Overlawyered: Chronicling The High Cost Of Our Legal System

Gate Guard v. Perez: the sequel

Last month we told the story of a Texas business that managed to clobber the U.S. Department of Labor in court over its challenge to the company’s use of independent contractors. The Fifth Circuit granted the company a substantial award in legal fees to punish the department for its bad faith in litigation.

Now, Coyote relates a personal encounter in which he runs into a man at a Houston steakhouse who turned out to be the owner of that company, Gate Guard:

I refused to believe him until he showed me a picture of him with the check. He had had it blown up into one of those huge golf tournament checks. I told him he was my hero and tried to buy him drinks the rest of the night, but when I got up to leave, I found he had actually paid my tab. I drank that evening on the Department of Labor’s dime, I guess.

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“I did it to make his life miserable, which I’m happy about.”

As recently as two weeks ago we covered Republican front-runner Donald Trump’s pattern of suing his critics. But the report by Paul Farhi in yesterday’s Washington Post, recounting Trump’s long courtroom assault on reporter Tim O’Brien, contains a remarkable new passage:

Both courts [in ruling that Trump’s suit should be dismissed] cited a lack of “clear and convincing” evidence to satisfy the basic legal test for libeling someone as well known as Trump: willful disregard for the truth. The appeals court noted O’Brien’s diligent and extensive efforts to research Trump’s wealth.

Trump said in an interview that he knew he couldn’t win the suit but brought it anyway to make a point. “I spent a couple of bucks on legal fees, and they spent a whole lot more. I did it to make his life miserable, which I’m happy about.”

Paul Alan Levy, at Public Citizen, calls Trump’s explanation of his actions and motives “astonishing” and says the front-runner’s “admission of malicious reasons for suing a reporter reminds us why we need anti-SLAPP statutes.” For voters, it might also raise questions of what to expect should a candidate with this instrumental view of legal action gain control of the machinery of law enforcement in the United States.

Bonus: “Litigation and legal threats related to Donald Trump’s presidential campaign” [Ballotpedia catalogue]

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Free speech roundup

  • Sequel to Driehaus case on penalizing inaccurate campaign speech: “A Final Goodbye to Ohio’s Ministry of Truth” [Ilya Shapiro, Cato; earlier here, here]
  • FCC commissioner Ajit Pai: U.S. tradition of free expression slipping away [Washington Examiner]
  • Québécois comedian Mike Ward is already out $100,000 in legal fees after discovering how CHRC can stand for Crushes Humor, Ruins Comedy [Gavin McInnes, The Federalist]
  • 10th Circuit free speech win: Colorado can’t shackle small-group speech against ballot measure [Coalition for Secular Government v. Williams, earlier]
  • New York Times goes after publisher of “War Is Beautiful” book: are picture thumbnails fair use? [Virginia Postrel, earlier]
  • Constitutional? Not quite: Illinois bill would ban posting “video of a crime being committed” “with the intent to promote or condone that activity” [Eugene Volokh]

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Investment-adviser fiduciary rule could trip up broadcast personalities

Brokers who advise retirement investors are bracing for more intense regulation under the Labor Department’s new “fiduciary” rule, and some are already planning to reduce the business they do. The rule is also expected to accelerate a shift toward fee-based investment advice, and is welcomed by some fee-based advisors. [Michael Wursthorn, WSJ] Perhaps less expectedly, the rule could trip up large numbers of persons who less obviously fit the role of financial advisor. John Berlau, Forbes:

Experts both for and against the rule I have talked to agree its broad reach could extend to financial media personalities who offer tips to individual audience members, a group that includes not just Ramsey but TV hosts like Suze Orman and Jim Cramer, as well as many other broadcasters who opine on business and investment matters. They would be ensnared by the rule’s broad redefinition of a vast swath of financial professionals as “fiduciaries” and its mandate that these “fiduciaries” only serve the “best interest” of IRA and 401(k) holders.

One insurance agent, Michael Markey, has written that such media personalities need to “be regulated and to be held accountable” by the government for the opinions he dish out, and “hailed the Labor Department rule as ushering a new era in which “entertainers …can no longer evade the pursuit of regulatory oversight.” Prof. Bainbridge wonders whether there might be a First Amendment issue lurking here, as well as an impulse to support regulation that works to handicap one’s competitors.

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March 9 roundup

  • Jury tells Marriott to pay $55 million after stalker takes nude video of TV personality from adjoining hotel room [Business Insider]
  • R.I.P. John Sullivan, long-time advocate for lawsuit reform in California [Sacramento Bee]
  • Colleges, speed cameras, and surveillance on buses in my latest Maryland policy roundup; paid leave, publicly financed conference centers and criminalizing drinking hosts in the one before that;
  • AAJ, the trial lawyers lobby, “panned companies’ method of fighting class actions as unfair after member accused it of using the same strategy” [John O’Brien, Chamber-backed Legal NewsLine]
  • In the 1920s, battling chain stores was part of the mission of the Ku Klux Klan [Atlas Obscura]
  • Class-action lawyer Goodson, “husband of Supreme Court justice, recommended 2 firms that got state auditor contract” [Arkansas Democrat-Gazette]
  • “Indian court issues summons to Hindu monkey god Hanuman” Again? [Lowering the Bar]

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Hayek on the public demand for a strong man

We must here return for a moment to the position which precedes the suppression of democratic institutions and the creation of a totalitarian regime. In this stage it is the general demand for quick and determined government action that is the dominating element in the situation, dissatisfaction with the slow and cumbersome course of democratic procedure which makes action for action’s sake the goal. It is then the man or the party who seems strong and resolute enough “to get things done” who exercises the greatest appeal. “Strong” in this sense means not merely a numerical majority – it is the ineffectiveness of parliamentary majorities with which people are dissatisfied. What they will seek is somebody with such solid support as to inspire confidence that he can carry out whatever he wants.

— Friedrich von Hayek, The Road To Serfdom, chapter Ten, “Why the Worst Get On Top.” More: Aesop on the Frogs Who Wanted a King, at Cato.

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Labor and employment roundup

  • Immigration-related rules on the one hand, national-origin discrimination rules on the other: “Employers could get sued for following the law” [Sean Higgins, Washington Examiner]
  • Should anyone doubt labor relations as an academic field tilts way left, here are numbers [Mitchell Langbert, Econ Journal Watch]
  • Connecticut high court opens door to letting kids of dismissed workers sue employers for lost consortium, on top of suits filed by the parents themselves [Daniel Schwartz]
  • Obama scheme to yank millions of workers off salaried status is a real economic menace [Trey Kovacs, CEI, earlier]
  • Panel discussion marks 80th anniversary of National Labor Relations Act with lawprofs Richard Epstein and John Raudabaugh, Bill Samuel (AFL-CIO) and Mark Schneider (Machinists), moderated by Hon. Joan Larsen of Michigan Supreme Court [Federalist Society video, National Lawyers Conference]
  • “Employment-related class action settlements hit high in 2015” [12th annual Seyfarth Shaw Workplace Class Action Litigation Report via Staffing Industry Analysts] EEOC Employee Charge trends, annual report [Hiscox, and note map on p. 4 of employee lawsuit hotspots including Illinois, California, Nevada, and New Mexico]

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