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TEXAS TORT REFORM OUTLOOK IMPROVES

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AUSTIN, Texas-Texas companies are optimistic about holding on to hard-won tort reforms now that Republicans have a majority in the state Senate for the first time in 125 years and four conservative Supreme Court justices have reclaimed their seats.

In Alabama, meanwhile, there is an effort under way to end the election of judges after a bitter and expensive Supreme Court contest that saw Harold See, R-Tuscaloosa, unseat incumbent Associate Justice Kenneth Ingram, D-Montgomery.

Business groups have long been wary of the high courts in Texas and Alabama, perceiving them as pro-plaintiff and inclined toward large awards.

The situation has changed in Texas over the last few years, but the Alabama courts remain a source of concern.

The Alabama election means the state Supreme Court now has five justices perceived to be pro-plaintiff, while the remaining four justices tend to lean toward business interests.

The December runoff victory in Texas by Robert Duncan, R-Lubbock, in a vote for the spot left vacant by retired Sen. John Montford, D-Lubbock, gives the GOP 16 of the 31 Senate seats.

The majority is the first the Republicans have held since 1871. Democrats still control the House 82-68.

In this year's general election, Supreme Court Justice Tom Phillips, R-Houston, and three Republican associate justices were re-elected to the court.

The associate justices are John Cornyn, R-San Antonio; Greg Abbott, R-Houston; and James A. Baker, R-Dallas.

The Risk & Insurance Management Society Inc. supported the slate of Supreme Court candidates, reminding Texas chapters that the effort to preserve tort reforms "begins with maintaining a favorable Supreme Court" (BI, Oct. 14, 1996).

The court, made up of seven Republicans and two Democrats, has made important pro-business rulings in the past. In a ruling cheered by risk managers, it overturned a 1993 lower court decision and held that the state's Workers Compensation Act was constitutional.

"I think the court elections in Texas were very positive from a business standpoint," said Jim Green, risk manager at footwear manufacturer Justin Industries Inc. in Fort Worth and an active participant in RIMS and state and local business groups.

"I think what we have is a balance," he added. "I don't think the court is pro-business. I think they look at cases on a case-by-case basis rather than legislating from the bench. Those are the kinds of judges we need."

Mr. Green said newly elected Sen. Duncan was portrayed as a friend of insurance companies by opponents but supported a 1995 bill that was opposed by insurers and saved employers hundreds of millions in guaranty fund payments.

The bill clarified a provision of the state insurance code that allowed the guaranty fund to collect some payments retroactively. "Duncan was a great advantage in getting that bill passed," Mr. Green said.

Sen. Duncan, a former state representative, "has been very pro-business and worked closely with our association," said Bob Kamm, senior vp-governmental affairs and general counsel at the Texas Assn. of Business & Chambers of Commerce. "He was very helpful on tort reform and insurance issues. We think he will be a great senator and will be very receptive to our positions on different issues, particularly tort reform and insurance."

The race for the associate justice seat on the Alabama Supreme Court was "vicious and acrimonious," according to Warren Lightfoot, president of the Alabama Bar Assn.

"Here in Alabama, the stakes are so high that you have the plaintiffs lawyers on one side and business on the other," Mr. Lightfoot said of judicial races. "And they are spending money like crazy."

The stakes are high for trial lawyers and business owners because of Alabama's reputation for astronomical damage awards. Some of the well-publicized awards include one ordering General Motors Corp. to pay $150 million to a driver thrown from his Chevrolet Blazer and another that called for BMW of North America Inc. to pay a car owner $2 million for not disclosing that paint had been retouched on a new car. That award was ruled unconstitutionally excessive by the U.S. Supreme Court (BI, May 27, 1996).

The brutal and expensive nature of the race for the Supreme Court seat points up the importance tort reform has come to play in judicial and legislative elections in Alabama. The big dollars raised by the candidates show how serious trial lawyers and businesses are about getting their man on the bench.

Mr. See is said to have raised about $3 million to fund his victory, while Mr. Ingram spent about $2 million in contributions.

Mr. Lightfoot said it is part of his agenda as president of the state bar association to change the system that elects judges in the state to one that appoints them on merits. A committee he established, made up of eight plaintiffs lawyers and eight defense lawyers, is expected to have ready early this year a draft of a constitutional amendment that would make the change.

The proposed amendment could make it onto the 1998 ballot, Mr. Lightfoot said.

A merit system would call for nominations to be submitted to the governor by a statewide committee. The governor would appoint the judge from the nominations, and voters would later be able to decide if the judge is retained or dismissed.

The battle over tort reforms is expected to heat up during this year's Alabama legislative session. The state bar association is staying out of the fray.

"That's a volatile issue and I represent both plaintiffs lawyers and trial lawyers. I'm not about to take a position on that," said Mr. Lightfoot.