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Tort Reform Boosted Mississippi Job-Creation, Barbour Tells Governors Gathered in Nashville

The Mississippi governor said companies had told him that the climate for “lawsuit abuse” in different states was a factor in their decisions on relocation and plant closures. “It was killing us on getting companies to come to our state,” Barbour said at a National Governors Association regional summit in Nashville Monday.

When the Tennessee Legislature debated tort reform earlier this year, with a lot of discussion of how the issue had played out in Mississippi, it was difficult to pin down lawmakers on exactly how to quantify the job creation involved.

But Mississippi Gov. Haley Barbour was in Nashville Monday, and if there was any doubt about whether tort reform made a difference in his state, Barbour attempted to smack down any debate about it.

“Toyota told us they would not consider Mississippi unless we got rid of lawsuit abuse, period,” said Barbour, who participated in a National Governors Association regional summit hosted by Gov. Bill Haslam. “They told us we would not be on the list.”

Barbour went on.

“The CEO of Caterpillar wrote the Speaker of the House, the president of the Senate and me a letter,” he said. “We have five Caterpillar plants in Mississippi.

“He wrote and said, ‘Don’t think lawsuit abuse only affects companies when they’re trying to decide where to site a new plant. It also affects companies that are trying to decide which plants to close.’ The fact Caterpillar had a plant in the speaker of the House’s hometown — who happened to be the biggest opponent of tort reform — I thought made it a particularly effective letter.”

Barbour’s conclusion: “We were the worst state in the United States three years in a row in the U.S. Chamber of Commerce’s lawsuit abuse rating. It was killing us on getting companies to come to our state. That, just very directly right out of the customer’s mouth, is how I know it.”

Toyota Corollas are scheduled to start rolling out of the plant in Blue Springs, Miss., this week.

Barbour joined Haslam, Nebraska Gov. Dave Heineman and Oklahoma Gov. Mary Fallin at the Loews Vanderbilt Hotel to talk about job creation. All four are Republicans. They engaged in considerable discussion about the potential of small businesses and the need to help them grow. They talked about logistics and the geographic advantages of some states in job recruitment. It was an all-encompassing look from four governors on the front line of the job hunt.

“There’s not a question in my mind that job creation is the number one issue for every state and frankly for America,” said Heineman, chairman of the NGA.

Nashville was the second of four regional summits in Heineman’s initiative. The first was in Hartford, Conn., a few weeks ago, and others are scheduled in 2012 for Seattle and Omaha.

Tort reform was just one part of Haslam’s legislative package in his first year meant to create an environment for job growth. And it was a limited package. Haslam insists the government can only create the right climate for job growth, not legislate its way to new jobs. Democrats in the Legislature challenged that view, offering several jobs bills that basically fell flat in the Republican-controlled Legislature.

Tennessee’s new tort law, the “Tennessee Civil Justice Act,” places a cap of $750,000 on non-economic damages in civil cases, although exceptions exist in cases that involve intentional misconduct, destruction of records or activity under the influence of drugs and alcohol. There is a $1 million cap in what are categorized as catastrophic cases. A cap on punitive damages is two times the compensatory damages or $500,000, whichever is greater.

Mississippi adopted tort reform laws in 2003, putting a $500,000 cap on non-economic damages. A study found the average number of lawsuits filed each year involving the predominant insurer in the state went from 318 to 140 after the reforms, and an annual average of 44 lawsuits involving obstetricians and gynecologists plunged to 15.

As lawmakers in Tennessee considered Haslam’s tort reform proposal, one advocacy group, the Tennessee Center for Policy Research, now known as the Beacon Center, asserted that 577 jobs a week could result from the measure. Haslam never used that number. But the Legislature passed the bill 21-12 in the Senate and 72-24 in the House.

Fallin weighed in with her own experience.

“We signed a hard cap on non-economic damages in Oklahoma and eliminated joint and several liability,” she said.

“The month before the law went into place, we typically averaged about 50 cases a month being filed in civil and criminal court cases. Once the law was getting ready to go into effect, it went up to over 500 filings that month.”

Barbour said his state had to overcome Chattanooga’s logistical advantages in landing Toyota over the competition, particularly in changes involving available rail lines to serve the plant.

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