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Pro Se’s Outlandish Menu

Thursday, August 23, 2007

Delusional plaintiffs with crazy suits are just a symptom of a larger problem.

A Kai Falkenberg article in the latest issue of Forbes details the tale of Holli Lundahl, who brought thirty cases over a decade against Eli Lilly alleging grand conspiracy theories. Eli Lilly had to retain five different law firms and spend over a million dollars defending itself. Most big businesses don’t want to speak publicly about the issue because many will respond to a persistent squeaky wheel by quietly resolving their customer-service problem on quite favorable terms (as one mental disability expert recommends to Forbes) and if that were more widely known, there would be a lot more incentive to be an obnoxious customer.

What are we to think about such abuses of the legal system?

Lawsuits such as Lundahl’s are certainly a problem, especially for a small business without counsel at the ready. For a mom-and-pop immigrant dry-cleaner to defend against Roy Pearson’s consumer-fraud claim demanding tens of millions of dollars over an allegedly lost pair of pants cost nearly six figures and nearly drove the Chung family out of business, which is why they were willing to settle that meritless case for $12,000. And the case still isn’t over, even after a trial victory. A loser-pays rule would hypothetically compensate the Chungs, except it is unlikely Pearson could ever pay the $83,000. Judges need to do more to throw cases like this out early: there is no reason the Pearson case had to go to trial and run up the bill for the Chungs. A recent Supreme Court case, Bell Atlantic v. Twombly, gives more freedom to judges to discard cases without plausible theories of recovery earlier in the process.

The U.S. government spends millions of dollars a year defending against suits by tax protestors claiming the income tax is illegal or does not apply to them.

For the truly delusional lawsuits, like the guy who sued his cable company over the Janet Jackson nipple exposure, or the prisoner who sued Arm & Hammer for not warning him not to use baking soda to make crack cocaine, a business can usually get rid of the suit relatively early through the briefs, though that can still cost in the tens of thousands of dollars. The government is likely the biggest victim of such delusions. The United States spends millions of dollars a year defending against suits by tax protestors with crazy rationalizations claiming the income tax is illegal or does not apply to them. The harassment is sometimes more directly personal, as when tax protestors file illegitimate liens on government attorneys’ property, with unpleasant disruptions to bureaucrats’ lives.  Many delusional suits were filed by prisoners, until the Prison Litigation Reform Act of 1995 did a lot to cut off the more meritless claims in federal court. (On the other hand, just this summer a couple of big law firms in Boston tried a case demanding that taxpayers pay for a convicted murderer’s sex change.)

It is surprisingly expensive to defend against suits like Pearson’s and Lundahl’s, but the real scandal is that, as expensive as these frictions are, they pale in comparison to the expenses imposed by “legitimate” lawyers using similarly outlandish theories.  In Prohias v. Pfizer, a drug company spent a tremendous amount of money defending itself against a meritless lawsuit in the Southern District of Florida by well-organized trial lawyers alleging that the promotion of an off-label use that was later approved by the FDA as safe and effective violated consumer fraud laws, and seeking the entire amount of profits realized by all uses of that drug, without anyone alleging that they were injured personally or defrauded because the drugs didn’t work. Attorneys are willing to bring these suits because they have a diversified portfolio of cases: nine out of ten judges may follow the rule of law, but if the tenth goes along (and many left-leaning judges do permit such wild claims to go forward), it can be wildly profitable.

Take for example the recent Enron litigation, currently on appeal to the Supreme Court. Investors in Citibank and other banks were victimized twice in the Enron collapse: first, when the banks lost money when the Enron securities lost all value, and then again when William Lerach and other trial lawyers sued them seeking the entire $40 billion from the Enron collapse from Enron shareholders. Citibank had a choice of gambling its entire company on a jury getting it right, or they were offered “insurance” by Lerach’s willingness to settle for pennies on the dollar—which still cost Citibank investors $2 billion, just as it would have cost the Chungs $12,000 if Pearson had been rational enough to settle for extortion rather than delusional demands of millions. (Note that if Lerach had a legitimate case against Citibank, he had no business settling it for 5% of the value he claimed it had.) Merrill Lynch, on the other hand, defended itself, and was vindicated when the Fifth Circuit Court of Appeals threw out the case, though it’s now being appealed to the Supreme Court.

Pro se cases can be amusingly absurd, and they are wasteful when courts don’t do more to screen them early, but they are symptomatic of a much larger problem than they themselves present. In the context of the hundreds of billions of dollars wasted in the justice system, they are not a big-ticket item, which is why the Association of Trial Lawyers of America is willing to throw the delusional pro se Pearson under the bus and ask for his disbarment, even as they defend equally ludicrous lawsuits.

Image credit: Photo by flickr user Vasto.

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