Every year, the 2023-2024 Judicial Hellholes Report from the American Tort Reform (ATR) Foundation shines a spotlight on the top nine jurisdictions that have earned reputations as Judicial Hellholes. Some are known for allowing innovative lawsuits to proceed or for welcoming litigation tourism.
For the first time in the history of the report, the Foundation has ranked two jurisdictions at the top of the list. Both Georgia and Pennsylvania’s courts, specifically the Pennsylvania Supreme Court and the Philadelphia Court of Common Pleas, share the unfortunate distinction of jointly being named the year’s Number 1 Judicial Hellholes.
According to the Pennsylvania Coalition for Civil Justice Reform, the ATR Foundation listed Pennsylvania at Number 2 until the Hangey v. Husqvarna decision (effectively eliminating the “quantity” prong of Pennsylvania’s longstanding venue analysis and holding that venue could lie over a defendant who does only 0.005% of its annual business in Philadelphia County) was handed down by the Supreme Court. As soon as it was handed down, the Foundation moved Pennsylvania up to tie with Georgia for the top spot.
According to the Foundation, this venue decision will increase litigation. Additionally, the ATR Foundation reports there is a flood of medical liability litigation in Philadelphia courts thanks to the Pennsylvania Supreme Court’s decision to eliminate an important rule governing where lawyers may file these cases. The report states the Pennsylvania Supreme Court broadly applied the state’s venue rule, which is predicted to further increase litigation tourism in PA.
The report states the Philadelphia Court of Common Pleas continues to be a prolific producer of nuclear verdicts and liability-expanding decisions by the high court that will only worsen the situation. The ATR Foundation reports, plaintiffs from across the country flock to the Pennsylvania Court of Common Pleas because of its reputation for excessive verdicts and its “open door” policy to out-of-state plaintiffs.
According to the ATR Foundation, the Philadelphia court continues to issue nuclear verdicts at a staggering rate. An almost $1 billion award was levied against Mitsubishi in a product liability case in 2023. The Philadelphia Court of Common Pleas also continues to be a hotbed for out-of-state plaintiffs’ mass torts claims. Plaintiffs’ lawyers also are looking to expand premises liability for business owners in the city. Additionally, the Pennsylvania Supreme Court issued a problematic decision on punitive damages, which will only lead to more abuses and more massive verdicts.
In a somewhat surprising turn of events, the U.S. Supreme Court issued a decision that will allow even more out-of-state plaintiffs to drag out-of-state defendants into Philadelphia courtrooms.
Read the full report and click through other states here: https://www.judicialhellholes.org/reports/2023-2024/2023-2024-executive-summary/
Why does it matter?
- Lawsuit abuse and excessive tort costs wipe out billions of dollars of economic activity annually.
- Pennsylvania residents pay a "tort tax" of $1,391.33 annually and 171,091 jobs are lost each year, according to a recent study by The Perryman Group.
- If Pennsylvania enacted specific reforms targeting lawsuit abuse, the state would increase its gross product by $18.04 billion.
- In 2022, trial lawyers spent over $92 million to air about 765,000 local legal services television ads across Pennsylvania media markets.
Litigation Tourism
In 2023, the United States Supreme Court and the Pennsylvania Supreme Court eliminated constitutional and statutory jurisdictional barriers that protected defendants from being dragged into plaintiff-friendly courts with no direct ties to the events or parties involved in a claim. Without these protections in place, plaintiffs’ lawyers can file lawsuits in the state court of their choosing, taking advantage of a court’s reputation for high verdicts and plaintiff-friendly rulings.
Through its decision in Mallory v. Norfolk Southern, the United States Supreme Court opened up Pennsylvania state courts to additional cases involving out-of-state parties and the Pennsylvania Supreme Court adopted a broad application of the state’s venue rule, which then will allow a majority of these cases to be filed in plaintiff-friendly county courts like the Philadelphia Court of Common Pleas.
Mallory v. Norfolk Southern Railway
On June 27, 2023, a fragmented U.S. Supreme Court handed down the Mallory decision – a plurality opinion that broadens the opportunity for attorneys to pursue lawsuits in Philadelphia that have no connection with the events or involved parties.
