Where you are sued can put you in the hole from the get-go. Generous jurisdictions and unfavorable rules and rulings can expose you to an extraordinary verdict.

The American Tort Reform Foundation (ATRF) annually releases its list of Judicial Hellholes. These are their listing of the most unfavorable locations for your company to be sued. Where are they? What can you do?

Where are Judicial Hellholes?

“Like with real estate: it’s location, location, location.” That was the message from the American Transportation Research Institute’s Rebecca Brewster when I interviewed her about the its nuclear verdict study. The jurors, rules, and ruling of a location can be the detonator of an excessive verdict.

This year’s list of Judicial Hellholes, in reverse order, is as follows:

8. St. Louis

7. Louisiana

6. South Carolina Asbestos Litigation

5. Cook County, Illinois

4. New York

3. California

2. (Runner up, like the Phillies) Philadelphia Common Pleas and PA Supreme Court

1. (Drum roll) Georgia

Some are obvious. Some make the list for their excessive verdicts. These include: Philadelphia; Cook County, Illinois; New York; and California. ATRF cites Georgia for a “propensity for nuclear verdicts”.

These are the swamps into which the billboard lawyers seek to drag their cases. The litigation atmosphere is a potential detonator in and of itself.

However, there are several other elements that earn hellhole status. These include the following:

Court rules

The court’s rules can enable suits to be brought in more plaintiff-friendly locations. These are often overlooked in evaluating a jurisdiction.

For example, the Pennsylvania Supreme Court changes the medical malpractice venue from provider location to anywhere the provider does business. These cases will now gravitate to its companion at Number 2 on the hellholes list, the Court of Common Pleas of Philadelphia.

So why should you care about a medical malpractice rule? Because the same rule allows trucking companies to be sued wherever they do business, regardless of the location of the accident.

What are the chances a company doesn’t do business in Philadelphia, the nation’s sixth largest city? The “doing business” rule results in your finding yourself in the Number 2 Judicial Hellhole.

Another rule cited by ATRF is New York’s permitting of “anchoring”. ATRF defines “anchoring” as a tactic “in which [the plaintiffs’ attorneys] place an extremely high figure into the jurors’ minds to start as a base dollar amount for a pain and suffering award, which, unlike medical expenses or lost wages, lacks a means of objective measurement.”

Meaning, plaintiffs put a big number out there to the jury to award a big verdict. ATRF similarly cites St. Louis and Georgia in this regard.

Court rulings

Beyond the rules are the rulings — court decisions that create a framework which is easily exploitable for big verdicts. ATRF cited St. Louis as such a venue. It wrote that the St. Louis Court permits “junk science” and “phantom damages”.

Courts are the gatekeepers for the expert testimony presented to the jury. This science must pass muster for reliability, and in terms of the “expert’s” qualifications. ATRF faults St. Louis courts in failing to do so, citing Roundup litigation.

ATRF notes that Missouri rules also permit plaintiffs’ medical bills that were for more than the amount that was actually paid. This practice, supposedly for the purpose of showing the extent of damages, further inflates the amount presented to the jury.

Docket congestion

ATRF notes that Cook County, Ill., courts are clogged with no-injury lawsuits. Is there really such a thing as a no-injury lawsuit? Yes. Yes, there is.

Illinois passed a Biometric Information Privacy Act (BIPA) permitting suits for the collection or disclosure of biometric information contrary to the Act’s provisions. Technical violation? Boom. Lawsuit.

Litigation funding permissiveness

Litigation funding and financing have major impacts on the justice system. ATRF cites New York for having an “open-door policy for predatory lawsuit loans”.

It states that these “operate like payday lenders”.

“This industry preys on vulnerable consumers, making it more difficult to settle cases for reasonable amounts,” it claims.

ATRF notes, “Examples abound of consumers taking small loans [$350 to $1,200] while run-of-the-mill claims like a slip-and-fall are still pending, leaving them on the hook to pay the lender five to 10 times that amount.”

What can you do?

You are not at the mercy of the billboard lawyers’ venue shopping. You must be proactive including the following:

Sue them first: Many states set jurisdiction where the first suit is filed. If you have an argument as to liability and suffered damages, consider suing first in a less onerous jurisdiction if rules permit.

Challenge the venue: Recent Supreme Court decisions have established that, generally, proper jurisdiction is only the state where the accident occurred or where the company is incorporated or has its principle place of business.

Align against Hellholes: Where possible, consider Hellhole exposure when hiring or revising corporate locations.

The bottom line is, consider what you can do to stay out of a Hellhole before the accident occurs and after the suit is filed. Is jurisdiction proper? What action can you take?

Absent an alternative, evaluate your case accordingly. Know what you are facing. Denuclearize your exposure.