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loser pays

A court has awarded costs against a Dublin family that sued a restaurant for not warning that if they allowed their two-year-old to put her finger down the metal lid of a sugar dispenser, she might have trouble pulling it out again. The balky lid had to be cut off at a hospital. [Mirror]

The vote was 325 to 91, with Reps. John Conyers (D-Mich.) and Mel Watt (D-N.C.) leading the opposition. Timothy Lee discusses in the Washington Post. While I haven’t tried to get into the details, the general drift looks quite good to me. One major provision requires those filing suits to plead with some specificity what the infringement is; another provides for losing parties to compensate prevailing parties toward the cost of the litigation in more cases; yet another attempts to forestall expensive discovery in cases destined to fail on other grounds. Readers who recall my first book, The Litigation Explosion, will recall that I recommended procedural reform as the most promising way to address the incentives to overlitigiousness in our legal system and in particular identified lack of fee shifting, anything-goes pleadings, and wide-open discovery as among the system’s key deficits. So, yes, developments like this make me feel I was on the right track.

Equal time dept.: Richard Epstein takes a different view.

Prevailing parties in patent suits can win attorneys’ fees from losing opponents in cases deemed “exceptional.” “Under the test used to identify exceptional cases, cases must be objectively baseless and brought in bad faith.” That is already a painfully narrow exception, allowing for large volumes of poorly founded litigation, but two cases before the Supreme Court this term may provide clarity on when courts can deem cases “exceptional” and suitable for a fee shift. Broader use of fee shifts — presumably by way of deeming at least some swath of losing cases “exceptional” — would be one way of addressing the patent troll problem that would not call for new legislation. [ABA Journal, related, Corporate Counsel (arguments that judiciary can deal with trolls on its own]

In other developments, the Federal Trade Commission has voted to proceed with an inquiry into the patent troll problem [New York Times] and the Government Accountability Office has released a long-awaited report on the issue [Mike Hogan and Gregory Hillyer, Legal Intelligencer]

Patent trolls roundup

by Walter Olson on September 6, 2013

More coverage for the Frank Buckley-edited new book on overlegalization, The American Disease [Richard Reinsch/Library of Law and Liberty, Alejandro Chafuen/Forbes] Here’s Buckley in the National Post:

If litigation rates are four times smaller in Canada than the United States, this should not occasion surprise: Subsidize something and you get more of it; penalize it and you get less of it.

Differences in legal ethics matter, too. In America, more than elsewhere, lawyers are encouraged to advance their client’s interests without regard to the interests of justice in the particular case or broader social concerns. American lawyers’ professional culture is unique in permitting and implicitly encouraging them to assert novel theories of recovery, coach witnesses, and wear down their opponents through burdensome pretrial discovery.

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Medical roundup

by Walter Olson on July 25, 2013

  • Crisis of sterile injectables rages on, among victims are premature infants who need parenteral nutrition [Washingtonian ("Even if the FDA’s doing something terrible, we can’t criticize them. They regulate us.") via Tabarrok, earlier here, here, here, etc.]
  • “Tweets not medical advice” [@Caduceusblogger via @jackshafer]
  • “Why Your Dog Can Get Vaccinated Against Lyme Disease And You Can’t” [Curt Nickisch, WBUR]
  • Cites distinctive Connecticut law: “Hospital Successfully Sues its Patient’s Attorneys for Filing a Vexatious Malpractice Suit” [Alex Stein, Bill of Health]
  • Should adversarial medical examinations be videotaped? [Turkewitz]
  • “Lawyers Have Learned To Distort Pharmacovigilance Signals” [Oliver on FDA Adverse Event Reporting System (FAERS), earlier]
  • Causation from nasal decongestant at issue: “Judge orders UW to pay $15M to Snoqualmie family” [KING5]
  • “The ban on compensated transplant organ donation has led to hundreds of thousands of excess deaths. A ban on compensated sperm and egg donation would lead to a dearth of lives.” [Alex Tabarrok, related on Canada]

A lawyer who’d been widely and scathingly criticized over his handling of a case — unfairly he thought — proceeded to sue bloggers and journalists for defamation, so many that the total of defendants reached 74. It’s over now, but a New York state judge declined to award sanctions, which may possibly say something about the difficulty of obtaining sanctions under today’s prevailing legal standards, especially in New York. [Tom Crane, San Antonio Employment Law Blog; Popehat ("Our legal system is so broken that it can take years to resolve even the most patently vexatious, harassing, and incompetently prosecuted lawsuits like this one.")]

