruled that the business or person cut corners in order to rake in an unreasonable profit or if the defendant, business or individual, committed a felony in the process. If the defendant is actually convicted of a felony, caused harm intentionally, or was under the influence of drugs or alcohol, the case is exempted from caps altogether.
The amending and softening that the bill underwent while making its way through the legislative chambers made it into something that Hemlepp begrudgingly admits isn’t too bad.
“I think the legislature did a very good job of educating themselves on something that was very complicated,” he said. “We don’t believe in caps of any kind, but what was passed in this bill is reasonable compared to other states.”
But defense attorneys like Culbreath can’t help but lament some of the things that it left out.
One provision included in the original bill would have overturned a South Carolina statute that disallows information about whether the plaintiff in an automobile accident was wearing a seatbelt.
In the Senate, that provision was taken out, but Culbreath said that the some in the trucking and manufacturing associations to whom he had spoken have said they wished it had been retained.
Brian Comer, a Columbia attorney who worked with the legislature on the proposed product liability aspects of the bill, also acknowledged that the bill has been watered down from its original form. However, he adds that if the alternative would be to not have anything pass, the new law is enough.
“It’s a compromise,” he said. “It does some good things, there are some things that could have been done, but overall there was something done.” In fact, Comer was happy that he and other product liability attorneys were successful in keeping the bill from being watered down any further.
The legislature briefly considered adding an amendment that would overturn the August 2010 ruling in Branham v. Ford Motor Co., which created the “feasible design” standard: In cases that alleged a company created a defective product, a plaintiff must demonstrate that the company could feasibly have manufactured a safer product.
Had the case been overturned, the plaintiff would only have to prove that the product did not live up to consumer expectations.
Comer said that the issue is one that deserves another look, but should be considered as a separate issue and not as an amendment to a larger bill.
“We aren’t necessarily averse to doing that, but it needs to come at the end of a debate involving members of bar and academic community,” he said. “It shouldn’t be something that happens at the eleventh hour.”
Even Hemlepp acknowledges that the bill wasn’t completely devastating to trial lawyers. The SCAJ successfully added a provision to the bill that prohibits award caps from being disclosed to the jury. By keeping the jury in the dark as to the award caps, it left the jurors to determine what a fair award would be. Under the bill, if the jury’s punitive damage award exceeds the cap, the plaintiff would get the maximum amount allowed by law.
C. Stuart Mauney, a defense trial lawyer in Greenville, said that even if the bill wasn’t everything the business community hoped for, it accomplished the ultimate goal of sending the message that South Carolina was making an effort to become more business friendly.
Having the caps in place, Mauney said, “creates a more positive business climate. When executives make decisions about whether or not to do business in South Carolina, they make the decisions in part based on the state’s lawsuit environment.”
But Terry Haselden, a Spartanburg attorney who handles tort cases, said the bill isn’t good for much else. He calls it a “feel-good bill” that lawmakers can crow about to constituents but doesn’t have much practical impact, since “punitive damages are extremely rare in South Carolina.”
The cases where the cap will come into play, he said, will be the most tragic ones where people are most severely hurt and the jury believes that the plaintiff deserves a higher sum – in other words, he said, the ones that deserve it the most.
“Juries in South Carolina are extremely conservative,” he said. “They rarely award punitive damages unless there’s a darn good reason.”
I’ve spent countless hours at the South Carolina State House this session working alongside other business leaders to pass tort reform. I am happy to say those logged hours have paid off. After a coordinated effort on many fronts, tort reform has been sent to the Governor for signature. Below is a press release issued by the South Carolina Civil Justice Coalition on the bill and the work done on behalf of South Carolina businesses.
FOR IMMEDIATE RELEASE: June 3, 2011
FOR MORE INFORMATION CALL: Joe Jones (803) 771 4271
With votes of 39 – 0 in the SC Senate and 99 – 16 in the House of Representatives for concurrence, the business community moved the mark higher for tort reform when legislation passed both houses and was sent to the Governor for signature this week.
“The business community has a lot of people to thank for their efforts to bring meaningful lawsuit reform to the Palmetto State,” said JJ Darby, NIFB SC State Director and SCCJC Chair. “Speaker Bobby Harrell worked with members to move the bill quickly through the House and Senators Larry Martin and Harvey Peeler guided the legislation through the debate in the Senate. Governor Nikki Haley’s strong stand for tort reform, and her frequent urging of passage also gave tremendous support to the effort.”
Cam Crawford who served as SCCJC Executive Director for eight years provided overall leadership and was the business community’s chief negotiator. Harry Lightsey, former BellSouth/AT&T General Counsel and CEO, and Gray Culbreath, SC Defense Trial Attorneys Association President, drew upon their extensive experience and that of their colleagues to keep the legislation on track. Rick Todd, President of the SC Trucking Association, served as SCCJC Legislative Chair and coordinated the lobbying effort.
This legislation was the second of two comprehensive lawsuit reform bills supported by the SC Civil Justice Coalition, the other having been passed by the legislature in 2005. The two bills have brought South Carolina more in line with its sister Southeastern states, and they make the business environment better for current and prospective companies who employee South Carolina people.
I have come to appreciate those bloggers who are diligent and post on a regular basis. As I sit here today in the SCDTAA deposition boot camp, I realize it has been 2 months since I last posted.
So what have I been up to?
Tort reform meetings
Hanging out in the State House Lobby (sometimes with Mark Joye)
Museum Commission meetings
Inn of Court Banquet
SCDTAA Corporate Counsel CLE in Columbia
SCDTAA Legislative Reception
SCDTAA PAC golf tournament
Lawyers for Civil Justice meeting in Washington
FDCC P&O Committee
This is all in addition to a full time law practice that has taken me up and down the East Coast and across SC multiple times. But it’s not been all work, I have also:
Celebrated my 18th wedding anniversary
Went to Amelia Island for spring break
Lots of Hammond girls soccer and softball
Wofford Terrier Club board meeting and supper with the senior athletes
4 days at the Masters
Hanging out in front of the White House Sunday night after Seal Team 6 did its job
Teaching my 15 year old daughter how to drive
After today, I am off to Asheville for the DRI regional meeting. Before that we have SCDTAA’s young lawyer Happy Hour tonight @ Liberty.
Tonight my Terriers play College of Charleston for the Southern Conference Championship and a second consecutive trip to March Madness. You can catch it on ESPN2 at 9PM. I will be with a group of my fraternity brothers watching the action from here in Columbia.
We won the tourney last year with a group of special players, 5 of whom are this year’s senior starters. Among the five is Noah Dahlman, an all Southern Conference player and last year’s Conference Player of the year, who came to Sparkle City via Minnesota. He is the kind of student athlete you want representing your school as evidenced by ESPN’s story from earlier this year about Noah and his Wofford experience.
Let’s see the Big Dog eat some Cougar tonight in Chattanooga.