248-409-1900 dburke@mi-worklaw.com

HEAVEN FORBID THERE SHOULD BE WINNERS AND LOSERS IN LITIGATION

By:  Bill Pilchak

Who can forget the scene in Meet the Fokkers when Gaylord’s (aka, “Greg’s”) dad, Dustin Hoffman, reveals the Wall of Gaylord to Greg’s new father in law, played by Robert DeNiro?  There, among the framed stuffed animals are Greg’s “awards,” prompting DeNiro to observe, “I didn’t even know they made ninth place ribbons.” When flower-child Hoffman observes that all participation should be rewarded, DeNiro states that a competitive drive is what made America the last remaining superpower.

Apparently in today’s society, parents believe that their child will be devastated if only the fastest three children in the 100 yard dash are recognized. I can state categorically that no Pilchak known to me has ever been on the podium in any race, ever. I don’t remember being crushed. My children shrugged off the fact that they weren’t fast, agile or athletic, knowing that they excelled in academics and the arts.

The “everybody’s a winner” and “reward me for showing up” mentality has already crept into adult society in several ways. Employers everywhere tell us and discuss in business forums that the incoming generation expects a six figure income before proving him/herself to be worth the money.   In a highly-competitive occupation, such as management-side labor and employment law, not everybody cuts the mustard. That “I deserve $X00,000 because I am here” mentality is a subtle expression of the participation award phenomenon.

However, a much more pernicious example is found in Michigan’s “case evaluation” system.   By Court Rule, every litigation case in Michigan must be evaluated by a panel of three lawyers, who place a “settlement value” upon the case. Either party must accept or reject that settlement value. If both accept it, the case is resolved for that amount. If a party rejects the award, that party must pay their opponent’s attorney fees unless the party betters its position by 10%.

Of course, innocent employers are not terribly inclined to settle. They want dismissal. As any client of ours who has gone through litigation knows, “summary disposition” (summary judgment in federal court) is the point where the plaintiff has laid all his/her cards on the table, and the defense can say: even if those facts are true, the case should be dismissed because the facts do not satisfy the law.

Without question, statistically, the vast majority of cases against employers should be dismissed. No matter how one gauges it, the overwhelming percentage of claims against employers lack merit:

  • If there is even a suspicion of discrimination, the EEOC finds “cause” to believe discrimination has occurred. Year after year, the EEO’s statistics consistently show that only 3.5% to 5% of Charges filed against employers result in a cause finding. Plus, 10% of Charges are typically settled before any cause finding. Since employers have an economic motive to get rid of meritless cases with a nominal payment at the agency level, that 10% figure does not equate with merit. Let’s presume 5% (50% of 10%) of those Charges have merit. Thus, in approximately 90% of claims handled by the EEOC, there is not even a suspicion of discrimination. (So, why their guilty-until-proven-innocent system? That’s a topic for another day.)
  • Though we don’t have precise statistics, every day, the Michigan Bar publishes appellate (and federal trial court) opinions to every lawyer by e-mail or app. Each of our attorneys read the labor and employment decisions daily. Certainly at least 60% of the summary disposition/judgment cases sustain dismissal. The figure could easily be 75% or even 80%. All I know is reading the E-Journal consistently provides me with more ammunition than it does concerns. That 60% to 80% employer appellate win ratio must be considered in the context that a large percentage of dismissals are not appealed by plaintiffs. So, the percentage of legally meritless cases is likely higher than the 60-80% figure shown in the cases.

So, how does the legal system treat those 60-70-80-90% innocent employers?

Does the system knock out those cases, so innocent employers aren’t pressured to settle and don’t needlessly pay an attorney to write a “Case Evaluation Summary” and attend and argue the case? No, actually. In fact, if an employer files its dismissal motion the moment discovery ends, so that it might avoid Case Evaluation, judges typically delay the hearing until after Case Evaluation, to see if the case might “settle.” If the case settles, Gaylord gets paid.

Do Case Evaluation awards reflect the fact that 60-90% of cases have no merit? If they did, that would translate into a high percentage of nuisance award evaluations. Nuisance value awards would discourage attorneys from taking bad cases. Well, nuisance awards virtually never occur at case evaluation. The mentality at the Mediation Tribunal Association is that if an attorney has filed a case, he/she deserves a pay day. The case evaluation system not only fails to dissuade attorneys from taking bad cases, it rewards them for not screening their cases or looking at the law. Just like in Meet The Fokkers, everybody gets rewarded for participating.

Recently, P&C presented a case where the plaintiff, a supervisor, was told he would get in trouble if he broke a certain rule. The plaintiff was obligated to enforce that same rule upon the union-member employees he supervised, and admitted that he could not discipline his employees for doing something that he did himself. The rule is of paramount importance in the operation. Nobody, and certainly no supervisor, had ever broken the rule before. When Plaintiff did, he was fired. The lead case we cited to the case evaluators was our 2010 appellate victory and opinion involving that very same employer, where a previous supervisor had also been warned that engaging in an act would violate the rules, proceeded to do so anyway, and was fired.   The Court of Appeals held in 2010 that where a supervisor is warned against action and engages in it anyway, he is not similarly situated to other employees who may have merely violated even the same rule. As many know, lack of a similarly-situated comparable employee is typically the death knell for a discrimination case.

As if that were not enough, the 2014 plaintiff admitted at deposition that he has been physically unable to perform the job since 2010. The inability to do the job is a complete defense – someone can’t get wage loss damages for a job they couldn’t have performed anyway.

What did the Case Evaluators do with the case? After mocking the attorney for bringing the claim, they still placed a $45,000 settlement value upon it. If that award were accepted, it would provide the attorney a $15,000 pay day. It would reward an attorney who didn’t even bother to look up the law and see that this very same employer had created precedent that when a supervisor is warned and still violates the rule, he has no case.

Frustrated with the $45,000 evaluation, when I returned to the office, I had the 2010 case pulled from the storage racks. What did the case evaluators do with that case – which was quickly and promptly dismissed at the trial court level and easily affirmed in the Court of Appeals? The 2010 award evaluated at $175,000!

I suppose that I should be thankful that the 2014 award is only 25% of the 2010 award. But I’m not. The litigation system in Michigan, and I daresay across the nation, is broken. My brethren and sistren of the bar are serving their self-interests and not the interests of justice. Innocent employers are being marauded by the system that rewards lawyers and victimizes business. The State Bar of Michigan touts a quote from its first president: “No organization of lawyers can long survive which has not for its primary object the protection of the public.”   The primary purpose of the current system in Michigan is assuring that attorneys get a pay day on worthless cases.