Attorney's Fees & Idaho S.1283

One area of civil litigation that I think is terribly destructive is that, unlike Britain, we do not have a consistent "loser pays" rule about attorney fees. What this means is that if Ms. A sues Mr. B for $500,000,000 because Mr. B said something that hurt Ms. A's feelings, Mr. B will spend thousands of dollars on an attorney to defend a suit that has no merit. Even if the judge looks at the evidence, and decides that Ms. A had absolutely no legitimate basis for the suit, Mr. B is out his attorney's fees. In theory, judges have the authority to order Ms. A to pay Mr. B's fees if it is apparent that there was no legitimate basis for the suit, but in practice, it isn't all that common.

Let me tell you a little story. Back in the late 1970s, my friend Eric and I jointly owned a 1973 Chevrolet Caprice station wagon, which we used for transporting furniture on those occasions when either of us moved. We lent the station wagon to Eric's brother Allan one day.

So Allan is driving down the street somewhere in Los Angeles, and ahead of him, he sees a Ford Mustang smash into a streetlight post. Allan comes to a stop, slightly tapping the Mustang's bumper. The driver of the Mustang is taken to the hospital by ambulance, where she is DOA.

The police officer investigating the crash puts in the police report that the Mustang was a one car accident--that Allan crashed our station wagon into the Mustang after it had already come to a complete stop, and the collision was so slow that there was no damage to either the station wagon or the Mustang from it. The autopsy on the Mustang driver shows that she had a .23% blood alcohol level; only an idiot would fail to see that she probably passed out at the wheel.

So, about six months later, the driver's father-in-law files suit on behalf of the driver's husband. (Father-in-law and husband are both attorneys, of course.) The suit demands $15,000 in damages from Allan (he was driving), myself and Eric (we owned the car), and 20 other people who were either driving cars, or owned cars, that were in the intersection, claiming that we "jointly and severally conspired" to force the Mustang into the post, thus causing the driver's death.

The complaint itself was embarrassingly bad: not just typos, but consistent misspellings, sentence fragments, and so on. Pretty obviously, the California Bar Exam couldn't be that difficult, or perhaps they gave special treatment to these lawyers because English wasn't their native language.

So I take this over to my insurance company, and ask them what they are going to do about it. I was outraged that such an obvious attempt at extortion had been filed. My insurance agent got back to me a few days later and said, "Ordinarily, we'll settle a suit like this for $500 just to make it go away, because it costs us too much to go and litigate it, but this is probably the most ridiculous suit our lawyers have seen this year, so we're probably going to fight it."

Probably? Suits like this that are extortion under color of law. There was simply no legitimate reason for this suit, and even if the grieving husband didn't want to see that the cause of the accident was that his wife was so drunk that she probably passed out, the lawyer who filed the suit should have refused to file it. The cost to my insurance company of going to court was high enough--and the judge was simply not going to impose any penalty on the plaintiff, by requiring him to pay the attorney's fees--that the lawyer had no incentive to tell the husband, "I'm not going to do this." After all: maybe the insurance company would be willing to settle for $500 out of court.

I recognize that a strict application of "loser pays" would prevent many legitimate suits from being filed, especially where the plaintiff is poor, and the defendant has deep pockets. But there does seem to be a point where a suit is so absurd that judges should impose "loser pays" as a way to discourage such suits. Pretty clearly, this suit in which I was a victim demonstrates that there were no penalties for filing absurd lawsuits in Los Angeles at the time. Some of the lawsuits that I have seen filed over the years (such as a multibillion dollar suit against International House of Pancakes by an irate customer who couldn't get the advertised special served to her) tell me that the problem hasn't been fixed.

Now, Idaho's legislature is considering a revision to our state law. The bill is S.1283, and it adds one line to the current statute that lists the available remedies for employment discrimination:

(f) An order for reasonable attorney's fees.

Why is anyone proposing to add this? Well, last year, the Idaho Supreme Court ruled in Stout v. Key Training Corporation, 144 Idaho 195, 158 P.3d 971 (2007) that even though federal law provides for someone who wins a suit for unlawful employment discrimination to receive "reasonable attorney's fees" (are there such things?), Idaho law does not have any specific provision granting this.

I don't know what the merits of the underlying suit were. Stout claimed discrimination because she got pregnant. The defendant, Key Training Corporation, apparently trains linemen--and I can see how someone might foolishly have thought that it was a bad idea to have a pregnant woman up on top of high voltage lines.

Regardless of the merits of the case, I can see why Stout, having won the case, thought that she should receive attorney's fees. I actually don't have a problem with this change in the law--but I'm a bit funny in one respect--I think that the law should apply equally on both sides. The way that I read the statute that S.1283 would change, the plaintiff is entitled to "reasonable attorney's fees" if he wins, but the defendant isn't entitled to "reasonable attorney's fees" if he wins.

I can support S.1283 if the winner, on either side, gets to collect attorney's fees from the loser. I can't support something this one-sided, because it creates an incentive to file discrimination suits, with no costs to the plaintiff for questionable or even completely bogus claims.