Supply and demand for judicial services

I’ve been trying to understand changes over time in the California state budget, though the data are presented in a way that makes that extremely difficult to do. I did spend enough time to discover one component of the budget that seems to have grown at a pretty healthy pace if you look at the last decade as a whole.

In the Governor’s proposed 2009-2010 budget, $3.4 billion dollars, or 2.5% of the total, is allocated to state trial court funding. That’s a 63% increase over the $2.1 billion that was spent in 2001-2002. Which led me to wonder: when, and in what manner, did California voters express a desire for a big increase in consumption of judicial services provided by the state over the last decade?

Let me tell you about the latest court case in which I’ve been involved. I received the following notice in the mail a couple weeks ago:

To: Any and all persons who purchased merchandise with a credit card at a Crate and Barrel retail or outlet store in California from June 3, 2004 through July 16, 2009 and who were asked to provide an address, telephone number, zip code, e-mail address, or any personal identification information at the time of the credit card transaction….

An action is currently pending in the Superior Court of the State of California for the County of San Diego (the “Court”) entitled McCarthy v. Euromarket Designs Inc., Case No. 37-2008-00085041-CU-BT-CTL (the “Consumer Lawsuit”). As a result of a proposed settlement of the Consumer Lawsuit (the “Settlement”), you may be entitled to share in the benefits made available to those persons described above….

The plaintiff in the Consumer Lawsuit filed a class action lawsuit against Euromarket Designs, Inc. (“Euromarket Designs”) on behalf of herself and those persons described above. The Consumer Lawsuit alleges that Euromarket Designs unlawfully requested and recorded personal identification information from customers during credit card sales transactions…

The Court has granted preliminary approval of the proposed Settlement. Euromarket Designs has agreed to provide all Class Members who have not chosen to opt-out of the Settlement with a certificate, attached to this notice, entitling them to $15.00 off a single purchase at any Crate and Barrel retail or outlet store in California (the “Certificate”)….

Euromarket Designs has also agreed that if the Settlement is granted final approval by the Court, Euromarket Designs will pay reasonable attorneys’ fees, litigation expenses and court costs in an amount to be determined by the Court … up to a maximum limit of $223,000.

I receive something like this on a pretty regular basis these days– someone has sued, allegedly on my behalf, a company for something that I in fact do not acknowledge to be a serious transgression against me personally. The award is significant dollars for the lawyers who file the case, and some trinket offered to me.

I’m sure some of our lawyer readers can offer spirited arguments for why this growth in the role of the courts has been most helpful and beneficial. But here’s what I really wish they’d tell me. If California voters desired a decrease rather than increase in the consumption of judicial services provided by the state, exactly how, under our current system of governance, could we achieve it?

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36 thoughts on “Supply and demand for judicial services

  1. Eric Legrand

    Great question. I live in California too and got the same thing in the mail.
    I’d love to see more commentary on California’s budget, tax, and political system.

  2. Cam

    The risk/reward of litigation is assymetric under the US system. In many other countries, if you litigate and lose, you may be liable for the other side’s legal fees. That creates greater symmetry to the risk-reward framework. Otherwise you are just giving the trial lawyers a free call option.

  3. Fat Man

    There are lots of laws and rules that could be changed to reduce the flood of litigation.
    But, this represents a classic public choice problem with diffuse costs and very concentrated benefits.
    Maybe the cheapest way would be to remove season and bag limits on lawyers, permit the taking of does, and put a bounty on them.

  4. Joseph

    JDH being an expert in econometrics, you would think that he would do at least a little research into the statistics before he goes off on one of his rants against civil torts. For example:
    here and
    here.
    The statistics show that of all California superior court cases, only 2% are unlimited civil cases (greater than $25,000). The vast majority, 85%, are criminal felony and misdemeanor cases.
    If you just look at all civil cases, only 12% are unlimited civil. The rest are motor vehicle injury, marital law, family law, probate and small claims.
    Now of the unlimited civil cases, only 27% are torts. The other 73% are contract disputes, companies suing each other. More interesting are the trends. Torts are down 30% in the last 8 years while contract disputes are up 17%. You never hear JDH complaining about the billions of dollars wasted by companies suing each other. He only complains about the much smaller issue of individuals suing companies.
    This is one of JDH’s more dishonest posts. He starts off with a complaint about the costs of the judicial system and then implies by his example that it is the fault of torts which make up only 0.5% of all court cases. The reality is that the vast majority of costs are for criminal cases and of the civil cases, most are companies suing other companies. If he really wants to reduce the costs to business, he should tell them to stop wasting money suing each other. Instead JDH is like Ronald Reagan dishonestly trying to blame his enormous deficits on the boogie man, the mythical welfare queen in a Cadillac.

