CLEANING UP THE COURTS Federal reform sweeps class action suits from Illinois’ cluttered dockets. When President Bush made tort reform a key part of his second term’s domestic agenda in 2004—presaging the successful passage of the first major federal tort reform bill in a decade—he debuted his legal-reform road show in that county-court poster child for runaway litigation, Madison County, Illinois.[82] At the time, Madison County had been named the nation’s worst “Judicial Hellhole” for three straight years.[83]   The county’s courts well deserved the title. On top of its role as a national center for asbestos litigation and one of the country’s most favorable venues for malpractice suits, Madison County had emerged as the forum of choice for Trial Lawyers, Inc.’s class action litigators. By their sheer size, class action suits—cases aggregating thousands, if not millions, of plaintiffs into a single claim—can force deep-pocketed corporate defendants to capitulate and settle, no matter how trivial or specious the suit, rather than risk trial in forums like Madison County.[84] The process nets millions of dollars for the lawyers—and pennies (or less) for their clients.[85]   The steady stream of verdict and settlement money from downstate Illinois courts had long allowed Trial Lawyers, Inc. to be a generous campaign contributor, and the judges of Madison County could rely almost exclusively on contributions from plaintiffs’ lawyers to bankroll their election bids (see “Buying Justice,” pages 14–15).[86] This corrupt dynamic epitomizes what billionaire trial lawyer Dickie Scruggs has fondly labeled the “magic jurisdiction,” where the “judiciary is elected with verdict money” and where “it’s almost impossible to get a fair trial if you’re a defendant.”[87]   Evolution of a Magnet Court   Once Trial Lawyers, Inc. had established Madison County’s reputation as a mega-verdict venue, class action filings there skyrocketed, rising a staggering 5,000 percent from 1998 to 2003.[88] Filings in neighboring, similarly pro-litigation St. Clair County soon followed suit, rising 1,100 percent from 2002 to 2004 alone.[89] During 2003 and 2004, Madison County judges gave the go-ahead to nearly 200 class action suits, the highest per-capita rate in the nation.[90] Like a magnet, the county was attracting speculative filings from around the country.   Leading the charge was Brad Lakin, the county’s most frequent class action filer, who followed a simple and effective business model: identify a standard industry practice; dig upa plaintiff supposedly injured by that practice; craft a nationwide class action against the major players in that industry; and tailor the details of the suit to prevent removal to a federal court.[91] Lakin would then punch out “cookie cutter” suits—reiterating the same charges against scores of different defendants, in batch after batch of identical pleadings, right down to the misspellings and typographical errors.[92]   The hallmark of these Madison and St. Clair class actions—and what cements the counties’ status as magic jurisdictions—was that filings typically involved out-of-state claims, led by out-ofstate plaintiffs, often even invoking out-of-state law. One Madison County judge certified a nationwide class action brought by two unhappy Barbie-doll collectors against California-based Mattel for manufacturing too many special-edition Barbies—and seeking damages for a nationwide class of plaintiffs under California’s consumer-protection laws.[93] In another case, Madison County judge Philip Kardis green-lighted a national class action case by Christopher Gridley alleging fraud against State Farm Mutual Automobile Insurance Company; Gridley was a resident of Louisiana, had purchased his car and his auto insurance in Louisiana, and State Farm’s alleged fraud had taken place in Louisiana.[94] The threat posed by Madison County’s class action courts to the national system of interstate commerce was very real indeed: a small-town judge and jury could perform end runs around the laws of other states, and even Congress, rewriting the rules for consumers all over the country.[95]   A Change for the Better?   Given the state of affairs in Madison County, it’s little wonder that President Bush made class action reform the first major economic effort of his second term. The resulting federal Class Action Fairness Act, signed into law in February 2005,[96] has put a damper on some of the most flagrant forum shopping and is a major reason why Madison County dropped from the Number One spot to Number Four on the American Tort Reform Association’s Judicial Hellhole list in 2005, while St. Clair County dropped from Number Two to Number Five.[97] One Madison County judge certified a class action against Mattel for manufacturing too many special-edition Barbies.   In addition, a shakeup in the state judiciary has had a major impact on Madison County’s class action problem. In 2004, the most expensive judicial race in American history saw Republican judge Lloyd Karmeier defeat plaintiffs’ lawyer and former appellate-court judge Gordon Maag to win a seat on the Illinois Supreme Court, a seat that for 34 years had been held by Democratic judges beholden to the trial bar.[98] Soon after, that court overturned two out-of-state class action plaintiff verdicts, and in the Christopher Gridley case, ruled that Illinois’ consumer-protection law does not apply to transactions that take place outside the state.[99] (Gridley’s chastened lawyers say that they’ll refile their case in his home state of Louisiana.)[100]   The Karmeier election confirmed that Illinoisans increasingly recognize the need for legal reform. This dawning public awareness was made manifest in May 2005, when members of a Madison County jury openly questioned why a Missouri plaintiff should be able to file suit in Illinois.[101] Presiding judge Nicholas Byron was so rattled that he declared a mistrial.[102] Byron—who received 81 percent of his 2002 reelection campaign funds from the trial bar—was recently dismissed as chief judge of the county’s civil division, yet another positive indicator of Madison County’s prospects.[103]   So there are growing signs that Madison County’s free ride for class action forum shoppers is over. Despite a stampede to the courthouse in the days before the Class Action Fairness Act took effect—over 80 class action suits were filed in downstate Illinois courts the week before President Bush signed the bill[104]—the law nearly halved the class actions filed in Madison County in 2005, and only one class action has been filed there so far this year (see graph).[105]

