Original Link: http://thinkprogress.org/2011/05/09/loser-pays-lawsuits/
By Travis Waldron
As ThinkProgress has reported, brothers Charles and David Koch and their corporate giant, Koch Industries, have played an extensive role in the corporate takeover of government, both at the state and federal level. This weekend, another of the Kochs’ projects surfaced in Texas, as the state’s Republican lawmakers rammed through a Koch-backed bill that would make it harder for consumers, workers, and small business owners to bring civil suits against corporations.
House Bill 274 — dubbed the “Loser Pays” bill — passed the state House Saturday with no amendments and no debate after Gov. Rick Perry (R) deemed it “emergency legislation,” rushing it to the top of the legislative agenda. Under the bill, those who sue corporations could be held responsible for the defendants’ legal fees if they lose the case — and in some instances, even if they win. If the court sides with the plaintiff, but awards a smaller amount than the defendant offered in a potential settlement, the plaintiff could be forced to pay the defendant’s court costs, even if those costs exceed the amount awarded to the plaintiff. For this reason, state Rep. Craig Eiland (D) wanted to rename the bill the “loser-pays-but-sometimes-the-winner pays-too” bill.
The law could intimidate potential plaintiffs into avoiding lawsuits against corporations, because they could be on the hook for massive legal fees if the court ultimately doesn’t side with them.
Not surprisingly, among the bill’s biggest proponent are large corporations, including Koch Industries, Chevron, and G.E., which all lobbied on its behalf. Also backing the bill is the Texas Public Policy Foundation, a non-profit front group funded largely by corporations, including Koch Industries and three other Koch-owned companies: Georgia Pacific, Invista, and Flint Hills Resources.
These companies stand to gain tremendously from the legislation, as it could both reduce their legal fees in specific cases and have a chilling effect on lawsuits more generally. And Koch’s business practices have made them a frequent target of expensive lawsuits. In Texas, for example, Koch’s refinery in Corpus Cristi has a history of leaking Benzene, a hazardous chemical linked to cancer, and was indicted in 2000 on 97 counts for violating EPA rules.
As the public interest group Texas Watch found, Florida experimented with its own version of the law, only to realize its ineffectiveness and abandon it just five years later:
As the Duke Law Journal notes, proponents are “diplomatically silent about Florida’s unsuccessful experience.” A former president of the nation’s oldest association of civil defense lawyers put it bluntly: “They tried it in Florida, and it was a disaster.”
The bill’s proponents also claim that the law is needed to curb frivolous lawsuits that are supposedly plaguing the Texas court system. But Texas already has sanctions regarding frivolous lawsuits, including the repayment of attorney fees, and a recent study by the Baylor Law Review found that 86 percent of Texas judges did not believe additional regulations were needed.
Recent court proceedings in Texas provide a snapshot of exactly how a “loser pays” law could play out. Last week, the ultra-conservative Fifth Circuit Court of Appeals dismissed a lawsuit brought by a Texas cheerleader who refused to cheer for her alleged rapist and forced her to pay $45,000 in legal fees accrued by the school district she sued.
If Texas Republicans, Koch Industries, and other corporations have their way and HB 274 is signed into law, similar results will become much more common