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December 4th, 2018

Supreme Court’s Adoption of Novel Theories of Liability, Abusive ‘No-Injury’ Litigation, Place California atop Latest ‘Judicial Hellholes’ List

Supreme Court’s Adoption of Novel Theories of Liability, Abusive ‘No-Injury’ Litigation, Place California atop Latest ‘Judicial Hellholes’ List

Dec. 4, 2018 (WASHINGTON) – Today, the American Tort Reform Foundation released its 2018-2019 Judicial Hellholes report. California tops the list, with Florida, New York City and St. Louis not far behind.

“With both this annual report and year-round website, our Judicial Hellholes program since 2002 has documented troubling developments in jurisdictions where civil court judges systematically apply laws and court procedures in an unfair and unbalanced manner, generally to the disadvantage of defendants,” American Tort Reform Association president Tiger Joyce said.

This year’s Judicial Hellholes report names the following as the nation’s “most unfair” in their handling of civil litigation:

  1. California
  2. Florida
  3. New York City
  4. The City of St. Louis
  5. Louisiana
  6. Philadelphia Court of Common Pleas
  7. New Jersey Legislature
  8. Madison and St. Clair Counties, Ill.
  9. The Twin Cities, Minn.

 

California, a perennial Judicial Hellhole, has the unfortunate distinction of once again earning this year’s No. 1 ranking. It was last at No. 1 in the 2015-2016 report, and also held the No. 1 title in the 2013-2014 and 2012-2013 reports.

“California judges and legislators expand liability at almost every given opportunity,” Joyce said. “This year, the court adopted ‘innovator liability,’ a novel and expansive theory concocted by the trial bar that has been rejected by more than 35 state and federal courts around the country. It holds brand-name drug manufacturers responsible for injuries caused by a generic drug, and serves only to disrupt innovation and hamper investment,” Joyce said.

This year’s No. 2 Judicial Hellhole is Florida, where the state’s Supreme Court issued a series of liability-expanding opinions that invalidated civil justice reforms including rejection of the Daubert standard for expert witness testimony – a standard adopted by more than 30 state and federal courts.

“Florida had a great opportunity to improve its ranking as a Judicial Hellhole, and they squandered it,” Joyce said. “The Florida legislature passed legislation in 2013 adopting the Daubert standard requiring judges to ensure that expert testimony in the courts is based on generally accepted scientific and technical principles, and this year the Florida Supreme Court deemed the bill unconstitutional, opening the door for ‘junk science’ in its courtrooms.”

Coming in at No. 3 is New York City which is no stranger to the Judicial Hellholes report as its asbestos court was on the list from 2013 to 2017, but this year the distinction expands to include other types of litigation in the city.

“While NYCAL (New York City’s Asbestos Litigation court) continues to cater to New York personal injury lawyers with its plaintiff-friendly procedures and some of the largest payouts in the country, the courts also have been inundated with frivolous consumer class actions targeting the food and beverage industry,” Joyce said. “The legislature also has failed to address excessive construction liability and asbestos litigation abuse, and has passed liability-expanding measures.”

No. 4 on the list is the City of St. Louis.

“A year plagued by scandal, legislative ineptitude and continued lawsuit abuse makes St. Louis a top contributor to Missouri’s nickname, the ‘Show Me Your Lawsuit’ state,” Joyce said. “Judges continue to allow blatant forum shopping, disregarding U.S. Supreme Court precedent, and judges allow plaintiffs’ lawyers to introduce ‘junk science’ in the city’s talc litigation. The legislature had the opportunity to address many of the litigation abuses plaguing the courts, but failed to pass the much-needed reforms.”

Louisiana’s multitude of lawsuits and Governor John Bel Edwards’ hiring of private attorneys land the state in the No. 5 spot this year.

“Governor Edwards continues to hire former campaign donors to represent the state in litigation, putting his own personal interests ahead of those of the citizens of Louisiana,” Joyce said. “Beyond the pay-to-play schemes, the Pelican State had the worst economic performance of 2017 and its economy actually shrank. Governor Edwards’ solution has been to target the oil and gas industry with a barrel of lawsuits in an effort to shore up the state’s budget.”

This year’s No. 6 Judicial Hellholes ranking goes to the Philadelphia Court of Common Pleas, due in part to the excessive pharmaceutical litigation pending in the court. Not only was there a sizeable increase in the number of cases filed in the court’s Complex Litigation Center, but 84 percent of the cases were filed by out-of-state plaintiffs.

“The Philadelphia Court of Common Pleas has become a jackpot for trial lawyers across the country who need a favorable venue to file frivolous lawsuits,” Joyce said. “The cases flocking to Philadelphia that have no connection to the state, are a burden on the state’s taxpayers and create a court backlog that puts Pennsylvanians at a disadvantage. The state also remains a hotbed for asbestos litigation, thanks to its plaintiff-friendly rules and procedures.”