  5. GK

    tell me. If California voters desired a decrease rather than increase in the consumption of judicial services provided by the state, exactly how, under our current system of governance, could we achieve it?
    Simple. Make no-fault divorce only an option for people who do not have minor children. So either early in the marriage or after the kids are all 18 or older. But NOT in the middle years.
    For people who have minor children and seek divorce (which 90% of the time is the woman who is incentivised by the prospect of an extortion windfall), change the law to require a darn good reason for divorce. Short of abuse, addiction, or impotence, divorce should not be granted. The kids, who usually suffer the most due to the woman’s choice to divorce, would not be harmed, and would not grow up to be underachievers who burden the court system further over the years.
    Once you have kids in a marriage, you are locked in barring some pretty serious wrongdoings on the part of the other spouse.
    The burden on courts would plumment. Children who have to grow up in broken homes would plummet. The general anti-male bias in modern culture would curtail. The fertility rate would rise. Adoptions, which are an all-round good thing, would also slightly rise.
    The misandrists (who call themselves feminists) would oppose it. But the other 80% of the public would probably support the law change.

  6. Robb Lutton

    The problem is that with the information provided it is impossible to tell whether it is in your interest to have more spending on trial courts. Maybe the fact that trials are more speedy means that fewer people are in pre trial detention which saves money. (not to mention that speedy trials are good independently). Maybe with more courts the state collects more fines. etc. etc. Your anecdote is meaningless since we don’t know the significance of such suits to the whole.

  7. Duncan Brown

    I asssume that the total includes criminal cases too, such as petty drug crime. Didn’t I hear that your prisons are so packed that they are paroling people just for the space? This in part refects the spiraling costs of the war on drugs, the three strikes law, and other feel good political issues.
    Duncan Brown

  8. JDH

    Joseph and Robb Lutton: This is not an isolated anecdote. I receive another one of these ridiculous letters every few months. A decade ago I recall none. The possibility that the increase in unwarranted lawsuits of which I have personal, firsthand knowledge might be related to the overall growth in judicial expenses is not “dishonest”, but instead a very natural hypothesis.

    As for the criminal court caseload, I welcome input from you or others as to what specifically has changed. To what extent is this an increase in the original prosecutions filed, and to what extent does it have other causes?

    Finding ways to control the California budget is a very real challenge. Looking at components that have grown significantly and asking why they changed is an extremely important task in which I would invite you and others with expertise to join me. The purpose of my post was to pose the following, not as rhetorical questions, but as queries on which I seek constructive responses:

    • When, and in what manner, did California voters express a desire for a big increase in consumption of judicial services provided by the state over the last decade?
    • If California voters desired a decrease rather than increase in the consumption of judicial services provided by the state, exactly how, under our current system of governance, could we achieve it?

    Any constructive answers that you or others might be able to offer for those questions would be most welcome.

  9. jonathan Kurtzman

    Oh dear Lord, you aren’t an idiot so why did you post such an idiotic piece of crap?
    Californians DID choose to consume more judicial services: they voted for tougher sentencing laws and putting more people in prison. The prison population is up nearly 50% in the same period.
    Jeez.
    And you completely miss the obvious point that civil litigation is very expensive – minimum about $25k outside of small claims – and that pricing keeps the consumption of judicial services in civil claims down.

  10. Jim Locke

    During the time frame mentioned in the article the Court funded the California Case Management System, supposedly designed to unify court records throughout California. Over $1.1 billion has been spent so far, a $600 million cost overrun from the initial contract amount. The system “is a dismal failure,” according Sacramento judges interviewed for an article in the Sacramento Bee (http://www.sacbee.com/government/story/2037399.html) And there we have almost all of the budget increase. This is where the outrage should be.
    Deloitte Consulting (remember Enron?), who had never done a case management system for a court, somehow won the contract. (I bet there is a story there.)
    The Legislative Analyst’s Office noted in 2004 “our analysis finds that the project development and oversight process used for CCMS . . . (1) lacks an assessment of the statewide costs and benefits of the projects and (2) does not sufficiently mitigate risks common to large IT projects.”
    (http://www.lao.ca.gov/analysis_2004/crim_justice/cj_06_0450_anl04.htm.) Scroll down a little.

