Ohio tort `reform' measure overturned.

The Ohio high court ruled the legislature had usurped the powers of the judiciary in passing the 1995 omnibus tort `reform' law.

In 1995, tort "reformers" knew the time was ripe to push their entire wish list through the Ohio General Assembly. Over a 20-month period, they organized their coalition, lined up testimony, drafted a bill, and constantly expanded its reach at the urging of other special interest groups also seeking immunity from lawsuits. The result was H.B. 350, a 246-page tort "reform" behemoth, which eclipsed the previous record holder, Illinois's 68-page omnibus bill, by a nearly four-to-one margin. It was the tort "reform" bill to end all tort "reform" bills.

In enacting the bill, with a January 1997 effective date, the legislature endorsed the yearnings of the habitually negligent and the intentionally irresponsible. It did so without apology, caution, or good and sufficient reason and in disregard of the rulings and constitutional duties of the Ohio courts. The new law was nothing less than a bold assault on the authority, responsibilities, and prerogatives of the judiciary that also substantially interfered with the rights of injured people to seek access to the courts. Fortunately, on August 16, 1999, the Ohio Supreme Court, 4-3, held the entire law unconstitutional.

The impact of the law on consumer rights was devastating. In one fell swoop, it made it more difficult and expensive to seek redress for injuries caused by another's wrongdoing, while limiting a plaintiff's ability to recover full compensation. The law recast the administration of justice in its political patrons' image by (1) changing rules of civil procedure and rules of evidence; (2) changing the amount and apportionment of damages available; (3) partially abrogating joint and several liability and adding an "empty chair" defense; (4) jettisoning the collateral source rule; (5) skewing jurisdictional rules; (6) imposing more stringent and unfair statutes of limitation and repose; (7) revising the rules governing comparative fault and contributory negligence; (8) establishing new, defendant-friendly legal presumptions; (9) adding new obstacles to medical malpractice claims; and (10) eviscerating much of the ability to pursue products liability claims, including applying comparative fault to strict liability actions.

As a consequence, potential plaintiffs were grievously disadvantaged and often foreclosed entirely from pursuing remedies in the courts. Meritorious claims were rendered more expensive to pursue and more difficult to prove, while recoveries were diminished for those who prevailed. The law was nothing less than a hostile takeover of the civil justice system in the service of tortfeasors and to the detriment of the consuming public.

Testimony at the legislative stage in support of the law was devoid of empirical evidence. The testimony often had no connection whatsoever with Ohio.

For example, two proponents of the law urged passage on the basis of distorted renderings of the New Mexico "McDonald's hot coffee" case.(1) The Ohio representative for the National Federation of Independent Businesses urged passage on the basis of the alleged size of the Illinois Girl Scout Council's liability premiums and a supposedly outrageous verdict won in Texas.(2) Only once did he invoke an Ohio case, which involved a contract claim, not one sounding in tort, which was what H.B. 350 concerned. The only other Ohio anecdotes offered by this witness were unidentifiable or involved other nontort cases.(3)

Other witnesses did no better. Most offered hypothetical horrors or speculated about the liability records of others.

Proponents also demonstrated a mysterious ability to contradict each other. Two, for example, trotted out the old chestnut that a "tort tax" adds to the cost of a "typical $30 ladder in your neighborhood hardware store," but differed as to whether that "tax" was $20 or $2.70.(4) Similarly, the Ohio Farm Bureau reported that obstetricians had become scarce in 36 rural Ohio counties. This assertion was contradicted by the Ohio Medical Association, which said there was no problem in Ohio but pointed to one in Missouri.(5)

Committees that conducted hearings usually made no findings but reached conclusions on the basis of incredibly weak testimony. One subcommittee forthrightly acknowledged that "on a number of issues, proponents did not provide a compelling rationale to link a proposed change in H.B. 350 with a specific problem in existing law. On some troubling proposals, the subcommittee specifically asked for such a rationale to be provided, without any response from proponents."(6) Nonetheless, the subcommittee approved the proposals. Certainly, neither H.B. 350's published findings nor the testimony the legislature received justified the bill's deforestation of the redwoods of the civil justice system.

