CO Senate Republicans apoplectic over H.B. 1020

The Colorado General Assembly enacted C.R.S. § 13-17-202 in 1990. It was a tort “reform” measure directed at the recovery of “costs” in civil actions.

Rule 54(d) of the Colorado Rules of Civil Procedure says that the “prevailing party” in a civil action is entitled to an award of “costs” unless the court otherwise directs. By statute, “costs” doesn’t include attorney fees but does include pretty much all other litigation expenses, such as filing fees, deposition expenses, subpoena service charges, expenses associated with preparing demonstrative exhibits, and — perhaps most notably — reasonable expert witness fees.

Rule 54(d) and the statutes defining “costs” provided a pretty effective hammer for compelling settlements. The prospect of losing and having to pay the other side’s costs, including expert witness fees that can easily run tens of thousands of dollars, is enough to get most anyone to the negotiating table.

Section 13-17-202 was all about making the hammer bigger, at least when wielded by insurance companies. The statute provides in relevant part:

If the defendant serves an offer of settlement in writing at any time more than fourteen days before the commencement of the trial that is rejected by the plaintiff, and the plaintiff does not recover a final judgment in excess of the amount offered, then the defendant shall be awarded actual costs accruing after the offer of settlement to be paid by the plaintiff.

So, then, a plaintiff is on the hook for all of the defense’s “actual costs” from the offer date forward if the judgment amount is less than the offer, even if the plaintiff wins the case. Suppose an auto accident plaintiff receives a $20,000 written offer from the tortfeasor’s insurance company twenty days before trial. The plaintiff rejects the offer and the case goes to trial. The jury finds in the plaintiff’s favor on the issues of negligence, causation and damages but only awards $19,000. Despite winning, the plaintiff is stuck paying the defense’s costs from the date of the offer forward. If the defense costs total $50,000, that’s just tough shit for the plaintiff. And $50,000 isn’t all that uncommon when you consider that insurance companies regularly hire both a medical whore and an engineering/biomechanics whore to defend such cases.

The statute doesn’t directly address costs accruing before the offer of settlement. If the plaintiff wins but recovers less than the defense’s offer, may the plaintiff still recover the costs he incurred before the offer date?

According to my boss, Colorado trial courts have answered that question with a resounding no.

And that’s where House Bill 1020 comes in. That bill, which passed the General Assembly last week, introduces some equity by adding the following language to the statutory provision quoted above:

HOWEVER, AS PROVIDED IN SECTION 13-16-104, IF THE PLAINTIFF IS THE PREVAILING PARTY IN THE ACTION, THE PLAINTIFF’S FINAL JUDGMENT SHALL INCLUDE THE AMOUNT OF THE PLAINTIFF’S ACTUAL COSTS THAT ACCRUED PRIOR TO THE OFFER OF SETTLEMENT.

Who could possibly object to that? In the above hypothetical, the defense still gets its post-offer costs and the plaintiff still gets none of his post-offer costs. However, the plaintiff did win the case, and thus recovers his pre-offer costs. Typically, those are significantly less than the costs incurred during the immediate run-up to trial and during the trial itself, but hey, it beats the shit out of nothing.

Who could object, you ask? Why, Republicans, that’s who. Coloradosenatenews.com, the online voice of Colorado State Senate Republicans, threw veritable fit. Their little exercise in overheated, apoplectic rhetorical excess is available here.

One of the perils of passion is the very real possibility of making statements that range from questionable to out-and-out fraud. So it is with H.B. 1021 and our Republican friends in the Colorado Senate.

The screed gets off to a flying start with:

A measure that has been dubbed the “Leave No Trial Lawyer Behind” bill passed the Senate this morning with majority Democrat support–over objections it would stoke litigation at the expense of business.

Dubbed by whom? Why, the Colorado Senate Republicans, of course!

And then we have:

While some legal observers say the bill upends a level playing field, the Colorado Trial Lawyers Association lobbied for the bill and testified in support of it in committee.

Ever since watching Outfoxed, a documentary on the worldwide shit machine known as Fox News, I’ve been especially attuned to these “some say” claims. Note that, as here, the “some” are never identified. As far as I’ve been able to ascertain, no “legal observers” are saying that H.B. 1020 “upends a level playing field” other than the Colorado Senate Republicans.

But mere hyperbole isn’t enough for our Republican buddies. They soon turn to outright dissembling. For instance:

Under the current system, plaintiffs who reject a reasonable settlement offer must pay the costs defendants accrued after an offer was made.

Bullshit. There is nothing in the pre- or post-H.B. 1020 version of the statute that imposes a reasonableness requirement on statutory settlement offers. And H.B. 1020 leaves intact the requirement that plaintiffs pay the post-offer defense costs.

But this here is my favorite:

The pending legislation would allow plaintiffs to recover their costs when they win even if the injury was negligible and judgment was for $1.

Double bullshit. H.B. 1020 does NOT allow plaintiffs to recover “their costs.” To the contrary, it expressly allows recovery of only those costs accruing before the defense’s offer. Thus, it disallows recovery of post-offer costs.

And the $1 claim would actually be laughable were it not so shit-all idiotic. Our Republican friends neglect to inform us that the original version of the bill would have allowed recovery of pre-offer costs “if the plaintiff prevails in the action . . . .” An amendment made in the Senate, which is part of the final bill passed by both houses, changed “prevails” to “is the prevailing party.”

The amendment is pretty damned significant. “Prevailing party” is a term of art in the law of costs that the Colorado Supreme Court defines to mean “one who prevails on a significant issue in the litigation and derives some of the benefits sought by the litigation.” Archer v. Farmer Bros. Co., 90 P.3d 228, 230 (Colo. 2004). Any lawyer who argues that a one-dollar judgment qualifies his client as a “prevailing party” under that definition risks being ordered to stand on the courthouse steps wearing nothing but a funny paper hat while singing I’m a Little Teapot.

Update (02/21/08): The governor signed H.B. 1021 into law today. The new law applies to all statutory offers of settlement made on or after July 1, 2008.