If
you observed a situation where you felt someone was in imminent danger, would
you get involved? What if you knew your actions could expose you to liability
and eventually a lawsuit? Surprisingly
this can and does happen. It is no secret that the American
society is litigious. From lawsuits that point the finger back at a good
Samaritan, to those that blame corporations for something as crazy
as alcoholism, our court system is commonly used to
assert frivolous claims in hopes of a settlement. Most lawsuits that are filed
never get close to a trial, nor are they expected to. In fact, 95% of all civil suits are resolved
through settlement. Settlements are costly for those directly involved and they
pose heavy costs on society. Doctors,
contractors, auto insurance carriers and many more, pass these costs onto the consumers
through increased prices. People that normally would step in when they see
something happening are discouraged to do so for fear of liability. It appears as though the US civil litigation
system is perpetuating this problem, and could stand some reform.
Does a plaintiff face any consequence
if they have made false allegations?
There are federal rules that attempt to
address this situation. FRCP
Rule 11 allows a judge to sanction any attorney, or
unrepresented plaintiff that is found to have violated the requirements under
Rule 11. See Frantz
v. U.S. Powerlifting Federation. The
fact is these sanctions are not issued often and many believe this rule is ineffective. There are loopholes that provide opportunities
for a plaintiff or plaintiff’s attorney to simply withdraw or amend their
complaint to avoid sanction. Since the rules inception, attempts have been made
to increase the bite of Rule 11 and encourage judges to impose sanctions. The most recent attempt was in 2017, bill
H.R. 720 known as the Lawsuit Abuse Reduction Act of 2017. This bill proposes a requirement that any
sanction provided by Rule 11 violation must also compensate the injured party. It also withdraws the provision in Rule 11
that allows withdrawal or amendment of the violating document. This bill is currently awaiting vote in the
Senate.
Does a defendant have any recourse?
Being
faced with a lawsuit is both a serious and stressful situation. Even if the
claims in the complaint are false, a defendant is required to afford the effort
and cost of asserting their defense. Under the US Federal Rules of Civil
Procedure, all that is necessary to begin the civil litigation process, is for a
plaintiff to file their complaint. From
the moment a defendant is served, the clock starts ticking and costs start to
incur. The US legal system applies the
American Rule, which basically says each party is
responsible for their own expenses that are associated with a lawsuit. Attorney’s
fees and other costs incurred are not recoverable for a defendant unless
otherwise provided through contract, state law or statute. The defendant is
forced to incur the expense of a defense, with very little chance of recourse
for having been put through this process, regardless if it has any merit.
Conclusion
While it is understood our forefathers set up our legal system to provide
citizens with easier access to the courts, it appears there are some unintended
consequences. Our court system is the appropriate place
to address legitimate issues or disputes, but due to the overwhelming number of
cases that are filed, they rarely see the inside of a courtroom. To address the
issues I have raised, I would recommend some reform to the civil litigation
process. Changing the “American Rule” to
what is known in the UK and other countries as the “loser pays rule” would help
in deterring a plaintiff from pursuing a frivolous lawsuit. The proposed
changes under the Lawsuit Abuse Reduction Act of 2017 are certainly a good
start, but would it help to also implement some pre-suit rules? Rules that
require a plaintiff to submit documentation to support the plausibility of the
claims made in the complaint?
Up for discussion:
Is FRCP Rule 11 being enforced and accomplishing what it’s intended
purpose was?
Do you feel changing the “American Rule” to the “loser pays rule” would
be effective in deterring a plaintiff from filing a baseless lawsuit?
What are your thoughts regarding requiring a plaintiff to perform formal pre-suit
discovery to support the allegations made in the complaint that is filed with
the court?
Sources and additional reading:
https://www.quimbee.com/keyterms/american-rule
This is something that I have thought about before and it seems like there are two sides to every story. I personally would support a "loser pays rule" based on the understanding that it would more likely deter frivolous lawsuits. However, I have a feeling that the consequences would be more complex than that (as everything seems to be complex with the law). My main concern would be the affect that it would have on access. I feel that a rule like this may deter lawsuits mainly from those who do not have the money to risk. It is not doubt that the number of lawsuits would decrease, but at what cost as far as influencing lower areas of socioeconomic status? Something to think about I suppose.
ReplyDeleteMy issue with the loser pays rule is that often both sides are at fault at least to some degree. It is on the lawyers to weed out frivolous cases prior to pursuing them. Recently, we had to drop one of our medical malpractice clients after the attorney determined that the costs in pursing the matter would outweigh the gain in recovery should the client pursue litigation. In this instance, there is harm, but it isn't worth the cost of recovery.
