Another publication ranks West Virginia legal climate bad for business

By John O'Brien | Jul 17, 2007

During the 2006 State of the State address, Gov. Joe Manchin unveiled new "Open For Business" highway signs that welcome visitors to West Virginia.

CHARLESTON - West Virginia and Virginia share a border, but apparently little else.

West Virginia was ranked Tuesday by Directorship magazine as having the worst legal climate for attracting business, while Virginia continued to earn accolades for its efforts.

Virginia was ranked the second-best state in which to do business, trailing only Nebraska. The survey was conducted by the American Justice Partnership, which includes organizations such as the National Association of Manufacturers, Council of State Chambers, Council of State Manufacturing Organizations, American Tort Reform Association (ATRA), Manhattan Institute and Pacific Research Institute.

"Expensive and excessive litigation leads to higher costs for consumers, less jobs for our citizens and slowdowns in economic growth," Virginia Attorney General Bob McDonnell said. "It discourages investment and has a negative effect on the expansion of the free market.

"Money that Virginia companies spend fighting lawsuits is money not spent expanding facilities, conducting research and hiring Virginia workers."

Meanwhile, the Mountain State is no stranger to bad publicity regarding its legal climate. The American Tort Reform Association called it the No. 1 Judicial Hellhole in America, claiming Attorney General Darrell McGraw's activist tendencies are partly to blame.

Also, the U.S. Chamber of Commerce's Institute for Legal Reform teamed with Harris Interactive for a survey that also ranked West Virginia's legal climate at the bottom, and Forbes magazine ranked the state's legal climate 49th-best for business.

Directorship said West Virginia has a problem on the Supreme Court despite the presence of justices Brent Benjamin and Spike Maynard. The report says the Court is "decidedly activist" and quotes former Chief Justice Richard Neeley, who said, "As long as I am allowed to redistribute wealth from out-of-state companies to in-state plaintiffs, I shall continue to do so."

In addition to Benjamin and Maynard, the current justices are Robin Davis, Larry Starcher and Joseph Albright. The trio of Davis, Starcher and Maynard is drawing criticism for being the majority of a recent 3-2 decision that will hold drug manufacturers liable for not expressing possible side effects to each individual prospective consumer.

Nearly every other state has upheld the learned intermediary doctrine, which states it is the doctor's responsibility. Those states feel manufacturers' responsibility ends with the warning label approved by the federal Food and Drug Administration.

Attorney Ted Frank said the decision had no legal basis and was done with the intention of fattening the pockets of trial lawyers who may now add another defendant on to certain lawsuits.

Directorship's report says Gov. Joe Manchin is trying is hardest but having little success reforming the legal climate. It also says insurance loss ratios are in the bottom 40 percent of all states.

Meanwhile, Virginia continues to shine. In 2006 and 2007, Forbes magazine ranked Virginia as the top legal climate for businesses. In CNBC's ratings, it came to the same conclusion.

In 2004, a U.S. Census Bureau report showed Virginia households had the seventh-highest average income. In contrast, its neighbor West Virginia, which was ranked last by Directorship, had the lowest average income.

"Virginia's pro-business climate and policies will continue to attract new companies to the Commonwealth in the years ahead, to the benefit of all who call Virginia home," McDonnell said.

The study cited Virginia's history of hiring legal reform leaders like McDonnell as a reason for its ranking, as well as "reasonable" limits on punitive damages. As the top state for businesses, Nebraska does not allow punitive damages, and Attorney General Jon Bruning is called a "staunch defender of the rule of law."

The rest of the top 10, in order, are: North Dakota, Kansas, Utah, North Carolina, Michigan, Indiana, Ohio and Colorado.

The bottom 10, from 41-50, are: Alabama, New Mexico, California, Vermont, Oklahoma, Pennsylvania, Illinois, Montana, Florida, Rhode Island and West Virginia.

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