California Gov. Arnold Schwarzenegger has signed into law a bill bestowing on the state a 75 percent share of punitive damage awards — but only after the details of the measure had been radically revamped in a manner highly unwelcome to critics of the litigation system. Negotiators agreed to a “lawyers eat first” principle, absent in the original proposal, which would guarantee private counsel a 25 percent share of the state’s take; they also stripped away a provision, much sought by defendants, which would have barred multiple punitive damages over a single course of conduct. Finally, they applied complicated time restrictions to the new law which makes it likely that it will cover relatively few actual cases unless later extended (“Governor Signs Bill Adopting Court Budget Reform, Giving State Share of Punitive Damages”, Metropolitan News-Enterprise, Aug. 18; Dan Walters, “Details torpedo Schwarzenegger’s budget gimmick on civil lawsuits”, Sacramento Bee, Sept. 8). George Wallace at Declarations and Exclusions has more. The state trial lawyers’ association, which styles itself Consumer Attorneys of California, declared itself “gratified” by the governor’s turnaround on the issue. (“Schwarzenegger’s Punitive Award Fund Part of Budget”, Bloomberg, Jul. 29, no longer online). More: Victor Schwartz, Mark Behrens and Cary Silverman have a paper on the subject from Washington Legal Foundation (Sept. 3, PDF). And Southern California Law Blog covered it Sept. 4.
Between 1983 and 1993, federal courts maintained relatively strong rules authorizing the levying of sanctions against lawyers or clients who pursue ill-grounded lawsuits, pleadings, motions or defenses. In 1993, following a quiet but determined lobbying campaign by organized litigation interests, Congress more or less gutted those rules, making sanctions much harder to obtain. Reinvigorating Rule 11 has long been high on our list of reform priorities, so we’re glad to see that Rep. Lamar Smith (R-Tex.), who chairs the House Judiciary subcommittee on courts, last week announced that he was introducing a bill entitled the Lawsuit Abuse Reduction Act, restoring a strong Rule 11. According to the Congressman’s Jun. 15 press release, the bill (begin direct quote):
* Makes sanctions against attorneys or parties who file frivolous lawsuits mandatory rather than discretionary;
* Removes a “safe harbor” provision that allows plaintiffs and their attorneys to avoid sanctions for frivolous suits by withdrawing them within 21 days;
* Allows sanctions for frivolous or harassing conduct during discovery, which is the phase of litigation where parties disclose documents;
* Permits judges to order plaintiffs to reimburse reasonable litigation costs, including attorney?s fees.
(end direct quote). According to the release, the bill also contains a provision to curb forum-shopping, and “[e]xtends Rule 11 sanctions to state cases that affect interstate commerce”. The last-mentioned clause sounds more than problematic from a federalist point of view, but presumably can be left on the cutting room floor at some point so that the other provisions can be considered on their own merits. More: Point of Law, Aug. 17.
Worried about the hypothetical privacy dangers resulting from “data mining” by federal security agencies chasing terrorists? Then you might want to spare a thought for the privacy implications of a commercial service called SmartJury, affiliated with the same database company that has been selling information on private citizens to the government for antiterrorist use. As Alex Tabarrok notes, SmartJury promises to provide trial lawyers with
real-time access to public record information on potential jurors. Within seconds of entering potential jurors, you will receive reports including information such as: Criminal Records; Political Party Affiliations; Bankruptcies; Corporate Affiliations; Real Property Ownership (including value); Motor Vehicle Registrations; Web Site Domain Names; and 2000 Census Information (including median household income, average age, average years of education, and median home value).
Adds Tabarrok: “Helpfully, SmartJury also provides demographic information from survey results to predict how each juror will vote! …the board of SmartJury is littered with well-placed government types like Jack Kemp, William Bennett and Robert Kennedy Jr.”
Reversing a seven-year-old precedent, the Massachusetts high court has ruled that even though employees enjoy an absolute right to seek jury trials rather than have their claims of bias adjudicated by the state antibias agency, MCAD, employers do not have a right to bring their case to a jury following an adverse MCAD ruling. In its May 6 decision, the court said that recognizing employers’ right to a jury trial, as it had done in a 1997 decision called Lavelle v. Massachusetts Commission Against Discrimination, was undermining the agency’s authority. Mustn’t do that! (“SJC decision curbs employer access to jury trial in job-related discrimination cases”, Boston Business Journal, May 7; “Bias case rulings may have wide impact”, BostonWorks.com (Boston Globe), May 23; “Q&A: MCAD’s Dorca Gomez, on jury trial reversal”, Boston Globe, May 16). The law firm of Foley, Hoag & Eliot (May 12, PDF) said the ruling “further stacks the deck against employers in discrimination cases”. Remarkably, the Massachusetts chapter of the ACLU had pressed to abolish employers’ right to jury trial, and hails the new decision in a press release which seems calculated to lull the casual reader into imagining that the two sides are somehow still endowed with symmetrical rights (by de-emphasizing complainants’ privilege of choosing which forum will hear the dispute). No doubt our friends at ATLA, with their frequent rhetoric about the need to prevent erosion of the jury system, will rise to deplore the stripping away of defendants’ access to juries. Right?
