Tort and retort: should we make litigants pay for the court cases they lose? - includes reply article

Washington Monthly, May, 1993 by Anthony Lewis, Charles Peters

In a response to a proposal to reform the legal system published in a recent issue of this magazine, Anthony Lewis lays out the argument against forcing losing parties to pay winners' legal fees in civil cases. Charles Peters' reply follows.

Critics of our civil justice system argue that the American economy is burdened by frivolous lawsuits and inflated damage awards. They say they have a cure for the disease: Make the losing party in any civil case pay the winner's legal fees. The British do it that way, they argue, and look at how much less litigious a society theirs is.

The fee-shifting idea, as it is called, has won much support in recent years. It was at the heart of Dan Quayle's proposals for "tort reform." Charles Peters, editor in chief of this magazine, put it at the top of his list of "eighteen cost-free steps to a better America" (see "No Dollars, Common Sense," December 1992). If faced with the prospect of paying both sides' lawyers' bills, Peters said, plaintiffs would not bring frivolous suits and defendants would not use delaying tactics to prolong cases they know they will eventually lose.

It seems such a simple solution. But the consequences would not be as advertised--not in the real world. Consider a real case: the litigation between Robert Manning, writer and former editor of The Atlantic, and Mortimer B. Zuckerman, the real estate and publishing tycoon. Manning describes the case in his recent autobiography, The Swamp Root Chronicle.

Zuckerman bought The Atlantic in 1980 for $3.6 million, to be paid in four annual installments. He gave Manning a contract binding him to remain editor for up to five years and promising him pension payments. But shortly after the deal was made, Zuckerman removed Manning as editor and announced that he would make no more payments to Manning and the others who had sold their shares in the magazine to him. He said he was refusing to pay because the true financial state of The Atlantic had been concealed from him. The others, including the principal former owner, Marion Campbell, sued Zuckerman in federal court for the money owed. Manning could not, because he, like Zuckerman, was a citizen of Massachusetts at that time. He sued in a state court.

Five years passed--years of frustration for Manning. Zuckerman's lawyers used every conceivable tactic to delay the case. Manning could not possibly pay for the legal work needed to keep up with them, although he stayed in the game with financial help from Campbell. Then Manning turned 65. Under Massachusetts law, he was entitied to a speedy trial. The trial was set for Nov. 13, 1986, but on Nov. 12, Zuckerman's lawyers settled the case, agreeing to pay Manning every cent owed him for his Atlantic shares, plus five years of withheld extra pension payments and interest.

Now suppose the British rule, which shifts the fee to the loser, had been in effect. Supporters of the British rule would no doubt argue that Zuckerman would have calculated the possibility of having to pay Manning's legal bills as well as his own, and would therefore have called off his lawyers and settled the case much sooner. That, however, is nonsense. Zuckerman had very deep pockets, and he could deduct all his legal bills. The amount of money at stake in the dispute with Manning was peanuts to him. For whatever reason, he had decided to stick it to Manning. The notion that he would have given up for fear of having to pay Manning's legal bills is laughable.

But if you look at it from Manning's side, fear would have been overwhelming. He was already vastly outgunned in the finances of the litigation and was able to keep fighting only by virtue of Campbell's generosity. Would that--could that--have continued if there had been a risk of having to pay the undoubtedly enormous fees of Zuckerman's lawyers? And there always is a risk. After all, no one can be absolutely certain how a jury will react.

The lesson is clear: A plaintiff of modest income would face far worse odds against a rich defendant under the British rule. And the same is true for defendants of modest means, as is shown by the case of Immuno A.G.v. Moor-Jankowski.

Immuno, a multinational company based in Austria, planned to conduct hepatitis research using chimpanzees captured in Sierra Leone. Dr. Shirley McGreal, chairwoman of the International Primate Protection League, wrote a letter of protest to the editor of the Journal of Medical Primatology, a specialist publication with a circulation of 300. She argued, among other things, that the plan might decimate the wild chimpanzee population because methods of capturing chimpanzees involved killing their mothers, and that any captured animals returned to the wild might spread hepatitis to other chimpanzees. In 1983, after the letter was published, Immuno brought a libel action against eight defendants, including McGreal and the editor of the journal, Dr. Jan Moor-Jankowski, who was also a professor at the New York University Medical School.

Over the next several years, Immuno conducted discovery proceedings that were burdensome and costly to the defendants. Eventually all of them except Moor-Jankowski settled with Immuno because of the prohibitive cost of litigating against a rich plaintiff. McGreal, confident that she had done nothing wrong, did not want to settle, but her insurance company, having already spent $250,000 on legal fees, agreed to pay Immuno $100,000 on her behalf. That left Moor-Jankowski alone, facing an Immuno charge for $4 million in damages. He, too, was covered by an insurance company, which agreed to carry on while he asked the New York courts where the suit was brought to dismiss it on summary judgment.