Contact: Ray De Lorenzi
202.965.3500, ext. 8369
Washington, DC—Tomorrow the U.S. Chamber of Commerce will release an updated “study” that supposedly ranks the best and worst state legal systems in America. The “study” is based on a survey of corporate defense lawyers from multi-million dollar corporations who are paid to avoid accountability for their misconduct and negligence. Nevertheless, U.S. Chamber touts this propaganda as fairly measuring the states’ legal systems. The facts tell a different story.
In addition to their annual rankings, U.S. Chamber’s Institute for Legal Reform plans to hold an event in Baton Rouge, LA, to highlight a separate survey on Louisiana business owners’ attitudes on their legal climate. Despite the devastation caused by Hurricane Katrina, Louisiana’s per capita personal income (PCPI) rose 27.8% from 2005, while the national change was only 5.6%. In 2006, Louisiana called itself “the destination for business and industry,” citing 48 new project announcements totaling more than $11 billion and an estimated 8,500 new jobs. Employment figures have also returned to pre-Katrina levels.
U.S. Chamber’s Institute for Legal Reform has seven board members representing the insurance industry, including Allstate and State Farm. These insurance companies have raised premiums, avoided paying claims and refused insurance to those who need it most in Louisiana. When Allstate was investigated for threatening to cancel 5,000 policies, Louisiana Insurance Commissioner Jim Donelon said, “At best, it was a very ill-conceived and sloppy inspection program. At worst, they wanted off of those properties.”
Over the last seven years, American Association for Justice has tracked the half-truths and outright lies that appear in these legal rankings. Here are just some of the incorrect statements and third-party criticisms that have appeared:
U.S. Chamber’s “Study” Is Misleading
- U.S. Chamber’s Own Pollster Admitted that There is No Way to Measure the Fairness of a State’s Legal System. Humphrey Taylor of Harris Interactive, the polling firm that conducted the survey for U.S. Chamber, admitted that there is no way to measure fairness of the legal system in each state. According to the Copley News Service, “Humphrey Taylor of Harris Interactive said the survey is based on the individual responses of the [corporate] lawyers because there is no hard data that can be used to measure the perceived fairness of a state's legal system.” Nevertheless, U.S. Chamber has mischaracterized the “study” as “rank[ing] the best to worst legal systems in America.”
- U.S. Chamber’s “Study” Is Actually a Survey of Corporate Defense Lawyers Working for Multi-Million Dollar Corporations. Instead of attempting to measure the effectiveness of the civil justice systems in each state, U.S. Chamber instead commissioned a poll of corporate lawyers at companies with $100 million or more in annual revenues. These are the very same lawyers who work every day protecting and defending large corporations when they take unfair advantage of consumers and employees.
- After Ranking West Virginia as Having One of the “Worst” Liability Systems, U.S. Chamber’s CEO and Pollster Were Forced to Admit that Only of a Fraction of Those Surveyed Actually Knew Anything About the State’s Court System. When questioned about the methodology of last year’s “study” that ranked West Virginia as 49th in the list of state legal systems, U.S. Chamber’s CEO, Thomas Donohue, and the pollster that conducted the survey, Humphrey Taylor of Harris Interactive, were forced to admit that only a fraction of the corporate lawyers surveyed actually knew anything about West Virginia’s courts. According to the Charleston Gazette, “Taylor and Donahue [sic] acknowledged not all of the 1,437 lawyers surveyed knew anything about West Virginia's courts. Taylor said ‘around 107’ said they had direct knowledge of the state. ‘You could argue that's a small sample, but what they keep saying is ‘49th, 49th, 49th,’ he said.”
- Florida Newspaper Criticized U.S. Chamber for Mischaracterizing the “Study” in a Television Ad. According to the Tallahassee Democrat, U.S. Chamber’s Institute for Legal Reform sponsored a television ad in Florida last year that mischaracterized the results of their “study” of state legal systems. U.S. Chamber’s ad included the line, “[a] recent Harris poll ranked the best to worst legal systems in America.” However, the Democrat reported that this claim was “wrong,” noting that the “ad did not mention the Harris poll was conducted among corporate lawyers who have to defend their clients against civil suits.”
Lawsuits are Not A Major Concern for Businesses
- A Survey Published by the National Association of Manufacturers Found that American Manufacturing Companies Ranked the “Fear of Litigation” at the Bottom of Their Concerns. The National Association of Manufacturers released a survey of manufacturers in the United States showing that the “fear of litigation” ranked at the bottom of their list of concerns:
“Please rate the following factors in terms of their negative impact on your company's operations (with 1 representing the greatest negative impact and 10 the least).”
2.9 Cost of non-wage compensation 6.1 Taxes
3.5 Cost of materials used in production 6.3 Cost of wages
4.0 Inability to raise prices 6.4 Shortage of qualified workers
4.1 Energy prices 7.4 Regulations/corporate governance rules (Sarbanes-Oxley)
5.0 Foreign competition 7.8 Fear of litigation
- Survey by Business Week Magazine Found that the Threat of Lawsuits is Not a Major Concern of Small Business Owners. According to a survey published in Business Week magazine, owners of small and medium-sized businesses are generally not concerned about the threat of lawsuits: “One of the survey's more surprising results revealed that tort reform -- particularly limiting class-action lawsuits -- is not a major priority.” The survey found that the biggest threats to their businesses are: (1) Rising inflation, 44 percent; (2) The trade deficit and a weak dollar, 40 percent; (3) Energy shortages, 40 percent; (4) Excessive household and/or corporate debt, 29 percent; (5) The growing federal deficit, 28 percent; (6) Poorly prepared labor force/Shortage of skilled labor, 27 percent.
The Number of State and Federal Tort Trials is Declining
- Bush Administration Statistics Show that the Number of Federal Tort Trials is Down Nearly 80 Percent Since 1985. The Bush Justice Department reported that the number of tort (personal injury) cases resolved in U.S. District Courts fell by 79 percent between 1985 and 2003. In 1985, 3,600 tort trials were decided by a judge or jury in U.S. District Courts. By 2003, that number had dropped to less than 800.
- The Number of State Tort Trials is Decreasing. According to the National Center for State Courts, the number of tort cases filed in state courts has dropped dramatically in the past decade. Tort filings in state courts dropped by 21 percent between 1996 and 2005. A study from West Virginia University’s Institute for Public Affairs discovered similar results for its state, which U.S. Chamber continuously puts at the bottom of its rankings.
- “Overwhelming Majority” of Federal Judges Don’t See “Frivolous Lawsuits” as Major Problem. According to a survey by the Federal Judicial Center – the research and education agency of the federal court system – most Federal judges do not view “frivolous lawsuits” as a problem: “Frivolous litigation is not a major problem in the federal court system, according to an overwhelming majority of federal judges who participated in a recent survey. The survey, conducted by the Federal Judicial Center, was based on the responses of 278 federal district court judges. Seventy percent of the respondents called groundless litigation either a ‘small problem’ or a ‘very small problem,’ and 15% said it was no problem at all. Only 1% called it a ‘very large problem,’ 2% called it a ‘large problem’ and the rest rated it as a ‘moderate problem’ in their courts. … In addition, 91% of the judges surveyed opposed provisions in the Lawsuit Abuse Reduction Act, which won House approval in the last Congress.”