Segal McCambridge Legal Blog

From the Madison County Record McLean County continues inching closer to becoming a ‘judicial hellhole’

Illinois’ reputation as a lawsuit magnet was not made overnight. It took time as hotspots such as Madison, St. Clair and Cook Counties became destination jurisdictions for personal injury lawyers looking to hit the “Lawsuit Lottery.”

Madison, St. Clair and Cook Counties have long been fixtures in the annual “Judicial Hellhole” report and for years these three counties have appeared to be unwilling to share the spotlight for being some of the worst jurisdictions in the country for legal fairness.

Unfortunately for Illinois, the usual suspects have apparently added a new member to the gang. Last December, McLean County was cited in the American Tort Reform Association’s annual Judicial Hellholes report as a jurisdiction to watch. The inclusion of McLean County in the report was intended to be a warning of what could happen should the situation in McLean County get any worse.

Sadly, the situation has indeed gotten worse.

Shortly after being cited in the report, a McLean County jury delivered an eye-opening $90 million judgment against Honeywell International Inc., Pneumo Abex, Owens-Illinois Inc. and John Crane Inc. when there was no evidence the plaintiff ever worked for these companies or was exposed to asbestos by any products made by the three companies.

In a recent asbestos case filed against Honeywell International Inc., McLean County Judge Paul Lawrence directed a verdict for the plaintiff before the defense even had a chance to say anything. A few days later, the jury awarded the plaintiff $4.3 million.

Judge Lawrence applied the conspiracy theory to the case even though neither the plaintiff nor her husband ever worked at Honeywell or were in any way ever connected to the company.

This is the equivalent of filing a lawsuit against Sears for something that happened 50 years ago at a J.C. Penney store.

In the past, Madison, St. Clair and Cook Counties have been at the center of Illinois’ growing legal climate concerns. Now McLean County seems to be descending deeper and deeper into Hellhole status. The situation is not improving, rather, it is getting worse.

It does not take long to build a reputation as a lawsuit magnet but it takes a long time to shed that reputation. Just talk to the folks in Madison County.

The last thing our state needs right now is yet another Judicial Hellhole jurisdiction. The reality is that businesses look carefully at where to locate a business and the litigation climate is a significant factor in the decision making process. It is not the only factor, obviously but it certainly is something companies consider. Once a county develops a reputation as a magnet for lawsuits, it is difficult to recruit new business and opportunities. The last thing McLean County needs is a reputation of being a plaintiffs’ paradise.

Lawmakers recently passed significant tax hikes into law and put Illinois communities at a competitive disadvantage in terms of attracting new businesses and opportunities. We simply cannot afford to add to our growing reputation as a state hostile to job growth and job creation by enshrining yet another Judicial Hellhole jurisdiction in Illinois.

McLean County, and all Illinois counties for that matter, should be working to create more jobs instead of creating a litigation climate that only serves to import lawsuits and drive jobs and opportunities away.
 

From the June 17th, 2011 Chicago Tribune: “Move over, Madison County“

Illinois is known for a few things that make it unique among all states: the tallest tower in America; Chicago-style deep-dish pizza; Abraham Lincoln.

But it also has another claim to fame: the state known for handing out multimillion dollar jackpot-justice verdicts. This distinction is reasserting itself in McLean County with frivolous “no-causation” conspiracy claims. It works like this: trial lawyers target solvent businesses in asbestos lawsuits even if they have no connection to their clients. They score big fees, settlements and damages by claiming that one or more companies conspired from the 1930s to the 1970s to suppress health and safety information concerning asbestos.
This is a setback for Illinois. The state struggled for years to shed a reputation as a plaintiff’s lawyer paradise. Its infamy was born a decade ago when Madison and St. Clair counties created a cottage industry for out-of-state class-action lawsuits that would have been rejected by almost every other court in the country.

Now, McLean County has become a hot spot for a similar abuse of justice. This threatens all companies because it demonstrates a company doesn’t have to cause any injury to be held liable — and face a bill in the tens of millions of dollars.

Plaintiffs claim they were injured when they were exposed to asbestos at the former Union Asbestos and Rubber Co. in Bloomington, Ill. UNARCO is bankrupt and is, therefore, never named as a defendant. So the plaintiffs sue other unrelated but financially viable companies — Owens-Illinois, Honeywell International and Pneumo Abex — claiming a conspiracy.

The Illinois Supreme Court has rejected the conspiracy claim theory. Supreme Courts in California and Texas and federal courts in Maryland have also ruled that you can’t sue a company for conspiracy if there is no relationship between the plaintiff and the company.

