The Pains and Perils of Phony Lawsuits

In this thread, we discuss the inherent unfairness of how the Jones lawsuit forced the President to respond to allegations that turned out not to hold much in the way of water - or, indeed, any moisture at all.

In the thread, I said, in essence, that it was a lousy by-product of the system, but that’s the way it is. If someone sues me, I have to spend time and money defending myself. This is why, I said, “nuisance” lawsuits are often settled for “nuisance value” - that it’s easier for a defendant to cough up a $2,500 cash settlement than spend $5,000 on legal fees crafting a defense.

In researching the tort of malicious prosecution, which is the wrong done by one who maliciously causes a false criminal prosecution to ensue, I came across a commentary on an interesting case that explains how a person filing a bogus lawsuit is often immune from any real consequences.

Fisher Island, off the Florida coast, was recently the target of “Boca Investors Group,” a firm that tried to buy the entire 216-acre island — apparently planning to build and sell new homes there. The island was already the home of some very wealthy and fmaous people - Oprah Winfrey, for one, makes her home there. Alarmed by this plan, the residents of Fisher Island filed a series of lawsuits against Boca Investors Group, which frightened the company’s would-be investors. They subsequently lost the sale for lack of funding.

Undaunted, or perhaps just angry, Boca Investors Group filed a suit of its own. It alleged that the island residents had conspired with their lawyers to use meritless litigation to scare off potential financial backers, and ruin the completion of its purchase of Fisher Island.

The specific legal claim was for tortious interference with prospective economic advantage. The investors’ group alleged that the islanders who hired lawyers and filed lawsuits did so with the intent to improperly interfere with its normal business activity of buying and developing land, and not for the reasons claimed in their suits. Under the law, it’s a civil wrong - a tort - to (under some circumstances) intentionally derail someone else’s pending contractual arrangement, just as it’s a tort to derail someone else’s existing contract.

The case was going well - the investors’ group was in good shape, especially after discovery unearthed a document that showed the residents planning, with their lawyers, exactly what sort of lawsuits they could file that would derail the sale. This proved, they felt, their whole claim: the suits were bogus, and only intended to create trouble for the sale of the island.

Then the judge agreed to dismiss the case. Why? Because the island residents’ lawyers came up with an earlier case that said that a lawyer had “complete immunity” to say things, in the course of conducting a lawsuit, that would otherwise constitute tortious interference. The residents’ lawyer argued that this absolute immunity should cover an individual’s statements made in preparation of filing a lawsuit as well.

The effect of this ruling is that the “tortious interference” window is now closed. If Boca Investors Group wants to sue the residents, they have only the tort of wrongful civil litigation available.

Unfortunately, to prevail in a case of wrongful civil litigation, the burden on the plaintiff is quite high. For one, the plaintiff (the original defendant) must show that the case ended in a “bona fide termination” unfavorable to the original plaintiff. If the civil lawsuit was settled, that’s not “bona fide termination” and the tort is unavailable. (In contrast, the criminal version - malicious prosecution - must also show a bona fide termination. That’s comparatively easy; since a bogus criminal charge is usually dismissed or nolle prossed, or results in an aquittal.)

Here, then, is a perfect example of the problem that Clinton faced. Paula Jones made conclusory and - ultimately - unsupported allegations. In defending himself, he walked into a potential perjury trap, and may have committed perjury. And the question that’s now spawned at the least two threads and a hijack – what about consequences for Paula Jones?

Since he ultimately - and wisely - ended up settling with her, the tort of wrongful civil litigation is lost to him. So she, at little personal expense, got to take some free legal shots at the sitting president, with no real consequences. For those that wonder why this is… hopefully the above is of some value in understanding the situation.

  • Rick

I understand that in the US you don’t have the principle that “costs follow the event”.

That is, if you lose your legal proceedings, you pay the winner’s taxed costs.

A taxation of costs involves a review by a judicial officer of a bill (schedule) of costs claimed from the loser, with reference to a maximum scale or guide.

You therefore recover 30%-80% of your total solicitor-client fees.

