C L P CENTER FOR LEGAL POLICY AT THE MANHATTAN INSTITUTE No. 7, December 2008 Louisiana LOUISIANA LITIGATORS: While People Leave the Pelican State, Attorneys Thrive The troubled state of Louisiana has lost 200,000 squeezed by comprehensive tort reform in neighboring residents in the years since Hurricane Katrina devastated states such as Texas and Mississippi. New Orleans.1 But the state had been having a hard time attracting workers and others, as well as holding on to those That plaintiffs’ lawyers would find the Bayou State a good it had, even before the hurricane struck. While the national place to sue is unsurprising. In a 2008 survey conducted trend in population growth in the previous five years was 4.6 by Harris Interactive for the U.S. Chamber of Commerce percent, Louisiana grew by only 0.6 percent in that period Institute for Legal Reform, corporate litigators ranked the (see graph).2 Even so, one segment of the population—trial fairness of Louisiana’s judicial system next-to-last among the lawyers—is finding the state to be an excellent place to hang fifty states (see map).3 The state ranked among the bottom out and do business. Long a lawsuit-friendly jurisdiction, three in every category surveyed, and Louisiana was deemed Louisiana has become a magnet for mass tort lawyers the worst state in the nation in its treatment of scientific Louisiana Population Growth Has Trailed That of The U.S. as a Whole 5.0 310 4.9 305 ) 302 4.8 ) ons 299 300 ons illi 4.7 296 illi (M 293 295 4.6 (M on Louis iana ti 290 on la 290 4.5 ti la U.S. pu 4.5 4.5 4.5 4.4 pu P o 285 a P o 4.3 S. sian 280 4.3 U. 4.2 4.2 Loui 275 4.1 4.0 270 2007 2006 2005 2004 2003 Note: Dated at July 1 of each year Source: U.S. Census Bureau 2 and technical evidence, its timeliness in granting or denying Louisiana’s Legal Climate Is Second-Worst summary judgment or dismissal, its discovery process, and its in the Nation judges’ competence. Orleans Parish, encompassing the city of New Orleans, has regularly been dubbed a “judicial hellhole” by the American Tort Reform Association,4 and it was ranked the ninth-worst local jurisdiction in the country.5 Oklahoma 17 Arkansas 34 Louisiana’s hospitability to litigation is an impediment to its Mississippi economic recovery: 64 percent of business leaders around 48 the country surveyed by Harris said that a state’s litigation Texas climate would affect their decision on where to locate a busi- 41 Louisiana ness.6 If Louisiana’s leaders want to resuscitate their state’s 49 fortunes, then cleaning up its system of civil justice would be a good place to start. State Legal Systems, as Ranked by Corporate Litigators Source: Harris/ILR Survey 2008 A UNIQUE LEGAL SYSTEM language has not changed. Traditionally, the state lumped Owing to its pre-1803 history as a French colony, together as “general damages” non-pecuniary injuries such Louisiana—alone among the fifty states—has a French- as “pain and suffering.”10 While loss of enjoyment of life can derived “civil law” tradition rather than a British-derived legitimately be thought to be an aspect of “general damages,” system of “common law.”7 Consequently, all causes of action recently Louisiana’s courts have begun allowing various in Louisiana are based in the Louisiana Civil Code8; in theory, elements of general damages to be set as separate elements at least, Louisiana’s judges do not make law. Unfortunately, in a jury charge. In 2006, the state supreme court for the Louisiana’s exceptionality does not extend to European-style first time embraced a separate jury charge for a new variety constraints on litigation, such as “loser pays” fee-shifting rules of damages11—”hedonic” damages, or “loss of enjoyment of and prohibitions against contingent fees and class actions. life”—developed conceptually by economists in the 1980s.12 In contrast to judges in common-law states, who typical- The dissenting justices were undoubtedly correct that allow- ly show substantial deference to previous court decisions, ing a separate charge for these losses—in addition to “pain Louisiana’s judges are supposed to work from a “direct inter- and suffering,” which includes mental suffering—creates pretation” of the code.9 While such a legal approach would the risk that jurors will mistakenly count the same harms seem to support legislative supremacy and judicial restraint, twice.13 The state supreme court’s decision not only depart- open-ended or ambiguous statutes have invited a wider ed from its traditional interpretation of the civil code but scope of judicial interpretation and disregard for judicial also separated it from the overwhelming majority of other predecessors’ rulings. states that have considered the issue.14 A NOVEL