Loser Pays - or Whose "Fault" Is It Anyway: A Response to Hensler-Rowe's "Beyond It Just Ain't Worth It."(response to Article by Deborah Hensler and Thomas Rowe in This Issue, P. 137)

By Gross, Marc I. | Law and Contemporary Problems, Spring-Summer 2001 | Go to article overview

Loser Pays - or Whose "Fault" Is It Anyway: A Response to Hensler-Rowe's "Beyond It Just Ain't Worth It."(response to Article by Deborah Hensler and Thomas Rowe in This Issue, P. 137)


Gross, Marc I., Law and Contemporary Problems


MARC I. GROSS [*]

I

INTRODUCTION

While acknowledging the benefits of class actions, Professors Hensler and Rowe propose a fundamental change that would sound their death knell. [1] The authors urge consideration of a loser-pays provision modified from the "English" rule in two fundamental ways. First, a loser-pays rule would apply only to certified class actions. [2] Second, while defendants would be personally liable for any attorney fees and costs if they lost the litigation, only plaintiffs' counsel would be liable if plaintiffs lost. [3] In effect, the "Hensler-Rowe proposal" would eliminate consideration of whether a claim was brought in good faith, imposing instead a "no-fault" rule on unsuccessful counsel.

The Hensler-Rowe proposal is unwise for many reasons. First, it is premised on an assumption that "abusive" or "nuisance" class actions are widespread. The authors, however, cite no empirical support for this assumption. They rely only on anecdotal evidence provided mostly by corporate counsel. [4] In addition, the Hensler-Rowe proposal incorrectly projects that a loser-pays rule would only modestly increase costs for prosecution of any class action. [5] The authors ignore the substantial costs that counsel for both sides already must incur to prepare any complex case for trial and the adverse impact that doubling those costs would have on counsel's decision to pursue a claim.

The authors also presume a high degree of prescience on the part of plaintiffs' counsel, particularly regarding uncertain areas of the law. Federal circuit courts often disagree on applicable legal standards, and along with the United States Supreme Court often issue split decisions, yet the Hensler-Rowe proposal would automatically penalize counsel even if several members of a court may have agreed with their position. Similarly, the Hensler-Rowe proposal ignores the uncertain nature of litigation, where jury verdicts for plaintiffs may be reversed on motions for judgment notwithstanding the verdict and appeals. The automatic "costs-follow-the-event-rule" [6] proposed by Professors Hensler and Rowe fails to account for unsuccessful cases with significant merit. In fact, if the Hensler-Rowe proposal were adopted, a substantial number of potentially meritorious claims would not be pursued at all. Moreover, attorneys who file class actions would face enormous pressure to settle prematurely rather than risk aut omatic sanctions, effectively placing counsel in conflict with the class they represent.

Hensler and Rowe discuss at length alternative solutions to the perceived problem of abusive class action suits. [7] The alternatives, which involve greater judicial scrutiny of settlements and fee awards, are well-considered and warrant further consideration. Another potential solution not addressed by Hensler and Rowe is mandatory consideration of Rule 11 sanctions at the conclusion of any class action, a remedy Congress imposed on securities fraud cases in the Private Securities Litigation Reform Act of 1995 ("PSLRA"). [8] As discussed below, Congress, when considering the PSLRA, wrestled with the same issues considered by the authors, and reached a far less draconian resolution. Rather than radically change the landscape of class action litigation, as suggested by Hensler and Rowe, the courts should instead apply heightened standards of scrutiny for settlements and fee awards. [9]

II

DISCOURAGING MERITORIOUS CASES

The fundamental problem with a loser-pays proposal is that it would chill counsel from pursuing cases involving potentially legitimate claims where success is uncertain. For example, the facts of a case may satisfy the legal standard of one jurisdiction, though not a second jurisdiction; in a third jurisdiction, the standard may be undecided. The Hensler-Rowe proposal also presumes that counsel can gauge accurately the strength or weakness of a claim at an early stage of the litigation without access to all of the discoverable facts.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Loser Pays - or Whose "Fault" Is It Anyway: A Response to Hensler-Rowe's "Beyond It Just Ain't Worth It."(response to Article by Deborah Hensler and Thomas Rowe in This Issue, P. 137)
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.