Proposed tort reform statutes are suspiciously alike: each would have the winner in a lawsuit paying the loser's legal fees and costs. The underlying assumptions are that a significant percentage of lawsuits brought by plaintiffs are frivolous; that the federal and state courts have been unable to deal with these alleged frivolous lawsuits by plaintiffs and their counsel; and that many plaintiffs will be discouraged from starting frivolous lawsuits if they as losers in the lawsuit are required to reimburse the defendant's legal fees and costs.
What's Wrong with the Tort Reform Proposal?
The tort reform proposal, if implemented, would take away the courts as a place for middle class persons and small business to try to obtain relief from actual and perceived abuses by government, business and others.
A Quick Test
How much does it cost to defend a lawsuit?
Answer: Obviously, it varies, but a typical alleged "frivolous" suit brought in the highest trial court or in federal court could easily run between $50,000 and $500,000 to defend.
How much would a major corporation be able to spend in defending a civil action charging the corporation with significant wrongdoing?
Answer: Whatever it takes, and often regardless of the amount for which the plaintiff is suing. Defendants will spend $500,000 in legal fees and costs to avoid paying $10,000. The theory is (which seems like a main selling point of expense defense counsel) that it is necessary to resist various types of suits at any cost to avoid additional lawsuits, and this is so it seems when the suits are most meritorious.
How much would you, the person taking this test, be able to spend in suing an insurance company (the "major corporation" above) which failed to pay your claim for medical expenses (claiming such expenses are not covered by your health insurance policy)?
What likelihood do you have, realistically, in winning your case against the major corporation insurance company, when realizing that the amount you can spend in prosecuting your case is less than 1% of the amount the major corporation is willing to spend in defeating your claim?
What would the typical family decide about bringing a lawsuit against a major corporation if it could spend only $10,000 in prosecuting its suit; it believed the major corporation would spend $1,000,000 in its defense; and that the family would lose all of its net worth if it lost the suit because it would be required to reimburse the major corporation for its $1,000,000 expense?
Litigation Costs - Middle-Class Plaintiff
Middle-class and poor plaintiffs generally do not have much money to pour into a lawsuit. The amount available to them ranges from zero (the amount which is most common) to perhaps $10,000 or $20,000. Few middle-class persons can afford to pay more than $20,000 for a lawsuit.
What middle-class person or poor person could afford to pay $20,000 in an effort to win, but if that was unsuccessful, be able to pay the defendant reimbursement of $50,000, $100,000 or $500,000 in the major corporation's legal fees and expenses? The answer - very few persons.
How do middle-class and poor persons run a lawsuit without any money? The answer - by putting in more time by the plaintiff and more time by a lawyer working on a contingent-fee basis. At the end of the lawsuit, how much in out-of-pocket expenses have been paid by the plaintiff? Very little in many cases. Many lawsuits are run on a contingent-fee basis with out-of-pocket expenses for xeroxing, taxis, depositions and filing fees amounting to less than $5,000 or $10,000. The labor of the parties and the contingent-fee lawyers has been used without payment of any legal fees.
Litigation Costs - Major Corporations
Major corporations, on the other hand, charge fees for everything which the middle-class plaintiff did without expectation of any fee reimbursement. The paralegals, librarians, file clerks, lawyers, partners, investigators, designers, artists, jury consultants, data processing consultants, and others all put in charges against the litigation which are added up at the end and charged to either the major corporation client, or the losing plaintiff under the tort reform proposal.
The unfairness of this is obvious for many good reasons:
Litigation Overkill by Major Corporate Defendants
Litigation can be very costly, as everyone has seen who has been following the O.J. Simpson trial, particularly when both sides are well financed. The O.J. Simpson trial is costing Los Angeles perhaps $10,000,000, and O.J. may be spending about the same amount.
What would happen if O.J. had no money? The trial would be much shorter, with a greater chance for conviction. What would happen if a nobody with no money were being tried instead of O.J.? The trial would be even shorter, and it would cost Los Angeles perhaps only $25,000 to $50,000 (including investigation costs) or so, and the public defender for the defendant and his/her costs might amount to about $10,000, with the prosecution having a decided advantage because of these economics.
