Judges are getting increasingly worried about litigants usng suits to blackmail opponents into knucking under, rather that absorbing what could be enormous legal bills.
Federal judges recently have rewritten their rules, for instance, to make clear that a lawyer is not merely a hired gun but is someone with a personal responsibility to file only meritorious cases.
Last month, the U.S. Court of Appeals in San Francisco took the toughest stance yet on making losing plaintiffs dig deep into their pockets for bothering opponents.
The Feb. 27 ruling came in Rickards v. Canine Eye Registration Foundation, an arcane dispute among two groups of veterinary ophthalmologists. But it will affect defendants in many other cases. Not only had the foundation's opponents lost their bid to have its policies declared a violation of the antitrust laws, but they also lost when the foundation turned around and called the original suit itself an antitrust violation.
Moving the debate into the antitrust arena is economically significant because any damages won under those laws automatically are trebled. So the foundation, which spent more than $400,000 defending the case, stands to collect more than $1 million in damages.
There's little dispute that the original suit, like much litigation, was intended to injure competitors. But because access to the courts is so important, the Supreme Court spelled out 15 years ago that the act of filing a suit is immune from antitrust attack unless the litigation is a sham, intended not to win points in court but merely to harass a competitor.
Generally, the courts will call a case a sham if it is one of a string of suits, filed even after similar complaints have been tossed out of court. But a single case can be a sham -- and therefore unprotected -- if it is part of a broader pattern of anticompetitive activity.
The majority in the Rickards case did not rewrite those rules. But they did interpret them in a way that gives defendants broad new powers to fight back, partially because the decision requires so little beyond a single suit as evidence of a pattern of attack.
In this instance, the only other act cited was an attempt to get veterinary ophthalmologists to boycott the foundation's program -- which caused the foundation no injury at all. But even more important, the original antitrust case was not at all flaky. The foundation's own lawyers had warned it that its policies raised antitrust questions.
In other cases, courts ruled that:
*Asbestos producers can be denied the kinds of defenses that other manufacturers can use in product liability suits. The majority of the judges at the U.S. District Court in Trenton approved a state ruling that companies turning out asbestos products cannot introduce into tort suit trials evidence that they had no way of knowing of the danger of the substance when they marketed goods in the 1940s and 1950s.
The judges noted that the special circumstances surrounding asbestos litigation, including the fact that the injury shows up years after exposure, make it especially difficult to show which corporate management knew what in what year. (In re asbestos litigation, Feb. 14)
*A state cannot regulate the price for which refiners sell their gasoline. That is what Georgia had been doing, through a law that forbade sales at a wholesale price to distributors who also channeled some of their supply directly to motorists.
A service station owner tried to invoke the law because he was being forced to buy gasoline at 3.5 cents a gallon above the wholesale price, while the wholesaler also was selling through a nearby outlet by paying a commission that for some grades was only 2 cents a gallon.
But the Georgia Supreme Court threw out the underlying law, saying that the state could regulate prices only in an industry "affected with a public interest" and that gasoline retailing did not qualify. (Texaco v. Reeves, March 4)
*To a borrower, $24 may make some real difference. The U.S. Court of Appeals in Atlanta held that it was a violation of the Truth in Lending Act for a finance company not to have told a customer that it kept some unearned interest on one loan when it made a second loan used partially to pay off the first.
Because the first loan was paid off early, the finance company rebated some interest paid, but rounded it so that it was actually $24 less than the customer had coming. Looking at the $24 as extra interest on the second loan, it would have raised the interest rate a bit more than one-tenth of 1 percent.
The finance company said the amount was too small to constitute a violation. But the appellate judges, while agreeing that some amounts might be too small to worry about, held that $24 was enough to be of significance to some reasonable customers. (Steele v. Ford Motor Credit, March 3)
*Being left-handed may be a social handicap, but it is not the kind of economic handicap that Congress had in mind when it passed the Rehabilitation Act in 1973. That law bars discrimination against handicapped people in employment in the government or by those doing business with the government. But it cannot be stretched to reach a claim by a postal worker that he was fired because he is left-handed, the U.S. Court of Appeals in New Orleans decided.
The lawmakers really meant to combat discrimination against those with an "impairment," the judges explained, and left-handedness simply is not included in that definition. (De La Tores v. Bolger, Feb. 5)