Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘loser pays’

Update: Michael Jordan lookalike drops suit

Updating our Jul. 8 item:

The Northeast Portland man who sought more than $800 million from Michael Jordan and Nike founder Phil Knight because he said he was tired of being mistaken for the famous basketball player is giving up his defamation lawsuit….

Vada Manager, Nike spokesman, said no payment was made to [Allen Ray] Heckard to get him to drop the lawsuit.

“It’s fairly simple,” Manager said Monday. “He finally realized he would end up paying our court costs if the lawsuit went to trial.”

(Holly Danks, “Man throws in towel on Jordan lawsuit”, The Oregonian, Aug. 1). For more on the principle that costs should follow the event — and not just in cases as wacky as this one — see our loser-pays page.

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Upset at photo, sues high school yearbook editors

Tyler Bennett wore boxer shorts instead of a jock strap when playing basketball for Colts Neck High School, and a resulting action photo published in the school’s yearbook inadvertently revealed more (or perhaps less) than Bennett would have liked. Some students didn’t return the yearbooks when they were recalled the business day after they were released, and an opposing basketball player teased Bennett the next year. Bennett claimed untold emotional distress (though he never sought counseling or medical assistance for his trauma) and sued the school board, three officials, two teachers, the publishing company, and nine students; the latter have had to hire their own attorneys at their own expense if their parents didn’t have homeowner’s insurance. “Some of the students weren’t even editors. The yearbook at Colts Neck High School is produced by a journalism class and some noneditors in the class jumped into the “editors” picture before it was snapped for the yearbook. Not able to determine who was responsible for content, [attorney Steven] Kessel named everyone in the picture.” Bennett even threw in a child pornography charge.

The trial court tossed the case (though only after depositions and summary judgment briefing) and an appeals court summarily affirmed, but Kessel says he’ll appeal to the New Jersey Supreme Court, which will add to the legal expenses of the defendants. Though the case was meritless, the court refused sanctions because the suit technically wasn’t “frivolous” because it wasn’t brought in “bad faith,” exhibiting once again the disconnect between the legal definition of “frivolous” in many states and the popular understanding of the adjective. (Henry Gottlieb, “Former Student Sues Over Revealing Yearbook Photo”, New Jersey Law Journal, Jul. 17; James Quirk, “Judge: Embarrassed ex-Colts Neck student has no claim in yearbook case”, Asbury Park Press, Jun. 24 (via Romenesko); Bennett v. Board of Education (unpublished)).

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RIAA [might be] told to pay attorney fees

The recording industry association sued Debbie Foster of Oklahoma along with her daughter Amanda for $5000, saying her broadband account had been used for song downloading. But when Foster resisted the suit, and requested to know the dates and song titles of the allegedly infringing downloads, the association failed to respond. Foster filed for summary judgment and RIAA withdrew its suit against her. A judge said Foster counted as a prevailing party under the terms of the Copyright Act and that RIAA should could apply for RIAA to pay her attorney’s fees. (Eric Bangeman, Ars Tecnica, Jul. 13). See, e.g., Nov. 4, 2005, Feb. 7, 2005. (Fixed Jul. 16 to respond to reader comment noting that the judge did not in fact order a fee shift but only declared Foster eligible to apply for one. A PDF of the ruling is here)

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“Big law firm picks up Little Guy in sweep for defendants”

In March 2004, the Kansas City law firm of Walters Bender Strohbehn & Vaughan filed a class action against 63 defendants for supposedly overcharging for mortgage fees. The firm, however, confused Wall Street banking behemoth Salomon Brothers with developer Berton Solomon’s “Solomon Brothers” St. Louis commercial real-estate company and sued the latter. (This was a double mistake since Salomon Brothers hasn’t existed since 1997, and is now part of Citibank after at least two name changes and two mergers.) Unfortunately, the plaintiffs refused to immediately drop Solomon from the suit, and he ran up (a remarkably cheap) $4000+ in legal expenses in the seventeen months of legal proceedings before he was finally dropped, $4000 that Walters Bender is refusing to pay. They’re not very happy about being sued in small claims court, and are fighting that suit, even though it will cost them more to do so than to pay Solomon’s bills. (Bill McClellan, St. Louis Post-Dispatch, Jun. 18).

Without a settlement, Solomon is unlikely to recoup his costs in the absence of showing malice, a required element in Missouri law; lawyers are immune from the consequences of mere negligence, because, they’ll be happy to explain, such liability might deter productive activity like scattershot lawsuits. If only the same protections applied to, say, practicing medicine or providing jobs or producing goods.

