Biz-favored tort bills finally pass the House

Before adjourning for caucus recess on Wednesday, House Republicans finished a major bit of business left on the table when the 2011 session expired, passing a series of four tort law bills favored by the biggest players in the state’s business lobby. The bills, which were approved only after a heated six-and-a-half-hour session featuring a lengthy docket of DFL amendments, would change laws pertaining to attorney fees, the civil statute of limitations, prejudgment interest and the certification of class action lawsuits.

The Senate passed all four measures last year, but House GOP leaders left them to the final hours of session, only to see the clock run out after DFLers prolonged debate on bills that preceded them on the calendar.

“We hear from job providers that the litigious nature of Minnesota is a problem for job creation,” House Majority Leader Matt Dean, R-Dellwood, said during Wednesday’s debate.
The U.S. Chamber of Commerce ranks Minnesota 11th on its list of states with the friendliest legal rules. But the GOP, with strong backing from the Minnesota Chamber of Commerce and the Insurance Federation of Minnesota, are trying to move Minnesota closer to number one.

Bills to Dayton after recess

The Senate’s chief tort author, Deputy Majority Leader Julianne Ortman, R-Chanhassen, was able to shepherd the bills through her chamber last year with less fanfare and more DFL votes than in the House. She said she hopes the Senate will send the bills to DFL Gov. Mark Dayton soon after they return from the recess.

“There’s bipartisan support for these reforms,” Ortman said, “so I’m hoping the governor will look at it on a straightforward basis. … He has been one to use that as a bellwether on his signature: Is there bipartisan support? And we demonstrated that clearly in the Senate last year.”

Dayton has set a precedent for bucking traditional DFL constituencies like teachers unions and environmental groups to sign Republican-backed policy initiatives into law. But Dayton’s relations with Senate Republicans have broken down in the aftermath of their decision to deny confirmation to his Public Utilities Commission chairwoman, Ellen Anderson. Moreover, House DFLers have vocally objected to GOP job creation claims and have railed on the proposals as throwing up barriers to individuals and businesses seeking justice in the courts.
Rep. Ryan Winkler, DFL-Golden Valley, rejected the claim that businesses are afraid of Minnesota because of the threat of lawsuits.

“This isn’t about business,” Winkler said. “This is about the people who are paying the bills. And the people who are paying the bills today are the insurance companies.”

Bills garner some bipartisan support

Republicans, who control both houses of the Legislature, voted unanimously for the bills in both chambers. House DFLers cast a handful of votes in their favor but were generally less receptive than their Senate counterparts had been in 2011. The least popular of the four bills among DFLers in both the House and Senate would freeze the legal process while defendants appeal the certification of a class action, a process known as interlocutory appeal. That measure garnered only two DFL votes in the House and last year passed on a party-line 36-29 vote in the Senate.

Rep. Doug Wardlow, R-Eagan, the bill’s chief House author, said defendants currently cannot appeal a judge’s class certification until after the trial is over. Wardlow said businesses sometimes get scared when class action status is granted and settle even if the claim is frivolous. He said his bill would alleviate that fear.

“That way, meritorious claims … go forward. Claims that are not meritorious, they stop right there,” Wardlow said.

DFLers strenuously objected to the bill, alleging that it would prolong litigation by stopping the legal process while the appeals court considers the challenge to class certification.
Rep. Steve Simon, DFL-St. Louis Park, who said achieving class certification is a high hurdle for plaintiffs to clear in the first place, said documents can be lost and memories fade if the appeal takes a long time.

“It allows someone who has been sued in a class action to run out the clock,” said Simon, who unsuccessfully tried to amend the interlocutory appeals section out of the bill.
“This is a flat-out rigging of the system for defendants in class actions,” he added.
Wardlow countered by arguing that a stay of any appeal could be granted, and appeals are usually carried out quickly.

“It doesn’t take years to have an appeal. It takes a matter of months,” Wardlow said.
Another bill that proved only slightly more popular with DFLers involves a proposal to reduce the civil statute of limitations from six years (a standard Minnesota has used since before statehood) to four years. That bill received only three of 59 DFL votes cast.

Support on the House floor broadened a little for bills related to prejudgment interest and attorney fees.

State lawmakers in 2009 changed the prejudgment interest rate to 10 percent. The bill would set interest at the variable Treasury rate with a floor of 4 percent, said chief author Pat Mazorol, R-Blooomington.

“The idea is that the 10 percent rate can tend to prolong litigation by plaintiffs. Prolonged litigation [means] additional attorneys’ fees, additional interest, contrary to what our businesses are looking for,” Mazorol said.

The bill was overwhelmingly opposed by DFLers, who contended that it would give wrongdoers an unwarranted break. But it did pick up six DFL votes, and Republicans pointed out that it passed the Senate last year 64-1.

In the attorney fees bill, in cases where a settlement has been offered and rejected, the plaintiff’s lawyer would not be allowed to collect fees if the final judgment came to less than the settlement offer. The bill would also require that attorney fees not stray too far from the amount of the judgment.

“What this bill would do,” Mazorol said, “is require that an award of attorneys’ fees be reasonable in relation to the actual award of damages given, so we don’t see the case of attorneys’ fees being two, three, four times the amount that’s actually awarded the plaintiff.”
Mazorol’s fees bill drew six DFL votes on Wednesday; last year it passed the Senate 44-21 with support from more than half a dozen Democrats.

Dayton’s political calculus

So if a handful of DFLers are willing to break ranks, do the bills stand a chance with Dayton?
Rep. Gene Pelowski, DFL-Winona, was the only DFLer to vote for all four bills. He said he doesn’t know where Dayton stands on the tort bills.

“I want to see what the governor is going to do. I voted for them all, so they’re all bipartisan,” Pelowski said.

A Dayton spokesperson said the governor is not prepared to offer any public judgment about the bills yet.

Because the tort proposals are divided into four bills rather than a single omnibus bill, their passage leaves a lot of room for haggling. Although Dayton has been angry with Senate Republicans in recent days over the Anderson vote, he is still carrying a legislative agenda that involves a bonding bill and a publicly subsidized stadium for the Minnesota Vikings, both of which will require Republican support. If the tort reform bills are as important to the Republican majorities as their rhetoric suggests, they might use some or all of them as bargaining chips at the end of session even if Dayton vetoes them this month.

Bob Johnson, president of the Insurance Federation of Minnesota, said the fact that the Republican leadership is linking the tort bills to the issue of jobs bodes well for their ultimate fate.

“We’ve got two bodies that have acted on the four same bills, and the leadership says this is job creation,” Johnson said. “We’ll be at the table and we’ll see whether or not Gov. Dayton thinks that belongs there.”