Engler: How Tort Reform Can Improve States’ Business Climates

By November 5, 2010Briefly Legal, Economy

John Engler, president of the National Association of Manufacturers, was a guest on the Hugh Hewitt Show last night to discuss what steps new governors can take to improve their states’ business climates.

Hewitt booked Engler, a former Republican governor of Michigan, as a follow-up to Hewitt’s column, “Where The Action Ought To Be: A Once in a Generation Chance for the Midwest,” which proposed a course of action for new governors in Pennsylvania, Ohio, Wisconsin and Michigan: reforms to business taxes, education and the state legal systems.

Here’s a transcript of a portion of the conversation on tort reform, slightly cleaned up for clarity.

Hugh Hewitt: If you’re talking to Kasich or Walker or Corbett, any of these new governors, what ought they to focus on when it comes to asking their legislatures to give them some tort reform?

John Engler: There have been a number of state-level reforms that have worked that need to be replicated everywhere. They’re sort of nitty-gritty, getting down in to how we run the legal system, but clearly, some of the venue issues, so they can keep these cases from being shopped into the more favorable venues. That’s part of it.

Cleaning up the expert witness mess that sometimes exists, where you have people showing up purporting to be an expert who really have no credentials and no special expertise, but yet they’re on the circuit.

I think there’s also a case to be made in certain areas for absolute caps on damages on the non-economic loss.

And you have to get into workers comp laws. That’s a specialty area, but there are many abuses that were there in states, and some I’m sure still remain, where injuries way outside the course of employment are being compensated in that system, driving up costs.

So, each state has peculiarities and subtleties in their system, but in almost all cases there are groups, there are centers for legal reform in the nation, that are helping out at the state level. ALEC [American Legislative Exchange Council] has some recommendations. The American Justice Partnership has recommendations. There are people willing to help when we’ve got leaders who are willing to step up on those issues.

The payoff doesn’t come immediately, but it’s important. …

When I talk about a “rule of law” court, we’re really talking about: The legislative bodies get elected and they’re partisans, they fight things out, and they make policy decisions. When they make a decision they’re entitled, I think, to an expectation that the court will uphold that judgment and not try to substitute its own.

And so you need that. I saw it in Illinois a couple of times where they passed tort reform, it passed and the Supreme Court threw it right back out.

Hugh Hewitt: Let me ask you. When you were governor and you were either trying to attract a new manufacturer or business to the Wolverine State, or you were trying to keep one from leaving, how often did you hear as an excuse either for not coming or packing up and going, the tort system brought up?

John Engler: Well, it was mentioned, and by the time I was at near the end of my tenure, we were able to cite that as an advantage in Michigan — that we had a fair, a responsible judicial system. We worked hard to get the delays wrung out, to get the reforms in place, and then, we’re proud to say once the courts have consistent interpretations, guess what happens? The number of lawsuits start to drop off, because people know this is what the law says, this is what the court will say that it says, there’s no reason to have the lawsuit.

So predictability in the law, like predictability in tax laws or regulatory policy, all are beneficial in creating a positive investment climate.

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