My op-ed on the subject appears in today’s Wall Street Journal. (Walter Olson, “More Punitives to the People!”, Jun. 2)($$). The California governor’s proposal to have the state take 75 percent of punitive awards has gotten a more favorable reception from the left/liberal side of the blogosphere than some might have expected; see Nathan Newman (calling it “the right idea”)(May 17), Atrios (“not a bad idea”) May 17, plaintiff’s attorney Dwight Meredith (more)(“I have no major objection to having a portion of punitive damages go to the state.”)(May 26)(and see Jun. 1 on the governor’s fanciful revenue scoring), and Kevin Drum (“probably a good idea”) May 29.
See also Adam Liptak, “Schwarzenegger Sees Money for State in Punitive Damages”, New York Times, May 30. More editorial and commentary links: Dan Walters, “Arnold enters battle over tort reform”, Sacramento Bee/Alameda Times-Star, May 29; “Sensible concept, suspicious numbers” (editorial), San Jose Mercury News, May 25 (reg); Phil Yost, “Governor’s budget counts on windfall that won’t arrive”, San Jose Mercury News, May 30 (reg); “A lawyer joke” (editorial), San Francisco Chronicle, May 27; George Skelton, “Proposal to Tap Punitive Damage Awards Has Many Agendas”, Los Angeles Times, May 24; “State profit in punishment” (editorial), Los Angeles Times, May 24. Further: Martin Grace has some more information about collections under the Georgia “split-award” statute (Jun. 2), and Paul Caron at TaxProfBlog discussed the proposal May 20.
A cottage industry has arisen in the plaintiffs’ bar seeking huge damages in US courts against foreign governments for what, reasonable people can agree, are often despicable acts. The plaintiffs and press (and sometimes the courts and Congress) express surprise when the State Department protests or otherwise intervenes against the suits. The State Department’s concerns are perhaps best explained by the risk of reciprocal suits and, indeed, it appears our neighbors have caught on: a Tehran court issued a $600 million “verdict” against the United States for the US’s role in the Iraq-Iran war in the 1980s. (Reuters, Apr. 28; IRNA, Apr. 28).
About one quarter of mesothelioma cases nationwide are filed in Madison County now, and the overwhelming majority of those are set for trial–even though the majority of those cases do not involve plaintiffs who have any connection with Madison County. Former attorney general and federal judge Griffin Bell, who served under Jimmy Carter from 1977-1979, has called for a DOJ investigation into the “stain on our system” behind the curiously plaintiff-friendly courts. Bell identifies some of the egregious practices in Madison County, such as blanket subpoenas of high-ranking corporate executives who know nothing about the individual details of a case, and the setting of multiple cases for trial the same day, with only plaintiffs knowing which case will actually be tried. (Trisha Howard, “Lawyer in big-money suits is scornful of ex-attorney general”, St. Louis Post-Dispatch, Apr. 14; Susan Skiles Luke, “Former attorney general calls for asbestos court reform”, AP, Apr. 14; “Asbestos cases quadruple in Madison County, Ill.”, St. Louis Business Journal, Apr. 14; Sanford J. Schmidt, “Lawyers spar over asbestos filings”, Alton Telegraph, Apr. 15; Brian Brueggemann, “Forum participants: Investigate Madison County court system”, Belleville News-Democrat, Apr. 15).
Across the country, reports Court TV, prison inmates are harassing lawyers and court personnel by filing liens against them for supposed violations of the inmates’ copyright in their own names. The copyright-in-one’s-name premise may be supremely absurd — an egregious example of the homespun legal reasoning I once described, in the context of tax protests, as “folk law” — but it works surprisingly well as a means of harassment: the target’s credit standing may be frozen until he manages to get the lien on his house removed, which can be an expensive and time-consuming undertaking (Emanuella Grinberg, “What’s in a name? A fortune, some inmates say”, Court TV, Mar. 17). Curmudgeonly Clerk (Mar. 30) cites several federal cases that have arisen from this abuse (complete with an opinion by Judge Easterbrook) and points out that despite the Prison Litigation Reform Act of 1995, the system clearly has a way to go in curbing unfounded inmate litigation.
Cameron County’s revenues apparently depend heavily on its warehousing of federal prisoners in its jail. But the U.S. Marshals pulled federal prisoners after a series of escapes. So Cameron County is suing the builder of the jail, and all of the contractors and subcontractors–including the plumber, who noone blames. Jo Rae Wagner, the president of the plumbing company, speaks out; such “shotgun” listing of plainly innocent defendants is common. The newspaper gets counterbalance from two law professors who assure readers that such defendants don’t have to pay anything to be dismissed from the suit, but apparently haven’t actually tried to get such a defendant out of a suit without incurring legal expenses or tried to recover legal fees for the frivolous suit. (Allan Essex, “Company calls county lawsuit unjustifiable”, Valley Morning Star, Mar. 27).
To obtain sanctions for a frivolous lawsuit in Texas, a defendant has to prove, after an evidentiary hearing, that the lawsuit was not only groundless, but was brought in bad faith. To do this, one must overcome the presumption that papers are filed in good faith. Tex. R. Civ. Proc. 13; GTE Comm. Sys. Corp. v. Tanner, 856 S.W.2d 725, 731 (Tex. 1993). “A trial court may not base Rule 13 sanctions on the legal merit of a pleading or motion.” Aldine ISD v. Baty, 999 S.W.2d 113, 116-17 (Tex. App. Houston 1999). The lawyer of “empty head and pure heart” avoids sanctions–and the defendant ends up incurring additional fees and costs over the evidentiary hearing, no matter how groundless the initial suit. So when you hear that recovery is possible for frivolous lawsuits, remember that the judicial system has a different definition for “frivolous” than the layperson does. (Tex. Rules of Civ. Proc. 13).