April 13, 2005

Below is the text of a memo from Governor Bush to the Florida Legislature on the issue of Legal Reform:

TO: Members of the Florida Legislature

FROM: Governor Jeb Bush

DATE: 4/13/05

RE: Tort Reform

During the past few weeks, several proposals for significant tort reform have been introduced in the Legislature, generating a much needed discussion about the future of our civil justice system. The case for tort reform is quite simple: wrongdoers should pay their fair share. Never, ever should someone be held more or less responsible because of the depth of their pockets. 

Elimination of joint and several liability – the legal doctrine that requires wrongdoers with only a partial role in a wrongdoing to pay more than their fair share for the damages -- is the lynchpin of tort reform. If you agree with that basic fairness, I hope you will join the effort to eliminate joint and several liability. Attached is a brief description of some of the key tort reform concepts currently under consideration by the Legislature. 

I hope you will join the effort to provide Floridians with a first-class civil justice system that results in fair, predictable outcomes. Thank you for your consideration. 

JEB BUSH 

GOVERNOR  

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The following "White Paper" on Legal Reform was provided to the Legislature along with the memo from Governor Bush:

 

Reining in Lawsuit Abuse: Tort Reform Legislation to Consider in Florida 

Why We Need Tort Reform

· To require wrongdoers to pay their share of damages when an injury occurs. 

· To compensate victims fairly. 

· To lower the tort tax on Florida’s families.  According to Towers-Perrin Tillinghast, tort costs are increasing nearly 10 percent per year on average, adding up to a current tort tax for the average family of four of nearly $3,400.  This tort tax can be regressive, typically hitting fixed income and low income families the hardest.  Because much of the hidden tort tax is passed on to consumers in the form of higher prices, families that spend the highest percentage of their monthly income are disproportionately affected.

· To reward productivity, innovation, an entrepreneurial spirit and encourage economic growth.

· To make Florida’s civil justice system fairer and more predictable.  For the last four years, the U.S. Chamber Institute for Legal Reform has ranked states according to the “fairness” of their legal systems, based on a Harris Interactive survey.  In 2004 Florida ranked 38th.  This year we dropped to 42nd. 

The following reforms under consideration by the Florida Legislature are designed to create a fairer and more predictable civil justice system for our state.

1. Eliminate Joint and Several Liability

Joint and several liability, the legal doctrine by which wrongdoers with only a partial role in a wrongdoing are held disproportionately liable for damages, is inconsistent with the notion of fairness and should be abolished. Perhaps no other element of Florida’s tort laws causes more damage to the state’s business climate or violates more clearly the basic notions of justice. Each wrongdoer should be responsible for his or her fair share of the cause of the injury – no more, no less. Many states have already taken the step of eliminating joint and several liability, including recently Mississippi and Georgia. Florida should do the same.

The following reforms highlight the need for a proportionate fault system in Florida (and thus, the need for elimination of joint and several liability):

a. Product Liability: If a retailer has nothing to do with the development or manufacture of a product – in other words, the retailer simply markets and sells the product and nothing else – he or she should not be held liable for product defects.

b. Premises Liability: Property owners should not be held liable for damages committed by the wrongful acts of others on their premises.

c. Vicarious Liability: According to Associated Industries of Florida, “the Florida courts have frequently held the rental company or dealership issuing a loaner car responsible for the damages” of drivers, even unauthorized drivers. Vicarious liability, therefore, penalizes a person for what he or she owns instead of what he or she has done wrong. Florida should join the majority of states and adopt “negligent entrustment” as the law.

2. Limit Class Action Lawsuits

Unsolicited “class actions” are increasingly common. More often than not, establishing a class of plaintiffs serves no other purpose than to expand a company’s liability (and thereby the price tag of and payoff from the lawsuit or settlement). The plaintiffs themselves are lucky if they find the notice in the mail indicating they are entitled to a portion of a settlement (often, just a few dollars per claimant) that they never authorized or requested.

The mere potential of class actions causes incredible unpredictability for employers, governments, schools and other institutions. A single class action can put a company out of business.

It’s time for class action reform in Florida.

a. Residency: Florida class actions should be limited to Florida residents in most cases.

b. Establishment: The criteria for establishing a class should be tightened. For instance, attorneys should be required to report case status and outcomes to all members of a class.

c. Remediation: The Legislature should give judges more tools to throw out non-meritorious class actions, such as permitting alleged wrongdoers to take corrective action, if appropriate.