In Mallory v. Norfolk Southern Railway, a Virginia resident sued a Virginia-based railroad in Pennsylvania, relying purely on the railroad’s registration to do business in the state. A state statute, 42 Pa. C.S.A. § 5301, provides that by registering to do business in Pennsylvania, a company consents to general jurisdiction in the state’s courts.
Given a series of U.S. Supreme Court decisions limiting the ability of state courts to assert jurisdiction over defendants in disputes that lack a connection to the forum state, the Pennsylvania Supreme Court ruled that the statutory scheme “does not constitute voluntary consent to general jurisdiction but, rather, compelled submission to general jurisdiction by legislative command,” and is unconstitutional under the due process clause. In those cases, the U.S. Supreme Court had limited general jurisdiction, which does not require a link between the claim and the forum state, to situations in which a business was “at home” in the state, meaning it was incorporated or had its principal place of business there.
The U.S. Supreme Court, to the surprise of many, reversed. It found that constitutional due process concerns are not implicated “when an out-of-state defendant submits to suit in the forum State” as the Pennsylvania business registration statutes require. By virtue of registering to do business in the state, because of the statute, a business consented to be sued for any purpose in its courts.
The Philadelphia Court of Common Pleas has a long-standing reputation for allowing out-of-state plaintiffs to flood court dockets with relatively low barriers of entry and this decision will further embolden the court. This policy benefits plaintiffs but negatively impacts Pennsylvanians. It clogs courts, drains court resources, and drives businesses out of the state leading to job loss.
Hangey v. Husqvarna
In late November, the Pennsylvania Supreme Court issued its long-awaited opinion in Hangey v. Husqvarna Professional Products. The disappointing decision already has been termed “one of if not the most impactful venue decisions in the last 20 years” by the plaintiffs’ bar, as it opens up plaintiff-friendly courts, like the Philadelphia Court of Common Pleas, to even more cases that lack a direct connection to the venue.
A plaintiffs’ attorney filed that lawsuit, stemming from a lawn mower accident, in Philadelphia even though the plaintiff purchased the equipment in Bucks County and was injured in Wayne County. The manufacturer was not registered to do business in Philadelphia, had no warehouses or other facilities, no address or telephone numbers, no property, and no employees or officers there. Just 0.005% of the manufacturer’s sales took place in Philadelphia. The manufacturer argued that the case should be transferred to Wayne County, where the accident occurred, or to Bucks and Montgomery Counties. In response, the trial court had transferred venue to Bucks County, where the plaintiff had purchased the allegedly defective lawnmower, based on this de minimis percentage, but a mid-level appellate court reversed.
The Pennsylvania Supreme Court found that the case could be decided in Philadelphia County. It held that Pennsylvania’s venue provision- which states that an action may be brought in a county where a corporation “regularly conducts business”- applies even when a defendant only has established a mere presence. The Court’s opinion dealt with its longstanding “quality-quantity” test under the statute, concluding that the trial court’s reliance on the percentage of the defendant’s total business in Philadelphia County was improper.
The Court explained that percentage of revenue is just one “data point” in a broader assessment of how “regular” a defendant’s business activities are in a forum. In doing so, the Court did not mention percentage of revenue at all; it noted only that the defendant’s sales to its two authorized dealers in the county had been “consistent” and were “not interrupted” during the relevant time period. The Court held that so long as “a company maintains a constant physical presence in the forum county” to perform acts in furtherance of its business objectives—even if only through an authorized dealer—venue will be appropriate in that county.
By expanding the application of the state’s venue rule, the Court will only further the forum-shopping problem already plaguing the Pennsylvania judicial system. It has eliminated an important safeguard for defendants and further tilts the scales in favor of plaintiffs who can choose to sue in the county that they view as most likely to return a favorable verdict and large award, rather than the county connected to the lawsuit.
Medical Liability
New medical malpractice filings increased 108% in Philadelphia this year after the Pennsylvania Supreme Court eliminated the state's venue rule in 2022.
In August 2022, the Supreme Court of Pennsylvania unilaterally eliminated constraints that have prevented lawyers from picking the most plaintiff-friendly jurisdiction for filing medical liability actions. At issue was a 2002 court rule that required plaintiffs’ lawyers to file medical liability lawsuits in the county where treatment occurred, not where a jury is expected to view the claim most favorably or return the largest award. The purpose was to reduce forum shopping and create a more fair and balanced playing field. Excessive medical liability drives up doctors’ insurance expenses, increases costs for patients, and reduces the public’s access to healthcare.
