David Yates and Jessica Karmasek Dec. 17, 2015, 11:14am


A tort reform group has christened the nation’s leading venue for patent litigation, the Eastern District of Texas, and Hidalgo County, home to more than 10,000 hailstorm lawsuits, as “judicial hellholes.”

The American Tort Reform Association released its “Judicial Hellholes” report for 2015-2006 on Dec. 17, shining a spotlight on nine courts or jurisdictions with reputations for unfairness.

While Hidalgo County captured the seventh spot, the U.S. District Court for the Eastern District of Texas finished ninth – a standing the group gave because of the high volume of patent litigation filed in the district.

“Most of the lawsuits are filed by patent trolls – entities that do not innovate, but exist only to sue,” the report states.

“This year concerns expanded beyond patent cases when the court imposed a record $663 million judgment against a maker of highway guardrails. A judge imposed triple damages, additional civil fines, and attorneys’ fees against the company that stood accused of nominally modifying the design of the rails purchased by the government, even as a federal agency’s repeated testing finds the product compliant with safety standards.”

More than 2,500 patent suits have been filed in the Eastern District in 2015 so far. 

“While Texas has long been recognized as a national leader in reining in frivolous lawsuits and championing smart reform, the findings in this latest ATRA report raise concerns for consumers, small business owners and all Texans who care about a civil justice system based on common sense and fairness,” said Jennifer Harris, a spokesperson for Texans Against Lawsuit Abuse.

Hidalgo County became a hot spot for litigation after two hailstorms swept through the area three years ago.

Trial lawyers, such as Houston attorney Steve Mostyn, who made hundreds of millions suing insures following Hurricane Ike, set up shop in Hidalgo County after the storms and begin advertising for clients.

It’s estimated that around 40 percent of the policy claims made after the hailstorms morphed into lawsuits.

“Seeking to profit from historic hailstorms that caused millions of dollars in damage in 2012 and 2013, plaintiffs’ lawyers have filed more than 10,000 lawsuits targeting insurers in this rural Texas county,” the report states.

“Local judges are known for handling cases in a manner that puts defendants at a disadvantage. Plaintiffs’ lawyers have made hundreds of millions of dollars in fees from property damage lawsuits in recent years while policyholders have struggled with the resulting doubling of insurance premiums.”

California earned the top spot, according to the report. The state’s courts ranked as the “most unfair” in the nation for their handling of civil litigation.

New York City’s asbestos court, Florida, Missouri and Illinois’ Madison County ranked second, third, fourth and fifth, respectively.

According to the ATRA report, California is the “epicenter” for lawyers trolling to bring disability access lawsuits against small businesses and class action lawsuits against food and beverage companies.

“.. A lengthy book could be written each year about the state’s irrepressibly plaintiff-friendly lawmakers and judges, and its often preposterous lawsuits and sometimes incredible court decisions that only encourage still more litigation,” the report states.

California has been included in the ATRA report every year in some form since it was first issued in 2002. In addition to the current year, it ranked No. 1 in 2012 and 2013.

Some believed that the state’s civil courts would earn it a third straight No. 1 ranking in 2014.

But what ATRA describes as “monumentally egregious” corruption in the New York City Asbestos Litigation, or NYCAL -- which has since led to the related arrest and conviction of former New York State Assembly Speaker Sheldon Silver -- demanded that California be relegated to second place last year.

Since then, the pro-plaintiff judge who headed the New York asbestos court has retired and been replaced.

“.. The Big Apple may begin to bob up from the bottom of the barrel,” this year’s report states.

“The new judge recently declined to put the city’s asbestos litigation on hold while the parties develop a more balanced process for handling the lawsuits, calling the system ‘not so rampantly unfair.’ Just mostly unfair -- given consolidation of trials, reintroduction of punitive damages, imposition of liability on one product manufacturer for the asbestos-containing parts attached by another, application of unwarranted joint liability, and the flipping of the burden of proof onto defendants.”

Meanwhile, Florida’s high court “continually expands” the liability exposure of those who live and do business there, according to the ATRA report.

The state’s plaintiffs’ bar is aggressive in its recruitment of clients and is politically influential, the report notes.

Missouri isn’t far behind, now often referred to as the “Show Me Your Lawsuits State.”

“Missouri’s reputation for a judicial nominating process controlled by the plaintiffs’ bar, an outlier high court willing to strike down civil justice reforms, and a lax standard for admission of expert testimony continue to discourage private investment in the state’s economy and help earn a No. 4 Judicial Hellholes ranking,” ATRA President Tiger Joyce said in a statement.

“Lawsuits in St. Louis are of particular concern, as plaintiffs’ lawyers enjoy excessive damage awards there and plenty of hospitable for those with asbestos lawsuits.”

But Joyce said no jurisdiction in the country is any more “hospitable” to asbestos plaintiffs than Madison County, just across the river.

“Never mind that the overwhelming majority of asbestos cases there have no connection to the county or even the rest of the state, defendants’ motions to escape the plaintiff-favoring jurisdiction are continually denied and large numbers of trials may be scheduled for a single day, further eroding defendants’ rights to due process and ratcheting up pressure to settle claims out of court,” he said.

Aside from Hidalgo County and East Texas, coming in behind Madison County is Louisiana at No. 6 and Newport News, Virginia, at No. 8.

The ATRA report also calls attention to four additional jurisdictions that “bear watching” due to their histories of abusive litigation or “troubling developments.”

On the Watch List: West Virginia, Philadelphia, New Jersey and Pottawatomie County, Oklahoma.

The report also includes a number of Dishonorable Mentions, which typically recognize poorly reasoned court decisions. This year’s include the supreme courts of Colorado, Indiana, Nevada, New Hampshire and South Carolina; an appellate court in Maryland; and a trial court in Tennessee.

However, the report does highlight some “good news” in its Points of Light section.

“Points of Light are examples of, among other things, fair and balanced judicial decisions that adhere to the rule of law and respect the policy-making authority of the legislative and executive branches,” ATRA states.

“This year’s good news comes from no-nonsense courts in Kentucky and Ohio, and legislatures in Indiana, Missouri and Ohio,” Joyce said.

The report found that positive civil justice reform enactments occurred in 15 states.

Notable reforms included greater transparency between the tort and trust fund systems for asbestos claims in Arizona, Texas and West Virginia; good-government safeguards when the state hires outside lawyers in Arkansas, Nevada, Ohio and Utah; and protections against expansions of property owner liability to trespassers in Nevada, South Carolina and Wyoming.

The ATRA report also includes two special sections examining federal multidistrict litigation, or MDL, and the influence of the American Law Institute.

The report explains that MDLs can be an efficient mechanism for managing mass torts, but notes that plaintiffs’ lawyers’ misleading advertising has inflated dockets and increased pressure on judges to push settlements, even in meritless cases.

ATRA says observers are closely watching the ALI, too, with its ongoing projects addressing consumer contracts, data privacy and liability insurance.

The tort reform group contends the three areas have the potential to alter the direction of state law -- for better or worse.

The annual Judicial Hellholes report compiles the most significant court rulings and legislative actions over the course of the year as documented in real-time online.

The report also reflects feedback gathered from ATRA members and other firsthand sources.

The group says it also receives tips and additional information, which it then researches independently through publicly available court documents, judicial branch statistics, press accounts and various studies.

The Judicial Hellholes program considers only civil litigation; it does not reflect in any way on the criminal justice system.

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