Report Issued on "New Lawsuit Ecosystem"

The U.S. Chamber of Commerce Institute for Legal Reform has released a report examining the developing lawsuit “ecosystem” and areas of litigation of most concern to the business community. The report examines the trends and players in six key litigation areas, offers insights into new emerging liability threats, and explores the growing alliance between state attorneys general and the plaintiffs’ bar.  One key feature notes how alleged deceptive marketing claims against food and beverage makers are on the rise.  Readers will recall our many posts about the trend for plaintiffs to parse labels and bring putative class actions even when they were not injured by the product. The report is entitled "The New Lawsuit Ecosystem.”

The report delves into the areas of law where entrepreneurial plaintiffs’ lawyers have been prospecting for new liability: Class actions against food makers alleging misleading advertising;
Data privacy suits against businesses over allegations that they inadvertently violated released or misused customer information; Claims against brand-name drug manufacturers for injuries allegedly stemming solely from generic products they did not make or sell; Speculative theories of liability seeking to recover for risks of harm or “economic loss,” not actual injuries.

The report also looks at the increasingly troubling trend of state attorneys general turning over the keys to their offices and litigation powers to private plaintiffs’ lawyers. Plaintiffs’ lawyers often develop the legal theories, decide whom to target, and then “recruit” state attorneys general
to retain them on a contingency fee basis to bring the lawsuits. This process provides significant advantages to plaintiffs’ lawyers: it eliminates the need to represent individuals who were actually injured by a defendants’ product or conduct; avoids any contribution those individuals may have
made to their own injuries; reduces traditional defenses; heightens the plaintiffs’ lawyers’ subpoena power; and gives them the ability to seek fines, not just damages. State attorneys general have these powers because they are to be used sparingly, and only to advance appropriate public policies. They are not to be used to maximize personal profit, which is the goal
of private contingency fee lawyers who are often personal or political allies of the state attorneys general.

Very interesting read.


Among those contributing to the report were my colleagues Mark Behrens, Phil Goldberg, Victor E. Schwartz and Cary Silverman.

Tort Liability Annual Report Released by Think Tanks

The Pacific Research Institute (PRI), a free-market think tank based in San Francisco, and the Manufacturers Alliance/MAPI, a public policy and economic research organization based in Arlington, VA, announced last week the release of their 2010 U.S. Tort Liability Index, a measure of which states impose the highest and lowest tort costs and risks.

According to the report, Alaska, Hawaii, and North Carolina lead the pack with the best rankings, while New Jersey, New York and Florida bring up the rear. Again, the states with the worst performance had the highest monetary tort losses and tort litigation risks, meaning they had more costly and riskier business climates due to larger plaintiff awards, larger plaintiff settlements, more lawsuits, or some combination of the three.

Direct tort costs account for almost 2 percent of GDP in the United States, which is the highest in the world, not surprising to our readers. Such high costs cause businesses to divert revenue, that could hire workers, to fight lawsuits. But all our readers ultimately shoulder the burden through higher prices and insurance premiums, lower wages, restricted access to health care, less innovation, and higher taxes to pay for court costs.

The Best Tort climates, according to the report:

Alaska
Hawaii
North Carolina
South Dakota
North Dakota
Maine
Idaho
Virginia
Wisconsin
Iowa


The Worst climates, according to the report:

New Jersey
New York
Florida
Illinois
Pennsylvania
Missouri
Montana
Michigan
Connecticut
California
 

States were also ranked according to their tort rules and reforms to reduce lawsuit abuse and limit tort costs and risks, such as award caps, or venue reforms to stop “litigation tourism."  Oklahoma, Texas, Ohio, Colorado and Mississippi did well on the tort reform scale in this report. The states with the least favorable tort rules for defendants, according to the analysis, are Rhode Island, New York, Pennsylvania, Minnesota and Illinois. 

This report can also be contrasted with the Chamber of Commerce report ranking state liability systems, and the ATRA report of the "most unfair jurisdictions."

