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While tort reform may sound like a boring topic, it is anything but that in South Carolina right now! The issue has become a major battlefront – one bringing out some very big guns, including a recent post on X from none other than Donald Trump, Jr.
On one side you have South Carolina’s entire business community (both large and small), the governor, Senate leaders and insurance companies. On the other side are the powerful trial attorneys protecting a uniquely favorable landscape for lawsuits.
And Trump Jr.’s post.
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THE CHALLENGE…
When our organizations – the Mom and Pop Alliance of SC and Mom and Pop Advocacy – first got involved in this issue a couple of years ago, we didn’t appreciate just how difficult getting fair lawsuit reform would be.
We didn’t anticipate the scale of pushback (and demonization) associated with any attempt to move toward common sense proportional liability (i.e. each party’s responsibility for an accident being allocated based on their percentage of fault).
While South Carolina’s laws place all businesses at risk, our state’s bars, taverns and restaurants are at greater risk for lawsuits for a variety of factors unique to our state.
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PUBLIC PERCEPTION AND MISINFORMATION
A battle for public support is currently unfolding across South Carolina on this issue. Several new, heavily funded groups have sprung up across the state attempting to create confusion and negativity around a Senate bill designed to enact meaningful tort reform.
The Mom and Pop Alliance is not funded by the insurance industry or trial attorneys; we only speak to what we see to be in the best interest of South Carolina’s small businesses.
Our organization has given Senate majority leader Shane Massey’s bill – S. 244 (a.k.a. “The Justice Act”) much study, and while not perfect (we would like to see the mandatory minimum alcohol coverage lowered), we strongly endorse it!
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WHY THIS BILL MATTERS FOR SMALL BUSINESSES
We like that Massey’s bill would do away with the very unfair practice of forcing a party that’s only 1% at fault for an accident to be held potentially 100% responsible for the damages – solely because they have the deepest pockets.
We think it would promote personal responsibility and lower the cost of living, because in the end we all pay for these unfair lawsuit payouts through higher prices. It would help businesses of all sizes across South Carolina, and we think passage of S. 244 would be a big plus for our state, economically.
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S.C. FAMILIES PAY $3,181 ‘LAWSUIT TAX’ EACH YEAR
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TRUMP JR.’S SURPRISING OPPOSITION
Honestly, we are baffled as to why Donald Trump Jr. would weigh in against this bill, but according to a report by The (Columbia, S.C.) State newspaper it could be because senator Massey was a Nikki Haley supporter.
Some who criticize the bill say that it would help big business, which is true but not a bad thing – because it would also help small business owners. This is why our organization supports it.
How we got here is complex, but in a nutshell, South Carolina’s lack of proportional liability is a major factor. Additionally, a law passed in 2017 requiring bars, restaurants and taverns to carry a minimum $1 million coverage policy has led to a notable rise in alcohol-related claims, thereby causing many insurance carriers to pull out of our state, leaving venue owners unable to find coverage.
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THE IMPACT ON BUSINESS OWNERS
Scott Woods, owner of City Tavern in downtown Greenville, S.C., says small venues especially have a target on their backs. He opened over twenty years ago. For the first 16 years, his establishment faced not one lawsuit. But since 2021, he has faced three lawsuits and 29 demand letters for information from defense attorneys.
Woods describes a pattern where attorneys wait years before filing lawsuits, knowing businesses may no longer have CCTV footage or receipts. Most owners let their insurance companies handle a claim for them, which often leads to quick settlements and higher premiums.
However, Woods takes a different approach:
- He immediately hires an attorney
- He demands discovery
- He threatens to counter-sue
- He talks directly to the plaintiff’s attorney
To date, he has not paid out a single claim, but he acknowledges this is not the way the system should operate.
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BUSINESS OWNERS UNFAIRLY ON THE HOOK
We spoke to multiple small business owners who explained that because the minimum auto liability coverage is only $25,000, there is a million-dollar incentive to link accidents back to a venue.
They also noted they are held to impossible standards, having no way of knowing:
- What else a person may have consumed off-premises
- Whether they used drugs
- What else they may consume after leaving
Many voiced their frustration that insurance companies settle too quickly, making coverage even more expensive. They also expressed concern that every bar a plaintiff visited the day of an incident can be sued.
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IMPROVING PERCEPTIONS OF SOUTH CAROLINA’S JUDICIAL CLIMATE
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CONVENIENCE STORES ALSO FACE HIGH COSTS
It’s not just bars. Convenience stores that sell alcohol are suffering too.
For example, the owner of Jack’s in Lancaster, S.C., explained that his liability insurance to sell beer/wine has shot up to $30,000/year — more than all his other general liability insurance combined. When he first opened decades ago, it was $800/year. Now, he worries that simply having coverage makes him a bigger target for lawsuits.
The issue also extends beyond liquor liability. One owner complained to us about a $150,000 settlement because a woman missed a step and broke her leg at his place of business. Trucking companies and many other types of businesses have also been on the hook for seemingly unfair payouts.