Coming in at No. 7 this year is the New Jersey state legislature that, with the exit of business-friendly Governor Chris Christie, pursued a liability-expanding agenda with high hopes that new Governor Phil Murphy would be sympathetic to the cause.

“While the Judicial Hellholes report typically focuses on courts, the New Jersey legislature is an exception, as it distinguished itself as the most plaintiff-friendly legislature in the country,” Joyce said.

However, the New Jersey Supreme Court made progress in its efforts to become a more judicially fair state, as shown by its enactment of the Daubert standard with regard to expert evidence.

“We applaud the New Jersey Supreme Court for its work this year to create a more balanced playing field in the courtroom,” Joyce said. “However, the trial lawyers maintain a strong hold on the state’s legislature and legislation like the Diane B. Allen Equal Pay Act only creates new opportunities for plaintiffs’ attorneys to sue employers.”

St. Clair and Madison Counties in Illinois earn the No. 8 spot due to the increase in “no-injury” consumer class action lawsuits filed in the counties. Many of these cases target food manufacturers for their labeling, claiming that products like cake mix or barbecue are not actually “all natural” as they might be labeled. The counties also remain among the plaintiffs’ bar’s favorite jurisdictions for asbestos lawsuits, and the Illinois legislature continues to turn a blind eye to the abuses.

Rounding out the list at No. 9 are Minnesota’s Twin Cities. 

“Attorney General Lori Swanson’s mishandling of a 3M groundwater contamination case ended in an $850 million grant settlement, with $125 million in contingency fees going to an out-of-state firm who handled the case,” Joyce said. “The state’s high court also expanded liability for Minnesota land owners and lower courts around the state have followed the high court’s lead. To top it off, the Supreme Court recently determined that they would not employ the Daubert standard, making Minnesota an outlier as more than 30 state and federal courts have adopted the standard for their expert witness testimony.”

This year’s “Watch List” puts several state supreme courts on notice, including Colorado, Georgia, Montana, Pennsylvania and West Virginia, along with the city of Newport News, Va. and the Ohio 8th District Court of Appeals in Cuyahoga County.

Dishonorable Mentionscall out singular actions negatively affecting the civil justice system. This year’s list of Dishonorable Mentions include the following:

  • American Law Institute’s adoption of a troublesome Restatement on Liability Insurance
  • Cook County, Illinois’ increased number of BIPA lawsuits
  • Delaware Supreme Court’s overrule of take-home asbestos liability precedent
  • Idaho’s rollback of seat belt non-usage admissibility
  • Maryland Court of Appeals’ refusal to apply the state’s statute of repose in asbestos cases
  • Massachusetts Supreme Court’s adoption of innovator liability
  • New Mexico and North Dakota’s reversal of medical liability limits
  • Texas trial courts allow large damage awards, including the largest in the nation for 2018

Not all developments are bad, however. There are a few Points of Light including a favorable ruling from the U.S. Supreme Court regarding class action waivers in arbitration agreements, the 5th Circuit Court of Appeals decision to overturn a half-billion dollar verdict against Johnson & Johnson, the New Jersey Supreme Court’s series of well-balanced decisions, and the Wisconsin Supreme Court’s upholding of the limit on noneconomic damages in medical liability cases.

Additionally, eight state legislatures enacted nine civil justice reform statutes in 2018 as well.

“Finally, this year’s three ‘Closer Looks’ examine junk science in the courts, the influx of “no-injury” lawsuits, and the attempt by activist state attorneys general to regulate through litigation.

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About the American Tort Reform Association (ATRA): The American Tort Reform Association, based in Washington, D.C., is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation. Its members include nonprofit organizations and small and large companies, as well as trade, business and professional associations from the state and national level. The American Tort Reform Foundation is a sister organization dedicated primarily to research and public education.

EXECUTIVE SUMMARY

The 2018 – 2019 Judicial Hellholes report shines its brightest spotlight on nine jurisdictions, courts or legislatures that have earned reputations as Judicial Hellholes.  Some are known for welcoming litigation tourism or as hotbeds for asbestos litigation, and in all of them state leadership seems eager to expand civil liability.

A recent study released by the U.S. Chamber Institute for Legal Reform highlights both the overall cost and inefficiencies of the tort system.  The report states that the cost and compensation paid in the U.S. tort system totaled $429 billion in 2016, accounting for 2.3 percent of the U.S. gross domestic product.  The 2018-2019 Judicial Hellholes jurisdictions largely contributed to these costs, and on a local level, they saw job loss, personal income loss, and state revenue loss due to the excessive tort costs in the states.  The data strongly demonstrate the need for a more balanced civil justice system.

