U.S. court rules invite harassment and extortion. Here’s one way to fix them. Our March cover story.
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Even if the lawsuit is frivolous. Even if it was filed to extract a nuisance settlement, on the theory that submitting to (legal) extortion would cost less than fighting to get the case dismissed. And even if “appearing and defending” would include months of costly and vexatious depositions and other discovery.
Are bogus lawsuits a rarity, and are the costs they impose on all of us a reasonable price to pay to keep courthouse doors open wide for genuinely wronged plaintiffs? Not when, for example, the courts are so clogged with bogus asbestos-poisoning claims brought by plaintiffs who are not sick that the limited pool of money available to compensate those with asbestos-caused cancers is severely depleted.
General Electric Vice President and Senior Counsel Alexander Dimitrief told judges at a conference in October that 80 percent of the company’s settlement decisions are made on the basis of the costs rather than the merits. Self-serving? Sure. Exaggerated? Perhaps. But not that hard to believe.
Even the most ethical of lawyers sometimes has incentives to file far-fetched claims (and defenses). “I have made claims myself that were very unlikely to prevail,” Don Elliott told me in an interview, “in order to impose discovery costs on the other side and get a better settlement—which I did.”
In fact, Elliott believes he had an obligation to file such claims. Legal ethics emphasize a lawyer’s duty to resolve every doubt in his client’s favor and take every possible legal step to promote the client’s interests. It is in part because of the powerful economic incentives for zealous advocacy, combined with the lack of any real penalty for bringing forth bogus claims, that judges should be required to screen out weak lawsuits before they start wasting the money and time of blameless defendants.
ELLIOTT’S REMEDY for this state of affairs is for judges to do just that. Specifically, he suggests amending the federal rules so that a defendant is summoned only when a judge, having reviewed the complaint and asked probing questions about the evidence, determines it reasonable to require a response. Many or most civil lawsuits would easily clear this modest hurdle.
But far-fetched claims filed to extort nuisance settlements—which have leached hundreds of millions of dollars from defendants over the years—would (or could) be dismissed at the outset. So would many lawsuits filed for purposes of harassment, including some brought by powerful organizations. The late L. Ron Hubbard, founder of the notoriously litigious Church of Scientology, once wrote that the purpose of a lawsuit is “to harass and discourage rather than to win.”
When plaintiffs’ lawyers looking for culpable parties cast their net too wide, such as in the Lone Star Steel mill case, judges could immediately release those defendants that clearly have no business being involved in the suit. In our interview, Elliott said that his proposal would not “necessarily get rid of a lot of cases, but it would get a lot of defendants out of cases when there is no evidence that they had anything to do with the plaintiffs’ alleged injuries.”
The vast majority of judges and litigators—for both plaintiffs and defendants—would probably dismiss Elliott’s proposal as impractical and unworkable. But judges in Germany and most other European countries routinely do something very much like what Elliott proposes, apparently with good results. And federal judges and magistrates are already required by law to dismiss, without requiring any defendant to respond, every lawsuit that appears on its face to be “frivolous or malicious” or otherwise flawed—but only if it was filed by a person poor enough to be exempt from the usual $350 filing fee (“in forma pauperis,” in legal jargon).
“[I]t is unfair and humiliating,” asserts Elliott, “to subject poor people to pre-service review of their lawsuits but exempt those wealthy enough to pay a filing fee.” Indeed, if two plaintiffs file frivolous lawsuits that are identical in every particular except that one is in forma pauperis, only that one will be dismissed without requiring the defendants to respond.
The most persuasive critique of Elliott’s proposal is that it is too vaguely worded and would be applied very differently depending on the inclinations of the judge or magistrate involved. That’s cause for concern, and perhaps an argument for defining more narrowly the category of lawsuits to be rejected out of hand. Nevertheless, in my view, something like Elliott’s proposal would be a vast improvement on the awful status quo.
ELLIOTT’S PROPOSAL WILL sound familiar to those aware of the Supreme Court’s 2007 decision in Bell Atlantic v. Twombly. Because of precedent set in Twombly, in order to surmount a motion to dismiss in a federal civil case, plaintiffs must now plead enough specific facts to show that their claims are plausible—not just conceivable.
But Elliott faults Twombly for failing to block implausible claims earlier in the process, before defendants are saddled with large legal costs. “My personal experience as a litigator,” his article notes, “is that hundreds of thousands of dollars, and sometimes even millions, in defense costs can be incurred before judges rule on motions to dismiss.”
In our interview, he added that judges typically stretch out cases for months or years by giving plaintiffs several chances to amend defective complaints; in one of his own cases the defense costs ran to $165,000 before it was finally dismissed.
(On the other hand, Elliott agrees to some extent with plaintiffs’ lawyers and scholars who assail the Twombly requirement of detailed fact-pleading. He stresses that to avoid killing potentially valid lawsuits prematurely, the courts should not require “that the plaintiff be in possession of all the facts necessary to take a case to trial as a pre-condition to bringing a claim.”)
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?