Will loser-pays bring down notorious copyright troll?

by Walter Olson on April 19, 2013

Cathy Gellis, guesting at Popehat, has a long post on the latest in the Prenda Law saga. A relevant paragraph:

The default rule in American litigation is that everyone pays for their own lawyers. But some laws, the Copyright Act being one of them, have provisions so that the loser pays for both sides’ lawyers. … But just because a judge may grant an award of attorney fees doesn’t mean the money will ever be recovered; enforcing a judgment often presents its own expensive challenges, meaning a wronged defendant can still be saddled with the costs of his own defense. However the California Code of Civil Procedure has a provision, § 1030, to help mitigate that financial risk by allowing defendants in similar positions as Mr. Navasca [a man seeking fee recovery from Prenda Law over a questionable copyright action] to require plaintiffs to make an “undertaking;” that is, to post a bond that would guarantee, when the defendant inevitably wins his fees, that he would actually get the money.

Both provisions could prove important in bringing the rogue legal enterprise to heel. If only other areas of law besides copyright had loser-pays, and other states besides California emulated the “undertaking” idea. Earlier on Prenda Law here and here.

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The Fallacy of Loser Pays in Tort Litigation – New York Personal Injury Law Blog
04.29.13 at 10:41 am

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1 RavingRambler 04.19.13 at 9:32 am

I agree completely! “Loser pays” across the board in civil cases would clear a *lot* of dockets and probably reduce a lot of consumer costs across the board in the long run.

2 Dan 04.19.13 at 11:11 am

This CCP 1030 tactic has been successfully used to have at least one of Prenda Law’s copyright suits dismissed with prejudice. AF Holdings LLC v. Trin [ hhttp://www.scholar.google.com/scholar_case?case=1148043448622720546 ]. Whether the defendant will be awarded his attorneys’ fees is another matter. But the dismissal with prejudice for failure to post an undertaking is a good step in the right direction.

3 ras 04.19.13 at 5:30 pm

Loser pays? Lemme see, I can launch a lawsuit asking for 100 million bucks and if I lose I gotta pay out maybe one percent of that? The utilitarian response would simply be for me to ask for 101 mil. We might need to up the ante.

How about, instead, all losing civil cases go to a civil jury afterwards who determine if the suit was frivolous and if so, the plaintiff and the plantiff’s lawyers will be jointly and severally liable for the same amount they were suing for?

4 Ron Miller 04.20.13 at 2:08 pm

RAS, I’m not sure how much you file for is particularly important. I don’t think the world is suing for a 100 million dollars and getting a hit now and again. How many collectable 100 million verdicts do you think individuals have achieved in human history?

I don’t think your second paragraph is a awful idea. Can we also do the same thing for frivolous defenses? (No one talks about frivolous defenses on here. It is odd, really.)

5 Turk 04.25.13 at 12:55 pm

I don’t think too many people object to “rogue” lawyers being hit with sanctions or legal fees for improper conduct.

The problem is trying to do that for the other 99% of the matters, thereby giving us a legal system that only the wealthy can use.

6 Walter Olson 04.25.13 at 1:20 pm

A “legal system that only the wealthy can use” is not an accurate description of the pluses and minuses of the legal systems in the great majority of advanced democracies where loser-pays is the norm, such as Canada, the U.K., Scandinavia, the Netherlands, and so forth. It does, unfortunately, accurately describe some sectors of the American legal system (such as small high-merit claims and many injunctive matters) where neither fee shifts nor contingency fees are available. Oppose loser-pays if you like, but enough of the sloganeering.

7 Turk 04.26.13 at 10:05 am

Hmmm, I don’t usually get accused of sloganeering. So let’s try again:

There are plenty of cases, some of them “routine” auto cases for instance, where the litigants are on life’s financial margins.

The defendants, however, are not on the financial margins, since there is inevitably a multi-billion dollar insurance company. For that company, Jones v. Smith is little more than a rounding error when the year is done, regardless of how it comes out. For the plaintiff, it may well be a life-altering experience. Thus, an inequity.

By creating a fee-shifting provision, an insurance company can effectively put the screws to the litigant, and drag is out forever and run the meter hoping that this will put additional pressure on a plaintiff to settle “cheap.”

It may be bad enough that they can’t work and can’t earn a living due to the injuries. And now they need to also ear what a jury will do with the determination of who had the red light? If the injured person is of lesser socio-economic status, there will be a bias against them.

Shift fees and award sanctions if needed on frivolous cases — I’m not only all for that but am asking for that myself in one matter. But people who bring actions in good faith should not have an additional burden hanging over their heads.

(It’s also worth noting that if people don’t bring viable actions out of fear, the taxpayer may end out picking up the tab. Your citation to high-tax nations with extensive social programs as a rationale seems to be at odds with libertarian mind set that may wish to limit those very same programs that would support the injured.)

The court house should be open to all, and let justice prevail. That may sound like a slogan, but I think it is based on solid arguments.

8 Hugo S. Cunningham 04.26.13 at 11:57 am

In Massachusetts, I believe it was in the 1970s that the tables were tilted against rogue insurance companies that stonewalled reasonable claims: they became liable for the claimant’s legal expenses and penalties, while the reverse was not necessarily true. Some of the stronger and better anti-SLAPP laws have a similar bias, in favor of free speech and the American way.

As for letting a jury decide whether a lawsuit (or the defense) was frivolous, I might agree, as long as it was the same jury that heard and ruled on the original case. There is no need to build in the delay and expense of empaneling a new jury months or years later. (But there should be the usual judicial review, in case a biased jury got it wrong.)

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