Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘loser pays’

November 28 roundup

All-medical edition:

  • Shocker for New York docs: possible assessment of $50K apiece to make up losses at nonprofit med-mal insurer [White Plains Journal-News Chamber reprint]

  • Dr. Ray Harron, a central figure in furor over mass asbestos and silicosis screenings, seems rather hard to locate at the moment, though he does have a lawyer speaking on his behalf [NY Times, WV Record]

  • Another push to raise the threshold of liability for emergency room care in Arizona [AZ Business Gazette]

  • End run around Roe? Some state legislatures attaching sweeping new tort liabilities to the provision of abortions [Childs]

  • Three nominees for worst-founded medical lawsuit, lamentably unsourced [Medical Justice]

  • Spokane psychiatrist shouldn’t have engaged in romantic (though not sexually consummated) dalliance with forty-ish patient; that much is clear. But should she now get cash? [AP/Seattle Times]

  • “Baby falls to floor during home delivery, mom sues hospital for too-early discharge” [SE Texas Record]

  • A sensitive subject: malpractice and doctors’ suicides [KevinMD, a while back]

  • “If the ‘loser pays’ system is so bad, why do most other countries keep it around instead of switching over to an ‘Americanized’ system of tort law?” [WhiteCoat Rants]

  • Hospital, ambulance service among those sued after fatal crash of NFL’s Derrick Thomas [seven years ago on Overlawyered]

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Update: Erin Brockovich vs. Beverly Hills High School

After the glamourpuss tort-chaser’s campaign over environmental contamination at the high school met with one reverse after another in court, ending in a judicial ruling of no merit, plaintiff’s lawyers have now agreed to reimburse the city and school district of Beverly Hills for a not insignificant chunk of their legal expenses in defending the claims, in the sum of $450,000. As readers of this site know, prevailing defendants very seldom recover fees from losing plaintiffs or their lawyers in American litigation. The Civil Justice Association of California has details (Oct. 9).

This summer Viking published a book by journalist Joy Horowitz entitled Parts Per Million: The Poisoning of Beverly Hills High School which, as its subtitle implies, would appear to place much credence in the lawsuits’ claims of disease causation from oil wells on the high school campus (undated L.A. Times review by Robin Abcarian). For the side of the story that proved more convincing to the courts, see the work of Norma Zager and Eric Umansky here and here as well as this article in Time. Brockovich herself, incidentally, now has a blog of her own.

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Criticizes BidZirk on his blog, and survives

Eric Goldman calls the case of BidZirk v. Smith, filed by a South Carolina eBay reseller against the blogger who’d criticized its services, “a flagship example of how a pernicious and misguided plaintiff with a thin skin can ruin a blogger’s life.” Maybe “ruin” is no longer the operative term, since a federal court has just thrown out the case. Among the court’s determinations: calling a company’s founder a “yes man” is opinion and not actionable as defamation (Oct. 28 and, before that, Nov. 21, 2006; decision (PDF)). More: Ron Coleman fingers as a culprit the “American Rule” (no shifting of fees) under which “there is for all practical purposes no downside to suing someone on the most preposterous of grounds and losing — hence making the bringing of meritless litigation a part of every large company’s toolkit for silencing criticism and destroying smaller competitors.”

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Canada: class action plaintiff’s lawyers on the hook?

Canada has moved toward more liberal allowance of class-action litigation in recent years; it has also, like most non-U.S. countries, chosen to retain its historic principle of “loser-pays”, or “costs follow the event”, fee shifting. What happens when prevailing defendants seek an award of costs against losing class plaintiffs, assuming that the individual class members cannot be reached for the purposes of assessing costs? In a bitterly fought lawsuit over unclaimed veterans’ pension accounts, the federal government in Ottawa went after three class lawyers for C$4 million in costs out of their own pockets. The Ontario Court of Appeal denied its petition, but the lawyers say they feel chilled from organizing more such suits. In all, the federal government spent an estimated C$6 million in legal fees and C$10 million in other costs successfully defending the pension suit. (Randy Richmond, “Ottawa claimed denying justice”, London Free Press, Sept. 20). Earlier London Free Press reports by Randy Richmond on underlying lawsuit: “One Last Battle: Dark Politics”, Oct. 30, 2006; “An ugly fight for veterans’ benefits”, Oct. 31.