With the playing field tilted so acutely against plaintiffs, the Ohio Academy of Trial Lawyers immediately resolved to bring a case challenging the law's constitutionality. Doing so was entirely consistent with the academy's founding objectives, which include promoting the administration of justice for the public good, protecting the adversary system and trial by jury, and advancing the cause of those injured and who must seek redress. The academy recruited the Ohio AFL-CIO as an additional challenging party.

While a constitutional challenge committee was established and began researching the best arguments to make, the Ohio Academy contacted ATLA's Legal Affairs Department, which had established a constitutional litigation program for precisely these purposes [see sidebar]. ATLA's legal team recommended a broad-based approach, using the full range of weapons available through the Ohio Constitution, and signed on as counsel in the case, joining past academy president Don Iler and Ohio AFL-CIO lawyers Stewart Jaffy and Marc Jaffy.

Arguments

After an intense research period, the case was crafted. The means chosen to accomplish an efficient review of the law's constitutionality was the Ohio Supreme Court's original jurisdiction over writs of mandamus and prohibition. The writs, dating back to the 12th and 13th centuries and engrafted into the Ohio Constitution, were designed to enable the Ohio Supreme Court to exercise its superintending authority over the lower courts and further justice.

By seeking writs against trial judges in Cuyahoga, Franklin, and Montgomery counties, the complaint ensured that only the Supreme Court had appropriate jurisdiction, for no other single court had superintending authority over those judges. In addition to the academy and the Ohio AFL-CIO, two officers of the organizations joined the challenge as taxpayers.

The case, filed in November 1997, was framed in terms of separation of powers, asserting that the General Assembly had exercised authority that the constitution assigned exclusively to the judiciary. As a result of H.B. 350, trial judges were instructed to rule in a fashion contrary to the binding constitutional decisions of the Ohio Supreme Court; the court's common law rulings for which the legislature provided no adequate alternative; and the rules of procedure and evidence promulgated by the high court, which, constitutionally, could not be overruled by the legislature.

In addition, invoking the court's ancillary jurisdiction to decide other constitutional issues raised by the new law, the complaint set out causes of action based on the one-subject rule, the right to trial by jury, the right to a remedy, the guarantee of full compensation in wrongful death cases, the guarantees of due process and equal protection, and the rule against retroactive legislation.

The attorney general immediately intervened and moved to dismiss the action. While challenging the assertion of original jurisdiction in the Supreme Court, the attorney general's most sustained attack was on the standing of the petitioners.

In response, the petitioners argued that, when acting as a private attorney general in support of important public rights, no individualized injury was necessary under the approach that the Supreme Court itself had adopted in 1832, relying on old English precedent, and had never overruled. Contemporary scholarship on the purposes and uses of writs of mandamus and prohibition supported that ancient ruling.

As an alternative ground for upholding standing, the academy and the Ohio AFLCIO showed they had suffered concrete financial injury. The academy lost members who found that the new law rendered uneconomic the practice of personal injury law, and the labor union had additional burdens placed on its health and welfare funds because of reduced recoveries available through the legal system.

In late February 1998, the Ohio Supreme Court accepted the case, setting in motion an intense and abbreviated evidentiary and briefing schedule. By mid-March, the challenging parties filed their evidence, even while fending off discovery motions that violated the academy's constitutional rights.

The attorney general, attempting to renew her motion to dismiss, sent subpoenas to academy employees, seeking to depose them about membership records, as well as seeking a list of all members who had not renewed and minutes of all board meetings where tort "reform" had been discussed. The academy successfully opposed discovery, challenging the motion to compel largely on First Amendment freedom of association grounds.

