Update (November 28, 2016): Will this slip’n’slide cat-and-mouse pursuit ever end? Have a look at the linked recently filed 63-page recitation of the judgment debtors’ years of breath-taking feats of deceit and subterfuge. Try to get your head around the number of hours that lawyers spent accumulating the information in that memorandum.
A court system that does not have the power to enforce its decisions has little power. It is a sad fact of our legal system that the high cost of compelling a losing litigants to pay judgments makes many judgments nearly worthless. Could it be that an $8 million+ judgment against a solvent company (operated under different names) is nearly worthless? If so, are our courthouses just a collection of Potemkin villages?
Update (March 29, 2016): No end in sight on a victorious plaintiff’s efforts to collection on a 2013 judgment for more than $8 million. After nearly three years of post-judgment collection efforts, it seems that the judgment debtor might have successfully jammed progress for the time being, at least, filing a bankruptcy petition in New Jersey, halting all further proceedings in the U.S. District Court for the District of Minnesota.
Update (March 21, 2016): The excruciating and protracted siege of Manley Toys, which Minnesota Litigator has reconned for years, continues…. Now shadowy entities, purportedly not the judgment defendant itself but somehow related to it, have appeared, seeking to “intervene,” slow down, or halt the already slow-grinding progress of the wheels of justice. U.S. District Court Judge Janie S. Mayeron (D. Minn.) will have none of it.
Judge Mayeron’s recent denial of a motion to intervene by Jun Tai Co. Ltd. and Winning Industrial Ltd. (emphasis on the “limited” and emphatic irony on the “winning”) is pointed:
[T]he movants wholly failed to provide the Court with any facts as to who they are, what they do (e.g., do they even sell or distribute Manley toys in the United States), what their interest in the sanctions motion is, what their relationship to Manley is, or how the outcome of the sanctions motion would affect them. Significantly, their motion was unsupported by any declaration or affidavits that would permit the Court to evaluate their contention that intervention was warranted. In fact, even their conclusory statements that they have a common ownership with Manley, but are separate legal entities, was without any evidentiary support….Counsel then explained that the reason no supporting affidavits or declarations were filed was that the motion had to be brought hurriedly and there was no time for counsel to obtain a declaration or affidavits from the movants in support of their motion. The Court placed no credence in this explanation.
I confess to vacillating between sympathy and disdain for the defenseless defense lawyers, forced to stand before the Court unarmed with either law or facts on their side. I guess it’s not child’s play but someone’s got to do it….
Original post (January 4, 2016): The efficiency of our civil litigation systems – state and federal – relies on many variables, the proper function of hundreds if not thousands of separate “moving parts.” I recently noted, for example, that a justice system that places a great deal of emphasis on advocates, litigants, and other parties speaking truthfully in a world full of shameless liars faces a significant hurdles and high costs.
We all recognize that a dispute resolution system that costs more than, say, $15,000 to use is useless for disputes where less than $15,000 is at stake. Sadly (to my mind), this puts our civil justice system out of reach for most people and most legal disputes.
Also, consider the limitations of a dispute resolution system that fairly and effectively decides legal disputes but that fails to provide affordable means to compel its decisions; a system that issues a finding, “You are entitled to $25,000,” is not very useful if the system provides inadequate or extremely expensive means for the winning party to get the money awarded.
Years ago, I sat in a room with about 25-30 trial lawyers representing an unpaid general contractor and a battalion of unpaid sub-contractors against a developer. Counsel for the developer suggested his client would pay $0.40 of every dollar the developer owed the large numbers of businesses represented in the room.
“Why in the world would I advise my client to take that offer when your defenses to our claims have no merit and we have a pending motion for summary judgment?” I asked.
Without delay, the opposing lawyer, an extremely successful and experienced trial lawyer, answered, “Because you will never recover any money on your claim if you do not settle.”
He was right. He knew he and his client could exploit the fact that the high cost and inherent uncertainty of our legal system effectively means that often the amoral and unscrupulous can exploit the system to steal money from other people and other businesses.
Incidentally, while it is true that one simply cannot recover misappropriated property from a completely insolvent wrong-doer, in the case I am referring to the developer had the money to make all of the laborers whole. He just knew that he could exploit the system in a variety of ways so that he could, if pushed, ultimately realize his threat of being “judgment proof” as a practical matter.
My point: our legal system fails, almost always and for a large number of reasons, to make victims whole, and that is a shame.
Photo by Ryan Malhoski
These thoughts came to mind when I noted yet another chapter in the endless slide to oblivion in a patent infringement action, Aviva Sports, Inc. v. Manley Toys (previous posts here).
Judgment in the amount of $8,588,931.59 was entered against Manley Toys, Ltd. and in favor of Aviva on August 21, 2013. How much money do you think that Aviva’s been able to collect to date? None?
Now Manley Toys has brought a lawsuit in Hong Kong to prevent collection on the judgment.
How much has this multi-year siege cost the litigants (and/or lawyers taking it on a contingent fee?)? When and how will it end? Will Plaintiff Aviva rue the day that it sought judicial intervention to vindicate its patent rights?
(And, finally, while Aviva v. Manley was a patent infringement case, meaning that Aviva could not have avoided this fight in advance, the case also reminds me of a post from some years ago about the hidden costs when exploiting “low cost” foreign manufacturing or supply. If you think enforcing a judgment against a U.S. counter-party is difficult, try it in international trade. As pointed out in a recent profile of Minnesota lawyer, Liz Kramer, international trade is one particular area where an arbitration agreement can make a lot of sense because enforcing an arbitration award internationally can be easier than enforcing a court judgment.)