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Business Lobby’s Wild Claims About “Judicial Hellholes” for Class Action Suits Are Fraudulent

Jan. 27, 2005

Business Lobby’s Wild Claims About “Judicial Hellholes” for Class Action Suits Are Fraudulent

Two Often-Cited Counties Should Not Be Reason for Congress to Lock Consumers Out of Courts With Class Action Legislation, New Report Shows

WASHINGTON, D.C. – There is no evidence to support the business lobby’s contention that the class action system has run amok and is plagued with so-called “judicial hellholes” that run roughshod over businesses, a new Public Citizen report shows.

In fact, business groups have provided some recent data about only two counties from one state to justify their claims that there is a “hellhole” problem for class actions. There are 3,139 other county court systems in the country. Further, many states already have amended class action rules to make it more difficult for consumers to pursue class action suits and easier for businesses to defend them, data show.

The report is particularly relevant given that Congress soon will be debating substantial changes to the class action system. A bill introduced in the U.S. Senate this week (S. 5) would prevent consumers from pursuing most class actions in state court and instead force them to turn to federal courts, which are far less likely to certify class action cases. This means that consumers will be locked out of the court when seeking redress for wrongdoing and fraud by companies.

“When you analyze the claims made about ‘judicial hellholes,’ the facts just don’t support the contentions,” said Public Citizen President Joan Claybrook. “The business lobby is throwing everything up on the wall and seeing what will stick. But the evidence just doesn’t support these wild claims. This is no reason to lock the courthouse doors to consumers.”

Added Frank Clemente, director of Public Citizen’s Congress Watch division and one of the report’s authors, “While it is tempting to be influenced by bumper sticker labels that feed into preconceived notions about the legal system, there is virtually no evidence that state court jurisdictions can be labeled ‘judicial hellholes.’ If one or two court systems are a problem, it doesn’t mean the whole system should be upended, as this federal legislation would do.”

The report shows that:

  • Of the government units (counties, parishes and boroughs) in the United States with their own court systems, the American Tort Reform Association (ATRA) in 2004 identified only nine as “judicial hellholes,” areas of the country where courts are “unfair” to defendants. ATRA further identified just four others as “dishonorable mentions.” ATRA’s 2004 “report” is based on survey results from its membership – small and large companies; trade, business and professional associations, and nonprofit organizations.
  • But in only two of these 13 locations – Madison County, Ill., the most often discussed “hellhole,” and St. Clair County, Ill. – did ATRA provide any data to substantiate its claims. And in Madison County, the number of class action filings decreased by more than 30 percent between 2003 and 2004. Additionally, the Illinois Supreme Court is considering proposals pushed by major corporations to amend the state’s class action rules.
  • ATRA has deemed the entire state of West Virginia to be a “hellhole.” One of the reasons cited in its 2004 report, and its only reference to class action cases was: In Roane County, the first two class actions in the court’s history were filed in the past two years. In its 2003 report, ATRA said West Virginia was a “hellhole” in part because a state Supreme Court justice married a prominent class action attorney – hardly supporting evidence. Again, that was the only reference to class action suits.
  • In Orleans Parish, La., a class of government employees was certified in a suit alleging the building in which they worked contained mold, which caused health problems. This is the only class action “problem” ATRA identified for this jurisdiction.
  • A comprehensive review of the Web sites of groups promoting federal class action legislation, reports they have issued in recent years, their congressional testimony and law journal articles shows virtually no other empirical evidence of a problem in places other than Madison County. One exception was a spirited debate among a few academic scholars about whether such a problem even exists.

The report documents the many states that have changed the rules governing state class actions. Previously in Alabama, for instance, class actions could be certified even before the party being sued was notified and given a chance to object. In 1997, though, the Alabama Supreme Court changed its rules to forbid this. Ten other states have changed their class action systems recently: Colorado, Florida, Georgia, Kansas, Louisiana, Mississippi, Missouri, Ohio, Oklahoma and Texas.

“Claims about ‘judicial hellholes’ are as deceptive as the business lobby’s claims about the need for a class action bill,” said Claybrook. “They have said the bill simply shifts state class actions to federal court. In fact, it will close federal and state courthouse doors to citizens. They claim legislation is needed to fix ‘judicial hellholes.’ There is no such need. The public should not be locked out of public courts.”