In light of the newly eliminated rule, attorneys can sue for medical malpractice not only where medical treatment took place, but also any additional location where the healthcare provider operates an office, any additional hospital locations in which the physician provides care, or where a physician lives. Of course, the state’s personal injury bar, through the Pennsylvania Association for Justice, supported the change.
Plaintiffs are expected to now flock to areas like Philadelphia, where juries are more willing to award higher verdicts in favor of plaintiffs.
New medical liability filings are surging in Philadelphia. Through October 2023, there was a 108% increase in filings (468) when compared to the same time last year (225). From 2017 to 2019, plaintiffs suing healthcare providers in Philadelphia County won at a 36% rate, compared to a 12% and 9% rate in nearby Montgomery and Lancaster counties, respectively. As a result of the elimination of the rule, cases filed against health systems in a variety of different counties across the state have now been refiled in Philadelphia.
In May 2023, the Pennsylvania Coalition for Civil Justice Reform (PCCJR) sent the Pennsylvania Supreme Court a formal request to immediately review the rule change. The letter points out how every month of 2023 has shown a significant increase in filings in Philadelphia over the previous six years for the same month. Philadelphia courts are struggling to keep up with the increased case load and if the current filing rate continues, the trial calendars for 2025, 2026, and 2027 will be filled – by the end of 2023.
Medical malpractice insurance rates have increased since the rule change went into effect. According to PCCJR’s letter, “manual rates have been increased by specialty, with a minimum increase of 10.5% and a maximum increase of 16.1%.”
Nuclear Verdicts Rise
According to the ATR Foundation, Philadelphia’s reputation as a pro-plaintiff jurisdiction with a propensity for nuclear verdicts is a main reason it’s a hotspot for medical liability cases and mass tort litigation.
Between 2017 and 2019, seven-figure awards made up three to seven percent of all Philadelphia verdicts. In 2022 and 2023, it grew to 11 percent of all verdicts. The percentage of plaintiff victories has likewise grown in Philadelphia from 41 percent in 2017 to 52 percent in 2023. According to a 2022 U.S. Chamber study, Pennsylvania had 78 nuclear verdicts ($10 million or more) in personal injury and wrongful death cases between 2010 and 2019. These verdicts totaled over $11 billion in damages, with a median of $20 million. The state ranked third in per capita nuclear verdicts and fifth in total nuclear verdicts. Medical malpractice and product liability cases pose the most risk of an astronomical award. They accounted for more than 60 percent of nuclear verdicts. The Philadelphia Court of Common Pleas hosted more than half of the state’s nuclear verdicts.
Record-Breaking Roundup Verdict
In April 2023, a Philadelphia court awarded the largest medical malpractice award in Pennsylvania history –$182.7 million. This fall, the first Roundup case to go to trial in Philadelphia resulted in a $175 million verdict for an 83-year-old man who blamed the herbicide for his cancer diagnosis. The verdict was not only contrary to findings that the product is safe by the EPA and the scientific consensus, but inconsistent with nine of the preceding 11 Roundup cases that had ended in defense verdicts. In its post-trial motion for relief, Monsanto brought to light troubling issues with the jury’s deliberations. According to information volunteered by a juror after the verdict, after a three-week trial, the jury had been unable to reach a decision on liability, with, at one point, five members siding with the defendant and one more considering shifting to the defense side. The jury foreperson asked the judge overseeing the case, Judge James Crumlish, how to proceed. Through his court clerk, Judge Crumlish instructed the jury that they had to reach ten “yes” or “no” votes or they would be required to return on Monday and again on Tuesday and Wednesday if the deadlock continued. According to the ATR Foundation, as soon as jurors learned they would be required to come back again and again, the frustrated jurors quickly moved back to the plaintiff’s side so that they could go home. These interactions between the jury and the court improperly occurred off the record with no notice to the parties. The deadlock instruction conveyed to the jury was contrary to careful instructions developed by the Pennsylvania Supreme Court that are designed to avoid the very result that reportedly occurred. In addition, the juror shared that some of its members had not agreed on the $175 million award and were surprised to hear it announced in court, but likely did not object because they knew it would prolong the trial. That extraordinary verdict would soon be overshadowed by another Pennsylvania record breaker – a nearly $1 billion verdict in a product liability case in the Philadelphia Court of Common Pleas this October.