DeleteThe same issue comes up with small claims clients and medical malpractice claims. A PNC for a small claims case called today and asked whether it was worth pursuing his case with the aid of a lawyer. I knew that on the whole, the answer is no, but I'm not allowed to give this advice so I transferred the call to the attorney who said basically what I was thinking. For medical malpractice cases, I have had to update my intake sheet to remember to ask the age of the client and the year of the incident. Depending on the type of medical malpractice, the age of the client can be significant in determining whether to pursue a claim or not. One PNC called and was in his later 60s or early 70s. My attorney declined the representation and told me that part of his reasoning was due to the factors surrounding the procedure, the fact that the client lived and did not have any or many economic damages due to the malpractice, and the fact that the client was older and thus opposing counsel could easily argue that even if the man had been seriously injured or died, his dependents would suffer fewer monetary losses and the outcome of his procedure could have been affected by his age in addition to any possible negligence.
Peter, I'm curious about your comment that both sides are at fault to some degree. Is this the norm? Using your example above, I can completely understand why your firm declined to represent the patient. However, even though the client did not suffer great financial harm, isn't the doctor to blame for the alleged malpractice? Obviously I don't have all the facts, but if this is the case, shouldn't the patient be entitled to sue for both the minimal financial burden and any emotional pain and suffering incurred as a result of the malpractice? In fact, wouldn't a loser pay system support weeding out these cases? While the attorneys you work for make those decisions in house, there are plenty of lawyers who take on these cases and may not provide the most realistic chance of success. I believe a loser pay rule may force a plaintiff to seriously consider their case in a way the American system does not encourage.
DeleteI agree with having some sort of penalty for filing a silly or insignificant lawsuit, but I'm not quite sure what the answer is. I wonder how to prevent frivolous lawsuits, which by definition are any lawsuit filed with the intention of harrassing, annoying or disturbing the opposite party. It is also a lawsuit that has little or no chance of success if it is actually brought to trial. But, in some ways, I think we are misled by how many of these frivolous cases are actually in the court system. I do think that adopting a form of the UK system might be worth looking in to.
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DeleteThe statistics in the UK show that the "loser pays rule" does cut down on the number of lawsuits, but is it appropriate for our due process rights here in America? If a layperson is suing a large corporation or files a medical malpractice lawsuit, who's going to win? Most likely, but not always, the large corporation or health insurance company will have more attorneys and resources to put into defending the case, whereas, a common layperson will not have as many monetary options for discovery. The judge may take this into consideration. But, if the layperson knows that he might lose the case and incur the corporation's attorney fees, then he will most likely not run the risk, which would deter him from exercising his due process rights.
ReplyDeleteOne thing to note for this example is that the client for both of these instances would most likely have their case taken on contingency, meaning that the attorney takes a percentage of the recovery (typically 33%) in addition to any fees incurred in the cost of pursuing this action. This means that the law firm puts up the money to prosecute this case and the plaintiff is not liable to repay the firm if the case is lost. This creates a strong incentive for the firm taking the case to make sure that the case is not only winnable, but also has a promise of a decent payout. This creates a strong incentive not to pursue frivolous cases as the firm has to pay rather than the client.
DeleteIt is up to the Attorney's discretion which cases they ultimately end up pursuing but there are attorney's that will take cases on contingency and try to "shoot the moon" especially when there are large corporations or insurance involved. I currently have a case where one of our employees tapped the rear bumper of another vehicle. There is no visible damage to either vehicle and this is noted in the police report. We have accepted responsibility for the accident. The other party has not pursued any claim for property damage, yet they have racked up tens of thousands in medical bills and are pursuing an injury claim. Clearly we are at fault for the accident, but the injury claim is HIGHLY questionable. This individual is attorney represented and they have filed a complaint in court. Should we pay this individual for an injury we didn't cause? OR do we spend tens of thousands defending our innocence on the injury claim. Either way we pay. Many attorney's realize this and pursue the claim knowing they will likely receive a settlement without even filing a complaint.
DeleteThere has been a lot of debate, particularly between Congress and legal community at large regarding the lawsuit abuse bill and whether or not frivolous lawsuits have risen since its adoption in 1983. I think there are strong arguments on both sides of the effectiveness of Rule 11. I don't know enough about the topic to make a definitive answer regarding whether Rule 11 seems to be working in the courts, however, I do agree with the ABA that rule 11 should be amended rather than passing legislation to curtail it.
ReplyDeletePermitting plaintiffs with actual injuries to seek redress in court while also protecting defendants from frivolous lawsuits is a true balancing act. Before Iqbal and Twombly, the FRCP required only that the complainant plainly and concisely state why he/she was entitled to remedy. Now, however, the Supreme Court has said that a complainant must include a "plausible" claim for relief.
ReplyDeleteMy first thought was to applaud the court's initiative to discourage weak complaints, thus curbing the amount of frivolous lawsuits and working to restore Americans' faith in the legal system (83% of whom feel that the system has made it too easy to make invalid claims - https://abovethelaw.com/uploads/2012/07/WethePlaintiffs2.jpg).