Yet the suits keep coming in McLean County. In March, the McLean County Circuit Court awarded one of the largest conspiracy claim asbestos verdicts ever — nearly $90 million — to a plaintiff whose only relationship was with the bankrupt UNARCO. He had no relationship at all with the three financially viable companies — Owens-Illinois, Honeywell and Pneumo Abex.

In April, McLean County Circuit Judge Paul Lawrence barred Honeywell from even defending itself against a plaintiff who sued the company for the alleged wrongful death of her husband. Lawrence halted the trial — before the defense could open its mouth — and directed a verdict for the plaintiff. The jury awarded $4.3 million.

Lawrence applied the conspiracy theory — even though neither the plaintiff nor her husband were ever employees, customers, visitors or in any way connected to Honeywell.

It’s akin to General Motors in 2011 being held liable for a defective part on a Ford Model T that injured someone in the 1920s … simply because both companies make cars.

And, unfortunately, even if the verdict is overturned on appeal, the damage has already been done. The costs of litigating these cases and the real risk of a huge verdict force many defendants to settle.

Abraham Lincoln, who toiled as a young circuit lawyer in the same McLean County court, said once: “Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser — in fees, expenses, and waste of time.”

In follow-up to our blog post of January 4, 2011 “Fraud case in asbestos lawsuits against Pittsburgh asbestos firm “ comes this January 5, 2011 blog post from Forbes.com “On The Docket” : “Asbestos Lawsuits as Racketeering Scheme?”

“For almost four decades, lawsuits alleging harm from asbestos have been filed against everyone from the product’s original manufacturers to general retailers like Sears. Billions of dollars have been paid out from settlements and verdicts. Scores of companies have been driven into bankruptcy. Lobbyists for plaintiffs and defendants have put generations of kids through college on fees paid to purse and oppose federal asbestos liability reform. Many law review articles and reports have been written arguing how this “elephantine massâ€� of litigation, as the U.S. Supreme Court called it in 1999, has been largely manufactured through mass x-ray screenings and other tactics directed by a select few mass tort plaintiffs’ law firms. Some defendants have successfully targeted absestos trial lawyers for their shady behavior (a WLF Web Seminar last April highlighted one example), and victims of asbestos litigation abuse had great hopes for a federal racketeering suit railroad firm CSX filed in 2007. Those hopes flagged, however, when in March 2008, a federal trial judge dismissed CSX’s Racketeer Influenced and Corrupt Organizations (RICO) Act and state fraud claims as barred by the limitations periods of those two laws.

This week, the U.S. Court of Appeals for the Fourth Circuit, at the urging of CSX and a score of amici, including WLF (our brief here), vacated the district court’s opinion on the limitations issue and remanded the claims for further proceedings. In CSX Transportation v. Gilkison, the Fourth Circuit passed no judgment on the merits of CSX’s claim that the plaintiffs’ firm and others:

‘embarked upon a calculated and deliberate strategy to participate in and to conduct the affairs of the Peirce firm through a pattern and practice of unlawful conduct, including bribery, fraud, conspiracy, and racketeering’ . . . by ‘orchestrat[ing] a scheme to inundate CSX and other entities with thousands of asbestosis cases without regard to their merit.’

Instead, the panel’s opinion focused on how the trial judge misapplied the legal standard for when the statutes of limitations commenced – i.e. when CSX knew or should have known fraudulent, harmful conduct had occurred. The basic act of asbestos lawsuits being filed against them, the court found, was not enough to put CSX on notice that a fraud was afoot. As WLF’s brief aptly put it, the firm and its compatriots arguably “carried out their scheme in a manner designed to ensure that a reasonable person would decide not to investigate.� The developments which led CSX to suspect fraud noted in the Fourth Circuit ruling, such as notorious mass plaintiffs’ “expert� Dr. Ray Harron losing his medical license, occurred well within the limitations periods. Whether those facts are true or amounted to RICO or state fraud violations will, thanks to the Fourth Circuit’s decision, be determined in a public judicial process at the trial court. Disinfectant sunlight is something all victims of asbestos lawsuit abuse will welcome.

One notable irony in CSX Transportation v. Gilkison: the Fourth Circuit deemed the opinion “unpublished,â€� which under that circuit’s rules means it is not binding precedent. Given the reality that the vast majority of civil RICO litigation is brought by against businesses, it is rather incongruous that a ruling which allows a RICO case against such lawyers to proceed is unlikely to help plaintiffs’ lawyers in the future.”

A link to the Forbes.com “On The Docket” post can be found here

On December 30, 2010, the Nevada Supreme Court upheld an earlier ruling in Bahena v. Goodyear Tire & Rubber Co., a case in which a Clark County district judge had imposed the ultimate sanction against the company for supposed discovery violations — prohibiting Goodyear from defending itself. The underlying case involved a $32.2 million judgment against Goodyear Tire & Rubber Co. in a single-car accident that killed three people and injured seven others.