Mitsubishi case shatters that record
The latest nuclear verdict stemmed from a car crash in which the plaintiff, a Bucks County resident, attempted to pass a vehicle but drove off the side of the road to avoid oncoming traffic, colliding into trees. He would later allege that the seatbelt of his 1992 Mitsubishi 3000 GT failed to adequately restrain him and contributed to his injuries. The jury awarded the plaintiff and his family $180 million in compensatory damages (including $160 million in noneconomic damages) after prevailing on the design defect claim. In the second phase of the trial on punitive damages, the jury awarded an additional $800 million dollars after less than 30 minutes of deliberation. It is the largest crashworthiness verdict ever awarded in the state.
According to the ATR Foundation, the court kept critical evidence from the jury. The Judicial Hellhole report states the court did not allow the automaker to tell the jury that the seatbelt design met motor vehicle safety standards, even as the plaintiffs’ lawyers asserted that the manufacturer had not tested the vehicle. In fact, the court instructed the jury that it should not consider compliance with safety standards when determining liability. The court also neglected to tell the jury that, in a case involving the crashworthiness of a vehicle, a manufacturer is liable only for injuries beyond those that would have otherwise occurred in the accident. Nor did the court tell the jury that a plaintiff, when claiming a product is defective, must show there was a feasible alternative, safer design that would have avoided the injury.
Instead, the court framed the need to show an alternative as optional. When it came to the jury’s consideration of punitive damages, the court did tell the difference between negligence and gross negligence, which is not sufficient to warrant such punishment, and willful or reckless conduct, which can be.
This case shows the practical impact of the Pennsylvania Supreme Court’s Hangey decision. The plaintiff was allowed to bring his case in the more favorable Philadelphia Court of Common Pleas instead of Bucks County court, where he lives and the accident occurred, because Mitsubishi does an infinitesimally small percentage of its business in the county.
Pennsylvania law also prevents defendants from introducing evidence of their compliance with state and federal regulations in products liability actions. Here, Mitsubishi was able to present limited details of the car’s regulatory compliance to rebut the plaintiff’s charge of willfulness, yet the jury was never instructed by the trial court judge to consider this evidence in their decision regarding punitive damages. Sullivan v. Werner, discussed in more detail later in the section, presents an opportunity for the Pennsylvania Supreme Court to correct this manifest unfairness for defendants that comes to light in cases like these.
NFL player injury
Other 2023 nuclear verdicts in the Philadelphia Court of Common Pleas include a $43.5 million to a former NFL player in a suit arising from knee surgery. This amount was more than five times what the player contended he lost in future NFL earnings.
Judge Doesn’t Hide His Pro-Plaintiff Views
In May 2023, a Philadelphia court awarded a plaintiff $26 million following unsuccessful treatment of a leg injury at Temple University Hospital. The plaintiff also requested an additional $3.7 million in delay damages. Following the verdict, Temple filed a motion for the court to reduce the damages and asked for a new trial.
Temple argued the damages were excessive and would impact the provider’s ability to provide healthcare in an underserved North Philadelphia community: “This excessive verdict is an unsustainable economic hit to TUH’s ability to provide quality care to the population in an area where medical care is desperately needed.”
In denying the defendant’s motion and granting the additional damages for delay, Judge James Crumlish of the Philadelphia Court of Common Pleas issued what the ATR Foundation called a scathing opinion that inappropriately dripped with sarcasm and rebuke of the hospital. He said the healthcare provider had a “skewed view of the facts” and relied “upon the purposefully vague and generalized nature of their spin asserted facts to propel the parties on a court-conducted frolic and detour…as if the entirety of the burden to prevent a medical malpractice crisis falls upon the shoulders of this court and the victim of their admitted catastrophic mal- practice.” Judge Crumlish also found that Temple’s efforts were “wholly without merit and represents a disingenuous effort to enlist the court to relieve the defendants from miscalculations in their trial strategy, an unsatisfactorily tried case and equally noncredible and unpersuasive witness testimony.”
