Policy
The Legislature should change Minnesota’s civil justice system by adopting the following reforms:
- Reform class-action litigation statutes and rules. This can be accomplished by allowing for an appellate court review of class certification and a stay of proceedings while the certification is being appealed.
- Reduce Minnesota’s statute of limitations. Minnesota’s statute of limitations should be reduced from six to three years to bring it more in line with the majority of states.
- Reduce Minnesota’s prejudgment interest rate. Minnesota should reduce its prejudgment interest rate for private parties, currently 10 percent, to the rate applicable to government entities, the greater of 4 percent or the one-year constant maturity treasury yield.
- Modify how attorney fees are awarded. This can be accomplished by giving courts the authority to consider the reasonableness of the attorney fees sought in relation to the amount of damages awarded, and prohibiting attorney fees to be awarded after a settlement offer is made if the party claiming attorney fees does not obtain a judgment in excess of the offer.
- Reform the consumer fraud statute. This can be accomplished by requiring plaintiffs to plead and prove that they individually relied on the alleged violations of the consumer fraud statute.
- Repeal the seat belt gag rule. At present, juries are not allowed to hear whether a person involved in an accident was wearing a seat belt. Now that seat-belt use is mandatory, it seems like an important fact when considering damage awards.
- Clarify the 2009 insurance recovery and prejudgment interest rate legislation. The insurance recovery legislation increased the prejudgment interest rate for commercial coverage disputes to 10 percent. The Legislature also passed a general increase in the prejudgment interest rate to 10 percent. Some attorneys are interpreting the two laws as being additive so that in commercial coverage disputes, a 20-percent prejudgment rate would apply. This was not the intent of the Legislature, and it should be clarified.
- Pass the Personal Responsibility in Food Consumption Act. This gives legal protection to producers, manufacturers, distributors and retailers of food or nonalcoholic beverages, among others, from litigation over weight gain, obesity or health conditions allegedly resulting from the long-term consumption of food or nonalcoholic beverages.
In addition, the Chamber opposes provisions that will increase the legal exposure of Minnesota businesses.
- Consumer fraud act. Private lawsuits alleging a violation of the consumer fraud act are brought under Minnesota's private attorney general act. The Minnesota Supreme Court in Ly v. Nystrom ruled that the private attorney general act only applies to plaintiffs who “demonstrate that their cause of action benefits the public.” Legislation has recently been debated that defines any private action under the consumer fraud act to be considered in the public interest. The Chamber opposes this legislation because it could expand the amount of consumer fraud litigation businesses face.
- Nonrecourse civil litigation funding agreements. In 2010, legislation was introduced that would have allowed individuals to enter into agreements that will provide cash to plaintiffs in exchange for a repayment of the advance, with interest, from the proceeds of the lawsuit. There are several concerns with these arrangements. First, they have the potential to inflate settlement values and prolong litigation because of the plaintiff’s obligation to share recoveries with the lender. Second, they are often times associated with extremely high interest rates that would typically be deemed illegal if offered by a traditional financial institution, and they pose ethical dilemmas if the “lender” attempts to influence the litigation.
Business Impact
According to a Tillinghast-Towers Perrin study, in 2007, the annual direct costs (economic and noneconomic damages, administration, claimants’ attorney fees and defense costs) of the U.S. tort system were $252 billion or 1.8 percent of the gross domestic product.
Class-action reform will eliminate the incentive in the system to settle cases that defendants face once the class is certified and will bring Minnesota’s class-action procedures in line with federal court rules. Attorney fee legislation would give the courts more authority over attorney fees and could provide an incentive to accept reasonable settlement offers. Reducing the statute of limitations would reduce the legal exposure of Minnesota businesses. Reforming the consumer-fraud statute will address a growing area of business litigation. Businesses are facing class-action lawsuits under the consumer-fraud statute by non-Minnesota plaintiffs in part due to the relaxed reliance requirement. Passing the Personal Responsibility in Food Consumption Act will eliminate nuisance and frivolous litigation, which is important because some food and agriculture representatives expect Minnesota to be a target for such litigation in the near future.
