Pennsylvania has earned a bad reputation for 'litigation tourism'
When a business in Allegheny County is sued by a resident of Butler County and the case is tried in a Philadelphia courtroom, it suggests there is a problem with the legal system -- and is one example of why the U.S. Chamber of Commerce has ranked Pennsylvania as having one of the worse lawsuit climates in the nation.
The study, which ranked Pennsylvania 40th, essentially found that it is too easy to sue companies in the state, compared to most states. Pennsylvania also makes it possible to engage in "litigation tourism," in which plaintiff's lawyers forum shop for favorable venues where it may be easier to cash in.
"When it relates to businesses, there are few if any rules about where the case will be heard," said Gene Barr, president of the Pennsylvania Chamber of Business and Industry in Harrisburg. "Plaintiffs' attorneys believe, for whatever reasons, they have a more receptive audience in Philadelphia."
That might explain why an accident involving two North Carolina residents, which occurred last year in North Carolina, is currently being heard in Philadelphia, Mr. Barr said. "Ford Motor Corp. is being sued by the plaintiff," he said. "The plaintiff's lawyer in Philadelphia sent a flatbed truck to North Carolina to pick up the car and bring it to Philadelphia and filed suit in Philadelphia Common Pleas Court."
Another example he used involves a slip-and-fall case in Bradford County. The plaintiff is from Bradford County, the business where the injury occurred is in Bradford County and multiple witnesses to the slip and fall reside in Bradford County.
Yet the lawsuit was filed in Philadelphia.
"There's no good reason why these case should be in Philadelphia other than the plaintiff's lawyers feel they have a better chance of success with a Philadelphia jury," Mr. Barr said.
Mr. Barr says while Pennsylvania has made some reforms to its legal system, more reforms will be needed to improve the state's reputation for supporting businesses.
"We have a climate that is viewed as not conducive to business growth and not fair and equitable to all parties," Mr. Barr said. "When you have chief counsels with this kind of perception regardless of how they got it, it will affect investment decisions made by those corporations, which may mean they steer businesses away."
The Lawsuit Climate 2012 Study released by the U.S. Chamber of Commerce showed Delaware has the most positive perception for business and that senior lawyers and corporate counsel perceive West Virginia as having the worse lawsuit climate for businesses.
Robert Linn, a litigation partner at Cohen & Grisby, Downtown, said after reading the report, his sense of the low grade Pennsylvania received from the legal community is a reflection of the Philadelphia court system.
"I spend little time in Philadelphia so I don't know much about the courts there," Mr. Linn said. "But the perception of state and local courts in the Pittsburgh area is very different from Philadelphia. Most litigators here believe Allegheny County courts are fair and speedy, and are performing quite well."
Mr. Barr said the business community is asking for the same deal that doctors and hospitals get, and that the same rules apply to all businesses and professionals in the state.
Doctors and hospital cases, he said, are not subject to venue changes. Anyone who sues a doctor or hospital in Pennsylvania must file suit in the county where the claim occurred.
"There should be some sensible connection between the plaintiffs and defendants and the place of business when it comes to filing lawsuits," he said.
According to the report, Pennsylvania made some progress last year on reforming laws related to joint and several liability.
Joint and several liability refers to how the responsibility for damages is divided -- for example, if a company is one of five defendants in a case, and the company is found only 5 percent at fault, the company still could have ended up paying 100 percent of the damages if the other companies were unable to pay or couldn't be found, under old Pennsylvania law. In other words, the company that has the ability to pay and can be found liable could be stuck with the full burden.
The law was changed last year. Now if a company is found 5 percent liable, it is only require to pay 5 percent of the damages.
"That's one reason Pennsylvania was viewed so negatively for so many decades," Mr. Barr said. "That is one reform we have achieved, but we still need to do much, much more."
First Published November 26, 2012 12:00 am