A cap on “jackpot” jury awards in Oklahoma courts has cleared its first legislative hurdle, passing out of a Senate committee.

Senate Bill 1065, by state Sen. Brent Howard, caps noneconomic-damages awards at $500,000. The bill allows unlimited awards for quantifiable economic damages, which can total millions.

Howard noted the bill allows citizens to recover money for numerous real and quantifiable damages they suffer as the result of another individual or entity’s negligence.

“Lost wages would be economic. Actual doctors’ bills that are paid would be economic. Property damage would all fall within economic where there is a direct value on that replacement that could be satisfied in there,” said Howard, R-Altus. “You can even have medical expenses going forward that fall within economic because you’re going to know that those expenses will occur and will be paid.”

The bill’s language does not apply to actions brought under the Governmental Tort Claims Act or actions for wrongful death brought pursuant to Section 7 of Article XXIII of the Oklahoma Constitution, which states that damages cannot be capped in wrongful-death cases.

Because large awards for unquantified non-economic damages have been shown to drive businesses away from states and hinder job creation and economic growth, Oklahoma lawmakers have sought to provide legal certainty by imposing caps on non-economic damages.

In 2011, Oklahoma legislators voted to impose a $350,000 cap on awards for noneconomic damages in many, but not all, lawsuits.

However, in a bizarre 2019 ruling, the Oklahoma Supreme Court struck down that law, declaring it a “special law” since the cap would apply in cases “where the plaintiff survives the injury-causing event, while persons who die from the injury-causing event face no such limitation.”

The plaintiff in that case objected that his family was receiving $9.7 million in payment for an on-the-job accident that cost him parts of his arm. The plaintiff was seeking millions more in “noneconomic” damages in addition to the $9.7 million award he had already received.

Howard believes the court’s ruling in that case had limited basis in the state constitution.

“I think the Supreme Court at the time had a verdict they wanted to put in, or a ruling they wanted to put in, and just found a way to get around that,” Howard said.

He noted the court’s membership has since changed and suggested current justices may be more likely to uphold SB 1065 should it be challenged in court.

State Sen. Michael Brooks, D-Oklahoma City, opposed the legislation.

“To me it doesn’t make sense that somehow the constitution provides for those people who are killed in accidents and their suffering mercifully ends, that somehow they have unlimited noneconomic damages, and somebody that has to live the rest of their life for the next 50 years, day by day, as a paraplegic or as someone with a traumatic brain injury, for those families that we’re going to cap it at $500,000,” Brooks said.

In reality, many Oklahomans injured by the negligence of others receive no meaningful financial benefit from the court system even without caps in place.

Howard noted that most Oklahomans will never be able to recover basic economic damages, let alone noneconomic awards, because the individual who harmed them does not have financial resources.

“If there’s a person that doesn’t have insurance, they don’t own their home, they only own a $500 beater (car) and that’s what ended up causing a wreck that killed three people, that recovery is still going to be zero,” Howard said. “Those noneconomic damages could be awarded as $5 million, but ultimately the actual recovery is going to be zero if there’s nothing to go after.”

As a result, he noted that most attorneys won’t represent people injured in such cases.

That also means lawsuits are pursued only against large businesses and plaintiff lawyers often seek to excessively penalize those companies.

“We don’t necessarily want people with deep pockets doing willy nilly on everything that they have, but we can’t just have them continue to be targets on their back from a litigious society,” Howard said.

The economic impact of excessive litigation and runaway awards for noneconomic damages costs jobs in Oklahoma, reduces economic activity, and ultimately reduces tax collections to state government as well, he noted.

“I’ve got a study here that potentially the impact of not having this limitation could reach into the billions for the state of Oklahoma,” Howard said.

Howard noted that Texas and other states have similar laws.

“The Economic and Fiscal Impact of Excessive Tort Costs on Oklahoma,” a study commissioned by the State Chamber Research Foundation and conducted by the Perryman Group, found that excessive tort costs have translated into the loss of $3.7 billion in state gross product each year and almost 32,000 jobs in Oklahoma.

The report found the decrease in tax receipts includes $195 million annually to the state and $162.5 million to local government entities.

And the report estimated that the share of economic losses tied to the Oklahoma Supreme Court’s 2019 decision striking down the prior cap on noneconomic damages is nearly $2.7 billion in gross product from 2020 to 2023.

SB 1065 passed the Senate Judiciary Committee on a 7-2 vote that broke along party lines with Republicans in support and Democrats opposed.

Members of the Senate also passed three other bills designed to address excessive and expensive litigation in Oklahoma courts.

Senate Bill 1115, by state Sen. Julie Daniels, R-Bartlesville, ensures that the manufacturing, marketing and selling of lawful products cannot be deemed a public nuisance. The bill also clarifies that a defendant in a public nuisance case must have had control over the conditions leading to the alleged harm at the time of injury to be held liable.

Senate Bill 453, by Howard, reforms the process of offers of judgment. It allows a defending party to propose settlement terms at least seven days before trial, with the opposing party having five days to accept. If rejected, the prevailing party may recover attorney fees, court costs, and expert witness fees.

Senate Bill 625, also by Howard, requires disclosure of commercial litigation funding agreements upon request in discovery, including an affidavit certifying whether funds originate from a foreign state or entity.