Tuesday, February 28, 2012
You don't need the Mass Tort Litigation Blog to tell you that the imminent BP trial has been stayed pending settlement talks. In the meantime, here are some thoughts from the ever relevant George Conk. Special shout out for his poetic references: Diving Into the Wreck: BP and Kenneth Feinberg's Gulf.
I was just at a wonderful conference at the Charleston School of Law on Mass Torts and the Federal Courts where Feinberg spoke. One of the key questions at the conference is the extent to which claims facilities (BP, 9/11, etc.) are unique and unlikely to be repeated or the wave of the future. The interesting thing about BP is that it shows the interaction between claims facilities and litigation - its not one or the other. Speakers mentioned how companies trying to get ahead of a litigation may well look to the BP model. Others questioned whether BP was really special because the company was prepared to admit liability (although not gross negligence).
I was especially interested by the remarks of Sheila Birnbaum, currently running the 9/11 Fund for first responders and who mediated settlements for the 94 families who chose not to participate in the 9/11 Victim Compensation Fund. Even the families who wanted a public trial to find out what happened ultimately settled because of the uncertainty of trial. This raises important questions about the purpose of litigation for individuals: is it ultimately to get compensation? How important is it to get to the "truth"? How important is vindication? Punishment? When people settle (or waive their right to litigate prior to filing suit), what kind of consent do we want and does money ultimately satisfy? Lynn Baker, who was at the conference, referred me to the following article that addresses some of these questions: Gillian Hadfield, Framing the Choice Between Cash and the Courthouse: Experiences with the 9/11 Victims Compensation Fund. This continues to be relevant, especially if Funds become a model rather than a one-off.
Friday, February 17, 2012
Mark Behrens sent me a new mass tort protocol issued by the Philadelphia Court of Common Pleas. Here are some highlights:
- There shall be no reverse bifurcation of any mass tort case, including asbestos, unless agreed upon by all counsel involved.
- Consolidation of mass tort cases shall not occur absent an agreement of all parties, except in the asbestos program in accordance with the protocols set forth herein below.
- All punitive damage claims in mass tort claims shall be deferred.
- Pro hoc vice counsel shall be limited to no more than two (2) trials per year, but otherwise will not be limited on pre-trial appearances. The Court encourages non-Pennsylvania counsel to pass its Bar Examination and thereby become familiar with Pennsylvania law, rules and procedures.
- Unless otherwise agreed by defense counsel or upon showing of exigent circumstances, all discovery shall take place in Philadelphia.
- Except for those cases already scheduled for trial through February 29, 2012, asbestos cases thereafter shall be grouped in groups of a minimum of 8 and a maximum of 10 and counsel shall be required to propose cases for consolidation considering the following criteria:
- Same law. Cases that involve application of the law of different states will not be tried together;
- Same disease. The disease category for each case in a group must be identical. The disease categories of cases to be grouped for trial are mesotheliomas, lung cancers, other cancers and non-malignancy cases;
- Same plaintiff’s law firm. Primary trial counsel for all cases in each group will be from a single plaintiff firm. Cases where Philadelphia plaintiff firms serve as local counsel for out-of-state counsel will not be grouped with cases from the local firm;
- Fair Share Act cases will not be consolidated with non-Fair Share Act cases;
- Pleural mesothelioma is a disease that is distinct from mesotheliomas originating in other parts of the body, and will not be tried on a consolidated basis with non-pleural mesothelioma cases and not necessarily tried on a consolidated basis. Non-pleural mesothelioma cases will be further classified for trial, so that non-pleural mesothelioma cases allegedly caused by occupational exposure will not be tried on a consolidated basis with non-pleural mesothelioma cases allegedly caused by para-occupational (bystander) exposure;
- And such other factors as determined appropriate in weighing whether all parties to the litigation can receive a prompt and just trial. The Court’s present backlog of asbestos cases shall not be an overriding factor in the consolidation determination.
