In Wisconsin and Texas, Liability Reform

By January 18, 2011Briefly Legal, Economy

Upon taking office, Wisconsin Gov. Scott Walker quickly called the Legislature into special session to pass jobs-related legislation, including a major tort reform package. As we report at Point of Law, the Senate is expected to debate the bill on the floor today, the House could act on Thursday, and the legislation could go to the governof for his signature by the end of the week.

Wisconsin Manufacturers and Commerce, representing the people who create jobs, is proving an effective advocate for the reforms, testifying last week before the Senate Judiciary Committee. From WCM, “Lawsuit Reforms Needed to Help Job Creation

MADISON– Lawsuit reforms proposed by Governor Scott Walker and lawmakers will send a signal to employers that Wisconsin is open for business and is a great place to create jobs, WMC said Tuesday.

“Wisconsin businesses need to know that our legal system is fair and predictable,” said James A. Buchen, vice president of government relations for Wisconsin Manufacturers & Commerce. “Governor Walker has put forward a common sense set of legal reforms that send a message to employers that our state is serious about improving our business climate.”

After being amended by the Senate committee, the bill would impose a cap of punitive damages of twice compensatory damages or $200,000, whichever is greater. State standards of proof would now reflect the Daubert standard, discouraging suits based on “junk science,” and the law’s provisions would be applied prospectively only. The bill would eliminate “risk contribution” theory in manufacturing lawsuits. The Wisconsin Supreme Court created the standard allowing plaintiffs to sue any lead paint manufacturer that sold paint in the state without proving which product caused the harm.

In Texas, similar issues — and the results of the 2010 gubernatorial and legislative elections — are encouraging passage of tort reform, as well. From the Office of Gov. Rick Perry, news release, Jan. 13, “Gov. Perry Calls for Expanded Lawsuit Reform in Texas”:

Gov. Rick Perry today urged lawmakers to maintain the principles that have helped Texas’ economy lead the nation, and to build upon previous improvements to the state’s legal system by further expanding lawsuit reform. The governor gave the keynote address at the Texas Public Policy Foundation’s (TPPF) 9th Annual Policy Orientation for the Texas Legislature.

“As the ripple effects of the recession began to reach Texas, our sound policies helped us rebound quicker than other states and are now helping us lead the way to recovery,” Gov. Perry said. “We must work together this session to strengthen the basic economic building blocks that have drawn new employers and jobs to our state to ensure Texas remains the best state to do business and raise a family.”…[He proposed]:

• Creating an early dismissal option for frivolous lawsuits;
• Ensuring victims of frivolous lawsuits do not bear the financial burden of defending themselves through the creation of a “loser pays” system;
• Ensuring new laws cannot create causes of action unless expressly established by the Legislature; and
• Setting up expedited trials and limited discovery for lawsuits with claims between $10,000 and $100,000.

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