UPDATE: State Supreme Court Affirms Rice Verdict, Declares Part of 'Tort Reform' Unconstitutional

by Jan Cottingham  on Thursday, Dec. 8, 2011 3:28 pm  

In a unanimous decision, the Arkansas Supreme Court on Thursday upheld a $48 million verdict for farmers who said they lost millions of dollars after their rice was tainted by genetically modified rice seeds produced by Bayer CropScience.

In April 2010, a Lonoke County jury had awarded $5.9 million in actual damages and $42 million in punitive damages to the farmers.

The Supreme Court affirmed a ruling by Lonoke County Circuit Judge Phillip Whiteaker that declared unconstitutional Arkansas' law capping punitive damages at $1 million — a ruling that could have far-reaching effects, including on an even bigger jury award to Riceland Foods of Stuttgart in a related case.

The Supreme Court ruling has as much significance for "tort reform" as it does for Arkansas farmers. It quickly generated both criticism and praise and exposed fissures between business and agricultural interests.

State Sen. Gilbert Baker, R-Conway, issued a news release in which he said, "I'm shocked and dismayed at how the courts have undermined the process by which Arkansas citizens govern themselves.

"The Legislature enacted tort reform in 2003 by overwhelming margins in both chambers, and since then the trial lawyers and the courts have been steadily chipping away at its major provisions," he said.

"Thursday's ruling by the Supreme Court severely limits the Legislature's authority to carry out the wishes of the majority of Arkansans who understand the wisdom of tort reform. The democratic process is the major casualty in this legal ruling," he said.

Randy Zook, president and CEO of the Arkansas State Chamber/Associated Industries of Arkansas, said: "This ruling marks a setback in efforts to create an environment that is encouraging to job-creating entrepreneurs and business leaders. The uncertainty presented by the potential for unlimited damage assessments will discourage growth and expansion of Arkansas businesses. The cost of this ruling will be significant."

At the heart of the dismay is the issue of punitive damages.

Bayer had argued that the $1 million cap on punitive damages enacted as part of Civil Justice Reform Act of 2003 was, in fact, constitutional. The Supreme Court, however, said that the punitive damages limit was unconstitutional because "it limits the amount of recovery outside the employment relationship."

The decision was written by Associate Justice Courtney Hudson Goodson.

"I'm very pleased with the ruling, obviously," said Scott Powell, an attorney with Hare Wynn Newell & Newton LLP in Birmingham, Ala., and the lead counsel for the plaintiffs in the Lonoke case. "It's a great victory for the rice farmers, and I think it's a victory for all consumers all over the state.



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