Complex Litigation Center
According to the ATR Foundation, for years, Philadelphia’s presence on the Judicial Hellholes list was in large part due to Philly’s Complex Litigation Center (CLC), which was created in 1992 to handle complex mass tort cases. The CLC, while criticized for its slow-moving litigation and high costs to the system, quickly became a magnet for trial lawyers nationwide who flocked to Philadelphia with hopes of scoring a nuclear verdict.
However, recent court data reveals that the Center’s dominant mass tort program is dwindling — the CLC’s case docket decreased 60 percent since 2020. Risperdal litigation alone accounted for a staggering 6,912 cases in 2019. But the volume of these cases sits at fewer than 330 today.
This reduction forces the question: is it time to close Philadelphia’s CLC altogether? Closure would re-focus court resources more effectively on matters relevant to local taxpayers and send a clear message to out-of-state trial lawyers that Philadelphia is no longer the preferred destination for “litigation tourism.”
Despite the decrease in activity, there are still a few active mass tort cases working their way through the system.
Paraquat
In 2021, paraquat litigation was designated a mass tort in the Philadelphia Complex Litigation Center. Plaintiffs across the country have filed suits alleging that paraquat, a main chemical in one of the most commonly used commercial herbicides, was responsible for the development of their Parkinson’s disease. After months of disputes between the parties regarding how the proceedings should be consolidated, in March of this year, the court approved a complaint allowing the litigation to proceed.
The ongoing paraquat litigation also offers some remarkable insights into how the state’s personal jurisdiction statute burdens out-of-state defendants, particularly in the wake of the U.S. Supreme Court’s decision in Mallory v. Norfolk Southern. For example, in the litigation against Syngenta, a manufacturer of paraquat, at least 350 of the 400 plaintiffs who sued in the Philadelphia Complex Litigation Center lack any connection to Pennsylvania, with many joining soon after the Court’s decision in Mallory provided a green light for plaintiffs to flock to this jurisdiction.
Syngenta challenged the Court’s exercise of personal jurisdiction over these plaintiffs, relying in large part on Justice Alito’s concurring opinion in which he signaled the possibility that the state’s consent-by-registration statute was unconstitutional under the Dormant Commerce Clause. Furthermore, unlike the railroad in Mallory that had “substantial operations” in Pennsylvania, Syngenta has fewer than fifteen employees in the entire state.
Regrettably, the Philadelphia Court of Common Pleas denied the preliminary objection to its jurisdiction. Despite this denial, this case presents an excellent opportunity for Pennsylvania appellate courts, and potentially the U.S. Supreme Court, to again weigh in on the validity of this statutory scheme.
Zantac
Lawsuits alleging that Zantac, an over-the-counter heartburn medication, contains a carcinogen have surged over the past year. Zantac litigation is now the largest of the four mass torts added in 2022 in the Complex Litigation Center. Plaintiffs from across the country have flocked to Philadelphia to file their claims due to the court’s pro-plaintiff reputation. An attorney involved in the litigation stated that “state court is typically a preferable battleground for plaintiffs” and that Philly’s Zantac case list is likely to grow. As of November 2023, there were nearly 398 cases in the CLC database.
The defendants attempted to challenge the jurisdiction of the CLC over cases brought by out-of-state plaintiffs because the corporations are neither incorporated nor retain a principal place of business in the state of Pennsylvania.
Meanwhile, the federal judge overseeing Zantac cases pending in federal court dismissed them months earlier.
Zantac was pulled off the market in 2020 after a study by Valisure, a private lab, found that one of the medication’s ingredients could possibly become carcinogenic under highly unlikely circumstances.
In dismissing the litigation, Judge Robin Rosenberg exposed the flaws behind the science of Valisure’s claims, which, as she pointed out in her opinion, “undermines the credibility of their findings.”
Valisure’s testing methodology involved heating the product to well over 200 degrees, which is clearly not a realistic scenario for how an individual would consume the drug, considering that is double the temperature of the average healthy person.
Besides heating the product to temperatures it would not otherwise be subjected to, Valisure also tested the product with an artificial stomach containing unusually high amounts of salt – amounts that humans could not safely ingest.
The FDA actually found that Valisure’s lab equipment created NDMA, the cancer-causing chemical in question.
Judge Rosenberg wrote in her opinion that “There is no scientist outside this litigation who concluded ranitidine causes cancer, and the Plaintiffs’ scientists within this litigation systemically utilized unreliable methodologies with a lack of documentation on how experiments were conducted, a lack of substantiation for analytical leaps, a lack of statistically significant data, and a lack of internally consistent, objective, science-based standards for the evenhanded evaluation of data.”
