Lawsuit industry: Shopping for venue
August 11, 2002
President Bush slammed Mississippi this week for driving doctors out of business, or out of the state, by failing to pass tort reform legislation. The debate about putting caps on punitive damages in civil lawsuits flared and died its most recent death in the last session of the Mississippi Legislature.
The Mississippi Trial Lawyers Association says tort reform is a "non-issue." The president says we have fostered the growth of a "lawsuit industry."
Doesn't sound like a non-issue to me.
As the rhetoric swirled, we all heard a lot about how trial attorneys like to file lawsuits in places where they are most likely to win and walk away with big punitive damage awards for clients sometimes hundreds of clients who have been clumped together in the same suit.
How does that work?
Why do they get to choose a courthouse?
If you are indicted for robbing a convenience store in Lauderdale County, you are tried in Lauderdale County. If you are hurt in a traffic accident, you can sue the other driver and get money for your hospital bills, loss of income and emotional distress. In this case, you have your choice of two courthouses: the one in the county where you were hurt or the one in the county where the other driver lives.
The other driver in this example is the defendant, and where the defendant lives goes to the crux of "venue shopping" which is looking for a courthouse where you think you can win.
The big lawsuits with hundreds of plaintiffs hang their hats on verbiage from the Mississippi Supreme Court: "Where venue is good for one defendant, venue is good for all defendants."
Step 1: Shop for clients
Let's say you are a trial lawyer and you want to file a big lawsuit and earn a big fee. You can file a lawsuit for one client, or plaintiff, and hope the jury awards millions of dollars in damages.
Or, you can file one lawsuit for hundreds of plaintiffs and hope to get a piece of everybody's settlement. Where do you go to find one lawsuit where there are hundreds of plaintiffs?
Well, in Mississippi, suing drug companies is good for this. Everyone goes to the doctor and drugs have side-effects, sometimes severe side-effects. Sometimes, the side-effects are unknown, or underestimated, until a lot of people have been harmed.
How do you find these people? Choose a drug and take out ads in lots of newspapers. Buy spots on television and radio. Set up a hotline: "Have you, or a member of your family, ever taken this drug?" Get everyone's name and address as they call in.
Now, you've got hundreds of clients and one defendant the drug company.
Step 2: Avoid federal court
So far, so good. But if you simply sue the drug company, your case is going to end up in federal court and you don't want that.
You want to be able to choose a place where there are no caps on punitive damage awards, like Mississippi. Where juries are in your estimation uneducated, naive or angry at "big business." Where the judge is viewed as liberal, or the jurisdiction has a history of being sympathetic to plaintiffs.
To get your case moved to someplace like that, you're going to need more defendants. Remember, "Where venue is good for one defendant, venue is good for all defendants." This is where doctors and drug stores get dragged into lawsuits against pharmaceutical companies.
Get that list of people who called the hotline and start sifting through it. Where do their doctors practice? Where did they fill their prescriptions? Pick the location you like the best and file your lawsuit there.
All you need is one defendant a doctor or pharmacist in the jurisdiction where you file your lawsuit. The rest of your clients, and all of their doctors and pharmacists, are pulled in because the issues discussed at trial are going to be similar namely, what harm the drug caused to the plaintiffs.
The law of court governing this says that many defendants can be tried together when the complaint "arises out of the same transaction or occurrence, or series of transactions and occurrences, and if common questions of law or fact will arise."
Now, the trial lawyer has hundreds of clients and hundreds of defendants. He's chosen a courthouse where he thinks he can win big. He's ready to go.
Not a non-issue'
In an environment like this, insurance companies get nervous and malpractice premiums skyrocket. The cost of health care goes up because doctors have to pay the premiums. Or, worse yet, they can't get malpractice insurance because their carriers are pulling out of the state. Sometimes, doctors move away to a place willing to protect them. Sometimes, they throw their hands up and retire. Sometimes, they lose in the courtroom and go broke.
All these things happen in Mississippi.
This is not to say that there aren't real atrocities out there, people who have been hurt by negligence, incompetence or malice. They should get their day in court, and I hope they win.
But, the set-up in Mississippi opens the door and unscrupulous lawyers are working the system here and in other states.
That's what the president meant when he said: "It's time for Congress to act. This liability system of ours should serve patients, not trial lawyers."