and thus, the proportion of cases actually dismissed did not really change.
Plaintiffs’ lawyers in many actions take cases based on a contingency fee. That is, the lawyer only gets paid if the plaintiff collects a judgment or a settlement. Whether the lawyer will take the case is a function of how much is likely to be collected (D) and how many hours (H) are necessary to obtain this collection. Inherent in this calculation is some marginal revenue (or hourly rate) that the attorney demands that is represented by attorney labor supply (ALS).
ALS=f(D,H)
The amount that is likely to be collected (D) is a function of prudent attorney decisions (A) and what the case is worth (W). W is likely a probability distribution.
D=f(A,W)
A is an upward sloping marginal cost variable. As litigation proceeds, there is an increasing chance of making a mistake, since there is progressively more happening as described in the sections below. Accordingly, there are two different ways to approach civil litigation. In the first model, the attorney simply files a complaint and attempts to negotiate a settlement. In the second model, the action proceeds through discovery, but typically settles before trial.
The issue for a manager is that some seemingly impoverished person is suing the firm for what seems like a trivial matter. The manager may wonder what lawyer would take such a weak case. The answer is that the lawyer is hoping the manager will settle early and not go into the discovery phase. Heightened pleading standards actually make this more difficult for the attorney but at the same time, the investigation required to make the complaint makes settlement more likely. Studies show these two effects cancel one another out.17
The Discovery Phase
After a motion to dismiss fails, the defendant submits an answer that provides either an affirmative defense or claims that the plaintiff is simply wrong and denies the allegations. Either way, discovery begins.
Discovery is a process of exchanging information between parties in order to gain information about the facts and circumstances of the case. That information determines whether the facts of the case demonstrate that a genuine dispute exists between the parties. Where there is no genuine issue of material fact, a party can move for summary judgment. If granted, summary judgment can end the case at the close of discovery.18
There are primarily five avenues in which parties exchange information. The first is initial disclosures. All details related to the case: witness identification information, damage calculation, and experts intended to be called as witnesses, need to be disclosed up front.19
Parties can depose witnesses. Typically, there is an oral examination of a witness under oath that is recorded by a court reporter. Absent an extenuating circumstance, a witness may only be deposed once per civil action.20 Parties can submit up to 25 written questions, called interrogatories, to one another and ask for a written response under oath.21 Parties can submit requests for production of documents or other physical evidence to be examined. A party receiving such a request must respond within 30 days.22 Finally, a party can request another party to either admit or deny facts, the application of law to facts, or the genuineness of documents produced. Again, there are 30 days to respond.23
At the close of discovery, the parties either have an idea of what settlement will be worth, or one side may believe that the other has no case at all. Summary judgment is granted where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.24 The discovery stage is substantially more expensive than the pleading stage, but not nearly as expensive as the trial stage.
Case Problems
Liberty Lobby sued Jack Anderson, publisher of Investigator Magazine, for defamation. Investigator Magazine had published stories claiming Liberty Lobby was a neo-Nazi group. Anderson moved for summary judgment stating that the evidence in discovery failed to show that Anderson had acted with actual malice by clear and convincing evidence. Liberty Lobby responded that as long as evidence existed, a jury could use it to determine whether actual malice existed. How much evidence must Liberty Lobby produce to have summary judgment denied?25
George Vais sold his firearms under the trademark “VAIS.” Vais became sick, sold his business to Ronald Bartlett, who started Vais Arms, Inc. and then moved to Greece. Six months later, George felt better and moved back to the United States, where he started up his firearm business again. Ronald sued George for trademark infringement, stating that George had abandoned the mark “VAIS” when he sold the business and moved to Greece. To show he did not abandon the mark, George submitted a single personal affidavit stating that he intended to return to the United States and use the mark and thus the mark was not abandoned. Is George’s declaration enough to create a genuine issue of material fact and avoid summary judgment?26
Under the Microscope—The Effects of Aggressive Summary Judgment
Returning to the matter of the trial lawyer operating on contingency, the focus now shifts to the view of the manager being sued. The manager has a singular focus—minimizing cost. Litigation defense costs generally do not add value to the firm in nearly the quantity of selling goods and services if these expenses offer any benefit at all. To the contrary, litigation defense costs drive up overhead costs and thus drive up the contribution margin necessary to put products on the shelves.
In Samuel Issacharoff & George Loewenstein, Second Thoughts About Summary Judgment, 100 Yale L.J. 73, 88–91 (1990), the authors demonstrate that aggressive use of summary judgment drives up costs for plaintiffs’ attorneys and lowers settlements. Accordingly, the manager facing a lawsuit that cannot be disposed of on a motion to dismiss but can be vanquished on a motion for summary judgment is, in a macro perspective, better off. This is because Plaintiff’s attorneys would take fewer cases that are not likely to result in adequate payment.
The question then becomes how exactly does one discern which cases have enough merit to survive a motion to dismiss and which cases have enough merit to survive a motion for summary judgment? That question is pursued in detail throughout this monograph. As various causes of actions are explored, there is an emphasis on the quantum of proof necessary to overcome these motions.
The Trial Stage
At a high level, there are two different kinds of trials, a bench trial and a jury trial. A jury trial must be demanded within 14 days of raising a claim in a complaint.27 U.S. Const. Amend VII provides that a jury trial is only available for “suits at common law, where the value in controversy shall exceed twenty dollars.” Suits at common law are usually defined as those matters for which a jury trial was offered in 1798. For example, tort liability is a matter of common law. Contract interpretation is a matter of equity. Contract breach and damages are matters of common law.
In a jury trial, the process for selecting jurors is known as voir dire. This is a pair of French verbs literally translated “to see to tell.” A little is lost in the translation; the Latin root is “verum dicere,” which means “tell the truth.” Potential jurors are asked a series of questions by attorneys for all sides and possibly the judge to which they must respond
