Tort/Civil Justice System ResourcesU.S. Chamber’s “Lawsuit Climate” Survey: Five Things to Know

March 2010
Contact: Ray De Lorenzi
American Association for Justice
202-965-3500 x8369

The U.S. Chamber’s Institute for Legal Reform released their annual “lawsuit climate” report, a survey of corporate defense lawyers from multi-million and billion dollar businesses.  But as is the case with much of their past rhetoric, this “study” is long on corporate spin and short on facts.  The methodology has been debunked and ridiculed year after year by academics, scholars, media, and independent experts.

Here are five points to keep in mind before reporting on the Chamber’s shameless attempt to shield its corporate financers from being held accountable through America’s civil justice system.  Please contact Ray De Lorenzi with American Association for Justice if you need more information or reaction / comment on the Chamber’s report.

1. The Chamber’s survey lacks any real methodology or scientific basis, and actual experts and academics have derided and debunked this report, year after year.
               1. In September 2009, Cornell Law professor Theodore Eisenberg called the report “inaccurate, unfair, and bad for business” and “substantively inaccurate and methodologically flawed.”  And even though Chamber claims to care about the concerns of business, Eisenberg found that the survey “may discourage investment in the U.S.” and “promotes corporate behavior that needlessly endangers the public.”i
               2. The Chamber’s latest slogan – “jobs, not lawsuits” – has already been ridiculed by Factcheck.org.  When the Chamber ran ads and movie trailers this year claiming a majority of small businesses were afraid or targeted by litigation, Factcheck.org called it “malarkey” and “not even close to the truth.”ii
               3. U.S. Chamber’s own pollster admitted that there is no way to measure the fairness of a state’s legal system.  According to the Copley News Service, “Humphrey Taylor of Harris Interactive said the survey is based on the individual responses of the [corporate] lawyers because there is no hard data that can be used to measure the perceived fairness of a state's legal system.”iii
               4. After ranking West Virginia as having one of the “worst” liability systems, U.S. Chamber’s CEO and pollster were forced to admit that only of a fraction of those surveyed actually knew anything about the state’s court system.  According to the Charleston Gazette, “Taylor and Donahue [sic] acknowledged not all of the 1,437 lawyers surveyed knew anything about West Virginia's courts. Taylor said ‘around 107’ said they had direct knowledge of the state. ‘You could argue that's a small sample, but what they keep saying is ‘49th, 49th, 49th.’”iv

2. The Chamber’s policies on behalf of AIG and other major corporations caused the economic collapse.
               1. The Chamber received $23 million from AIG and its charitable foundation, the Starr Foundation, in the years leading up to the economic collapse in 2008.v
               2. The majority of this money, $15 million, was pledged in 2003 immediately after the passage of Sarbanes-Oxley to initiate a “capital campaign for educational and research programs.” Effectively, this money was to begin setting the groundwork to roll back post-Enron reforms.
               3. In the wake of the Enron debacle, U.S. Chamber began a hard-hitting campaign against regulation and enforcement. U.S. Chamber targeted the SEC and other agencies for overzealous regulation by claiming “an accounting error should never be seen as a crime.”
               4. The SEC estimated that the string of accounting failures at companies such as Enron, WorldCom, Adelphia, and Tyco cost U.S. households nearly $60,000 each on average as some $5 trillion in market value was lost.vi

3. Despite its rhetoric, the Chamber doesn’t care about small businesses.
               1. The Chamber is funded by large, multinational corporations that want to undermine and eliminate America’s civil justice system so they won’t be held accountable for their misconduct.  Wal-Mart, Bank of America, AIG, and a slew of drug and insurance companies sit on the front board of Chamber’s Institute for Legal Reform.
               2. During the last decade, AIG gave nearly $25 million to the Chamber to roll back regulations, eliminate all accountability, and create the system that caused our economy’s recession in the first place.vii
               3. When the Chamber ran ads and movie trailers this year claiming a majority of small businesses were afraid or targeted by litigation, Factcheck.org called it “malarkey” and “not even close to the truth.”viii
               4. A 2008 survey by the National Federation of Independent Business on the biggest threats facing small business owners (3,530 owners surveyed), out of 75 possible concerns, “costs and frequency of lawsuits / threatened suits” ranks 65th.ix
               5. The National Association of Manufacturers released a survey of manufacturers in the United States showing that the “fear of litigation” ranked at the bottom of their list of concerns, well below foreign competition, wages, and cost of goods.x

