Posts Tagged ‘loser pays’

In Britain, less fearful M.D.s

David Asman, reflecting on his wife’s experience in British and American hospitals, notices some patterns (“There’s No Place Like Home”, American Spectator/Wall Street Journal, Jun. 8):

There is also much less of a tendency in British medicine to make decisions on the basis of whether one will be sued for that decision. This can lead to a much healthier period of recuperation. For example, as soon as my wife was ambulatory, I was determined to get her out of the hospital as much as possible….

Now try leaving a hospital as an inpatient in the U.S. In fact, we did try and were frustrated at every step. You’d have better luck breaking out of prison. Forms, permission slips and guards at the gate all conspire to keep you in bounds. It was clear that what prevented us from getting out was the pressing fear on everyone’s part of getting sued. Anything happens on the outside and folks naturally sue the hospital for not doing their job as the patient’s nanny.

Why are the Brits so less concerned about being sued? I can only guess that Britain’s practice of forcing losers in civil cases to pay for court costs has lessened the number of lawsuits, and thus the paranoia about lawsuits from which American medical services suffer….

One-way fee shifting and religious litigation

Under the Civil Rights Attorney’s Fees Award Act of 1976, plaintiffs collect fees if they win even in part, but pay no fees if they lose. That puts a bludgeon in the hands of objectors in church-state lawsuits (as well as in many other kinds of lawsuits characterized as being about civil rights). Rep. John Hostettler of Indiana has introduced the Public Expression of Religion Act, a bill that would attempt to level the playing field as regards claims of religion-related civil rights violations by public officials. It would do so, however, by eliminating fee entitlements entirely; that would indeed deprive long-shot suits of much of their in terrorem effect, but at the cost of undercutting valid claims brought under the act. Why not take a look at moving toward full two-way fee shifting instead? (Christopher Levenick, “High Noon at Sunrise Rock”, WSJ/OpinionJournal.com, May 27).

Update: Judge dismisses “happy hour” antitrust case

Last year, after taverns in Madison, Wisconsin bowed to pressure from official programs discouraging youth drinking and agreed to end “happy hour” discounts in the university town, a law firm from Minneapolis swooped down to file an antitrust suit demanding millions for the offense of having colluded to charge higher prices (see Mar. 29, 2004). Now, however, Circuit Judge Angela B. Bartell has dismissed the suit on summary judgment, finding that the bar owners had acted against their will under regulatory constraint. An alderman who represents the downtown area where most of the bars are located “said bar owners had racked up more than $250,000 in legal fees defending themselves”; given our lack of a loser-pays rule, they have no expectation that either attorney Steven Uhr or the three students on whose behalf he filed the action will chip in to defray any of those outlays. (Ryan J. Foley, “Judge: Bars didn’t fix price of drinks”, AP/Capital Times, Apr. 8; Megan Costello, “Judge dismisses drink special suit”, Badger Herald, Apr. 8).

“Doctor fights, wins; lawyers aren’t swayed”

Dr. Zev Maycon has been sued four times in three years; he’s been dismissed before trial each time, but has missed weeks of work as a result, to the detriment of his patients. The only time he’s been able to recover his expenses for these meritless lawsuits is the one time an attorney was impolitic enough to acknowledge the lack of evidence and explicitly demand settlement money as a precondition for dropping the suit. Though none of the press mentions it, a meritless suit in Ohio state court isn’t considered “frivolous” unless there’s evidence that it’s brought in bad faith. The sanctioned attorney, Catherine Little, is appealing, the costs of which may end up exceeding the $6,000 sanctions if the appeal isn’t also considered frivolous. (Tracy Wheeler, Akron Beacon-Journal, Mar. 14; Medpundit, Mar. 13; OSMA press release).

Gibson Dunn punished for meritless lawsuit

Steve Morton, heir to the salt fortune, asked Steve Seltzer to evaluate the early 20th-century painting “Lassoing a Longhorn”, thought to be a C.M. Russell; Seltzer instead identified it as the work of a less famous artist, his own grandfather, the Russell contemporary O.C. Seltzer. This meant the painting’s value was not about $650-800 thousand, but perhaps a tenth of that. So Morton hired the big law firm Gibson Dunn & Crutcher, and sued Seltzer in federal court for the difference plus punitive damages. Unfortunately, though Morton did have evidence the Russell signature wasn’t altered, he couldn’t find any experts who backed his theory of the painting’s provenance, while Seltzer lined up nine affidavits that supported his conclusion. Morton dropped the lawsuit, and Seltzer then sued Morton, the law firm, and the apparently-now-retired lawyer, Dennis Gladwell. A Montana state court jury found malicious prosecution, and awarded $21 million in damages, based in part on Gibson Dunn’s earnings. The damages award seems improper (it’s punishing the law firm for being large, rather than for wrongdoing); one hopes it is reduced to something in line with the actual damages to Seltzer–legal fees, any economic damages from the brief loss in reputation (though Seltzer doesn’t charge for his authentications), plus perhaps some reasonable non-economic damages for the stress of litigation.

