State Lawsuit Climates

Year
Overall Treatment of Tort and Contract Litigation
Having and Enforcing Meaningful Venue Requirements
Treatment of Class Action Suits & Mass Consolidation Suits
Punitive Damages
Non-economic Damages
Damages
Timeliness of Summary Judgment or Dismissal
Discovery
Scientific and Technical Evidence
Judges’ Impartiality
Judges’ Competence
Juries’ Fairness
Juries’ Predictability
OVERALL RANK

The 2012 State Liability Systems Ranking Study was conducted for the U.S. Chamber Institute for Legal Reform to explore how fair and reasonable the states’ tort liability systems are perceived to be by U.S. businesses. Participants in the survey were comprised of a national sample of 1,125 in-house general counsel, senior litigators or attorneys, and other senior executives who indicated that they are knowledgeable about litigation matters at companies with at least $100 million in annual revenues. The 2012 ranking builds on previous years’ work,1 where in each survey year all 50 states are ranked by those familiar with the litigation environment in that state. Prior to these rankings, information regarding the attitudes of the business world toward the legal systems in each of the states had been largely anecdotal. The State Liability Systems Ranking Study aims to quantify how corporate attorneys view the state systems.

Approximately half of all senior attorneys (49%) 2 view the fairness and reasonableness of state court liability systems in America as excellent or pretty good, up from 44% in the 2010 survey. The remaining 51% view the systems as only fair or poor, or declined to answer (1%). The impact of a state’s litigation environment has always been and continues to be important, with more than two-thirds (70%) reporting that it is likely to impact important business decisions at their companies, such as where to locate or do business. This is an increase from 67% in 2010 and 63% in 2008.

Respondents were first screened for their familiarity with states, and those who were very or somewhat familiar with the litigation environment in a given state were then asked to evaluate that state. It is important to remember that courts and localities within a state may vary a great deal in fairness and reasonableness. However, respondents had to evaluate the state as a whole. To explore the detailed nuances within each state would have required extensive questioning about each state and was beyond the scope and purpose of this study. Other studies have also demonstrated this variability within a state. For example, several studies have documented very high litigation activity in certain county courts such as Madison County, Illinois, and Jefferson County, Texas, revealing that these counties have “magnet courts” that are extremely hospitable to plaintiffs. Thus, it is possible that some states received low grades due to the negative reputation of one or two of their counties or jurisdictions.

1 2010, 2008, 2007, 2006, 2005, 2004, 2003, and 2002. 2 Differences between this value and those on the line graph on p. 5 are due to rounding.

Overall Rankings of States

Respondents were asked to give states a grade (A through F) in each of the following areas: overall treatment of tort and contract litigation; having and enforcing meaningful venue requirements; treatment of class action suits and mass consolidation suits; damages; timeliness of summary judgment or dismissal; discovery; scientific and technical evidence; judges’ impartiality; judges’ competence; and juries’ fairness. They were also asked to give the state an overall grade for creating a fair and reasonable litigation environment. These elements were then combined to create an overall ranking of state liability systems.

Taken as a whole, general counsel and senior litigators perceive state courts to be doing better than average on the various elements. States received significantly more A’s and B’s (49%) than D’s and F’s (16%) when all of the elements were averaged together, as shown in the table below.

Average Percentage Across All Elements Among 50 States

Grade	Average Percentage
A	12%
B	37%
C	28%
D	11%
F	5%
Not sure/ Decline to answer	7%

Since the inception of the survey, there has been a general increase in the overall average score (expressed numerically on a scale of 1 to 100) of state liability systems, and this trend continues with the 2012 survey. In fact, the 2012 survey results show a significant increase from the relatively level showing from 2007- 2010. This year the score has increased by three percentage points.

