U.S. Chamber says business laws flawed in Mississippi

JACKSON, Miss. -- The U.S. Chamber of Commerce, the world's largest nonprofit business federation, is dedicated to encouraging pro-business policies and promoting trade ties.

Except, that is, when it comes to Mississippi.

For the first time in its 90-year history, the chamber is warning members about doing business in a particular state, saying Mississippi is a legal magnet for negligence lawsuits and eye-popping verdicts.

The chamber is spending $100,000 to run newspaper advertisements in the state Thursday urging Mississippians to call on lawmakers to make changes to the state's "flawed legal system."

The chamber's decision to single out Mississippi prompted an outcry from the state's top elected officials. Gov. Ronnie Musgrove called the pronouncement "outrageous."

Mississippi has gained a national reputation for multimillion-dollar verdicts and settlements in high-profile suits involving the tobacco industry, asbestos, health maintenance organizations and drug companies.

"It's a sad day in America when an institution like the U.S. Chamber of Commerce has no choice but to shine a spotlight on the state's legal environment," Tom Donohue, the chamber's president and chief executive, said at a news conference Wednesday in Washington.

Musgrove said news reports in recent days that Alabama-based USA Fabrics is opening a plant in Clarke County and that Mississippi's exports rose 30 percent last year are evidence the business climate is healthy. "With all those positive things happening, the action of the U.S. Chamber is outrageous, inappropriate and irresponsible," Musgrove said after the business group's news conference.

"Basically what they're doing is no more than political blackmail," the governor said. "To me, the U.S. Chamber should worry about the national economy and the national recession's effect on Mississippi."

Liability crisis

The chamber is the second national organization to target Mississippi this week. On Monday, the American College of Obstetricians and Gynecologists identified Mississippi as one of nine states with a liability insurance crisis that threatens the availability of doctors to deliver babies. In three cases so far this year, Mississippi juries have awarded $15 million in verdicts to plaintiffs suing doctors and hospitals, said Mississippi State Medical Association spokeswoman Liz Carroll.

Many doctors have left, and the association cites the state's volatile legal climate and reputation for "jackpot justice" as the reasons many insurance carriers have stopped doing business in Mississippi.

The chamber of commerce action follows anger that the Mississippi Legislature rejected several tort reform bills in its three-month session that ended April 12. Tort reform measures seek to limit the amount of money suing plaintiffs can collect from businesses.

Unlike other Southeastern states, Mississippi has not adopted caps on jury awards and other new civil liability laws. Before 1995, the state's largest punitive damage award was $8 million; since then, at least seven jury verdicts have hit $100 million or more.

James M. Wootton, president of the Chamber Institute for Legal Reform, said Mississippi loses more than 7,500 jobs a year while the average family pays an additional $264 a year "as a direct result of the state's love affair with lawsuits.

The U.S. Chamber, which says it has 3 million members, is no stranger to Mississippi politics. In 2000, the organization and trial lawyers squared off and spent several hundred thousand dollars on ads promoting judicial candidates in the state.

Donohue acknowledged that other states have similar legal woes and said the chamber planned to cite them in coming months.

He said the group started with Mississippi because its legal system was ranked the worst in America in a recent chamber-sponsored Harris Interactive survey of more than 800 corporate law firms.

Mississippi ranked last in categories such as judicial competence, jury fairness and the overall treatment of tort and contract litigation.

Trial lawyers in Mississippi consistently have said that the state's legal system works fine and that a handful of high-profile cases in recent years resulting in expensive resolutions isn't cause for massive tort reform.

But the advocacy group Stop Lawsuit Abuse in Mississippi has said the state should use new laws from Alabama as a model for tort reform, including one that caps punitive damage awards.

Mississippi House Speaker Tim Ford and Lt. Gov. Amy Tuck said this week that the Legislature will hold meetings this summer to study tort reform.

Musgrove went a step further Wednesday, saying he'd call a special legislative session "if the leadership of the House and Senate give me any indication that meaningful, reasonable civil justice reform will be considered."