- Any grouping of cases less than 8-10 in number shall not receive a trial date until a group is formed of 8-10 cases. A maximum of 3 of these 8-10 cases may be tried, with the other 5-7 cases either resolving through settlement or returned to the Coordinating Judge for regrouping and relisting for trial.
- Mediation: Once grouped, assigned a trial date and after Motions for Summary Judgment have been decided by the Court, counsel are urged to seek mediation from a special panel of former judges named herein below. Either side may request mediation. The mediator selected by the parties shall advise the Court whether the plaintiff firm’s participation was in good faith or not. In the discretion of the Coordinating Judge, any plaintiff firm’s failure to proceed in good faith in mediation may constitute just cause to remove that group of cases from the trial list and any defendant’s failure to proceed in good faith may result in an increase of the maximum 3 cases consolidated for trial. Since no more than 3 cases may be consolidated and proceed to trial in any group of 8-10, the remaining 5-7 cases should be resolved and settled. Otherwise, those unresolved cases shall be relisted for trial. All parties will share the expense of mediation.
11. Immediately prior to trial of up to 3 consolidated asbestos cases, the assigned trial judge shall independently determine whether the cases will be tried in a consolidated manner based on the criteria herein above set forth and any other factors deemed relevant to the issue of consolidation and a fair trial.
12. Expediting of Cases. There shall be no expediting of cases based on exigent medical or financial reasons until the backlog of pending cases has been resolved, unless otherwise agreed by a majority of the defendants. When this Program achieves 80% of all asbestos cases resolved in 24-25 months, advanced listings based on exigent medical circumstances will be considered for plaintiffs with Pennsylvania exposure only.
Thursday, February 2, 2012
Honda Loses Small Claims Court Suit Over Hybrid Fuel Economy, Raising Questions About Alternatives to Class Actions
As the L.A. Times reports, Honda has lost a case filed in small claims court in California by a Civic hybrid owner who claims her Honda misrepresented the gas mileage possible. The owner apparently opted out of a proposed class action settlement that might provide $100 and new-car rebate coupons to Civic owners, and pay class counsel $8.5 million in attorneys fees. Instead, she filed in small claims court and after 3 hours of testimony over two days, she was awarded $9,867.19 in damages. (In California small claims courts, parties must appear without separate counsel; plaintiff here was an attorney representing herself, though her bar membership is apparently inactive.) Honda, however, plans to appeal the small claims award to Los Angeles County District Court. (H/t to my Mass Tort Litigation student Michelle Rosenberg, who sent me the story.)
Might small claims court be a viable alternative to class action litigation? Class actions of course are most appropriate in so-called negative value claims, where the cost of bringing individual suit exceeds the recovery sought. Small claims court, with its radically diminished transaction costs (and no attorneys' fees), could be seen to shrink the realm of negative value claims. And smalls claims court avoids the potential conflict of interest arising from the temptation for class counsel to settle class claims for a less than optimal amount, in pursuit of a hefty, sure, and speedy class counsel fee. Small claims court still wouldn't be worth the trouble of people who think they were defrauded only a dollar or two, but it might be a viable alternative if hundreds of dollars per claimant were at stake.
Monday, January 30, 2012
Sunday, January 29, 2012
According to this article from CNN, French authorities have arrested Jean-Claude Mas, the founder of Poly Implant Protheses (PIP), in connection with alleged manslaughter and involuntary harm to a woman who died from cancer and had PIP breast implants. The article notes that 300,000 women in 65 countries received PIP breast implants, and that questions have been raised about the use of non-medical-grade silicon and PIP went bankrupt in late 2010.
The PIP breast-implants controversy may present an opportunity to observe non-U.S.-style mechanisms for what here would likely have been a mass tort litigation. Since the PIP breast implants were not permitted to be sold in the U.S., litigation may be concentrated abroad. In general, my sense is that the European approach is more reliant on criminal law than tort for deterrence, compensatory damages are limited because of the comparatively extensive governmental social insurance, punitive damages are unavailable, and class actions are traditionally not embraced (though class actions appear to be on the rise globally -- see, e.g., the Stanford Global Class Actions Exchange).
