The effort to rein in lawsuit abuse in the United States is a bit like the old arcade game "Whack-a-Mole." Just when you knock down one abuse, another pops up. This frustrating dynamic is the result of the creativity and political savvy of the class action and mass-tort trial bar -- whom we at the Manhattan Institute call Trial Lawyers, Inc. It's also the product of America's inverted legal federalism, in which the decisions of one state or local jurisdiction can dictate the terms of national commerce.
The most recent "magnet court" pulling in cases from around the country has been Philadelphia's Complex Litigation Center (CLC), which has drawn the ignominious distinction of being named the nation's worst "judicial hellhole" by the American Tort Reform Association two years running.
Founded in 1992 to deal with the deluge of mass-tort cases in the jurisdiction, the CLC has proved itself most attractive to Trial Lawyers, Inc. Over the last five years, the number of active asbestos and pharmaceutical cases in the CLC swelled 143 percent. This increase was not driven by more local injuries -- 87 percent of these plaintiffs had no connection to Philadelphia, and less than a third lived inside Pennsylvania.
Plaintiffs' lawyers have tried to get their cases heard in Philadelphia because the CLC's "rocket docket" promises a fast return on case filings, local juries have shown themselves likely to issue outsized verdicts, and certain procedural "innovations" in the CLC -- including, until recently, ordering juries to determine the costs of injury before deciding whether a defendant was liable -- drive up expected damages still further.
In Pennsylvania, judges have an incentive to increase caseloads, since local courts retain filing fees. Thus, when Judge Pamela Pryor Dembe assumed control of Philadelphia's Court of Common Pleas, she unabashedly announced the goal of "taking away business from other courts."
To block legislative efforts at reform, Trial Lawyers, Inc. works aggressively to curry favor with critical politicians of either party. In Pennsylvania, the Philadelphia Trial Lawyers Association was by far the largest donor to Stewart Greenleaf, the Republican chairman of the state Senate's Judiciary Committee. Mr. Greenleaf, in turn, has worked to thwart tort-reform efforts in the state.
Fortunately, the tide in Philadelphia may be turning. Notwithstanding Mr. Greenleaf, the legislature passed a reform in June 2011 that limited courts' ability to stick minimally responsible "deep pocket" defendants with the full costs of alleged legal injury. In November 2011, the state supreme court's chief justice, Ronald Castille, appointed Judge John Herron to oversee Philadelphia's Court of Common Pleas. Judge Herron instituted procedural reforms that have stemmed the flow of new case filings.
Even if these changes improve Philadelphia's legal climate, other jurisdictions stand primed to pop up as the trial bar's next most-favored place of business. Plaintiffs' lawyers will just file their cases in another court that assumes its place as the nation's top magnet court.
America's system of race-to-the-bottom, lowest-common-denominator legal rules is a clear impediment to our businesses' competitiveness. Litigation costs continue to consume a larger fraction of the national economy of the United States than in any other developed country.
But just as Trial Lawyers, Inc. bottles up most tort reform efforts at the state level through champions like Mr. Greenleaf, it largely stymies reforms at the federal level through outsized influence over congressional leaders. Three of the top four campaign contributors to Senate Majority Leader Harry Reid, Nevada Democrat, are out-of-state plaintiffs' law firms: Weitz and Luxenberg (New York), Girardi and Keese (California), and Simmons Cooper (Illinois).
With Mr. Reid resuming his Senate control after this month's elections, the prospect of positive national tort reform in the next two years is nil. Progress, however, is still possible. Indeed, overall improvements in the American litigation climate over the last decade owe little to federal reforms, save the Class Action Fairness Act of 2005. Tort reformers will have to continue to work, as they have been, state by state -- hitting each mole, in turn, that rears its head.
James R. Copland is director of the Manhattan Institute's Center for Legal Policy and primary author of its new report, "Trial Lawyers, Inc. Update: Philadelphia."