Attorney’s Fees and Costs Are the Main Sanctions.
House Judiciary Committee Chairman Lamar Smith (R-Texas) and Senate Judiciary Committee Ranking Member Chuck Grassley (R-Iowa), on March 10, 2011, introduced legislation to curb frivolous lawsuits. The Lawsuit Abuse Reduction Act, if passed as introduced, would impose mandatory sanctions upon lawyers filing meritless suits in federal court. The legislation proposes a three-pronged attack on frivolous suits: (1) F.R.Civ. P 11 sanctions would be mandatory (not just discretionary) in nature; (2) frivolous suit sanctions would be mandatory against the offending lawyer, including an award of attorney’s fees and costs incurred by the other side; and (3) Rule 11’s 21-day “safe harbor” provision would be eliminated. According to one study, the 2002 tort system’s purported direct costs were $223 billion, the equivalent of a 5% tax on wages, with the annual direct cost of American tort litigation now exceeding $250 billion. [Query: What are the measurable economic benefits of the tort system, if it leads to cleaner air, cleaner water, and safer automobiles, and if it compensates persons who are injured?] If passed, the sponsors hope that state courts would strengthen rules in line with the proposed Rule 11 reforms. More on this bill can be found by reading the March 10, 2011 post on IowaPolitics.com.
A March 11, 2011 post in The BLT: The Blog of Legal Times, noted that a House Judiciary subcommittee, “received some cautionary testimony from Lonny Hoffman, a professor at the University of Houston Law Center. Hoffman described the results of a 1983 change in Rule 11 that made sanctions mandatory before it was reversed a decade later. Among the reported problems with that change was that it distracted lawyers from resolving the merits of a case, ultimately adding to litigation costs and delays.
‘Any decision by this committee to repeat the same mistake of the 1983 judicial rules committee in assuming a need for the proposed legislation is lamentable,’ Hoffman wrote.”