• April 17, 2014

Poker ChipsMinnesota Litigator recently posted about DPPA (Drivers Privacy Protection Act) class actions taking the stand that these cases are examples of opportunism and “rent-seeking.” These lawsuits enrich some parties (and their lawyers), they strip money from other parties (and, sometimes, their lawyers), but they provide negligible, if any, social benefit.

But, here’s the puzzle and problem: we very much want the civil justice system to vindicate the rights of meritorious claims of the poor and exploited. How do we strain out the rent-seeking and reward those parties and their risk-taking lawyers as they deserve?

Let’s be more concrete: “qui tam” actions are actions brought by private parties to vindicate rights that confer a wide-spread social benefit. These cases are often known as “whistle-blower cases” where, say, an employee at a business that enters into contracts with the government reveals corruption in these transactions and uncovers losses we all incur as taxpayers.

Sometimes these cases proceed like this: enterprising risk-seeking/premium-seeking lawyer takes up the claims of a “whistle-blower.” (Sometimes the whistle-blower has been to dozens of other lawyers who reject the case.) The whistle-blower’s lawyer takes on the case (and these cases are sometimes massive undertakings involving millions of dollars and many more millions of pages of documents) and, if the “qui tam plaintiff’s lawyer” is lucky, the U.S. government steps in (“intervenes”) takes up the cause of the whistle-blower, takes up the expense of the litigation, and then the original lawyer is awarded a large premium for having brought the case in the first place and for having helped root out corruption.

Where this can get complicated is when the theory of corruption by the whistle-blower with his original counsel deviates from the liability theory that the government ultimately prevails on.

Take an extreme hypothetical: Qui tam plaintiff alleges kickbacks in the trucking industry, the government intervenes, finds unrelated price-fixing, and no evidence of kickbacks.  Should the original lawyer recover or would that be an abuse of the system? (Presumably not.)

Take a less extreme hypothetical and the question is far more difficult to answer. Even three judges on the U.S. Eighth Circuit Court of Appeals could not agree.

Regardless of where we stand on the question, congratulations to the qui tam plaintiff’s lawyer, Neil M. Soltman. We’ll see whether the unsuccessful appellant, the United States, seeks U.S. Supreme Court review in Soltman’s (and his law firm’s) favor.

 

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