The Nuisance Settlement 'Problem': The Elusive Truth and a Clarifying Proposal
60 Pages Posted: 28 Aug 2007 Last revised: 5 Jul 2008
Many analysts have studied nuisance-value settlements and the disruption they pose to the administration of civil justice in the United States. Concerns about litigation extortion have been expressed. Economic models for why nuisance litigation occurs have been offered. Solutions to the crisis have been proposed. Despite this attention, the surprising truth is that actual proof of a nuisance settlement problem simply does not exist. For reasons such as settlement confidentiality, this lack of empirical evidence is not likely to change any time soon. The absence of reliable data has consequences for legal reform. Without an accurate measurement of the impact of nuisance litigation, crafting solutions proportionate to the problem becomes all the more difficult. Because the perception of a litigation crisis stands far ahead of the proof, there is a significant danger that proposals aimed at curbing nuisance litigation will overreach, causing unintended effects.
Still, there is progress to be made. Ultimately, whether a particular plaintiff intends to abuse the legal system by filing a meritless claim comes down to this inquiry: what did the plaintiff know and when did the plaintiff know it? To aid in answering this question, this Article proposes a five-part test for determining nuisance intent. The test focuses the nuisance analysis on how a plaintiff acts to determine what that plaintiff actually believes. It is not enough to look at the face of a complaint and try to divine conclusions about the plaintiff's state of mind. Something more is needed. The test I propose aims to provide that something more. On the deterrence side, I then propose the Nuisance Litigation Sanctions Act, which combines the nuisance intent test with a number of small but important procedural changes designed to heighten the ability of defendants to seek relief against nuisance filings.
Keywords: nuisance settlement, frivolous lawsuit, frivolous litigation, torts, class actions, litigation
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