On Tuesday, the U.S. Chamber Institute for Legal Reform (ILR), an advocacy arm of the U.S. Chamber of Commerce, released the most recent results of a national “lawsuit climate” survey it has periodically conducted since 2002, and for the first time ever, Louisiana is ranked dead last.
It may sound counterintuitive, but we should wear our “worst in the nation” ranking as a badge of honor. This is actually a “good” list masquerading as a “bad” list, and it reveals far more about the nakedly corporatist agenda of its respondents than anything about the effectiveness or fairness of Louisiana’s civil justice system.
“This means the rest of America thinks we have the worst legal climate in the country,” writes Stephen Waguespack, the President and CEO of the Louisiana Association of Business and Industry (LABI), the state’s most influential lobbying organization (emphasis added).
Contrary to Waguespack’s assertion, however, the survey does not really reflect the opinion of the “rest of America” because it did not poll a broad cross-section of the country or even a wide range of people with experience working in the Louisiana judicial system.
Instead, the ILR exclusively polled “1,321 in-house general counsel, senior litigators or attorneys, and other senior executives who are knowledgeable about litigation matters at companies with annual revenue of at least $100 million,” paying them each $100 or donating $100 to one of eleven charities under their name.
“Survey of Corporate Lawyers Says Lawsuits Are Terrible,” reported the California-based legal blog, Wage Law, noting, among other things, that the Chamber’s own pollster admitted “there is no hard data that can be used to measure the perceived fairness of a state’s legal system.” Wage Law also noted that only a tiny proportion of respondents were actually familiar with the legal climates of the states ranked at the bottom of the list. “When questioned about the methodology of previous versions of the ‘study’ that ranked West Virginia as 49th in the list of state legal systems, the Chamber’s CEO, Thomas Donohue, and the pollster that conducted the survey, Humphrey Taylor of Harris Interactive, were forced to admit that only a fraction of the corporate lawyers surveyed actually knew anything about West Virginia’s courts.”
This isn’t the first or even the most significant time in which the survey’s methodology has been openly criticized.
In 2009, the Cornell Law professor Theodore Eisenberg, known as “the grandfather of empirical legal studies,” published an article titled “U.S. Chamber of Commerce Liability Survey: Inaccurate, Unfair, and Bad for Business.”
Eisenberg, who died in 2014, was actually inspired to write his analysis by his work in Louisiana. “My interest in evaluating the survey analyzed here arose after meeting with Louisiana’s Ad Hoc Committee to Study Perceptions of the Legal System (the Committee), a 21-member group chaired by Louisiana Chief Justice Catherine D. Kimball,” he writes. “The Committee asked me to assess the Chamber’s survey; in particular, the Committee wished to know whether the survey identified problems that Louisiana’s legal system should address.”
Quoting from his report’s executive summary (emphasis added):
The U.S. Chamber of Commerce uses its Survey of State Liability to criticize judiciaries and seek legal change but no detailed evaluation of the survey’s quality exists. This article presents evidence that the survey is substantively inaccurate and methodologically flawed. It incorrectly characterizes state law; respondents provide less than 10 percent correct answers for objectively verifiable responses. It is internally inconsistent; a state threatened with judicial hellhole status ranked first in the survey while venues not on the list ranked lower. The absence of correlation between survey rankings and observable activity suggests that other factors drive the rankings. Two factors may help explain them.
First, persistent low ranking of Gulf Coast states indicates that corporate counsel cannot shed hostility to states that were prominent in asbestos and tobacco litigation, notwithstanding changes in state laws. Second, low rankings of populous states suggest respondents fail to distinguish between rates of events and the absolute number of events. Adverse events in large states may occur more often but not necessarily at higher rates than in small states. The Chamber’s uses of the survey fail to account for the sample design, fail to account for the same respondent rating multiple states, fail to account for industry effects, and fail to distinguish among respondents based on their knowledge of a state.
The survey may discourage investment in the United States, and corporate risk managers’ views suggest that the survey promotes corporate behavior that needlessly endangers the public.