Chamber Releases State Liability Systems Ranking Study

The Institute for Legal Reform of the U.S. Chamber of Commerce has released its 2010 State Liability Systems Ranking Study.  The study was conducted for the U.S. Chamber to explore how reasonable and balanced the states’ tort liability systems are perceived to be by U.S. business. Participants in the survey were comprised of a sample of 1,500 in-house general counsel, senior litigators or attorneys, and other senior executives who indicated they are knowledgeable about litigation matters at companies with at least $100 million in annual revenues.

The 2010 ranking builds on seven previous surveys in which all 50 states were ranked by those familiar with the litigation environment in that state.  The State Liability Systems Ranking Study basically aims to quantify how corporate attorneys view the state systems.  Overall, more than two in five (44%) senior attorneys view the fairness and reasonableness of state court liability systems in America as excellent or pretty good, up slightly from the last survey in 2008 (41%).  A majority
(56%) view the systems as only fair or poor. Two-thirds (67%) report that the litigation environment in a state is likely to impact important business decisions at their companies, for instance, where to locate or do business, an increase from 63% in 2008 and 57% in 2007.

Respondents were asked to give jurisdictions a grade (A, B, C, D or F) in each of the following areas:

  • Having and enforcing meaningful venue requirements;
  • Overall treatment of tort and contract litigation;
  • Treatment of class action suits and mass consolidation suits;
  • Damages;
  • Timeliness of summary judgment or dismissal;
  • Discovery;
  • Scientific and technical evidence;
  • Judges’ impartiality;
  • Judges’ competence; and
  • Juries’ fairness.

These elements were then combined to create an overall ranking.

The worst jurisdiction in the survey was Chicago/Cook County, Illinois,  followed by Los Angeles,
California, the state of California in general, the state of  Texas in general, and Madison County, Illinois.  Your humble logger's home turf of Philadelphia was ranked 13th worst.

The best? Survey says:

1. Delaware
2. North Dakota
3. Utah
4. Nebraska
5. Iowa

Chamber of Commerce Requests Open Debate on Science of Global Warming

The U.S. Chamber of Commerce last week filed a supplemental request for an “on-the-record” hearing to debate the evidence behind the Environmental Protection Agency’s expected finding that greenhouse gases endanger the public health and welfare.

Readers of MassTortDefense may recall that in 2007, in Massachusetts v. EPA, 549 U.S. 497 (2007), the Supreme Court found that greenhouse gases could be regarded as air pollutants, and held that EPA must determine whether or not emissions of greenhouse gases from motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision. In making these decisions, the agency is required to follow the language of section 202(a) of the Clean Air Act. The Supreme Court decision resulted from a petition for rulemaking under section 202(a) filed by more than a dozen environmental, renewable energy, and other organizations.

The EPA is proposing to find that the current and projected concentrations of the mix of six key greenhouse gases — carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) — in the atmosphere threaten the public health and welfare of current and future generations. This is typically referred to as an "endangerment finding."  EPA is further proposing to find that the combined emissions of CO2, CH4, N2O, and HFCs from new motor vehicles and motor vehicle engines contribute to the atmospheric concentrations of these key greenhouse gases and hence to the threat of climate change.  While an endangerment finding under the Clean Air Act would not by itself automatically trigger extensive regulation under the entire Act, many observers expect such regulations.  Moreover, the finding could prod the Congress to pass controversial climate legislation.  Finally, it may impact the pace and weight of climate change litigation.

The Chamber argues that the informal notice-and-comment process employed here has not worked to air the issues, and the only real solution is an on-the-record hearing for a transparent review of all the evidence.  Having reviewed the evidence in EPA’s endangerment docket, the Chamber observes flaws and omissions in the reasoning underlying the proposed endangerment finding. The Chamber is thus asking for more transparency in this process, as the ruling could ultimately cause a "regulatory train wreck" with inescapable economic consequences, as well as an impact on mass tort litigation. The agency has apparently ignored evidence contradicting its preliminary conclusions on a wide range of issues, such as the alleged effect higher temperatures will have on net mortality and on the levels of other pollutants.  Media reports have surfaced that EPA ignored a study by two members of its staff concluding that the agency had relied on outdated studies and that the current state of climate science refutes the proposed endangerment finding.