Tuesday, June 12, 2007

Cadlo v. Metalclad Insulation Corp. (Cal. Ct. App. - June 11, 2007)

This one was published by the Court of Appeal just under the 5:00 p.m. wire today. It involves a couple of different interesting topics, so even though I wasn't able to finish posting before I went home for dinner, I thought I'd finish it up at an absurdly early hour in the morning.

First, it's a good CCP 998 case, and holds that plaintiff can recover expert fees even though the statutory offer was made fairly early in the discovery process (i.e., that it remained in "good faith"). That will make the case cited a fair piece. Plus, purely as a matter of interest, compare the relatively tiny CCP offer (around $100,000) with the eventual verdict at trial and judgment entered therewith ($1,000,000+). I bet the defendants wish they could turn back the clock, eh?

Second, the case also raises some very interesting issues about what you do when the plaintiff dies immediately after the verdict; particularly when, as here, he dies after the verdict has been rendered but before the judgment has been entered. Many times, as here, the verdict includes a component -- often a huge one (e.g., here, for seven figures) -- for future damages. Had the plaintiff died during trial, he wouldn't have been able to recover those. Plus, even after the trial, prior to entering the judgment, we now know that the jury's award is erroneous in fact; namely, that it includes compensation for future damages (e.g., future medical expenses) that we are certain will not be incurred. This is just a small -- but very concrete -- subset of larger issues about what you do with a verdict that we know, post hoc, is erroneous, and that results in (as here) a substantial windfall to one of the parties (e.g., gives them, or their estate, millions of dollars in unjust compensation). Or, to put it another way, why and how we structure our civil justice system to place a very high premium on finality notwithstanding the consequences of that approach and the resulting inefficiencies. When a plaintiff dies two days after the verdict is rendered, it's pretty clear that the resulting award is "wrong" in some ways, and that the failure to modify it according to what we now know is indisputably true enshrines a degree of injustice. That said, we enshrine similar injustice all the time, and necessarily do so whenever we decide cases -- as we must -- on the basis of what we know at the time. Plaintiff here was given large damages for future medical expenses that we now know won't be incurred. But the plaintiff in another case might have been given future medical expenses, or lost wages, that eventually turn out to substantially undercompensate him; for example, he lives for 40 years (losing wages and incurring medical expenses throughout) rather than the 20 that was expected at trial. Or the plaintiff in a different case eventually suffers additional damages as a result of the accident -- maybe even dies -- but is uncompensated therefor because we didn't realize that would be the actual consequences of the tort. All of those situations involve injustice. And the fact that we overcompensate in some cases and undercompensate in others hardly makes the system "all balance out" and thereby become just. It remains inadequate, and inefficient, even if one party or the other receives a windfall but that those windfalls are randomly distributed.

Generally, we say "tough luck" and enshrine the verdict, even when we know it's wrong -- or, more accurately, "right" given what we knew at the time but "wrong" in fact. There are very few grounds upon which one can modify a judgment (e.g., in federal court, under Rule 60) in light of post-judgment facts. Basically we simply value finality over other principles, so even if we're sure that the judgment is actually wrong, we let it stand anyway. For a contrary principle would allow consistent litigation over a judgment in light of ever-changing actual events.

My personal sense is that we may value finality a bit too much, and that there might be other regimes that might be superior. Some of these changes might be fairly radical; e.g., judgments might be annuities rather than lump-sum amounts, as is sometimes done in medical malpractice cases (albeit imperfectly and, at least in California, inequitably), in order to more accurately reflect eventual realities. Other changes might be less fundamental; e.g., allowing parties to attack a judgment when it is essentially beyond doubt that the award was inaccurate in light of future events. The extremely high standard of review would reflect our keen interest in finality but the exception would nonetheless allow us to modify a result when we're absolutely sure that it's not actually the right one in light of future events.

That said, that's not the law. Nor is it likely to be anytime soon. This case is a good example, and Justice Simons's opinion collects and reflects the various cases that hold that even, as here, when the judgment hasn't even been entered yet we're still unwilling to tinker with it in light of things we now know to be true. Finality is that important. So plaintiff gets his money for future medical expenses over the next 20 or so years even though he's indisputably dead.

Plaintiff dropping dead two days after the verdict but before judgment is entered is presumably pretty rare. Nonetheless, don't think that the case is unimportant for that reason, or that the system should (or must) accept inefficiencies in a case like this one on the grounds that it's a statistical outlier. The general principle evinced by the underlying rule is one that is probably implicated in the majority of cases, all of which involve a necessarily imprecise estimate of future events that may well (and often do) turn out to be demonstrably wrong. The inefficiency and injustice that exists here isn't aberrational, but rather pervades the system. That doesn't make the system wrong, of course. But you gotta nonetheless recognize both the consequences as well as the justifications -- right or wrong -- for adopting the relevant rule.