Wampum

Another Liberal for Tort Reform

Jim Henley suggests that Juan Cole, Atrios and Henry Farrell of Crooked Timber may be liberals for tort reform. He can add me to the list but not, perhaps, in the way that tort reform is commonly understood.

Juan Cole posted some comments about the Middle East Media Research Organization (MEMRI). He then received a letter from MEMRI threatening a lawsuit, Henry Farrell sums it up:

MEMRI makes an inept attempt to intimidate Juan Cole.

Dear Professor Cole,

I write in response to your article “Osama Threatening Red States?” published on November 3, 2004 on antiwar.com. The article included several statements about MEMRI which go beyond what could be considered legitimate criticism, and which in fact qualify as slander and libel. … As such, we demand that you retract the false statements you have made about MEMRI. If you will not do so, we will be forced to pursue legal action against you personally and against the University of Michigan, which the article identifies you as an employee of.

MEMRI’s threat is strongly reminiscent of Donald Luskin’s threat of legal action against Atrios a while back. It seems to me (though I note that I’m not a lawyer) that the purported complaint is completely, utterly and entirely bogus.

But like Luskin’s supposed complaint, the threat isn’t so much in the possibility of a successful action, as in outcomes related to that action. In Atrios’ case, the real threat was that his identity would be revealed, possibly landing him in difficulty with the university that employed him. Similarly, MEMRI’s threat seems to me to be more about trying to create difficulties for Cole with the University of Michigan than the nugatory possibility of an adverse judgement in court against him. There’s no remotely plausible theory under which the University of Michigan can be held responsible for Cole’s private activities or statements, even if they were libellous. However, a state-funded university would presumably prefer, all things considered, not to be embroiled in an action of this sort, however frivolous. Thus, the inclusion of University of Michigan in the complaint seems to me to be an inept class of an indirect threat to embarrass the university and thus perhaps put Cole in a tricky position.

If one assumes or believes any suit by MEMRI against Cole or by Luskin against Atrios would be frivolous, the tort system should deter such actions. If the tort system does an inadequate job of provding such deterrence now (and in many jurisdictions, I believe that is does), then the sytem should be reformed. That is why I am a liberal for tort reform.

The question remains as to the nature of the reform. Please note that a cap of $250,000 on non-economic damages provides little or not deterrent effect. If the purpose of the Luskin letter was to threaten to disclose Atrios' no longer secret identity (I was betting he was Peter Parker), whether or not non-economic damages are limited is beside the point. Similarly, if the purpose of the threatended suit against Cole is to harm his relationship with the University of Michigan, a damages cap will not prevent that harm.

If you agree with Farrell that the possibility of an adverse judgment is "nugatory" then a damages cap does not effect the expected value of the case. Zero percent chance of winning a million dollars yields exactly the same expected value as a zero percent chances of winning $250,000.

The truth is that a damages cap is designed to reduce the award in meritorious cases. It is ill designed to deter frivolous cases. As a result, if the policy goal is to deter frivolous suits, we must look to a different reform.

In response to Henley, Atrios writes:

Just because I may believe that there exist some potential abuses of our legal system does not mean I believe that, say, a $250,000 cap on non-economic damages in malpractice suits is a particular good idea.

That is exactly right. Liberals should be for a form of tort reform that would do several things. Such reform should improve the accuracy of litigation results. It should improve efficiency to lessen the burden the litigation process now imposes on all litigants, win or lose. And it should deter and punish frivolous law suits.

What kind of reform would be effective to deter frivolous suits? The first requirement is to insulate the target of such suits from any harm. A statute giving the trial judge the right, and in some cases the duty, to impose frivolous litigation sanctions in the amount of the victim's attorney fees and litigation expenses is a good idea but it is not enough.

Victims of frivolous litigation may suffer damage over and above their attorney fees and litigation expenses. In the examples above, Atrios could potentially suffered damge to his relationship with the University at which he was teaching. That damage might have resulted in lost future earnings, loss of reputation, and loss of prestige in the acdemic community. Tort reform should impose liability for such damages as a way to deter frivolous suits.

Georgia has a good scheme. OCGA 51-7-81 provides as follows:

Any person who takes an active part in the initiation, continuation, or procurement of civil proceedings against another shall be liable for abusive litigation if such person acts:

(1) With malice; and

(2) Without substantial justification.

The "any person" language includes both the opposing party and the opposing lawyer. As a result, a lawyer filing a frivolous suit on behalf of a client may suffer personal liability for damages caused by such action.

What does it mean to act with "malice" in this context? Malice means:

[A]cting with ill will or for a wrongful purpose and may be inferred in an action if the party initiated ...civil proceedings ... in a harassing manner or used process for a purpose other than that of securing the proper adjudication of the claim upon which the proceedings are based.

The "wrongful purpose" language seems to cover the cases that are brought for the purpose of intimidation.

Of course, many a legitimate law suit will feel like harrasasment to the other side. I certainly hope that my pleadings cause some worry and perhaps "intimidation" to the other party. The better the law suit, the more worrisome to the opposing party is a good rule of thumb. For abusive litigation liability to be imposed, the suit must also have been "without substantial justification."

"Without substanial justification" means frivolous or groundless in law or fact.

To prevent damages from being imposed on meritorious law suits, even of they are losers, the statutory scheme makes "good faith" a defense to a suit for abusive litigation. Good faith means:

[T]hat to the best of a person´s or his or her attorney´s knowledge, information, and belief, formed honestly after reasonable inquiry, that such civil proceeding ... is well grounded in fact and is either warranted by existing law or by reasonable grounds to believe that an argument for the extension, modification, or reversal of existing law may be successful.

The damages available in a claim for abusive litigation include "all damages allowed by law as proven by the evidence, including costs and expenses of litigation and reasonable attorney´s fees."

Please note that in some cases, the non-economic damages available in an abusive litigation action could exceed $250,000. Should those non-economic damages be capped?

The Georgia scheme makes the abuser of the system fully liable for all damage caused by frivolous litigation. It permits those damages against not only the opposing party but against the opposing attorney as well. It provides a good method of distinguishing between frivolous and meritorius suits.

That Georgia statutory scheme may not do everything that a liberal tort reformer might wish, but is does a pretty good job of detering frivolous suits.

It is easy for a liberal to be for tort reform that is actually about reducing frivolous suits. It is a shame that most tort reform debates are centered around a policy proposal that has nothing to do with preventing frivolous suits.

Posted by Dwight Meredith at November 30, 2004 11:00 AM | TrackBack