Asbestos
Despite national asbestos claims falling 7% nationwide from last year, the Philadelphia Court of Common Pleas saw a nearly 20% increase in filings from 2021 to 2022, making it one of the top three jurisdictions with the greatest year-to-year increase. As of July 2023, Philadelphia ranked fourth nationwide in total asbestos claims, its fourth consecutive year ranked in the top four.
Philadelphia’s asbestos litigation has resulted in nuclear verdicts. For example, in December 2022, the Philadelphia County Court of Common Pleas awarded a mesothelioma plaintiff who alleged he was exposed to asbestos contained in gaskets and packing materials $25 million in damages.
The manufacturer argued that the $25 million award was excessive and requested a new trial to recalculate damages. The $15 million verdict for noneconomic damages is far greater than what is typically awarded in similar cases and is seven times larger than what the plaintiff’s lawyers had previously obtained in any prior asbestos case. The manufacturer further argued that the jury should have learned that the plaintiff was exposed to asbestos in other products produced by companies not named as parties to the lawsuit. The plaintiff sued dozens of companies alleging exposure to asbestos-containing products caused his disease. Before a decision could be made regarding a new trial, the case settled.
Liability-expanding decisions by Pennsylvania Supreme Court
Punitive Damages
A key factor in evaluating whether a punitive damage award is appropriately proportional is the ratio between the harm (the compensatory damages) and the punishment (the punitive damages). In July 2023, the Supreme Court of Pennsylvania issued a long-awaited decision that will have vast implications in cases involving multiple defendants in which there is a punitive damage award.
Bert v. Turk arose when a business sued a competitor, two of its subsidiaries, and a former employee alleging they poached its sales force and client base. The jury awarded $250,000 in compensatory damages and $2.8 million in punitive damages. In that instance, the trial court judge had calculated the ratios by dividing the punitive damages assessed to each defendant (rather than the total punitive award) by the total compensatory award, resulting in much lower ratios. The Supreme Court of Pennsylvania affirmed this per-defendant approach.
The state high court also found that punitive damages that are more than nine times compensatory damages are constitutional, despite U.S. Supreme Court precedent finding that a 9:1 ratio is rarely constitutional and even a 4:1 ratio pushes the boundary in a typical case. The Pennsylvania Supreme Court reasoned that even though the U.S. Supreme Court signaled that double digit ratios are likely unconstitutional, the high court has repeatedly declined to adopt a rigid line and has instead relied on terms like “reasonableness” when instructing lower courts.
This decision will drive up damage awards across the state and has the potential to create more nuclear verdicts, especially in Philadelphia.
Expansion of Premise Liability
In May 2023, the Supreme Court of Pennsylvania increased liability for contractors that unknowingly create potentially dangerous conditions on job sites even when they no longer have access to the property.
In Brown v. The City of Oil City, Oil City contracted with the defendants to renovate a set of concrete stairs leading to the city’s public library. The contractors finished the work by the end of the year, but shortly after, Oil City learned the stairs were degrading. Between 2012 and 2015, the condition of the stairs worsened, yet the city made no efforts to repair the stairs or warn the public. A visitor to the library tripped and fell down a deteriorated section of the stairs and suffered fatal injuries. Her estate sued Oil City as well as the contractor who performed the work, alleging a breach of duty of care.
The City settled for the maximum amount permitted against government entities. The case proceeded to trial against the contractor, with the trial court ruling that contractors are liable “for all defective conditions of structures on land which they are responsible for creating through their repair work,” even though the contractor was no longer responsible for the property or under contract.
On appeal, the contractor argued that the company was unable to repair its work on its own nor was it instructed to make any repairs by the city. Holding the contractor liable encourages property owners to neglect to inspect and repair dangerous defects on their property.
The dissent agreed, pointing out the majority’s opinion placed a higher burden on contractors than land- owners. “The practical effect of the majority’s position is to make the manufacturers and contractors strictly liable under conditions where they are not in a position to correct or ameliorate against the dangers posed while possessors and third parties need not take any precautions against dangers of which they are aware.”