Average Overall Score Among 50 States

Year	Average Overall Score
2012	60.9
2010	57.9
2008	59.4
2007	58.1
2006	55.3
2005	52.8
2004	53.2
2003	50.7
2002	52.7

Most Important Issues to Focus On to Improve the Litigation Environment

The study also asked respondents to name the most important issue that policymakers who care about economic development should focus on to improve the litigation environment in their states. Limits on discovery were mentioned by 5% of respondents. Other top issues named were elimination of unnecessary lawsuits (4%), fairness and impartiality (4%), speeding up the trial process (3%), and tort reform (3%).

Worst Local Jurisdictions

In order to understand if there are any cities or counties that might impact a state’s ranking, respondents were asked which five cities or counties have the least fair and reasonable litigation environments. The worst jurisdiction was Chicago/Cook County, Illinois (17%), followed by Los Angeles, California (16%), the state of California in general (9%), San Francisco, California (9%), and Philadelphia, Pennsylvania (8%).

To understand why respondents feel negatively about particular jurisdictions, a follow-up question was asked to those who cited a jurisdiction. A third (33%) of respondents mentioned that the reason why a city or county has the least fair and reasonable litigation environment is because of biased or partial juries/ judges. Similar to 2010, this is the number one reason by a large margin. The next tier includes corrupt/unfair system (9%), a slow process (9%), anti-business/anti-corporate environment (8%), unreasonable rulings/verdicts (6%), incompetent juries/judges (5%), and excessive damages awards (5%).

Conclusion

Several organizations³ have conducted surveys among various constituencies of state courts to determine and understand how the state courts are perceived by these audiences. Until the annual State Liability Systems Survey was initiated in 2002, there was no data on one important constituency: senior lawyers in large companies. This, the ninth State Liability Systems Survey, finds that while the overall average scores of the states are increasing, senior lawyers in large corporations still have mixed perceptions about the fairness and reasonableness of state liability systems overall.

An examination of individual state evaluations, however, reveals wide disparity among those states that are doing the best job and those states that are doing the worst job, with the highest performing state (Delaware) scoring 76 out of a possible 100 and the poorest performing state (West Virginia) scoring 45 out of 100. However, the poorest performing state score does reflect a 10 percentage point improvement over the 2010 survey results. Clearly, corporate counsel see specific areas needing improvement in the individual states, and the perceptions of senior lawyers and executives in large companies matter. This survey reveals that the litigation environment in a state is likely to impact important business decisions, which could have economic consequences for the states. The challenge for the states is to focus on areas where they received the lowest score and then make improvements where they are needed.

3 This includes the Public Perceptions of the State Courts: A Primer, National Center for State Courts (2000); Perceptions of the U.S. Justice System, American Bar Association (1998); Public Trust and Confidence in the Courts: What Public Opinion Surveys Mean to Judges, National Center for State Courts and University of Nebraska (1999); and Level of Public Trust and Confidence: Utah State Courts, State Justice Institute (2000).

The 2012 State Liability Systems Ranking Study was conducted for the U.S. Chamber Institute for Legal Reform by Harris Interactive. The final results are based on interviews with a nationally representative sample of 1,125 in-house general counsel, senior litigators or attorneys, and other senior executives who are knowledgeable about litigation matters at public and private companies with annual revenues of at least $100 million. Phone interviews averaging 19 minutes in length were conducted with a total of 551 respondents and took place between March 19, 2012 and June 25, 2012. Online interviews using the same questionnaire and averaging 16 minutes in length were conducted with a total of 574 respondents that took place between March 13, 2012 and June 25, 2012. The previous research was conducted from October to January in the years 2002–2010.

Sample Design

For the telephone sample, a comprehensive list of general counsel at companies with annual revenues of at least $100 million was compiled using idExec, Dun & Bradstreet (Hoovers), AMI, and ALM. An alert letter was sent to the general counsel at each company. This letter provided general information about the study, notified them of the option to take the survey online or by phone, and told them that an interviewer from Harris Interactive would be contacting them to request their participation if they chose not to take the survey online. The letter included an 800 number for respondents to call and schedule a survey appointment, and it also alerted the general counsel to a $100 charitable incentive or check in exchange for qualified participation in the study.