Interestingly, according to the article, one French woman who received PIP breast implants said, "Too bad we do not have a justice system like they do in the United States which allows the accumulation of penalties...because the small punishment he will receive for what he did to 300,000 to 400,000 women, is not much compared to what we have suffered because of him."
(H/t to my Mass Tort Litigation student Abigail Anderson for sending me the CNN story.)
Tuesday, January 24, 2012
The litigation that arose of out the Engle class action ruling (Engle v. Ligett Group, 945 So.2d 1245 (Fla. 2006) might be coming to the Supreme Court. As mentioned in my previous post, petitions for cert have been filed by Philip Morris and others. In Engle the Florida Supreme Court held that the factual findings reached in an issue class class action can preclude the tobacco company from raising certain issues in subsequent litigation against class members. Now the individual cases that were part of that class action are being litigated and Philip Morris claims that the use of issue preclusion here violates their due process rights.
So far there is a petition for cert (2011 WL 6330473), Brief of the Product Liability Advisory Council, Inc. as Amicus Curiae in Support of Petitioners (2012 WL 135308), Brief of The Chamber of Commerce of The United States of America as Amicus Curiae in Support of Petitioners (2012 WL 167004) and Brief of Professors Aaron Twerski and James A. Henderson Jr. as Amici Curiae in Support of Petitioners (2012 WL 167005).
Friday, January 20, 2012
Tom Scott, the Executive Director of California Citizens Against Lawsuit Abuse, has posted on Fox&Hounds a 2012 wishlist for legal reform. While there are many proposed reforms helpful to business, I was struck by one not usually associated with business desires or law reform:
6. Stop cutting the funding of the California courts. Our court system is still reeling from cuts last year, and more cuts would only reduce access to the courts even more.
I am heartened to see that even those who are "fighting against lawsuit abuse" understand that adequate court funding is essential if suits are to be promptly adjudicated -- and found either meritorious and tried, or found unmeritorious and dismissed. Both pro-plaintiff and pro-business groups should be able to come together to advocate for court funding in a time of shrinking governmental budgets. And those who practice in mass tort litigation should be especially vocal, in light of the heavy demands such litigation places on state and federal courts. Moreover, as the election season approaches and disagreements multiply across the political spectrum, liberals and conservatives might remind themselves that they agree on government's core responsibility in providing a functioning court system for dispute resolution.
Monday, January 16, 2012
Below is the announcement from Southwestern Law School, and here is the brochure.
Southwestern Journal of International Law presents
Friday, February 3, 2012, 9:00 a.m. – 5:15 p.m.
Southwestern Law School, Los Angeles, California
Panelists include (in alphabetical order):
· Samuel P. Baumgartner, Professor of Law, University of Akron School of Law
· Vaughan Black, Professor of Law, Dalhousie University Schulich School of Law
· Gary B. Born, Partner, WilmerHale, Lecturer on Law, Harvard Law School
· Stephen B. Burbank, David Berger Professor for the Administration of Justice, University of Pennsylvania Law School
· Montré D. Carodine, Associate Professor of Law, University of Alabama School of Law
· Donald Earl Childress III, Associate Professor of Law, Pepperdine University School of Law
· Paul R. Dubinsky, Associate Professor of Law, Wayne State University Law School
· Allan Ides, Christopher N. May Professor of Law, Loyola Law School, Los Angeles
· Thomas Orin Main, Professor of Law, University of the Pacific, McGeorge School of Law
· Erin O’Hara O’Connor, Professor of Law and Director of Graduate Studies, Law & Economics PhD Program, Vanderbilt Law School
· Cassandra Burke Robertson, Associate Professor, Case Western Reserve University School of Law
· Linda J. Silberman, Martin Lipton Professor of Law, New York University School of Law
· Linda Sandstrom Simard, Professor of Law, Suffolk University Law School
· Adam N. Steinman, Professor of Law and Michael J. Zimmer Fellow, Seton Hall University School of Law
· Janet Walker, Professor of Law, Osgoode Hall Law School
· Rhonda Wasserman, Professor of Law, University of Pittsburgh School of Law
· William E. Thomson, Partners, Gibson, Dunn & Crutcher LLP
· James H. Broderick, Jr., Partner, Squire, Sanders & Dempsey LLP
· Marcus S. Quintanilla, Counsel, O’Melveny & Myers LLP
· Ray D. Weston Jr., Vice President and General Counsel, Taco Bell Corp.