Additionally, I was skeptical of criticisms I found of the plausibility standard change because by and large it was lawyers, those who have a vested interest in allowing citizens to bring suit as much as possible for any reason, who were complaining.
However, I found one ABA publication which explained that the plausibility changes have "made it much more difficult for civil rights and employment discrimination plaintiffs to survive a motion to dismiss. And it also has tilted the scales in favor of corporate and governmental litigants, at the expense of individual litigants, to make the playing field even less balanced than one would expect given the relative disparities in access to resources that already exist between these groups. And, surprising to some observers, it has imposed this cost without any corresponding benefit in the quality or merit of the underlying cases. In other words, plausibility pleading has led to an increase in the rate of dismissals, but there is no evidence that it has been an effective filter for the merit of a case." (https://www.americanbar.org/publications/human_rights_magazine_home/2015--vol--41-/vol--41--no--1---lurking-in-the-shadows--the-supreme-court-s-qui/the-supreme-courts-civil-assault-on-civil-procedure/)
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ReplyDeleteFrivolous complaint under rule 11 is a lawsuit intended to harass, annoy or disturb an opposite party (defendant), usually with plaintiff’s intention without a chance to succeed if pursued in court. That can be dismiss under rule 12 with motion to strike for a frivolous claim, at the same time there could be a counterclaim for defamation from the defendant. An improper purpose you can also file a complaint for “malicious prosecution”, after defeating the frivolous case. Unfortunately, the only sanction to a plaintiff is a civil fine which is not considered a criminal punishment. There is only a civil penalty for wrongful conduct.
ReplyDeleteDefinitely, “loser pays rule” would be very effective. In American society the general rule as you described is that in a litigation each party pays their attorney’s fee regardless of who wins. In Peru we say, the only winner in a litigation is the lawyer. Because the system is so corrupt that a defendant’s lawyer can buy the opposite’s lawyer, and there are no sanctions, “you can also buy a judge.” And simple cases can last 5 to 10 years just for litigation earning purposes, very sad but reality. In England on the other hand the losing side is often required to pay the opposite’s attorney’s fees after losing a trial. England’s system in some jurisdiction is a rule to control lawyer’s fees arising out of litigation. So the party who loses pays the other party’s legal cost. Imagine that rule in the American legal system. Even lawyers would have to think about taking a case to a litigation. Keep in mind that lawyer who do not go to trial and settle a case before it, make at least 33% of any settlement.
I will suggest everyone to read the following case in Delaware Law, ATP Tour, Inc. v. Deutscher Tennis Bund (German Tennis Federation), No. 534, 2013. ATP’s bylaw to add an Article 23 explains, a claiming Party or in whose Claim the Claiming Party had a direct financial interest) does not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought, then each Claiming Party shall be obligated jointly and severally to reimburse the League and any such member or Owners for all fees, costs and expenses of every kind and description (including, but not limited to, all reasonable attorneys’ fees and other litigation expenses) (collectively, “Litigation Costs”) that the parties may incur in connection with such Claim.3”
The supreme court of the State of Delaware concluded.
Under Delaware law, a fee-shifting bylaw is not invalid per se, and the fact that it was adopted after entities became members will not affect its enforceability. But we cannot say, as a matter of law, that the ATP fee-shifting provision was adopted for a proper purpose or is enforceable in the circumstances presented.
As professor Dryer explained, if this is stated in a contract it might be enforceable, I think this should be introduced in the litigation system in the U.S.A.
Yesterday, I went to the justice court of West Valley to help a client to file a criminal complaint, and I was very surprised that they have a legal counselor that spoke with the plaintiff about the allegation before filing a complaint. Should it be the plaintiff’s duty to perform formal pre-suit discovery or a duty to the court before accepting a complaint? wouldn’t that change the perspective of the citizens before filing a complaint? wouldn’t the citizens think twice before making a frivolous allegation?
I contemplate this issue often, and have come to the opinion that the only realistic solution to the problem is to dramatically increase the role of Alternative Dispute Resolution within the traditional court system. Utah has taken a tentative step in this direction by enacting UCA 30-3-39, which requires mediation in cases of contested divorce, and, UCJA 4-50, which requires mediation in contested civil actions, but I think a lot more can be done.
ReplyDeleteSome members of the legal community believe mandatory mediation diminishes peoples 14th Amendment right to due process. But I think there is a better way of looking at it. I see mandatory mediation as a kind of legal triage—where the smaller wounds can be patched up, and the critical cases can be assessed before being admitted. This is not to imply that mediators should, or would, ever become the gatekeepers of justice. I simply mean that ADR might be the fastest way of clearing the path to the peoples’ “day in court”, if it were to be adopted into the more traditional hierarchy of the justice system.
Great discussion; we will discuss in our next class.
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