Thursday, March 21, 2013

You may be entitled to a financial settlement!

A state’s legal environment is a major contributing factor in its attractiveness to business. If you’re in the job creation business, you don’t want your state to show up on the American Tort Reform Foundation’s list of Judicial Hellholes.

The Arizona Chamber this session has joined with Sen. Kimberly Yee on Senate Bill 1452, an effort to make significant improvements in the area of class action lawsuits. It’s a move that will definitely keep Arizona off the hellholes list. SB 1452 is now a strike everything amendment on SB 1346 offered by Rep. Eddie Farnsworth in the House Judiciary Committee this morning.

Class action lawsuits can be useful vehicles for large groups of plaintiffs with identical claims, but over the last 20 years there has been a startling increase in the number of class action lawsuits filed in the United States. You can’t turn on the TV without seeing a commercial asking you whether you’ve used a certain product or device that was taken off the market, and you’ve probably gotten a postcard letting you know you’re eligible for a few bucks because at some point you did business with a company that was subject to a class action.

The cost of defending a class action suit and the possibility, no matter how remote, of losing against a sizeable class of plaintiffs, is enough to discourage a defendant from going to trial, even if they have a legitimate defense. The suits are just too expensive and too time-consuming. Often times, multi-state class action suits are taxing on state resources as well.

Sen. Yee’s bill (and the Rep. Farnsworth striker) would require the court to enter written findings after a hearing about whether the action should be maintained as a class. The bill will also permit an immediate appeal of class certification decisions and would establish that all proceedings would be stayed while the appeal is pending. This change would allow for defendants to obtain review of class certification decision, which are often the most important legal ruling in the case. The bill will let plaintiffs seek immediate review of a decision against class certification.

Currently, 12 states, including Alabama, Arkansas, Connecticut, Florida, Georgia, North Dakota, Ohio, Oklahoma, Tennessee and Texas allow appeals from a class certification determination by a trial court, seven others and the federal system provide for appeals with leave of the appeals court.

We’ve got a very jobs-friendly legal environment in Arizona, but we should never stop looking for ways to improve. Implementing the changes in this reform legislation would help to ensure that only those actions properly suited to the class action mechanism would proceed and would continue to burnish Arizona’s reputation for a pro-business legal environment.  

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