FEDERAL FAIRNESS Early last year, after trial-lawyer crony and former Democratic minority leader Tom Daschle had been voted out of his U.S. Senate seat, 18 Democrats defied the lawyers’ lobby and voted with Senate Republicans to pass the long-stalled Class Action Fairness Act (CAFA).[106] Signed into law in February 2005, CAFA has put the brakes on some of the rampant forum shopping that passes for civil justice in Madison and St. Clair Counties and in other class action mills around the country.   The new federal law doesn’t entirely remove the class action racket from state courts. It does, however, force big, national suits—those involving over $5 million in damages and more than 100 plaintiffs, a third or more of whom are from out of state—into federal court,[107] where pleading standards are tougher and judges appointed for life are not indebted to trial-lawyer political contributors.   By establishing federal jurisdiction when at least one-third of plaintiffs are from out of state,[108] CAFA also puts the kibosh on some tried-and-true ploys to block removal to federal court. Under earlier jurisdictional rules, if at least one defendant and one plaintiff were from the home state, the case could not be removed to federal court. Class action attorneys typically abused this pre-CAFA “diversity jurisdiction” rule by, for instance, suing a local pharmacy in a broader lawsuit against a big out-of-town drugmaker.[109]   Finally, CAFA sets limits on attorneys’ fees in class action settlements.[110] Settlements like the 2002 Madison County verdict that dispensed $80 in coupons to class members while forking over $84.5 million to lawyers are a thing of the past in federal court.[111]

<<previous section | next section>> 82. See Press Release, President Discusses Medical Liability Reform (Jan. 5, 2005), available at http://www.whitehouse.gov/news/releases/2005/01/20050105-4.html. 83. See American Tort Reform Foundation, Judicial Hellholes 14 (2004). 84. Cf. Richard A. Epstein, class acTIons: The need for a hard second look, Manhattan Inst. Civ. Just. Rep. no. 4 (Mar. 2002), available at http://www.manhattan-institute.org/pdf/cjr_04.pdf. 85. See, e.g., Lester Brickman, Anatomy of Madison County (Illinois) Class Action: A Study of Pathology, Manhattan Inst. Civ. Just. Rep.No. 6 (Aug. 2002), available at http://www.manhattan-institute.org/pdf/cjr_06.pdf. 86. See Generally Illinois Lawsuit Abuse Watch/IllinoisCivil Justice League, Justice For Sale: The Judges of Madison County (Oct. 3, 2002) [hereinafter Justice For Sale]. 87. Scruggs, supra note 10. 88. See American Tort Reform Foundation, supra note 20, at 22. 89. See id. at 26. 90. See id. at 21. 91. See John H. Beisner & Jessica Davidson Miller, Class Action Magnet Courts: The Allure Intensifies, Manhattan Inst. Civ. Just. Rep. No. 5, at 3 (July 2002), available at http://www.manhattan-institute.org/pdf/cjr_05.pdf. 92. Sanford J. Schmidt, Debate Renews in Wake of Record Class Action Filings, Telegraph (Alton, Ill.), Jan. 4, 2004. 93. See Steve Korris, Barbie Suit Settles in Madison County, Madison County Rec., June 29, 2005. 94. See Gridley v. State Farm Mutual Ins. Co., 840 N.E.2d 269 (Ill. 2005). 95. See BeIsner, supra note 91, at 7-8. 96. 28 U.S.C. §§ 1332(d), 1453, 1711-1715 (2006); see Press Release, President Signs Class-Action Fairness Act of 2005 (Feb. 18, 2005), available at http://www.whitehouse.gov/news/releases/2005/02/20050218-11.html. 97. American Tort Reform Foundation, supra note 20, at 7, 10–11. 98. See Douglas L. Whitley, Improvements on the Judicial Front, sTar (Tinley Park, Ill.), Nov. 6, 2005. 99. Price v. Phillip Morris, Inc., No. 96236, 2005 Ill. LEXIS 2071 (Ill. 2005); Avery v. State Farm Mutual Auto. Ins. Co., 805 N.E.2d 801 (Ill. 2005); Gridley, 840 N.E.2d 269. 100. Chicago Automobile Trade Associastion, CATA Bulletin (Dec. 5, 2005). 101. Paul Hampel, Jurors Battle Image of Plaintiff Paradise, St. Louis Post-Dispatch, June 26, 2005, at C1. 102. American Tort Refom Foundation, supra note 20, at 22. 103. See Justice For Sale, supra note 86, at 4; Ann Knef, Stack to Head Madison County’s Civil Division, Madison County Rec., July 18, 2006. 104. See Paul Hampel, Reality May Stymie Desired Effects, St. Louis Post-Dispatch, Feb. 19, 2005. 105. See Shruti Date Singh, Madison County Goes Quiet, Crain’s Chicago Bus., Sept. 11, 2006. 106. S. 5, 109th Cong. (1st Sess. 2005) (enacted) (codified as 28 U.S.C. §§ 1332(d), 1453, 1711-1715 (2006)), roll–call vote available at http://www.senate.gov. 107. See id. at § 4; 28 U.S.C. § 1332(d)(2)–(4). 108. See id. 109. See, e.g., Testimony by Hilda Bankston, Senate Committee on the Judiciary, July 31, 2002, cited in John H. Beisner et.al., One Small Step for a County Court . . . One Giant Calamity for the National Legal System, Manhattan Inst. Civ. Just. Rep. No. 7, at 15 (Apr. 2003). 110. S. 5, 109th Cong. § 3; 28 U.S.C. § 1712. 111. Trisha L. Howard, Lawyers Profit Most in Suit, St. Louis Post-Dispach, March 31, 2004, at A1.