But one would have more sympathy for the defendants if they hadn’t been the first to be using litigation to make unreasonable demands; if all Morton and his attorneys wanted, as they claimed, was to clear the painting’s title, he didn’t need to seek punitive damages against Seltzer. The defendants will appeal. (Kathleen Schultz, “Jury awards artist $21 million”, Great Falls Tribune, Feb. 8; Kathleen A. Schultz, “Seltzer jury may receive case today”, Great Falls Tribune, Feb. 4; Kathleen A. Schultz, “Art collector defends position in malicious prosecution trial”, Great Falls Tribune, Feb. 3; Kathleen A. Schultz, “Seltzer outlines personal suffering in civil suit”, Great Falls Tribune, Feb. 2; David Hewett, “Owners Sue Art Expert, Art Expert Sues Owners”, Maine Antique Digest, Oct. 2003).

Update: Canadian loser-pays

In my brief essay on loser-pays posted early in the history of this site, I observed: “While some loser-pays jurisdictions suspend the principle [of costs following the event] for what are viewed as true ‘cases of first impression’ where there is no established law, most are skeptical about applying any exemption more liberally, as one sees in this 1996 case from Alberta, Canada.” A belated update on that case, Vriend v. Alberta: on appeal to the Supreme Court of Canada, the plaintiff in 1998 won his case on the merits (with an award of costs), thus presumably escaping any need to pay costs arising from his “case of first impression” loss at the earlier stage. Thanks to Doris Wilson of the Alberta Law Reform Institute for calling my attention to this.

Libel: the damage winning can do

About a year ago the conservative magazine National Review (disclosure: I’ve written for them and for a while served as a contributing editor on their masthead) was sued by a Muslim activist who claimed to have been defamed by an article containing inaccuracies about his connection to a controversial gathering. The communications director for the local chapter of the Council for American-Islamic Relations (CAIR) expressed the hope that the lawsuit would “deter hate-mongers from undermining the character and work of those who do not share their extremist views.” The magazine eventually succeeded in getting the suit thrown out and even got a small payment from the plaintiff, but its libel insurance policy carried a $50,000 deductible, and its total expenses exceeded $65,000. It’s opened an appeal for contributions to cover the resulting hole in its budget — a “post-defense defense fund”. As Voltaire put it, “I was never ruined but twice: once when I lost a lawsuit and once when I won one.”

“Judge Says Artist Can Make Fun of Barbie”

Merits of loser-pays: Five years ago, the Mattel toy company sued artist/photographer Tom Forsythe for copyright and trademark infringement over “a series of 78 photographic images of the wildly famous doll showing her nude, and sometimes posed provocatively, in or around various household appliances. … After a lengthy legal tussle, which included a series of appeals, a federal judge late last week instructed Mattel to pay Mr. Forsythe legal fees of more than $1.8 million.” (Bill Werde, New York Times, Jun. 28).

Oz: a sued gardener’s plight

Even the loser-pays principle wasn’t enough to shield 78-year-old backyard gardener Vincenzo Tavernese of Hornsby, New South Wales, from a far-fetched claim by litigious neighbors claiming injury from the pesticides he used. “The growing popularity of no-win, no-fee law [in Australia] has led to an increase in litigation with little downside for the losing plaintiff. It has been a major driver of the liability crisis.” (Miranda Devine, “Don’t blame me, I’m just the lawyer” (opinion), Sydney Morning Herald, Mar. 4). The article drew responses in the form of letters that appeared in the SMH (one of which asserts that defendant Tavernese had the right to seek a costs security order in the litigation requiring the plaintiffs to show an ability to pay his fees if unsuccessful); a response by Ian Harrison SC defending contingency fees; and a discussion on the Slattsnews blog.

Sen. Graham introduces loser-pays bill

Sen. Lindsey Graham (R-S.C.) has introduced legislation that would provide for a modified “loser pays” rule in federal courts. It’s of the “offer-of-settlement-driven” variety, and would expose litigants to a possible fee shift if they turned down a settlement offer and then did less well at trial. “Loser pays’ does more to stop frivolous lawsuits in the federal court system than any other reform,” Graham said. “Litigation designed to shake someone down for a settlement would be far less frequent if each party had something to lose.” And: “The culture of suing anybody about anything with no consequences to yourself has to change.” (Amy Geier Edgar, “Graham urges reform to curb frivolous suits”, AP/Myrtle Beach (S.C.) Sun-News, Mar. 2).