For the online sample, a representative sample of general counsel and other senior attorneys was drawn from Hoovers ConnectMail, the Association of Corporate Counsel, and LinkedIn. Respondents from Hoovers ConnectMail and the ACC received an electronic version of the alert letter, which included a password-protected link to take the survey. LinkedIn respondents received a public link. All were screened to ensure that they worked for companies with more than $100 million in annual revenues.

Sample Characteristics

A vast majority (83%) of respondents were general counsel, corporate counsel, associate or assistant counsel, or some other senior litigator or attorney. The remaining respondents were senior executives knowledgeable about or responsible for litigation at their companies. Respondents had an average of 21 years of relevant legal experience, including their current position, and had been involved in or familiar with litigation at their current companies for an average of 10 years. Most respondents (81%) were familiar with or had litigated in the states they rated within the past three years. The most common industry sector represented was manufacturing, followed by services.

Telephone Interviewing Procedures

The telephone interviews utilized a computer-assisted telephone interviewing (CATI) system, whereby trained interviewers call and immediately input responses into the computer. This system greatly enhances reporting reliability. It reduces clerical error by eliminating the need for keypunching, since interviewers enter respondent answers directly into a computer terminal during the interview itself. This data entry program does not permit interviewers to inadvertently skip questions, since each question must be answered before the computer moves on to the next question. The data entry program also ensures that all skip patterns are correctly followed. The online data editing system refuses to accept punches that are out-of-range, it demands confirmation of responses that exceed expected ranges, and asks for explanations for inconsistencies between certain key responses.

To achieve high participation, in addition to the alert letters, numerous telephone callbacks were made to reach respondents and conduct the interviews at a convenient time. Interviewers also offered to send respondents an e-mail invitation so that respondents could take the survey online on their own time.

Online Interviewing Procedures

All online interviews were hosted on Harris Interactive’s server and were conducted using a self-administered, online questionnaire via proprietary Web-assisted interviewing software. The mail version of the alert letter directed respondents to a URL and provided participants with a unique ID and password that they were required to enter on the landing page of the survey. Those who received an e-mail version of the alert letter accessed the survey by clicking on the password-protected URL included in the e-mail. Due to password protection, it was not possible for a respondent to answer the survey more than once. Respondents for whom we had e-mail addresses received an initial invitation as well as one to two reminder e-mails.

Interviewing Protocol

After determining that respondents were qualified to participate in the survey, interviewers identified the state liability systems with which the respondents were familiar. Then the respondents were asked to identify the last time they litigated in or were familiar with the states’ liability systems. From there, respondents were given the opportunity to evaluate the states’ liability systems, prioritized by most recent litigation experience. On average, respondents evaluated four states via telephone and five states online.

Rating and Scoring of States

States were given a grade (A through F) by respondents for each of the key elements of their liability systems, providing a rating of the states by these grades, the percentage of respondents giving each grade, and the mean grade for each element. The mean grade was calculated by converting the letter grade using a 5.0 scale where A = 5.0, B = 4.0, C = 3.0, D = 2.0, and F = 1.0. Therefore, the mean score displayed can also be interpreted as a letter grade. For example, a mean score of 2.8 is roughly a C- grade.

The Overall Ranking of State Liability Systems table was developed by creating an index using the grades given on each of the key elements plus the overall performance grade. All of the key elements were highly correlated with one another and with overall performance. The differences in the relationship between each element and overall performance were trivial, so it was determined that each element should contribute equally to the index score. To create the index, each grade across the elements plus the overall performance grade were rescaled from 0 to 100 (A = 100, B = 75, C = 50, D= 25, and F = 0). Then, any evaluation that contained 6 or more “not sure” or “decline to answer” responses per state was removed. A total of 7.1% of state evaluations were unusable. From the usable evaluations, the scores on the elements were then averaged together to create the index score from 0 to 100.