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Seattle schools pro bono, cont’d

It’s sparking further discussion:

Hey, Davis Wright Tremaine, and your clients, the parents who sued the district: This is insane.

You argue this isn’t to enrich the firm, but to punish the district. The theory is that the fees, at $1.8 million and rising, are a lash to whip the district for its bad race-based deeds.

When I called the lawyers Tuesday, they compared it to, among other cases, their pro bono defense of a prisoner beaten by L.A. jail guards.

This makes no sense. Seattle’s policy wasn’t intended to hurt anyone, let alone beat them to a pulp.

(Danny Westneat, “The bill just keeps going up”, Seattle Times, Sept. 19; Emily Heffter, “Billing in ‘pro bono’ cases is fodder for ethics debate”, Seattle Times, Sept. 18; Above the Law, Sept. 18).

Read On…

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Frivolous — but honest about it

No matter how absurd a lawsuit is, the plaintiff usually has an elaborate, ingenuous theory to explain why he deserves to be compensated for injuries caused in some convoluted, indirect way by the nefarious defendant, and the obligatory disclaimer about the case “not being about the money” is usually tacked on. Usually. And then there’s James Schlimpert, president of Oklahoma-based Garage Storage Cabinets LLC.

When asked why he brought a suit against a competitor (Don Mitchell/MGCS) for misappropriation of trade secrets and tortious interference with his company’s dealer contracts, he explained, forthrightly:

When deposed, GSC President John Schlimpert testified that his company held no trade secrets, had no exclusive dealer contracts, and had filed the lawsuit for the sole purpose of putting MGCS out of business.

“I am amazed in some respects that the plaintiff said that, and he said it more than once, said his purpose was to put them out of business,” reads the court record issued by the District Court of Payne County, Honorable Larry Brooks, judge. “I think, under the plaintiff’s stated purpose, he was bringing it just to be vexatious to the defendants. I think it’s vexatious litigation.”

Wow. Still, for anybody who wasn’t already convinced by the Roy Pearson case, the history of the suit illustrates the difficulty courts have in protecting defendants from frivolous suits.

Because the complaint, on its face, seemingly stated legitimate causes of action, the only way for Mitchell to establish that the suit was frivolous was to conduct discovery and take the deposition of the plaintiff. Then Mitchell had to get lucky; if Schlimpert hadn’t foolishly admitted the fraudulent nature of his suit, the court would almost certainly treated the suit as legitimate. (Mitchell could still have won, but wouldn’t have gotten sanctions.) Once Mitchell got lucky, he had to make a motion to the court to have the case thrown out.

Then, after having the case thrown out, Mitchell had to make a separate application to the court for sanctions — he actually botched this procedure, but the court let the issue slide — and then had to participate in a hearing to try to establish how much those sanctions should be. All of that cost more money, more attorneys fees, with no guarantee that these costs would be recouped. Indeed, in this case Mitchell asked for $49,300, and the judge awarded only $31,500, because Schlimpert was successful in finding an expert witness to convince the judge that the lower number should have been sufficient to beat his frivolous case.

Moreover, the judge refused to penalize the plaintiff’s lawyer, finding that just because Schlimpert was acting in bad faith didn’t mean his lawyer was.

And then, after all that, Schlimpert appealed. Finally, this month, the appeals court upheld the trial court’s decision. And now Mitchell has to go back to the trial court, after having spent another $8,000 on the appeal, and has to hope the judge will make him whole.

P.S. In case you were wondering: this suit was filed in May 2003. It took 17 months from the time the suit was filed until the time the judge ruled in favor of Mitchell. It took another 17 months for the judge to award sanctions to Mitchell. After Schlimpert appealed, it took yet another 17 months for the appeals court to rule. In other words, more than four years elapsed. But — as mentioned — it’s still not over, because now Mitchell has to return to the trial court, to be awarded fees because of Schlimpert’s appeal.

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More on Insurance Fair Conduct

My last post commented on Washington’s Insurance Fair Conduct Act. The Act is up for public vote as Referendum 67. Check out the web sites advocating approval or rejection of the measure.

