The recurring problems in the Marion County Small Claims court system came to light on a national stage last July, when the Wall Street Journal published a lengthy report detailing pervasive problems in the Marion County Small Claims Courts. Titled “In Debt Collection, Location Matters,” this article alleged that high-volume filers receive preferential treatment and engage in “forum shopping” among the nine Marion County Small Claims Courts. The front-page article also asserted that defendants are often unaware of their rights and coerced by creditors’ counsel into settlement.
Marion County is the only county in the state with small claims courts based on township lines—there are nine small claims courts, one for each township, hearing collection disputes and landlord-tenant matters involving claims up to $6,000. In all other Indiana counties, small claims cases are handled by the county circuit or superior courts.
Unlike all other Indiana judges who handle small claims dockets, the nine Marion County small claims judges serve on a part-time basis. However, under the state’s Weighted Caseload Measures system, the current Marion County small claims caseload (approximately 70,000 new filings per year) would support nearly twelve full-time judicial officers. More than one-third of all small claims cases and approximately one-twelfth of all civil cases are heard in these nine Indiana courts. For many litigants, the Marion County Small Claims Courts are their first or only exposure to the judicial system.
In January 2011, the Indiana Supreme Court appointed a two-person Small Claims Task Force—Court of Appeals Judge John Baker and Senior Judge Betty Barteau—to investigate the allegations published in the Wall Street Journal. Both judges have extensive experience within the Indiana court system, including time spent hearing small claims cases.
During its investigation, the Task Force conducted three public hearings to seek comments about the practices and procedures of the Marion County Small Claims Courts. More than 200 local residents attended these hearings, and about fifty individuals—including collection attorneys, landlords, renters, small claims defendants, law students, pro bono attorneys, and a state senator—testified before the Task Force and the public.
The final, thirty two-page report was sent to the Supreme Court Rules Committee and made available to the public on the Court’s website on May 1, 2012. A nearly five hundred page appendix was published with this report. It included transcripts of the public hearings, statutes and rules governing the Marion County Small Claims courts, letters and emails received from small claims litigants, financial information and caseload data for the nine township courts, and correspondence between the Task Force and Marion County Small Claims Court judges.
The Task Force Report lists seventy-nine specific findings of fact relating to the structure, operation, and management of the nine Marion County Small Claims Courts. The bulk of these findings focus on problems in court structure and funding, and inequities in the rights and access provided to small claims defendants.
Part of the problem with the Marion County Small Claims Courts involves the governmental structure and townships’ influence on the courts.
- Many Small Claims Court judges reported that their township trustees hire, fire, supervise, and promote court s taff without seeking input from the judges.
- Court employees have stated that they believe they work for the trustees.
- The judges have also asserted that some trustees retain unilateral control over the courts’ budgets, completely excluding the judges from the budgeting process.
Another area of concern involves management of the courtroom. Task Force staffers who attended court sessions reported that, in certain courts, the creditors’ counsel controlled the proceedings, meeting with defendants in unsupervised settlement conferences and even conducting hearings outside the judges’ presence. In addition:
- Some litigants have complained of settlement agreements and judgments being approved by the court clerks, without ever being reviewed by the judge.
- Small claims defendants are often unaware of their rights, including their rights to request a hearing before the judge, or to request a change of venue.
- Marion County is the only county in Indiana where a small claims action may be filed in a jurisdiction in which neither party lives nor works. Defendants who lack access to private transportation may find it difficult to attend court proceedings in a far-flung township.
Many have expressed concern that large-volume filers appear to deliberately seek out busy courts that provide less oversight of settlement agreements.
- Because the townships retain more than 50 percent of fees for all cases filed within their township court, this ability to choose one’s venue may effectively discourage judges from closely monitoring settlement agreements and negotiations.
- In fact, judges who make a point to review the terms of settlements have seen dramatic declines in new filings in their township courts.
The Task Force has created a set of comprehensive plans to address each of the problems noted above, as well as other issues such as judicial pay, private practice by small claims judges in other Marion County Small Claims Courts, and problems with timely service of process.
Although two of the proposed plans involve fundamental changes to the structure of the Marion County Small Claims Court system, the third includes many comprehensive reforms which may be implemented as “best practices” by the courts in absence of any structural changes.
The Task Force in Plan A of the Report suggests that the township courts be incorporated into the Marion Superior Court system. This would require action by the Indiana General Assembly. Township courts would become the Small Claims Division of the Marion County Superior Court, the county would bear responsibility for funding the Small Claims Division, and judges would serve full-time, with a salary fixed by statute. Under this plan, small claims cases would be randomly assigned to a judge (as all other cases filed in Marion County), rendering moot concerns on forum-shopping.
The Task Force in Plan B of the Report, which also requires action by the Indiana General Assembly, would keep the small claims courts within the townships but transfers control of court finances, employees, and procedures to the small claims court judges. A central court administrator would be hired by the Marion County Circuit Court to assist the small claims courts in adopting common court procedures and accounting methods. This plan also includes a charge to the Indiana Supreme Court’s Rules Committee to adopt rules preventing forum shopping among the township courts.
The third plan consists of comprehensive reforms that may be enacted regardless of whether Plan A or Plan B (or neither) is implemented. These include adoption of court procedures requiring judges to lead court proceedings and review settlement agreements; the creation of a centralized court website and standardized court forms; and the prohibition of township judges from practicing law in other township courts. This plan, like Plan B, grants to township courts the sole authority to prepare budgets, manage court funds, and supervise employees.
Some courts have already begun to put several of these recommendations into practice, including the creation of a litigants’ rights poster to be displayed in each courtroom. The Division of State Court Administration is also partnering with the Indiana Bar Foundation to create a video—to be made available both online and at the courts—advising small claims litigants of their rights. The Task Force is optimistic that the nine Marion County small claims judges, under the leadership of Circuit Court Judge Louis Rosenberg, will remain proactive in implementing these recommended reforms.