Overlawyered: Chronicling The High Cost Of Our Legal System

Archive for June, 2007

Pearsonesque $2 billion consumer-fraud lawsuit against Ford

The Ford Explorer is a sport utility vehicle. Judge Roy Pearson, excited by the $67 million he anticipates receiving for his pants, is bringing a lawsuit in California claiming that every California Explorer owner is entitled a total of $2 billion from Ford because the Explorer is allegedly prone to rolling over, using the California version of the law that Pearson is bringing his pants-suit over. Note that the damages are not for an actual rollover, just damages because of the “fraud” that the vehicle might roll over, though at least some models of the Explorer are in fact less dangerous than an average SUV in rollovers, and safer than the average vehicle in other types of accidents. (IIHS reports that the average fatality rate for mid-sized 2-door SUVs is 63 per million vehicles, and the average fatality rate for the 2-door Ford Explorer is 49 per million vehicles—and that latter number includes crashes caused by defective Firestone tires. Note that this is publicly available information: where is the fraud?)

Oh, sorry, it’s not Roy Pearson, it’s Arkansas attorney Tab Turner who is bringing the lawsuit. [Hudson Sangree, “SUV rollovers put Ford’s future in judge’s hands”, Sacramento Bee, May 24; official class notice from Sacramento County Court]

But because ATLA and Kia Franklin have condemned Roy Pearson’s lawsuit as a frivolous abuse of justice, I am sure that they will have no compunction against issuing the same criticism against millionaire trial lawyer Tab Turner for bringing a much larger and socially harmful lawsuit that might bankrupt Ford on the same bogus “consumer fraud” legal theory that Pearson used. Of course, there’s a difference between Pearson and Turner: Turner is asking for more money, and his claim has less factual basis.

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Roy Pearson pants suit: the bottom line

Our editor, Walter Olson, in today’s Wall Street Journal:

A few observations:
• Phrases like “Do you realize I’m a lawyer?” uttered in the course of routine disputes with storekeepers, neighbors, school principals, etc., probably account for more of the legal profession’s aggregate unpopularity than any number of scandals in the actual representation of clients.

• David and Goliath talk notwithstanding, legal action is often a powerful dis-equalizer of the playing field, as those who know how to work the system fleece the outsiders, the novices, the distracted and the trustful.

• Pretty much every other advanced country would have afforded the Chungs better protection against a lawsuit like this. Under proper “loser-pays” rules, the Chungs would be correctly construed as having won even if Mr. Pearson proves damages of, say, $1,000, since they would have prevailed on the actual issues in dispute. D.C. does have a weak “offer of judgment” rule that might let the Chungs recover some miscellaneous court costs — but not their major expense, lawyers’ fees — if Mr. Pearson loses or wins but a token sum. So even if they win, they’re bound to lose.

• The other source of Mr. Pearson’s power — his ability to hold the threat of huge penalties over the Chungs’ heads — arises from consumer laws that encourage complainants to multiply the stated penalty for a single infraction by the whole universe of a business’s clientele, or by all the days in the calendar, with no need to prove actual injury.

This sort of mechanical damage-multiplication has been a key engine in shakedown scandals in California (where roving complainants have mass-mailed demand letters to small businesses over technical infractions); in “junk-fax” litigation demanding billions from hapless merchants in Texas, Illinois and elsewhere; and in important sectors of litigation aimed at bigger businesses, including claims against credit-card providers and purveyors of “light” cigarettes. Whole dockets’-worth of opportunistic litigation would dry up if we revised these laws so as to require a showing of actual injury. Doing so would require overcoming epic resistance from the litigation lobby.

It’s nice to see that even the organized plaintiffs bar piously deplores Mr. Pearson’s abuse of the law. It would be even nicer if they agreed to stop opposing reforms that would give the Chungs of the world a fighting chance the next time around.

Earlier: June 17; June 14; Apr. 26; et cetera.

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Scrap over “bandaged-client” graphic

Not just promotional and eye-catching, but creative and artistic too: “A New York lawyer who used a cartoon image of a heavily bandaged patient to advertise his personal injury practice may be entitled to copyright protection for the drawing, a federal judge has ruled.” Richard P. Neimark of Rockland County (toll-free number: 1-888-PAL-RICH) had been using the picture of a bandaged patient lying in a hospital bed in Yellow Pages ads and on his website and had even gone so far as to register it with the U.S. Copyright Office in 1990, so you can imagine his annoyance when a personal injury firm with an office in nearby White Plains, Ronai and Ronai, adapted the drawing for its own ad, later saying it thought the drawing was in the public domain. A federal judge has urged the parties to settle, noting that the Ronai firm had pulled down the graphic immediately and that no evidence had been presented of any actual injury. (Anthony Lin, “Copyright Infringement Suit Over Lawyer’s Advertising Cartoon Continues”, New York Law Journal, Jun. 11).

