Companies Weigh Fairness of a State’s Lawsuit Climate Heavily When Considering Where to Do Business

By Institute for Legal Reform

WASHINGTON, D.C.— A record 89 percent of senior business executives say a state’s lawsuit climate impacts important company decisions such as where to locate or do business, according to a new national survey measuring the relative fairness of the nation’s 50 state lawsuit climates.

The 2019 Lawsuit Climate Survey: Ranking the States, conducted by renowned polling firm The Harris Poll on behalf of the U.S. Chamber Institute for Legal Reform, questioned senior business executives about the fairness and reasonableness of state court systems. Those scores were compiled and the nation’s 50 states were ranked.

Delaware’s legal system was ranked best in the country; Illinois’ system is the worst. Additionally, 24 percent selected Chicago or Cook County, Illinois, as the worst city or county court.

Other notable rankings include California (48th) and Florida (46th). New York slid this year, falling seven slots to 36th from 29th in 2017. On the other end, Montana jumped 20 slots to 7th best overall.

“The survey should be a wake-up call to policymakers that their state’s economic growth and prosperity depend in large part on the fairness and predictability of its legal system,” said Harold Kim, chief operating officer of the U.S. Chamber Institute for Legal Reform. “States like Illinois are pariahs to companies. Illinois’ lawsuit system is so bad that major tech companies are refusing to sell some of their products there.”

Illinois’ Biometric Information Privacy Act (BIPA), which regulates the collection and storage of biometric information, has created a new lawsuit industry in the state with more than 300 lawsuits filed in just the last two years. BIPA is the only one of its kind in the country allowing individuals to file private lawsuits over alleged violations even if there is no injury.

For more than 15 years, Illinois has been a magnet for out-of-state plaintiffs, especially in asbestos litigation. Ninety-two percent of the plaintiffs filing asbestos lawsuits in Illinois reside out of state. More than one-in-four asbestos lawsuits in the U.S. last year were filed in Madison County, IL.

Delaware returns to the top ranking after falling to 11th in the 2017 survey. Its return to the top is likely because of the Chancery Court’s crackdown on meritless securities class action litigation, the state’s high-quality judges, and its predictable and stable legal environment.

State legal systems were ranked on several key elements, such as the competence and impartiality of its judges and juries, the treatment of tort and class action litigation, and enforcement of venue requirements and standards for scientific evidence.