Legal Reforms are Steering Ohio's Struggling Economy in the Right Direction
Today’s economic picture is not pretty in Ohio, where the average annual income of a family of four is $12,000 below the national average and its unemployment rate was 6.3 percent in May 2008, up from 5.6 percent a year ago and well above the 5.5 percent national average. From 2000 to 2005, Ohio’s economy generated some 300,000 fewer jobs than it would have done if it had grown as fast as the United States as a whole. And by preserving a combined state and local tax burden that is fifth-highest in the country, the state’s politicians are not making economic recovery any easier.
There is a bright spot for Ohioans, however, and it is the state’s legal climate. With a court system now making reasonably predictable rulings and a legislature that was able to pass broad tort reforms in 2002, 2003, and 2004, Ohio’s litigation climate has become less hostile to economic development than it had been for years. Moreover, the state’s asbestos-litigation docket is clearing, and doctors’ malpractice-insurance bills are falling. Absent such positive developments, the state’s prospects would be much worse than they are.
Less than a decade ago, Ohio’s legal system was in the grip of personal-injury attorneys, whom the Manhattan Institute calls Trial Lawyers, Inc. Jury verdicts were skyrocketing, and the state supreme court was repeatedly turning back the legislature’s efforts to rein in the state’s out-of-control tort system. Today, however, Ohio’s once-threatening legal environment is looking friendlier and fairer, thanks in no small part to the electorate’s decision to install new judges who are less willing to substitute their policy preferences for the legislature’s political will. Still, the newly restrained judiciary could easily revert to its former ways and make the state a haven for lawsuit abuse once more, should the plaintiffs’ bar succeed in defeating two supreme court justices up for reelection this fall.
THE OHIO COURT’S ACTIVISM
Today, Ohio’s judicial elections are hotly contested, but they were not always so. They became that way after 1999, when the state supreme court made headlines by thoroughly rejecting the legislature’s broad 1996 tort-reform law. In an extraordinary maneuver, the court—by a four-to-three majority—accepted “original jurisdiction” and took up a direct frontal challenge to the new legislation from the Ohio Academy of Trial Lawyers without waiting for any lower court to apply it. The court ruled that the reform measure violated the separation of powers—in other words, that the legislature could not intrude substantially upon the legal system, which was, in the court’s opinion, the purview of the judges.
In addition, the court said that the legislation violated the state constitution’s “one-subject rule,” which mandates that “[n]o bill shall contain more than one subject, which shall be clearly expressed in its title.” Essentially, the court’s opinion argued that even though the sole subject of the new law was tort reform, it was too comprehensive to be in compliance with the requirement. The dissent forcefully noted that under the one-subject rule, there was a “strong presumption of constitutionality” and that historically, the court had invoked the rule only when there was “a gross and fraudulent violation”—that is, “when there is an absence of common purpose or relationship between specific topics in an act and when there are no discernible practical, rational or legitimate reasons for combining the provisions in one act.” Ignoring this historical restraint in order to invoke the constitutional provision, the supreme court made the bold claim that the law was unsalvageable, even in part, and threw it out in its entirety.