WASHINGTON, D.C., Jan. 24, 2000 – The United States Chamber of Commerce warned that overly lenient state courts are becoming magnets for class action litigation, in an amicus brief filed today in the Supreme Court of Illinois on behalf of State Farm Mutual Automobile Insurance Company. State Farm was hit with a billion-dollar judgment after a state trial court certified a class action suit involving nearly five million plaintiffs in 48 states.
“Because the potential for lucrative attorneys’ fees is so great, filing of class action lawsuits has become a business,” said Robin Conrad, senior vice president of the National Chamber Litigation Center, the legal arm of the U.S. Chamber. “These filings are often directed by attorneys who dream up suits against ‘deep pocket’ defendants even before seeking out plaintiffs.
“Improper grants of class action status can turn a routine, low-stake claim into a ‘bet-the-company’ case, where businesses are forced to weigh their chances of fighting the lawsuit or settle out of court,” said Conrad. “It’s the business community’s worst nightmare and a class action plaintiff’s lawyer’s wildest dream.”
An explosion of class action suits has resulted in higher prices, higher insurance premiums, lower earnings and outrageous litigation costs for both defendants and plaintiffs, according to the Chamber. In some cases, multi-million dollar awards go entirely to cover lawyers’ bills and the actual claimants receive little or nothing.
Certain state courts are particularly lax about certifying for class treatment cases that do not meet basic class action requirements. In the 1990’s, Alabama and Texas were considered havens for class action abuse, frequently approving the practice of “conditionally certifying” class action lawsuits as soon as they were filed, without notice to the defendants. Many of those cases were filed against out-of-state companies and proposed multi-state or nationwide plaintiff classes. Illinois will no doubt experience the same class action explosion unless the State Farm decision is reversed.