  11. PaulS

    @j Kurtzman: namecalling doesn’t get us anywhere useful. But anyway, by voting to Git Tuff, didn’t Californians vote to decrease consumption of
    judicial services, by increasing consumption of prison services, in the possibly vain and certainly politically incorrect hope of incapacitating those who find nothing better to do in life than prey upon others? I.e. keep ‘em in jail and maybe you don’t have to try ‘em as often?

  12. q

    i have no idea whether this is true, but could it be that the increase in judicial services is due at least in part to the increase in personal bankruptcies in California?

  13. Joseph

    JDH says: “This is not an isolated anecdote. I receive another one of these ridiculous letters every few months.”
    This is embarrassing. Renowned econometrician James Hamilton now proclaims that the plural of anecdote is data. He gets a couple of letters about class action lawsuits and concludes that this must be the cause of billions of dollars of court costs.
    Two minutes of googling would have told him that there are 9.5 million judicial cases filed each year in California and torts are less than one-half of one percent of them. Of those, class actions are only a few hundred. Another two minutes of googling would have told him that torts have declined while contract disputes have increased yet he concludes that torts are the problem. He obsesses about a few hundred cases while ignoring the many millions of others each year.
    It’s bizarre. JDH is a very smart man and does outstanding work. Yet when it comes to this one subject of torts, all the facts, data and reasoned analysis we’ve come to expect from him go out the window and he turns into a foaming at the mouth Glenn Beck just speaking from his gut.

  14. Hitchhiker

    Joseph, perhaps he is frustrated that the lawyer class is always rewarded under democratic administrations and congressional majorities while these same politicians believe they can micro manage any other aspect of our lives. More likely, he has had a bad personal experience with an extremely morally impaired attorney and holds a grudge. My self, I wouldn’t shoot one for no good reason but, I also wouldn’t shed a tear if a busload went over a cliff.

  15. ISLM

    After this JDH post, which is thoroughly obliterated by comments, I shall be a little embarrassed each time I reach back to grab my copy of Time Series Analysis.

  16. uber_snotling

    While the level of discourse about the post is poor, I would agree with those posting that this is well below the typical level of discourse we expect from JDH. The plural of anecdote is not anecdata.
    Joseph, Jonathan, and Robb have all posted evidence backing their claims that tort cases are a tiny fraction of all court cases in California and do not explain the increase in the budget as postulated by JDH.
    Why even post this with this low level of analysis? At least JDH could have done a bit of fact-checking before posting this unfounded speculation…

  17. JDH

    uber_snotling: I do not see where I postulated that tort cases account for the increase in the judicial budget. Instead I passed along two things that I found interesting: (1) there has been a 63% increase in the state’s contribution to trial court funding since 2001-2002, and (2) I now regularly receive notice that I am a party to ridiculous lawsuits, details of the latest I share with readers.

    No one has disputed the budget facts, and no one has suggested that “my” latest lawsuit is anything other than completely absurd.

    Yes, I brought these two observations together because I feel that they are connected, not because I suppose that the Crate and Barrel case by itself represents a significant burden on the California budget, but because the ridiculousness of this latest case suggests to me a system that is quite out of control. That leaves me wondering what has been the cause of the increased expenditures for the vast majority of court cases in which I have not been personally involved.

    The purpose of my post was to raise the following question. If citizens wished to consider the option, how could total expenditures on the judicial branch be reduced? Offering a thoughtful response to that seemingly straightforward question appears to be beneath the dignity of our lawyer readers. However, calling me dishonest, idiotic, and foaming at the mouth evidently is not.

    I guess just asking the question is very upsetting to some people.

  18. Rob

    Joseph is one of these tort lawyers? And instead of taking a serious question seriously resorts to ad hominem attacks? Noone is foaming at the mouth but Joe–say it aint so Joe

  19. Rob

    Prof Hamilton,
    I rarely speak out as I come here to learn, not pontificate, but I think you raise an entirely appropriate issue. I too receive letters along these lines and once I receive a check for about $2. What irked me then (and now) is that the shareholders of these companies are the ones that are held culpable, not the principals–and I therefore view it as legalized shakedown of company owners. I also received a letter once of “…if you owned this stock during these dates… you can “shakedown” the current owners…since mgmt should have told you (in effect) “that the stock might go down” (some trivial risk factor not disclosed). I paid my money, I took my chances, and I lost. No biggie to me. I wrote back to the lawyer, “take my name off your book, and tell me that you did so.” I never heard back. This is a moral issue, upon which wealth creation depends (going to debate this), and to me (imho) is very much a subject to Prof Hamilton is very right to inquire about.

