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Monday, November 18, 2013

The Lawsuit Abuse Reduction Act of 2013

While arguments for and against litigation reform were notably absent during the last presidential election, it looks like the House of Representatives has not bypassed the issue.  Patricia Moore at the Civil Procedure and Federal Courts Blog posts about the Lawsuit Abuse Reduction Act of 2013, a bill that passed in the House of Representatives on November 14.  As Moore notes, Lonny Hoffman criticized this bill in testimony here.

The Act calls for revisions to Rule 11 of the Federal Rules of Civil Procedure.  Rule 11 gives courts the power to lever sanctions against parties who file untrue or frivolous claims in court.  The Act makes issuance of sanctions for a Rule 11 violation mandatory.  It also reduces options for what those sanctions should be -- requiring that the offending party pay the other party the amount of money that the Rule 11 violation causes that other party.

Here is the relevant language of the bill, from Section Two:

(a) Sanctions Under Rule 11
Rule 11(c) of the Federal Rules of Civil Procedure is amended—

in paragraph (1), by striking may and inserting shall;
in paragraph (2), by striking Rule 5 and all that follows through motion. and inserting Rule 5.; and
in paragraph (4), by striking situated and all that follows through the end of the paragraph and inserting situated, and to compensate the parties that were injured by such conduct. Subject to the limitations in paragraph (5), the sanction shall consist of an order to pay to the party or parties the amount of the reasonable expenses incurred as a direct result of the violation, including reasonable attorneys’ fees and costs. The court may also impose additional appropriate sanctions, such as striking the pleadings, dismissing the suit, or other directives of a nonmonetary nature, or, if warranted for effective deterrence, an order directing payment of a penalty into the court.

I don't think that this is the right approach to take if lawmakers want to decrease the quantity of litigation.  From a simple accuracy perspective, the vast variety of situations that may arise in civil cases favor a flexible approach over a single type of mandatory sanction.

More importantly, if sanctions are mandatory, but the violation does not rise to the level where the monetary sanctions described in (3) seem warranted, the court may simply take advantage of the broad language in Rule 11(b) and conclude that no Rule 11 violation has occurred.  The judge would find this course of action appealing because finding a violation would require additional motions and argumentation in order for the cost of the violation to be determined. -- which would be more work for the judge.

By requiring a heavyhanded, mandatory remedy, this bill may lead to fewer findings that Rule 11 was violated -- which is hardly the outcome that lawmakers seeking control over lawsuit abuse desire.

UPDATE - I have changed the formatting of the quote from the bill to correct some issues with how it appeared on the main page of the blog.

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