Saturday, January 14, 2012
All that in the recent interesting op-ed from New York Times business columnist Joe Nocera -- BP Makes Amends.
January 14, 2012 in Aggregate Litigation Procedures, Environmental Torts, Informal Aggregation, Lawyers, Mass Disasters, Procedure, Punitive Damages, Settlement | Permalink | Comments (0) | TrackBack (0)
Wednesday, November 30, 2011
Sunday, November 27, 2011
The Fifth Annual Conference on the Globalization of Class Actions and Mass Litigation is being hosted by Tilburg University and will be held on December 8-9, 2011 in The Hague, Netherlands. The conference is being organized by Professors Deborah Hensler (Stanford Law School), Christopher Hodges (Oxford Centre for Socio-Legal Studies and Erasmus University), and Ianika Tzankova (Tilburg University). Master claim administrator Kenneth Feinberg is delivering the keynote speech.
Thursday, October 20, 2011
BNA reports that a set of cases (one trial, two plaintiffs) reached a defense verdict in the Levaquin pharma litigation. Beare v. Johnson & Johnson, N.J. Super. Ct. Law Div., No. ATL-L-196-10, verdict 10/14/11; Gaffney v. Johnson & Johnson, N.J. Super. Ct. Law Div., No. ATL-L-4551-09, verdict 10/14/11). The cases are consolidated before Judge Carol Higbee of New Jersey, who also oversaw the New Jersey Vioxx litigation.
The allegations are the the manufacturer of the antibiotic did not provide adequate warnings of its potential to cause tendon injuries. There are six more bellwether cases to go. According to BNA there are approximately 1,900 Levaquin cases before Judge Higbee.
I don't have information about how the bellwether cases were picked or why eight is the number. For an analysis of how judges can do a more rigorous job of using bellwether trials to promote case resolution and equality among litigants, see my latest paper: The Case for "Trial by Formula."
Monday, October 10, 2011
Today's Wall Street Journal Law Blog has an update on the state and federal Toyota acceleration cases. California Superior Court Judge Anthony Mohr has penciled in bellwether trials to begin in April of 2012, but Judge Selna, who is presiding over the federal MDL, estimates that bellwether trials will not begin there until February 2013. Likewise, plaintiffs' attorneys litigating before Judge Robert Schaffer in Texas suspect that they too will not try a case until 2013.
Sunday, October 2, 2011
(With apologies to HME for stealing his title)
The Second Circuit last week (just in time for the Jewish New Year) decided Johnsons v. Nextel Communications, Inc., -- F.3d -- , 2011 WL 4436263 (2d Cir. Sept. 26, 2011) . You can find the opinion here. That case involved an aggregate settlement with all kinds of schenanigans that our own Howard Erichson described in his article "The Trouble With All or Nothing Settlements." (download it while its hot! ...as they say....)
The Second Circuit allowed the clients to sue the lawyers on a broad breach of fiduciary duty theory. The clients may also sue the defendants on an "aiding and abetting" theory.
I learned from this opinion from Adam Zimmerman (St. John's) who has also blogged about it on the ADR Prof Blog.
Thursday, September 22, 2011
I just read a very interesting student note from 1987 suggesting that in mass tort cases the JPMDL should be permitted to send mass tort cases to state court. George T. Conway III,* The Consolidation of Multistate Litigation in State Courts, 96 Yale L. J. 1099, 1101 (1987). The rule of thumb could be that the state with the applicable law would be the target jurisdiction. Of course this would take new Congressional action to implement, but what an idea!