P.S. “Loser pays would have been valuable here. Costs to each defendant would teach a memorable lesson.” [@erikmagraken]

  • We’re worth it: lawyers in credit card case want judge to award them $720 million [Alison Frankel, Reuters] Johnson & Johnson will fight $181 million payday for private lawyers in Arkansas Risperdal case [Legal NewsLine]
  • British Columbia, Canada: “Lawyer Ordered To Pay Costs Personally For ‘Shoddy Piece Of Counsel Work’” [Erik Magraken] Ontario client questions lawyer’s fee [Law Times]
  • Sixth Circuit: attorneys fees statute not intended to cover dry cleaning and mini-blinds [Legal Ethics Forum]
  • Indiana lawmaker goes back to drawing board on loser-pays bill [Indiana Law Blog]
  • ‘Shocked’ by $3M legal fee in fatal car-crash case, judge tells lawyers to pay plaintiff lawyer $50K [ABA Journal]
  • Seth Katsuya Endo, “Should Evidence of Settlement Negotiations Affect Attorneys’ Fees Awards?” [SSRN via Legal Ethics Forum] /li>
  • In Israel, more of a discretionary loser-pays arrangement [Eisenberg et al, SSRN via @tedfrank]
  • British cabbie beats ticket, recovers only some of his legal costs. Still better than he’d do here, right? [Daily Mail]
  • Turnaround guru Wilbur Ross: current structure of bankruptcy fees encourages lawyer “hyperactivity” [Reuters]

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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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  • Sounds promising: “Peeved politicians want ‘loser pays’ rule for patent trolls” [Joe Mullin, Ars Technica] Defense of patent trolls in Wired mag [Michael Risch]
  • Scènes à Faire: the copyright exception for scenes that inevitably suggest themselves [Bruce Boyden, ConcurOp]
  • If the terms of service/purchase say you don’t have a right to resell the digitized book or song, maybe you don’t [The Digital Reader on court decision against ReDigi startup]
  • Pay to quote a single word from a newspaper? That’s what the popup at Canada’s National Post seems to suggest [Doctorow, BoingBoing]
  • Inside copyright enforcers’ “bait-car” operations [TechCrunch]
  • “Firm and two of its lawyers must pay $200K over frivolous patent case” [Sheri Qualters, National Law Journal]
  • “Crazy copyright bot (now suspended by Twitter) threatens those who tweet tiny poem” [Rob Beschizza via @ChrisBellNZ]

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  • California Supreme Court: fee shift in disabled-rights claim can go to winning defendant, not just plaintiff [Jankey v. Song Koo Lee, Bagenstos/Disability Law]
  • That’s Olsen with an “e”: “Lawmaker wants to protect cities from frivolous lawsuits over A.D.A.” [California Assemblywoman Kristen Olsen; L.A. Times] “Gas stations confront disabled-access lawsuits” [Orange County Register] Serial ADA filer hits New Orleans [Louisiana Record] ADA drive-by suits in Colorado and elsewhere [Kevin Funnell]
  • And this lawyer follows a see-no-evil policy regarding ADA filing mills: “I refuse to pass judgment on other attorneys here.” [Julia Campins]
  • Child care center could not turn away applicant with nut allergy because Iowa disabled-rights law said to have expanded its coverage of categories when the U.S. Congress expanded ADA, though Iowa lawmakers enacted no such expansion [Disability Law]
  • Feds join in LSAT accommodation suit [Recorder]
  • Official in San Francisco’s mayoral Office on Disability files disability-bias claim [KGO]
  • “Testing employees for legally prescribed medications must be done carefully” [Jon Hyman]

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Scott Greenfield, contra Radley Balko, believes the idea would prove “problematic, if not disastrous,” in real life, especially if enacted in the form of two-way fee-shifting (as distinct from a one-way fee payable only to defendants). It is worth noting that although legal systems around the world predominantly embrace loser-pays principles in civil litigation between private parties, they more or less uniformly decline to carry a similar principle over to criminal prosecution.

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According to a press release from Feld Entertainment, which owns the Ringling Bros.-Barnum & Bailey circus, the American Society for the Prevention of Cruelty to Animals (ASPCA) has agreed to pay $9.3 million to settle racketeering and other charges arising from alleged litigation abuse in lawsuits beginning in 2000 over elephant welfare. Feld says ASPCA and others paid a plaintiff and fact witness in the case whose testimony a judge described as not credible. It says it intends to continue suing other animal-welfare groups that it has named in connection with the episode, including the Humane Society of the United States, and Fund for Animals, as well as attorneys. [more on circus's side of dispute; earlier here, here, here, here] More: John Steele, Legal Ethics Forum.