#1 CALIFORNIA A perennial Judicial Hellhole, California has once again regained its position atop the Judicial Hellholes list due to the propensity of California judges and legislators to extend liability at almost every given opportunity.  California courts have adopted novel theories of liability and unique California laws and expansive court decisions have fostered abusive “no-injury” litigation.  As a result, the state has become a magnet for class actions targeting food and beverage marketing and disability access lawsuits.  In addition, a new data privacy law is plaintiffs’ lawyer gold and is expected to lead to extensive lawsuit abuse.

#2 FLORIDA The Florida Supreme Court issued a series of liability-expanding opinions that invalidated civil justice reforms, damaging the state’s civil justice system.  The high court once again showed contempt for the lawmaking authority of the state legislature and its decisions will have a lasting impact on the state’s legal climate.  The Florida legislature also failed to address blatant lawsuit abuse and fraud, and plaintiffs’ lawyers continued with their usual antics. 

#3 NEW YORK CITY While the New York City Asbestos Litigation has been featured in the report since 2013, the 2018-2019 report broadens the “Judicial Hellhole” distinction to include other types of litigation in New York City.  New York City courts are filled with frivolous consumer class actions and judges permit plaintiff-friendly procedures and high awards in asbestos courts.  The state high court also further stacked the deck against defendants in personal injury litigation.  Hedge funds are increasingly investing in New York litigation and driving some of the most expensive cases in the state.  Additionally, the legislature failed to address excessive construction liability and asbestos litigation abuse, and it expanded medical liability. 

#4 THE CITY OF ST. LOUIS, MISSOURI The optimism for a more balanced City of St. Louis expressed in last year’s report quickly evaporated in 2018 as judges were reluctant to end forum shopping and allowed plaintiffs’ lawyers to introduce junk science in the city’s talc litigation.  “No-injury” consumer class actions continue to fill the courts and the liability-expanding state high court overlooked juror misconduct in a crucial case against a large in-state employer.  Excessive lawsuit advertising has inundated jury pools, making it difficult for defendants to receive a fair trial, and once again, the legislature was unable or unwilling to pass needed legal reforms.

#5 LOUISIANA The state of Louisiana, led by Governor John Bel Edwards, has developed a propensity to hire former campaign donors to represent the state in litigation, creating the appearance of a “pay-to-play” system.  There is rampant lawsuit abuse and the legislature has failed to address these problems.  The Louisiana Supreme Court also has a propensity to expand liability.

#6 PHILADELPHIA COURT OF COMMON PLEAS Mass tort cases continue to flood the Philadelphia court system due to judges’ loose application of venue laws and an overall lack of legal reform.  Philadelphia also remains a hotbed for asbestos litigation.  State leadership appears to be strongly aligned with the plaintiffs’ bar, signaling little hope for change.

#7 NEW JERSEY LEGISLATURE In 2018, the New Jersey legislature distinguished itself as the most plaintiff-friendly legislature in the country.  While the Judicial Hellholes report typically focuses on the courts, the New Jersey legislature is an exception because of its drastic liability-expanding agenda for the 2018-2019 session.  The trial bar also has gained significant power and influence in the state legislature, leading to legislators’ refusal to entertain even the most modest of tort reforms.

#8 ST. CLAIR AND MADISON COUNTIES, ILLINOIS These counties are notorious for their disproportionate volumes of litigation and large verdicts.  St. Clair County is a magnet for “no-injury” consumer class action litigation, while Madison County continues to be the plaintiffs’ favorite jurisdiction for asbestos lawsuits.  St. Clair also is experiencing a meteoric rise in asbestos litigation, and a lack of legal reform in Illinois allows the litigation to flourish.

#9 TWIN CITIES, MINNESOTA A newcomer to the Judicial Hellholes report, the Twin Cities’ position was solidified after the attorney general mishandled a lawsuit against a large Twin Cities employer and a Hennepin County trial judge stripped a company’s defenses during the course of a trial.  The lower courts appear to be following the lead of the state’s high court after it subjected property owners to expanded liability in 2018.

WATCH LIST

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

COLORADO SUPREME COURT Liability-expanding decisions and rulemaking by the court coupled with prospects of a pro-plaintiff legislative agenda in 2019 has created an unfair and unbalanced environment for defendants in the Centennial State.

GEORGIA SUPREME COURT Georgia’s Supreme Court in recent years has issued decisions that significantly expanded civil liability, and that troubling trend continued in 2018.

MONTANA SUPREME COURT The Montana Supreme Court’s penchant for expanding liability, judicial activism, and defiance of U.S. Supreme Court precedent once again landed it on the Judicial Hellholes Watch List.

