The home-improvement company in question is defunct, but lawyers say they’ll try to collect the $1,500-per-recipient statutory fine, or part of it, from its commercial liability insurer. [Fulton County Daily Report] My take on entrepreneurial junk fax litigation is here.
Manhattan solo practitioner Andrew Lavoott Bluestone claimed to be sending out informational advisories on legal issues, but a judge ruled that he was promoting his practice and implicitly proposing a commercial transaction. (Anthony Lin, “Judge Rules Attorney’s Faxes Are Prohibited Advertising”, New York Law Journal, Sept. 6). More on junk fax law: Jul. 31, etc.
We’ve posted repeatedly about the federal junk-fax law, which authorizes lawsuits for $500 apiece for inadvertent participation in unsolicited sending of faxes (and $1500 apiece for knowing violations); lawyers have learned to roll together class actions so as to generate million-dollar class actions against unsophisticated local businesses who weren’t aware of the law’s application to them (Oct. 22, 1999; see also Dec. 15, 2004; Mar. 19, 2004, Jul. 19, 2003, etc.). Now the Internet and Class Action Law Blog, published by a Naperville, Ill. class-action attorney, takes note of the phenomenon — not merely as an annoyance, but as a business opportunity. “Damages in these cases can be very large. If a blast fax has 50,000 recipients, damages could total $25,000,000! Why not turn all those junk faxes into a college fund for your kids?” (Jun. 30).
Illinois lawyers have established their state as the new hotbed of junk-fax litigation, according to Chicago Business. “In 2002 in Downstate St. Clair County, a Circuit Court judge ordered Seventeen Motors Inc. to pay $7 million for sending about 33,000 unsolicited faxes.” Cleveland-based Charter One Bank recently “agreed to pay $1.8 million for sending unsolicited faxes to about 70,000 phone numbers.” And “Cook County Circuit Court Judge Patrick McGann alone has since 2002 presided over more than 100 lawsuits, all seeking class action status, filed against senders of junk faxes.” Particularly active in the business: Daniel Edelman and his firm of Edelman Combs Latturner & Goodwin LLC. (Shruti Dat? Singh, “An IL industry: junk-fax law suits”, Chicago Business, Dec. 12). For more on junk-fax litigation, see Mar. 19, 2004, Jul. 19, 2003, etc.
“The Georgia Court of Appeals has revived a junk fax case that involves 73,500 faxes and potential fines of $110 million.” The ruling revives a lawsuit against a metro Atlanta car wash, Carnett’s Inc., for paying an ad agency $3,200 to send faxes to what it says it thought would be a “clean” list of recipients who didn’t object to receiving them. A federal law provides for automatic $500 to $1500 fines for each fax sent without permission. (Rachel Tobin Ramos, “Appeals Court Revives Hope for Junk Fax Class Action”, Fulton County Daily Report, Jul. 2) (more on junk-fax litigation: Oct. 22, 1999; Jul. 24, 2001 and links from there; Aug. 26, 2002)
Pitney Bowes, the office supply giant, will pay some Georgia lawyers $950,000 and make available discount coupons to class members to settle charges that it improperly sent faxes to customers of a toner business it bought in 2007. [Fulton County Daily Report] I’ve written and blogged about the junk-fax law here as well as on this site.
Yesterday, in the case of Maracich v. Spears, the Supreme Court ruled that the Driver’s Privacy Protection Act of 1994 (DPPA) prohibits trial lawyers from accessing names and contact information from states’ drivers license databases with the intention of soliciting potential clients for litigation. Under DPPA, the general rule is that states must keep the information in such databases private; there is a “litigation exception” for queries intended to investigate or prepare for legal proceedings, but the Court ruled that soliciting clients was not part of its scope. As I argue in a new post at Cato at Liberty, the dispute brought about a curious reversal in the polarities displayed in the case of Maryland v. King earlier this month: the pro-privacy justices in that case were more likely to be willing to dispense with privacy this time, and vice versa.