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October 2 roundup

by Walter Olson on October 2, 2012

  • CFPB hopes to fix regulation that has prevented stay-home moms from getting credit [Bloomberg Business Week, earlier]
  • Uncertified class action: “Federal judge orders cost-shifting for fishing expedition” [PoL] Ted Frank objects to $10 million fee in “cosmetic” Johnson & Johnson settlement [Daniel Fisher, PoL]
  • “Accused of Providing Blank Arrest Warrants to Police, Georgia Magistrate Resigns” [ABA Journal]
  • Lester Brickman, Peter Schuck in new podcast on Brickman’s book Lawyer Barons [Federalist Society]
  • “Wright and Ginsburg on Behavioral Law & Economics” [NW Law Review and SSRN via Adler]
  • “17th injury claim in 12 years got Chicago cop her disability deal” [Sun-Times]
  • “Injured while working for the Empire? Call Lando Calrissian.” Law firm ad parody [YouTube]

His speech is titled “Economic Lessons from American History,” (printable PDF version) and one of the lessons has to do with loser-pays:

…if Jefferson’s decimal coinage concept was a good idea that quickly spread around the world, another idea that developed here at that time was lousy: the so-called American Rule, whereby each side in a civil legal case pays its own court costs regardless of outcome. This was different from the English system where the loser has to pay the court costs of both sides.

The American Rule came about as what might be called a deadbeat’s relief act. The Treaty of Paris (which ended the American Revolution) stipulated that British creditors could sue in American courts in order to collect debts owed them by people who were now American citizens. To make it less likely that they would do so, state legislatures passed the American Rule. With the British merchant stuck paying his own court costs, he had little incentive to go to court unless the debt was considerable.

The American Rule was a relatively minor anomaly in our legal system until the mid-20th century. But since then, as lawyers’ ethics changed and they became much more active in seeking cases, the American Rule has proved an engine of litigation. For every malpractice case filed in 1960, for instance, 300 are filed today. In practice, the American Rule has become an open invitation, frequently accepted, to legal extortion: “Pay us $25,000 to go away or spend $250,000 to defend yourself successfully in court. Your choice.” …

…policing the marketplace has long been considered a quintessential function of government. The reason for this is that when policing has been in private hands, self-interest and the public interest inevitably conflicted. The private armies of the Middle Ages all too often turned into bands of brigands or rebels. The naval privateers who flourished in the 16th to 18th centuries were also private citizens pursuing private gain while performing a public service by raiding an enemy’s commerce during wartime. In the War of 1812, for instance, American privateers pushed British insurance rates up to 30 percent of the value of ship and cargo. But when a war ended, privateers had a bad habit of turning into pirates or, after the War of 1812, into slavers.

Predictably, the American Rule has spread exactly nowhere since its inception at the same time as the decimal coinage system. There is not another country in the common-law world that uses it. … Few things would help the American economy more than ending the American Rule.

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“After achieving a university entry rank of 99.95, winning fifth place in the state for chemistry and a place at the University of Sydney studying medicine, the former Abbotsleigh student Sarah Hui Xin Wong believed she could have done better in the [Higher School Certificate].” A New South Wales administrative tribunal has now turned down her complaint that she suffered disability discrimination by not being allowed further accommodations on the test, specifically a computer and extra time. But Australia does have loser-pays: “Ms. Wong has been ordered to pay some of the Board of Studies’ costs, including a proportion of the fees of the leading Sydney barrister Chris Ronalds, SC.” [Sydney Morning Herald]

In other Australia schools litigation news, a “former student who is suing Geelong Grammar School says she decided to seek damages after she failed to qualify for her preferred university course. Rose Ashton-Weir, 18, alleges Geelong Grammar gave her inadequate academic support, particularly in maths.” [Melbourne Age] More in update at The Age (“was perpetually disorganised and failed to attend classes, a tribunal has heard.”)

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July 23 roundup

by Walter Olson on July 23, 2012

  • Oh, ABC: “America’s Wrongest Reporter” Brian Ross achieves another feat of wrongness [Hans Bader] “Don’t turn Aurora killer into celebrity” [David Kopel, USA Today] For the media: five tips on how not to misreport the gun angle [Robert VerBruggen, NRO]
  • Ed Brayton of Dispatches from the Culture Wars challenges me on the War For Roberts’ Vote, and I respond;
  • The “contains peanuts” warning on a peanut jar [Point of Law]
  • “California Stats Show Elected Judges Disciplined More Often than Appointed Judges” [ABA Journal] New Federalist Society guide on state judicial selection procedures;
  • “Science Quotas for Women–A White House Goal” [Charlotte Allen, Minding the Campus; Hans Bader] More: Heritage. “Title IX swings wildly at invisible enemy” [Neal McCluskey]
  • So that’s what his business card meant when it said he practiced at Loeb and Wachs [AP: "Hawaii attorney convicted in ear licking case"]
  • Rare occasion in which defendant is allowed to strike back: California appeals court says software executive can pursue malicious prosecution case against class action lawyers [NLJ]

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