Survey Says: Indiana Ranks as One of the Best Legal Climates for Business

Indiana ranked fourth overall among all 50 states in fairness of its litigation environment in a 2010 survey conducted for the U.S. Chamber Institute for Legal Reform. Indiana ranked as the best jurisdiction with regards to limiting damages, and the third best with regards to having and enforcing meaningful venue requirements, treatment of class action suits and mass consolidation suits, and discovery. Read the full 2010 State Liability Systems Ranking Study.

Survey participants were comprised of over 1,400 in-house general counsel, senior litigators or attorneys, and other executives who indicated they were knowledgeable about litigation matters at companies with at least $100 million in annual revenues. Participants were asked to grade (A, B, C, D and F) each state based on certain criteria.

Here's how Indiana ranked compared to its Midwestern peers:

	Nationwide Rankings
	Indiana	Illinois	Ohio	Kentucky	Michigan
Having and enforcing meaningful venue requirements	3	45	16	42	19
Overall treatment of tort and contract litigation	6	45	27	37	30
Treatment of class action suits and mass consolidation suits	3	46	18	34	19
Damages	1	45	28	37	23
Timeliness of summary judgment or dismissal	4	47	38	41	35
Discovery	3	46	30	42	31
Scientific and technical evidence	6	43	25	45	34
Judges’ impartiality	6	46	26	39	28
Judges’ competence	9	44	28	40	34
Juries’ fairness	4	45	32	36	27
Overall Ranking	4	45	29	40	30

So What Does This Mean for Businesses?

According to the survey, 67 percent of participants indicated that the litigation environment impacts important business decisions such as where to locate or do business. Another consideration is whether businesses should begin to demand, if not strongly prefer, Indiana governing law and jurisdiction in contractual matters.

What is Special About Indiana's Legal Climate?

There are a number of legal doctrines and state policies which contribute to Indiana's business-friendly legal climate:

· Limited Punitive Damages. A punitive damage award may not be more than the greater of: 1) triple the amount of compensatory damages awarded in the action; or 2) $50,000. Even if punitive damages are awarded, only 25 percent goes to the plaintiff, while the remaining 75 percent of the punitive damage award is paid to the state for deposit into Indiana's violent crime victims compensation fund.

· Business Takeover Protections. Indiana expresses strong support for the business judgment rule relating to a board of directors' response to a hostile takeover (i.e., expressly rejects Delaware's intermediate scrutiny test set forth in Unocal v. Mesa Petroleum, 493 A.2d 946 [Del. 1985]).

· Competitive Business Taxes. Indiana ranked 10th overall in the Tax Foundation's 2010 Business Tax Climate Index (comparison to Midwestern peers: Michigan 17th, Kentucky 20th, Illinois 30th and Ohio 47th).

· Recognition and Ease of Electronic Platforms for Commerce. Indiana's secretary of state permits electronic filing of business formation, transactional documents and annual reports. Indiana has also adopted the Uniform Electronic Transaction Act.

· Uniform Trial and Discovery Rules. Indiana's Rules of Trial Procedure are very closely modeled on the Federal Rules of Civil Procedure. Thus, Indiana courts often consider federal case law in interpreting Indiana's rules, providing additional consistency and predictability.

· Defense for Corporate Directors. Indiana law provides that corporate directors are not liable for breaches of their duties unless the plaintiff can show "willful misconduct or recklessness." Additionally, directors are given wide latitude to rely on opinions of corporate employees, accountants, attorneys, and board committees.

· Uniform Securities Laws. Indiana adopted the 2002 Uniform Securities Act simplifying securities offerings and harmonizing Indiana's laws with federal securities exemptions (none of Indiana's Midwestern peers has adopted the 2002 Uniform Securities Act).

· Modified Comparative Fault Rules. Indiana requires a defendant be at least 51 percent at fault before any recovery and a plaintiff’s recovery is reduced by the degree of his or her fault (Michigan, Illinois and Ohio also follow Modified Comparative Fault rules, while Kentucky uses Pure Comparative Fault rules).

· Anti-Strategic Lawsuit Against Public Participation (SLAPP). Indiana's Anti-SLAPP Act provides for expedited dismissal of lawsuits where the act, statement or omission is lawful and "furtherance of the person's right of petition or free speech under the Constitution of the United States or the Constitution of the State of Indiana in connection with a public issue." Ind. Code 34-7-7 et seq.

· Limitations on Medical Practice Claims. Before medical malpractice claimants may proceed in court, their claim must be reviewed by a Medical Panel. The panel is made of medical professionals, and they must make expert determinations of whether the reasonable standard of care was breached. Indiana law also caps medical malpractice awards against providers.

· Automatic Right to Change of Judge. Indiana Trial Rule 76 allows each party one opportunity to change judge in civil matters. The request must be made early in the case (within 10 days after the issues are closed on the pleadings) and the rules contain procedures for selection of the new judge.

To learn more about the climate for doing business in Indiana, please contact Erik Johnson or Dale Stackhouse.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.