4. The Chamber wants to keep the courts open for corporations but not individuals, filing its own lawsuits all the time.

               1. The U.S. Chamber of Commerce has an affiliated organization called the National Chamber Litigation Center (NCLC), which engages in litigation on behalf of corporate interests. The NCLC filed 131 amicus briefs and direct party challenges in 2009, which it calls “new record for litigation activity.”xi
               2. Paradoxically, the U.S. Chamber also has an affiliated organization called the Institute for Legal Reform (ILR), whose sole mission is to restrict the ability of individuals harmed by negligent corporations to file suit. In 2010, ILR purchased two minute trailers on 300 movie screens around the country to try to convince viewers that they should want to restrict their own legal rights.
               3. In 2009, the U.S. Chamber of Commerce filed a lawsuit against the activist group the Yes Men for holding a fake press conference where representatives of the group pretended to be representatives of the Chamber and announced to reporters that the Chamber had changed its stance on climate change policies.xii
               4. Following the government takeover of the U.S. auto industry in 2008, the Chamber sent a letter to members of the U.S. Congress stating its opposition to a provision in the legislation that would prevent automobile manufacturers that received federal funding from challenging laws on greenhouse gas emissions. The Chamber called the provision “blackmail, pure and simple,” and argued that it would “deny the manufacturers their basic constitutional right to use the federal courts.”xiii
5. The number of lawsuits filed has been dropping for years.
               1. Tort filings in state courts declined 24 percent between 1998 and 2007. In 2007, tort filings accounted for just six percent of the civil caseload in state courts. Meanwhile, contract filings, which are more likely to involve businesses as plaintiffs than tort cases, rose by 37 percent between 1998 and 2007.xiv
               2. These downward trends in civil litigation filings apply to federal caseloads, too. Between 1985 and 2003, the number of tort trials in U.S. District Courts declined by 79 percent, from 3,604 in 1985 to fewer than 800 in 2003.xv
               3. The Bureau of Justice Statistics (BJS) found that the median awards for tort trials in state courts in the nation’s 75 largest counties dropped 18.4 percent between 1996 and 2005. In 2005, the median award in tort jury trials was $24,000.xvi
               4. Three decades of research have shown that juries are not biased toward plaintiffs and that meritless cases rarely win. And contrary to allegations that they cannot understand the intricacies of the law, juries, judges and independent reviewers are in agreement as to verdicts the vast majority of the time. In fact, of the three, juries are the most likely to rule in favor of a defendant.xvii

i http://online.wsj.com/public/resources/documents/ranking.pdf
ii http://www.factcheck.org/2010/01/us-chamber-more-lawsuit-malarky/
iii “Survey says frivolous lawsuits hurt state's reputation,” Copley News Service, 3/8/04
iv “Corporate lawyers rank state's legal climate poor,” The Charleston Gazette, 3/9/05
v Starr Foundation 990s.
vi Accounting Failures Have Cost Americans $60,000 on Average, SEC Commissioner Says, Associated Press, November 14, 2002.
vii http://www.justice.org/cps/rde/xchg/justice/hs.xsl/2923.htm
viii http://www.factcheck.org/2010/01/us-chamber-more-lawsuit-malarky/
ix National Federation of Independent Business, “2008 Small Business Problems and Priorities,” http://www.nfib.com/object/2008problemspriorities.html.
x “NAM Survey Shows Most Manufacturers Concerned About Energy, Production Costs and a Skills Shortage,” National Association of Manufacturers press release, 3/21/05, http://www.nam.org/s_nam/doc1.asp?CID=67&DID=236615
xi Policy Accomplishments for 2009, National Chamber Litigation Center, viewed at http://www.uschamber.com/issues/accomplishments/nclc.htm
xii Anne Mulkern, U.S. Chamber Sues Activists Over Climate Stunt, New York Times, October 27, 2009.
xii R. Bruce Josten, Letter to Members of the United States Congress, December 9, 2008.
xiv Examining the Work of State Courts: An Analysis of 2007 State Court Caseloads, National Center for State Courts.
xv Thomas H. Cohen, Federal Tort Trials and Verdicts, 2002-03, Bureau of Justice Statistics, August 17, 2005.
xvi Thomas H. Cohen, Tort, Bench, and Jury Trials in State Courts, 2005, Bureau of Justice Statistics, November 2009.
xvii Philip G. Peters, Jr., Doctors & Juries, University of Missouri-Columbia School of Law, 2006, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=929474.