3. End the Asbestos Lawsuit Free-for-All

Asbestos lawsuits have created a travesty of justice. Lawyers round up tens of thousands of “plaintiffs” who are not even sick (who only have been determined to have been exposed to asbestos) to file suit while the truly sick get short-changed. According to the RAND Institute, by 2000 more than $54 billion had been paid out for asbestos litigation with approximately 65 percent being awarded to plaintiffs who were not even sick.

We need asbestos lawsuit reform to make sure sick plaintiffs are made as whole as possible as quickly as possible. Without reform, runaway asbestos litigation will drive more and more employers into bankruptcy meaning truly sick people will be left uncompensated. Already, according to the National Association of Manufacturers, at least 70 companies have been forced into bankruptcy primarily due to asbestos litigation. Armstrong World Industries, Pittsburgh Corning and Owens Corning are just a few examples of companies that have filed for Chapter 11 bankruptcy largely due to asbestos litigation. And Towers-Perrin Tillinghast cites asbestos litigation as the fastest growing component of tort costs in America.

Asbestos litigation is a unique problem in our tort system which calls for a unique solution. We cannot afford to wait for a federal solution to the asbestos litigation challenge. Ohio has established a policy for expediting payment to sick individuals and the Florida Legislature should do the same here.

4. Limit Venue Shopping

Plaintiffs attorneys like to file their cases in courthouses they view as friendly in order to enhance their chances of success. Such forum shopping is particularly acute in south Florida. Its reputation for excessive judgments has led the American Tort Reform Association to declare the south Florida region one of the nation’s “judicial hell-holes.” Current Florida law allows suits to be filed in any county in which a corporation maintains an office and therefore invites abuse.

The Legislature clearly has the authority to limit forum shopping by aggressive lawyers. Specifically, the Legislature should limit civil filings to the county in which the company has its principal place of business, the county in which the damage occurred, or where the property in litigation is located.

5. Enact Bad Faith Reforms

When insurers defend their clients against liability lawsuits, they have a duty to negotiate in good faith. If the client believes his insurer has negotiated in bad faith and harm has resulted, he can sue his insurer. That’s reasonable. The insurer has a contract with its clients. Bad faith laws are important to protect clients from potential bad acts of insurers.

But current Florida law also allows third parties to sue insurers, even though they do not have a contractual relationship with the insurer. Recent court opinions have tipped the scales so heavily toward plaintiff’s attorneys, the mere threat of third party lawsuits forces insurers to settle cases they ordinarily would not, thereby causing insurers to pass the costs back to the insurers’ clients in the form of higher premiums.

The 2003 reforms to medical malpractice insurance provide a good framework for correcting these imbalances and minimizing coercion: (1) provide factors for a jury to consider when determining whether an insurer acted in good faith while handling a claim and (2) allow an insurer reasonable opportunity to investigate a claim before making a settlement decision.

6. Reverse the Judicial “Zone-of-Risk” Decisions

The Florida courts have established a fallacious definition of what a person’s “duty” is towards others. These “zone-of-risk” decisions constitute bad policy and should be overturned. Left unchecked, these decisions could have dire consequences.

a. Law Enforcement Officers Involved in Pursuits: “Zone-of-risk” has expanded to hold a law enforcement officer civilly liable for an accident that occurs during the high-speed pursuit of a suspect. Do we really want law enforcement officers to fear apprehending criminals?

b. Streetlight Operators: In December 2003, the court applied the “zone-of-risk” reasoning to hold that utility companies owe a legal duty to third parties when street lights burn out. What utility company or municipality will want to install streetlights in new neighborhoods if it only serves to expand the company’s or city’s potential future liability?

7. Prevent a Trial Lawyer End Run Around Amendment 3

On November 2, 2004, Florida voters overwhelmingly passed Amendment 3, to limit trial lawyers’ contingency fees in medical malpractice actions and make sure damage awards get to the injured patients instead. Since Amendment 3’s passage, some trial attorneys have attempted an end-run around the will of the voters by asking prospective clients to waive their rights under Amendment 3.

The Legislature can stop the end-run around Amendment 3 by stipulating that any contract in a medical malpractice action in which the person bringing the action attempts to waive his or her rights under Amendment 3 is null and void.