Civil Justice Update : Arkansas Issue 1 – Off the Ballot

On October 18, 2018, the Arkansas Supreme Court handed down a 6-1 decision, removing a legislatively proposed constitutional amendment aimed at civil justice reform from the ballot. The decision in Martin v. Humphrey construed Article 19, § 22 of the Arkansas Constitution as imposing a narrow separate-issue requirement, which requires that all parts of a legislatively referred amendment be “reasonably germane to each other and to the general subject of the amendment,” in order to be properly submitted to voters.[1] This decision is the latest volley in a fifteen year back and forth between the Court and the General Assembly on tort reform measures in Arkansas.

Fifteen years ago, Arkansas enacted the Civil Justice Reform Act with overwhelming bipartisan support.[2] This compromise tort-reform package included a number of proposals impacting civil lawsuits and medical malpractice actions. The CJRA included the abolition of joint and several liability;[3] permitting nonparty fault allocation;[4] fixing venue in medical malpractice actions in the county where the treatment took place;[5] requiring a good-cause affidavit for medical malpractice suits;[6] requiring expert witnesses in medical malpractice actions be of the same specialty as the defendant;[7] and placing a cap on punitive damages awards.[8]

Almost immediately, constitutional challenges attacked core components of the CJRA and brought the Act before the Arkansas Supreme Court. Of the major components, only the abolition of joint and several liability and venue escaped unscathed.[9] In the process, the Supreme Court declared that it had sole authority over procedural law in the state, which was a marked departure from earlier case law and practice of shared procedural authority between the legislative and judicial branches.[10] The Court also struck the punitive damages cap, upholding a $42 million punitive damages verdict.[11]

In response to these rulings, several efforts were made at tort-reform legislation. In 2013, the General Assembly debated, but failed to approve, a proposal to place damages caps for noneconomic and punitive damages in the constitution and to vest rule-making authority in the General Assembly.[12] In 2016, a voter-initiated ballot proposal sought to amend the constitution to cap attorney contingency fees at 33⅓% of the “recovered” amount and to permit noneconomic damages caps of no less than $250,000 in cases involving medical malpractice. The Supreme Court removed this petition due to ballot title insufficiencies.[13]

In this backdrop, the 91st General Assembly referred a constitutional amendment for voter approval embracing aspects of these prior proposals. Issue No. 1 included provisions capping attorney contingency fees at 33⅓% of the “net” recovery, placing a minimum $500,000 cap on noneconomic damages, placing a minimum $500,000 (or three times compensatory) punitive damages cap, and vesting rule-making authority in the General Assembly. Among other groups, the proposal was supported by the Arkansas Chamber of Commerce and Arkansas Medical Society and opposed by Arkansas Trial Lawyers Association, Arkansas Family Council, and the Arkansas Bar Association.[14] Many members of the judiciary spoke out against the rule-making provision, including sitting Chief Justice John Dan Kemp.[15]

A former judge, Marion Humphrey, challenged the proposal, arguing that it ran afoul of Article 19, § 22 of the Arkansas Constitution, which limits the General Assembly to referring only three amendments for voter approval each session. A state trial court agreed, striking the ballot proposal, and teeing it up for review by the Supreme Court.

On October 18, 2018, the Court declared that Issue No. 1 failed the separate-issue requirement. Concluding that the cap on attorney contingency fees was not reasonably germane to the caps on damages or rule-making authority and also that there was no general subject to which all of the amendment parts related, the Court found the legislatively-referred proposal ran afoul of the Arkansas Constitution. Article 19, § 22 permits the General Assembly to propose amendments for voter approval, but limits those proposals to three.[16] They “shall be so submitted as to enable the electors to vote on each amendment separately.”[17] The Court explained that the requirement for a separate vote on each amendment imposes an implicit separate issue requirement, which limits the proposals to a single subject where all parts of the amendment are reasonably germane to each other and to a general subject.[18]

Justice Shawn Womack dissented, calling into question the “extraconstitutional, judicially created test, imported from California, to stop the people of Arkansas from exercising their public policymaking power to either accept or reject a change proposed by their elected senators and representatives.”[19] He argued that the “reasonably germane” and “separate issue” requirements found no support in the actual text of Article 19, § 22, and was a mistaken import from California case law interpreting a constitutional provision with different language from the Arkansas Constitution.[20]

With polling calling into question support for the proposed amendment and opposition from social conservatives in the state, the future of tort reform proposals like Issue No. 1 remains uncertain.[21] The General Assembly will likely take up the issue next session. Stay tuned.