Then there are indemnity costs. If someone brings a totally spurious case, and you can show this to the judicial officer, then you can ask for an award of the entirety of your costs - to put you in the position you would have been in if not for the proceedings. This is relatively rare - primarily because in the jurisdictions I am familiar with, spurious claims are few and far between.

I admit my jaw dropped when I only very recently found out the US doesn’t have this principle in litigation, which is accepted in at least the UK, Australia, New Zealand, and Hong Kong.

Wouldn’t this solve the problem in the OP?

The problem with implementing this sort of system is that it is thought to have a chilling effect on poorer would-be plaintiffs, who would be reluctant to sue in a product liability case, for instance, if their defendants built up thousands of hours in legal bills, and then a jury didn’t see enough fault to justify an award.

In other words, we generally accept that there’s a salutary aspect to civil litigation - as well as the judgement awarding the one bringing the suit, there’s a sort of qui tam effect: companies avoid bringing harmful products to market out of just fear of large jury awards. Every effort is made to keep the products safe, because of the looming possibility of a giant civil judgement.

If we allow the sort of proposal Dave Stewart mentions, goes the thinking, we will limit certain potentially meritorious suits because the would-be plaintiffs are unwilling to expose themselves to liability if they happen to lose.

  • Rick

Harmful products are IIRC usually dealt with by a combination of trade practices legislation, which impose stiff penalties ($10m, under the Australian legaisltion, from vague memory), and negligence suits. Negligence suits, it seems to me, usually always settle. I have a friend at a plaintiff negligence firm - I might ask her for some stats on that.

In practice, the costs principle doesn’t seem to deter valid claims. I’ve had this argument with Jodi before, and I really should back up this subjective obsevartion with some evidence.

I would appreciate specific citations of backing up your assertion: "Paula Jones made conclusory and - ultimately - unsupported allegations."

Lawsuits involving sexual harassment frequently evolve into “blaming the victim” episodes in which the accuser is put on trial to cast doubt on the credibility of their claim. It is my understanding that the average settlement in sexual harassment suits in the U.S. is in the neighborhood of $1,500 to $2,000. If this is the case, it would appear unlikely that individuals would be willing to undergo the very difficult process of defending their personal morality and integrity for the sake of taking a shot at some easy money with a frivilous lawsuit.

I would appreciate input from professionals dealing with sexual harassment litigation regarding the typical veracity of such cases.

[QUOTE]
*Originally posted by Dave Stewart *
**

That would depend upon what you mean by “valid”. Its hard to win lawsuits, and every case has its problems. I only have subjective observations to add, but I do plaintiff’s work, and run through the economics of cases with plaintiffs every day. In my view, the chilling effect would eliminate many valid, but troubled claims.

For what it is worth, The Association of Trial Lawyers of America has this to say on the issue:

Even England does not strictly adhere to the English rule. More than half of England’s citizens qualify for government-run legal assistance. The English rule rarely applies when the “loser” is a recipient of legal aid.

The conservative English magazine The Economist in January called for abandonment of the English Rule and expansion of contingent fees. The magazine stated: “The worst aspect of this system [English Rule] is that it denies access to justice to huge numbers of people.”

English trade unions provide legal representation to their members and pay the other side’s costs if a case is lost.

Without a government-run program to help injured consumers pay legal fees and costs, Americans could not afford to vindicate their rights and wrongdoers would not be held accountable. Has anyone seriously suggested that America needs to replace its system, in which private litigants pay their own expenses, with a government-run program?

Happy to help.