His final point bears repeating: Because the survey is so flawed, it actually undermines investment, a fact that appears to be totally lost on Waguespack of LABI.
“Considering that over 70% of the world’s lawyers live and practice in the United States, this unfortunate reputation may essentially make us one of the most hostile legal climates in the world in terms of investment and economic development,” Waguespack argues (emphasis added). “Considering we need every private sector job we can get these days, that can’t be good.”
This is the same argument espoused by the Chamber as well: That Louisiana is somehow losing business because of its legal climate. It’s nonsense.
On the same exact day that Waguespack called Louisiana “one of the most hostile legal climates in the world,” The Advocate published a story with this headline:
It’s the second consecutive year Louisiana ranked in the top five, and Area Development isn’t the only business publication to recently praise the state. “Southern Business & Development ranked Louisiana No. 1 among Southern states for attracting the most significant capital investment and job-creation projects per capita, for the seventh year in a row,” reported Louisiana Economic Development in 2016.
This year, Southern Business and Development “ranked Louisiana No. 1 for the ninth consecutive year as the Southern state claiming the most economic development project wins per capita.”
This year, Chief Executive moved Louisiana up four spots in its annual assessment of the best states for business, and WalletHub listed Louisiana as the 22nd best in the country to start a new business.
“North Louisiana ranks as the most cost competitive place to do business in the United States, according to the 2016 Competitive Alternatives study by KPMG, LLP, a global audit, tax and advisory firm,” KNOE reported. “Monroe, Louisiana tops the list of U. S cities as having the lowest cost of business. Shreveport-Bossier ranks as the second most cost competitive place, followed by other Louisiana metropolitan areas. KPMG compared costs in 133 cities in 10 countries, including 81 U.S. cities.”
When Don Briggs, the head of the Louisiana Oil and Gas Association, was asked under oath if he knew of a single energy company that refused to do business in the state because of the threat of a lawsuit, he responded succinctly, “I don’t know any.”
These are all facts that remain conspicuously absent from LABI’s website, an organization that ostensibly lobbies on behalf of the interests of Louisiana’s businesses. There’s no acknowledgment from Waguespack that his former boss, Gov. Bobby Jindal, whom he served as both Chief of Staff and Executive Counsel, oversaw a state that the Chamber ranked as the 49th worst legal climate during all eight years of his tenure.
And there is a simple explanation for all of this, one that Waguespack unwittingly reveals. “The Edwards Administration is also cited in the new report for helping make our bad legal climate reputation even worse by pursuing state lawsuits that have taken Louisiana’s legacy lawsuit concept to a whole new level,” he claims, falsely. “Hand-selected attorneys are broadly attacking numerous energy companies that have legally operated with coastal use permits in Louisiana for years, rather than seeking to penalize specific actions or bad actors. And the pursuit of lawsuits didn’t stop there, parishes are now being pressured by the Governor’s team to do the same. This litigious behavior by state government itself is simply unprecedented and unacceptable.”
In fact, the Chamber’s report does not mention the Edwards Administration or “legacy lawsuits” or any specific litigation whatsoever, but Waguespack is probably right in assuming the elite corporate lawyers who work for companies that make more than $100 million a year and have interacted with the Louisiana judicial system during the last five years are the culprits behind the state’s poor ranking.
He decided to take the side of these corporate lawyers, but the overwhelming majority of Louisianians care more about the future of their state and holding those liable for billions of dollars in devastating environmental damages responsible for their negligence than they care about protecting the profit margins of the wealthiest industry on the planet.
The same survey has ranked California’s “lawsuit climate” #47 since 2012, and since then, the state, which has the world’s fifth largest economy, has led the nation in economic growth. “California is the chief reason America is the only developed economy to achieve record GDP growth since the financial crisis of 2008 and ensuing global recession,” Bloomberg recently reported (emphasis added). “Much of the U.S. growth can be traced to California laws promoting clean energy, government accountability and protections for undocumented people.”
And that is precisely why Louisiana should wear its ranking as a badge of honor. We are in good company.
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