Do advocates of more “loser pays” rules offer a solution in search of a problem?

Are people unaware of the “loser pays” sanctions that are already part of Georgia law?

As discussed in previous posts, Georgia already has five statutory “loser pays” rules, four of which passed in tort reform legislation during the time I have been practicing law, and one we have had since the Civil War. Georgia needs a sixth “loser pays” about as much as it needs a sixth law school at a time when graduates of the existing law schools have a really hard time finding

Brig. Gen. Thomas R. R. Cobb, father of Georgia’s first “loser pays” statute”

The oldest of the five “loser pays” rules in existing Georgia law has been in effect for nearly 150 years, having first appeared in the Code of 1863.

That Code was largely the work product of Thomas R. R. Cobb, son-in-law of Chief Justice Lumpkin and a foremost Georgia legal scholar of his day. He was a Confederate brigadier general who died at the Battle of  Fredericksburg only a couple of weeks before the Code for which he was largely responsible went into

tort of abusive litgation for frivolous lawsuitsBefore rushing into legislation to create yet another “loser pays” rule in Georgia law, it is useful to examine the five forms of “loser pays” rules we already have. I wrote earlier about OCGA 9-11-68 (offer of judgment / offer of settlement rule and frivolous claims and defenses rule) and OCGA 9-11-14 (no justiciable issue, delay, harassment).

The 1989 wave of tort reform legislation included O.C.G.A. §§ 51-7-80 et seq., which created a statutory tort of abusive litigation giving rise to liability against “any person who takes an active part in the initiation, continuation, or procurement of civil

Advocates of tort reform often call for “loser pays” legislation. Georgia already has five different “loser pays” rules. In earlier posts I have discussed OCGA § 9-11-68, enacted as part of tort reform legislation in 2005, which includes both the offer of judgment / offer of settlement rule and the frivolous claims and defenses rule.

O.C.G.A. § 9-15-14, enacted in 1986, provides for a motion for award of fees and expenses against a party that had asserted a claim or defense “that lacked substantial justification or that the action, or any part thereof, was interposed for delay or harassment, or

“Loser pays” is a popular theme among advocates of “tort reform,” many of whom may not understand what the popular political calls for “loser pays” or “tort reform” really mean in any detail. Perhaps some people who say they are for it do not understand that Georgia already has five “loser pays” rules that have been enacted in legislation over the years.

Yesterday I posted a summary of one of our “loser pays” rules, the offer of judgment under OCGA 9-11-68, which applies when a party rejects an offer of judgment or settlement and does not do at least 25%

We hear talk of another round of “tort reform” legislation including a “loser pays” rule. But some of the folks talking about it may not realize that Georgia already has five different “loser pays” rules.

One of the five forms of “loser pays” rules in Georgia is in O.C.G.A. § 9-11-68. Passed as part of the 2005 tort reform legislation, it provides for an award of attorney fees and 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%. See Smith v. Baptiste, 287

When the Georgia General Assembly passed Senate Bill 3 — the "tort reform" conglomeration — in February 2005, most of the legislators hadn’t even read the entire bill, most of its provisions were not discussed in any detail, and hardly anyone understood it. To say it had a lot of poor draftsmanship is an understatement.  I heard one prominent Republican legislator privately describe it has having been "written with a crayon."  Since then bits and peices of the legislation have been been held unconstitutional by trial or appellate courts, and more likely meet the same fate.  Increasingly, I hear legislators who voted for it in the rush of the moment saying things like, "we went too far," "we didn’t understand what was in the bill," etc. 

It will take a few years, but I predict that the problems with the bill will be largely repaired.  A cap on noneconomic damages in medical malpractice cases will likely remain, as the political support for it in the medical community is mighty strong.  However, as in California after it adopted such a cap in the 1970’s, we may see a requirement for financial disclosure by insurance companies to support premium rate increases.

Likewise, the replacement of "joint and several liability" with "proportional liability" will be politically difficult to change.  However, if the problems with the new rule are explained to legislators, perhaps there could be some modification.

The Daubert rule on expert testimony is here to stay, but the version of it in the State Bar’s proposed new Georgia Evidence Code makes more sense, both procedurally and substantively, than the self-contradictory scissors and paste job in S.B. 3.

The offer of judgment rule in S.B. 3 is such a miscarriage that I hardly ever hear of anyone actually using it.  I know that most of the insurance companies are afraid to use it in significant cases out of concern that it will be they rather than the plaintiffs who it will hurt.  It may take a couple of years, but I expect that a more sensible and workable version of the offer of judgment rule will be passed.

A lot of the other stuff that was included in S.B. 3 will bite the dust over the next couple of years.

I have begun to hear anecdotal reports of insurance companies using low offers of judgment effectively in small soft tissue injury cases. In those small cases and particularly with lawyers who handle high volumes of small cases, the intimidation factor provided by the new OCGA Section 9-11-68 can be substantial.
At the same time, I am not seeing or hearing of much use of offers of judgment by insurers in larger cases or in dealing with well established trial lawyers. In meaty cases with serious injuries or wrongful death, I am hearing rumblings that insurers and defense firms are concerned that the offer of judgment statute could cost them money, so they aren’t using it much at this point.
At the same time, I am beginning to hear reports of strong, well-established plaintiffs’ lawyers making well-reasoned offers of judgment early in cases, and coupling them with demands for prejudgment interest under the Unliquidated Damages Interest Act.

Senate Bill 3 says that the offer of judgment rule should apply to pending cases. However, a Florida case found that similar “loser pays” rule was substantive rather than merely procedural. See Timmons v. Combs, 608 So.2d 1 (Fla.1992) If followed in Georgia, that would exclude retroactive application in cases arising before the effective date of SB 3. See Polito v. Holland, 365 S.E.2d 273, 258 Ga. 54, (1988).

A litte over two months after the General Assembly passed Senate Bill 3, my extremely unscientific survey indicates that the new new Offer of Judgment rule in OCGA 9-11-68 is getting little use. We are not seeing the kind of massive and abusive use of this rule that many of us had feared. I have heard a number of defense lawyers and insurance claims professionals express concern that use of offers of judgment could come back to bite them, as their companies could wind up paying cash for plaintiffs’ attorney fees and litigation expenses.
Are we seeing the development of the sort of tacit understanding of “no first use” that some of us have been encouraging?