NEWPORT NEWS, VIRGINIA Perhaps most notable in 2018 is the lack of cases to go to trial in Newport News.  Plaintiffs and defendants alike have sought to litigate asbestos cases in federal court, and, as a result, it is hard to know whether problems and inequities that have manifested themselves in the past will persist.  Newport News has been known for its evidentiary double standards, unsound legal rulings and lack of transparency in asbestos litigation.

OHIO EIGHTH DISTRICT COURT OF APPEALS- CUYAHOGA COUNTY A newcomer to the Watch List, the district has developed a reputation for handing down large damage awards and being a “haven” for class action lawsuits.  It has developed a troublesome pattern of issuing unbalanced plaintiff-friendly decisions, which had to be overturned multiple times by the Ohio Supreme Court.

PENNSYLVANIA SUPREME COURT The high court issued a series of liability expanding decisions and has been selective, at best, in following U.S. Supreme Court precedent, leading the state’s courts to cater to out-of-state plaintiffs and their lawyers.

SUPREME COURT OF APPEALS OF WEST VIRGINIA In an unprecedented move, West Virginia lawmakers voted to recommend the impeachment of all sitting members of the state’s highest court in 2018.  Prior to the impeachment chaos, the court also issued a disappointing class certification decision that rejects U.S. Supreme Court precedent and encourages plaintiffs’ lawyers from all over the country to flock to West Virginia courts to file class action lawsuits.  The 2018 elections did bring about some encouraging news with the election of U.S Representative Evan Jenkins and former House of Delegates Speaker Tim Armstead to fill the vacancies on the court.

DISHONORABLE MENTIONS

Dishonorable Mentions comprise singularly unsound court decisions, abusive practices, legislation or other actions that erode the fairness of a state’s civil justice system and aren’t otherwise detailed in other sections of the report.

Included among this year’s list is the American Law Institute’s adoption of a troublesome Restatement on Liability Insurance, Cook County, Illinois’ BIPA litigation, disappointing asbestos decisions in Delaware and Maryland, and the judicial nullification of liability limits in New Mexico and North Dakota.  The Massachusetts high court also adopted ‘innovator liability’ and two Texas trial courts handed down massive judgments, one of which was the nation’s largest in 2018.

POINTS OF LIGHT

This year’s report again enthusiastically emphasizes the good news from some of the Judicial Hellholes states and other jurisdictions across the country.  Points of Light are examples of fair and balanced judicial decisions adhering to the rule of law, positive legislative reforms and other encouraging developments.

One very encouraging development this year was the New Jersey Supreme Court’s series of well-balanced decisions.  A perennial Judicial Hellhole, the court took very important steps in helping to restore fairness in the state’s legal system.

Among the other positive decisions, the U.S. Supreme Court enforced a class action waiver in arbitration agreements, and the Fifth Circuit overturned a $502 million verdict against Johnson & Johnson after finding “unequivocally deceptive” conduct by the plaintiffs’ lawyer.  The Wisconsin Supreme Court also upheld the statutory limit on noneconomic damages in medical liability cases.

Meanwhile, legislatures in eight states enacted nine civil justice reform statutes in 2018, including asbestos trust transparency legislation in Kansas, Michigan, and North Carolina; transparency in private attorney contracting legislation in Kentucky and Missouri; and finally, an important e-Discovery and class action reform bill in Wisconsin.

CLOSER LOOKS

‘JUNK SCIENCE’ MAKING ITS WAY INTO AMERICAN COURTROOMS Despite the U.S Supreme Court bestowing upon judges the responsibility of serving as “gatekeepers” to weed out junk science and prevent it from being offered to jurors in their courtrooms, many judges have either refused to accept this role or have fallen short in their efforts to do so.  There is a growing trend of judges and juries relying on unsubstantiated “science” as the basis of massive judgments against corporate defendants.  Reasonable rules and procedures are essential to a balanced civil justice system, and it is up to the judiciary and lawmakers to ensure that junk science does not find its way into courtrooms.

FIGHTING ‘NO-INJURY’ LAWSUITS In recent years, plaintiffs’ lawyers are chipping away at the core requirement of a plaintiff experiencing an injury in order to file a lawsuit, bringing claims based purely on speculation, risks of future harm, and creative theories of financial loss.  The injury requirement is a critical safeguard for the civil justice system and must be restored.

ACTIVIST STATE ATTORNEYS GENERAL LOOKING TO REGULATE THROUGH LITIGATION State attorneys general are seizing the opportunity to use current “hot-button” issues, like the opioid crisis and climate change, to propel forward their personal careers and generate campaign dollars for future political aspirations.  Lawsuits brought by powerful state governments must serve the public interest, and not merely the profit-seeking interests of politically influential members of the plaintiffs’ bar.

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