The Nevada Supreme Court, in a 6-1 decision said it did not overlook any material facts or misapply the law.

The dissenting Justice said she would have granted a rehearing because the default judgment in the case rested on the District Court “choosing to believe one side’s lawyers over another’s with no evidentiary hearing, no cross-examination and a genuine dispute over willfulness, fault, and prejudice.”

Pointoflaw.com has a blog post about this case here

The Madison County Record reports that Madison County, Illinois Chief Judge Ann Callis responds to the ATRA report putting Madison County on the “Watch List”. The entire article can be found here

LegalNewsline.com reports that Philly is No. 1 ‘judicial hellhole,’ group says

The Southeast Texas Record reports Texas Gulf Coast courts tough place for defendants, ‘Hellhole’ report claims

The West Virginia Record article on its own third place in the report can be found here Reaction in West Virginia can be found here

From LegalNewsline.com

Two asbestos attorneys in Mississippi are appealing a federal jury’s ruling that they committed fraud in litigation against Illinois Central Railroad.

Attorneys William Guy and Thomas Brock were ordered in March to return $210,000 in settlements secured on behalf of two clients and to give another $210,000 in punitive damages to Illinois Central Railroad, which filed a fraud lawsuit against the two in November 2006.

The attorneys are alleged to have concealed their clients’ previous involvements in a mass action years before their lawsuits were filed against Illinois Central.

Guy and Brock filed their notice of appeal Friday. They are appealing an order granting prejudgment interest, the jury verdict and the opinion and order overruling their motions for judgment as a matter of law and for a new trial.

The full article can be found here

Courtesy of the Electronic Discovery Law blog

Medcorp, Inc. v. Pinpoint Tech., Inc., 2010 WL 2500301 (D. Colo. June 15, 2010)

Finding “willful� spoliation of 43 hard drives “in the sense that Plaintiff was aware of its responsibilities to preserve relevant evidence and failed to take necessary steps to do so�, a special master ordered a jury instruction which allowed the jury to infer that the destroyed evidence was unfavorable to plaintiff and for the parties to split the cost of defendants’ litigation of the spoliation issue. Upon a motion to modify the order, the magistrate judge affirmed the imposition of the jury instruction, but found plaintiff should pay all of defendants’ reasonable expenses and ordered payment of $89,365.88.

The blog post with link to a copy of the order is here

From Overlawyered.com

The civil litigation death penalty

There’s an old legal joke that goes: “If you’re weak on the facts, pound the law. If you’re weak on the law, pound the facts. If you’re weak on both the facts and the law, pound the table.�

Except the entrepreneurial trial bar has found an intermediate step: instead of pounding the table, pound the discovery requests. Persuade a judge that a discovery snafu was really a deliberate attempt at a cover-up, and get sanctions that prohibit the other side from defending itself. Because plaintiffs rarely have discovery obligations that are more than an infinitesmal fraction of a defendant’s discovery obligations, this can be a profitable strategy.

The strategy is not new–I saw it myself first-hand in the 1990s defending GM, and wrote a piece about a trial where John Edwards successfully used a variant. But as discovery gets more and more complex due to emails, voicemails, and instant-messaging, it becomes easier for the discovery snafu to happen, and it becomes harder for judges to distinguish between good-faith mistakes and bad-faith withholding of documents. You may recall a famous example in Florida where Morgan Stanley was precluded from introducing evidence about a transaction involving Sunbeam before the appellate court threw out the entire case.

A recent example of this sort of gamesmanship is going on now in Florida where a group of lawyers representing Ecuadorian shrimp farmers came up with a brand new implausible theory of their case–now alleging that runoff from a formulation of a Benlate fungicide that stopped being used in 1991 is what caused their damages in the mid-to-late 1990s, all so they can claim to a judge that DuPont’s failure to produce documents about this marginally relevant formulation (which was effectively identical to the other formulations, except it included two inert ingredients) deserved sanctions. And sure enough, the court ordered a civil death penalty: all of DuPont’s defenses have been stricken, even though there is no scientific evidence that fungicide runoff caused the virus that killed many Ecuadorian shrimp. (Aquamar S.A. v. DuPont, Case No. 97-020375 (Broward County, Fla.))

A similar case involving Goodyear and a civil death penalty sanction that resulted in a $30 million verdict is pending in the Nevada Supreme Court

Another excellent post on the topic of the civil litigation sanction situation is The Emerging Business Threat Of Civil “Death Penalty� Sanctions