Report's Expanded 'Points of Light' Section Celebrates a 'Boom of Good News' in the States. Federal Court in Eastern Texas Tops 'Watch List' with 'Patent Troll' Traffic

Washington, DC, December 15, 2011 -- The American Tort Reform Association today released its annual Judicial Hellholes ® report, documenting abuses of the civil justice system in jurisdictions it says are among the most unfair and out-of-balance in the nation.

Civil courts in Philadelphia, particularly the Complex Litigation Center there, top the list of Judicial Hellholes for the second year in a row, as “litigation tourism” is actually encouraged by some judges (see the Wall Street Journal’s recent editorial, “The City of Unbrotherly Torts”). Civil justice problems throughout California and West Virginia earn the second- and third-place rankings, respectively. And auto-accident fraud racketeers helped place perennial judicial hellhole South Florida in fourth place.

Two neighboring rural counties in Illinois, Madison and St. Clair, return to the Judicial Hellholes list in the fifth spot this year after recent civil justice reform efforts there appear to have stalled. New York City and Albany collectively claim sixth place as petty lawsuits remain the norm and personal injury lawyers block reform. An ongoing half-billion-dollar miscarriage of justice, which, at the very least, has contributed to spot shortages of a widely used anesthetic, keeps Clark County, Nevada, on the hellholes list for another year, ranked seventh. And McLean County, Illinois, makes it to the hellholes rankings for the first time, in the eighth place, thanks to a novel theory of asbestos liability that relieves a plaintiff of the need to show exposure to a defendant’s product.

“Traditionally, Judicial Hellholes have been considered places where civil judges systematically apply laws and court procedures in an unfair and unbalanced manner, generally against defendants in civil lawsuits,” explained ATRA president Tiger Joyce. “The jurisdictions we name as Judicial Hellholes each year are not the only unfair courts in the nation, but they are among the most unfair, based on our survey of litigants and considerable independent research.”

Shifting gears somewhat, Joyce said, “But this year’s report, more so than any other in the past, also emphasizes a boom in good news from the states with an expanded Points of Light section. Nearly 50 positive tort reform laws were enacted in more than 20 states throughout 2011.

“As anemic economic growth and high unemployment continue to plague much of the country,” continued Joyce, “many governors and state legislators were determined to make their states more competitive and attractive to employers. A variety of tort reform measures figured prominently in these policymakers’ pro-growth, job-creation agendas. Our Points of Light section details many such tort reform enactments, including comprehensive packages in Wisconsin, Tennessee, Alabama and North Carolina, along with a number of encouragingly fair and balanced court decisions.”

After commending “the clear majority of judges who are fair and dedicated to the rule of law,” ATRA general counsel Victor Schwartz observed that even supreme courts in Judicial Hellholes jurisdictions can get it right. “For example,” Schwartz continued, “in two well-reasoned decisions this year, the West Virginia Supreme Court of Appeals ruled that those who bring deceptive advertising lawsuits must show they actually relied on the alleged misrepresentation, and it also upheld a law limiting subjective pain and suffering awards that have helped to increase West Virginians’ access to medical care. 

“The California Supreme Court, which is not known for being friendly toward civil defendants,” Schwartz went on, “set its own positive example for courts across the nation in ruling that awards for damages in personal injury lawsuits seeking reimbursement for medical treatment must reflect the amount actually paid for care, not the often significantly higher price initially billed by healthcare providers, before discounted rates are applied and final bills are negotiated.”

Joyce returned to the bad news with a review of the report’s Watch List, reserved for jurisdictions that don’t quite qualify as full-blown judicial hellholes but nonetheless “bear watching due to troubling developments or their histories of lawsuit abuse.”

Joyce pointed to this year’s rare Watch List citation of a federal district court, noting “Our report traditionally focuses on state courts, but a growing and disproportionate patent litigation docket in the Eastern District of Texas is troubling and warrants congressional scrutiny.” He also noted Cook County, Illinois’ slipping from the ranks of Judicial Hellholes to the Watch List after a relatively quiet year with respect to the types of unsound rulings and extraordinary verdicts that had qualified it among Judicial Hellholes for many years running.” Rounding out the Watch List are jurisdictions in Southern New Jersey, where local employers share a justifiable fear of lawsuits; Atlantic County, New Jersey, a magnet for massive lawsuits against drug makers – the state’s economic backbone; Franklin County, Alabama for an outsized $61 million verdict that favored a local manufacturer over an out-of-state software company; Smith County, Mississippi for the largest single-plaintiff asbestos verdict in U.S. history ($322 million), following a trial presided over by a judge who failed to disclose his own family’s history as asbestos plaintiffs; and the state of Louisiana for its job-killing “legacy lawsuits,” a cottage industry of litigation that targets energy companies with unsubstantiated claims of environmental contamination, and for an appellate court’s decision to uphold a $15 million verdict for the family of a man who blew up his home while in the process of stealing natural gas from a local utility.

