This report’s Dishonorable Mentions generally comprise singularly unsound court decisions, abusive practices, legislation or other actions that erode the fairness of a state’s civil justice system and are not otherwise detailed in other sections of the report.
Recent reports have examined the American Law Institute’s mission shift over the past decade from “scholarly institution that was safely above the fray” to that of an advocacy group proposing novel expansions in liability law. Perhaps the clearest example of the ALI’s activist mentality is the Restatement of the Law, Consumer Contracts, which the ALI approved in May 2022.
Through this project, the ALI has proposed creating a separate and unprecedented area of governing law distinct from the established law of contracts. This Restatement’s basic goal is to recommend novel rules for courts to adopt that would enhance consumers’ ability to challenge and void agreements they enter voluntarily with businesses and other entities. To accomplish this policy goal, the Restatement resorts to inventing rather that “restating” existing law. For example, it intertwines contract law with state consumer protection statutes to create a new theory of “deceptive contracts,” allowing consumers to challenge – and courts to overturn – any allegedly misleading contracts or terms. It also ignores both the Federal Arbitration Act and the Supreme Court’s ample precedents favoring arbitration and pre-dispute arbitration agreements. Judicial adoption of this Restatement’s provisions may encourage state court judges to nullify arbitration agreements or otherwise reach results inconsistent with existing law.
When the Restatement was approved in May 2022, the ALI adopted a motion that adds a new, even more radical section on “Interpretation and Construction of Consumer Contracts.” This section provides in part that standard contract terms (i.e. boilerplate terms) are to be interpreted to effectuate the “reasonable expectations of the consumer” and construed “against the drafter of the term” (i.e. business). It further provides that any ambiguities in the lan- guage of the standard contract term or the process by which a consumer assents to provisions are to be resolved against the business supplying the term or process.
In October, U.S. Senator Thom Tillis from North Carolina, wrote a letter to Richard Revesz, Director of the American Law Institute, expressing his concern about the organization’s departure from its “historic mission to educate judges.” Given the involvement of sitting members of the federal judiciary in the ALI, he asked several questions about the future of the organization. He stated his concern that “the ALI’s deepening engagement in legal advocacy through novel restatements of the law … appears poised to mislead judges as to existing law and potentially compromise fairness in the courts.” He points specifically to the recently enacted Restatement of the Law, Consumer Contracts and the Restatement of Copyright Law.
“The ALI’s deepening engagement in legal advocacy through novel restatements of the law … appears poised to mislead judges as to existing law and potentially compromise fairness in the courts.”
As asbestos claims continue to fall nationwide, the number of lawsuits filed in three Illinois counties, Cook, Madison and St. Clair, remain constant. The courts in these three counties host nearly half of the nation’s asbestos litigation. Plaintiffs flock to these county courthouses due to their plaintiff-friendly reputations, low evidentiary standards, and judges’ willingness to allow meritless claims to survive.
Madison County remains the plaintiffs’ favorite venue for asbestos claims regardless of where the plaintiffs live or the exposure to asbestos allegedly occurred. Over 95% of all cases filed in Madison County were by non-Illinois residents and over 7% of all filings in the county were by residents of Florida, a state almost 1,000 miles away. Additionally, several filers in 2021 held their primary residency in Canada.
Of note – based on the data, it appears the decline in the number of asbestos claims filed in Madison County in 2021 results from plaintiffs’ lawyers choosing to instead file in neighboring St. Clair County.
Asbestos litigation in Madison County has driven innocent businesses to bankruptcy. Plaintiff’s lawyers are on “an endless search for a solvent bystander,” since many former asbestos manufacturers are now bankrupt. This “avalanche of speculative lawsuits” has led nearly 140 businesses to file for bankruptcy, even though many of the claims “turned out to be meritless as to those companies because many of the plaintiffs could not demonstrate exposure to their products.” For example, Ferro Engineering filed for bankruptcy after litigating more than 182,000 asbestos claims, despite only 5% of the claims resulting in a monetary payment to the plaintiff.
St. Clair Country saw a greater than 50% increase in asbestos filings in 2021 mostly due to an influx of lung cancer claims.
Three law firms, SWMW Law, The Gori Law Firm, and Flint Law Firm, are largely responsible for this spike. These firms increased the number of asbestos lawsuits they filed in St. Clair from 31 filings in 2020 to 106 in 2021, 312 filings in 2020 to 344 filings in 2021, and 13 filings in 2020 to 102 filings in 2021, respectively.
Lawsuits against state and local governments are typically subject to statutory caps on damages to protect taxpayers and the government’s ability to provide public services. A recent Montana Supreme Court decision, however, exposes insurers who provide coverage to public entities to damage awards that vastly exceed the statutory maximum.
Montana law limits the amount that counties must pay in tort actions to $750,000 per claim and $1.5 million per accident. A trial court found Gallatin County liable for over $12 million in damages to a plaintiff, who was injured by a county-owned snowplow. Atlantic Specialty Insurance Co. (ASIC), the county’s insurer, offered to pay the maximum amount of the county’s statutory liability, $750,000.
In July 2022, the Montana Supreme Court ruled that ASIC must provide $6.5 million in coverage.
While the policy limited coverage to the amount the county was “legally obligated” to pay, the Court found that the policy did not explicitly limit its coverage to the $750,000 statutory cap. Since the policy insured Gallatin County for a limit of $1.5 million in coverage and $5 million in excess coverage, the majority found that ASIC must pay the full $6.5 million in coverage, regardless of the statutory limit.
The dissent, as well as legal observers, question how an insurer can be obligated to pay more than the legal liability of is policyholder. The decision could impact the ability of Montana’s cities and counties to obtain excess liability coverage, which protects them from the risk that a statutory limit does not apply in a certain case.
In February 2020, a Wisconsin trial court doled out a $38.1 million verdict after a teenager rear-ended the plaintiff’s 2013 Hyundai Elantra. But rather than place responsibility on the driver, plaintiffs’ lawyers led the jury to place 84 percent of responsibility for the plaintiff’s injuries on the car’s manufacturer, providing a deep pocket for recovery. This outcome was influenced by the court’s improper admission of untested junk science (a first-of-its-kind theory that the headrest prongs in the seat were defective) and evidence of unrelated recalls and subsequent remedial measures. Unbelievably, the Wisconsin Court of Appeals affirmed that verdict in October 2022.
In 2011, Wisconsin enacted tort reform – declaring Wisconsin “open for business” – including the adoption of Daubert, a rebuttable presumption that a product compliant with federal or state regulations is not defective, and protections against the introduction of subsequent remedial measures. The Court of Appeals disregarded those reforms. It found that the evidence of unrelated recalls of different products could rebut the presumption that the seat was not defective; that subsequent remedial measures were admissible to impeach Hyundai’s witnesses before they even testified; that the subsequent remedial measure was admissible as evidence of a reasonable alternative design – even though the design did not exist when the product was sold; and that a biomechanical expert could offer medical causation testimony and a medical expert could provide biomechanical causation testimony, without assessing the reliability of those opinions.
The automaker has filed a petition for review to the Wisconsin Supreme Court. If the high court does not grant review and the verdict is not reversed, a single court in Wisconsin will have effectively wiped-out significant portions of the legislature’s tort reform – raising the question whether the state is really “open for business” after all.
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