The Tortellini

How do you define "meritless"?

Here's a question: If a plaintiff loses a lawsuit in court, does that automatically mean the case was bogus? That's what AEI's Ted Frank seems to be suggesting in his comments from a few days ago. As evidence, he pointed to Bill Lerach's shareholder class action against the big banks and financial institutions that aided and abetted the Enron fraud, which was decertified by the 5th Circuit Monday.

I'm not intimately familiar with the case, but a quick read on it suggests that the Enron bank litigation was anything but meritless. I've not seen too many people other than Ted argue that the banks were simply "innocent bystanders" in the Enron debacle. Even the judges on the 5th Circuit acknowledged that their decision was deeply at odds with our notions of justice and fair play, largely because the evidence showed the banks were deeply and knowingly involved in the Enron fraud. Reasonable lawyers obviously differ on the interpretation of the law that allowed the lower court judge to certify the class, but the facts at the heart of the case strike me as extremely serious. This was no Econo Lodge suit.

The civil justice system was designed as a place where people can resolve legitimate disputes without shooting at each other. So I can't believe that just because one side wins and the other side loses doesn't mean that the plaintiff didn't have a legitimate dispute or that the courthouse wasn't the best place to wrestle with it. Yet the tort reform movement seems premised on the notion that the corporation is never wrong, and that average people have no business questioning its conduct, particularly in the courtroom.

If the real purpose of tort reform is to make the legal system work better for everyone, its leading lights would occasionally acknowledge that some lawsuits have merit, that juries get a lot right, and that big awards are occasionally warranted. But that just never happens. Instead, they categorize all lawsuits against "innocent bystander" banks or other corporations as simply meritless, and when juries on those rare occasions find for a plaintiff, well, that's just an error that needs to be corrected by a judge (preferably not one on the 9th Circuit).

Frivolous lawsuits: Job security for lazy defense lawyers?

Writing about the Econo Lodge lawsuit yesterday got me thinking....So many people who think the legal system is "out of control" suggest that frivolous lawsuits are a huge burden on the taxpayers and a drain on the economy--not, apparently, because the plaintiffs ever win any money (they don't), but because the cost of defending the suits is supposedly so oppressive.

I must confess that I'm skeptical. I am not a lawyer, so I could be totally off base here--and am happy to hear from the fray just how far off--but when you have a suit that was, as in the Econo Lodge case, filed in the wrong place against the wrong people for the wrong reason by a guy without a lawyer, with no discovery, no depositions and apparently not even a court appearance, how on earth can that cost a company millions? I know from reading enough of these things in the courthouse that responses to frivolous suits (and a lot of meritorious ones) are boilerplate documents that probably take a paralegal about five minutes to update. If a lawyer charges Econo Lodge more than a couple of hundred dollars to get a case like this dismissed, I gotta think he's just churning.

More on that Econo Lodge suit..

Thanks to Overlawyered for doing more research on that Econo Lodge lawsuit I wrote about last week. They were kind enough to dig out the appellate court decision so you can read it in its entirety. (Oh, FYI, to the commenter who asked: This was a pro se suit, even the appeal.) 

Overlawyered suggests that there need to be stronger deterrents to filing frivolous suits, but it doesn't actually suggest what they might be. Stiffer fines? Even the appellate court judges recognized that the Econo Lodge plaintiff was unlikely to pay the $2,500 penalty for the frivolous filing, so what would be the point of higher fines? Should we put the guy in jail? That seems a bit excessive, too. One obvious solution would be to ban pro se lawsuits, since a huge number of  frivolous suits are brought by people representing themselves. But then, that wouldn't be very democratic, would it? Saying you have to be rich enough to pay a lawyer to get into court is highly un-American.

So again, I would never argue that there aren't frivolous suits in the legal system, or that they don't cost innocent people and businesses money. But I have yet to see anyone propose a cure for this that doesn't also infringe on everyone else's legitimate access to the courts. Frivolous suits are the cost of preserving constitutional rights to access to the civil courts, in the same way that guilty criminals occasionally go free because the police conducted an illegal search. No one likes those results, either, but we tolerate them for the greater good of protecting critical constitional rights.

When Judges Do Their Jobs

When President Bush complains that the country is awash in too many frivolous lawsuits, he often makes it sound as if there is no penalty for filing suits like this, if they really are frivolous. But here's a recent story where some Ohio judges showed that the legal system already has a mechanism built in to dispense with frivolous suits--and to punish those who abuse the system, all without changing a single law on the books.

Thomas Sparks filed suit against Econo Lodge after he was charged for an extra day's stay because he failed to check out at 11 a.m. Sparks argued that since he'd only checked in at 4 a.m., he shouldn't have to checkout at 11 a.m.. He sued to get his $46 back, plus $750,000 in additional damages, and free stays for life in the motel chain. A panel of Ohio appellate judges said, um, no, everyone knows the rule about check out times. The judges found that Sparks not only didn't have a case, but that "Starks had sued the wrong people, in the wrong place, for the wrong reason," and they ordered him to pay Econo Lodge $2,500 for the cost of defending the suit.

Obviously you can argue that Econo Lodge was put out by having to deal with the suit (as the odds that they'll ever collect the fine from Sparks I suspect are slim to none), but that seems like a small price to pay, in my book, for a democratic legal system. Letting judges make these determinations on a case by case basis ensures that people with legitimate beefs still get their day in court--unlike some of the other measures the president would like to see enacted that would have the federal government making  blanket decisions on who can sue and who can't, without ever considering the individual facts of a case.