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THE PARKERS’ KITCHEN SETTLEMENT
Most South Carolinians are familiar with the Murdaugh family saga, but many small business owners were shocked to see a convenience store on the hook for damages. The insurance company for Parker’s Kitchen agreed to a $15 million settlement in the tragic Mallory Beach boat crash case, despite:
- Parker’s checking ID before selling alcohol to Paul Murdaugh
- No citation issued to them by SLED
Parker’s Kitchen and Alex Murdaugh were both named as defendants in the lawsuit, so under current South Carolina law, Parker’s could have been held responsible for Alex Murdaugh’s share of any judgment if he couldn’t pay.
This forced Parker’s to settle to avoid financial ruin.
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THE URGENT NEED FOR REFORM
We all want justice when a venue blatantly over-serves a patron and contributes to tragedy. However, South Carolina’s lack of proportional liability and the $1 million coverage minimum create incentives for lawsuits that insurance companies can no longer sustain.
As a result, liquor liability rates are skyrocketing, and carriers are leaving SC. Additionally, insurance agents (often compensated on commission) don’t have a financial incentive to push back on rising premiums.
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A BROKEN SYSTEM HURTING SMALL BUSINESSES
Craig Claxton of AllSouth Insurance Group explained that:
- The $1 million minimum coverage applies regardless of how much alcohol is sold (hurts mom-and-pop venues more)
- Every lawsuit is now filed for $1 million, no matter how minor the injury
- Each claim costs $30,000+ just in discovery and legal fees
- A brand-new bar, planning to stay open past 11 p.m. with entertainment could pay $50,000 for liquor liability, in addition to general liability, workers’ comp, and property insurance
- In 2017 we had 20-24 carriers writing liquor liability insurance; currently, we have three.
Members of the Mom and Pop Alliance worry that without lawsuit reform, only large chains will be able to afford to do business in our state.
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OTHER STATES DO IT DIFFERENTLY
South Carolina is an outlier as it relates to its tort laws. Most states, including those surrounding the Palmetto State, have some form of proportional liability.
Kansas is at the opposite end of the spectrum, having no liquor liability at all. They emphasize personal responsibility and do not hold establishments accountable for individuals’ choices.
Florida was having similar problems to South Carolina, with double-digit rising insurance rates and insurance carriers fleeing the market, so governor Ron DeSantis “spearheaded a series of litigation reforms in 2022 and 2023 that have headed off insurance disaster.”
DeSantis said this month eleven new insurers have entered the market over tort reforms.
Read more here.
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WHY WE SUPPORT S. 244
Clearly, South Carolina small businesses need relief. The Mom and Pop Alliance of SC (along with multiple other groups), is backing S. 244.
Why?
Because without proportional liability lawsuit reform many of our small business owners will be forced to close, bigger businesses will be leery of coming to our state, and we all will pay this hidden tax in the way of higher prices, not to mention that our current system is just downright unfair!
BANNER VIA: GETTY IMAGES
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ABOUT THE AUTHOR …
Diane Hardy is a former nurse anesthetist turned entrepreneur, who opened a franchise at Verdae in Greenville over seven years ago. She is executive director of the Mom and Pop Alliance of SC, which she founded during Covid upon discovering South Carolina’s almost 400,000 small businesses had little representation in our State House. The Alliance provides education, communication, and advocacy for SC’s family-owned businesses. Her passion for South Carolina’s small business is strong, and as such she donates her time to the organization, accepting no salary or government funding. Her love for our state isn’t new. Before launching the Mom and Pop Alliance she was the founder and host of The Palmetto Panel (2014-2019), an annual statewide conference highlighting issues impacting South Carolina. Diane has a bachelor’s degree in nursing and psychology from Michigan State as well as a master’s degree from MUSC.
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5 comments
Lawd how long have we talked about tort reform?!? Scott is doing it right by facing the ambulance chasers down. A couple of terabytes worth of storage to retain electronic records for 5-7 years added to his method will largely make him bulletproof – as long as he refuses to serve obviously intoxicated customers, cards everyone and continues to act in a responsible matter. I know of a place on the gulf coast of wherever, where anytime they have a “maybe ID”, they click “capture “ on their surveillance system of the customer holding their license up by their face, telling the customer that they’re doing it. A surprising number of “youthful looking potential customers” chose to go somewhere else.
Excellent article
Isn’t Massey a lawyer for one of the major SC insurance companies? Seems that could save his client(s) millions. But no one ever said SC lawyer/legislators are working for the best of SC citizens.
Yes, Massey works for the interests of Allstate. This bill provides no safeguards against insurance companies for increasing premiums. This bill only harms victims and benefits the insurance companies.
I would be shocked if there was actual tort reform this year that implements common sense proportional attribution of fault in jury verdicts. There are just too many small town plaintiff’s lawyers (and GOP ones at that) whose livelihoods rely on these types of ambush lawsuits. They are too short-sighted to see beyond their personal immediate gratification. This is something that has been wrangled over for at least 20 years and despite having GOP supermajorities it never gets passed. There are always just enough RINOs to switch over to the Democrats who vote in block against the reform and kill it.