  20. Lord

    The judicial system is high in political contributions. That is probably more important than anything else.

  21. John Lee Hooker

    @Lord : that’s the point.
    And Paul Krugmann told me, the eco professors are high in political contributions, too. He must know it.
    @JDH : cool down, and keep on going. Why not a post about the future gold price ?

  22. Brian D. Quinn

    All of the vitriolic attacks aside, the simple fact is that this has not been driven by civil suits. This has been driven by the rising criminal caseload. If you want to view a real outrage, look at the growth in the prison budget since 1999. Currently California’s corrections budget is a whopping $8.2 billion in state funds and $12.9 billion overall. California’s insane criminal code condemns the state to rapidly rising prison costs for decades to come.

  23. Michael E Sullivan

    The simple answer to your question is:
    1) legalize or decriminalize the use and possession of most recreational drugs.
    2) repeal or radically reform three strikes laws. Have them apply only to people convicted three times of violent felony offenses. Or just get rid of them entirely
    Either of those would do *far* more to reduce consumption of the judicial system than completely eliminating all torts, let alone trying to discern useless torts from legitimate ones.
    Not to say that latter shouldn’t be attempted, but perhaps it would make sense to go for the low-hanging fruit first.

  24. JDH

    Michael E Sullivan: On your point (2), by what mechanism do longer sentences result in greater burden on the courts? Is there a number you could suggest we look at that could be used to confirm your conjecture?

  25. Diana

    I’m with Joseph: the vast majority of useless cases clogging the court system are 1) corporations engaged in earnings management, and 2) putting people away for drug crimes. I speak as a former federal clerk who did the judge’s research.
    The vast majority of high-priced lawyers are doing earnings management. What really happens is: 1) corporation makes a bad bet; 2) bad bet turns out to be a really expensive bad bet, and party on other side of the case wants his money. No surprise there.
    So the corporation turns to really expensive counsel and says, here’s the contract, we’ll pay when we can, but we can’t afford this right now, can you find a flaw?
    And then the pricey lawyers go to work.
    (Think about this, all you tort reformers out there: do you really think the best and the brightest are working for the poor, or the public, and on contingency?)
    The expensive lawyers’ job is to come up with colorable legal reasons why the corporation won’t pay on that contract just now. Not sanctionable bullshit, and not reasons that will win — even the client knows *that* is just about impossible (but let’s just say paying for the legal research on how to get out of this contract is a lot cheaper than paying on the contract) and meanwhile the company can publish audited financials saying the amount is “in litigation.”
    No-one knows what this means. Sarbanes-Oxely actually requires companies to explain exactly what went wrong and how much they expect to lose when a significant amount of money is at risk “in litigation”, in the false hope that companies could be required to divulge that they were engaged in earnings management, but the expensive lawyers have figured out how to B.S. their way around this.
    In case anyone ever wonders what costs thousands of hours at $900+ an hour of legal work, this is it. Now you know.
    Eventually the individual who signed the contract moves on in the corporate hierarchy, new blood settles in, circumstances change for the company and there’s money available to pay. Now the companies settle for a lot of money, and cite the idiocies of juries and the liberal judiciary as the excuse. No-one remembers the original problem, no-one’s career is harmed, much money was moved from the company’s shareholders to its lawyers and its management, and the counterparty vows to hire those kinds of expensive attorneys to draft its next contract so this doesn’t happen again.
    Of course all the expensive attorneys are in on the scam, because the contract and litigation attorneys work for the same big firms, it’s their bread and butter, so of course it happens again. To everyone.
    And you really think the lawyers working on contingency are the problem? or the luckless souls who volunteer their time to represent the really luckless souls we put in prison for life?

