A Delaware Superior Court committee examining whether asbestos cases from outside the state are clogging the system has sparked controversy about special interest groups' influence over court policy.
A November 2007 letter from Delaware State Chamber of Commerce President and CEO James A. Wolfe to Delaware Superior Court President Judge James T. Vaughn Jr. prompted the judge to form a special committee to examine Delaware's asbestos litigation and toxic-tort personal injury cases.
The committee, which includes five Delaware lawyers who don't work on asbestos cases, is examining the court's procedures concerning toxic-tort personal injury litigation and making recommendations to the court.
The committee held a public hearing in January.
The Chamber's letter complained about the rising number of asbestos-related personal injury cases filed by out-of-state law firms for out-of-state plaintiffs with claims that "have no meaningful connection to Delaware.
"The Chamber's fear is that unless steps are taken to abate the ability of such plaintiffs to sue for personal injuries and wrongful death in Delaware, the fact of Delaware incorporation will soon come to be viewed as a liability and not an asset," Wolfe wrote.
In the Chamber's letter and at the hearing, Wolfe claimed that a review of the court's electronic docket turned up 62 asbestos cases filed in Delaware in 2004 by local counsel. That compared with 576 cases since May 2005, including 445 by out-of-state firms on behalf of out-of-state plaintiffs up through September 2007.
THE DELAWARE EDGE
Many U.S. companies incorporate in Delaware and set up their headquarters in other states to take advantage of Delaware's business-friendly corporate laws.
That incorporation status also means many business disputes will land in the highly respected Delaware Court of Chancery and that companies with a Delaware incorporation can be sued in the state's Superior Court system.
At the hearing, committee member Bartholomew "Bart" Dalton of Dalton & Associates in Wilmington, Del., said there were 2,000 asbestos cases several years ago, compared with about 650 now.
The percentage of cases filed by non-Delaware parties is rising, but the court's overall asbestos caseload is not, said court-appointed defense coordinator Loreto P. Rufo, who is also a managing director of Rufo Associates in Hockessin, Del.
"The court is not burdened by this," Rufo said. "There isn't a single piece of data, information or fact to support that."
Committee member Edward McNally, a corporate lawyer and business litigator at Wilmington-based Morris James, said lawyers on both sides have mostly "small concerns" about asbestos case management in Delaware.
"The defense bar is generally satisfied with the way the cases are handled," McNally said.
Yet defense lawyers for Chrysler LLC and Freightliner (which was recently renamed Daimler Trucks North America LLC) testified about the inadequacies of the court's asbestos case procedures, such as a rule requiring a settlement conference before the court will rule on a summary judgment motion or certain discovery motions.
Somers Price Jr., a partner at Potter Anderson & Corroon in Wilmington who represented Daimler Trucks, said in the hearing that the court's current scheduling system consolidates cases and allows a fast-track process that burdens defendants. "If you try to put together expert reports for 19 cases at the same time, all scheduled, it's going to be an incredibly difficult undertaking," Price said.
Chrysler also submitted written recommendations endorsed by several other companies including Ford Motor Co. and General Motors Corp.
The state's court system is responsive to defendants' concerns, countered plaintiffs lawyer Thomas Crumplar of Wilmington-based Jacobs & Crumplar, who has worked on asbestos cases since 1978 and is frequently local counsel for out-of-state firms. "The courts have responded really well in terms of adjusting their procedures," Crumplar said.
Most companies incorporated in Delaware want to be sued in the state because "they like our bench and they want a fair shake," said Michael Kelly, a litigator and managing partner of the Wilmington office of Newark, N.J.'s McCarter & English.
At the hearing, Kelly said he is representing AstraZeneca in more than 700 cases in Delaware involving the antidepressant Seroquel.
"Would they have preferred to be sued in some plaintiff[-friendly] jurisdiction?," Kelly said of companies involved in Delaware asbestos cases. Kelly also noted that facing litigation in multiple jurisdictions increases defendants' costs.
The Chamber's letter warned that the court system's positive reputation must not be tarnished and noted that the American Tort Reform Association placed Delaware on its "Judicial Hellholes" watchlist.
The Washington-based association's controversial "hellholes" list refers to court systems "where judges systematically apply laws and court procedures in an inequitable manner, generally against defendants in civil lawsuits."
The committee's existence has also raised questions about whether an outside interest group should be able to affect case management.
Although Rufo believes that the Delaware courts "deserve applause" for responding to criticism, he worries that the formation of a committee will establish a precedent. "Private interest groups getting courts to set up committees could be dangerous," Rufo said.
The Delaware State Chamber declined to talk about the court's special committee or its role, but the U.S. Chamber Institute for Legal Reform has made public statements about the matter.
President Lisa Rickard said the U.S. Chamber Institute wasn't involved in the Delaware State Chamber's initial efforts, but she noted that the state chamber group has "a strong and vested interest" in maintaining Delaware's efficient court system.