Tall Tales About "Loser Pays"

Rick Perry and his corporatist buddies have been pushing hard for their so-called "loser pays" bill. In one ad sponsored by the facetiously-named "Americans for Job Security," an astroturf group fronting for big business and insurance interest, we are told:

ANNOUNCER: A man sued a beer company because beautiful women didn't appear when he drank lots of their beer.

A woman sued an amusement park because the haunted house was too scary.

Lawsuits like these happen all the time. Why? Because the people who file them have nothing to lose.

Frivolous lawsuits are tying up our legal system, hurting our economy and costing Texas jobs.

But that can change thanks to HB 274 the Creighton-Huffman Jobs and Small Business Magnet Plan.

The Texas Legislature can put a stop to frivolous lawsuits, help small business and attract and create new jobs.

It's time to stand up to the trial lawyers and serial litigants who are hurting our economy. It's time to put an end to their free ride.

The Texas legislature needs to pass HB 274 -- support small businesses and help attract and create new jobs in Texas.

To join the fight or to learn more visit www.SaveJobs.Org.

Paid for by Americans for Job Security.

Let's assume, for the moment, that the actual lawsuits are just as described, and obviously frivolous. Under current law, they could be quickly disposed of with a motion for summary judgment. Even the greediest of trial lawyers (in fact, especially the greediest of trial lawyers) wouldn't touch such a case because trial lawyers front the litigation expenses work on contingent fee basis, so they'd be investing their time and money in a case that they know they have no chance of winning, and that any competent defense lawyer would be able to get quickly dismissed.

So what is this "loser pays" that Rick and Pals want to throw into the mix? Under current law in Texas, the defendant can make an offer of judgment, and if that offer is at least 80% of what the jury awards, the the award is reduced by the amount of the the defendant's legal fees incurred after the offer was rejected. The proposed legislation is in flux and may be different now, but what they were originally going for was an elimination of the floor. Under the current law, a winning plaintiff who doesn't beat the offer by enough can only lose what the defendant would otherwise have to pay. Under Perry and Pals dream legislation, a plaintiff who doesn't win by enough could lose the entire award, plus have to come up with additional money out of his own pocket to pay the defendant's legal fees.

And if there's one thing defense lawyers are really, really good at, it's running up really outrageous legal bills. (This is what I'm talkin' about.) As with hospital bills that are knocked down to a third of he amount billed when they're submitted to the insurance company, they might not really expect their clients to pay the full amount, but you can be damned sure they won't be including any such reductions when they submit the billing records to the court.

But I digress.

Getting back to the point, the only way the "loser pays" provision kicks in is if the defendant offers some money to make the case go away. So someone who files a truly frivolous lawsuit is assured that he'll be offered something for his trouble, while a person with a valid claim will have to think long and hard about rejecting a low-ball offer, because he risks getting bankrupted if he doesn't beat the offer by enough. Regular people with families to take care of just can't afford to take that sort of risk.

So it's really not about "frivolous lawsuits" at all; it's all about giving insurance companies additional leverage to make injured people with valid claims accept considerably less than those claims are worth. Perry and Pals want to make litigation less expensive for corporate and insurance interests by making people with legitimate claims settle early on for significantly less than their claims are worth. And that's all it's about.

* * *

But what about the "frivolous lawsuits" that the ad tells us happen "all the time"? At first I thought of the Stella Awards, wherein "tort reform" advocated used a bunch of made up lawsuits to illustrate the need for "tort reform." Were these too made up lawsuits, I wondered? After a bit of Googling, I think not. One of them appears to be a 1998 lawsuit from Florida, and the other a 1991 case from Michigan. One might think that if "frivolous lawsuits" were really such a big problem in Texas,and they happen "all the time" and there are so many of them that they're "tying up our legal system," they could at least find a few from Texas and maybe within the past year or so, or at least last decade. Especially if this is, as Rick Perry tells us, an "emergency" that demands the legislature's immediate attention. But that, it seems, is too much to ask.

* * *

And what about the the descriptions of the lawsuits? Are they accurate? Did a man really sue a beer company because beautiful women didn't appear when he drank lots of their beer?

Not exactly.

This appears to be a reference to a false advertising lawsuit filed by Richard Overton pro se (i.e., without the assistance of a Greedy Trial Lawyer) in Michigan in 1991. Mr. Overton's basic complaint was that Anheuser-Busch's ads misrepresented the benefits of consuming its products while failing to mention the downside. Mr. Overton's explanation for the suit is reported on the Personal Injury Lawyer Directory. According to Mr. Overton, the suit was filed over "an alleged violation of the advertising Act," and “No where [sic] can you find that I am suing A-B for failure to deliver on implied [sic] promises from their commercials!” It seems that Mr. Overton's claims were not quite as advertised. Again, for the full context of this lawsuit, please read the complaint. Not a case I would have taken on a contingent fee, but also not quite the case that Perry and Pals would have you believe.

And what about the woman sued an amusement park because the haunted house was too scary?

Really?

Not even close.

Here's the story, as reported in the Orlando Sentinel on January 5, 2000:

Universal Fall Leads To Lawsuit

A Woman Says She Suffered ``emotional Distress And Mental Anguish'' At The Theme Park's Halloween Horror Nights

January 05, 2000|By Tim Barker of The Sentinel Staff

For nearly a decade, people have flocked by the thousands to pay for a healthy dose of fear and anguish at Universal Studios Florida's annual Halloween Horror Nights.

The fright festival has it all: blood-curdling screams, slimy goo and fiendish creatures jumping out of the shadows.

It's scary stuff - too scary, according to a local woman who is suing Universal, saying she was ``assaulted'' by one of the company's chainsaw-wielding maniacs.

Cleanthi Peters, 57, wants Universal to pay for emotional and physical damage that she claims she suffered in 1998 during a horrific journey through one of the park's several haunted houses. Peters was with her 10-year-old granddaughter.

It was near the end of one of the haunted houses - Hell's High - that the evening took an ugly turn, according to the lawsuit. Just as the exit came into view, Peters and her granddaughter were set upon by a man waving a loud chainsaw, minus the chain.

With the maniac - referred to in the suit as John Doe - in hot pursuit, the frightened duo fled toward the exit door and the safety that surely lay beyond.

What they didn't know - and couldn't know, according to the lawsuit - was that the floor near the door was wet from the mist that Universal was using to cool off customers leaving the den of evil.

The two hit the wet patch and crashed to the floor, according to the lawsuit, filed recently in state Circuit Court in Orlando.

To make matters worse, the unsympathetic chainsaw-toting fiend continued his assault - crouching over them and thrusting his weapon, according to the suit.

The ordeal left Peters, who lives in Seminole County, with unspecified physical injuries and inflicted ``extreme fear, emotional distress and mental anguish,'' the suit says.

For that - which her lawsuit says was the result of negligence - she wants to be paid more than $15,000.

Peters' attorney and Universal officials would not comment. The company has not yet filed a response to the lawsuit.

I have not been able to find the actual complaint online for this one, but it looks like what we have here is a slip-and-fall case with some questionable behavior on the part of the premises owner's employees after the fall. But I guess the fact that they had a slipping hazard in the form of a puddle on the floor in a place where it was dark and their customers were likely to be distracted doesn't sound as good as "woman sued an amusement park because the haunted house was too scary."