Lawsuits Hurt Job Growth, Make Life Harder In Louisiana

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Louisiana has a problem. Excessive lawsuits are costing the state as many as 50,000 new jobs every year.1

Lawsuit abuse doesn’t just hamper job growth in Louisiana, it also increases the cost of living for all Louisianans. For example, it is no coincidence that our state has some of the highest car insurance premium rates. If you pay for car insurance in Louisiana, you already know how astronomical your rates can be. A major contributing factor to the costly insurance premiums is the high volume of lawsuits and injury claims filed in the state.2 Louisiana has more lawsuits after car accidents than any other state, demonstrating that our state’s trial lawyer and lawsuit industry can be extremely lucrative for those taking advantage of it.

The cost of our negative legal environment doesn’t end there. The average Louisiana family of four pays a so-called “tort tax,”3 of at least $3,500 every year. The tort tax is directly connected to lawsuit abuse and rampant litigation, as it aims to recoup the losses our unbalanced legal system costs the state. “We feel the direct impact of the ‘tort tax’ through increased insurance premiums, fewer jobs, lower wages and benefits for workers, reduced access to health care and higher taxes to pay for court costs,” Melissa Landry, executive director of Louisiana Lawsuit Abuse Watch, said. “What’s worse is these costs will only keep going up if our courts continue to be abused by those who view our system as a lottery rather than an instrument of justice.”

Lawsuit abuse and the need for legal reform in Louisiana has been a hot topic for some time, and in recent years, there have been clear battle lines drawn over the future of the state’s litigation climate. On one side stands Louisiana’s business community, economic developers, sensible lawmakers and countless citizens that are fed up with the state’s ranking as one of the most sue-happy in the country. On the other side stands Gov. John Bel Edwards, who made his career as a trial lawyer before entering politics, along with some liberal state lawmakers and a small group of extremely wealthy attorneys pulling the strings, filling campaign funds and plotting to make gigantic paydays.

“Louisiana has a reputation for plaintiff-friendly venue laws, permissive judges… the highest jury threshold in the nation, abuse of consumer protection laws and excessive jury verdicts,” American Tort Reform Foundation4 wrote in this year’s Judicial Hellholes report. “But it is the governor’s attempt to hire campaign contributors to run multi-billion-dollar coastal erosion litigation against the state’s key energy industry that ensured the Pelican State’s ranking among Judicial Hellholes this year.”

Since the early days of his campaign for governor, questions have been raised about former trial lawyer Gov. John Bel Edwards’ connection to wealthy attorneys involved in multi-billion dollar lawsuits against more than 100 oil and gas companies, both local and international. “Edwards desperately wants voters to believe he is a moderate who will ‘put Louisiana first,’” Melissa Landry wrote on her blog5 during the 2015 governor’s race. “But his history as a state lawmaker suggests he’s likely to behave differently. In fact, Edwards’ record shows his priorities and values are far closer to the job-killing special interest groups bankrolling his campaign than they are to those held by most mainstream Louisiana voters.”

Landry also noted Gov. Edwards’ top two campaign contributors were trial lawyers and unions. These connections and campaign contributions would not be controversial by themselves, but Gov. Edwards has shown he will consistently grant favors to donors, particularly if the donors are lawyers, at the expense of Louisiana jobs and businesses.

“There is a perception that the governor is turning his office into a private law firm”

One glaring example of the governor showing his allegiances to his donors occurred on Aug. 31, 2016. In a joint investigative report, The Advocate and WWL-TV6 revealed that during the chaos and distractions surrounding the historic flooding across the state, Gov. Edwards “quietly” hired some of his top campaign donors as attorneys in a billion dollar lawsuit against dozens of oil and gas employers around the state. Attorney Taylor Townsend, who currently runs the governor’s super PAC fundraising committee, and his law firm and affiliates were among the group hired to the case. What’s more outrageous is the fact that Townsend donated $130,000 to Edwards and his transition team just months before he was hired onto the lawsuit. “There is a perception that the governor is turning his office into a private law firm,” Melissa Landry told WWL-TV and The Advocate. The governor, she said, “is quietly handing no-bid legal contracts to his campaign supporters.”

Fortunately, Attorney General Jeff Landry quickly blocked Gov. Edwards’ contract7 with Townsend from going through, with Landry’s top aide calling the hire “unacceptable on multiple grounds.” Since then, Gov. Edwards has only intensified his aggression toward Louisiana’s No. 1 job creator. In a letter8 to coastal parishes around the state, he tried to pitch parish leaders to get on board with the state’s lawsuit, saying they can join in or risk missing out on any settlement funds resulting from the case.

Louisiana Association of Business and Industry President Stephen Waguespack called the letters threatening and a strong-arm tactic by the governor. “This template of state government forcing local government to sue local industry and blame them for large societal challenges is unprecedented, and it is sure to send shock waves across the country,” Waguespack wrote in a local guest column.9 “What Louisiana business can honestly look in the mirror without questioning whether they are next on the chopping block if such a lawsuit gameplan is perpetuated by our elected leaders?”

It should concern all Louisianans that this perception of our state exists, particularly when business leaders and others seeking to potentially invest here are taking notice. “The Louisiana litigation environment is awful; tort and legacy liability litigation appears to be a major industry,” an anonymous CEO told Chief Executive magazine.10 In a large survey11 of in-house general counsels, senior litigators and corporate executives, 70 percent of respondents noted that a state’s lawsuit environment is “likely to impact important business decisions at their companies, such as where to locate or do business.”

The writing on the wall is clear: if we want to bring more jobs to Louisiana, or at least stop the job losses we’re already suffering from every year, we need to clean up Louisiana’s legal climate and stop lawsuit abuse.

Footnotes:

1 http://www.labi.org/assets/images/media/2014_002_Issue_Brief–Lawsuit_Reform_WEB.pdf

2 http://www.nola.com/business/baton-rouge/index.ssf/2014/02/high_claims_litigation_continu.html

3 http://thehayride.com/2014/04/the-hidden-cost-of-the-tort-tax/

4 http://www.judicialhellholes.org/2016-2017/executive-summary/

5 http://llaw.org/edwards-past-is-prologue-john-bel-puts-special-interests-ahead-of-louisianas-interests/

6 http://www.wwltv.com/news/investigations/critics-say-gov-edwards-is-running-his-own-buddy-system/312078675

7 http://www.wwltv.com/news/investigations/state-attorney-general-rejects-contract-for-edwards-top-donors/314599709

8 http://www.theadvocate.com/baton_rouge/news/environment/article_37c3d7bc-801c-11e6-8778-0bb43f7b2319.html

9 https://thehayride.com/2016/09/waguespack-sue-or-get-out-of-the-way/

10 http://louisianarecord.com/stories/510724636-ceo-survey-says-louisiana-s-litigation-laws-are-bad-for-business

11 http://llaw.wpengine.com/wp-content/uploads/2014/12/LABI-2014_002_Issue_Brief-Lawsuit_Reform_WEB.pdf