Texas not 'Judicial Hellhole,' but report says patent trolls and class actions still problems

Marilyn Tennissen Dec. 17, 2013, 12:10pm

For the first time since it has been published, Texas does not appear on the list of "Judicial Hellholes" in an annual report.

Since 2002, the American Tort Reform Foundation report ranks places where judges in civil cases systematically apply laws and court procedures in an unfair and unbalanced manner, generally against defendants. 

Over the past few years, Texas has moved from one of the top spots on the list to the watch list and is now off the list completely.

This year, the dubious honor of No. 1 Hellhole is the state of California. The report states the food industry is the “latest target” of plaintiffs’ lawyers who seek to take advantage of the state’s plaintiff-friendly consumer protection laws. In addition, asbestos litigation continues to migrate from reform states into California’s “permissive courts.”

Texas’ neighbor to the east, Louisiana, has the No. 2 spot on the Hellhole list.

“Louisiana rockets up the Judicial Hellholes list after the state’s high court gave new life to abusive ’legacy lawsuits’ that threaten the state’s onshore oil and gas production,” the report states.

Rounding out the top six spots on the list are New York City, West Virginia, Madison and St. Clair counties in Illinois and South Florida.

While not on the Hellhole list this year, Texas is still part of the compilation. For the past several years, the report has mentioned patent troll litigation in East Texas, calling out the high number of patent lawsuits suits filed in the area.

"The Eastern District of Texas is the most popular venue for patent trolls because the court moves cases to trial quickly and its juries are perceived to be plaintiff-friendly," this year's report noted.

Diane Davis, executive director with East Texans Against Lawsuit Abuse (ETALA), responded to the report.

"While it might be a positive that our courts are known for moving these cases quickly, we have to be concerned when any area is viewed as being overly friendly to plaintiffs or defendants, as perceptions of unfairness invite abuse," she said in a statement.

Previous Judicial Hellholes reports have called the area the "center of the patent litigation universe" noting that between 2002 and 2010, the district saw nearly a ten-fold increase in patent filings.

"It's never a positive for a community to be a hot-bed of litigation," Davis added. "We are pleased to see ATRA continue to focus on this area and also that our state and federal leaders are taking this issue seriously."

Davis commended Lt. Governor David Dewhurst asking the Senate to study the issue during the state legislative interim and U.S. Senator John Cornyn for his work to pass federal laws to rein in abusive patent lawsuits.

"The Texas Legislature and Texas elected officials are working tirelessly on behalf of Texas innovators and entrepreneurs to combat patent trolls," Davis said. "While Texas has continued to be the national leader in reigning in frivolous lawsuits, clearly there is still work to be done, and we appreciate ATRA for their focus on this issue and our state leaders for working to ensure our courts are used for justice, not greed."

The U.S. Court of Appeals for the Fifth Circuit, which has jurisdiction for Texas federal cases, was given “Point of Light” status for upholding Mississippi’s $1 million limit on noneconomic damages in general personal injury cases.

Texas is also mentioned in the Point of Light section as one of 14 states that “enacted significant, positive civil justice reforms.”

“Texas provided an automatic mechanism (HB 1325) for state courts to dismiss long dormant asbestos and silica claims, while preserving a claimant’s ability to refile a dismissed case should the claimant develop an impairing condition,” the report states.

In a section of the report regarding class actions, ATRF points out Nueces and Hidalgo counties in Texas. Mass actions there demonstrate plaintiff lawyers’ attempts to skirt the Class Action Fairness Act, the report states.

“Congress enacted the Class Action Fairness Act of 2005 (CAFA) in response to a handful of jurisdictions, such as Madison County, Illinois, becoming magnets for massive lawsuits against out-of-state businesses. CAFA, which gained bipartisan support, moved many of these multi-state class actions into neutral federal courts,” the report states. “Plaintiffs’ lawyers, however, have developed strategies to exploit exceptions in the law to dodge federal jurisdiction and keep their cases in state courts, which are often those considered Judicial Hellholes.”

The American Tort Reform Foundation is a District of Columbia nonprofit organization, founded in 1997. The primary purpose of the Foundation is to educate the general public about how the American civil justice system operates, the role of tort law in the civil justice system and the impact of tort law on the public and private sectors.

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