The “Approve 67” web site struck me as a bit demagogic–the main page shows a young girl clutching a teddy bear being comforted by (apparently) her father. The next shot is a man in a wheelchair, face cast sullenly downward. (Ostensibly suffering from insurance company malfeasance.) The final shot is a generic image of an emergency clinic. Then, under the “Take Action” column on your left there’s a link to “Share Your Insurance Horror Story.” (As of this writing there is a grand total of three “horror” stories.)

Under the endorsements tab, trial lawyers are notably absent–at least from the list. There are, however, multiple labor organizations as well as the Washington State Democratic Party. Under the “About Referendum 67” tab [with my comment]:

If an insurance company unfairly denies a legitimate claim, your only recourse is to sue. But if you win, the only thing they have to pay is the amount of the original claim [not true, just ask millionaire prankster dentist Robert Woo.] Referendum 67 creates an incentive [there already are incentives: coverage by waiver or estoppel, Olympic Steamship attorney fees and the Washington Consumer Protection Act (CPA)] to treat legitimate claims fairly by allowing the court to assess penalties if an insurance company illegally denies or delays payment of a legitimate claim.

Referendum 67 would help to ensure that the insurance industry honor their commitments to treat all policyholders honestly by making it against the law [it’s already against the law, silly–see the existing RCW and WAC] to unreasonably delay or deny legitimate claims.

The News Tribune in its story Let’s not try to fix an insurance industry that’s not broken says:

That the system is working well is illustrated by a storm of a different sort: the windstorm that smashed into Western Washington earlier this year. Within less than four months of the event, according to a recent study, 90 percent of the 42,000 claims were settled, for $170 million in compensation. Most of the remaining claims remained unsettled due to lack of qualified contractors or the time needed to rebuild homes. Only three complaints were filed with the insurance commissioner’s office.

I don’t know if I would characterize this legislation as a jackpot for trial lawyers, but it’s probably unnecessary and will increase the frequency of litigated first party claims at the greater expense of the insurance paying public. It’s up to Washington voters to get it right.

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Jackpot Justice or Insurance Fair Conduct?

The Washington Legislature recently passed and governor signed the “Insurance Fair Conduct Act” allowing first party claimants to recover treble (triple) damages and attorney fees for claims unreasonably denied. The Seattle Post Intelligencer’s story here lays out the pending battle between insurers and the trial bar. You see, the legislation is up for public vote in November and each side is scurrying to curry favor with the electorate.

Now, as an insurance consumer myself I expect high marks from my insurance company in the event of a loss. And, I have from time to time witnessed the recalcitrance of other insurers when tendering defense and indemnity to them (particularly in additional insured scenarios.) Few would disagree that insurers should promptly and cheerfully pay those claims they owe, period.

Read On…

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Forbes on pro se cases

Kai Falkenberg’s September 3 story in Forbes quotes me (though I promise I told the fact-checker that the Chung’s legal bills were only $83,000) and Overlawyered guest-blogger Steve Hantler. The sidebar to the article lists a number of cases Overlawyered readers might be familiar with.

Before David Giacalone jumps down my throat, let me say that I had a lengthy interview with Falkenberg, detailing my views on pro se litigation, but only the throw-away anecdote about Roy Pearson’s pants suit made it in. (Interestingly, the Supreme Court’s decision this spring in Bell Atlantic v. Twombly helps resolve the problem I complained about in that December post.)

Update: Falkenberg writes to let me know that “Regarding the Chungs, the $100,000 references not just the $83,000 in legal fees but other costs associated with Pearson’s claim and was confirmed with their lawyer, Chris Manning.” Fair enough (though I think Manning is including lost sales from Pearson’s picketing the Chungs’ shop, which one might argue does not really reflect legal costs). Let me clarify that I thought that Falkenberg wrote an excellent piece, especially given the limitations of space. Quote of note:

In a study of pro se suits brought between 1995 and 1999 in the federal district court in Manhattan, attorney Jonathan Rosenbloom found that a “disturbing” number of pro se cases were dismissed for asserting claims that were “delusional” or “wholly incredible.” … Rosenbloom also found a lot of frequent filers: Nearly half of the study’s 765 pro se litigants filed at least one previous suit in that court, including one who filed 57 complaints in one year.

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