South Carolina businesses continue to be pummeled by a civil justice system that forces each household in the state to pony up $3,181 annually in the form of a “lawsuit tax” to fund out-of-control damages awards, a new report concludes.
The study released this month by the Palmetto Promise Institute paints a picture of a civil litigation system weighted too heavily toward the plaintiffs’ bar, forcing some defendant businesses to pay 100% of damages awards to plaintiffs even though they are only 1% at fault.
The study comes amid an effort by businesses and their supporters to pass a tort reform measure in the Legislature, S. 244, which would require juries or judges to apportion damages awards to the percentage of fault among defendants and other nonparties in a lawsuit. Such is the case in states that practice “pure” joint-and-several liability.
But South Carolina, in order to ensure a plaintiff is fully compensated for injuries, provides for comparative negligence. Under its system, a defendant may have to pay full compensation to a plaintiff no matter what percentage of fault the defendant is assigned, according to the report.
“Business and industry are finally making a solid case that outsized damage awards are a lawsuit tax by a lawsuit industry on employers, that these trial lawyer-led shakedowns have become all too common in South Carolina, and we are at risk of strangling the golden goose that has led to our recent in-migration and prosperity,” the Palmetto Promise Institute study states. “275,000 jobs are at risk in the hospitality industry alone.”
The problem gets even more complex in cases in which defendants’ conduct involves the use, sale or possession of alcohol or illicit drugs, according to the report. This “alcohol exception” to the determination of proportional damages means defendants with only a small portion of responsibility end up paying the full damages judgment, the institute reported.
But S. 244, whose primary author is state Sen. Shane Massey (R-Edgefield), could create a more balanced civil justice system, in which small-business defendants will only pay their fair share of damages to plaintiffs, according to the National Federation of Independent Business’ South Carolina director, Ben Homeyer.
“This is probably the No. 1 priority for the entire business community in South Carolina,” Homeyer told Legal Newsline. “It is certainly the No. 1 priority for the NFIB.”
The institute’s report also points to the state’s need for multiple tort reforms, especially considering the state’s status as a “Judicial Hellhole” as defined by the American Tort Reform Federation, he said..
“South Carolina is always in the top 10 if not the top five for being a Judicial Hellhole,” Homeyer said. “And 244 goes a long way to helping fix that.”
The measure would also disqualify people from recovering damages if they knowingly are passengers in a vehicle driven by someone who is visibly intoxicated or someone who passengers should have known would have become incapacitated from alcohol.
“The bill has two hearings this week,” Homeyer said. “The subcommittee chairman said he would like to have the bill moved out on Thursday. … They hope to have the bill to the full (Senate Judiciary) Committee next week.”
Excessive lawsuits and an imbalanced civil justice system increase insurance costs and force small businesses to devote more resources to legal fees rather than expanding their enterprises and adding jobs, he said.
“There is no question that our civil justice system should protect vulnerable plaintiffs, but not at the expense of grossly unfair treatment of a defendant who is perceived as having ‘deep pockets,’ like a regional trucking firm in a traffic accident or a large discount store chain in a ‘slip and fall,’ the institute’s report says.