The petitioners' evidence consisted of four affidavits. University of Wisconsin law professor Marc Galanter filed an affidavit that authenticated his law review article, Real World Torts, which argues that there is no credible empirical evidence of a need for tort "reform" legislation and that nothing in his extensive study of the issue suggests otherwise about the state of Ohio.(7)

American Bar Foundation scholars Stephen Daniels and Joanne Martin filed an affidavit that recounted their research about tort "reform" and about jury verdicts in Ohio. They concluded that no empirical studies or evidence exist to substantiate the factual assertions and legislative findings that H.B. 350 attempts to rely on. They further indicated that those few studies mentioned by the legislature "were either misread or of doubtful relevance or validity."(8)

Former Georgia Insurance Commissioner Tim Ryles filed an affidavit that stated tort "reform" was unnecessary, because insurance regulations are designed to ensure insurance company profitability. He also attached a study to his affidavit that showed that insurance company profitability in Ohio was higher than the national average and that medical malpractice premiums for the nation's largest insurer had steadily decreased in Ohio, again by a greater rate than nationwide.(9)

Last, Columbus attorney Stephen Chappelear filed an affidavit that described his 12-year study of every jury verdict rendered in demographically typical Franklin County, Ohio. His study showed that jury verdicts were not increasing and that punitive damage awards were infrequently awarded and seldom large enough to trigger the bill's caps on these awards.(10)

In response, the attorney general provided very little evidence. Most telling, however, was where that evidence came from. Rather than produce Ohio's insurance commissioner to refute the Ryles affidavit on insurance rates, the attorney general instead filed an affidavit from Edward Muhl, an insurance industry consultant who had served as the insurance commissioner in both Maryland and New York. Muhl attempted to dismiss the Ryles affidavit by stating that there might be other explanations for the health of Ohio's insurance industry.

The merit brief in support of the constitutional challenge noted that the General Assembly's own Legislative Service Commission found at least 13 different constitutional infirmities in the bill that its supporters chose to ignore. A law professor who supported the bill had also conceded that in some areas, "most notably statutes of repose and limitations on damages, the government need is weak, the effect drastic, and the likelihood of defending against constitutional attack is minimal."(11) These constitutional flaws, however, barely scratched the surface.

Original intent

Before proceeding with the legal argument in the case, the brief took advantage of the court's original-intent orientation by recalling the events that led to the framing of Ohio's constitution. The first state constitution was a response to a dictatorial, territorial governor.

To avoid a concentration of power in another individual, the 1802 constitution gave unchecked authority to the legislature. It appointed both the vetoless governor's cabinet as well as the judges. Judges who ruled against the legislature were swiftly removed from office.

It was not long before rapacious businesspeople saw the concentration of power in the legislature as an invitation to plunder the treasury and win advantages ensconced in law. Legislators proceeded "to haggle, dicker, and bargain to secure individual and special advantages and privileges for those who had sent them."(12) The situation was so bad that "any man, who could think of a scheme by which to forcibly take tribute from his fellow citizens, could secure the legal right to do so by applying to the legislature."(13)

Railroads conspired with the legislature to secure private property at nominal prices; businesses received exemption from various forms of liability; and taxpayers were required to foot the bill for infrastructure improvements that inured to the benefit of companies, which then charged tolls for private profit to the very taxpayers who had financed the roads, canals, and railroads. This last event, resulting from the passage of an 1837 law that became popularly known as the "plunder law," helped accelerate public pressure for a new constitution that would curb legislative power and invigorate the judiciary with a responsibility for checking legislative excesses.

At the constitutional convention, anti-corporate sentiment was in abundant evidence. One convention delegate, R.P. Ranney, later a justice of the Ohio Supreme Court, declared that the "people had been handed over to [the corporations'] tender mercies." He added that "one of the most crying evils connected with corporate privileges was ... exemption from individual liability for the payment of their debts."(14)

It was plain from this history that the Ohio Constitution was specifically designed to prevent the General Assembly from exercising arbitrary power at the behest of corporate interests, especially when that exercise undermines the fair administration of justice. In enacting H.B. 350 for its corporate patrons, the General Assembly had brought into being a new "plunder law."