The scores displayed in this report have been rounded to one decimal point. However, when developing the ranking, scores were evaluated based on two decimal points. Therefore, states that appear tied based upon the scores in this report were not tied when two decimal points were taken into consideration. The scores for states that appear tied based on one decimal place are Iowa (69.49) and South Dakota (69.48), Arkansas (57.23) and Texas (57.15), and South Carolina (56.34) and Pennsylvania (56.29).

For the Ranking on Key Elements tables, a score was calculated per element for each state based on the 0–100 rescaled performance grades. The states were then ranked by their mean scores on that element.

Reliability of Survey Percentages

The results from any sample survey are subject to sampling variation. The sampling variation (or error) that applies to the results for this survey of 1,125 respondents is plus or minus 2.9 percentage points. That is, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 2.9 percentage points from the result that would have been obtained if interviews were conducted with all persons in the universe represented by the sample. Note that survey results based on subgroups of smaller sizes can be subject to larger sampling error.

Sampling error of the type so far discussed is only one type of error. Survey research is also susceptible to other types of error, such as refusals to be interviewed (nonresponse error), question wording and question order, interviewer error, and weighting by demographic control data. Although it is difficult or impossible to quantify these types of error, the procedures followed by Harris Interactive keep errors of these types to a minimum.

Overall Rating of State Court Liability Systems*

* Results given are for a base of 1,125 general counsel/senior litigators who were asked, "Overall, how would you describe the fairness and reasonableness of state court liability systems in America – excellent, pretty good, only fair, or poor?"

Overall Rankings of State Liability Systems 2002-2012*

State	'12 Score	'12	'10	'08	'07	'06	'05	'04	'03	'02
Delaware	75.8	1	1	1	1	1	1	1	1	1
Nebraska	74.1	2	3	2	3	2	2	2	2	6
Wyoming	72.6	3	15	23	22	16	9	15	25	20
Minnesota	71.4	4	11	11	2	14	7	8	9	19
Kansas	70.6	5	14	10	13	15	16	9	15	4
Idaho	70.5	6	18	26	30	18	10	5	13	14
Virginia	70.2	7	6	6	12	3	4	3	8	2
North Dakota	69.8	8	2	13	20	12	3	16	6	25
Utah	69.7	9	7	5	9	17	14	6	7	8
Iowa	69.5	10	5	7	4	4	5	4	3	5
South Dakota	69.5	11	10	12	11	7	8	17	4	9
Maine	69.2	12	12	3	5	9	11	12	16	18
Alaska	69.1	13	33	20	43	36	33	33	32	37
Indiana	69	14	4	4	8	11	6	11	5	12
Wisconsin	68.4	15	22	24	10	23	17	10	11	15
Vermont	67.1	16	25	8	27	24	21	20	19	21
Arizona	66.8	17	13	15	15	13	19	13	18	11
New York	66.4	18	23	25	19	21	27	22	27	27
Massachusetts	66.3	19	9	18	18	32	31	28	22	36
North Carolina	65.8	20	17	21	16	10	20	19	20	16
New Hampshire	65.7	21	16	16	6	6	12	7	10	17
Washington	65.4	22	26	27	25	28	15	24	21	3
Colorado	64.2	23	8	9	21	8	13	13	12	7
Georgia	64	24	27	28	31	27	28	29	39	23
Connecticut	63.8	25	24	19	14	5	18	18	17	10
Tennessee	63.7	26	19	22	7	29	22	25	26	24
Michigan	63	27	30	33	23	22	24	23	29	28
Oregon	62.6	28	21	14	17	30	25	27	14	13
Hawaii	62.5	29	35	45	42	46	41	39	43	40
Ohio	62.1	30	29	32	24	19	26	32	24	26
Rhode Island	60.9	31	38	39	35	26	35	36	37	35
New Jersey	60.1	32	32	35	26	25	30	26	30	32
Maryland	58.3	33	20	30	29	20	23	21	23	22
Missouri	57.8	34	37	31	34	35	40	41	33	29
Arkansas	57.2	35	44	34	41	41	43	42	45	44
Texas	57.2	36	36	41	44	43	44	45	46	46
Nevada	57	37	28	40	28	37	29	34	34	30
Kentucky	56.8	38	40	29	33	34	36	35	35	38
South Carolina	56.3	39	39	43	37	42	39	40	42	42
Pennsylvania	56.3	40	34	36	32	31	34	30	31	31
Florida	55.3	41	42	42	36	38	42	38	40	33
Oklahoma	55	42	31	17	38	33	32	31	36	41
Alabama	52.8	43	47	47	47	47	48	48	48	48
New Mexico	52.7	44	41	37	39	40	38	37	41	39
Montana	52.2	45	43	38	40	39	37	43	28	43
Illinois	51.3	46	45	46	46	45	46	44	38	34
California	50.6	47	46	44	45	44	45	46	44	45
Mississippi	46.6	48	48	48	49	48	50	50	50	50
Louisiana	46.5	49	49	49	48	49	47	47	47	47
West Virginia	44.8	50	50	50	50	50	49	49	49	49