Paula Jones claimed - as she had to - that subsequent to her refusal of Governor Clinton’s request for sex, she suffered “tangible job detriments.” See Jones, 974 F.Supp. 712; Order of November 24, 1997. A “tangible job detriment” is a mixed question of fact and law – a question of fact as to what actually happened, and a question of law as to whether the event(s) constitute “tangible job harrasment.” Cram v. Lamson & Sessions Co., 49 F.3d 466, 473 (8th Cir. 1995) (citing Kauffman v. Allied Signal, Inc., 970 F.2d 178, 186 (6th Cir.), cert. denied, 506 U.S. 1041 (1992)). See also Sanders v. Casa View Baptist Church, 134 F.3d 331, 339 (5th Cir. 1998) (noting that to withstand summary judgment on quid pro quo claims, plaintiffs were required to produce evidence showing that the harassment complained of affected tangible aspects of their compensation, terms, conditions, or privileges of employment). “[A] supervisor’s mere threat or promise of job-related harm or benefits in exchange for sexual favors does not constitute quid pro quo harassment …” Gary v. Long, 59 F.3d 1391, 1396 (D.C. Cir. 1995).

President Clinton moved for summary judgement, asserting that the record of Ms. Jones’ deposition, even if believed in its entirety, did not create a record of tangible job harrassment. In summary judgement, the nonmoving party may not rest on mere allegations or denials of his pleading, but must “come forward with 'specific facts showing that there is a genuine issue for trial.” (See Fed.R.Civ.P. 56(e)).

Ms. Jones’ specific claims included, as an example:

As to the claim that she was discouraged from applying for higher pay grade jobs, her own deposition testimony showed this was, as I said and HairyPotter questioned, an unsupported and conclusory allegation:

It’s kind of funny - in the linked thread above, I was battling Elvis1Lives, who called Ms. Jones’ testimony about the tangible job deriment ‘perjury’. I had been trying to carefully explain that she cannot perjure herself claiming a tangible job detriment because that’s a conclusion, not a statement of fact. The facts are that she, at best, “…would go ahead and fill out an application maybe or something…” without ever actually applying for another AIDC job - and that this evidence cannot support a conclusion that she suffered a tangible job detriment.

Here, I find the opposite problem - HairyPotter seems to have a higher opinion of Ms. Jones than is warranted. But, as is hopefully demonstrated by the above, Ms. Jones did indeed provide conclusory, and ultimately unsupported, allegations.

  • Rick

Thanks for taking the trouble to summarize the unsupported allegations. Based on the information you provided, it appears that the Jones case qualifies as a frivilous lawsuit.

I have no opinions regarding Ms. Jones. I know nothing about her, and I have no idea whether or not Clinton imposed lewd behavior upon her. I would caution individuals not to draw conclusions regrading the integrity of sexual harassment cases, in general, based on this example.

I’m not completely sure it was frivolous.

Sexual harrassment law is still rapidly evolving. A recent Supreme Court case suggests that proving a tangible job detriment may not always be a requirement.

There are two general kinds of sexual harrassment cases: quid pro quo and hostile workplace. The quid pro quo sexual harrasser offers a bargain of sexual favors in return for job-related benefits. The hostile workplace harrasser merely creates an environment that makes the victim uncomfortable, based on gender.

One interpretation of Paula Jones’ lawsuit might be that her attorneys were working, in good faith, to expand the law regarding proof of tangible job detriments. Under this admittedly unlikely view, her lawsuit wasn’t frivolous - it was a brave attempt to expand what the law will view as actionable. Under the law, Mr. Clinton’s behavior may have been “boorish” but it did not constitute harrassment, since she didn’t suffer any tangible job detriment. But - is that the right standard to apply? Don’t we want to send a message to supervisors that ANY request for sex from a subordinate is wrong - it places the subordinate in an impossible situation.

Etc, etc, etc. I don’t buy it, myself, but it’s possible that’s what her lawyers were thinking. And it’s not that far off - see the Ellerth case mentioned in the linked thread, which seems to suggest that proving a tangible job detriment is not necessary.

  • Rick

With respect to the question of court costs, I think it’s important to recognizes that costs are always in the discretion of the judge. My experience (I do a fair bit of litigation with public interest components) is that in awarding costs, courts take into account factors such as the respective merits of the law suit, the position of the parties, their prior relationship, and the public interest in allowing meritorious claims to be brought forward. It’s not an automatic payment to the winning side.

