Rule 82 and Tort Reform: an Empirical Study of the Impact of Alaska's English Rule on Federal Civil Case Filings

• Publication year: 2012

§ 29 Alaska L. Rev. 1. RULE 82 and TORT REFORM: AN EMPIRICAL STUDY OF THE IMPACT OF ALASKA'S ENGLISH RULE ON FEDERAL CIVIL CASE FILINGS

Alaska Law Review
Volume 29
Cited: 29 Alaska L. Rev. 1

RULE 82 and TORT REFORM: AN EMPIRICAL STUDY OF THE IMPACT OF ALASKA'S ENGLISH RULE ON FEDERAL CIVIL CASE FILINGS

Douglas C. Rennie ^[*]

Abstract

Alaska is the only American state that employs a variation of the "English Rule," whereby the losing party in a civil case must pay the prevailing party's attorneys' fees. In recent years, advocates of tort reform have praised Alaska's Civil Rule 82 as a model for tort reform to help rid the overburdened courts of low merit claims. But does Rule 82 really reduce meritless litigation? This study compares civil case filings in the District of Alaska to a sample of other comparable federal district courts. Although filings in the District of Alaska were lower than the national average, they were indistinguishable from the remainder of the sample. Other measures also failed to demonstrate any significant differences between civil cases in the District of Alaska and the other districts. These results suggest that reformers looking to reduce meritless litigation should look elsewhere for model reform measures.

Introduction

Alaska has long been unique among American states as the only jurisdiction that follows the "English Rule," whereby the "loser" in a civil litigation must pay the prevailing party's attorneys' fees. ^[1] Other states follow the "American Rule," which presumes that each party will bear its own attorneys' fees. ^[2] Alaska's version of the "English Rule" is codified as Alaska Rule of Civil Procedure 82. ^[3]

Rising concerns about defendants being forced to settle frivolous lawsuits-particularly tort claims-in order to avoid litigation costs have led some commentators to propose adopting the English Rule in the United States. ^[4] As explained by one commentator, "[i]f one believes that there are a substantial number of what amounts to frivolous lawsuits in which a plaintiff obtains a settlement simply because of the defendant's concern about the costs of fighting the case, then fee shifting would probably serve to discourage suits of that type." ^[5] Perhaps inspired by the increased public interest in Alaska in recent years (a likely side effect of former Governor Sarah Palin's rising profile), some academic and media commentators have suggested that other states use Alaska's Rule 82 as a model for tort reform. ^[6] Indeed, this view appears to be gaining traction in some state legislatures. ^[7]

But does Alaska's "loser pays" rule really discourage meritless claims? This empirical study examines the rates of civil filings, tort filings, and other criteria regarding the civil cases in the United States District Court for the District of Alaska and compares them to data in a sample of federal district courts selected based on demographic, geographic, and legal similarities. The comparison shows that although Alaska's filing rates are lower than the overall filing rates for the nation as a whole, they are very similar to many courts in the sample. This suggests that Rule 82 does not have a significant impact on civil filings in Alaska.

Of course, this is not the first study examining fee shifting, either in general or with respect to Rule 82 in particular. Yet, much of the prior research comparing the American Rule with the English Rule has been theoretical. ^[8] Alaska's rule has been the subject of significant scholarly commentary and studies, most prominently a comprehensive study led by Susanne Di Pietro and Teresa W. Carns in the 1990s. ^[9] However, efforts to compare the impact of the procedure in Alaska with other jurisdictions have been limited. Comparative studies examining fee shifting rules are generally handicapped by significant cultural, legal, and data keeping differences between nations and even states. ^[10] Given the common procedural background and statistical collection efforts, federal district courts provide an ideal data pool for comparison. This study examines filing rates over a longer, more recent period of time (the fourteen year period from 1997 through 2010) than prior studies, within a set of otherwise procedurally similar jurisdictions, within the same country. The results suggest that policymakers looking for a "magic bullet" to eliminate low merit litigation should look elsewhere. They also suggest that Rule 82 is presently fulfilling its more modestly framed intended purpose-providing partial compensation to the prevailing party without limiting access to the courts.

