1997 Letter to Senator Orrin Hatch Re: Judicial Improvements Act

By G. Michael "Mike" German

Advisory letter concerning proposed legislation re: judicial forum shopping, amendment of FRCvP 68 offers of judgment as part of Tort Reform, reform of bankruptcy laws and Legal Services Corporation.

The Honorable Orrin G. Hatch
UNITED STATES SENATE
Washington, DC 20510

Re: Judicial Reform Legislation

Dear Senator Hatch:

It was with great satisfaction that I read a recent report in the legal press of your taking the initiative to rein in those federal judges who have overstepped their bounds by overturning voter initiatives such as California's Proposition 209, which would have ended affirmative action in this state had it been allowed to become law. As you know, San Francisco U.S. District Chief Judge Thelton E. Henderson enjoined operation of Prop 209 last December in a highly controversial display of judicial legerdemain facilitated by the ACLU's creative use of "related case" procedure, a matter covered not by the Federal Rules of Civil or Criminal Procedure, but by each District Court's Local Rules. See, e.g., ND of CA LR 3-12. As you may not know, Log Cabin Republicans of California, the largest statewide organization of Log Cabin Republican clubs in the nation and whose General Counsel it is my privilege to be, supported passage of Prop. 209 by an even larger margin than did California's voters, actively campaigned to ensure its passage and will be filing an amicus curiae brief to reinstate it as the law.

To my understanding there are currently pending at least two proposals designed to end both the judge and forum shopping that usually accompany challenges to voter-approved initiatives. First is permitting each party to litigation one peremptory challenge to the federal judge assigned a case, as is now the practice in most state courts. While this idea has merit, it also suffers, as several conservative colleagues have informed me, from encouraging more of the judge shopping already rife. Second is Congressman Sonny Bono's proposed legislation requiring assignment of cases challenging voter initiatives to a three-judge court, as is now done in apportionment cases, per 28 USC §2284. This idea disallows the judge shopping possible under peremptory challenges but carries with it the potential for delaying case resolution that already accompanies cases assigned to three-judge panels.

I respectfully offer for your consideration a third alternative designed to firmly fix both venue and who will preside over challenges to voter initiatives without risking either increasing judge or forum shopping or allowing for manipulation of local related case rules: adoption of a federal "best venue" rule. In those states where best venue rules apply, venue may be proper in several jurisdictions but is deemed most proper in one court to limit forum shopping. In our situation, a federal best venue rule would require that any challenge to a voter initiative would be required to be filed in the US District Court embracing the state capital. This would determine from the outset the sole court in which the challenge could be filed and would foreclose shopping among districts. Choosing the District of the state capital makes sense since the state attorney general is always located there. Prejudice to the plaintiffs is unlikely, given that their counsel, public or private, will likely have an office there or nearby as well.

With a case thus bound to be filed in a single, ascertainable district, the only chance to undo the random assignment to a judge the case receives upon its filing would come from manipulating related case procedure, as occurred here in San Francisco with Chief Judge Henderson. It is therefore necessary to limit related case procedure by either eliminating it entirely, which could lead to inconsistent results and judicial inefficiency, or rein it in through incorporation into the Federal Rules, which would then preempt any local rules. FRCvP 42, dealing with consolidation, addresses a similar aspect of this issue and may serve as the basis for such a law. Whatever approach is utilized, the focus must be on preventing one judge from arrogating to her or himself the power to decide both that a cases is "related" and that she or he is the right judge to hear it through to resolution. As an added protection against improper relation of cases, a statutory right of immediate appeal could be made available, akin to that already applicable to interlocutory appeals under 28 USC §1292.

As with all the above suggestions, a combination of individual options may be advisable. Whatever the approach, there is at least as much room for ending abuses of the judicial system as there now exist the opportunities for unscrupulous litigants to continue to do so.

A second issue within your purview as Chairman of the Senate Judiciary Committee is the "tort reform" legislation certain to reappear in this Congress. I respectfully submit that there is no better time than now to amend Federal Rule of Civil Procedure 68 to allow plaintiffs and cross-complainants to make statutory offers of judgment, as defendants are now permitted to do, in order to spur settlement. If we are seriously interested in streamlining the litigation process and keeping it fair at the same time, there is ample reason for making defendants, as well as plaintiffs, choose whether to continue contesting clear liability cases or to settle them early on, lest penalties for not settling later apply.

Thus, if a defendant upon whom such a plaintiff's offer is served fails to accept it, and the plaintiff later goes on to recover at trial at least as much as he offered under FRCvP 68, that plaintiff should recover interest on the entire judgment - inclusive of special, general, and punitive damages - at an enhanced rate (say, 10%, a prime+ factor or the higher of the two) from the date the offer was first made. Furthermore, to the extent that such a plaintiff might not recover all of the costs he incurred in prevailing in such a trial (e.g., expert witness fees), he should be permitted to recover those as well, as defendants currently can under FRCvP 68. Both penalty "sticks" are directly related to the settlement "carrot" and will surely make defendants think just as hard about settling a case as federal plaintiffs have had to when confronted with Rule 68 offers since instituted in 1948.

California's analogous statute, Code of Civil Procedure §998, has proven an effective means of encouraging settlements. The only caveat I would add is not to exclude the US and state or local governmental entities or employees from its operation. Experience, particularly in civil rights cases, has shown that sparing the interest rod from public entities or employees has spoiled their incentive to settle and needlessly drags out negotiation in even the clearest of liability cases until the eve of trial, by which time the plaintiff is fully prepared to try his case. It is exactly this "sporting theory of litigation" that we must eliminate in order to achieve real legal reform, whatever the forum.

Third, our bankruptcy laws remain entirely too permissive and continue to aid and abet too much frivolous litigation. In one case litigated several years ago, defendants consciously evaded service of process and were sanctioned by the state court for doing so. Later, their lawyer failed to respond to discovery and incurred further sanctions for his neglect. Undeterred, he convinced his clients to file bankruptcy, which then stayed the state case - and the sanctions assessed against him and his clients. While it might be thought that such sanctions are not dischargeable in bankruptcy by operation of 11 USC §523a7, lenient court decisions have needlessly muddled the matter and have given protection where no protection is due. (See, e.g., Re: Corbly (SD: 1986) 61 BR 851, and its discussion of debts "to uphold the dignity of courts.") Legislation making all fines, sanctions, court costs, attorneys fees, penalties and assessments neither dischargeable in bankruptcy nor subject to its automatic stay provisions would close this loophole and discourage debtors - and their counsel - from seeking protection in bankruptcy when confronted with their own malfeasance.

Finally, a serious look needs to be taken at the role the Legal Services Corporation has played in contributing to these problems in our system of justice. Too often, local legal aid offices funded with LSC grants engage in purely dilatory and frivolous litigation, usually under the guise of pro bono work, which serves no good purpose at all. For example, in San Francisco and wherever such organizations are found, landlords must incur expensive attorney's fees for full trials to evict defaulting tenants, when those tenants, who often have lengthy criminal records as did the last one I prosecuted, are given representation free of charge to them but at considerable cost to the taxpayers and the courts. Eliminating the LSC once and for all will end this problem.

Thank you for taking the time from your busy schedule to consider these matters. Trusting in your informed judgment throughout this Congress, I wish you well in your efforts and remain

Very truly yours,

G. MICHAEL GERMAN

General Counsel, Log Cabin Republicans of California
Member & General Counsel, San Francisco Republican
County Central Committee