Frivolous lawsuits and Rule 11: Is the cure worse than the problem?
Few would argue the merits of frivolous lawsuits, but the “cure” being proposed in Congress this week is far worse than the disease. One only needs to journey back in history a few decades to get a preview of what could easily happen again if the groups pushing for tougher measures get their way in the fight against frivolous lawsuits.
At the heart of the battle is Rule 11 of the Federal Rules of Civil Procedure. Originally drafted more than 70 years ago, it has been revised twice in the last thirty years: first to toughen up sanctions against attorneys filing frivolous lawsuits, and a decade later to mitigate the damage caused by the first revision. In today’s version of Rule 11, judges have some latitude in determining whether or not to impose attorney sanctions, and lawyers in civil cases are granted a 21-day “safe harbor” period during which time they can withdraw a lawsuit following a sanctions motion.
This week, though, lobbyists representing two of the country’s most powerful small-business interest groups have testified on Capitol Hill that they want to see Rule 11 brought back to its 1983 state – that is, the time of the first, lamentable revision. Their argument: that in its current form, Rule 11 is creating a chilling effect on small businesses. These lobbyists are asking Congress to reinstate mandatory attorney sanctions under Rule 11 and remove the rule’s provision granting the 21-day withdrawal period. What these small-business interest groups may not realize is that the Rule 11 of today is far less “chilling” to the American judicial system than the Rule 11 to which they want to revert.
University of Houston law professor Lonny Hoffman, who testified against the proposed changes, put it best, recalling the chaos that ensued after Rule 11 was first amended in 1983: “Sanctions practice took on a life of its own…with lawyers routinely battling over the minutiae of all the new obligations imposed.” Indeed, rather than reduce litigation, Rule 11 added both time and expense to it.
In his testimony, Hoffman cited another legal scholar, Georgene Vairo, who wrote about the “avalanche” of satellite litigation unleashed by the 1983 revisions, including one study that found that in a one-year period almost 55% of respondents had experienced either formal or informal threats of Rule 11 sanctions.
Even more disturbing about Rule 11, particularly after it was amended in 1983 and before it was revised again in 1993, was that those most hurt by it were low-income civil rights and employment discrimination plaintiffs. These were the people least likely to have the funds to keep the battle going. In effect, Rule 11 became an intimidation technique and had a chilling effect on free access to the courts. Even in its current form, Rule 11 suffers similar criticisms. It also encroaches upon the American rule disfavoring the award of counsel fees for the losing party.
When, in 1993, Congress revised Rule 11 to give judges more latitude in imposing sanctions and to create the safe-harbor provision, Congress was attempting to correct much of the damage of Rule 11 in its earlier form. Now groups representing small businesses want to have Rule 11 brought back to those glory days of the mid-1980s?
Before we rush to do that, we should pause and reflect on history. After all, as American philosopher George Santayana once said, “ Those who do not learn from history are doomed to repeat it.”
