ABA Journal Recycles Misleading Survey Results on Pending Lawsuit Reform Bill

U.S. District Court judges by a sizable majority oppose mandatory sanctions for lawyers who file groundless suits, a recent survey shows.

The Federal Judicial Center surveyed 400 judges via e-mail in December 2004 and January 2005. The survey, which garnered 278 responses, found that 87 percent preferred the current Rule 11 of the Federal Rules of Civil Procedure. That rule gives judges the discretion to impose sanctions on attorneys who file pleadings that are frivolous, presented for an improper purpose or lack evidentiary support.

The survey, consisting of 13 questions dealing with Rule 11, comes in the wake of the proposed Lawsuit Abuse Reduction Act, which cleared the U.S. House of Representatives last year but was not voted on by the Senate. The bill, reintroduced in January by Rep. Lamar Smith, R-Texas, would amend Rule 11 to make attorney sanctions mandatory, eliminate the "safe harbor" provision that gives attorneys 21 days to withdraw frivolous pleadings, and apply Rule 11 to discovery.

"The filing of frivolous suits by attorneys across the nation has made a mockery of our legal system," Smith said in a January news release. "Instead of concentrating on real cases that need timely rulings, our courts today are forced to wade knee-deep in a pool of false claims and unscrupulous plaintiffs. These suits have increased insurance premiums and raised health care costs."

The bill would largely restore Rule 11 to what it looked like before a series of amendments in 1993. One difference is that attorney fees are a mandatory sanction under the bill, but discretionary under the older Rule 11.

How about Stop Youth Addiction v. Lucky Stores, Inc., 17 Cal. 4th 553 (1998) in which a plaintiffs' lawyer formed a corporation (Stop Youth Addiction, Inc.) and installed his mother as the President and sole shareholder?

The newly-formed corporation then sued thousands of convenience stores under California's Unfair Competition Law 17200, claiming that the stores illegally sold cigarettes to minors.

While some of the stores may have violated the law by selling cigarettes to minors, the plaintiff had no injury of which to complain. The lawsuit was nothing more than a vehicle to generate attorneys' fees for the plaintiffs' lawyer -- a fact admitted by his mother, err . . . the president of the company -- in her deposition.

Although the California Supreme Court upheld lower court rulings allowing this monstrosity of a lawsuit to proceed, Janice Rogers Brown dissented, writing, "the majority chooses to speed us along the path to perdition, genially opting for the worst of all possible legal worlds: abuse of process . . . exotortionate nuisance lawsuits, confusion, duplication of litigation resources and uncertain finality."

Eventually, the loophole in UCL 17200 had to be closed by referendum through Propsition 64.

Lawsuit Abuse Hurts California Businesses:
The Abuse of the Unfair Competition Law
Unfair Competition lawsuits are "a means of generating attorneys' fees without any corresponding public benefit." - California state Supreme Court Justice Janice Brown

California is the only state in the nation that sanctions extortion by personal injury lawyers.

A few examples of how California's Unfair Competition Law, which is unlike any other law in the nation, has been "legally" used to shake down small businesses and put thousands of dollars in the pockets of greedy personal injury lawyers.

Remember, even though these kind of suits are filed "on behalf of the general public," the lawyers keep all the money!

A pizzeria owner was sued, twice, for minor health code violations that had already been cited and corrected by the County of Los Angeles Department of Health Services. The "violations" were so minor that despite them the restaurant still received an "A" rating from the inspector.

A travel agent received a letter demanding $10,000 as an "incentive award" to a law firm for pointing out that he forgot to list his California Seller of Travel code on his Web site. Similar letters were sent to more than 200 other travel agents.

Hundreds of nail salon owners were sued because they used the same bottle of nail polish on more than one customer, even though this is widely considered a standard industry practice by the State Board of Barbering and Cosmetology.

Hundreds of automobile dealerships have been sued for technical violations in the financial terms section of their advertisements for car sales. Common mistakes include the wrong size of the print or using the common acronym "A.P.R." instead of spelling out "Annual Percentage Rate."

The Remedy: Proposition 64

The politicians in Sacramento have had plenty of chances to fix the law to end this mafia-style extortion, but the personal injury lawyers who profit from the abuses have stepped in and killed every proposal, and even tried to make the law worse. Now it's up to the people of California to do what the friends of the personal injury lawyers in the Capitol won't. In November, voters will have a chance to approve Proposition 64, the "Stop Shakedown Lawsuits Initiative." It's purpose is to close the major loopholes in the Unfair Competition Law that allow greedy lawyers to rob California businesses, while preserving the law's important consumer protections and providing more resources for the Attorney General to enforce the law.

What Proposition 64 Does

It would amend current law so private lawyers could no longer file lawsuits without clients and without evidence of harm or financial loss.

Private lawyers will no longer be able to use 17200 to file "representative lawsuits" on behalf of the general public; they must use the class action process.

More funding will be dedicated to empowering District Attorneys to use 17200 to protect the general public, and businesses, from business practice violations.

Proposition 64 only Ends Abusive Lawsuits

Despite what the proposition's opponents (personal injury lawyers and their front groups) would like people to believe, nothing in Proposition 64 would prevent legitimate lawsuits over violations of environmental laws or legitimate lawsuits on behalf of the general public.

Here's what kind of lawsuits would still be allowable under Proposition 64:

Environmental lawsuits against any person, company, government or government agency for violations of the Clean Air Act, Clean Water Act, the Resource Conservation and Recovery Act, California's Proposition 65 and other state and federal environmental laws.

Suits on behalf of the general public, provided they are filed by District Attorneys or the Attorney General, who are charged with this duty.

Suits by private lawyers, on behalf of the public, which are certified as class actions.

Lawsuits where there is clear evidence of injury or financial loss.

Lawsuits by businesses against competitors that are conducting business unfairly.

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