North Carolina Found to be Friendly to Business in Tort Cases

That’s the conclusion reached by a new study from the Pacific Research Institute, a San Francisco think tank that advocates for free-market policy solutions. The 2008 U.S. Tort Liability Index found that North Carolina was the third best state in the country in terms of having relatively low tort costs and litigation risks.

“There are very few states that are as consistent as North Carolina, says Lawrence McQuillan, one of the authors of the report. “You really have low costs for the size of the state.”

Of course, legal climate is a matter of perspective. Businesses like states that are tougher for tort plaintiffs. Others argue that such a climate does a disservice to the public.

“I think we have too many barriers against justice in our state,” says Dick Taylor, chief executive officer of the North Carolina Academy of Trial Lawyers. “We need to do more to help consumers.”

The report ranked states in two categories: inputs and outputs. North Carolina’s No. 3 ranking was for the outputs side of the ledger, which considered variables such as litigation-related insurance losses, the number of extremely large jury verdict awards and the number of attorneys and civil cases.

Why did North Carolina do so well in outputs, ending up behind just North Dakota and Alaska? McQuillan points to North Carolina’s contributory negligence standard and to the fact that the state’s civil jury trials require unanimous verdicts from 12 people.

The contributory negligence laws say that plaintiffs can’t collect damages if they are even 1 percent at fault in a tort case. In practice, there are ways that can be used to get around this standard, such as if the defendant has committed gross negligence. But it’s definitely a defense-friendly law, and North Carolina is one of just a few states that cling to the standard.

“I think contributory negligence is horribly unfair,” says Taylor.

The vast majority of states use some form of comparative negligence standard, which allows plaintiffs to receive an award even if they’re partly to blame in an incident. In that case, plaintiffs and defendants are assigned a percentage of blame. When plaintiffs win, the percentage of blame they are assigned is used to reduce the amount they are awarded in a verdict.

To prevail in a civil trial in North Carolina, plaintiffs must secure a unanimous verdict from a 12-person jury. Some states allow smaller civil juries and require only a majority or two-thirds of jurors to agree to decide the case.

The ranking wasn’t a surprise to local defense attorneys.

“I’ve always believed that we were a very good legal climate for businesses,” says Leslie O’Toole, a Raleigh attorney at Ellis & Winters. “I think by culture and tradition, we’re not an especially litigious population.”

The study wasn’t all hearts and sunshine for North Carolina, which finished No. 25 in the input rankings. That’s an indication that the researchers think the state hasn’t done enough to reform laws or add new ones that could reduce potential lawsuit abuses and tort costs in the future.

McQuillan would like to see changes involving monetary caps on damages, class-action reform and asbestos reform, among others. The report even labels North Carolina a “sucker” state – saying it has weak tort rules but that the state “foolishly” believes it doesn’t need to make changes due to its relatively low losses so far.

“These states are a personal-injury lawyer’s next green pasture,” reads the report’s description of “sucker” states. “In the game of lawsuit ‘Whack-a-Mole,’ the suckers will be the states where plaintiffs and their lawyers pop up next to pursue abusive lawsuits because these states have not preemptively closed off opportunities for excessive litigation.”

Taylor was not amused by the playful language used in the report, which also described other states as sinners and saints.

“It’s pretty ridiculous, I think,” Taylor says. “It doesn’t sound too scientific to have suckers and saints …”

In addition to being opposed to contributory negligence, Taylor also isn’t happy with the state’s six-year statute of repose. That law limits the amount of time in which a consumer can sue a manufacturer for a defective product.

Taylor says the academy has worked for years to change those laws and still hopes to do so.


Here’s a look at the largest verdicts and settlements in North Carolina in 2007.

  1. Case: Krispy Kreme Doughnuts Inc. Securities Litigation
  • Court: U.S. District Court for the Middle District of N.C.
  • Type: Federal class action for securities fraud
  • Resolved by: Settlement
  • Amount: $90 million
  1. Case: Pearl Virginia Via Johnson, Individually and as administratrix of the Estate of James Milton Johnson v. Denny C. Booth
  • Court: Forsyth County Superior Court
  • Type: Wrongful death
  • Resolved by: Judgement
  • Amount: $20 million
  1. Case: City of Raleigh v. Jack Parker Properties
  • Court: Wake County
  • Type: Land condemnation/eminent domain
  • Resolved by: Settlement (mediation)
  • Amount: $11.9 million
  1. Case: Davis v. N.C. Baptist Hospital et al.
  • Court: Forsyth County Superior Court
  • Type: Medical negligence
  • Resolved by: Verdict
  • Amount: $10.4 million
  1. Case: Durham Land Owners Association, et al. v. County of Durham
  • Court: Durham County Superior Court
  • Type: Class action involving Durham’s authority to impose impact fees
  • Resolved by: Verdict
  • Amount: $8.3 million

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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