  26. Robert Bell

    JDH, Diana: “If California voters desired a decrease rather than increase in the consumption of judicial services provided by the state, exactly how, under our current system of governance, could we achieve it?”
    In the case of the corporate cases, all parties seem to be knowingly and willingly participating in the shenanigans (which we as taxpayers seem to be subsidizing unless court costs fully cover all of the court infrastructure, staff, etc)
    However, in the case of the class action suit here, JDH neither knew about the suit ex ante nor chose to participate. Do you know enough about the mechanics of such suits to explain how they come about. For example, is it necessary that at least some customers who might have had their information misappropriated have to contact a law firm? Did Euromarket Designs have to be cited in a criminal case first establishing that they violated some information/privacy statue by gathering the information, after which civil suits for damages could proceed? Would the list of people putatively harmed by the information collection be released to the suing firm as part of discovery?

  27. sjp

    I think Brian Quinn is onto it — the large prison population is an observable that can suggest where the judiciary expenses are going.

    Why did the comment section devolve so quickly? I cannot find a trace of the “dishonesty” Joseph first ranted about. JDH posted some facts he has experienced and then posed a question; he didn’t run a Swift-boat ad.

    In response to Joseph: sheer quantity numbers don’t answer the question. It could be that the 2% of tort cases we are discussing systematically demand more resources-per-case than the criminal cases. What we want is price times quantity.

    And finally to ISLM: math is math, so TSA is either correct or incorrect. If you need a reputation to convince you the math is right, are you understanding the symbols?

  28. Joseph

    sjp: …sheer quantity numbers don’t answer the question. It could be that the 2% of tort cases we are discussing systematically demand more resources-per-case than the criminal cases. What we want is price times quantity.
    Common sense tells you that a couple hundred class action cases out of the nearly 10 million cases annually handled by the courts doesn’t amount to a hill of beans for court costs. You are talking about 1 case out of 10,000 — four orders of magnitude. Even if class actions were 100 times more costly than the average case, it still would have no overall significance. And JDH should have taken a couple minutes to find this out.
    Perhaps dishonesty is too strong a word. At the very least it is intellectual recklessness. It stands in stark contrast to the usual careful, reasoned analysis he provides which suggests that there is some underlying grudge involved that defies reason.

  29. ohwilleke

    The implications in the post are absurd. You can think that we have too many or too few class actions, but they aren’t driving state court budgets.
    The civil side of the court system comes very close to paying for itself with court costs; collection cases which are the numerical bulk of the total judicial system docket are up, but so far the fees paid by creditors. No country spends less on the court system per civil case than the United States. Most countries have lower settlement rates and much greater judicial involvement in cases (with serious cases typically having three judges assigned one of whom supervises every witnesses testimony; in the U.S. witnesses are routinely examined first in depositions with no judge involved in civil cases).
    Almost all of the general fund expenditures in the judicial system come on the criminal side. Even there, the aggregate spending per case by prosecutors, public defenders, judges and judicial staff combined is phenomenally low per felony and per misdemeanor. They handle a typical mid-level felony case, on average, for less than the average private criminal defense lawyer alone charges to handle a disorderly conduct or DUI case. Population growth naturally drives up criminal justice expenses in the judicial budget, but declining crime rates should be compensating, particularly because it is the capital and very serious criminal cases that drive judicial branch criminal expenditures and those cases have definitely fallen. It isn’t as if judges, prosecutors and public defenders are raking in the big bucks relative to private practice lawyers in either absolute or income growth terms.
    I strongly suspect that most of the cost growth comes from changes in sentencing legislation. A big part of the judicial branch budget in most states in the probation department. High incarceration rates have put pressure on the judicial branch to expand its probation caseloads as well. You have to when the prisons are full. Bigger probation departments require more probation officers, and probation officers aren’t cheap.
    Bottom line: criminal sentencing trends have far more to do with the judicial system budget than class action lawsuits (incidentally, that has almost certainly gone down, as recent federal legislation transferred jurisdiction over most class action lawsuits to the federal courts which don’t show up as a line item in the state budget).
    Also, don’t forget that class action cases are much cheaper for the court system than lots of individual small dollar claims. Class actions are very expensive for litigants. But, they are very cheap for the court system; usually little more expensive than a run of the mill automobile accident case. This is because settlement rates in class action cases are far higher than in non-class action cases (class actions almost never go to trial), yet the costs on the judicial system of a civil lawsuit are heavily backloaded to the trial stage. Trials cost heaps of money. A scheduling conference or two, and a few motions to resolve before a case settles does not cost much. A typical class action case involves something on the order of six hours of judge work and perhaps a similar amount of work for a law clerk, who is paid 25% of less of what the judge is paid. All told, a typical class action may cost the court system $1,000 give or take, a good share of which is covered by filing fees in the case. The litigants, of course, may easily spend hundreds of thousands of dollars each on those cases, but our system is firmly based on limiting judicial system costs, no matter how great the private cost of handling those cases with minimal judicial intervention might be.

