ATRA's 'hellhole' list due soon: Will Madison County move off top spot?

Ann Knef Dec. 8, 2005, 3:58am

Ed Murnane

Justice Mary Ann McMorrow

On the eve of the fourth annual "Judicial Hellhole" report, a review of this year's class action lawsuits in Madison County provides a hint that the American Tort Reform Association may move the Illinois venue off the roster's top spot.

The number of class action filings in Madison County in 2005--45--has dropped precipitously from previous years. In 2004, there were 82 cases; in 2003, a peak occurred with 106 suits.

"I am hopeful that the positive change in Illinois will be reflected in the judicial report," said Ed Murnane, president of the Illinois Civil Justice League.

Murnane, also a member of ATRA's executive board, said there are signs of improvement in Illinois' legal environment--particularly in Madison County. Increased media attention and a heightened public interest in judicial reform, as evidenced by the Illinois Supreme Court election in 2004, are examples.

ATRA's report, which will be released Dec. 13, ranks the worst courtrooms throughout the United States.

From 1999 to 2003, there had been a steady increase in class action filings in Madison County. Many plaintiffs with no connection to the venue were pitted against a litany of U.S. corporate giants. That helped the southwestern Illinois court earn its "hellhole" reputation and Number 1 ranking two years running, 2003-2004, as determined by ATRA.

ATRA describes "judicial hellholes" as places where "'litigation tourists,' guided by their personal injury lawyer agents, file lawsuits...because they know they will receive a large award, a favorable precedent, or both."

Murnane said that recent media attention has caused some local judges to rethink their decisions and that is a move in the right direction.

"These pressures have to continue," Murnane said. "Plaintiff lawyers who have been negatively impacted are not going to go away. They will develop new strategies."

Madison County class action filings
1998: 2
1999: 16
2000: 39
2001: 43
2002: 77
2003: 106
2004: 82
2005: 45

In 2005, significant legislative action and Illinois Supreme Court decisions helped reshape state court activity.

February: Class Action Fairness Act signed into law

President George W. Bush's targeted visit to Madison County in January, an unprecedented domestic policy visit to Illinois, preceded the signing of the Class Action Fairness Act of 2005 into law Feb. 18

During the landmark bill-signing, the president made several references to the Metro-East, including the significant number of cases filed in Madison County during the preceding week: 20.

"And we're only in February," President Bush said.

The U.S. House of Representatives approved the Class Action Fairness Act of 2005 in a 279-149 vote on Feb. 17, and because of a flurry of class action filings taking place in Madison and St. Clair counties at the time, the president hastened signing the bill into law.

The measure requires that class action cases with plaintiffs and defendants from multiple states be filed in federal court.

Under the legislation, class actions in which the aggregate amount of damages plaintiffs seek exceeds $5 million would have to be tried in federal court. An exception would be allowed when a company is being sued in its home state and at least two-thirds of the class members are from that state.

"Madison County juries are responsible for awarding large verdicts," President Bush said before signing the bill. "And the vast majority (involved) are not from Madison County."

The president also referenced a case involving a faulty TV that was settled in Madison County. Class members got $50 rebates for TVs from the same manufacturer and their lawyers got millions.

"Where's the justice in that?" the president quipped.

President Bush said the bill would "help protect people who are wrongfully harmed while reducing the frivolous lawsuits that clog our courts, hurt the economy, cost jobs and burden American businesses."

Shining the light on "the abuses of local plaintiff's bar" is making a difference, says a spokesman for the U.S. Chamber of Commerce, an avid proponent of legal reform.

"I think there is no question we have seen some positive changes in Madison County over the past year," said Curt Mercadante of the U.S. Chamber of Commerce Institute for Legal Reform.

"It's sad that it took a federal bill to affect the change," he said.

Mercadante said that further legislative action in Illinois, such as venue reform, is necessary to create a business-friendly environment.

August: Avery decision smacks lower courts

On Aug. 18, the Illinois Supreme Court threw out a billion dollar verdict declaring that a Williamson County Circuit Court erred in certifying a nationwide class, Avery v. State Farm.

Avery alleged that State Farm breached its contracts with policy holders by repairing vehicles with inferior parts and it violated the Illinois Consumer Fraud Act by concealing that practice.

Illinois Supreme Court Chief Justice Mary Ann McMorrow's majority opinion tore to tatters not only the Fifth District Court of Appeals, but also the trial judge and the plaintiff's attorneys.

In 1999, a jury had awarded the plaintiff $456 million on the contract claims. The judge, in a simultaneous trial, awarded $600 million in punitive damages and $130 million in disgorgement on the fraud claim.

In 2001, the 5th Appellate Court disallowed the disgorgement, but otherwise affirmed, leaving State Farm liable for $1.056 billion.

Because of different language in different policies, the circuit court erred in certifying a nationwide class on the contract claims.

