Posts Tagged ‘loser pays’

Fear of Thiel and the case for litigation reform

“Angry about Peter Thiel’s pursuit of Gawker? Tort reform is the best solution.” Sonny Bunch of the Free Beacon is kind enough to quote me at length (and quote my debut book, The Litigation Explosion, at length too) in this Washington Post opinion piece.

…members of the media are finally starting to realize something that conservatives have been arguing for quite some time with regard to our litigious culture, namely that the process itself is the punishment….

One of the causes that Olson argued most strenuously for in his book [The Litigation Explosion] was a more aggressive regime of fee shifting — that is, crafting and enforcing “loser-pays” laws common in other countries. Given that he literally wrote the book on the topic, I emailed him and asked how news outlets could work to avoid ruin at the hands of the vengeful wealthy….

If you wonder how loser-pays might have helped Gawker even though Hulk Hogan’s case was a winner, you need to read the link. More: Andrew Kloster and Jessica Higa, Daily Signal.

Sweden: image vs. reality

Please update your mental image of Scandinavian policy: “Being more like modern Sweden actually means deregulation, free trade, a national school voucher system, partially privatized pensions, no property tax, no inheritance tax, and much lower corporate taxes. Sorry to burst your bubble, Bernie.” [Johan Norberg, Reason; Daniel Mitchell, Cato]

While we’re at it, Sweden has fewer than one-sixth as many lawyers per capita as the U.S., in part because its rules of civil procedure are drawn so to discourage needless legal combat.

Post-trial maneuvering in a discrimination verdict

In March a San Francisco jury returned a defense verdict in Ellen Pao’s widely publicized sex discrimination suit against Kleiner Perkins. As so often when a lawsuit story sounds over, however, that’s been just the prelude to further wrangling over a possible settlement: Kleiner says Pao has demanded $2.7 million in exchange for not pursuing an appeal, while Kleiner, citing a spurned pre-trial offer that it says triggers the operation of California’s offer-of-settlement law, has asked a court to order Pao to pay nearly $1 million in expert witness fees and other costs. Davey Alba at Wired reports and quotes me on several aspects.

Last week CBS radio quoted me on another high-profile discrimination suit, EEOC v. Abercrombie & Fitch Stores LLC, the headscarf accommodation case:

May 27 roundup

  • All aboard! “Louisiana AG hires nine private law firms, 17 attorneys for federal antitrust pharmaceutical lawsuit” [Legal NewsLine]
  • National Association of Insurance Commissioners has, and exploits, legally privileged status as collector of insurance data. Time for open access [Ray Lehmann]
  • Europe’s antitrust charges against Google remind us of “the poverty of the standard antitrust doctrine” [Pierre Lemieux]
  • Court blasts Morrison Foerster for ‘nonsensical’ legal theories and ‘carnival fun house’ arguments [ABA Journal]
  • “Trolls aren’t the primary problem with the patent system. They’re just the problem Congress is willing to fix.” [Timothy Lee, Vox] What makes you think lawyers and rent-seekers aren’t going to turn “patent reform” to their own purposes? [Mark Mills]
  • “It only goes that one direction, too.” Rachel Maddow recognizes the fairness problem with one-way fee shifting, this one time [Huffington Post on pro-defendant Colorado firearms law]
  • CPSC still going after Zen Magnets, which isn’t backing down [Nancy Nord, earlier]

Banking and finance roundup

  • Critics say by naming payment processors in massive enforcement action over debt collection practices, CFPB is implementing its own version of Operation Choke Point [Kent Hoover/Business Journals; Barbara Mishkin, Ballard Spahr; Iain Murray, CEI]
  • Green sprout in Amish country: “Bank of Bird-in-Hand is the only new bank to open in the U.S. since 2010, when the Dodd-Frank law was passed” [WSJ via Tyler Cowen; Kevin Funnell on smothering of new (de novo) bank formation; Ira Stoll (auto-plays ad) on growth of non-bank lenders]
  • “Quicken Loans Sues DOJ; Claims ‘Political Agenda’ Driving Pressure to Settle” [W$J; J.C. Reindl, Detroit Free Press]
  • Shocker: after years of Sen. Warren’s tongue-lashings, some banks consider not giving to Democrats. Is that even legal? [Reuters] “Elizabeth Warren’s Extraordinarily Bad Idea For A Financial Transactions Tax” [Tim Worstall]
  • Still raging on: Delaware debate about fee-shifting corporate bylaws as deterrent to low-value shareholder litigation [Prof. Bainbridge first, second, third posts]
  • “How a Business Owner Becomes Criminally Liable for How Customers Spend ATM Withdrawals” [Elizabeth Nolan Brown, Reason]
  • New York financial regulator pushes to install government monitors at firms where no misconduct has been legally established [Robert Anello, Forbes]

Counting the costs of the New Mexico wi-fi suit

We posted earlier about a court’s dismissal after five years of the suit by Santa Fe, N.M. resident Arthur Firstenberg against neighbor Raphaela Monribot, over his claims that her electronic devices were exacerbating his condition of “electromagnetic hypersensitivity.” Don’t miss George Johnson’s excellent New York Times write-up, which fills in many more details:

…I assumed the case would be quickly dismissed. Instead, in 2010, it entered the maze of hamster tubes that make up the judicial system.

…About a week ago, after the Court of Appeals upheld the decision, I stopped by the office of Ms. Monribot’s lawyer, Christopher Graeser, with a tape measure. The files for the case sat in boxes on a table. Piled together, the pages would reach more than six feet high.

Court costs, not counting lawyers’ fees, had come to almost $85,000, or more than $1,000 an inch. Because of what the court described as Mr. Firstenberg’s “inability to pay,” the bill went instead to Ms. Monribot’s landlord’s insurance company — as if someone had slipped on an icy sidewalk, or pretended to.

Mr. Graeser and another lawyer, Joseph Romero, represented her pro bono, writing off an estimated $200,000 in legal fees.

Jury rules against Ellen Pao; fees fail to shift

A San Francisco jury has found no improper gender discrimination or retaliation by Kleiner Perkins and returned a defense verdict in Ellen Pao’s high-profile lawsuit [Mashable, Roger Parloff/Fortune (noting judge’s evidentiary rulings favorable to Pao)] Pao’s “lawyers also missed out on a payday that could have reached into the millions of dollars.” In particular, “had Pao won on any of her claims, under California law her legal team, led by longtime San Francisco employment lawyers Alan Exelrod and Therese Lawless, could have sought all its fees from Kleiner.” [Reuters] One-way fee-shifting rules like those in discrimination law, especially with the further “win on any claim, collect all legal fees including those spent pursuing losing claims” refinement, diverge sharply from the principles of two-way loser pays followed in other advanced nations, but have the result (and the intent) of strongly incentivizing speculative litigation. The only real way to go further would be to order defendants to pay both sides’ fees even when the defendants win outright, as Kleiner did; but as of yet even California law does not go that far.

P.S. Apparently even a lost case counts as valuable promotion for the California plaintiff’s employment bar [Margaret Cronin Fisk, Bloomberg, auto-plays]