  30. Bryan Willman

    Well first, I see large absolute numbers, and large percentage increase numbers, but no statement of court costs, or costs of the criminal justice system with respect to the size of the population and/or the size of the economy.
    How much have court costs (or any other cost of CA government) changed w.r.t. state domenstic product, state population, etc? (Surely CA domestic product has not risen 63%, nor has its population. But they both rose some significant amount in the period in question, did they not?)
    One suspects that there is a lot of truth to both Diana’s observation, and to the observations about criminal load and people in prison.
    Which brings us to the nut of the real question “how do voters choose this, how do they continue to approve it, how might they choose to spend less?”
    It’s all indirect. By choosing to have some kind of available legal system, and some kind of law enforcement, society chooses to pay some bills. Period. If the fabric of society is riddled with illegal behavoir, there will be high police, court, and prison costs. (And high victim costs.) Period. So the 85% criminal case load cited cannot really be directly acted on, but only adjusted as a side effect of different policies about what is crime, and different treatment of people that reduce their tendency to commit crime. So *some* programs that “help” people may save money. Programs that prepare citizens for successful participation in life are most likely a win. Whether treating some “crimes” as “not crimes” will only reduce the burden if there are not collateral crimes. e.g. If recreational drug users still engage in violence, theft, reckless endangerment, and so forth, the criminal case load may not change much.
    The civil costs could be set out and paid for by the litigants – perhaps the bringer of a suit must post funding for it, and the loser in the end pay for it? Keep in mind that some civil cases (including one’s I’ve been involved in) are a response to some kind of outright fraud – which happens much more than people may think. So the civil courts must be accessible.

  31. ohwilleke

    The other big factor is that California made a policy choice in 1997 to systematically shift court funding from county governments to the state government in the cost shares trial court system. Thus, a lot of the increase from 2001 to 2009 is offset by reduced burdens on county coffers.
    Local trial court operational expenses are capped at 1994 levels, despite significant increases in population in the state (which is a driver of court system cots). Responsibility for court facilities was shifted from local government to state government between 2002 and 2007.
    A key fundamental flaw in the original post is that it assumes incorrectly that state judicial branch general fund expenditures are an accurate or complete measure of California’s consumption of judicial services. A shift from county level funding to state level funding has a big effect on the state budget that has nothing to do with aggregate funding at all. It isn’t economically irrevlant – it effectively shifts wealth from high income counties that contribute a lot to the general fund but often have proportionately little criminal docket costs to low income counties that contribute little to the general fund but often have proportionately hihg criminal docket costs. But, the shifts have far more to do with Robin Hood impacts and intrastate federalism than they do with increased spending on judicial services.
    The combined filing fees in a class action lawsuit like the one you mentioned is $700. Many class action lawsuits have multiple defendants and the filing fee revenue goes up by $350 per defendant. This is quite close to the actual cost to the judicial system of processing these cases. The court costs referred to in the blockquote are the Plaintiffs’ filing fees and out of pocket costs (e.g. photocopying, service of process fees, court reporter fees for depositions without judicial supervision, expert witness fees) in connection with the lawsuit, not judicial system costs.
    As the budget document explains (paragraph breaks added for reading ease):
    “Chapter 850, Statutes of 1997, enacted the Lockyer-Isenberg Trial Court Funding Act of 1997 to provide a stable and consistent funding source for the trial courts. Beginning with the 1997-98 fiscal year, consolidation of the costs of operation of the trial courts was implemented at the state level, with the exception of facility, revenue collection, and local judicial benefit costs. This implementation capped the counties’ general purpose revenue contributions to trial court costs at a revised 1994-95 level.
    The county contributions become part of the Trial Court Trust Fund, which supports all trial court operations. Fine and penalty revenue collected by each county is retained or distributed in accordance with statute. Each county makes quarterly payments to the Trial Court Trust Fund equal to the fine and penalty revenue received by the state General Fund in 1994-95, as adjusted by amounts equivalent to specified fine and fee revenues that counties benefited from in 2003-04.
    Chapter 1082, Statutes of 2002, enacted the Trial Court Facilities Act of 2002, which provided a process for the responsibility for court facilities to be transferred from the counties to the state by July 1, 2007. This Chapter also established several new revenue sources, which went into effect on January 1, 2003. These revenues are deposited into the State Court Facilities Construction Fund for the purpose of funding the construction and maintenance of court facilities throughout the state. As facilities transfer to the state, counties will also contribute revenues for operation and maintenance of court facilities based upon historical expenditures.”
    You should start worrying about the cost to the judicial system of class action cases when you start reading about class action lawsuit trials in the newspapers, rather than reading about class action lawsuit settlements in your mailbox. A class action lawsuit trial could easily go for ten weeks, using roughly 100 times the judicial resources as a settled case (juries have to be paid in addition to judges and much of the work of judges is in the month or two before trial that settled class action cases never reach). Of course, even then, class actions are so rare that they wouldn’t make a material impact on the state budget.

