Mississippi Adopts 'Tort Reform'

Effective Date

The new laws will apply only to causes of action filed on or after January 1, 2003.

Statutory Caps on Punitive Damages

Awards of punitive damages are capped at $20 million for a defendant with a net worth, determined in accordance with GAAP, of more than $1 billion. The amount of the cap decreases on a sliding scale for defendants with net worths over $50 million and not more than $1 billion. A defendant with a net worth of $50 million or less cannot be assessed punitive damages in excess of 4% of his or her net worth. The statute does not address how the caps are to be applied in multi-plaintiff cases.

There are no caps in cases involving a defendant whose tortious conduct resulted in a felony conviction or occurred while the defendant was under the influence of alcohol or non-prescription drugs. These exceptions, however, do not apply to an employer whose employee causes injury while acting outside the scope of his or her employment.

Joint and Several Liability

Under existing law, juries in tort cases that do not involve intentional misconduct allocate fault among multiple tortfeasors, and joint and several liability is imposed on a single tortfeasor only as may be necessary to enable a plaintiff to recover 50% of recoverable damages.

The new statute includes several modifications to current law.

First, in addition to absent tortfeasors (eg, a settled defendant), juries will be required to determine the percentage of fault attributable to immune tortfeasors (eg, an employer protected by workers' compensation exclusivity).

Second, while the amount of non-economic damages (eg, pain and suffering) is not capped, liability for such damages is several only, ie, one defendant cannot be forced to pay any non-economic damages caused by the conduct of another tortfeasor.

Finally, with regard to economic damages (ie, lost wages), joint and several liability is abolished for any defendant determined to be less than 30% at fault. Defendants found to be more than 30% at fault will continue to face joint and several liability up to 50%.

'Innocent Sellers'

Plaintiffs in Mississippi product liability cases routinely join the local retailer of a product to defeat federal court diversity jurisdiction. That practice unfortunately will be allowed to continue. While the new statute provides a relatively simple mechanism for the early dismissal of “innocent sellers,” such a dismissal will not impact venue or jurisdiction, and the new statute does not provide much-needed protection from adding local parties for venue purposes. However, an “innocent seller” in a product liability case is entitled to indemnification by the product manufacturer if the seller gives notice of the suit to the manufacturer within 90 days of service of process. So-called “innocent sellers” of products, ie, sellers sued solely because of their presence in the stream of commerce, are not subject to punitive damages in any amount.

'Hedonic Damages' Not Recoverable

In Kansas City Southern Rwy. Co. v. Johnson, 798 So.2d 374 (Miss. 2001), the Mississippi Supreme Court officially sanctioned awards of “hedonic damages,” ie, damages for the loss of enjoyment of life, in addition to damages for pain and suffering. The court also approved the introduction of expert opinion testimony on the monetary value of such damages. The legislature eviscerated the Kansas City case by prohibiting any award of hedonic damages separate and distinct from pain and suffering damages, and by excluding expert testimony on the issue. Moreover, hedonic damages will not be recoverable in wrongful death cases.

Venue

Forum shopping traditionally has been a serious problem in parts of Mississippi. The new venue provisions, which do not address joinder issues, will do little to remedy many aspects of the problem. Resident defendants can be sued only where they reside, where the “alleged act or omission occurred” or “where the event that caused the injury occurred.” Non-resident defendants, however, also can be sued where the plaintiff resides or is domiciled, and defendants in product liability actions also can be sued in the county where the product was obtained.

The new legislation does not purport to alter the Mississippi case law that in civil actions involving multiple defendants, a venue proper for one defendant is proper for all. E.g., Blackledge v. Scott, 530 So.2d 1363 (Miss. 1988).

Appeal Penalty

The 15% penalty currently assessed against unsuccessful Mississippi Supreme Court appellants is repealed by the new law.

Judge Shopping

In an effort to curtail or eliminate this practice, no judge will be assigned to any civil action in circuit, chancery or county court until at least one defendant has responded to the complaint.

