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 favourable 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 favourable 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.
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.
2012 score: 52.7
Treatment of class-action suits: 6th worst
Damages: 7th worst
Admissibility of evidence: 6th worst
Judges' impartiality: 7th worst
Only 2% of respondents gave New Mexico an A for the overall state grade. Meanwhile, 45% gave the state a C, while 26% gave it either a D or an F. In terms of fairness in assessing damages, 15% gave the state an F and an additional 13% gave the state a D. The American Medical Association notes that the state has a $600,000 cap on total damages, excluding punitive damages and the cost of medical care. The state also received a low score for treatment of class-action suits, with 21% of respondents giving the state a grade of D or F. The issue of class-action suits made headlines in New Mexico in Oct. 2011 when state judge James Browning allowed a class-action suit against credit rating agencies to proceed. Similar attempts to file suits against the agencies regarding the claims they made on mortgage-backed securities previously failed.
2012 score: 52.2
Treatment of class-action suits: 19th worst
Damages: 9th worst
Admissibility of evidence: 5th worst
Judges' impartiality: 5th worst
Corporate lawyers gave Montana's legal system a big thumbs-down, as 13% of survey respondents gave the state an overall F rating, while just 6% rated the state an A. Reviews were even worse when attorneys were asked to give their opinion on how well tort and contract cases were handled -- 20% of respondents gave the state an F, while just 7% were A ratings. Judges in the state were also rated poorly by attorneys, who ranked both the impartiality and competence of Montana judges as being inferior to all-but four other states.
2012 score: 46.6
Treatment of class action suits: 3rd-worst
Admissibility of evidence: 3rd-worst
Judges' impartiality: 2nd-worst
Only 3% of the survey respondents gave the state an A for its handling of tort and contract litigation, while 35% of respondents gave the state a D or F. Respondents also showed concerns about the fairness of judges and juries in the state. The state was rated the worst in judge competence and jury fairness, with 14% and 17% of respondents giving it an F in both measures. The state was ranked the sixth-worst in terms of how it assesses damages, with 33% of respondents grading it a D or an F. Currently, the Fifth Circuit U.S. Court of Appeals is determining whether the a state law limiting noneconomic damages in civil cases to $1 million is constitutional.
2012 score: 44.8
Treatment of class action suits: 5th-worst
Damages: the worst
Admissibility of evidence: the worst
Judges' impartiality: the worst
A whopping 29% of respondents gave the state an F for how it assesses damages, while another 22% gave it a D, making West Virginia the worst state in that category. While the state has a $500,000 cap on noneconomic damages in cases where a plaintiff suffers serious medical harm, it is unclear whether it only applies to medical doctors and hospitals or if it can be defined more broadly. This debate was reopened after a family was awarded $91.5 million after an 87-year old woman living at a nursing home died from dehydration. The verdict included $11.5 million in compensatory damages. Respondents to the ILR also had deep misgivings about judge and jury fairness. The state ranked at the bottom in terms of judge impartiality, and second from the bottom in judge competence and jury fairness.
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