FLAWED CLASS ACTION STUDY SHOULD NOT BE CONSIDERED IN POLICY CONCLUSIONS, SAYS ATRA

Washington, DC, January 14, 2004 -- Today’s New York Times featured an article about a study that disputes the “costly surge in class-action suits,” a study that has a fatal flaw, according to the American Tort Reform Association (ATRA).

“The study does not take into account the handful of egregious state court jurisdictions—we call them ‘Judicial Hellholes’,” said ATRA President Sherman Joyce. “Even the study’s author admitted that due to the absence of published court opinions in these jurisdictions ‘it is difficult to learn about state court settlements.’ Any policy conclusions drawn from this study are therefore inconclusive.”

Judicial Hellholes adjudicate a disproportionate number of class action lawsuits in this country. Plaintiffs’ lawyers file cases in them because they know they can win big judgments or settlements that are often settled under extortionate terms. If defendants do not settle, they may face judgments from the court that may lead to bankruptcy.

Joyce notes that legislation essential to solving the problems endemic to Judicial Hellholes could soon be enacted at the federal level. According to the January 9 Congress Daily, legislation will return to the Senate floor in late January or early February.

The Senate failed in October to overcome a filibuster of the Class Action Fairness Act of 2003, S. 1751 (formerly S. 274). Prior to the New Year, Senators announced a compromise had been reached. “The legislation would help alleviate some of the lawsuit abuse in Judicial Hellholes by moving cases from state to federal courts based on the number of plaintiffs’ in the class who reside out of state,” Joyce said.

Joyce explains how the legislation will helped solve the problem of national policy-making at the local level: “When national class action lawsuits are concentrated in a handful of state courts, local judges are allowed to set national policies. Those policies can conflict with the laws of other states and subject companies to being held liable for conduct that is not only permissible, but, in some instances, required by state law or regulation.”

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The American Tort Reform Association (ATRA) is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation. ATRA's membership includes non profits, small and large companies, as well as state and national trade, business, and professional associations.