Update #5 (March 22, 2017): How much does a contingent promise to pay of $37,837,510.45 dollars cost? As we understand a recent order in the case discussed below (and it is not at all clear that we do), the answer might be $525,000?
In any event, defendant Essar Steel appealed the adverse verdict against it, obtained a “supersedeas bond” as a prerequisite for the appeal, won on its appeal, and now “the surety” (the promisor to make good on the verdict if the appeal failed) is released from the bond.
Update #4 (February 3, 2017): The Great Lakes Gas Transmission v. Essar Steel lawsuit, filed in October, 2009, tried to a jury August, 2015, resulted in a $37+ million verdict. We’re a little late in reporting that the verdict was thrown out in December by the U.S. Court of Appeals for the Eighth Circuit in December. The Court of Appeals held that the district court (D. Minn.) did not have subject matter jurisdiction. This week, however, we learned that Great Lakes failed to get the Eighth Circuit to reconsider the decision. Now the question is whether Great Lakes will seek review by the U.S. Supreme Court or whether it will give up and start again in state court.
This result highlights a flaw in our legal system. This extraordinary, even mind-boggling, sacrifice of time and money is due to our “dual federalism” — federal courts preside over some cases and state courts over others. The complexity involved in the analysis of federal jurisdiction (or state court jurisdiction), combined with the unbelievable waste if the trial court gets it wrong, and, finally, combined with the fact that ever-shrinking distinctions between states in our country make for an antiquated, inefficient, and deeply faulty dispute resolution system.
Update #3 (October 14, 2015) (under headline: The Dollar’s In the Details: Great Lakes Gas Transmission v. Essar Steel (filed in October, 2009, tried to a jury August, 2015)): We read about litigants “posting bond” often but we do not get to see them very often to see just what they are, what they actually look like. If you are curious, here’s one (for $37,837,510.45).
Update #2 (Sept. 30, 2015): And now we know how much it cost Plaintiff Great Lakes Gas in attorneys’ fees to fight in the case, described below, for six years (over $5.1 million). Whose pocket should that come out of? Whose pocket will it come out of? Stay tuned….(I bet I could have done it for less than $5 million.)
Update (Sept. 30, 2015): The previous “Pyrrhic post” was about a trial win that probably cost more than the plaintiff was able to recover.
The case discussed below falls into the other category: a case where it looks as if an investment of millions of dollars of lawyer time was cost justified.
The recent trial in a case that went for nearly six year resulted in a jury verdict (after 90 minutes of deliberation) that the applicable discount rate was 4.30%. As discussed below, this did not give Minnesota Litigator the slightest clue of what kind of money they were fighting over. This past week, however, we got our answer: somewhere in the neighborhood of $36-37 million.
Update (August 19, 2015): The case, discussed below, was litigated for nearly six years. Trial on the last remaining issue, the appropriate discount rate, took one day. Jury received case at 11:09 a.m today and returned a verdict at 12:39 p.m. today, determining the discount rate to be 4.30%. I would be curious to know what the “swing” was — the likely range of the jury’s decision in dollars — to determine whether the half decade (and then some) of litigation was really worth it for the litigants. (I noted that plaintiff’s expert was $600/hour, incidentally and there have been 969 entries on the docket of this case since it was filed in October, 2009.)
Original post (August 17, 2015): For those of us Minnesota litigators with relatively small and legally unsophisticated clients, there is often a discussion early on in the attorney/client engagement about the high cost of civil litigation and the high uncertainty of civil litigation.
“What? You mean this could cost more than TWENTY THOUSAND DOLLARS???!!!” some potential clients will say, sincerely stunned.
“HUNH? We could lose even though THE GUY ADMITTED HE TORTED ME OR WHATEVER YOU CALLED IT???!!!” another potential client might cry out in confusion and despair.
Actually, it’s a whole lot worse than that. The more you study any particular legal dispute, the more complexity you find, and the more uncertainty you are likely to unearth.
“Hold on, Mr. Minnesota Litigator,” you counter, “What about a slam-dunk debt collection? You can’t guaranty a win even in one of those cases? You cannot guaranty or cap fees???”
Sure, there are definitely some cases where civil litigators, particularly with a database of past experience and a developed niche expertise, can come up with fairly accurate estimates. They might even cap their fees. It is lawyers’ abilities to have some sense of cost and value of legal claims that gives lawyers in particular niches the ability to charge flat fees or to offer contingent fees. These are cases where the lawyers accept the shift the risk of loss or high cost from their clients to themselves.
But make no mistake, the lawyers can take on, own, or “assume the risk,” as lawyers say, but lawyers cannot eliminate it.
I thought of this when reading the recent orders from U.S. District Court Judge Susan R. Nelson (D. Minn.) on motions in limine in the Great Lates Transmission Ltd. v. Essar Steel case. The trial is scheduled to start today, finally.
Great Lakes Gas Transmission has been suing to collect on a contract since 2009. The case seems quite straight-forward. Defendant purchased something, then did not pay for it.
[T]he only remaining issues for trial are: (1) the discount rate to apply to future damages; and (2) whether the discount rate to apply to future damages is pre- or post-tax. Trial was initially scheduled to begin October 27, 2014.
Imagine who could have predicted the twists and turns (the fees, costs, and likely range of recovery at the end of it all) in this 5-year simple debt collection battle?
On the threshold of trial, the two sides have recently battled over the appropriate prejudgment interest. Interest under Minnesota state law for a breach of contract action (10%) or under the federal law for “Tariff prejudgment interest rate” (3.25%)? Defendant Essar Steel of Minnesota won that round (i.e., answer: 3.25%).
The point being, there is no imaginable way, I suggest, that Plaintiff could have appreciated that this battle would go for over five years, that the issues at trial (which, by the way, is obviously NOT necessarily the end of this saga) would be what they are, or that the hugely important dice-throws along the way would roll in their favor or against them.
For the sake of the Plaintiff, I would hope it has hired its lawyers on a contingent fee so that it has not had to pay out every last dollar of this long siege to get what it appears to be owed.