The underlying lawsuit (Kevin Russell at SCOTUSBlog and background here, here) also involves a bit of a reversal: class action lawyers are themselves being sued in a class action. The majority opinion by Justice Anthony Kennedy sketches in some of the background:
In the case now before the Court, petitioners are South Carolina residents whose personal information was obtained by respondents from the South Carolina DMV and used without their consent to send solicitation letters asking them to join the lawsuits against the car dealerships. Petitioner Edward Maracich received one of the letters in March 2007. While his personal information had been disclosed to respondents because he was one of many buyers from a particular dealership, Maracich also happened to be the dealership’s director of sales and marketing. Petitioners Martha Weeks and John Tanner received letters from respondents in May 2007. In response to the letter, Tanner called Richard Harpootlian, one of the respondent attorneys listed on the letter. According to Tanner, Harpootlian made an aggressive sales pitch to sign Tanner as a client for the lawsuit without asking about the circumstances of his purchase.
Some of these points may be relevant on remand, because the court will be asked to consider whether the original solicitation letter (marked “SOLICITATION”) had the predominant purpose of investigating the developing lawsuit, or of attracting clients for it. And this leads to the third turnabout. In the second class action, the one over privacy and the lawyers’ use of the DMV database, petitioners are seeking specified statutory damages of $2,500 for each person whose privacy was breached, which could add up to an “astronomical” (as Justice Ginsburg put it in her dissent) sum of hundreds of millions of dollars in all. Indeed, the majority opinion as well as the dissent signaled disquiet at a possible assessment of damages so far out of proportion to any actual harm done — a phenomenon we have seen again and again in statutory class or group damages cases in the past. Some trial lawyers have in the past pooh-poohed, as the griping of sore losers, complaints about mechanical multiplication of statutory damages into huge sums (e.g. FACTA, junk faxes, song piracy, California Labor Code). In this case, such multiplication could pose a threat to the fiscal well-being of some of their own number. (& welcome TortsProf, Legal Ethics Forum, SCOTUSBlog, JOLT Digest (Harvard Journal of Law and Technology) readers)
- His own bad deal to make: client can’t sue lawyer for malpractice after lawsuit lending swallows up proceeds of $150K settlement [BNA]
- U.K. legal representation: “John Flood looks at the cab rank rule” [Legal Ethics Forum, more]
- Drumming up business: “Junk fax class action may proceed despite attorney misconduct” [Reuters]
- “Personal Injury Lawyers Sue Other Personal Injury Lawyers Over Solicitation” [Turkewitz, more]
- Manipulating time records to qualify for bonus proves costly for Wisconsin attorney [Volokh]
- Lawyer profile: “Defender of the Notorious, and Now Himself” [NY Times]
- Local prosecutors connive at debt-collection abuses thanks to 2006 legal provision [LA Weekly]
- Ted Frank on Whirlpool front-loading washer class action [PoL] $1.5 million for attorneys, $41,510 for class? Judge balks at Amex gift card settlement [same] EasySaver coupon settlement “conservatively” values coupons at 85% of face value [same]
- Cy pres: Roger Parloff on tech-defendant class-action cy pres [Fortune] Privacy groups nominated for cy pres windfall in Facebook settlement [Wired, PoL]
- “Class-Action Lawyers Face Triple Threat At Supreme Court” [Daniel Fisher at Forbes; related, Michael Bobelian]
- Georgia high court: company could be on hook for $456 million for sending junk faxes [UPI] Will unwanted text-message class actions be the sequel to junk-fax litigation? [Almeida, Sedgwick via WLF]
- “Class action summer camp” series from Andrew Trask includes refreshers on key concepts such as typicality, adequacy, etc.
- “Supreme Court Hears Arguments in Comcast” [Wajert, earlier]
- City of Des Moines class action: we owe it to ourselves [Iowa Appeals] For another case where there was high overlap between plaintiff class members and those expected to pay damages, see Sept. 2, 1999 [Milwaukee tainted municipal water system]