What generally happens when a poor or middle class person sues a major corporation for something serious? Answer: the major corporation spends whatever it needs to spend (such as $1,000,000) in a major effort to overwhelm the plaintiff and his/her lawyer, who may only have $25,000 to $100,000 in combined resources (money plus value of legal time) to spend in prosecuting the case. This factor of 10 to 1 makes a big difference and can make the plaintiff's case look insubstantial or "frivolous" when it is not.
The evil of this type of overkill is that it is not necessary, but diverts the efforts of the plaintiff and plaintiff's lawyer from trying to develop the plaintiff's case into trying to cope with all of the unwarranted, useless demands made by the defendant, so that the plaintiff's case remains undeveloped.
The courts try to some extent to stop this type of overkill, but it happens without the court's involvement in most instances, and it can be a major effort in many cases to try to stop the defendants' excessive litigation efforts. Any kind of meaningful tort reform should try to end these abuses which are typically by defendants (litigation overkill). One way would be to require full disclosure each week or month of what each side is doing as preparation in the litigation including the hours involved and the costs including legal fees (on the theory that there is no need for secrets in the gathering of evidence). Another way would be to have a trial within a month after the complaint is served with only automatic document production similar to criminal-law disclosure at the outset of the case. Another way would be to have access to judges or magistrates by telephone call without the need for motion papers at any time to resolve discovery disputes immediately, and by telephone and fax. In this way, the massive litigation effort by major corporations can be reduced, to eliminate some of the high litigation costs which are not involved in many significant civil lawsuits.
The term frivolous lawsuit is a term created by major corporations (including TV, newspapers and other media owned by major corporations) to sell the public, without its awareness, on committing political and economic suicide. The term "frivolous" is not a clear-cut standard for lawyers and clients. Even the U.S. Supreme Court split 5 to 4 in a decision in which it held that something was frivolous. Four judges did not believe so, but 5 judges did, which was sufficient. Of course, this does not make plaintiffs' lawyers feel very confident about a system in which plaintiffs and plaintiffs' lawyers can lose all of their worldly possessions when a court holds after 2 years of fierce battle that a lawsuit is frivolous, especially when the defendant has spent $1,000,000 in defending a "frivolous" lawsuit.
It would seem that a sine quo non of any tort reform legislation would be a requirement that frivolousness be tested at the outset, within the first week or two, before any legal fees can be built up, so that all "frivolous" lawsuits be identified as frivolous by the courts and opponents at the outset, rather than months and years later after the expenditure of hundreds of thousands of dollars, and then assessing such defense expenses against the plaintiff and his lawyer.
In fact, it would seem that any defendant wanting to have the plaintiff pay his legal expenses should send a weekly statement to the plaintiff and court of what the defendant's lawyers did, and the cost of such legal work, so that the defendants are not able to overdefend a frivolous case or present a serious case (requiring substantial expenditure in its legitimate defense) to the court and plaintiff as a "frivolous" case. The defendants who overlitigate a "frivolous" case are just as frivolous as the plaintiff prosecuting a "frivolous" lawsuit they are defending against. The detailed weekly reports of the lawyers' activities would show that the defendant was not treating the case as frivolous even though it was maintaining to others that the case was frivolous. This inconsistency should not be allowed.
A few days at the start of a lawsuit should be devoted to resolving the issue of frivolousness, to prevent any significant expenditure by the parties and their counsel until the issue of frivolousness has been decided, by whatever standard is applicable, even an evidentiary hearing (really a non-jury trial) on the issue of frivolousness, if necessary. If a plaintiff and his lawyer are held liable for knowing that a suit is frivolous when commenced, this same information should be made available to the defendant and it counsel and the court right away to be able to make such determination, if true. If the suit can't be determined to be frivolous when started, there should be no reassessment years later. Once frivolousness is determined, one way or the other, the issue of frivolousness should be finally decided once and for all. If the case is "frivolous", the case should be dismissed, with the right of the plaintiff to appeal, but with no legal fees at the trial court level payable by either side. If the case is held not to be frivolous at this juncture, the case should continue as a non-frivolous case.
