Memo to the General Assembly: Tell Them You Mean Business!!

There is always much discussion and debate in the political arena about job creation, especially in times like these. The regulatory and legal environment businesses operate in determines, in large part, if jobs are created. Generally speaking, business does better without rules and regulations that drive up the cost of doing business.

An important subset of that environment is the civil justice system. Courts are vital to society. They provide the forum through which citizens - and businesses - settle disputes in an impartial manner, guided by the law. For business, it is important that the rules by which the courts operate facilitate settlement of issues in an expeditious, fair manner.

It is important to note at the outset that Virginia has one of the best civil justice systems in the nation and is consistently ranked near the top among the states. Because we are near the top, many would argue that we should not even consider ways to make our good system better. To rest on our laurels in such a competitive economic environment, however, should not be an option. In fact, we should constantly be working to improve our civil justice system (and other components of our regulatory and legal environment) and make it even more hospitable to investment in the Commonwealth. Past success and accolades should not keep us from trying to go from good to great.

To that end, the Virginia Chamber of Commerce (full disclosure – I am an employee of the Chamber and one of their lobbyists) will be supporting two pieces of legislation during the upcoming General Assembly session. One bill would allow the use of depositions in a motion for summary judgment. The other would create in Virginia an offer of judgment process similar to that practiced in the federal courts.

Unless you are an attorney, you probably are asking, “What in the heck does this all mean?

The best way to illustrate how these bills would work is to use an example. Let us assume that Betty Businessperson owns a small retail business in downtown Martinsville. And, let us further assume that Pete Plaintiff has filed suit against her, claiming that he was injured on her premises as a result of her negligence.

The type of cases in which summary judgment or offer of judgment might come into play differ based on what comes out during discovery, as attorneys for the defendant and the plaintiff examine evidence and question witnesses.

To illustrate how allowing depositions to be argued as evidence in support of a summary judgment motion would be beneficial, let us assume that through depositions taken during discovery, it becomes clear in the opinion of Betty’s attorney that Pete’s case is without any merit and in fact frivolous. In 49 other states, Betty’s attorney could file a motion for summary judgment and use the deposition(s) from discovery as supporting evidence for that motion. The judge would then rule on the summary judgment motion. In Virginia, however, Betty’s lawyers cannot do so unless Pete’s lawyers agree to allow that deposition to be used, an unlikely event. So, in Virginia courts, Betty is left without a practical summary judgment alternative and must either go forward, bearing the potential costs of litigating a frivolous case or consider accepting some sort of settlement, even if she is not a fault.

To illustrate how the offer of judgment process works, let us assume that during discovery, it becomes clear to Betty’s attorneys that she has some liability. Rather than going to trial she wants to make an honest offer to make Pete whole. As it stands, Pete can simply ignore the offer and go to trial. What might happen is that a court would rule in Pete’s favor, award him damages less than or equal to what he would have gotten from Betty’s offer. In other words, Betty offered in good faith to make Pete whole, and Pete refused, causing Betty the expense of trial when she was fully prepared to do the right thing. What the offer of judgment legislation would do is require Pete to respond to the offer. If he accepts it, then judgment is entered and the case is closed. If not, the case proceeds to trial. If Pete prevails, but does not obtain a judgment more favorable than Betty’s offer, he would have to pay Betty’s costs of litigation. This is similar to the system used in federal courts with one exception: this proposal would provide for a much wider definition of costs than the federal system, thereby providing greater incentives for settlement prior to litigation.

Taken together, these bills would make plaintiffs (and trial lawyers) think twice about filing frivolous lawsuits or going forward with cases in which defendants have made solid, good-faith offers. That would, in turn, save the taxpayers money by cutting down on litigation and the public costs associated with operating the court system, and it would cut down on the potential costs associated with needless litigation for Virginia businesses, thereby creating even greater incentive for investment in the Old Dominion.

2 Responses »

  1. RE: Memo to the General Assembly: Tell Them You Mean Business!!

    How about loser pays court costs legislation as the English have? Also, allowing judges to fine attorneys for bring frivolous lawsuits and suspending or revoking loawyers licenses to practice for multiple frivolous lawsuits.

  2. How about the adopting the English rule that loser pays court costs and/or legislation allowing a judge to fine an attorney for revoke the license to practice for multiple frivolous lawsiuts.