Philip Howard’s new online discussion series, New Talk, is back today with a discussion of loser-pays, moderated by Rebecca Love Kourlis. I’m one of the discussants, as is Marie Gryphon of the Manhattan Institute’s Center for Legal Policy, and a galaxy of others, including several law professors who can be expected to oppose the idea strongly. You can tune in here (cross-posted from Point of Law).
More: publicity from Kevin Williamson at NRO Media Blog.
Alberta, Canada, acquits Ezra Levant over publication of Mohammed cartoons, and it only cost him C$100,000* [National Post, his site, Daimnation]*Levant can recover nothing from his tormentors because the so-called human rights tribunals are given a special dispensation from the normally prevailing Canadian rule of loser-pays.
I’ve previously criticized the unrealistic notions judges have of the expense of litigation. (For example: Budget Rent A Car (7th Cir. 2005).) As I said, “[T]he mistake of thinking that legal practice is so frictionless is what encourages so many judges to deny motions to dismiss and deny motions for summary judgment and fail to restrain discovery.” The Spalding Labs v. ARBICO case, No. CV 06-1157 ODW (SHx), 2008 WL 2227501 (C.D. Cal., May 29, 2008) (via Tushnet) provides another example.
“Three years ago, Purina sent a cease-and-desist letter to Chow, Baby!, a Baltimore area pet supply shop and Web site owned by Robin McDonald, asserting that its use of the ‘Chow, Baby!’ name was likely to cause confusion with Purina’s CHOW trademarks and would dilute the distinctive quality of those marks. … According to the dictionary, ‘chow’ is defined as food, a meaning that dates back to 1860.” (Carolyn Elefant, Legal Blog Watch, May 2). More from Ron Coleman:
But companies such as Purina are not interested in discussing the matter. Brand management isn’t a seminar. They are interesting in executing and maintaining a policy of complete domination of not only their brand equity space, but a comfortable semiotic buffer all around that space to the full extent that they can get away with it. Judges simply do not award fees or otherwise penalize brand owners for overreaching under the Lanham Act, though the Act empowers them to do so (the exceptions are notable and hence reportable). For this reason it is worth it to Purina and companies like it — it is a rational economic and corporate choice — to litigate these cases at the small risk of actually getting to a final adverse judgment regarding a trademark they have no right to anyway, as weighed against the much higher possibility that the other side will surrender $10,000, $25,000 or even $100,000 worth of fees into the process — dollars that are orders of magnitude more significant to the defendant (or declaratory judgment plaintiff) than for a corporation that probably has counsel on a retainer anyway.
Another strong reaction from the bench to scorched-earth practices in litigation:
A Massachusetts U.S. District Court judge fined Medtronic Sofamor Danek Inc. and related companies $10 million for the behavior of its trial lawyers at Dewey & LeBoeuf while fighting a patent case brought by DePuy Spine Inc.Senior District Judge Edward F. Harrington also ordered Medtronic Sofamor, which makes spinal implant devices, to pay some of the plaintiffs’ attorney fees. …
“The defendants prolonged the proceedings unnecessarily (thus unduly imposing upon the jury’s time), they sought to mislead both the jury and the Court, and they flouted the governing claim construction as set forth by the Federal Circuit,” Harrington wrote.
(Sheri Qualters, National Law Journal, Feb. 28).
In 1993 the U.S. Congress, urged on by organized litigators, gutted Rule 11, which for ten years had provided relatively strong remedies to those targeted by groundless litigation in federal courts. It’s time to look again at the case for a stronger Rule 11, argue Zeke J. Roeser and Karen Harned (National Federation of Independent Business, in a new article for the Federalist Society’s Engage (cross-posted from Point of Law).
U. S District Court Judge Robert Matsch recently got so infuriated by the conduct of McDermott, Will and Emery attorneys Terrance McMahon and Vera Elson that he overturned a jury’s $51 million verdict, then ordered the lawyers to pay the fees and costs of the opposing lawyers, a sum that could total several million dollars. (Denver Post, Feb. 25)
From the decision (Medtronic Navigation, Inc. v. BrainLAB Medizinische, 2008 WL 410413):
In essence, the response from the plaintiff and MWE, through new counsel, is that the Court had the obligation to stop any trial conduct that stepped over the line of zealous advocacy. In short, they argue that they should not be held responsible for what they were able to get away with during the trial presentation. The adamant denial that there was any abuse of advocacy in this case is in disregard of what this Court has already concluded and displays the same arrogance that has colored this case almost from its inception. Throughout these proceedings Medtronic and the MWE lawyers have demonstrated that when they are faced with adverse court rulings, they proceed undeterred, with only superficial observance of the court’s determinations. Such conduct supports the conclusion that after the Markman rulings, Medtronic’s primary objective in pursuing this litigation was to put economic pressure on its competitor in the market.
Medtronic’s counsel proceeded cavalierly, with reckless indifference to the merits of Medtronic’s infringement claims. The continued prosecution of a claim after its lack of merit has become apparent warrants sanctions under § 1927. At trial, MWE’s conduct was in disregard for the duty of candor, reflecting an attitude of “what can I get away with?” Throughout the trial, the MWE lawyers artfully avoided the limitations of the patent claims and created an illusion of infringement. They did so with full awareness that their case was without merit.
“The New Jersey Supreme Court has agreed to review a case that could determine whether a lawyer is liable for furthering a client’s illegitimate purpose in pursuing litigation.” A lower New Jersey court had ruled that even if a lawyer knew his client was moved by an improper purpose in filing a lawsuit, he could not be held liable unless he was pursuing an illegitimate purpose of his own (as opposed to furthering the client’s illegitimate purpose). On top of it all, the lawyer’s former client was defending an action for malicious process on the grounds that he’d relied on the lawyer’s advice in suing. Since this was the same lawyer who was disclaiming all responsibility for the results of the advice, the overall effect might be seen as that of a shell game in which responsibility for the wrongful lawsuit was to be found under whichever walnut shell — attorney or client — wasn’t being lifted for inspection. (Mary Pat Gallagher, “N.J. Supreme Court to Take Up Issue of Lawyer’s Liability for Client’s Baseless Claim”, New Jersey Law Journal, Jan. 31)(LoBiondo v. Schwartz).
As one of our reader/informants sums up this litigation against a Kentucky surgeon filed by (and backfiring against) a Tennessee attorney: “Plaintiff lawyer (who is a JD/MD) gets sued by both his plaintiff client and the defendant doctor and he loses to both.” (Andrew Wolfson, “Attorney is loser in malpractice lawsuit”, Louisville Courier-Journal, Nov. 28; Childs, Dec. 27). More on countersuits by doctors: Point of Law, Dec. 20.
A guestblogger will be joining us momentarily, and I’ll be posting less over the holidays. Meanwhile, my pipeline is still backed up with items from the past year that deserve a more serious treatment than a hurried roundup mention permits. Here are four of them:
Earlier this week, we quoted an Australian newspaper that Michael Flatley had won an “$11 million settlement” in his lawsuit against Tyna Marie Robertson, a woman who had falsely accused him of rape and tried to extort him through the threat of litigation, and speculated that Robertson’s other romantic shenanigans with the wealthy may permit her to pay it. Alas, other press coverage reveals that this was not a settlement, but a default judgment, which suggests the inability to pay for a lawyer to defend herself as well as to pay Flatley. On Point’s report of the default judgment notes that Robertson’s child support litigation claims she has $6 to her name. Flatley did come to an undisclosed financial settlement with D. Dean Mauro, the attorney who handled Robertson’s claim, so there will be some justice done.
All-medical edition:
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.
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.”
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.
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).
Point of Law Volokh