Finally, the report’s Dishonorable Mentions this year include an astounding Mississippi Supreme Court decision that creates unprecedented products liability for defendants that never manufactured or sold to consumers the products in question. Also criticized is the Arkansas Supreme Court ruling that strikes down the state’s reasonable statutory limit on punitive damages, enacted in 2003, and Missouri appellate court decisions that upheld a shameless class-action coupon settlement first reported last year.

“The Mississippi Supreme Court’s decision now inappropriately places design companies on the hook, regardless of whether they had control over or profited from the manufacture or sale of a product. Mississippi has made great strides in leaving its Judicial Hellholes history in the past, and this decision can be fairly viewed as an aberration. But it presents lawmakers in the Magnolia State with an opportunity to clarify liability law there in 2012, and they should seize it,” Joyce concluded.

Full text of the Judicial Hellholes report and year-round updates are posted at JudicialHellholes.org. For easy reference, an executive summary of the 2011-2012 report follows immediately below.

Executive Summary

JUDICIAL HELLHOLES 2011/2012

The 2011-2012 report shines the spotlight on eight areas of the country that have developed reputations as Judicial Hellholes:

#1 Philadelphia. Philadelphia hosts a disproportionate share of Pennsylvania’s lawsuits and, as demonstrated by the report, forum shopping for plaintiff-friendly courts within the state is primarily a “Philly phenomenon.” Of greatest concern is the Complex Litigation Center (CLC) in Philadelphia, where judges have actively sought to attract personal injury lawyers from across the state and the country. Plaintiff-friendly law, expedited procedures, a reputation for a high plaintiff-win rate and generous awards contribute to Philadelphia’s status as a venue of choice. Success in addressing the flow of medical liability cases to Philadelphia and the legislature’s recent limiting of a defendant’s liability to its share of fault provide some hope for the future.

#2 California. While Los Angeles historically earned a reputation as the most plaintiff-friendly jurisdiction in the Golden State, small business-destroying lawsuits filed by professional plaintiffs have spread throughout California. These individuals have filed thousands of extortionate claims against popular family-owned restaurants, book stores and salons, demanding thousands of dollars to settle allegations of technical violations of disabled access standards, and California’s courts have enabled the extortion. Recent court decisions demonstrate that California remains friendly to consumer lawsuits (even after voters attempted to rein in abuse), class actions, and high awards. The California Supreme Court deserves praise for its recent rejection of “phantom damages,” but the adverse effect of its late 2010 decision allowing local government officials to hire private contingency-fee lawyers to enforce state law is now becoming evident.

#3 West Virginia. West Virginia’s high court reached well-reasoned decisions this year when interpreting its consumer protection law and upholding the limit on subjective pain and suffering damages in lawsuits against healthcare providers. Such rulings, while helpful, do not address core problems in West Virginia’s civil justice system, such as its lack of full appellate review, liability rules that are out of the mainstream, and excessive awards. West Virginia continues to be a haven for weak lawsuits by plaintiffs from other states. The state’s attorney general remains under fire for running his office as if it were a private personal injury law firm and distributing litigation settlements to programs and organizations of his choosing, rather than the state and its taxpayers.

#4 South Florida. South Florida, known for its aggressive personal injury bar, is the national epicenter of excessive and fraudulent automobile insurance litigation and tobacco lawsuits. The state’s insufficiently rigorous standard for admission of expert testimony contributes to its reputation as a Judicial Hellhole. While the state legislature has made steady progress in reasonably limiting liability in certain areas, the Florida Supreme Court’s record of striking down such legislative efforts leaves observers cautiously optimistic at best.

#5 Madison and St. Clair Counties, Illinois. These two counties in the Metro East have come a long way since hitting rock bottom, but there are concerns of a relapse. For instance, this year the Illinois Supreme Court reversed a Madison County ruling that, after a one-sided trial that favored the plaintiff, would have imposed new liability on manufacturers.  Mid-level appellate courts threw out two class actions certified by Madison County judges.  And a tobacco lawsuit that had resulted in a $10.1 billion verdict may be back on the Madison County docket. Similarly, after significantly culling its asbestos docket in recent years, Madison County is again the national epicenter for such lawsuits. Only about 1 in 10 asbestos claims have any connection to the area. Neighboring St. Clair County has also emerged as a magnet for mesothelioma claims and hosts lawsuits against pharmaceutical companies from around the country.

#6 New York City and Albany, New York. The mayor of the Big Apple and its chief legal officer plead for reforms that would reduce the massive liability payouts that cost taxpayers over $500 million annually, but state legislators in Albany remain wedded to the plaintiffs’ bar. That same expansive liability that burdens the city also takes its toll on New York’s businesses, such as the photography studio being sued by a groom who was not satisfied with his wedding album and sought to re-create the wedding after a divorce, or the White Castle patron who brought a federal case against the restaurant when, at 290 pounds, he could no longer comfortably fit into its booths. Offering a minor dose of sanity, New York’s highest court upheld dismissal of a lawsuit, featured in the 2010-2011 report, wherein one golf pal sued another after being struck by a bad shot.

