According to the in-house lawyers of America’s biggest companies, the court system is making things easier for them.
The U.S. Chamber of Commerce’s Institute for Legal Reform (ILR), a lobbying group that represents the legal interests of businesses, asked attorneys working for major corporations to describe how fair the corporate legal systems are in each of the 50 states.
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Nearly 50% responded that court systems were favorable and reasonable, up from 44% in 2010.
The survey asked the general counsels of companies with revenues of $100 million or more to grade each state on 10 key areas of legal fairness in the court system. This included how the state treated class-action suits, damages that were awarded to plaintiffs and judges’ fairness or competence. Respondents were only allowed to grade states with which they were at least somewhat familiar. The overall scores nationwide have improved substantially in the past 10 years, but businesses still perceive many states as being extremely unfair and unreasonable toward corporations. These are the 10 states that companies rated as the least fair.
While the survey attempts to rank the overall fairness of the legal climate in each state, some believe the survey only identifies the states’ with legal systems that benefit corporations the most. “This is purely from the perspective of big business,” says J. G. Preston, press secretary for the Consumer Attorneys for California, whose members represent plaintiffs in civil cases against companies. “We don’t think it’s any way to evaluate the civil justice system. I say it’s like asking the players what they think of the referees.”
A review of the rankings shows that states with legal climates that are perceived as unreasonable for businesses tend to do poorly in everything they are evaluated in. The three worst states scored among the worst 10 in each of the categories the group measured.
Respondents were asked to rate the five districts nationwide they viewed as the worst for overall fairness. The places most commonly referenced were located in states that also scored poorly overall. Chicago/Cook County, Ill. was mentioned a survey-high 17% of the time, followed by Los Angeles, Calif. at 16%.
Michael Lepage, spokesman for the Institute for Legal Reform — the group that conducted the study — said while all of the areas evaluated for fairness are important, some are bigger issues for American corporations than others. In particular, the practice of “venue shopping,” or “forum shopping” by plaintiffs looking for the best jurisdiction to file suits was a problem in these 10 states.
In many cases, the group states, people will choose locations where they believe they are most likely to win trials and be awarded the most damages. In Philadelphia, Pa., for example, 47% of all the asbestos cases tried in the area were from out-of-state, and more than 80% of all pharmaceutical cases were from out of state. Other states with similarly high proportions of out-of-state suits include Texas and Illinois.
In addition to making class-action lawsuits easier to bring, Lepage indicated that jurisdictions in some states, like California and Florida, award much larger jury awards than others. In West Virginia, the state rated by respondents as the least fair for awarding damages to plaintiffs, the debate was reignited last year after a judge awarded more than $90 million to a resident whose mother died of dehydration in a nursing home.
Not surprisingly, the states that are often viewed as exceptionally favorable to business were rated very well in some of these key areas. Delaware, for example, which has ranked number one every year the study was conducted, received the best scores of any state for venue requirements, strict requirements on the admissibility of scientific evidence and impartial judges.
10. Florida
2012 score: 55.3
Treatment of class-action suits: 9th worst
Damages: 10th worst
Admissibility of evidence: 9th worst
Judges’ impartiality: 17th worst
In each of the past three surveys, Florida was rated as one of the 10 worst states by the lawyers surveyed by the Institute for Legal Reform. In this year’s survey, Florida has been rated the eighth-worst state for companies looking for the prompt dismissal of a case. Respondents were also dissatisfied with how the state’s legal system assessed damages, with 61% of respondents giving Florida a C grade or worse. In a statement, Lisa A. Rickard, president of the ILR, said, “Florida’s litigation climate can be attributed in large part to its notorious reputation for exorbitant jury awards.” Tom Donohue, president of the U.S. Chamber of Commerce, similarly described the state’s jury awards as “ridiculously high.”
9. Oklahoma
2012 score: 55.0
Treatment of class-action suits: 11th worst
Damages: 8th worst
Admissibility of evidence: 10th worst
Judges’ impartiality: 10th worst
The corporate attorneys who responded to the survey are not big fans of Oklahoma’s court rules regarding damages. Only 7% of respondents gave the state an A in this area, while 34% gave it a D or F. This comes despite Oklahoma enacting tort reform in 2011 that included a $350,000 cap on noneconomic damages in civil liability cases. In fact, the Tulsa Worldreported in July that malpractice judgments against defendants are at a 10-year low due to these policies. Lawyers gave the highest marks to the state for “having and enforcing meaningful venue requirement,” which measures factors such as how easy it is to bring in a case in a pro-plaintiff jurisdiction. Of the respondents, 46% gave the state an A or a B in that regard.
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8. Alabama
2012 score: 52.8
Treatment of class-action suits: 8th worst
Damages: 5th worst
Admissibility of evidence: 8th worst
Judges’ impartiality: 4th worst
Alabama’s corporate attorneys had numerous concerns about how litigation was handled in the state. In particular, respondents to the ILR survey were dissatisfied with how the state determined and enforced rules for filing and trying lawsuits within the state, with 55% of respondents giving Alabama a grade of C or worse. Respondents also disliked how the state assessed damages, with almost two-thirds providing a grade of C or lower, and 15% or respondents giving Alabama an F. Of all the measures, lawyers gave judicial impartiality the lowest score.
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