How do judicial hellholes stand out from other jurisdictions? All of them are keenly impacted by factors such as expanding liability theories, nuclear verdicts, and third-party litigation financing. CLM recently held an exclusive webinar, titled, “Journey to the Center of the Hellholes,” that examined these factors in detail.
CLM CEO Ronna Ruppelt conducted an informative interview with Lauren Sheets Jarrell, vice president and counsel, Civil Justice Policy, American Tort Reform Foundation (ATRF), in which the pair discussed ATRF’s recently released 2023-2024 “Judicial Hellholes” report, and the reasons behind why these jurisdictions were chosen.
“The purpose of the program and of the report is to shine a spotlight on the jurisdictions across the country that are allowing the worst civil justice abuses and to really be a catalyst for change, whether it be through the state legislatures or through the judiciary themselves,” explained Sheets Jarrell. “We begin the process early in the year and continue throughout. We scan primary resources, we go through court dockets, we review and analyze court opinions, the data. And then we also survey our members, local businesses, and defense firms to see what those on the ground are experiencing and how certain areas are outliers in what’s occurring in other places.”
This year, for the first time, two states tied for first place as the top judicial hellholes of the year: the state of Georgia and The Pennsylvania Supreme Court and The Philadelphia Court of Common Pleas. Among many jurisdictions deserving of the title of “hellholes,” there were several commonalities found.
How the Judicial Hellholes Stand Out
Liability Theories
Five of the nine hellhole jurisdictions have been impacted by expansion of liability theories, noted Ruppelt. “It’s actually mentioned in the report more often than nuclear verdicts,” she said, and asked how much is coming from the legislatures and how much is coming from the courts.
“We paid close attention to what the courts were doing,” said Sheets Jarrell. “Are they adopting these novel theories of liability that are proposed by the plaintiff’s firms? There [are] certainly some problematic legislatures that are discussed—specifically Michigan, New York; Illinois—where they are pursuing a very pro-plaintiff agenda. But the main focus is on the courts and the judges who are allowing these theories, whether it be expansion of liability or an adoption of a new theory.”
Sheets Jarrell continued, “I do also want to point out, however, that many legislatures in these judicial hellholes are turning a blind eye to the abuses that are occurring in the state courts. There are certainly instances where they could adopt legislation to reign in some of the abuses but…they are not doing anything to help the states’ legal system.”
Nuclear Verdicts
Ruppelt also pointed out that nuclear verdicts were referenced as drivers in half the venues, and that “in Georgia alone, there were 39 nuclear verdicts from Jan. 1, 2018 to April 10, 2023, with 12 of those happening in 2022….” She asked what ATRF is seeing as far as the frequency and severity of nuclear verdicts since last year’s CLM “Journey to the Center of the Hellholes” webinar.
Sheets Jarrell responded, “Unfortunately, we are seeing an uptick in both the frequency and the severity in most of the hellholes, really thanks to tactics like the reptile theory and jury anchoring the judges are allowing in the court rooms, and it’s leading to more of these verdicts.”
She added, “I’ll also say it’s concerning that we are seeing—in states like New York—these verdicts are being upheld on appeal. I think there was some hope that they would be struck down by appellate courts, but so far, in many instances, that has not been the case.”
No-injury Litigation
Asked what ATRF is seeing as far as no-injury litigation now compared to pre-2023 activity, Sheets Jarrell said, “We continue to see an uptick in a few specific areas. First, Americans with Disabilities Act litigation. We’re seeing a lot of no-injury serial plaintiffs filing hundreds of cases against defendants where there’s no intention of visiting the venues or the businesses.
“The U.S. Supreme Court had an opportunity to review one of these cases out of Maine this past year. But the plaintiff voluntarily dismissed the case, so the U.S. Supreme Court declared the case moot. So, that was disappointing, but hopefully there will be another opportunity in the future.”
She continued, “We’re also seeing a lot of no-injury in California around the PAGA, or the Private Attorney General Act, based on technical nitpicks with addresses being wrong on pay stubs and minor things like that. We’re seeing large damages where no one was really harmed. And then we continue to see BIPA (Biometric Information Privacy Act) abuses in Illinois—but the Illinois Supreme Court issued a few decisions in 2023 that has driven the number of filings even higher this year.”
Third-Party Litigation Financing
On the last most common theme among the hellholes, Ruppelt noticed that third-party litigation financing was mentioned less this year in ATRF’s report compared to previous years.
Asked whether this was due to positive developments or merely other issues coming to the forefront, Sheets Jarrell said, “So, third-party litigation financing is certainly an issue. It’s driving a lot of the mass tort litigation we’re seeing right now. It’s driving a wide variety of litigation in the states. However, since disclosure is not required, which is really one of the main issues around this, it’s difficult to get the data. It’s difficult to know exactly which cases are being funded by outside sources, and so it’s hard for us to include that type of information in a report like this. It’s basically just anecdotal.”
However, on a brighter note, Sheets Jarrell explained that “there has been some positive legislative activity around this issue…. Last year, in 2023, there were bills passed in Montana and Indiana to reign in the industry. And then already this year, we’ve seen legislation pop up in several states. We’re tracking legislation currently in Florida, California, Kansas, Wisconsin, and we expect a few other bills to pop up.
“So, this is certainly one area that is looking to be addressed by state legislatures.” There is also some legislation at the federal level that is seeking to touch on this issue. “There have been some hearings in Congress…looking to require disclosure. I think there’s some concern about the national security angle about these sovereign wealth funds that could be driving some of this litigation on the mass tort side, so we’re certainly paying attention to that as well, but the hellholes report really focuses on state activity.”
To learn more and to review the judicial hellholes report, visit www.judicialhellholes.org and view the full interview in CLM’s webinar archive.