*The author is now a litigation partner at Wachtell - I wonder what he would say of his student note with many years of experience under his belt? If you're reading this, leave a comment or drop me an email.
Monday, September 19, 2011
District Court Judge Carl Barbier (EDLa) has issued a case managment order for the upcoming trial arising out of the BP Horizon Deep Water Oil Spill. You can find the order here: Pretrial Order #41. According to BNA, the MDL has more than 500 lawsuits arising out of the spill.
Monday, August 29, 2011
Jeremy Grabill (Weill, Gotshall) has posted to SSRN his article, Judicial Review of Private Mass Tort Settlements, which is forthcoming in the Seton Hall Law Review. Here's the abstract:
In the mass tort context, class action settlements have largely given way to a unique form of non-class aggregate settlements that this Article refers to as “private mass tort settlements.” Although it has been argued that aggregation in tort law is “inevitable,” the legal profession has struggled for many years to find an effective aggregate settlement mechanism for mass tort litigation that does not run afoul of the “historic tradition” that everyone should have their own day in court, assuming they want it. Over the last decade, however, as a result of the evolution of non-class aggregate settlements, a new opt-in paradigm for mass tort settlements has emerged that is true to that historic tradition. This Article discusses the new opt-in paradigm and the appropriate contours of judicial authority vis-à-vis private mass tort settlements.
Private mass tort settlements present a difficult conundrum for presiding judges. On one hand, mass tort litigation requires active judicial involvement and oversight due to the sheer size and complexity of such matters. Thus, having been intimately involved in the litigation from its inception, it understandably seems natural for courts to want to exercise some degree of control over private mass tort settlements. But, on the other hand, like traditional one-on-one settlements and unlike class action settlements and other specific settlements, private mass tort settlements do not impact the rights of absent or unrepresented parties. Perhaps not surprisingly then, courts have struggled in applying established principles concerning the scope of judicial authority to evaluate and oversee the implementation of traditional settlements in the unfamiliar context of private mass tort settlements.
This Article seeks to provide a clear path forward by first examining the limited contexts in which courts have the authority to evaluate and oversee the implementation of traditional settlements, highlighting the nature of the absent or unrepresented interests that judicial review is designed to protect in those traditional contexts. The Article then discusses the emerging opt-in paradigm for mass tort settlements and traces the paradigm’s lineage to three recent cases: In re Baycol Products Liability Litigation, In re Vioxx Products Liability Litigation, and In re World Trade Center Disaster Site Litigation. The Article argues that the well-established maxim that courts lack authority over private one-on-one settlements should apply with equal force to private mass tort settlements because these non-class aggregate settlements allow each individual plaintiff to decide whether or not to settle on the terms offered and do not impact the rights of absent or unrepresented parties. In short, courts do not have - and do not need - the authority to review private mass tort settlements. The Article concludes by addressing the arguments that have been advanced to support judicial review of non-class aggregate settlements, debunking the “quasi-class action” theory that some courts have relied upon to regulate attorneys’ fees in connection with mass tort settlements, and discussing the various ways in which courts may nevertheless be able to influence private mass tort settlements.
Thursday, August 25, 2011
RAND's Institute for Civil Justice last week released its report, Asbestos Bankruptcy Trusts and Tort Compensation, by Lloyd Dixon and Geoffrey McGovern. Here's the summary:
Payments by asbestos bankruptcy trusts have played an increasingly important role in compensating asbestos injuries and have become a matter of contention between plaintiff and defense attorneys. At issue is how tort cases take into consideration compensation paid by trusts and the evidence submitted in trust claim forms. This monograph examines how such evidence and compensation are addressed by state laws and considered during court proceedings. It also examines how the establishment of the trusts potentially affects plaintiff compensation from trusts and the tort system combined, payments by defendants that remain solvent, and the compensation available to future, as compared to current, plaintiffs. The authors find that the potential effects of trusts' replacement of once-solvent defendants are very different in states with joint-and-several liability than in states with several liability. In states with joint-and-several liability, total plaintiff compensation should not change. In several-liability states, the replacement of once-solvent defendants by trusts can cause total plaintiff compensation to increase, decrease, or remain unchanged. The findings underscore the importance of information on plaintiff exposure to the products and practices of the bankrupt firms in determining the trusts' effects on plaintiff compensation and on payments by defendants that remain solvent.
