Texas lawmaker proposes reforms to federal rule regarding frivolous lawsuits

Marilyn Tennissen May 16, 2011, 5:18am


On the heels of the Texas House of Representatives' successful passage of a lawsuit reform bill to reduce frivolous suits in state courts, a Texas lawmaker in Washington is hoping to push a similar bill on the federal level.

U.S. Rep. Lamar Smith, R-Texas, chair of the House Judiciary Committee, introduced the Lawsuit Abuse Reduction Act (LARA) in March. The committee is scheduled to take up House Bill 966 early next month.

The bill would amend Rule 11 sanctions provisions of the Federal Rules of Civil Procedure.

It would require the court to impose sanctions on those who file frivolous claims in federal court, and the sanctions would compensate the injured parties.

A frivolous suit is defined as a case having "no basis in fact."

"... [T]he 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," HB 966 states.

"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."

Currently, Rule 11 provides for sanctions against the attorney or client for harassment, frivolous arguments, or a lack of factual investigation. The purpose of the sanctions is deterrent, not punitive.

Courts have broad discretion about the exact nature of the sanction, which can include fines, dismissal of claims or dismissal of the entire case.

Judges can only fine the frivolous filer enough to deter misbehavior and the fines collected go to the court.

Under the existing rule, if a business being sued feels the suit is frivolous, then it can hire a lawyer to file a motion alleging the suit is frivolous. The plaintiff's attorney can then withdraw the suit without penalty within 21 days, however the business owner is still stuck with the legal costs of fighting the suit.

In 1993, Supreme Court Justice Antonin Scalia wrote that the current system allows plaintiffs to file "thoughtless, reckless and harassing pleadings, secure in the knowledge that they have nothing to lose."

Smith's legislation would eliminate the 21-day "safe harbor" rule, which allows an attorney to avoid sanctions if he withdraws the allegedly frivolous suit within 21 days.

The bill also would direct judges to penalize frivolous plaintiffs enough to cover the defendant's court costs.

Opponents say such legislation only deters plaintiffs from filing suits in the first place and blocks their opportunity to obtain justice.

But Smith addressed that argument in his bill proposal.

"Nothing in this Act shall be construed to bar or impede the assertion or development of new claims, defenses, or remedies under Federal, State, or local laws, including civil rights law," Smith wrote.

Earlier this month, the Texas House passed a controversial "loser pays" bill, which would -- in certain circumstances, such as breach of contract suits -- require the filer of a frivolous lawsuit to pay the court costs of the defendant.

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