In reality, tort reform legislation is not an attack on poor people, but an attack on the middle class, which has something to lose. If a poor person loses a lawsuit, the imposition of costs in the amount of $10 to $10,000,000 on such person would ordinarily be of little consequence, since any effort at collecting the judgment for costs would be useless, and might even cause the poor judgment debtor to borrow several hundred dollars to file a bankruptcy petition to eliminate the debt entirely (assuming, which I believe to be true, that the indebtedness would be schedulable, and not a non-schedulable debt such as a judgment for fraud, an intentional tort, which cannot be eliminated through bankruptcy).
Thus, the only class of person left is the middle class person, who would lose all of his/her assets if he/she loses a heavily defended lawsuit. Knowing this, the typical middle class person would probably choose not to sue, whether or not the case was "frivolous" because the risk of loss as to non-frivolous suits is just about as great as the risk of loss for frivolous suits, especially when it is difficult other than through hindsight to tell the difference in many cases.
Do you know how many cases a typical judge has on his/her calendar? I asked one Supreme Court Justice in Queens, New York two years ago, and he replied more than 14,000 (civil cases). How many civil cases do you think the average judge tries per year in the top trial courts of any state? Well, how many trials is Judge Ito (O. J. Simpson fame) going to try during 1995? Correct, not many more than one or two. But what about the other trial-court judges? I would say about 20 trials per year (perhaps as many as 40 trials per year). If this is true, what happens to the plaintiffs in the 13,950 cases which are not tried? The answer is that they are forced out of the judicial system in a variety of ways, such as abandonment (often because of insufficient financing), dismissed by the court for "frivolousness" or lack of evidence to support a claim; settled (often for far less than the value of the case because of the realization that the court may dismiss the case without any trial) or that the trial may be too far into the future to do any good for the plaintiff.
With all this in mind, what are the probabilities of success of the typical plaintiff in a significant civil case versus the prospects for the typical defendant? The plaintiff is far more apt to lose his or her valuable claim than a defendant is apt to lose in a frivolous lawsuit. Let's give the defendant a 75% opportunity versus a plaintiff's 25% opportunity, assuming that the merits are 50-50. This failure to give a plaintiff an equal opportunity for justice is attributable to "court congestion", which means that the courts have more business than they have judges to handle the business, and the excessive number of cases is being called "frivolous" by major corporations and their major media apologists, in an effort to have restrictions put on civil litigation which will make the odds far worse for plaintiffs.
Court congestion has nothing to do with frivolousness. It is no more than deliberate underfinancing of the court systems by the politicians who are willfully creating court congestion as a means of making it appear that there is a need to get rid of "frivolous" lawsuits.
Court congestion and frivolousness are parts of the same political goal of preventing plaintiffs from obtaining justice against major corporations, which would take away some of their assets.
The courts should be financed to meet the number of suits which the public chooses to bring, and if there are enough judges, the judges can nip "frivolous" lawsuits in the bud and get them out of the system right away, as well as frivolous defenses. The nation should set aside 5% of the gross national product for the fast, fair and inexpensive resolution of disputes to make the other 95% of the economy most efficient.
In fact, the best thing for the nation's legal system would be a throw back to yesteryear, when a case would be tried perhaps on the day it was filed. After 30 years of litigation experience, I have concluded that the best thing would be to permit the plaintiff to notice the case for trial 30 days after the complaint is served, and require the parties to deliver the basic documents without request in fashion similar to criminal disclosure rules.
Present Sanction Rules
Already there is an overabundance of rules which transfer the expense of defendants to the plaintiff or his lawyer under the guise of "sanctions". These rules permit a judge, who often sides with the defendant apparently in order to get rid of the excessive number of cases on the judge's calendar, to issue a sheet of page called an order directing the plaintiff or his/her attorney to pay $10,000, or $100,000, or $1,000,000 or something more or less, as "sanctions" to the defendant for maintaining a "frivolous" lawsuit. These sanctions for a plaintiff or plaintiff's lawyer who are poor or middle class at best have a frightening consequence. They inhibit cases from being brought where there is some doubt. For example, at one time the Supreme Court held that slavers were personal property. Under present law, anyone bringing an action which is diametrically opposed to a U.S. Supreme Court ruling (or even a ruling by a lower, but governing court) could be "sanctioned" for having brought a frivolous case. How does one determine whether the elimination of slavery or liability for putting cigarettes on the market is frivolous or not. It is interesting to note that plaintiffs in civil rights cases have the greatest statistical possibility of being hit with sanctions in their effort to petition the federal courts for protection of their constitutional rights.
