Good Morning Commissioners. I am here with a modest proposal that reflects solely my own views. It is based on more than a quarter of a century of work reviewing the briefs and setting the calendar for the United States Court of Appeals for the Seventh Circuit.

The proposal is for a four year experiment in which appellate attorney's fees would be awarded to the defendant-appellee if the appeal is affirmed. The experiment would include only cases whose sole basis of jurisdiction in the district court was diversity of citizenship pursuant to 28 U.S.C. § 1332. I realize that this proposal may appear to run against two tenets of American law: that everyone pays their own attorney's fees and that parties of diverse citizenship should have access to federal court. I do not think that this proposal runs contrary to those tenets as it does not restrict plaintiffs of diverse citizenship suing in federal court and you only have to pay the other person's attorney's fees if you are a plaintiff who loses twice. The benefit is that it provides a strong disincentive to a losing plaintiff who might otherwise bring an insubstantial appeal.

Picture yourself at an all night poker game--- in a jurisdiction where it is legal. You have not won a single hand and you have dipped into your wallet on many occasions to come up with more money. The night is late and everyone is weary. The big winner of the night says to you, I'll cut cards with you for your last ten dollars-winner takes all. For an investment of your last ten dollars, you have the opportunity to win back all that you have lost all night. You would be a fool not to take the risk. That I suggest is what happens when a losing party in the trial court decides whether to appeal. The party has spent tens of thousands of dollars on interrogatories, requests for documents, and depositions; hundreds of hours have been spent on pretrial substantive motions and hearings; and even if the case has been decided on motion to dismiss or for summary judgment rather than trial, the total for attorneys fees and costs is astronomical. You as losing counsel and your client then have to decide whether to appeal. As long as it is not frivolous, why not appeal. There is very little cost in time and money to rework the trial court memoranda with an update of legal research into a respectable appellate brief. To get one more chance to win and to win big, the losing plaintiff only has to ante up the appellate attorneys fees and the appellate costs which are minor. Who would not take an appeal.

There are two reasons for my proposal. The first is that the trial court loser may not be willing to take an insubstantial appeal if he or she has to reach into their own pocket and pay the other side's appellate attorneys fees. It is not only the dollar cost but also the psychological insult to have to pay out money to the other side. This may help the losing plaintiff have a more realistic view of the chances for success on appeal. The plaintiff has had one free bite, but may have to pay for the second bite. The second reason for the proposal is one of equity. The defendant has had to pay for attorney's fees to successfully defend in the trial court and now has to pay the attorney for the costs to defend the judgment on appeal. Under my proposal counsel for defendant-appellee would still pay for the attorneys's fees at trial but the plaintiff-appellant who loses both in the trial and appellate courts would pay for defendant-appellee's appellate attorney fees.

I have limited this proposal to diversity cases as parties have a choice of bringing them in state or federal court and federal appellate decisions on state law issues are somewhat tangential to the development of state law. If the experiment does reduce insubstantial appeals, an expansion to other civil cases could be considered. It could also be made applicable to defendants who lose in both the trial court and appellate courts. They would pay the plaintiff's appellate attorneys fees.

For the year ending December 31, 1997 there were 3724 appeals based on diversity of jurisdiction terminated in the courts of appeals. About half of them were terminated on the merits and 12% of those terminated on the merits were reversed. As this proposal only applies to plaintiffs who appeal, the potential number affected by this proposal would be less. There are no national figures for the number of plaintiffs appealing in diversity cases..

In order to avoid creating fee dispute work for judges while trying to dissuade insubstantial appeals, I would provide that the clerk of the court of appeals would review and approve the amount of attorney's fees based on their reasonableness. If the plaintiff-appellant disagreed with the clerk's decision, counsel could request review by the judge that authored the affirmance on appeal.

Thank you for the opportunity to appear before you. I will be happy to answer any questions.