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November 14, 2007

Mississippi on Trial

By Jim Copland

This piece originally appeared on National Review Online, 11-6-2007.

For all the attention being showered on the interminably long campaign leading up to next year�s election, a handful of states around the country are holding important elections for statewide office today. The stakes are particularly high in Mississippi, the nation�s poorest state and until recently its most abusively litigious. While Mississippi�s legal climate has recently improved, the Magnolia State�s trial lawyers have this year mounted an aggressive campaign to take control of the government and turn back the clock.

Headlining the trial bar�s ticket is John Arthur Eaves, the Democratic nominee for governor. Eaves is himself a personal injury, mass tort attorney, whose law firm website advertises for clients suing over a range of products from Benzene to Celebrex to Bextra, as well as nursing homes and even terrorism. In his bid to win over a conservative state, Eaves has been trumpeting his born-again Christian beliefs to religious fundamentalists as he challenges popular incumbent governor Haley Barbour, the Republican architect of the state�s comprehensive tort reform legislation of 2004.

While Eaves is one of Mississippi�s most prominent plaintiffs� lawyers, 34-year-old Democratic lieutenant-governor candidate Jamie Franks, while also educated as an attorney, has made his professional home for over a decade in the state legislature. Yet Franks too is a favorite of the trial bar and has based his campaign in significant part on his support for a �Mississippi Insurance Policyholders Bill of Rights,� which would make it easier to sue insurance companies to collect on less tenable claims.

Indeed, demagoguing against insurance companies in the wake of Hurricane Katrina is a theme that all the Democrat candidates in Mississippi have adopted. While the overwhelming majority of claimants have been paid, some homeowners who lacked flood insurance but whose houses were destroyed by flooding have engaged in litigation against insurers in an effort to collect under their general homeowners� policies, the flood-exclusion language be damned.

Leading this massive legal charge is none other than Pascagoula lawyer Dickie Scruggs, who led the negotiations for the states when they sued the tobacco companies and netted a cool billion in the process. In his handling of the Katrina cases, Scruggs�s behavior has been so aggressive that it has drawn the ire of federal judges and prosecutors; the feds have accused him of criminal contempt.

Politically, Scruggs is connected to both parties—he�s Republican Senator Trent Lott�s brother-in-law—and his efforts in the current campaign have been brazen. When the state�s eight-term incumbent insurance commissioner George Dale, a Democrat, refused to scapegoat the insurance companies, Scruggs gave $250,000 to a political action committee to support his favored candidate, Gary Anderson, who defeated Dale in the Democratic primary.

But Scruggs has certainly had no beef with the Democratic nominee for attorney general, his close friend Jim Hood, who launched civil suits and criminal investigations against State Farm, which was at the time of the hurricane Mississippi�s largest home insurer (and now, in response, has decided against writing any more homeowners� policies in the state). In his time in office, Hood has not only worked closely with Scruggs; his AG office has been so solicitous of hiring outside contingency fee counsel that it has often appeared to be on auction to the highest trial lawyer bidder.

For example, in November 2005, Hood received a campaign contribution of $15,000 from the New York law firm Bernstein Liebhard & Lifshitz; the firm received a state contract on February 16, 2006—and sent Hood another $15,000 one week later. Other out-of-state firms that have received Mississippi contracts for legal work and donated heavily to Hood�s campaign are the New York firm Bernstein Litowitz Berger & Grossman, which gave Hood over $30,000 in the last two years, and the Texas firm Baron & Budd, which gave him almost $20,000 in 2005.

The trial lawyers� efforts to take Mississippi reflect their weakened power in what was once their favorite jurisdiction: In the U.S. Chamber of Commerce�s annual survey of business attorneys conducted by the Harris Group, Mississippi was perennially ranked the �worst state� for overall legal climate, through 2004. Tiny Jefferson County—home to fewer than 10,000 residents—hosted over 600 lawsuits in 2000, involving over 3,000 plaintiffs, almost three-fourths of whom were from out of state. The owner of the only drugstore in town, Hilda Bankston, found herself dragged into every mass action pharmaceutical lawsuit in the county, since the out-of-town lawyers needed her as a defendant to keep the case in Mississippi courts.

In 2004, Governor Barbour led the charge to clean up this situation, and the state passed comprehensive tort reform. The results of this legislation, and improvements to the state�s judiciary, have been profound: the state�s largest medical malpractice insurer lowered rates each of the following three years, and businesses have begun to look at Mississippi as a attractive site for investment. But the improvement has been limited by fears that the state could revert to what the American Tort Reform Association calls a "judicial hellhole"—an outcome that will be largely determined by what the state�s voters do at the polls.

— Jim Copland is the director of the Center for Legal Policy at the Manhattan Institute.

November 2007


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.