One of the bills being considered in the legislature's special session is AB 12. It would place certain limits on the ability of state courts to award attorneys' fees in cases in which some other law, say, a consumer protection statute or the open meetings law, provides for an award of fees. It specifies factors that a court ought to consider in approving a fee request and that part of the law is a good development and ought to be uncontroversial.
The more challenging issue is AB 12's cap on an award of fees at three times compensatory damages. The cap would be presumptive in cases in which compensatory damages are combined with some other form of relief (say an injunction or declaratory judgment) and mandatory in cases where only compensatory relief is to be granted.
The poster child for the bill was a case involving a dealership in Racine. The issue was whether the plaintiff had authorized $ 5000 in repairs. The plaintiff claimed that he did not, thinking that the work was covered under warranty. The dealership said that he did and made some legal arguments regarding whether the plaintiff could recover even if the repairs were not authorized. The dealership won at the trial court on these legal arguments but the case was reversed by the Court of Appeals. Shortly before trial, the dealership settled for a payment of $12500 in damages and interest and over $ 150,000 in attorneys' fees plus a bit over $5000 in costs.
That's a pretty unreasonable and wasteful outcome. Part of the reason for it was the parties' insistence on litigating a legal issue through the Court of Appeals, but even that shouldn't explain such a ridiculous result. I can't say it who it was but someone (or someones) did not cover themselves in glory here. (For my conservative friends, you ought to wonder why the dealer agreed to pay the fees in that amount. Not a good sign.)
Still it makes sense that a litigant's behavior be disciplined by economic reality. Requiring some connection between the amount at issue and fees is a good idea and, even prior to AB 12, courts making awards of fees under the Consumer Protection Act were to consider it. This bill tightens that up.
Still, in may go just a bit too far. I can imagine circumstances in which fees in excess of three times compensatories might be warranted either because of the litigation behavior of one side or the need to resolve some uncertain point of law. I always tell clients that once you have commenced litigation, you lose a great deal of control. It is a thing that goes of itself and you can't command the extent to which the other side might make you work.
I'd make the "three times compensatory" rule only presumptive in all cases, including those in which only compensatory relief is sought. I think we can trust our circuit court judges to handle that properly.
Thumbs down, however, for Rep. Gary Hebl (D-Sun Prairie) for suggesting that the bill was occasioned by the dealer's campaign constributions to Republicans. This is just ad hominem garbage. The issue is a real one and the bill won't save the dealer one penny.
A friend of mine takes great umbrage at another bill that will limit prejudgment interest in only certain types of cases. I can't get excited about it but I also can't see any reason to have a different rate in different types of cases.