* Scores displayed in this table have been rounded to one decimal point. However, when developing the ranking, scores were evaluated based on two decimal points. Therefore, states that appear tied based upon the scores in this table were not tied when two decimal points were taken into consideration. See details on p. 27.

Most Important Issues for State Policymakers*

Limits on discovery	5%
Eliminate unnecessary lawsuits	4%
Fairness and impartiality	4%
Speeding up the trial process	3%
Tort reform issues	3%
Punitive damages	2%
Lack of timely decisions	2%
Cap/Limits on settlements/Damages	2%
Electronic discovery	2%

* The responses displayed in this table were volunteered by respondents. Mentions by 2% or more are given above. Results given are for a base of 1,125 general counsel/senior litigators who were asked, “What do you think is the single worst aspect of the litigation environment that state policymakers should focus on to improve the business climate in their states?”

Cities or Counties with the Least Fair and Reasonable Litigation Environment*

Chicago/Cook County, Illinois	17%
Los Angeles, California	16%
California (unspecified**)	9%
San Francisco, California	9%
Philadelphia, Pennsylvania	8%
Madison County, Illinois	7%
Texas (unspecified)	7%
New York (unspecified)	7%
Miami/Dade County, Florida	6%
New Orleans/Orleans Parish, Louisiana	5%
Mississippi (unspecified)	5%
Louisiana (unspecified)	4%
East Texas	3%
Alabama (unspecified)	3%
California (other mentions**)	2%
Illinois (unspecified)	2%
Houston, Texas	2%
Beaumont, Texas	2%
Dallas/Fort Worth, Texas	2%
Texas (other mentions)	2%
New York (other mentions)	2%
West Virginia (unspecified)	2%
St Louis, Missouri	2%
Detroit, Michigan	2%
Washington, DC	2%

* Responses displayed above were volunteered by respondents. Mentions by at least 2% given above. Results given are for a base who were asked, “Thinking about the entire country, what do you think are the five worst city or county courts? That is, which city or county courts have the least fair and reasonable litigation environment for both defendants and plaintiffs?”

** Each “unspecified” parenthetical denotes a response of the state name; no specific city or county within the state was mentioned. The “other mentions” parenthetical denotes miscellaneous cities and counties in that particular state that were mentioned by 1% of respondents or fewer.

