Brett Emison Testifies Before House Committee in Support of American Rule - 2012-02-23

Langdon & Emison attorney Brett Emison testified last week before the Missouri House Committee on General Laws in Jefferson City. In his testimony Brett supported the American Rule of civil justice, and voiced opposition to a bill that would reject centuries of legal precedent. 

As Brett mentioned before the House Committee, America's founding fathers fought the revolutionary war not only for tea and taxes, but also to uphold the rule of law to ensure access to courts and civil justice. In the list of grievances given in the Declaration of Independence, immediately following "For imposing Taxes on us without our Consent," "For depriving us in many cases, of the benefits of Trial by Jury" is listed.

"The American Rule of civil justice ensures fair access to the courts and an even playing field among litigants by eliminating oppressive disincentives to both those seeking justice (as a plaintiff) and those defending their conduct (as a defendant)," Brett says.

The sponsor of the proposed bill, HB 1342, suggested the purpose of the bill was to discourage frivolous lawsuits. But this is why Missouri already has in place mechanisms to identify frivolous lawsuits, dismiss them from court, and award attorneys' fees to the prevailing party. Mo. Rev. Stat. section 514.205 states:

In any civil action... if the court finds... that the cause was initiated, or a defense was asserted, or a motion was filed, or any proceeding therein was had frivolously and in bad faith, the court shall require the party who initiated such cause, asserted such defense, filed such motion, or caused such proceeding to be had to pay the other party... the amount of the costs attributable thereto and the reasonable expenses incurred...,including reasonable attorney's fees and compensation of said party for the time reasonably required of the party to oppose such cause, defense, motion or proceeding.

Missouri Supreme Court Rule 55.03(d) also permits the recovery of costs and attorney's fees as sanctions for bringing a frivolous claim or raising a frivolous defense.

Law professor John Vargo's research suggests that the British Rule escalates legal expenses and can make settlements less likely. In Vargo's article, The American Rule on Attorney Fee Allocation: The Injured Person's Access to Justice, he recounted how the Florida Medical Association (FMA) lobbied the Florida legislature in 1980 to impose the British Rule. By 1985, the FMA lobbied for repeal of the British Rule in Florida because the British Rule caused expensive losses for doctors and hospitals.

Brett testified that HB 1342 unlevels the playing field by permitting a defendant to invoke the British Rule, but preventing an injured plaintiff from doing so. Under proposed section 511.801.3, the British Rule can only be invoked by a defendant. Under the proposed statute, an injured plaintiff could not invoke the rule if a defendant asserted frivolous defenses, bad faith delay tactics, or refused to negotiate a reasonable settlement.

It is also important to note that HB 1342, in certain circumstances, also requires a winning party to pay the attorney's fees of the opponent. Proposed section 511.806 requires a winning party to pay attorneys fees and costs to their opponent if the amount of the verdict was "significantly less favorable" (defined as 50% of the last certified settlement offer).

However, under proposed section 511.806.7, the award of attorney's fees is made in the judgment as an offset against the injured plaintiff's recovery from the defendant, so if the jury renders a defense verdict, no attorney's fees may be recovered by the defendant. However, if the jury awards damages to the plaintiff and the verdict is "significantly less favorable", attorney's fees can be recovered from 100% of the non-economic damages awarded, 100% of the punitive damages awarded, but only 50% of the economic damages awarded.

Brett has pointed out that HB 1342 represents a substantial departure from more than 200 years of American history and jurisprudence. As conservative Andrew Cochran - "The 7th Amendment Advocate" - said about British Rule proposals: "Where are the Tea Party groups....? Why aren't they raising hell about the business community stripping [Missourians] of their rights?!"

As the colonists recognized, as our Founders recognized, and as more than 200 years of history and practice has recognized, the fundamental problem with the British Rule is that it denies access to the courts for all but the society's most wealthy (or, perhaps, the very, very poor). This is because anyone else could not afford to risk the financial burden of losing even a meritorious case and being forced to pay the other side's attorney bill.

The British Rule, thus, provides disincentive to either seek justice for wrongdoing or to defend against a claim brought against you.

If the losing party is very wealthy (or is a wealthy corporation), perhaps he can simply write a check for the winning side's costs, Brett hypothesized. If the losing party is very poor, perhaps he is "judgment proof" or can simply file bankruptcy to avoid paying the prevailing side's litigation costs. For everyone else, the substantial risk of loss in even a reasonable case brought in good faith will effectively shut the courthouse doors. The rich and the powerful will have much greater leverage in such litigation as they understand very few ordinary people can afford to risk loss at trial.

Brett pointed out in his blog and in previous public forums on the subject that thinkers like Andrew Cochran, Fred Thompson, Rand Paul, Clarence Thomas, and other leading conservatives have come out against tort reform.

For more information:

• The American Rule On Attorney Fee Allocation: The Injured Person's Access To Justice [John Vargo for The American University Law Review]
• The Declaration of Independence
• How The Chamber's Special Interest Politics Will Grow Government, Raise Taxes, And Threaten Liberty
• Missouri Chamber's Tort Reform Policies Just Don't Work
• "Loser Pays" Do