  32. ottnott

    JDH wrote: Michael E Sullivan: On your point (2), by what mechanism do longer sentences result in greater burden on the courts? Is there a number you could suggest we look at that could be used to confirm your conjecture?
    The mechanism is quite easy to see if you put yourself in the position of the defendent.
    Wouldn’t you put up a bigger fight if the stakes were higher?

  33. Anonymous

    ottnott: The mechanism is quite easy to see if you put yourself in the position of the defendent.
    Wouldn’t you put up a bigger fight if the stakes were higher?

    Indeed, if you look at the California statistics, only 0.6% of all cases filed ever go to trial. The vast majority are settled or dismissed before trial. But for felonies the rate of jury trials is 2.8%, almost five times higher than average. When three strikes means life in prison, the stakes are very high.

  34. Bill Shoe

    Here is an article from 2009-Sep-16 that says the California court system will start closing for a few days each month due to emergency budget shortfalls (http://www.ireport.com/docs/DOC-329547). The article says the total budget shortfall in the judicial branch of California government is $445 million.
    So based on Jim Hamilton’s numbers:
    2001-02 budget = 2.1 billion.
    2009-10 budget = 3.4 billion.
    Therefore, the 2009-10 budget minus the emergency shortfall looks like this:
    $3.4 billion – $0.445 billion = $2.955 billion.
    This $2.95 billion remaining budget is an increase of 40% over the 2001-02 budget. The real (inflation adjusted) increase is around 13% from FY 2001-02 to FY 2009-10. Yet they are now unable to remain open for normal business hours.
    Maybe the Cali government’s problem is spending as opposed to tax revenue issues.