Worst Specific City or County Courts by State*

CALIFORNIA (all mentions)	30%
Los Angeles, California	16%
California (unspecified)	9%
San Francisco, California	9%
San Diego, California	1%
Oakland, California	1%
Sacramento, California	1%
Other jurisdictions mentioned	2%
ILLINOIS (all mentions)	25%
Chicago/Cook County, Illinois	17%
Madison County, Illinois	7%
East St. Louis, Illinois	1%
St. Clair, Illinois	1%
Other jurisdictions mentioned	2%
TEXAS (all mentions)	23%
Texas (unspecified)	7%
East Texas	3%
Houston, Texas	2%
Beaumont, Texas	2%
Dallas/Fort Worth, Texas	2%
Harris County, Texas	1%
South Texas	1%
Brownsville, Texas	1%
Jefferson County, Texas	1%
Marshall County, Texas	1%
Hidalgo County, Texas	1%
Other jurisdictions mentioned	2%
NEW YORK (all mentions)	10%
New York (unspecified)	7%
Bronx County, New York	1%
Brooklyn, New York	1%
Other jurisdictions mentioned	2%

FLORIDA (all mentions)	10%
Miami/Dade County, Florida	6%
Florida (unspecified)	1%
Broward, Florida	1%
South Florida	1%
Other jurisdictions mentioned	1%
LOUISIANA (all mentions)	9%
New Orleans/Orleans Parish, Louisiana	5%
Louisiana (unspecified)	4%
Other jurisdictions mentioned	1%
PENNSYLVANIA (all mentions)	9%
Philadelphia, Pennsylvania	8%
Other jurisdictions mentioned	1%
MISSISSIPPI (all mentions)	7%
Mississippi (unspecified)	5%
Jackson, Mississippi	1%
Other jurisdictions mentioned	1%
ALABAMA (all mentions)	6%
Alabama (unspecified)	3%
Birmingham, Alabama	1%
Other jurisdictions mentioned	1%
WEST VIRGINIA (all mentions)	5%
West Virginia (unspecified)	2%
Charleston, West Virginia	1%
Other jurisdictions mentioned	1%
NEW JERSEY (all mentions)	3%
New Jersey (unspecified)	1%
Newark, New Jersey	1%
Other jurisdictions mentioned	1%
MISSOURI (all mentions)	3%
St Louis, Missouri	2%
Other jurisdictions mentioned	1%

* The responses displayed above were volunteered by respondents. Mentions by at least 3% for an entire state are given above. Results given are for a base who were asked, "Thinking about the entire country what do you think are the five worst city or county courts? That is, which city or county courts have the least fair and reasonable litigation environment for both defendants and plaintiff?"

Top Issues Mentioned as Creating the Least Fair and Reasonable Litigation Environment*

Biased/Partial judgment	33%
Corrupt/Unfair system	9%
Slow process/Delays	9%
Anti-business/Anti-corporate environment	8%
Unreasonable rulings/Verdicts	6%
Incompetent juries/Judges	5%
Other negative jury/Judge mentions	5%
Personal experience	5%
Excessive damage awards	5%
Heavily influenced by politics	4%
Poor quality of juries/Judges	4%
Composition of jury pool	4%
Good old boy system/Depends on who you know	3%
Other corruption mentions	3%
Overburdened with cases/Too many cases	3%
Discovery issues	3%
Other attorney mentions	3%
Other issues mentioned	3%
Does not adhere to laws/Rules	3%
Liberal jury/judges/System	2%
Election of judges	2%
Unpredictable juries/Judges	2%
Refusal to consider summary judgment	2%
Bad reputation	2%
Out of control system/Verdicts/Jury	2%
Frivolous litigation	2%
Other court system mentions	2%
Too easy to file cases there	2%
Difficult to get cases dismissed	2%
Expensive/High court costs	2%
Inconsistent application of the law	2%

* The responses displayed in this table were volunteered by respondents. Mentions by at least 2% are given above. Results are given for a base of who were asked, “Why do you say [Insert Name of City or County] has the LEAST fair and reasonable litigation environment for both defendants and plaintiffs?”

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