Bad actors are abusing the legal system to make a quick buck — and flawed litigation rules pave the way for them.
In a growing number of cases, courts award absurdly large payouts on questionable grounds, even when they seem to openly contradict previous court verdicts. Take, for instance, the Title Source v. HouseCanary case. After the former sued for a breach of contract, the latter countersued and claimed trade secrets had been stolen.
A San Antonio jury sided with HouseCanary, awarding a near-record judgment worth $740 million — almost 150 times the value of the disputed contract. But HouseCanary’s claims were soon undermined when a group of whistleblowers emerged to discredit its case. Still, that didn’t deter it in its counterclaim. In December 2021, a trial court ignored findings by the appellate court and the Texas Supreme Court to side, incredibly, with HouseCanary once again.
In the most recent development in that case, the Texas Supreme Court eventually sided with Title Source, now Amrock, nixing the $740 million verdict — for now, at least. But there have been several conflicting opinions since 2016 when the case surfaced. It could very easily have gone the other way since this part of the legal system seems to be driven mostly by fortune. It’s little wonder highly questionable claims consistently emerge as bad-faith actors try their luck.
The problem with this is that it drowns the legal system in overlitigation as nefarious actors chase huge payouts based on weak or unfounded claims in the hope of swaying juries, which tend to view large companies with hostility even when they are in the right. Some are calling it “jackpot justice.” It could ruin innovation and the free market in America.
What if it hadn’t been for those HouseCanary whistleblowers? Amrock could have been unfairly lumped with a staggering bill of nearly three quarters of a billion dollars. Inflated court verdicts such as this pose a real threat to the free market in America because they can wipe companies off the map in one fell swoop, directly undermining innovation and competition — even when things are much more complex than they might first seem, as we now know about the Amrock case thanks to those whistleblowers.
What’s more, Amrock is not the only company to fall foul of overlitigation in the legal system. There are countless examples of patently absurd verdicts in which companies find themselves on the hook for millions of dollars. In 1994, a jury famously awarded a woman $2.86 million after she spilled McDonald’s coffee on her lap. Right now, a man is suing Popeyes for $5,000 over “emotional damages and wasted time” because the chain’s signature sandwich was out of stock when he tried to buy one. There are plenty more ludicrous examples.
The system is harmful and dangerous for a range of reasons, not least that it makes investing in the United States look profoundly unattractive. If you ran an energy drinks company, would you jump out of your seat to sell your products in a country where Red Bull once had to settle a $13 million case on the grounds that its product doesn’t actually “give you wings?”
Basic litigation reforms, such as limiting when juries can decide civil cases, having losers pay court fees, and introducing caps on tort damages are easy, accessible ways to make the U.S. a much more enticing prospect for investment and growth. This is greatly needed given the state of the world economy, not to mention to prevent the courts from slipping into farce.
Jason Reed (@JasonReed624) is the spokesman at Young Voices and a writer and broadcaster for a wide range of outlets.