Pennsylvania Cases to Watch
On July 13, 2021, Matthew Maguire was fatally stabbed in the parking lot of a McDonald’s in Philadelphia County. In July 2023, Huy Nguyen, the administrator of Maguire’s estate, claimed that McDonald’s knew or should have known about the risk of violence to their customers and failed to provide adequate security.
Personal injury lawyers also filed a pair of negligence claims against Pat’s King of Steaks, a beloved restaurant in South Philadelphia. The first, brought in July, resulted from a deadly shooting that took place outside the restaurant. Although the perpetrators of this crime were ultimately brought to justice, the estate of the victim sued Pat’s, alleging that they were liable for their failure to take prior measures to prevent the shooting. More recently, in September, the estate of an individual who was beaten to death outside of the restaurant sued Pat’s, claiming that the restaurant owners had a duty to protect its customers or intervene in the altercation.
As these cases demonstrate, businesses are becoming increasingly vulnerable to lawsuits arising from criminal acts beyond their control. These types of lawsuits will burden businesses that operate in high-crime areas. They will be forced to decide to either close their stores or charge higher prices to offset the significant costs of additional security measures that may not be able to stop crime from occurring around the store.
Supreme Court Cases to Watch
Treble Damages in Consumer Protection Cases
In January, the Supreme Court of Pennsylvania agreed to decide whether a court must award treble (triple) damages in cases brought under the state’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) when a jury awards punitive damages on a similar tort claim. In that instance, the trial court properly found that trebling damages on top of an award that already included punitive damages, in addition to substantial compensatory damages and attorneys’ fees, was not necessary or appropriate. As pointed out by a coalition of civil justice and business groups in its amicus brief, the alternative would result in duplicative damages for the same conduct. Finding that a trial court lacks discretion to find treble damages unnecessary in such circumstances would exacerbate a trend of expanding liability exposure under the UTPCPL and lead to extortionate settlement demands.
During oral arguments, several justices of the Supreme Court of Pennsylvania signaled their disapproval of the trial court’s ruling. Justice Christine Donohue, for example, asked, “Why would we take into account any other damage award? This statute… makes no reference to other considerations,” in reference to the trial judge’s decision to consider the punitive damage award as part of the treble damage determination.
Design Defect Litigation
In March 2023, the Supreme Court of Pennsylvania heard arguments in a case regarding whether courts should admit evidence of industry and government standards in cases alleging that a product’s design is defective. In Sullivan v. Werner, a carpenter sued a scaffold manufacturer, alleging a design defect after falling through the platform and injuring his back. The plaintiff’s lawyer sought to keep the jury from learning about government regulations and industry standards for scaffold design offered by the manufacturer, citing the Superior Court’s decision in Gaudio v. Ford Motor Co. He argued that evidence of a product’s compliance with industry standards may be kept from the jury in a strict liability claim because the reasonableness of the manufacturer’s conduct is irrelevant.
As an amicus brief recognized, however, industry and government standards “promote uniformity in product design, reduce costs associated with development and testing, and ensure the product is safely designed and manufactured.” Businesses rely on such standards to manufacture safe products. The standards are “widely recognized by the majority of courts as relevant to a design-defect claim.” It is also fair to permit defendants to offer such evidence, particularly when plaintiffs routinely introduce evidence of noncompliance to bolster their product liability claims.
Uber
In July, the full Pennsylvania Superior Court upheld a three-judge panel’s decision to invalidate Uber’s arbitration provision in its “terms and conditions” agreement. Here, the plaintiff sued Uber in the Philadelphia Court of Common Pleas despite having agreed to Uber’s terms and conditions prior to registering an account.
The Superior Court disregarded the Federal Arbitration Act and held that a stricter burden of proof is necessary to ensure users understand they are waiving their right to a jury trial. This happened even after the Superior Court concluded that the plaintiff would have been bound by the other contractual provisions under the regular application of contract law.
This decision calls into question the validity of countless arbitration agreements found in consumer contracts. Uber, like many companies, has included provisions like these in its terms and services under the expectation that the Federal Arbitration Act prohibits their disparate treatment. Further, the use of arbitration to settle consumer disputes is a benefit to businesses and consumers alike, providing a quicker and cheaper resolution process.
The decision has been appealed to the Pennsylvania Supreme Court, but the Court has not yet decided whether to review it.
