Ignoring Lawsuit Abuse Results in Increased Costs

Articles | March 10th, 2014

An important element to job retention and creation is developing positive conditions for businesses to prosper and grow. Likewise, an important element of a positive business environment is low costs of doing business. One way we can move South Carolina forward starts with improving the civil lawsuit climate.

In a 2012 U.S. Chamber of Commerce Institute for Legal Reform study, South Carolina ranked 39th out of all 50 states in fairness of its lawsuit climate. South Carolina ranked 37th in the category of tort litigation, or lawsuits that seek damages. Some may ask, “Why does this matter to job creation?”

More than 70 percent of senior business executives and corporate attorneys who participated in the study reported that the litigation environment impacts company decisions concerning where they choose to locate and conduct business. The same study reports that stimulus resulting from improving the lawsuit climate and eliminating unnecessary lawsuits can increase employment in South Carolina by as much as 1.93 percent. Simply put, companies do not want to do business in an environment where they are likely to be sued unfairly, and removing that obstacle will be one more ingredient in job creation for our state.

Tort reform, legislation that addresses damages in lawsuits, is supported by many legislators, companies and state organizations, such as the South Carolina Chamber of Commerce and the South Carolina Civil Justice Coalition. Prior improvements to the state’s tort climate have passed by an overwhelming majority in the House of Representatives and Senate, and Governor Nikki Haley continues to be a solid proponent of improving the lawsuit climate through tort reform.

Significant legislation concerning the awarding of damages was passed in 2011. It allowed South Carolina to compete with other states for jobs, but it was only a first step. Our neighboring states, which compete for the same businesses and jobs, continue to examine their own lawsuit climates for the threat of frivolous lawsuits. In the 2012 U.S. Chamber study, North Carolina ranked 20th and Georgia ranked 24th out of 50 states, well ahead of our 39th ranking.

There is much left to be done. The Palmetto State has a great opportunity to create a legal climate that embraces small business growth and protects business and property owners from being victimized by unfair, frivolous lawsuits. Senator Shane Massey has introduced two comprehensive tort reform bills that will aid in achieving a level playing field for businesses: the Court Transparency Act (S.773) and the Liability Reform Act (S.788).

Issues addressed in the Court Transparency Act (S.773) include:

  • Transparency in Private Attorney Contracting – Attorneys General and solicitors who hire private attorneys with taxpayer dollars are subject to limits in the amount of payment as well as oversight in the selection process.
  • Phantom Damages – The proposal will prevent juries from awarding damages that exceed the actual out of pocket costs incurred by the plaintiff.
  • Seatbelt Admissibility – In the case of an automobile accident, the injured party’s seatbelt usage is both relative and admissible.

The Liability Reform Act (S.788) includes:

  • Trespasser Responsibility – Landowners are protected from being sued by a trespasser injured on the landowner’s property, regardless of whether or not the land is leased for a fee.
  • Non-economic damages – Civil liability for pain and suffering is limited to $350,000 for each individual, not to exceed $1,050,000 in total damages.
  • Commercial Driver’s License – Employers of commercially licensed drivers are protected from liability in civil action concerning the driver’s operation of a vehicle.

Through reasonable legislation like the Court Transparency Act and the Liability Reform Act, we can restore faith and integrity in the state’s civil justice system – all at no expense to the taxpayer. South Carolina will be prepared to recognize that whether you’re a factory owner who employs hundreds of people, a small businessperson with a neighborhood store, or a private landowner who enjoys recreational hunting and fishing, you don’t want to be unfairly sued for issues beyond your control. Please join us in supporting tort reform in our state. It’s good common sense, and it’s great business sense.

Otis Rawl is President and CEO of the South Carolina Chamber of Commerce.

Cathy Novinger is Executive Director of the Palmetto Agribusiness Council.

The South Carolina Civil Justice Coalition (SCCJC) serves as the united voice for the business community on tort and workers' compensation issues; coordinating lobbying, legal, grassroots and public relations activities.