Class Action Study Ignores ?Hellholes': ATRA

Class Action Study Ignores ?Hellholes': ATRA

NU Online News Service, Jan. 19, 1:56 p.m. EST?A tort reform group is blasting a new study that said, contrary to popular belief, settlement costs from class action suits had not risen much in the past seven years.[@@]

The report has "a fatal flaw" in the opinion of the American Tort Reform Association in Washington, D.C.

"The study does not take into account the handful of egregious state court jurisdictions--we call them ?Judicial Hellholes,'" said Sherman Joyce, ATRA president, commenting on the study published in the Journal of Empirical Legal Studies.

Written by Theodore Eisenberg, a law professor at Cornell University, and Geoffrey Miller, a New York University law professor, the study found that both the average cost of settling class action lawsuits as well as the average fee paid to class action attorneys who bring them haven't changed much between 1993 and 2002.

The authors said their study had used the largest sample to date of class action cases--ranging from civil rights violations to securities fraud.

"Contrary to popular belief, we find no robust evidence that either recoveries for plaintiffs or fees for their attorneys as a percentage of the class recovery increased," the authors said in their report. The study states that the average settlement over the 1993-to-2002 period was some $100 million, adjusted to 2002 dollars. "The means client recovery has not noticeably increased over the last decade," the report said.

However, Mr. Joyce from ATRA dismissed the study's results, noting that the study doesn't examine the effects of problem jurisdictions around the country.

"Even the study's author admitted that due to the absence of published court opinions in these jurisdictions, ?it is difficult to learn about state court settlements,'" he argued. "Any policy conclusions drawn from this study are therefore inconclusive."

Mr. Joyce observed that "judicial hellholes" arbitrate a disproportionately large number of class action lawsuits in this country. "Plaintiffs' lawyers file cases in them because they know they can win big judgments or settlements that are often settled under extortionate terms," he commented. "If defendants do not settle, they may face judgments from the court that may lead to bankruptcy."

But Mr. Joyce said legislation for tackling problem jurisdictions might soon be enacted in Washington. The tort reform legislation is expected back on the Senate floor in late January or early February.