More discussion of Georgia’s new “stay of discovery” rule, frivolous lawsuits, “loser pays” rules, etc.

My learned colleague and fellow Atlantan, Jonathan Wilson, writing on the Manhattan Institute’s blog, has responded to my earlier comment about the "stay of discovery" provision of the legislation recently passed as HB 29.

I had commented earlier, in part, that the legislation as passed would prompt a "rash of frivolous motions to dismiss as a stalling tactic" but will eventually become "much ado about nothing." He responded that this was "an outcome that’s hard to dispute, although I seem to have missed the plaintiff’s bar using that argument in favor of H.B. 29 before it was passed."

In the spirit of friendly discussion, I would point out that no one has less use for frivolous lawsuits that a truly professional plaintiff’s lawyer. We have no desire to waste time and resources on trivial claims that we do not believe, at least in the beginning after some due diligence investigation and research, we would be glad to take to trial.

The bill that was eventually passed as HB 29, rolled together with another bill on service by email (which I supported in its final form after addition of appropriate safeguards), started out as Senate Bill 108.  As originally introduced, SB 108 included a vague "loser pays" provision that the party losing on a motion to dismiss would be assessed the defendant’s attorney fees.

The point I made in other discussions within the Bar, and that I was prepared to make in some detail at the Senate Special Judiciary Committee, was that SB 108 would not do anything significant that is not already possible under existing law. There are already five “loser pays” provisions in Georgia law, and trial judges can already stay discovery upon motion by a party.  

It appeared to me that the unintended effect of SB 108 could be to add another layer of delay, complexity and expense in litigation. 

The bill as introduced provided for an automatic stay of discovery when a motion to dismiss is filed, but no sanction against parties that exploit the automatic stay without substantial justification merely for purposes of delay.  Moreover, it appeared that many of the cases SB 108 sought  to address are filed by convicts and other unrepresented and sometimes unstable individuals, who would not be deterred by the legislation

When I arrived at the committee hearing, the Governor’s floor leader announced that the "loser pays" provision of the bill had been withdrawn on the same grounds that I was prepared to outline for the committee. Those provisions  would not have improved upon the five existing "loser pays" provisions in Georgia law.  Those are:

  • O.C.G.A. § 9-11-68, passed in 2005, provides for an award of attorney fees, expenses against a party that refuses to accept a settlement offer and at trial does not improve upon the rejected offer by at least 25%.
  • Also under O.C.G.A. § 9-11-68, a jury may award damages against a party whose claim or defense was frivolous.
  • O.C.G.A. § 51-7-80 through 51-7-85, passed in 1989, provides liability for making a claim or defense in litigation that is made with malice or without substantial justification.  That includes claims and defenses that are frivolous, groundless in fact or law, or vexatious, unless the claim or defense is withdrawn within 30 days after a demand to do so.
  • O.C.G.A. § 9-15-14, passed in 1986, authorizes a court to award attorney fees and expenses of litigation against any party that raises a claim or defense without substantial justification. This covers any “claim, defense, or other position with respect to which there existed such a complete absence of any justiciable issue of law or fact that it could not be reasonably believed that a court would accept the asserted claim, defense, or other position.”
  • O.C.G.A. § 13-6-11, which was included in the Code of 1863, provides for an award of attorney fees and expenses of litigation against a party who has acted in bad faith, has been stubbornly litigious, or has caused unnecessary trouble and expense.

The remaining provision of a ninety day stay of discovery when a motion to dismiss is filed was, I thought, also unnecessary. Trial courts inherently have all the authority they need to enter a stay of discovery for a wide range of reasons, including the pendency of a motion to dismiss. 

If I had been a legislator, I might have suggested a compromise provision based loosely on the Anti-SLAPP statute, O.C.G.A. § 9-11-11.1, which provides:

(d) All discovery and any pending hearings or motions in the action shall be stayed upon the filing of a motion to dismiss or a motion to strike made pursuant to subsection (b) of this Code section. The motion shall be heard not more than 30 days after service unless the emergency matters before the court require a later hearing. The court, on noticed motion and for good cause shown, may order that specified discovery or other hearings or motions be conducted notwithstanding this subsection.

However, the legislature adopted as a compromise a new OCGA Section 9-11-12(j), relating to answers, defenses, and objections in civil practice, to read as follows:

(j)(1) Stay of discovery. If a party files a motion to dismiss before or at the time of filing an answer and pursuant to the provisions of this Code section, discovery shall be stayed for 90 days after the filing of such motion or until the ruling of the court on such motion, whichever is sooner. The court shall decide the motion to dismiss within the 90 days provided in this paragraph.

(2) The discovery period and all discovery deadlines shall be extended for a period equal to the duration of the stay imposed by this subsection.

(3) The court may upon its own motion or upon motion of a party terminate or modify the stay imposed by this subsection but shall not extend such stay.

(4) If a motion to dismiss raises defenses set forth in paragraph (2), (3), (5), or (7) of subsection (b) of this Code section or if any party needs discovery in order to identify persons who may be joined as parties, limited discovery needed to respond to such defenses or identify such persons shall be permitted until the court rules on such motion.

(5) The provisions of this subsection shall not modify or affect the provisions of paragraph (2) of subsection (f) of Code Section 9-11-23 or any other power of the court to stay discovery."

As I wrote earlier, I expect some defense lawyers will file a bunch of frivolous motions to dismiss in order to stall discovery.  Good plaintiff lawyers will modify their initial discovery requests to include some specifically targeted at the basis of any motion to dismiss, and will follow up promptly by noticing depositions sharply focused on the grounds of any such motion and ask the court for the earliest possible hearing on the motion.  In a year or two it will be, as I pointed out earlier, “much ado about nothing.”

The existing “loser pays” provisions of Georgia law listed above allow plenty of room for recovery against parties who pursue truly frivolous claims and defenses in litigation. That they are little used may indicate that truly frivolous lawsuits, though we hear a lot about them, are not as common as some folks would lead us to believe. Or it may indicate that insurers recognize that 9-11-68 is a two-way street, and that to initiate its use is to play with fire.  Someone has suggested a policy of “no first use” regarding 9-11-68, analogous to “no first use” of nuclear weapons.

My hunch is that unfounded claims and unfounded defenses pretty well balance out.  But any seasoned plaintiff’s lawyer has quite a collection of frivolous claims that never made it to a courthouse because sensible plaintiff lawyers screened out of the system  The contingent fee system can be remarkably efficient at screening out cases that lack substantial merit if people go to a legitimate, experienced plaintiffs’ attorney who has absolutely no incentive to waste time and resources on frivolous cases. It is largely the "TV and billboard lawyers" who bring the nonsense cases.