Frivolous Litigation

Posted by Adam Smith on

Right now any person can sue any other random person or corporation in any jurisdiction, proper or not, for any reason, valid or not, with or without any evidence whatsoever. Meritless lawsuits will fail miserably in court but still cost tens of thousands of dollars to defend against. Look at the Maddox vs Dick Masterson lawsuit; complete and utter nonsense intended purely to harass and intimidate the defendants and services they use. It has no chance in court. The plaintiffs will probably be sanctioned, possibly their lawyer too. Legally they will be required to pay for the defense costs. In reality they will never be able to afford it. The net effect is that they have used violence (the court system) to deprive their enemies of several years of their lives in earnings. At least.

There is a legal word for this: conversion. Conversion is a tort, which is a damage you can sue over. It's a fancy lawyer word for a certain kind of theft. For this specific kind of conversion there is no real recourse and the courts and police are complicit in it. If the victims are not wealthy enough to afford a legal defense, they lose by default and will be further robbed and kidnapped by gun-toting government thugs. Attempting to defend yourself will be treated like a crime, assuming the thugs don't murder you immediately.

Two states have attempted to discourage legal harassment. California and Washington State have "Anti-SLAPP" laws, Washington's being weaker than California's. Such laws arguably reduce the damage from completely baseless lawsuits but do not address fivolous harassment standing on weak but technically legal grounds. Consider the Crytek vs CIG lawsuit. They had a valid contract concerning some software licensing. CIG switched to different software, well within the bounds of the contract, but Crytek became spiteful and vindictive over being rejected. Crytek sued by intentionally misinterpreting legal terms and cherry picking phrases out of context. They will lose but sanctions are unlikely because they walked the fine line of legality. Anti-SLAPP laws do not apply. It's still armed robbery in collusion with the courts.    

A common suggestion is to implement criminal penalties for filing frivolous lawsuits. Judges and legislators have deemed this a bad idea. They do not want to introduce any chilling effects on those who legitimately seek justice. And they are right. At least right enough to not try to fix a complex problem in the most naive, authoritarian way possible.

Let's step back and break the problem down. Assume the frivolous motion fails and defense costs are awarded to the victim.
  • Harassers can amass a legal debt far too large to pay.
  • Victims are stuck with the bill when harassers run out of money
  • It is difficult for victims to collect on their debt, often costing them even more money in legal fees.
  • Frivolous lawsuits are admitted to the court system and treated as legitimate until defeated.
  • There is no financial barrier to file a frivolous lawsuit, especially with unscrupulous lawyers working on contingency.
  • Quick settlements are common, often being cheaper than defending even if you win.
  • There is no significant criminal consequence for abusing the court system to harass someone.
  • Sanctions are largely limited by jurisdiction, leaving them powerless to prevent further harassment.
  • Lawyers seldom face any consequence for filing a frivolous lawsuit. They have to commit outlandish and easily avoidable perjury to even be slapped on the wrist.

Now some not so great ideas:
  • Lower the standard for perjury and increase the penalty. This is bad because it can be difficult to discern between intentionally lying and just plain being a dumbass. Perjury convictions should require solid proof.
  • Institute stiff prison sentences for filing frivolous lawsuits, to both individuals and the responsible executives of corporations. Three problems arise. The first is separating predators from morons. The second and more difficult is defining exactly what constitutes a frivolous lawsuit. Err on one side and people filing legitimate grievances will be wrongly imprisoned. Err on the other side and the law is rendered ineffective. Even an impossible perfect definition would not last long as technology changes society. Third is the chilling effect on those seeking justice.
  • Institute permanent, nation-wide sanctions on attorneys who file frivolous lawsuits. This is not much different from the previous bad idea.
  • Prohibit lawyers from working on contingency, either an outright ban on the practice or by prohibiting fees from being based on proceeds from a successful suit. This would only make things worse. Victims would have to finance their own counter-suits for better or worse. Poor litigants would be priced out of the court system regardless of their claims. Harassers with modest means could still afford a cheap lawyer. Broke harassers could still file personally.

So what can be done? Looking back at the problem breakdown it becomes apparent that one of the core issues is creation of massive uncollectable debts. So how about we require plaintiffs to post a surety of some sort to cover defense costs in the case they lose. Before you can initiate any legal action against someone, you would be required to place in court escrow a sum of money expected to cover court costs and reasonable attorney fees for the defense. If you win, you get it back. If you lose, it's payed out to your victims.

"But wouldn't this prevent poor people from affording justice?", I hear you say. No, not at all. If the suit has any merits they can purchase a bond from a private party to satisfy the requirements. The bond's premium would be included in the award should they win the case. If your claims have any merit someone will be willing to bet on you. Bail bonds already work like this. If you can't even manage to convince a loan shark of the merits of your lawsuit, it's certainly frivolous. Democracy in action.

If the case drags on and defense costs exceed the escrowed amount, the plaintiff must post more surety. If he cannot, a default judgment is entered against him, without prejudice (meaning he loses but can still sue again for the same thing later on).

Hell, even the plaintiff's lawyer could post the money on contingency if they believe in the case enough.

Defendants would have the option to waive the plaintiff's requirement if the complaint is mutual. Under no circumstances would the requirement be waived for the inability to get the money or being poor. Under no circumstances could the surety be provided by or insured by the government or any public agency or any organization that receives public money. Plaintiffs who cannot afford to pay for the damage they cause others have to convince an independent private party to bet their own money on the case; that's the whole point.

In this system, financial risk is moved from an involuntary victim to a voluntary creditor. If the creditor can't collect it's his fault for taking on a frivolous case. Note that there are no requirements for defendants to post a surety; that would just circle back to the original problem. There is also no need to define what a frivolous case is, nor does the government make additional value judgments about who is able to seek justice. Chilling effects are proportional to the validity of the case based on the judgment of many separate individuals. You only need one to say yes, which should be trivial for every legitimate case and still possible for some frivolous cases.

I propose a second way to reduce frivolous lawsuits as well as potentially save time. A judge should review all new cases for proper form and legal basis before defendants are served. The truth of the claims is not being reviewed, only whether procedures were followed, jurisdiction is vaguely reasonable, and the claims are actionable and based in law. In other words, is the plaintiff claiming the defendant did something illegal, providing some sort of evidence for it, and is the court capable of giving the requested justice. For example, you can't sue someone for calling you an idiot and ask the court to prevent them from calling you an idiot again. It's not a crime to call someone an idiot and the first amendment prohibits the court from silencing them.

The plaintiff should have to pay an hourly rate up front for this review. If it passes, the fee is part of court costs charged to the loser. If the review fails, the plaintiff loses the fee and must correct the problems before resubmitting. Passing such a review should be trivial for any legitimate lawsuit drafted by any competent attorney. Incompetently drafted lawsuits should not require legal response by defendants.

I do not assert that these two suggestions will solve the problem. I do strongly suspect they will help more than the other methods posed. Neither prevent harassment completely. Both increase nominal costs slightly but I suspect the net effect will be reduced costs due to less wasted court time and less money paid to lawyers to defend against harassment. Neither suggestion will be implemented in the United States any time soon but perhaps the ideas will find their way to someone who does craft a legal system in the future.