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Canadian magazine sued over cartoons

Following up on earlier threats (Feb. 14, Mar. 19), Syed Soharwardy has brought a complaint against the Western Standard before the Alberta Human Rights Commission over its publication of the Mohammed cartoons. Ezra Levant, publisher of the Western Standard, explains (Mar. 29) that defendants in the “human rights” tribunal do not benefit from the protection that the loser-pays principle affords most defendants in Canada against groundless or nuisance litigation:

even if we are successful in the human rights commission, we will not be compensated for our legal fees. It’s not like a real court [! — W.O.], where an unsuccessful plaintiff would be ordered to pay a successful defendant’s costs. So even if we win, we lose — the process is the penalty. Worse than that, the radical imam who is suing us doesn’t have to put up a dime — the commission uses tax dollars to pay lawyers and other inquisitors to go at us directly. Human rights tribunals themselves are illiberal institutions.

More: A. Alan Borovoy, “Hearing complaint alters rights body’s mandate”, Calgary Herald, Mar. 16 (PDF).

In other cartoon-jihad news, it appears that giant book retailers Borders and Waldenbooks have been Boston-Phoenix-ized (see Feb. 10); they say they won’t carry the April-May issue of the magazine Free Inquiry, which reprints Mohammed cartoons, for fear of Islamist violence against their employees and customers (Carolyn Thompson, “Borders, Waldenbooks Won’t Carry Magazine”, AP/San Francisco Chronicle, Mar. 29). Free Inquiry is actually worth subscribing to quite aside from this episode; you can do that here.

P.S. Eugene Volokh has a thread discussing the extent to which Borders/Walden might be subject to later tort liability if its sale of the magazine led to violence that harmed customers (Mar. 30). SupportDenmarkSmall3EN.png

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No abuse of process here, move along

Dr. Hazel I. Holst contends that attorney Harry J. Oxman named her as a defendant in a lawsuit brought by Roderick T. Powell arising from a nasal surgery performed in 1970 even though — kind of a big gap in the case — “there was absolutely no record of Dr. Holst ever treating Mr. Powell”. So she sued Oxman for various counts including abuse of process, extortion and racketeering. Now U.S. District Judge R. Barclay Surrick of the Eastern District of Pennsylvania has dismissed her complaint, ruling that 1) Holst could not prove that the case eventuated in a verdict or dismissal in her favor — a prerequisite for an abuse of process claim — because the case had apparently been diverted to alternative dispute resolution and resolved there without a “verdict”; 2) she could not prove racketeering because she made no showing that the lawyer followed a pattern or practice of filing cases of this sort, and — this is my favorite — 3)

that Holst had also failed to allege a valid claim of abuse of process because her extortion claim was limited to an allegation that Oxman had initiated the suit in the hopes of inducing settlement discussions [he had in fact demanded $200,000, per her account].

“This tort requires a ‘perversion of legal process after it has begun in order to achieve a result for which the process was not intended….” [the judge wrote]

(emphasis added). Should we infer that enabling $200,000 demands against doctors under these circumstances is the sort of purpose for which the process was intended? (Shannon P. Duffy, “RICO Suit Against Lawyer Dismissed due to Lack of ‘Enterprise'”, Legal Intelligencer, Mar. 23).

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“Serial” litigant told to pay $270K

If you drive your SUV into someone’s picture window you’ll be expected to pay for the damage, and — even in this country, at least in extreme circumstances — the same can hold true if you drive your lawsuits into them: “A federal judge has ruled that a Rochester School District teacher — who has been labeled a ‘serial’ litigant by district lawyers — must pay $270,000 in legal fees to the district and the Rochester Teachers Association. City school teacher Donald Murphy, who has been embroiled with the district in litigation for more than a decade, filed multiple frivolous actions claiming his civil rights were violated, U.S. District Judge David Larimer ruled.” (Gary Craig, “Teacher must pay $270,000”, Rochester Democrat & Chronicle, Mar. 14).

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A Little Taste of Loser Pays?

My company is in the business of managing recreation sites, many of which are located in the National Forest. I deal with local Forest Service rangers all the time, and I’ll tell you they have an almost impossible job. They all joined the Forest Service because they wanted to be close to trees, but many of them find that the closest they get to trees every day is via the reams of paper they must generate in environmental impact studies and motions in lawsuits. Everything they try to do in the forest tends to be blocked legally by somebody, the most common opposition coming from environmental groups.

One federal judge may be raising the costs of filing such suits against everything….

While this is not really a true loser-pay system, and appeal bonds are fairly normal, they seldom cover the true costs of the delay and extra litigation. Apparently this bond is getting attention for being 10x larger than is typical. (Brett Wilkison, “Judge orders litigating enviros to pony up”, High Country News, Feb 6).

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Flying shrimp not so fatal after all

Peter Lattman reports that a jury took two hours to reject the claim that dodging a flying shrimp at a Benihana restaurant caused Jerry Colaitis’s death ten months later. Some opponents of liability reform might use this as evidence that the system works, but Benihana is still out the exorbitant cost of the attorney time required to prepare for and defend a four-week trial, which was certainly in the six digits, and perhaps the seven digits, effectively punishing them for not paying protection money. (Corey Kilgannon, “Jury to Decide if Flying Sizzling Shrimp Led to Man’s Death”, New York Times, Feb. 9). We were way in front of this story in the blogosphere, reporting on it Nov. 23, 2004 and Jan. 13.

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