Congress should address forum shopping to even the playing field
Yesterday, a Senate Judiciary subcommittee held a hearing on the bankruptcy process which focused on the treatment of litigation in these proceedings.
During the Subcommittee on Federal Courts, Oversight, Agency Action, and Federal Rights hearing, “Abusing Chapter 11: Corporate Efforts to Side-Step Accountability Through Bankruptcy,” Senator Sheldon Whitehouse (D-Rhode Island) identified “forum shopping” and venue issues as a central concern, stating “Outcomes in court should not be determined by strategic forum shopping.”
“Senator Whitehouse expressed significant concern about businesses having the opportunity to choose the jurisdictions in which they pursue bankruptcy protection due to litigation costs,” American Tort Reform Association President Tiger Joyce said. “Senator Whitehouse and his colleagues should address the issue he raises and the broader issue of ‘venue’ reform to combat some of the most urgent problems in the civil justice system.
“Plaintiffs’ lawyers utilize what we consider to be inappropriate “forum shopping” to bring their cases in plaintiff-friendly jurisdictions where high-dollar awards, low evidentiary standards, and low barriers of entry are the norm. Congress should tackle these abuses that too often leave companies with little or no alternative to bankruptcy. The priority should be taking the steps necessary to keep companies out of these proceedings in the first place,” Joyce said.
ATRA believes that the most egregious abuses of the civil justice system have occurred when plaintiffs’ lawyers have been allowed to forum shop and bring their cases in plaintiff-friendly courts that have no real connection to the case at hand, especially in jurisdictions it calls “Judicial Hellholes®”:
Madison County, Illinois: Plaintiffs flock to Madison County because of its plaintiff-friendly reputation, low evidentiary standards, and judges’ willingness to allow meritless claims to survive.
In 2020, it accounted for 31.7% of all asbestos filings nationwide, which is nearly three times as many filings as the next highest jurisdiction.
In total, Illinois made up 47% of all asbestos filings in 2020.
Out of the asbestos plaintiffs who filed a lawsuit out of their state of residency, the majority (57%) filed their lawsuits in Madison County.
Pennsylvania: Plaintiffs from across the country flock to Pennsylvania and Philadelphia’s Court of Common Pleas because of its reputation for excessive verdicts and “open door” policy to out-of-state plaintiffs.
October 2019: A Maryland plaintiff was awarded an $8 billion verdict in a case against Jannsen Pharmaceutical, a New Jersey company, and a subsidiary of Johnson & Johnson. The award was later reduced to $6.8 million.
September 2020: The Supreme Court of Pennsylvania refused to review a $70 million verdict awarded to a Tennessee plaintiff who chose to file his lawsuit in the Philadelphia Court of Common Pleas.
October 2020: The Supreme Court of Pennsylvania openly defied the U.S. Supreme Court in Hammons v. Ethicon, the state high court’s first opportunity to apply the Bristol-Myers Squibb SCOTUSdecision to claims brought by out-of-state plaintiffs in Pennsylvania courts. The only connection between the parties and Pennsylvania was that the defendant, New Jersey company Ethicon, contracted with a Pennsylvania company, Secant, to provide pelvic mesh and the plaintiffs’ lawyer decided that Philadelphia would be a more favorable place to sue.
St. Louis (July 2018): A St. Louis jury awarded $550 million in actual damages and $4.14 billion in punitive damages to a group of 22 plaintiffs,17 of whom had no connection to Missouri. The award was later reduced by an appellate court to $2.12 billion
St. Louis County Circuit Court Judge Burlison allowed plaintiffs’ attorneys to manipulate rules that permit combining the lawsuits of multiple plaintiffs in some circumstances and has consolidated hundreds of cases involving plaintiffs from outside St. Louis with cases brought by St. Louis residents. After a St. Louis city jury awarded $72 million in the first talc trial, lawyers began engaging in “blatant forum shopping” to ensure a maximum payday for their clients and St. Louis judges have allowed it to continue.
“Doing business with third parties should not automatically subject an out-of-state business to personal jurisdiction in a given jurisdiction unless there is a specific connection between the forum and the injury,” Joyce said. “Congress should address forum shopping to even the playing field. Lawmakers can use their oversight and legislative authority, as they did when they reformed class actions, to crack down on plaintiffs’ forum shopping.”
ATRA’s Tiger Joyce also penned an op-ed in October 2021, when Congress held its first hearing on the bankruptcy process, detailing the need for Congress to prioritize national interests over the profit motives of plaintiffs’ lawyers and address the real issues driving the bankruptcy process.
