The Texas House of Representatives this week has passed a bill that is being called the “loser pays” bill. Proponents of this bill are touting the necessity of the bill by misleading the general public into thinking that this bill is only aimed at “frivolous” lawsuits. The goal of the bill, according to those that support it, is to “make those who file frivolous lawsuits responsible for paying the defense costs of the innocent defendant.” However, this bill does much more and, if passed, will likely close the courthouse doors for many Texans and small businesses that operate in Texas.
As part of the “tort deform” of 2003, laws were passed that mandated that if a plaintiff (the person bringing the lawsuit) turns down a settlement offer and later gets a jury verdict that is less than 80% of the settlement offer, the plaintiff must pay the other side’s legal costs from the date of the offer. The goal was clear – force plaintiffs to settle rather than have their day in court, and punish the plaintiffs that receive less from the jury than was offered in settlement. This new bill has a much more nefarious purpose, and will likely have a more drastic effect.
The “loser pays” bill is also intentionally misnamed. In a true loser pays system, the party that lost the lawsuit would have to pay the legal fees and costs of the party that prevailed. That is also known as the “English Rule.” This applies equally to both parties – plaintiff and defendant. Whichever party loses – that party has to pay for the other side’s costs and expenses. However, according to Governor Perry, “Texas needs a ‘loser pays’ component to our legal system, in which those who sue and lose are required to pay the court costs and legal expenses of those they sued.” Either Governor Perry doesn’t understand what loser pays means, or he, and other supporters of this bill, are intentionally trying to mislead Texans. This is what the law calls fraud.
This Texas bill is not loser pays; rather, this is “if the plaintiff loses, the plaintiff pays.” If the plaintiff prevails, this bill does not provide any authority that would require the defendant to pay the plaintiff’s legal fees and costs. Why not? If the defendant lost in a loser pays system, shouldn’t the defendant have to pay the plaintiff’s legal fees and costs? Logic and an understanding of the English language would say “absolutely.” However, Gov. Perry is not interested in being accurate in the description of the bill, he is interested in protecting defendants and, ultimately, insurance companies. Indeed, this bill is blatantly one-sided and clearly aimed at protecting the interests of the insurance companies – to the detriment of every Texas citizen. Make no mistake, this bill is aimed at intimidating people from invoking their Constitutional 7th Amendment right to a trial by jury. This is not aimed at frivolous lawsuits – it is aimed at all lawsuits and all Texans.