Frivolous Pleadings

In addition to the sanctions now available (but rarely imposed) under Miss. R. Civ. P. 11 and the Litigation Accountability Act of 1988, Miss. Code Ann. ” 11-55-1, et seq., a court may fine an offending party and/or attorney up to $1,000 for filing a frivolous pleading. The proceeds will be paid to the Mississippi Volunteer Lawyers Project, Inc.

Conclusion

If history repeats itself, the Mississippi tort reform package will be subject to judicial challenge, so its future is far from clear. It is significant, however, that the Mississippi Legislature, albeit in the face of strong, domestic public pressure, reached a consensus on several key issues in an attempt to change the current litigation environment in the state. While the new legislation is not perfect, it does provide a more rational framework for litigation in a jurisdiction characterized as the home of “jackpot justice.”

Bradley W. Smith is a Shareholder at Baker, Donelson, Bearman & Caldwell in Jackson, MS. Phone: 601-351-2400. Habib Nasrullah is a Director at Wheeler Trigg & Kennedy, P.C. in Denver, CO. Phone: 303-292-2525. Smith and Nasrullah have worked together on several high-profile product liability cases in Mississippi.

Tort reform continues to be a controversial topic. California has placed a cap on damages. At press time, New York was considering similar legislation. Doctors in several states have conducted “strikes” to protest the amount of their malpractice premiums and to urge tort reform in their states. This article describes recent legislation in Mississippi ' in order to alert readers to the trend and illustrate one state's efforts to deal with the problem of astronomic verdicts by sympathetic juries.

Months after the American Tort Reform Association declared Mississippi's 22nd Judicial District one of the “judicial hellholes” of the nation, the Special Session of the Mississippi Legislature that began on September 5, 2002, and ended on November 26, 2002, passed tort reform legislation impacting product liability litigants.

Over the last few years, Mississippi has been home to several enormous verdicts, including those for punitive damages, in state court product liability cases. For example, in Johnson v. AC&S Mfg., a jury awarded the six plaintiffs $150 million in actual damages in an asbestos product liability case. In Rankin v. Janssen Pharmaceuticals, the jury awarded ten plaintiffs $100 million in actual damages relating to use of the drug Propulsid. Finally, a jury awarded two plaintiffs $25 million in actual damages and $120 million in punitive damages in Robinson v. Ford, an automobile product liability case. The volume of litigation and high verdicts led the American Chamber of Commerce to name Mississippi one of the worst states in the nation in which to do business. While the reforms prompted the president of the Mississippi Trial Lawyers Association to declare, “[I]t's a bad day for Mississippi,” the reality is that the Legislature predictably compromised several issues of importance to segments of the business community. At a minimum, however, the new laws collectively represent a giant step in the right direction, particularly for product liability defendants. The significant provisions include the following:

Effective Date

The new laws will apply only to causes of action filed on or after January 1, 2003.

Statutory Caps on Punitive Damages

Awards of punitive damages are capped at $20 million for a defendant with a net worth, determined in accordance with GAAP, of more than $1 billion. The amount of the cap decreases on a sliding scale for defendants with net worths over $50 million and not more than $1 billion. A defendant with a net worth of $50 million or less cannot be assessed punitive damages in excess of 4% of his or her net worth. The statute does not address how the caps are to be applied in multi-plaintiff cases.

There are no caps in cases involving a defendant whose tortious conduct resulted in a felony conviction or occurred while the defendant was under the influence of alcohol or non-prescription drugs. These exceptions, however, do not apply to an employer whose employee causes injury while acting outside the scope of his or her employment.

Joint and Several Liability

Under existing law, juries in tort cases that do not involve intentional misconduct allocate fault among multiple tortfeasors, and joint and several liability is imposed on a single tortfeasor only as may be necessary to enable a plaintiff to recover 50% of recoverable damages.

The new statute includes several modifications to current law.