McMorrow's opinion held that the appellate court adopted a theory of damages that plaintiffs did not advance and the circuit court did not adopt.

"Actual damage cannot be the result of omissions and misrepresentations which are made after the damage has already occurred," McMorrow wrote.

McMorrow quoted the appellate court: "There is evidence that State Farm's material misrepresentations led numerous class members to blindly accept the non-OEM parts..."

She wrote, "Notice what the appellate court has done here. With this sentence, it is no longer the case that damage occurred when non-OEM parts were specified. Instead, the damage occurred when non-OEM parts were accepted. This is not the theory of damages which was adopted by the circuit court, nor is it the theory advanced by plaintiffs."

November: Gridley puts an exclamation on Avery!

In a 6-0 decision, the Illinios Supreme Court reversed lower court rulings and remanded a Louisiana man's case against State Farm Insurance back to Madison County with directions to dismiss the complaint based on forum non conveniens.

"We find that the circuit court abused its discretion in denying State Farm's motion to dismiss based upon forum non conveniens," wrote Chief Justice Robert Thomas.

Christopher Gridley filed a class action complaint in Madison County on June 19, 2000, on behalf of himself and a proposed nationwide class against State Farm Mutual Automobile Insurance Company. Gridley's complaint alleged unjust enrichment and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act in connection with State Farm's sale of salvage vehicles.

Gridley filed suit as representative of a class of "all persons in the United States who purchased an automobile which was previously declared a 'total loss' by State Farm, and for which State Farm failed to obtain a salvage title."

In case anyone missed the message that the Illinois Supreme Court sent in Avery vs. State Farm, the justices added an exclamation point in Gridley vs. State Farm.

In each case, the Court chased Louisiana plaintiffs out of Illinois courts like a mother bear. Not one justice took the side of either plaintiff.

Justices knocked out the props that supported class action litigation.

And, they made Fifth District Court of Appeals decisions look foolish.

Madison County judges taking note

  • Eleven days after the Gridley decision was issued by the Illinois Supreme Court, Madison County Circuit Judge George Moran cited the case when transferring a suit against Pfizer to Cook County--even though some of the plaintiffs are from the Metro-East.

    "Our Supreme Court in Gridley v. State Farm makes it apparent that this case must be transferred from this court, venue is not proper in Madison County," he wrote in his Nov. 28 order.

    Ricky Lott of Madison, Gerald Sumner of Belleville, Sandy Becker of Pontoon Beach and Mike Baldwin of Smithton filed suit Feb. 18 in Madison County against the New York drug maker, demanding refunds for money spent on arthritis pain relievers Celebrex and Bextra.

  • One day after Moran transferred his case, Circuit Judge Daniel Stack nearly did the same in a forum ruling, but decided that defendants waited too long to file the motion.

    "...Considering our Supreme Court's recent pronouncements in the Avery and Gridley cases...this is a case which would more likely have been transferred to Cook County had the timing been more appropriate," Stack wrote in a Nov. 29 order denying the motion to transfer O'Connell v. A.W. Chesterton, Union Carbide, to Cook County.

    Stack relied on Dawdy v. Union Pacific in which the Illinois Supreme Court held that a "foreign plaintiff's" forum choice deserves less deference if it is not the plaintiff's home.

    "The further reading of the Dawdy case makes it clear that our Supreme Court does not condone such 'forum shopping'," Stack wrote.

    "This case involves some similar facts....The plaintiffs in this case have had no contact with Madison County except for the bringing of this lawsuit."

  • Pekin Insurance Company invoked the Avery decision in a motion to dismiss a proposed Madison County class action suit filed by chiropractor Frank Bemis who accuses Pekin Insurance of improperly reducing payouts on medical bills.

    In June, Pekin Insurance attorney David Osborne moved Madison County Circuit Judge George Moran to dismiss. Osborne wrote that Bemis failed to state a cause of action.

    Osborne moved Oct. 11 for leave to revise his motion to dismiss. Moran granted it.

    Osborne argued in his revised motion that under Avery, a plaintiff must plead that the defendant committed a deceptive act or practice and must also plead that the defendant intended for the plaintiff to rely on the deception.

    Under Avery, Osborne continued, a plaintiff must plead that the deception involved trade or commerce, that the plaintiff suffered actual damage, and that the deception was the proximate cause of the damage.

    Osborne wrote that Bemis's complaint failed on all five of those points.

    Osborne wrote that the Supreme Court put to rest the notion that a plaintiff can base a consumer fraud claim on a breach of contract.

    "Plaintiff respectfully suggests that the Supreme Court's controlling decision in Avery mandates dismissal with prejudice in this case," wrote Osborne.

    Moran ordered Bemis to respond by Dec. 9.

    The Madison County Record is owned by the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce.

    Reporters Steve Gonzalez and Steve Korris contributed to this report.

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