RAND also published the shorter Research Brief, Bankruptcy Trusts, Asbestos Compensation, and the Courts, by the same authors.
Wednesday, August 24, 2011
Call for Papers for "New Voices" Workshop at Vanderbilt's Branstetter Litigation & Dispute Resolution Program
Announcement from Professor Tracey George, who is the new Director of Vanderbilt's Branstetter Litigation & Dispute Resolution Program:
VANDERBILT LAW SCHOOL • BRANSTETTER LITIGATION & DISPUTE RESOLUTION PROGRAM
CALL FOR PAPERS
Vanderbilt Law School and the Cecil D. Branstetter Litigation & Dispute Resolution Program announce the 2012 New Voices in Civil Justice Scholarship Workshop to be held at Vanderbilt on April 20, 2012, and invite submissions for the workshop.
The Branstetter Litigation & Dispute Resolution Program draws on a multimillion-dollar endowment to support research and curriculum in civil litigation and dispute resolution. The idea for the Branstetter “New Voices” workshop is to draw together scholars on civil justice issues who are in the first seven years of their academic careers. Four to six scholars will be chosen by anonymous review of the submitted papers. The audience will include invited junior scholars, Vanderbilt faculty, and invited guests. Previous participants include Nora Freeman Engstrom (Stanford), Maria Glover (Harvard), Margaret Lemos (Cardozo), Jonathan Mitchell (George Mason), Myriam Gilles (Cardozo), Donna Shestowsky (UC Davis), Benjamin Spencer (Washington & Lee), Amanda Tyler (George Washington), and Tobias Wolff (Pennsylvania).
The format for the workshop is designed to maximize collegial interaction and feedback. All participants will have read the selected papers. A senior faculty member will provide a brief overview and commentary on the paper, and then we are off and running with interactive discussion. Paper authors thus do not deliver prepared “presentations” as such. Rather, the overwhelming majority of each session is devoted to collective discussion of the paper involved.
1. Subject matter. Submitted papers should address an aspect of civil justice. Subject areas may include, but are not limited to, civil procedure, complex litigation, evidence, federal courts, judicial decisionmaking, alternative dispute resolution, remedies, and conflict of laws. In keeping with the intellectual breadth of the Branstetter Program faculty, we are very receptive to the full range of scholarly methodologies, from traditional doctrinal analysis to quantitative or experimental approaches.
2. Author qualifications. To be eligible to submit a paper, scholars must currently hold a permanent faculty position. In addition, scholars may not have held a position at assistant professor or higher (including visiting assistant professor) prior to 2004.
3. Format. Papers may be sent in either Microsoft Word or Adobe Acrobat format. To maintain the anonymity of the process, please remove any self-identifying information from the submission.
4. Deadline. Submissions should be e-mailed to Branstetter.Program@vanderbilt.edu no later than January 13, 2011. Please include your name, current position, and contact information in the e-mail accompanying the submission. We will contact you with our decision by February 15.
The Branstetter Program will pay all reasonable travel expenses within the United States for invited participants. If you have any questions, please email Professor Tracey George, Branstetter Program Director, at Branstetter.Program@vanderbilt.edu
Friday, July 8, 2011
The U.S. Chamber of Commerce is arguing in favor of the Lawsuit Abuse Reduction Act, which is pending in the House and would change Rule 11 back to its pre-1993 mandatory sanctions approach and remove the current 21-day "safe harbor" for a litigant to withdraw challenged filings. In the 1980s, I believe the mandatory-sanctions/no-safe-harbor regime was blamed for increasing costly satellite Rule 11 litigations brought by both plaintiffs and defendants who perhaps in an excess of zeal repeatedly argued that the other side's positions were utterly meritless and frivolous.