First, in addition to absent tortfeasors (eg, a settled defendant), juries will be required to determine the percentage of fault attributable to immune tortfeasors (eg, an employer protected by workers' compensation exclusivity).

Second, while the amount of non-economic damages (eg, pain and suffering) is not capped, liability for such damages is several only, ie, one defendant cannot be forced to pay any non-economic damages caused by the conduct of another tortfeasor.

Finally, with regard to economic damages (ie, lost wages), joint and several liability is abolished for any defendant determined to be less than 30% at fault. Defendants found to be more than 30% at fault will continue to face joint and several liability up to 50%.

'Innocent Sellers'

Plaintiffs in Mississippi product liability cases routinely join the local retailer of a product to defeat federal court diversity jurisdiction. That practice unfortunately will be allowed to continue. While the new statute provides a relatively simple mechanism for the early dismissal of “innocent sellers,” such a dismissal will not impact venue or jurisdiction, and the new statute does not provide much-needed protection from adding local parties for venue purposes. However, an “innocent seller” in a product liability case is entitled to indemnification by the product manufacturer if the seller gives notice of the suit to the manufacturer within 90 days of service of process. So-called “innocent sellers” of products, ie, sellers sued solely because of their presence in the stream of commerce, are not subject to punitive damages in any amount.

'Hedonic Damages' Not Recoverable

In Kansas City Southern Rwy. Co. v. Johnson , 798 So.2d 374 (Miss. 2001), the Mississippi Supreme Court officially sanctioned awards of “hedonic damages,” ie, damages for the loss of enjoyment of life, in addition to damages for pain and suffering. The court also approved the introduction of expert opinion testimony on the monetary value of such damages. The legislature eviscerated the Kansas City case by prohibiting any award of hedonic damages separate and distinct from pain and suffering damages, and by excluding expert testimony on the issue. Moreover, hedonic damages will not be recoverable in wrongful death cases.

Venue

Forum shopping traditionally has been a serious problem in parts of Mississippi. The new venue provisions, which do not address joinder issues, will do little to remedy many aspects of the problem. Resident defendants can be sued only where they reside, where the “alleged act or omission occurred” or “where the event that caused the injury occurred.” Non-resident defendants, however, also can be sued where the plaintiff resides or is domiciled, and defendants in product liability actions also can be sued in the county where the product was obtained.

The new legislation does not purport to alter the Mississippi case law that in civil actions involving multiple defendants, a venue proper for one defendant is proper for all. E.g., Blackledge v. Scott, 530 So.2d 1363 (Miss. 1988).

Appeal Penalty

The 15% penalty currently assessed against unsuccessful Mississippi Supreme Court appellants is repealed by the new law.

Judge Shopping

In an effort to curtail or eliminate this practice, no judge will be assigned to any civil action in circuit, chancery or county court until at least one defendant has responded to the complaint.

Frivolous Pleadings

In addition to the sanctions now available (but rarely imposed) under Miss. R. Civ. P. 11 and the Litigation Accountability Act of 1988, Miss. Code Ann. ” 11-55-1, et seq., a court may fine an offending party and/or attorney up to $1,000 for filing a frivolous pleading. The proceeds will be paid to the Mississippi Volunteer Lawyers Project, Inc.

Conclusion

If history repeats itself, the Mississippi tort reform package will be subject to judicial challenge, so its future is far from clear. It is significant, however, that the Mississippi Legislature, albeit in the face of strong, domestic public pressure, reached a consensus on several key issues in an attempt to change the current litigation environment in the state. While the new legislation is not perfect, it does provide a more rational framework for litigation in a jurisdiction characterized as the home of “jackpot justice.”

Bradley W. Smith is a Shareholder at Baker, Donelson, Bearman & Caldwell in Jackson, MS. Phone: 601-351-2400. Habib Nasrullah is a Director at Wheeler Trigg & Kennedy, P.C. in Denver, CO. Phone: 303-292-2525. Smith and Nasrullah have worked together on several high-profile product liability cases in Mississippi.