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That security patch your product needs? Sorry, we’ve patented it

Another new way to bring the idea of software patents into disrepute, per eWeek/SecurityWatch:

Security researchers, are you tired of handing your vulnerability discoveries over to your employer, as if that were what you’re paid to do? Helping vendors securing their products—for free—so that their users won’t be endangered by new vulnerabilities? Showing your hacking prowess off to your friends, groveling for security jobs or selling your raw discoveries to middlemen for a fraction—a pittance—of their real value?

Take heart, underappreciated, unremunerated vassals, for a new firm is offering to work with you on a vulnerability patch that they will then patent and go to court to defend. You’ll split the profits with the firm, Intellectual Weapons, if they manage to sell the patch to the vendor. The firm may also try to patent any adaptations to an intrusion detection system or any other third-party software aimed at dealing with the vulnerability, so rest assured, there are many parties from which to potentially squeeze payoff.

Intellectual Weapons is offering to accept vulnerabilities you’ve discovered, as long as you haven’t told anyone else, haven’t discovered the vulnerability through illegal means or have any legal responsibility to tell a vendor about the vulnerability.

Also, the vulnerability has to be profitable—the product must be “highly valuable,” according to the firm’s site, “especially as a percentage of the vendor’s revenue.” The product can’t be up for upcoming phaseout—after all, the system takes, on average, seven years to churn out a new patent. The vendor has to have deep pockets so it can pay damages, and your solution has to be simple enough to be explained to a jury. …

The firm says it “fully [anticipates] major battles.”

(“New Firm Eager to Slap Patents on Security Patches”, Jun. 7; Slashdot thread).

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The Litigation Lobby’s “frivolous” bait-and-switch: the Judge Roy Pearson pants-suit

Second Milberg Weiss Justice Fellow, same as the first? Bizarro-Overlawyered twists itself into contortions over the infamous $54 million Judge Pearson pants-suit. Cyrus Dugger’s replacement as Milberg Weiss Justice Fellow, Kia Franklin, recognizes that the anti-reform cause can’t be seen endorsing the patently-ridiculous lawsuit that is the laughingstock of the world. So, she dances over the issue: yes, this case is frivolous, but frivolous cases are rare, so there are no lessons to learn from the fact that a small business was forced to pay tens of thousands of dollars litigating an overbroad consumer-fraud claim, to the point that it was willing to pay $12,000 over a pair of pants to make the lawsuit go away and stop the financial bleeding.

Her evidence is a Public Citizen study—but she ignores our 2006 post noting that Public Citizen got its math wrong, and even distorts the distorted statistic beyond what Public Citizen claimed. (Public Citizen gerrymandered its claim to falsely say businesses were 69% more likely to be sanctioned for frivolousness than individual tort plaintiffs, but Franklin misreads that to say individuals, which is false even by Public Citizen’s numbers, which found by its own measure that individuals were sanctioned for frivolousness 86% more often than corporations. Note also the difference between the inaccurate “more likely” and “more often.”)

The really funny thing is that, under the Public Citizen narrow definition of “frivolous lawsuit” used in its study, Judge Pearson’s suit is not frivolous! When politicians speak of “frivolous” cases, they use it in the everyday English sense of “silly”: they mean the meritless cases, where, because of far-fetched legal theories, junk science, or overbroad liability rules, plaintiffs seek or realize recovery far beyond what makes good social policy—cases like Roy Pearson’s. Public Citizen’s study, however, in a typical litigation-lobby bait-and-switch (see, e.g., the Kerry/Edwards malpractice reform plan), defines “frivolous” with the narrow technical legal definition so that it can conclude (like Franklin) that frivolous litigation is “rare” and thus not a problem. (Amazing how many problems disappear when you assume them away.) The definition is so narrow that Pearson’s suit is outside of it: Pearson defeated motions to dismiss and for summary judgment, and received a $12,000 offer of judgment. (Pearson is apparently sufficiently emotionally troubled that he thinks he has a better shot seeking tens of millions from a couple of immigrant Korean dry cleaners than the thousands of dollars offered in settlement for a pair of pants, even though the judge who will be ruling on his case has given him plenty of hints that he has no hope of success.) The Pearson suit would have been excluded from Public Citizen’s count of frivolous suits for a second reason: Public Citizen ignored pro se lawsuits brought by attorneys like Pearson in its count of frivolous suits, as it had to to deflate the number of sanctions issued against individual tort plaintiffs and falsely claim that corporations are sanctioned more often.