This Article is divided into four parts. Part I provides background on the debate over fee shifting, describes prior commentary and empirical studies, and reviews Rule 82 in detail. Part II describes the methodology for the empirical analysis. Part III describes the results. Part IV analyzes the implications of those results.

I. Background

This Part of the Article discusses the background necessary to understand the empirical data. The sections describe the English Rule and the American Rule, Alaska's Rule 82, the commentary and theoretical research on fee shifting, several significant empirical studies on fee shifting, and the hypotheses about the effects of Rule 82 on federal civil cases that follow from the prior research.

A. The English Rule and the American Rule

At common law, a prevailing party could not recover attorneys' fees from the loser. ^[11] In England, however, a prevailing party could recover attorneys' fees from the losing party as a matter of statute by 1607. ^[12] Most jurisdictions ^[13] have since adopted some variation of this presumption, which is commonly known as the "English Rule." ^[14] Under this system, the prevailing party will typically recover part, but not necessarily all, of their fees. ^[15] Recoveries in jurisdictions that follow the English Rule may range from one-half to two-thirds of actual attorneys' fees. ^[16] Policymakers have favored partial, rather than full, recovery of attorneys' fees in order to deter parties likely to succeed from unnecessarily prolonging litigation and to encourage settlement. ^[17] Fees are commonly factored into settlements in jurisdictions that follow the English Rule. ^[18]

The United States, however, is unique. ^[19] Under the "American Rule," the prevailing party is generally not entitled to collect attorneys' fees from the losing party. ^[20] This anomaly developed out of an absence of specific statutory authorization in the United States, in contrast to countries such as England. ^[21] The lack of a statute may have resulted from general hostility towards lawyers in colonial America and the fear that such a statute might provide some justification for their legal fees. ^[22] Despite being an aberration, the American Rule is generally considered to be "deeply rooted" in American "history and in congressional policy[.]" ^[23]

There are, however, exceptions to the American Rule in the United States. Congress and state legislatures have authorized the recovery of attorneys' fees, or "fee shifting," under many statutes. ^[24] Some of these statutes operate in favor of the prevailing party, regardless of whether it is a plaintiff or defendant. ^[25] This is frequently referred to as a "two-way" fee shift. ^[26] Many statutes, however, provide that only one party- typically the plaintiff-may recover attorneys' fees. ^[27] This type of law is known as a "one-way" fee shift, and it is the most common form of fee shifting in the United States. ^[28] Unlike two-way fee shifting, one-way fee shifting provisions are not policy-neutral and are typically designed to encourage suits that the legislature has deemed further public policy goals. ^[29]

Courts in the United States have also carved out exceptions to the American Rule, including situations where parties seek to recover a fund or property for others in addition to themselves, where parties willfully disobey court orders, or where the losing party has acted in "bad faith." ^[30] American courts have also typically honored contractual agreements to shift fees. ^[31]

Notably, cases in federal court based on diversity of citizenship jurisdiction have always represented a potential exception as well. As the Supreme Court has explained, a "state law denying the right to attorneys' fees or giving a right thereto, which reflects a substantial policy of the state, should be followed" in diversity cases absent a contrary federal law or court rule. ^[32] Deference to state fee shifting rules in diversity cases guards against forum shopping. ^[33] The diversity exception, however, has lost much of its "practical significance" since nearly all states follow the American Rule. ^[34]

B. Alaska's Rule 82

Dating back to before its organization as a territory, Alaska has been alone among American jurisdictions in awarding attorneys' fees as a matter of course to the prevailing party. ^[35] Since statehood, that presumption has been codified in Alaska Rule of Civil Procedure 82. ^[36] The "primary," arguably even exclusive, purpose of the Rule "is to partially compensate a prevailing party for attorneys' fees incurred in enforcing or defending the party's rights, regardless of the nature of those rights." ^[37] The Alaska Supreme Court has explained that "[w]ithout the rule, the rights of the prevailing party would be less completely vindicated because of the uncompensated expense of...