After establishing that consonant with the underpinnings of the constitution legislative largesse at the behest of corporate interests should be viewed suspiciously, the brief noted just how fully the legislature had trespassed onto judicial ground. For example, H.B. 350 overrode three rules of civil procedure and seven rules of evidence, all of which worked to the detriment of plaintiffs. Although this might not seem a remarkable act of legislative aggrandizement, the Ohio Constitution vests the promulgation of all rules governing practice and procedure exclusively in the supreme court and further provides that "all laws in conflict with such rules shall be of no further force or effect after such rules have taken effect."(15)

In addition, the legislature challenged rulings of the court that had held previous tort "reform" efforts unconstitutional by reenacting those provisions. These included a cap on noneconomic damages, a cap on punitive damages, a prerequisite of a "certificate of merit" from a medical expert before filing a medical malpractice case, the abrogation of the collateral source rule, and a shortened statute of repose.

Such action against precedent amounted to the legislature appropriating a new power of cancellation over judicial review, an institution whose pedigree was well established even before there was a state called Ohio.

Finally, the legislature asserted a plenary power to alter the administration of justice and to revise the common law. The brief, however, noted that such power was contrary to constitutional assumptions. As early as 1922, the Ohio Supreme Court had noted that the administration of justice was "a matter for which the judges are answerable to the people, and not to the General Assembly of Ohio."(16) The court later said the judiciary's discharge of its duties "cannot be impeded by the other branches of the government in the exercise of their respective powers" and must remain "free and untrammeled."(17)

Moreover, the Ohio Supreme Court had long recognized its special custodianship of the common law. In 1896, it noted that authority to administer the common law had been an inherent power of the courts and "within every conception of a judicial court."(18) Protecting the common law from wholesale revision by the legislature without either a showing of compelling necessity or the creation of a reasonable alternative remedy for those who seek redress through the courts remains a constitutional mandate for the courts.

Single subject

At a global level, the lawsuit argued that the mammoth tort "reform" bill violated the state constitutional requirement that bills embrace no more than a single subject. The single-subject rule was developed to ensure that legislative policy would be developed in full public view and that controversial provisions could not be masked from public input by the legislation's sheer volume.

H.B. 350 provided a textbook example of how that could occur. The bill, 143 pages in length when first introduced, grew to 257 pages by the time it passed the House. The final measure's 246 pages covered such diverse topics as trial evidence and procedure, court jurisdiction and authority, domestic relations, statutes of limitation, jury instructions, attorney misconduct and ethics, comparative fault and contributory negligence, apportionment of damages, wrongful death, the standard of care for agricultural producers, products liability, commercial regulation, medical malpractice, public employment and whistleblower protections, public utility rates, and the appropriation and allocation of state funds. If all these subjects could constitutionally constitute the single subject of tort "reform," the brief argued, any bill could pass constitutional muster under the rubric of "law."

While the brief went on to demonstrate why particular provisions in H.B. 350 violated specific constitutional language, the court found it unnecessary to go beyond the separation of powers and single-subject rule arguments. It held that H.B. 350 constituted "an attack on the judiciary as a coordinate branch of government."(19)

In the court's view, the legislation marked "the first time in modern history that the General Assembly has openly challenged this court's authority to prescribe rules governing the courts of Ohio and to render definitive interpretations of the Ohio Constitution binding upon the other branches."(20)

Like the petitioner's brief, the court recalled the history that led to the writing of the Ohio Constitution. That review, the court concluded, placed a special duty on the court to patrol the constitutional excesses of the legislature. It then concluded, consistent with precedents over the previous century, that an Ohio citizen did not need to demonstrate a concrete injury to challenge the constitutionality of a legislative aggrandizement of power, particularly when that power was exercised to diminish the checks and balances of constitutional government.

The majority reviewed the myriad constitutional holdings that H.B. 350 intentionally attempted to overrule. These included decisions striking down statutes of repose, certificate-of-merit requirements, set-offs against collateral benefits, various forms of damages caps, standards for summary judgment in toxic tort cases, and bars on the admissibility of evidence of a common insurer.

