Tort-law redo bid clears Arkansas Senate 21-10; aim is to cap attorney fees, damages

The Arkansas Senate on Thursday approved a proposed constitutional amendment to refer to voters next year that would limit attorneys' contingency fees and the award of certain damages while granting the Legislature control over the state Supreme Court's rules.

The vote was 21-10 to send Senate Joint Resolution 8 by Missy Irvin, R-Mountain View, to the House for further consideration. The vote came after about an hour of what Irvin described as a lively debate.

Fifty-three of the House's 100 representatives are co-sponsors of SJR8. If the House approves the proposal, it will be on the ballot of the November 2018 general election.

This proposed amendment to change the state's tort laws comes on the heels of unsuccessful legislative efforts in 2013 and 2015 to refer similar proposals to voters. An initiated amendment was offered in 2016, but in October, the Supreme Court declared that "critical" parts of the proposed amendment were insufficiently described in the ballot title. The court blocked the state from counting votes cast on the measure in the November general election.

The Legislature may refer up to three constitutional amendments to voters during each regular session, such sessions being held in odd-numbered years

On the Senate floor, Irvin said it's "game-changing legislation" that would help make the state more competitive in economic development and help create more jobs.

[EMAIL UPDATES: Get free breaking news alerts, daily newsletters with top headlines delivered to your inbox]

The legal climate makes it less attractive to businesses to locate in Arkansas, she said.

Irvin said the Legislature approved needed changes in tort laws in 2003, and the Supreme Court overturned parts of those laws over several years.

Under Irvin's proposal, the Legislature, with a three-fifths vote in each chamber, would be able to approve, change or repeal a rule of pleading, practice or procedure now decided by the Supreme Court. And the Legislature would be able to adopt court rules on its own initiative.

She said the Legislature had control over the Supreme Court's rules for about 120 years before voter approval of Amendment 80 in 2000.

"We are asking to restore that to the legislative branch," she said.

Sen. Linda Chesterfield, D-Little Rock, pressed Irvin to name one company that hasn't come to Arkansas because of its tort laws.

"You have alleged this is a job killer or a killer of economic growth," Chesterfield told Irvin.

Irvin replied that it's well-known that some companies aren't coming to Arkansas because of the legal climate.

Sen. Trent Garner, R-El Dorado, later said tort laws are costing the state dozens and dozens of companies. He cited the support for SJR8 from companies.

More than 60 officials representing companies and industry groups -- ranging from Stephens Inc. CEO Warren Stephens to Arkansas Health Care Association Executive Director Rachel Davis -- told lawmakers in a letter this week, "We cannot overstate the importance of passing SJR8.

"Doing so will allow the voters of Arkansas to consider the measure that will create a fair and competitive business environment that will benefit professionals, businesses of all size, health care providers, and industry," said the letter. Other signers represented USA Truck, Maverick Transportation, Simmons Food, Nucor Arkansas, Entergy Arkansas and Americans for Prosperity Arkansas.

Sen. Will Bond, D-Little Rock, warned that the proposed amendment "is a wholesale takeover of the judiciary" and would infringe on Arkansans' right to a jury trial.

"Juries protect the powerless from the powers," he said.

Garner countered that about 17 other states have similar systems in which the Legislature has control over high-court rules.

The proposed amendment would preserve the right to a jury trial and it's "a red herring" to suggest otherwise, he said.

"We have become a target of out-of state lawyers," Garner told senators.

Chesterfield said, "What frightens me is the creeping infringement [by the Legislature] on the two other branches of government" -- the executive and judicial branches. "Who is going to check us?"

Sen. Alan Clark, R-Lonsdale, countered, "I haven't seen the judiciary ever afraid that they were going to exercise too much power" in areas from "running education to whatever else they want to run."

The proposal would limit contingency fees for attorneys in civil lawsuits to one-third of the net amount of recovery obtained through a settlement, arbitration or judgment. The Legislature would establish penalties for contingency fees that exceed the cap and define the term "net amount of the recovery."

The House and Senate, by two-thirds vote, would be able to change the maximum percentage for contingency fees.

Punitive damages for each claimant would be limited to $250,000 or three times the amount of compensatory damages awarded, under the proposal. The Legislature could, by a two-thirds vote, increase the limits.

Noneconomic damages -- in cases in which money can't remedy the losses -- would be limited to $250,000 for each claimant and $500,000 for all beneficiaries of a deceased person. The Legislature could increase those limits with a two-thirds vote.

Under the amendment, the House and Senate would pass laws in the 2019 legislative session to establish a procedure for future inflation or deflation adjustments of the punitive and noneconomic damages limits. In 2021, by a two-thirds vote of the House and the Senate, the Legislature could change that procedure.

The House and Senate's joint rules limit each chamber to referring one amendment each with the other chamber's approval. A two-thirds vote of the House and Senate are required before considering referring a third amendment.

A House subcommittee on constitutional amendments will make recommendations Tuesday on which of the 20 amendments proposed by representatives to advance to the House State Agencies and Governmental Affairs Committee, which will decide which proposals should be considered by the House. Senators proposed 11.

At a news conference, Gov. Asa Hutchinson declined to take a position on SJR8.

"I'm supportive of tort reform in general, and I hope a proposal can get to the people for a decision," the Republican governor said.

"I have been supportive of some of the authority being returned to the Legislature, in terms of the ability to set reasonable caps on punitive damages or [noncompensatory damages]," Hutchinson said.

"But I've also had some criteria that there needs to be some safety valves in place, there needs to be proper balance there," he said.

Hutchinson said he would be "meeting with both sides even later [Thursday] on this issue and continuing to evaluate the current proposal.

"I do have some concerns about the drafting of it, whether it meets my criteria. For example, under the current drafting of the tort reform proposal, the way I read it, the courts would have to go to the Legislature for approval of a rule change on the size of the paper of their pleadings. If they wanted to change the time of opening of their court, that's a rule change that would have to go to the Legislature for approval," he said.

Hutchinson doesn't have to take action for SJR8 to be on the ballot if both the House and Senate vote to refer it to voters, an attorney said Thursday.

Calendar

The calendar of public events of the 91st General Assembly for today, the 40th day of the 2017 regular session.

COMMITTEES

9 a.m. House Agriculture, Forestry and Economic Development Committee, Room

138.

9 a.m. House City, County and Local Affairs Committee, Room B, Multi-Agency Complex.

9 a.m. House Insurance and Commerce Committee, Room 149.

9 a.m. House State Agencies and Governmental Affairs Committee, Room 151.

HOUSE

10 a.m. House convenes.

SENATE

Senate does not meet.

A Section on 02/17/2017