  35. Doug Brown

    I’ll preface my comments by identifying myself as a trial lawyer and admitting that I am not a regular reader of this blog, nor of Prof. Hamilton’s. I understand that he is a faculty member in the Economics Department at UCSD, and a widely respected one at that, for which I have significant respect. It is for those reasons that I both temper my initial, emotional response to this entry and that I feel compelled to comment.
    Others have very sufficiently identified some of the most salient information that’s missing from Prof. Hamilton’s original post, so I won’t rehash those details here other than to recap them. Civil cases are a very minimal drag on the state’s coffers, as the associated filing fees generally cover the cost of a case’s processing. And tort cases, and class actions in particular, constitute a very small percentage of the state’s composite caseload. Tort filings are, in fact, down significantly over the last 8 years, as Joseph has pointed out (more on this in a bit). Finally, a smattering of anecdotes based on class action notices received in the mail hardly constitutes data.
    Unfortunately, such a smattering does inform public opinion, as Prof. Hamilton’s post evidences. For decades now, so-called reformers have beaten the drum of “tort reform” loudly and mercilessly before the American public. We’ve been subjected to countless accounts of ostensibly greedy people burning themselves with hot coffee from McDonald’s and then shaking down defendants for [Insert Big $$$ Here] at trial or through settlement. These accounts have resulted in legislation that makes filing lawsuits on behalf of tort victims more difficult, more expensive, and less likely to succeed. As in many arenas, California has led the way on this issue, as its medical malpractice laws are, for instance, among the most hostile to plaintiffs in the nation. For its part, the federal government also took dramatic steps to undermine consumer rights, such as the Class Action Fairness Act (“CAFA”) that, as has been pointed out in the comments stream, now makes significant class action litigation in state courts all but impossible. A considerable amount of this litigation became enacted under the radar, under little public scrutiny and with little media coverage, during the brief period when Bush was president and the Republicans controlled Congress. Even now, and despite this recent and incredible string of legislative victories for the “reformers,” we again hear the sound of the “tort reform” drum in the context of the Health Care debate. In short, the issue has become extremely political.
    Within the comment stream, Prof. Hamilton expresses bewilderment as to why his “asking the question is very upsetting to people.” This is the reason. By constructively attempting to identify aspects of the state budget that have grown in recent years and that may, by implication, be opportunities to now achieve cost savings, and then connecting that discussion to a class action notification that you believe represents the frivolity of consumer litigation, you took a position on this very political issue. Your position was particularly likely to incite controversy because it was based on the same distorted reckoning of the costs of tort litigation on the public and the same distorted anecdotal reasoning that has fueled the “tort reform” cause.
    And for those of us that are consumer attorneys, your position is hurtful on a personal level. A natural extension of your premise, and an overt assumption of many of the commenters here that apparently share your view, is that the purported inefficiencies you identify in the judicial system serve the purpose of padding lawyers’ pockets. Commenter “Diana” has already exposed the fallaciousness of this trope and pointed out that trial lawyers working on contingency are very rarely the ones getting rich. In my case, I accepted a job as a trial lawyer that pays me less than half of what I was guaranteed as a civil defense lawyer at a large corporate law firm, in large part because I believe more in what I’m now doing. I don’t challenge the virtue or value to society of the work that you do. Please don’t publicly invite such a challenge to mine.
    Finally, since no one else has, I want to address Prof. Hamilton’s statement that “no one has suggested that ‘my’ latest lawsuit is anything other than completely absurd.” This is a bit difficult at first blush, as you don’t ever describe for us what you believe is “completely absurd” about this lawsuit. According to the mailer you quoted, a company “unlawfully requested and recorded personal identification information” about you because you purchased something with a credit card at a Crate & Barrel store. Is this completely inconsequential to you? Is your privacy or your ability to control the dissemination of your own personal information insignificant to you? How do you feel about your answers to these same questions once you learn that one of the defendant company’s databases has been hacked and that these bits of data about you, your purchasing preferences, and those of your fellow Crate & Barrel shoppers is now in the hands of an unknown criminal, or when that same information is used to berate you with unsolicited mailings targeting those the marketer has identified as a suitable demographic because they shop at Crate & Barrel?
    I don’t know the answer to those questions, obviously, but I do know that privacy is important to a number of consumers and that it is protected by law. If the allegations on the class action notice are true, a company unlawfully took, and then misappropriated, information that belongs to you and your fellow class members. If that means nothing, you are lawfully entitled to opt out of the class. If it offends you, you are likewise entitled to file a formal objection to class certification and seek, essentially, to have the action destroyed.
    I suspect that your skepticism regarding the case has little to do with your feelings about information privacy and much more to do with the $15 coupon it promises, as the value of such a coupon may seem trifling and, even if it does not, is difficult to match-up with the value of the privacy right that has allegedly been invaded. In a zealously contested class action settlement, the amount to be awarded to class members is rigorously contested and ultimately reflects both the extent of those members’ damages and the probability of their success in litigation. By law, the trial judge must then grant preliminary, and later final, approval to any and all class settlements in order to guard against settlements that do not properly reflect this balance. So if your complaint is that the coupon is too trifling, then your larger point is really that the tort system unfairly advantages defendants, not that it is overrun with frivolous lawsuits. If your complaint is with the dissonance between an invasion of privacy and a monetary award, that is unfortunately a fundamental impairment of our civil judicial system.
    Finally, I appreciate that you and much of your audience are economists, and so I’ll leave you with this thought. There is no unified or universally accepted theory as to the purpose of our tort system. One purpose that it does serve, however, is deterrence. On the whole, America is a very safe country. The specter of litigation doubtlessly contributes to this. If not for the ability to aggregate myriad $15 claims against a company for misappropriating personal information, who will ever bring the case on his/her own behalf and what will discourage would-be violators from such conduct? This is nowhere more true than in the realm of seemingly minor “gotchas” that we all bear constantly on behalf of large corporations, such as the misappropriation of consumers’ personal information for those corporations’ profit. Bob Sullivan’s book “Gotcha Capitalism” is instructive on this point. I urge you to please thoughtfully consider the consequences of the “reform” that your post suggests before hopping aboard the bandwagon.
    Thank you, and take care,

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