Bills to Require State Agencies to Pay Court Costs Move Forward

Date: April 28, 2016 Last Edit: May 02, 2016

State Agencies
Should Pay Prevailing Party Legal Costs

April 28, 2016 – Lansing, MI: NFIB backed legislation that
would end the unfair advantage that state agencies have in court and administrative hearings took another step forward today. 

NFIB testified before the Senate Committee on Elections and Government Reform and urged them to report out Senate bills 189 and 190, sponsored by Senators Tom Casperson (38th District) and David Robertson (14th District), that would require a state agency to pay the legal costs of the prevailing party when that state agency loses a lawsuit involving a regulatory issue. 

This change
would curb the current approach by state departments and agencies of telling a
citizen or business owner that if they don’t like the “deal” a state agency
proposes to resolve an issue they can “take it to court”. Agencies use this tactic in place of good faith
negotiation because they know that taxpayers and business owners will have to
settle because they do not have the financial ability to fight the state (who
has an almost unlimited supply of taxpayer dollars to spend on litigation) in

While existing law does require a state agency to pay the court costs of
a prevailing party in a lawsuit, the way the current language is
written limits this provision to cases that are considered
“frivolous” by the presiding officer in the hearing. In most
cases the “presiding officer” is an employee of the state. In
addition, current law does not allow anyone with a net worth of more than
$500,000, or an owner of a business with a net worth exceeding $3,000,000 or
with more than 250 employees to be awarded court costs if they prevail against
the state.

NFIB told the Committee that, while it
may seem to the general public that a business owners with this kind of net
worth should be able to pay their own court costs, every business owner knows
that “net worth” does not translate into cash in the bank for fighting an
unfair rule dispute with a state agency that has unlimited legal resources.

The change in the law made by Senate Bills 189 and 190 would
encourage state agencies and departments to work with permit applicants,
property owners, taxpayers and business owners to resolve issues rather
than have department staff present constituents with an ultimatum – to do
what the department wants or else take their case to court and incur steep
costs – even if they prevail.

The bills were reported out of the Committee and sent to the Senate floor for further action.

Watch NFIB testimony before the Senate Elections and Government Reform Committee HERE

Related Content: Small Business News | Legal | Michigan

Subscribe For Free News And Tips

Enter your email to get FREE small business insights. Learn more

Get to know NFIB

NFIB is a member-driven organization advocating on behalf of small and independent businesses nationwide.

Learn More

Or call us today

© 2001 - 2022 National Federation of Independent Business. All Rights Reserved. Terms and Conditions | Privacy