The legislature's knowing overrule of these decisions made plain the constitutional violation. The court said that H.B. 350 was "no ordinary piece of legislation."(21) Instead, it was a declaration whereby the General Assembly sought to

   circumvent our mandates, while attempting to establish itself as the final
   arbiter of the validity of its own legislation. It has boldly seized the
   power of constitutional adjudication, appropriated the authority to
   establish rules of court and overrule judicial declarations of
   unconstitutionality, and, under the thinly veiled guise of declaring
   "public policy," establishing "jurisdiction," and enacting "substantive"
   law, forbade the courts the province of judicial review.(22)

Addressing the one-subject violation, the court noted that H.B. 350 combined in one bill "the wearing of seat belts with employment discrimination claims, class actions arising from the sale of securities with limitations on agency liability in actions against a hospital, recall notification with qualified immunity for athletic coaches, actions by a roller skater with supporting affidavits in a medical claim, and so on."(23) The subjects, the court held, were "so blatantly unrelated that, if allowed to stand as a single subject, this court would be forever left with no basis upon which to invalidate any bill, no matter how flawed."(24)

The court concluded that H.B. 350 raised issues of such fundamental public importance that it had to be addressed as the decision did. Any other course, the court wrote, would have made the judiciary "a willing participant in divesting the courts of judicial power and a coconspirator in the abdication of fundamental individual rights and liberties contained in our constitution."(25)

Framework for government

Like the framers of the constitutions of most states, the framers of Ohio's constitution were concerned about the exercise of power by the government. They established a framework for governing that limited those powers and recognized individual rights, while simultaneously putting their trust in bodies such as the judiciary to effectuate their design.

Tort "reform" of the type enacted in Ohio could not stand if the courts were to remain open for the redress of injuries caused by powerful political forces and if juries were to remain the means by which we resolve disputes. It could not stand if the actual language of the Ohio Constitution, the conditions that called that language into being, and existing precedent were observed. Fortunately, the Ohio Supreme Court vindicated these timeless principles.

Notes

(1.) Civil Justice Reform: Hearings on Am. Sub. H.B. 350 Before the Senate Select Comm. on Tort Reform, 121st Ohio General Assembly 2 (Apr. 18,1996) (statement of Ralph B. Hoffman, professional engineer, Hoffman Engineering Co.); Civil Justice Reform: Hearings on Am. Sub. 350 Before the Subcomm. on Limitation of Damages of the House Select Comm. on Civil Justice Reform, 121st Ohio General Assembly 4 (July 18, 1995) (statement of Roger R. Geiger, State Director, National Federation of Independent Business/Ohio (NFIB/Ohio) and president of the Ohio Alliance for Civil Justice. The Ohio Alliance is a business coalition that pushed H.B. 350 through to passage.).

(2.) Statement of Mr. Geiger, NFIB/Ohio, supra note 1, at 4-5.

(3.) Id. at 4.

(4.) Compare statement of Mr. Geiger, NFIB/ Ohio, supra note 1, at 5 ($20), with Senate Tort Reform Hearing 2 (Mar. 27, 1996) (statement of John Hatfield, President, Archbold Ladder Co.) ($2.70).

(5.) Compare House Select Comm. on Civil Justice Reform Hearings 4 (July 26,1995) (statement of Larry R. Gearhardt, Ohio Farm Bureau) with Civil Justice Reform: Hearings on H.B. 350 Before the House Select Comm. on Civil Justice Reform, 121st Ohio General Assembly 2 (July 18,1995) (statement of Claire V. Wolfe, M.D., Immediate Past President, Ohio State Medical Association).

(6.) Report of Subcomm. One, House Select Comm. on Tort Reform 1 (Oct. 5,1995).

(7.) Marc Galanter, Real World Torts:An Antidote to Anecdote, 55 MD. L. REV. 1093 (1996).

(8.) Relators' Joint Presentation of Evidence and Index, Affidavit of Stephen Daniels and Joanne Martin, State ex rel. Ohio Academy of Trial Lawyers v. Sheward, No. 97-2419 (filed Mar. 17, 1998).

(9.) Id., Affidavit of Tim Ryles.

(10.) Id., Affidavit of Stephen E. Chappelear.