The tort reform act is no more than a suppression of the only right (and a First Amendment right at that, to petition for a redress of grievances) available to poor persons and middle-class persons, which is the courts. The courts are set up to give relief to these groups when the legislature and executive branches, which are controlled by the major corporate and financial interests, get out of control and need an offsetting force. The U.S. Constitution envisioned that the Judiciary would be a co-equal body as a check and balance on the other two bodies, but by deliberate underfinancing and by a movement called "tort reform", the well-heeled financial, business and political interests in the U.S. are trying to cut back on the Constitutional rights of the have nots to obtain justice through the courts and a jury trial by their peers.
Tort reform is no more than a constitutional amendment depriving many citizens of their rights to have access to the courts, to have a trial by jury or any trial for that matter, and to petition the courts for a redress of their grievances against the persons who control the legislative and executive branches.
Part of "tort reform" is to put a cap on or eliminate punitive damages awards. For most litigation, this would make no difference because punitive damages are seldom awarded anyway. I would gladly trade off punitive damages for an early trial without discovery (other than automatic disclosure at the very outset of the case). This would have the effect of eliminating one of the most pressing "problems" for backers of "tort reform"; eliminate delays in obtaining justice; reduce the costs of litigation for both parties by reducing the amount of time for the litigation to be conducted from two to three years (in many cases) to only one or two months (disregarding appeals); and create greater equality in the courts between plaintiffs and defendants.
Summary Judgment - Taking Away Right to Jury and Non-Jury
For those of you who don't know, a motion for summary judgment is a device by which the defendant, usually, asks the court to look over the offered evidence and make a ruling that the plaintiff has insufficient evidence to warrant a trial, and that the plaintiff's case should be thrown out of court without any kind of trial, whether jury or non-jury trial.
Most people would think that this unconstitutionally deprives a plaintiff of his/her right to a trial, and especially a jury trial. In the criminal field, a defendant is entitled to a trial unless he pleads guilty, but the same is not true in a civil case. The courts have held for a long time that whether there is sufficient evidence to warrant a trial is a question of law for the judge in the case to decide, and his decision can and often does deprive a plaintiff (usually) of any right to a trial (jury or otherwise). This is one of the ways that the "congested" court system gets rid of excess cases, by throwing them out by the grant of a summary judgment motion.
Inasmuch as the courts have so much power to eliminate lawsuits, there really is no need to go any further and eliminate cases before they are filed by the so-called "tort reform" legislation. What is needed instead is "court reform", meaning the addition of new courts and more judges and support personnel to handle the amount of litigation which the public chooses to bring. If there are enough judges, the judges can get rid of "frivolous" cases. It's only when the judges have no time to handle their caseload that they don't have time for trials and "frivolous" cases. To put it another way, if there were an adequate number of judges backed by adequate judicial facilities, there would be more trials, faster resolution of cases, fairer determinations, fewer "frivolous" cases, and a more equitable distribution of the economic pie.
One Happy, Ending Note
It should be noted that tort reform is against the interest of the law firms and related service organizations which assist major corporations in defending lawsuits. If "tort reform" as envisioned actually is enacted into law, lawsuits by the middle class will fall off in direct proportion to the perceived risks, and the lawyers earning $250 to $500 an hour or more for their litigation services will wind up with a high personal overhead (taken on during the good times) and no job to meet the expense. Thus, you can expect that right-thinking lawyers will not go along with tort reform for several reasons: (i) it is a blatant effort by insurance companies and other major financial interests (such as the media) to deprive persons of their civil right to petition the court for a redress of their grievances and to have a trial and jury determine the facts in the case; and (ii) the lawyers for both plaintiffs and defendants would be forced into doing something else for a living.
Carl E. Person, 3/10/95
Copyright © 1995 by Carl E. Person. Permission is given for non-commercial users to send a copy of the data processing file for this work by electronic means to a specific individual for his or her own use, and then only if the entire file is sent, including this copyright notice, but no permission is given for anyone to copy or transmit this file for or to any person for public viewing or downloading. It is intended by the author of this work that the work shall be made available in electronic form only through LawMall (sm), including linking to LawMall through other web sites.