by Timothy Sandefur
January 29, 2019
Ever since the NAACP’s
victorious courtroom campaign against segregated schools, public-interest
litigation has been a respected method of addressing social and political
wrongs. Whether it be taxpayers challenging the legality of government
expenditures, same-sex couples suing for the right to marry, or voters arguing
against restrictions on access to the polling place, public-interest litigation
plays a critical role in our constitutional system.
But thanks to a harsh,
hastily written rule imposed by the Arizona Supreme Court, citizens who ask
judges to decide such public-interest lawsuits face the risk of crippling
monetary penalties that unfairly punish them for exercising their legal rights.
That rule — Arizona Rule of Civil Procedure 68 — mandates that when a defendant
in a lawsuit offers to settle out of court, and the plaintiff disregards the
offer, the plaintiff must pay twice the defendant’s legal costs, including
hefty expert witness costs, if he ends up losing the case.
The rule was intended
to encourage people to compromise whenever possible in cases involving traffic
accidents, breaches of contract, or other arguments over money or property. But
it also applies to public-interest lawsuits against the government, in which
citizens simply ask courts to decide important legal questions. And the results
can be harsh. Just ask Mark Stuart, a Scottsdale taxpayer who sued the city
over its agreement to subsidize a private golf club with $1.5 million in
taxpayer funds. Stuart thought that violated the state Constitution, which
forbids government from giving public dollars to private companies, so he asked
a court to block the deal. He didn’t seek money damages—just a court order
vindicating his constitutional rights.
The city’s attorneys sent
him a “settlement offer”–drop the case, and call it a day. Stuart refused—but
he didn’t write out an objection as Rule 68 requires. So when he lost his case,
the court enforced the double-costs penalty, ordering him to pay the city more
than $68,000.
Such severe sanctions
are likely to frighten taxpayers away from challenging possibly illegal
government activity, and that’s bad for Arizona in the long run. Courts should
encourage private disputes to settle out of court, but public-interest cases
challenging government actions benefit everyone by resolving important legal
controversies. And settling such cases is often counter-productive, since it
leaves those questions unanswered and might encourage government to act
illegally in the future.
That’s why federal
courts use a different rule. They don’t impose costly attorney fee awards on
civil rights plaintiffs who lose their cases, unless the lawsuit was
“frivolous.” As the Supreme Court said in 1978, “assessing attorney’s fees
against plaintiffs simply because they do not finally prevail would
substantially add to the risks inhering in most litigation,” which would
“undercut the efforts of Congress to promote the vigorous enforcement” of the
law.
The court noted that
when the government violates the law, it should be punished — but when citizens
sue and lose, they’ve done nothing wrong and don’t deserve punishment except in
frivolous cases.
No other state inflicts
the kind of severe sanctions imposed by Rule 68. Most follow the federal model,
and Michigan specifically allows judges “in the interest of justice, [to]
refuse” to impose such penalties, meaning judges can decide in each case
whether the lawsuit was so baseless that the plaintiff should be penalized — or
whether the plaintiff, though wrong on the law, still made legitimate legal
arguments.
The Goldwater Institute
filed a
petition last week asking the Arizona Supreme Court to amend
Rule 68 to follow the federal or Michigan standards. In lawsuits that seek only
a legal ruling, courts shouldn’t inflict severe penalties on people who bring
legitimate complaints to court — and trial judges should be given the power to
decide for themselves whether a monetary sanction serves the interests of
justice. That strikes a wiser balance between the need to settle disputes — and
the need to resolve them.
Nobody likes lawsuit
abuse. But Arizonans benefit when vigilant taxpayers challenge potentially
unlawful government actions in court. Our laws should ensure that frivolous
cases are penalized, but conscientious taxpayers are not.
Timothy Sandefur is the Vice President for Litigation at the Goldwater Institute.
First appeared at the Arizona Capitol Times.