APPROACH TO DAMAGES A HOTBED OF NEW LEGAL THEORIES One example of how Louisiana’s unique legal approach Louisiana’s courts have permitted other novel theories of in- encourages instability in the law is the state supreme court’s jury in recent years. Take the $591 million jury verdict lev- move away from long-standing limitations on damages ied against tobacco companies in 2004 in Scott v. American recoverable in litigation, even though the underlying statutory Tobacco.15 The class action in Scott did not seek damages for Trial Lawyers, Inc. Update No. 7, December 2008 3 MASS TORT MASTER ouisiana’s lawyers have long been Russ Herman of the Year for his role in leading nego- Lled by an intriguing cast of charac- tiations that culminated in a $4.85 billion ters, from the late “King of Torts,” Mel- settlement between Merck, the pharma- vin Belli, and “the General,” Wendell ceutical company, and plaintiffs alleging Gauthier, who sued the manufacturers injuries that resulted from their taking its of everything from tobacco to breast prescription painkiller Vioxx.29 implants, to the flamboyant Michael St. Martin, whose nickname, “Alliga- Herman’s organizing skills, honed while tor Mick,” stems from his penchant for he served in similar leadership roles in hunting reptiles.25 Today the king of the earlier mass tort litigation, proved es- Louisiana plaintiffs’ bar is Russ Herman, sential in the Vioxx cases. He quipped: a jazz aficionado and a fan and some- “It was like each lawyer had a greased time impersonator of Harry Potter.26 football and was running like a wild 30 AP Photo/Bill Haber monkey.” But whether the deal was in Herman practices law in New Orleans the best interests of the lawyers’ clients with his son in the firm founded by his father and uncle. He is debatable. The Manhattan Institute’s Marie Gryphon has has served as president of the Louisiana Trial Lawyers Asso- criticized the Vioxx settlement as structured to pay out settle- ciation and the Association of Trial Lawyers of America.27 A ment cash to objectively weak claims while “sell[ing] out the leader in the multibillion-dollar litigation against the tobacco interests of those clients who actually have viable claims.”31 industry on behalf of the states, in 2004 Herman scored a While those “sold out” clients may have little recourse, Her- $591 million jury verdict against American Tobacco Compa- man’s deal does well by his fellow litigators, who received ny.28 Last year, Lawyers USA named Herman its 2007 Lawyer some $1.5 billion in fees.32 individuals actually harmed by smoking; in the event, it won ents.21 Big asbestos firms such as Texas’s Baron & Budd have funding of a “smoking cessation” program on behalf of class begun running ads in newspapers like The Advocate looking members.16 The 1998 $200 billion-plus Master Settlement for hearing-loss clients.22 As George Bezet, a lawyer defend- Agreement with the tobacco companies was supposed to pay ing against several such suits that have been fileden masse in for such programs,17 but the trial court actually forbade the southern Louisiana, concedes: “It’s logical that [noisy] plants defendants to present evidence of the master agreement’s ex- … would be a natural place to start looking for people who penditures for the same purpose.18 On appeal, the smoking- might have hearing loss.”23 While workers exposed to asbes- cessation efforts funded by the jury were “limited” to such tos would not know during the period of exposure either programs as “reimbursement of medications” (including that they had been exposed or that the exposure was harm- nicotine gum), “telephone quit lines,” and “intensive cessa- ful, workers exposed to deafening sound should be able to tion programs.”19 These restrictions reduced overall damages anticipate the risk to their hearing. But this key distinction to “only” $279 million20—a sum that still results in a mighty between these two kinds of harms hasn’t stopped lawyers hefty paycheck for Trial Lawyers, Inc. from filing claims embracing this new theory for hundreds of clients this year.24 Tobacco is not the only traditional lawsuit business for which Louisiana lawyers have developed new theories of li- Louisiana lawyers have also developed a growth business ability; even as asbestos lawsuits continue to fill the state’s out of suing for damages alleged to be caused by mold court dockets, creative lawyers have begun to file new law- growing in buildings—an inevitable consequence of the suits that allege loss of hearing in many of the very same cli- Pelican State’s humid climate. In 2004, New Orleans’s 4 PROFESSIONAL PLAINTIFFS ouisiana’s public-employee pension funds are notorious for of “lead plaintiffs” in securities suits.