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Harold Kim

Montana’s come a long way since 2004. That year, U.S. Chamber of Commerce President Thomas J. Donohue described legal reform in the state as little more than a “bump in the road” for the trial bar. Business leaders widely viewed the state lawsuit climate as heavily favoring plaintiffs’ lawyers — that’s why they ranked Montana 43 of 50 in the 2004 edition of the national Lawsuit Climate Survey: Ranking the States.

Things have gotten better since then. Thirteen years later, in 2017, Montana ranked 27 out of 50 in that same survey. So what explains the progress?

The biggest single answer is venue.

Without going too deep into the legal weeds, meaningful venue requirements — that is, meaningful standards about where cases can be tried—are a major priority for businesses. Without those standards, entrepreneurial plaintiffs’ lawyers can target "friendly" venues for filing cash-grab lawsuits against companies, regardless of whether the plaintiffs’ claims have anything to do with the venue in question. Montana used to be a prime target for such lawsuits.

A recent U.S. Supreme Court decision helped change that. In 2017, the U.S. Supreme Court reversed the Montana Supreme Court’s ruling in Tyrrell v. BNSF Ry. Co. The Montana Court had held that state trial courts could rule on a federal Employers’ Liability Act (FELA) lawsuit filed by BNSF railroad workers allegedly injured on BNSF track outside Montana. Given that BNSF is headquartered in Delaware, this didn’t make much sense. If the ruling had stood, it would have put any company doing business in the Treasure State in danger of being sued there for out-of-state injuries, contributing to Montana’s status as a magnet for lawsuits.

The Supreme Court’s reversal in BNSF appears to have made a significant impact. Prior to 2017, Montana never ranked above 35 out of 50 in the Lawsuit Climate Survey’s category on meaningful venue requirements. In 2017, the state improved to number 10 in that category — the single biggest factor in boosting Montana’s overall ranking.

This is good news, but Montana business leaders and legislators should be aware that all four of its neighboring states have stronger overall lawsuit climates. Idaho, Wyoming, and South Dakota placed in the top 10 in the 2017 survey, while North Dakota came in at 17. Given that an all-time high 85% of business leaders polled in the survey agreed that a state’s lawsuit climate is an important factor when making business decisions such as where to locate or expand, Montana’s 27th-place rank represents a competitive disadvantage compared to its immediate neighbors.

As the survey results demonstrate, it is more important than ever for Montana to do the hard work of legal reform if it wants to continue to attract and support the businesses that are crucial to the state’s economic health. Like all worthy causes, legal reform is not a “one and done” proposition; it is a continued commitment to maintain a fair and rational system of law, often in the face of opposition from those who profit from flaws in that system.

To help Montana fulfill that commitment, the U.S. Chamber Institute for Legal Reform will be participating in the Montana Chamber’s biannual Business and the Law Conference on March 14, in Helena. Throughout the day we’ll be discussing the issues I’ve touched on here, alongside the priorities discussed in the Montana Chamber’s Envision 2026 plan. You can register at www.montanachamber.com/events.

Montana has a reputation for fair dealing and clear-headed reasoning. The state’s businesses and citizens deserve a lawsuit climate to match.

Harold H. Kim serves as the executive vice president of the U.S. Chamber Institute for Legal Reform. 

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