The U.S. Chamber of Commerce also suggests that the Lawsuit Abuse Reduction Act would make it easier for parties challenging to recover their attorneys' fees. That modification raises the larger question of "loser pays" as a broad and perhaps more effective way to deter frivolous lawsuits. Under loser pays, the party that loses in a litigation must pay the attorneys' fees of the prevailing party. Followed in much of the world outside the U.S., loser pays deters frivolous litigation by removing much of the litigation costs that are used as a weapon to extract a nuisance-value settlement. For example, if it costs a defendant $50,000 in legal fees to obtain a ruling that a lawsuit is meritless, a plaintiff lawyer might offer to settle with the defendant for $25,000 -- less than it costs to litigate to a judge ruling. Unless the defendant thinks the plaintiff lawyer will turn around and sue the defendant again, the defendant may well choose the $25,000 settlement, even if the lawsuit seems clearly meritless or frivolous. But the $25,000 settlement may sufficiently compensate (via contingency fee) the plaintiff lawyer to incentivize the plaintiff lawyer to file another meritless claim against another defendant, and indeed, the plaintiff lawyer might even develop a successful business in frivolous claims. In contrast, if a loser-pays rule applies, defendant might well reject the $25,000 settlement and elect to spend $50,000 to obtain a court ruling exposing and dismissing the frivolous claim, also confident that the defendant can seek to recover the $50,000 in attorneys' fees from the plaintiff under the loser-pays rule. Moreover, ex ante, the plaintiff lawyer in a loser-pays jurisdiction should decline to even file a meritless claim, because the plaintiff lawyer would expect that the defendant would refuse a nuisance settlement and instead litigate to a ruling that will impose defendant's attorneys' fees on the plaintiff. The presence of loser pays is often cited as one reason that countries outside the United States have less litigation -- see, e.g., John Stossel, When Lawyers Become Bullies, Real Clear Politics (April 8, 2008).
One significant objection to loser pays is that impecunious plaintiffs will elect never to file their claims not because their claims are frivolous, but because they are risk averse about the possibility of defendants' attorneys fees being imposed on them. This concern is even greater in tort litigation, where injured plaintiffs are regular folks whose finances may already be strained by an injury. So the argument goes, loser pays should be rejected because these impecunious plaintiffs will not file what are meritorious suits -- and access to justice is denied.
But what if the cost of loser pays were permitted to be shifted from a plaintiff to his or her attorney? Plaintiff attorneys already make entrepreneurial decisions about the likelihood of success in a case when plaintiff attorneys decide whether to take a case on contingency fee and risk no reimbursement if they lose at trial or by judicial ruling. Adding fee-shifting via loser pays would only increase the size of the bet on each case, and plaintiff firms could adjust to that larger bet by becoming somewhat larger and greater diversifying that risk, or even by gaining greater access to outside capital and loans (the latter of which is itself controversial). Ultimately, injured plaintiffs would conceivably still have access to attorneys for meritorious cases, but having lost the threat of nuisance-value settlements and now fearing fee-shifting via loser pays, plaintiff lawyers would screen out frivolous claims and never file them.
I think there is much to recommend this market-finance-oriented version of loser pays, but of course plaintiff lawyers might resist it because it would remove the stream of income from nuisance-value settlements. And even though they might not admit it, defense lawyers also benefit from being hired to defend frivolous cases, so they might not vigorously push such a proposal, unless their defendant clients vigorously pushed them to do so. Ultimately, a reduction in frivolous litigation reduces the wealth of the entire bar, but the bar has no valid entitlement to enrichment by waste. Notwithstanding lawyers' interests, Alaska has had a version of loser pays, and Texas over a month ago enacted a version of loser pays. If Texas Governor Rick Perry enters the Republican primary as a candidate for President in 2012, loser pays as litigation reform (and tort reform) may well receive substantial national attention. That would be a good thing.