(11.) Stephen J. Werber, Ohio Tort Reform Versus the Ohio Constitution, 69 TEMPLE L. REV. 1155, 1199-1200 (1996).

(12.) ISAAC PATTERSON, THE CONSTITUTIONS OF OHIO 16-17 (1912).

(13.) Id. at 21.

(14.) I Report of the Debates and Proceedings of the Convention for the Revision of the Constitution of the State of Ohio, 1850-51, at 371 (1851; reprinted 1933) (remarks of R.P. Ranney).

(15.) OHIO CONST. art. IV, [sections] 5(B).

(16.) Schario v. State, 138 N.E. 63, 64 (Ohio 1922).

(17.) State ex rel. Johnston v. Taulbee, 423 N.E. 2d 80, 83 (Ohio 1981).

(18.) Hale v. State, 45 N.E. 199, 200 (Ohio 1896).

(19.) State ex rel. Ohio Academy of Trial Lawyers v. Sheward, No. 97-2419,1999 WL 617856, at *2 (Ohio 1999).

(20.) Id. at *3.

(21.) Id. at *27.

(22.) Id.

(23.) Id. at *32.

(24.) Id.

(25.) Id. at *35.

RELATED ARTICLE: Legal Affairs team fights tort `reform'

The Ohio tort "reform" case marked the first time an ATLA staff lawyer argued a case before a state supreme court, urging the court to strike down a law as unconstitutional. The case also began a new phase in ATLA's constitutional litigation program because this was the first time the association's Legal Affairs Department undertook soup-to-nuts representation of a case. For the litigation, staff devised the strategy; drafted the pleadings, briefs, motions, and affidavits; and shared the argument time before the Ohio high court.

ATLA's constitutional litigation program was established as a response to the legislative successes of tort "reformers." Initially, it served as a clearinghouse of information on constitutional issues affecting trial lawyers, while also providing amicus briefs in support of those challenges. Its first foray into litigation was the challenge to the omnibus Illinois tort "reform" law, which culminated in a favorable state supreme court decision in December 1997 in Best v. Taylor Machine Works. (Illinois High Court Strikes Down Tort `Reform' Law, TRIAL, Jan. 1998, at 17.)

This year, in addition to the victory in Ohio, Legal Affairs enjoyed two other wins:

* In Lakin v. Senco Products, Inc., the Oregon Supreme Court unanimously struck down a 12-year-old $500,000 cap on noneconomic damages as a violation of the state constitution's "inviolate" right to a jury trial. Legal Affairs worked closely with ATLA members Kathryn Clarke and Bill Gaylord on the case. The court's decision relied heavily on the historical basis for the right to trial by jury and its nexus with the common law that had been set out in the brief developed by ATLA Legal Affairs attorney Ned Miltenberg.

* In Martin v. Richey, the Indiana Supreme Court used arguments crafted by Miltenberg to hold a two-year "occurrence" statute of limitations in medical malpractice cases unconstitutional as applied to diseases or injuries with long latency periods. (Oregon, Indiana Courts Weigh in on Side of Consumers in Tort `Reform' Cases, TRIAL, Sept. 1999, at 14.)

The Ohio effort reflected the collective work of the entire Legal Affairs team. Senior Director Robert Peck developed the underlying theory and was responsible for the primary drafting in the case. Contributing to the briefs and other efforts were Ned Miltenberg, who has line responsibility for the ATLA constitutional litigation program, and Jeffrey White, whose duties include writing amicus briefs.

James Rooks, an expert on court rules, provided critical drafting assistance on the affidavits placed in evidence, and research analyst Richard Marshall, a social scientist on staff, developed much of the empirical evidence submitted. Since the briefing was completed in the Ohio case, Legal Affairs has added John Vail, another constitutional litigator, to the staff.

The 1999 ATLA member satisfaction survey found that constitutional litigation was the most important service that the association provides to its members. With this string of four uninterrupted victories, the program is paying members--and their clients--big dividends.

Robert S. Peck is ATLA's senior director for Legal Affairs and Policy Research. He was primarily responsible for preparing and arguing the Ohio challenge.3