As well, costs can be used to discipline counsel - where a claim is clearly frivolous, the award of costs can be quite heavy.

I guess my basic reaction is that I don’t understand a system where anyone who can pay filing fees can start a law-suit, with no major financial risk to themself, and yet the defendant has no recourse against a frivolous law-suit, other than starting a lawsuit in turn, the “wrongful litigation” that Bricker mentioned, which sounds quite difficult to win.

If you want further information about costs in the Canadian system, see my post in a thread that the dear departed Wildest Bill posted a year ago: Loser Should Pay in Lawsuits - PERIOD!.

(I don’t recommend reading the whole thing, given WB’s posting style - it made my head hurt. Just read my bit. That’s all you need. :wink: )

We have costs in Canada. In my experience they tend to discourage honest middle class litigants with cases where the chances of success are tenuous or unpredictable. They don’t seem to do much with the Paula Jones sort of lawsuit. Where they really kick in is encouraging timely settlements.

Trying to paint the plaintif as crazy or a tramp is an extraordinarily dangerous strategy these days. And if you think it is bad for her you should see what happens to the accused. I still feel guilty over my cross examination of one poor bastard years ago.

I’m going to skip the costs issue, which seems to be well in hand, and return to the phony lawsuit issue.

I’m actually in the course of writing an article (which I hope to expand into a book) on this issue. Actually, the issue is slightly different - I’m writing about cases that attempt to use the judicial system as a means of extortion (attempts to commit fraud on the court), rather than wrongful civil litigation per se, but in many ways there is a difference of degree between the two, not kind.

My conclusion is that the judicial system is weighed too heavily in favor of letting plaintiffs have their day in court to adequately protect themselves or opposing parties.
The presumption is that parties coming before a court are acting in good faith. In order to prove that they aren’t, you need to meet a high standard of proof, both as to the lack of merit of their lawsuit and their intent. This is bloody expensive.
Even if you can prove bad faith and get your fees awarded, the court isn’t likely to actually award you what you spent. The court has to determine whether the fees and costs were “reasonable” - fine in theory (a fee award isn’t supposed to be a jackpot), but hell, you actually spent the money and wouldn’t have had to spend the money were it not for the other side’s bad faith. In addition, you expend more on legal fees and costs in the process of determining whether the fees sought are reasonable (in theory, this money can also be awarded back to you, but it is often impossible to seek it for tactical/practical reasons).
Finally, and in many ways most importantly, a fee award isn’t the same as a check. You have to actually collect the money, which can be very expensive, particularly due to another set of protections for the extortionists - debtor protections and bankruptcy laws. And, of course, there is always the case where the bad-faith plaintiff doesn’t have the money to pay you - a guy who makes $60,000 a year is never going to repay you if you spent $500,000 fending of his bad-faith lawsuit (this can easily happen if the plaintiff brought his lawsuit on a contingency fee basis).

There are other problems. If a party brings a lawsuit or makes an argument that is frivolous or unreasonable, but didn’t act in bad faith, the rule is that the party (or his attorney) is sanctioned enough to “deter” him and others from making the same mistake in the future, not fully compensate the other side for having to respond to your meritless argument. Fine, the guy wasn’t malicious - but you still spent money you shouldn’t have had to spend to show that the case or argument was frivolous. Just because the guy didn’t mean it you have to eat part of the money you shouldn’t have had to spend in the first place? Ridiculous.

Sua

I take it this is not a new problem.

In an old Rex Stout mystery from the 30’s or 40’s, Character A threatens to sue Character B. A has no reasonable claim for damages. However, the lawsuit would make public an embarassing fact about B. A offers to settle the suit in what amounts to a legal means of blackmailing B.

Interesting. So then character A threatens to sue character B, oh, let’s say, for “sexual harrassment.” A has no reasonable claim for damages. However the lawsuit would make public an embarrassing fact about B (oh, for example, let’s say B has a history of marital infidelity). A offers to settle the suit in what amounts to a legal means of blackmailing B.

I dunno. Kinda far-fetched. Do you think something like that could happen in real life?