We’re excited to see Franklin join the world of reformers and recognize that many more lawsuits are frivolous than what Public Citizen recognizes. We encourage her to read the data and arguments of those she mistakenly claims to oppose, and to scrutinize those she mistakenly thinks are her allies a bit more closely. Why is it alright for wealthy white trial lawyers to extort billions from big business using the same ad terrorem tactics (and even the same consumer-protection laws!) as a poor African-American pro se did to extort $12,000 from a small business? We encourage Franklin to examine the Association of Trial Lawyers of America’s racial double-standard.

And since Franklin agrees that the Pearson lawsuit is frivolous, we are eager to hear how she would define a frivolous lawsuit, and hope that she uses that definition consistently for both the Milberg Weisses of the world as well as African-American city employees.

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Committee votes to disbar Nifong

The Duke lacrosse prosecutor acted as a “minister of injustice”, said State Bar prosecutor Douglas Brocker. The disciplinary committee wound up agreeing unanimously on nearly every element of the ethics charges against Nifong, who’s agreed to quit as Durham prosecutor. (Aaron Beard, “N.C. Panel Disbars Duke Prosecutor”, AP/Chattanooga Times Free Press, Jun. 16; “Nifong stripped of law license”, Sports Network, Jun. 17). We’ve covered the case extensively from early on; K.C. Johnson at Durham in Wonderland, who’s led the blog charge on the issue, notes that the New York Times’s Duff Wilson is still slanting his coverage of the case (Jun. 16).

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New at Point of Law

If you’re not reading our sister site, you’re missing posts about federal indictments in the Ky. fen-phen scandal; great moments in labor arbitration; a big embarrassment (and maybe even liability?) for Yale Law School; more cosmetics from John Edwards on med-mal; New Jersey and Missouri high courts rule against lead-paint nuisance suits; federal judge refers for possible prosecution criminal contempt charges against Pascagoula potentate Dickie Scruggs; lots of Stoneridge coverage; and much more.

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Privacy laws and Seung Hui Cho, cont’d

Better late than never:

Virginia Tech has provided some of Seung Hui Cho’s medical records to a panel investigating the April 16 massacre, after negotiating with family members to waive their privacy rights….

The records were released after weeks of frustration among the eight panel members over not being able to analyze Cho’s mental health in the years leading to the massacre, the worst mass shooting by an individual in U.S. history….

…panel officials said Thursday that they will continue to press for additional records, which also are protected under state and federal privacy laws.

(Tim Craig, “Panel Given Some Medical Files on Cho”, Washington Post, Jun. 15). And from a Thursday news report, also in the Post:

Authorities’ abilities to identify potentially dangerous mentally ill people are crippled across the nation by the same kinds of conflicts in privacy laws that prevented state officials from being able to intervene before Seung Hui Cho went on his rampage at Virginia Tech, according to a federal report commissioned after the Blacksburg shootings that was presented to President Bush yesterday.

Because school administrators, doctors and police officials rarely share information about students and others who have mental illnesses, troubled people don’t get the counseling they need, and authorities are often unable to prevent them from buying handguns, the report says.

(Chris L. Jenkins, “Confusion Over Laws Impedes Aid For Mentally Ill”, Washington Post, Jun. 14). My writings on the topic from April are here, here and here.

Vienna, Va. attorney Thomas J. Fadoul, Jr., who represents twenty victim families, has threatened to sue unless a family representative is appointed to the panel investigating the massacre so as to help “steer” its proceedings; Virginia governor Tim Kaine has replied that the panel was chosen so as not to include parties involved, and noted that the panel does not include any representative of Virginia Tech itself.

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Mamaroneck: our cops won’t ask about legal status

That’s what the Westchester County, N.Y. town has pledged as part of the settlement of a lawsuit charging that cops were overly aggressive in policing an area where Hispanic day laborers hung out to solicit work. Because it’s not as if local police have any business concerning themselves with whether anyone’s violating federal law, right? Or something like that. You can see why David Frum (Jun. 15) might get riled up (Jim Fitzgerald, “Hispanic day laborers, NY village reach tentative agreement over discrimination lawsuit”, AP/Canton Repository, Jun. 11).

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