Illinois has one of the worst climates in the nation for the fair handling of civil lawsuits, the U.S. Chamber of Commerce proclaimed this week. It’s a distinction that should come as no surprise–and a distinction Illinois should not want.
Illinois is bad in general, but down in the southwest corner of the state Madison County has earned the ugly distinction of being the No. 1 “Judicial Hellhole,” according to the American Tort Reform Association’s annual analysis of how legal systems handle class-action lawsuits.
How bad? Illinois is 44th on the Chamber of Commerce’s list of states, down from 34th place two years ago. That’s one trend that can beget another trend: the loss of jobs and investment. “Businesses go where they are wanted and they bring jobs and economic growth to the states with the best legal systems,” said Chamber President and CEO Thomas Donohue.
Lest one think Illinois can afford to be bad for business, remember that Illinois’ unemployment rate stood at 6.2 percent in January, above the national average of 5.6 percent.
In a perverse way, Madison County attracts business–legal business. Class-action lawyers flock there to file lawsuits because it’s easy to certify a class there, the county systematically applies the law in a way that harms defendants, it has low standards for admissibility of expert testimony and a reputation for pro-plaintiff decisions and high verdicts, said ATRA.
This week, the Tribune took a look at the class-action phenomenon in general and Madison County in particular. Reporters Greg Burns and Michael Berens examined more than 300 state and federal class-action settlements reached over the last three years and found that just one-third of them resulted in reform of improper practices. In at least one of every 10 cases, victims got little compensation and plaintiffs’ attorneys got rich.
Class-action suits can allow many people who are wronged to sue as one group and receive restitution. But when cases with national implications are steered to plaintiff-friendly state jurisdictions–places like Madison County–the results can create injustice. They end up penalizing companies and rewarding lawyers rather than victims.
These abuses are spurring some efforts for change, though the powerful plaintiffs’ bar stands in the way. The U.S. House voted Wednesday to ban lawsuits that seek to hold the food industry liable for Americans getting fat.
Legislation that could shift more class-action cases out of the states and into federal courts has passed the House, but failed in the Senate by just one vote last fall.
Under that legislation, class actions that involve at least 100 plaintiffs from several different states and that seek at least $5 million in damages could be moved to federal court. That has the support of firms like Ford Motor Co., which, the Tribune reported, faces 180 class-action suits–155 of which involve overlapping issues. (Many stem from the recall of Firestone tires in 2000.) Attorney Don Lough, who handles class actions for Ford, told the Tribune: “We find ourselves defending the same cases over and over and over again.”
The Class Action Fairness Act would permit those suits to be moved to the federal courts where they could be consolidated. It would substantially end the practice of “forum shopping,” seeking a home in state courts that are deemed most likely to produce juicy settlements.
That legislation has been amended to allow states to retain jurisdiction over suits that have particular impact in their states, even if most of the plaintiffs aren’t local residents. Lawyers’ fees would be limited in settlements where plaintiffs receive nominal compensation, such as coupons for discounts on goods and services.
This would go a long way to halt the worst class-action abuses. It should be the law.
