The cuts continue; L.A. Court loses hundreds of employees

One day after running my Perspective column, entitled "Legislature Using Purse Strings to Bind Judiciary," the Daily Journal has published a story today that chronicles the massive cuts to the Los Angeles County Superior Court system.  Rebecca U. Cho & Catherine Ho, Hundreds Of L.A. Court Workers to Be Laid Off Today (March 16, 2010) www.dailyjournal.com [subscription required]. 

329 employees are scheduled to receive pink slips today.  In addition, it is reported that 12 courtrooms will close, but the specifics have not been announced.    The Los Angeles Superior Court currently plan to lay off an additional 500 employees in September.  Los Angeles court officials are reportedly "facing a $79 million budget deficit in the current fiscal year, which is expected to grow to $120 million next year." Judge Charles McCoy is reported to have asked the Judicial Council for permission to use court construction funds for court operations.

In an article by the Los Angeles Times, Presiding Judge McCoy's missing to communicate the court funding crisis was described:

Los Angeles County Presiding Judge Charles "Tim" McCoy's message is loud and clear: His court system, the largest trial court in the nation, is facing deep fiscal trouble in the years ahead due to drastic cuts in state government funding.

Victoria Kim, L.A. County's top judge faces steep opposition to fund diversion proposal (February 16, 2010).  In that article, the uphill battle in front of Judge McCoy is spelled out.  According to Ann O'Malley. O'Malley, who chairs the state's Trial Court Presiding Judges Advisory Committee, 53 presiding judges of the state's 58 trial courts have told her they oppose Judge McCoy's proposed use of the construction fund to cover operating expenses.

If it is even necessary to consider layoffs of hundreds of employees or utilizing a court construction fund backed by bonds, not budget appropriations, to support basic operations, something is seriously awry in California's budgeting process.  Whether or not you agree with Judge McCoy's specific predictions and approach to the problem, there is no disputing that a problem of colossal magnitude now exists.  Pretty soon we won't need to debate tort reform or amendments to California's class action procedures; nobody will be able to have a civil case heard by a judge before the parties and counsel are all dead of old age.

Update on 2010-03-16 21:43 by The Complex Litigator

The Press Release from the Los Angeles Superior Court is now available at the Los Angeles Superior Court website.

Second Interim Report on class actions in California sheds new light on certification

Earlier this month, the Administrative Office of the Courts released its Second Interim Report from the Study of California Class Action Litigation.  The Second Interim Report specifically analyzed class certifications in cases initially filed with a class action designation.  The findings were surprising.

First, over the period of 2000 to 2005, certification rates plummeted: "The rate of class certification (by any means) decreased by more than 50 percent over the study years."  Report, at 6.  This sharp decline mirrored findings in federal courts.

Second, a meager 13% of cases initially filed as a class action ever had a motion for class certification filed before final disposition, and only 46% of those motions were granted.  Report, at 8-9.  However, three times more cases were certified as part of a settlement.  Report, at 11.  The Report speculated that the rate of certification by settlement could be attributable to the State's complex litigation programs:  "In California, the frequency of classes certified as part of a settlement agreement may be another product of the Complex Civil Litigation Program."  Report, at 11.  Sadly, the apparent success of this program hasn't ensured that class actions filed in Los Angeles County receive the careful attention of the Complex Civil Litigation Program.  Due to limited resources, the Los Angeles County Complex Courts are rejecting most class actions to focus on construction defect cases, mass torts, and other multi-party suits.

The Second Interim Report also examined data to test the hypothesis that class certification pressures settlements from defendants.  The data did not support that hypothesis.  For example, the lack of interlocutory review of orders granting certification did not reveal a settlement pressure when compared to federal courts:

Given the absence of an interlocutory appeal option in California, one may conclude that settlement pressure would exert more effect and more cases would be compelled to settle after the granting of a motion for class certification as compared to federal court. However, the disposition composition for certified cases that reached a final outcome in California does not support this hypothesis. Table 16 shows that the rate of settlement after certification through a court-granted motion for certification is 69%. This is actually slightly lower than the rate of 72% in the federal court. California‘s lack of intermediate recourse in response to the granting of class certification does not result in a higher rate of settlement in that situation when compared to data from federal court.

Report, at 26.  Summing up the data analysis related to the theorized pressure to settle, the Report concluded:

In sum, California data show that very few cases could be included in a category in which the commonly discussed parameters that define settlement pressure from class certification may have been a factor in the decision to settle. Many cases circumvented the issue altogether by including class certification as an element of the settlement itself. In cases with a class certified through a court-granted motion for certification, neither the overall disposition composition nor the time-to-settlement analyses seem to suggest an automatic or immediate progression from certification through motion to settlement which would allow the determination that pressure results in inevitable settlement. The conclusion here is not that the idea of settlement pressure is fabricated, or even altogether negligible, but rather that the pervasive effect of settlement pressure in California does not appear to be supported by the data.

Report, at 28.  It is at least fair to say that the only comprehensive study of California class action data available does not provide support for the recent, repeated claims by CJAC, Governor Schwarzenegger, and others that class actions are out of control, forcing settlements or in need of reforms such as the right to immediately appeal any order certifying a class.  Such a reform would likely lower the number of contested settlements from meager to negligible.  Certainly, that is a desirable result for businesses that underpay employees, sell defective products, or falsely advertise goods and services.  It is not, however, necessary to save our bankrupt state.