#7 Clark County, Nevada. Since Clark County’s May 2010 verdict pinning a half-billion dollars in liability for an endoscopy clinic’s unsanitary, illegal practices on a drug maker, the hits just keep on coming. Even as separate state and federal criminal prosecutions proceed against the clinic’s owner, Clark County juries returned two more multimillion-dollar awards against the company under the theory that it should have offered a widely-used anesthetic solely in smaller vials to limit the potential for reuse, despite a clear warning on the label against use for multiple patients. Some Clark County judges have kept jurors from learning the full scope of the clinic’s role in the resulting Hepatitis outbreak when considering the drug maker’s responsibility.

#8 McLean County, Illinois. After a year of observation on the “Watch List,” McLean County advances to a Judicial Hellhole due to its unique practice of allowing lawsuits seeking compensation for asbestos-related injuries, even when the plaintiff did not come in contact with the named defendant’s products. These civil conspiracy lawsuits target deep-pocket companies on with allegations that they had some role in concealing the dangers of asbestos from the public decades ago. One such McLean case recently resulted in a stunning $90 million verdict.

WATCH LIST

Beyond the Judicial Hellholes, this report calls attention to several additional jurisdictions that also bear watching due to troubling developments or their histories of abusive litigation. Watch List jurisdictions fall on the cusp – they may drop into the Hellholes abyss or rise to the promise of Equal Justice Under Law.

The Eastern District of Texas is known for its growing, costly patent litigation. It is rare for this report, which traditionally focuses on state courts, to include a federal district court.

Cook County, Illinois falls from the Judicial Hellholes list due to a relatively quiet year with respect to the types of unsound rulings and extraordinary verdicts that have cemented its Hellholes reputation in the past.

Southern New Jersey joins the Watch List this year, thanks in part to local employers’ fears of lawsuits there.

Atlantic County, New Jersey, a magnet for massive lawsuits against the very drug makers that form the state’s economic backbone, drops from a full Judicial Hellhole to the Watch List, given a number of defense verdicts suggesting that defendants’ previously miniscule chances of winning may have improved somewhat.

Franklin County, Alabama’s $61 million verdict in favor of a local manufacturer against an out-of-state software company is reason to closely watch this rural jurisdiction.

Smith County, Mississippi awarded the largest single-plaintiff asbestos verdict in U.S. history, a $322 million award that the defendant has challenged on the basis that the presiding judge did not disclose that his parents had previously settled asbestos claims with one of the defendant companies, and his father had a pending claim in a nearby court.

Louisiana has developed a cottage industry of lawsuits against energy companies, replete with unsubstantiated claims of environmental contamination. Over 250 of these lawsuits have impacted about 1,500 companies with many choosing to settle rather than risk unpredictable and financially devastating jury verdicts in local courts.

DISHONORABLE MENTIONS

The report awards Dishonorable Mentions to the Mississippi Supreme Court for an unsound ruling that abandons a core principle of product liability law, and to the Arkansas Supreme Court for striking down the state’s perfectly reasonable statutory limit on punitive damages enacted in 2003. An appellate court and the Missouri Supreme Court are also criticized for letting stand a shameless class-action coupon settlement.

POINTS OF LIGHT

This year’s report enthusiastically emphasizes the good news from some of the Judicial Hellholes and across the country.Points of Light are examples of, among other things, positive legislative reforms and fair and balanced judicial decisions that adhere to the rule of law.

• State legislatures enacted nearly 50 civil justice reforms in 2011. These included comprehensive tort reform packages in Wisconsin, Tennessee, Alabama, and North Carolina, and more targeted reforms in Arizona, Florida, Indiana, Kentucky, Missouri, North and South Dakota, Oregon, Pennsylvania, South Carolina, and Texas. Examples of such reforms include strengthening standards that guard against junk science in the courts, ensuring that courts do not broaden liability of landowners to those who are injured while trespassing on their property, limiting the amount or interest rates on pre- and post-judgment bonds, and requiring state officials to make certain disclosures when hiring private lawyers to represent the state.
• Sound rulings by several courts, some of which are located in states that otherwise have reputations as inhospitable to civil defendants, are particularly worthy of note.
  • The California Supreme Court rejected inflated damages for the costs of medical treatment.
  • The District of Columbia’s highest local court found that, despite the broad language of the city’s consumer protection law, the basic principle that a person must be harmed before bringing a lawsuit applies.
  • The Illinois Supreme Court threw out a Madison County ruling that established a new and costly duty for manufacturers to warn consumers of remote risks of injury long after their purchase of the product.
  • The West Virginia Supreme Court of Appeal upheld the state’s limit on subjective pain and suffering awards in cases brought against healthcare providers and facilities.
  • The U.S. Court of Appeals for the Fourth Circuit reinstated a suit against a personal injury law firm alleging that attorneys engaged in a scheme to file in West Virginia courts fabricated asbestos claims with no factual basis.

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The American Tort Reform Association (ATRA) is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation. ATRA's membership includes non profits, small and large companies, as well as state and national trade, business, and professional associations.