FRIVOLOUS LAWSUITS (PART 2) -- ENRON

A friend whom I should listen to told me he found the previous post on this topic condescending. After getting him to explain what "condescending" means, I decided he had a point and I should take another stab at the subject. With luck, this will create even more rancor and confusion than the first one.

In describing what I think to be two definitions of "frivolous lawsuit", one understanding held by lawyers and the other by laymen, I was trying to illustrate that the very fact of these different definitions makes a discussion of the topic difficult. Without a common understanding of the terms involved, it's hard to frame the nature of the problem, much less reach consensus or a conclusion.

Having firmly inserted my foot in it on that point, let me shift mid-post to the Enron case, which I am involved in on behalf of the bond purchasers that lost money during the company's collapse. It's clear to me that the primary culprits as identified in the media -- the top officers and Andersen -- are going to get hammered, at least civilly. Not so clear, but vitally important from both a legal and economic standpoint, is what is the liability of the outside directors of Enron? Legal: what are, or should be the boundaries of directors' duties to inquire into management's practices? If you answer "minimal" or "none", then why have a board anyway? Doesn't that make the concept that directors are to look out for and answer to the shareholders and creditors a joke, and a sick joke at that, given the billions of losses due to fraud at Enron? Just what were these folks doing for their $300,000 annual stipends? Attending quarterly meetings and rubber-stamping management decisions, apparently. On the economic side, it's a grim fact that, even if the aforementioned primary culprits are denuded of their assets to pay claims, there will still be multiple billions of unsatisfied losses. As between the directors, who, the facts may well show, were merely negligent and not actually in on the fraud, and the innocent shareholders and creditors, where should those losses land? When the really guilty can't pay the whole freight, the slightly guilty have to pick up the slack until the innocent are made whole.

NOW WITH ARCHIVES!

On the passing chance that folks might want to refer to old posts that have disappeared from the main page, I've created Archives pages which can be accessed from the links at left.

STUPID LIBERAL SOFT-ON-CRIME QUOTE OF THE DAY

"Quite frankly it bothers me as a lawyer to see members of our Congress, in their inflection and their tone, suggest there's something wrong with taking the Fifth. It's a right we all have. It's a precious right. And if they think only the bad guys take that, they're wrong."

Who can guess which bleeding-heart ACLU member offered up this gem to the Houston Chronicle when asked about Enron executives invoking the Fifth Amendment before congress?

That's right, Johnny Holmes, longtime Houston district attorney who sent more people to death row than any other prosecutor. Hmmm, maybe there's something to this Bill of Rights business.

CLONING (PART 7)

The Daily Standard ran another piece on the horrors of cloning research and the terrible folly we risk if we make possible genetic enhancements to humans. Here's my reply.

Well, the opposition to cloning and embryonic stem cell research finally comes clean. The real horror is not the techniques of this nascent science (though those techniques are quite terrible, Smith hastens to point out, having decided for all of us that the soul attaches at conception -- has he brought other stone tablets down from on high?), but the result that will follow if this science is not stamped out, and now: people might actually be able to choose for their children the potential of longer lives, abetted by bodies and brains that are genetically predisposed towards greater abilities and fewer limits. How horrible! God forbid that a Steven Hawking might be born without a wracked shell for a body. Let's make sure that the lottery of cancer, heart disease, diabetes and slow-wittedness continues unabated. Don't deny parents the thrilling chance to have their own Downs syndrome, cerebral palsy, blind, or other special child. After all, it builds character. And let's for sure keep the chance of passing on sparks of genius in the arts, athletics, the professions, science and every other field of human endeavor totally random, as God intended. We wouldn't want a bunch of Picassos, or Ruths, or Darrows, or Curies, or Churchills running around. Who'd be left to watch Oprah and Rosie?

Not so my God. He created us in the midst of this universe of infinite size, infinite danger, and infinite possibility, and He gave us just one weapon to match against that vastness: the human mind. Our long ascent from the caves, through barbarism, to our current semi-civilized state, we owe to that tool. And we owe Him, and ourselves, continued striving towards something better. It's not necessary that we have mapped out what that something is. What is needed is a commitment to continue the struggle, unburdened by irrational fear, sometimes referred to as "the wisdom of repugnance." New science always offers possibilities, not promises. We should trust ourselves, and our essential humanity, which is surely resilient enough to withstand changes in the vessel which houses it (remember, Yoda teaches: "Luminous beings are we, not this crude matter [flesh and blood]").

Before we buy the bogeyman of Brave New World, mustn't we recognize that the horror of that world lies not in the genetic techniques that are such an instrument of oppression, but in the fact of oppresssion? Try thinking of an open, democratic society governed by the rule of law, where genetic enhancement is an available choice, not a totalitarian requirement.

Of course, this science is coming, no matter what the President and congress do. All they can do by enacting prohibitions is: 1) delay things, so the lottery grips a couple more generations and 2) make sure that America follows, not leads, the charge. And the leaders might well be nations who don't share our libertarian institutions and unwillingness to see science used for oppression.

WHAT IS A FRIVOLOUS LAWSUIT?

On Febrauary 3, I attended the second day of a very interesting conference on the costs of the legal system at the University of Texas School of Law. A variety of academics with training in law and economics presented studies they had done which belied much of the popular wisdom about the expense of the American civil justice system.

The topic of frivolous suits -- whether they are in fact a problem, and whether measures designed to discourage them (sanctions against lawyers and clients who file them) work -- was discussed. In the course of the discussion, I realized that the law's (and presumably most lawyers') definition of a frivolous suit and that of the seemingly legion lay critics are quite different. I also realized that this difference in definitions is the source of much "signal noise" in attempts by trial lawyers (like me) to explain that frivolous lawsuits are not a big problem. The law defines a frivolous suit, subject to sanctions, as one not justified by the facts, the law, or a good faith argument for change in existing law. For example, Federal Rule of Civl Procedure 13, governing standards for pleadings filed in civil cases, including the suit itself, provides, in part:

(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for
the extension, modification, or reversal of existing law or the establishment of new law;
(3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery;

Lay people, on the other hand, seem to define frivolous lawsuit in terms of either a trivial injury -- suing over a hangnail -- or what they perceive as an improper shifting of blame from an injured party to the defendant. The most famous example of the latter is, of course, the McDonald's coffee case. We can leave aside the "trivial injury" cases; except in popular (and inaccurate) myth, they do not exist. Even after you clean up the tremendous inaccuracies in the popular version of the McDonald's case (a good account of the actual facts can be found here), many conservative folks still disagree with the result, on the grounds that anything that happens to you when you spill coffee on yourself is solely your own fault, irrespective of how hot the coffee was. Thus they define even the idea of suing over spilled coffee as frivolous.

The law is a set of generalities designed to govern specific situations. One such generality is that makers of unreasonably dangerous products ought to pay for the consequences when those unreasonable dangers cause injury. We have judges and juries to apply those generalities to specific disputes. Twelve people, not under hypnosis, not having taken stupid pills, decided that the McDonald's coffee, which the company's own expert admitted was "unsafe for human consumption" was unreasonably dangerous. What's frivolous about that?