Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘class actions’

FTC Commissioner on class actions

Federal Trade Commissioner Thomas Leary’s June 26 speech on the FTC’s interest in class action litigation is on-line. Leary criticizes excessive attorney fees, cites the Manhattan Institute’s work on forum-shopping (see Mar. 24) and also notes the problem that the process can drive the result:

Once a class is certified to address a single common factor, it acquires a life of its own. If the case does not settle promptly, conservation of judicial resources may motivate courts to find ways to shortcut a burdensome inquiry into other substantive elements of the plaintiff’s case, like actual “impact” on, or “reliance” by, a large number of individuals who are differently situated. Substance is tailored to serve the needs of process rather than the other way around.

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Class Action Fairness Act: more editorials

Last month the Hartford Courant editorially endorsed the Class Action Fairness Act: “No one in Congress is proposing doing away with class-action lawsuits. Rather, this overdue legislation would curtail some of the worst abuses. Legislators have debated the issue long enough. There’s no good reason to wait another year to adopt this important reform.” (“Stop Class Action Abuses”, Aug. 22, no longer online). This weekend the New York Daily News takes a sharper tone: “Who could be against this rational reform? The trial lawyers’ lobby, that’s who. The sharks are not about to surrender their feeding grounds. Sens. Chuck Schumer and Hillary Clinton could have a huge impact on the matter, but so far both appear happy in the role of remora.” (“End lawyers’ shopping spree” (editorial), New York Daily News, Sept. 28).

Notwithstanding Schumer’s and Clinton’s stance, Business Week notes that the bill has won significant support among moderate-to-liberal Democrats (Lorraine Woellert, “Tort Reform Even a Democrat Could Love”, Jun. 2). A study from the Illinois Civil Justice League finds that, contrary to widely repeated reports, it is untrue that the state courts will lose jurisdiction over the great majority of the class actions they now hear. Meanwhile, Sen. John Breaux (D-La.) has been promoting a watered-down alternative to the legislation, but last week Sen. Chuck Grassley (R-Ia.) blasted the Breaux alternative as a “poison pill” which would doom class action reform efforts (Mark A. Hofmann, “Grassley blasts competing class-action reform plan”, Business Insurance, Sept. 23). (Earlier editorial (Washington Post, Christian Science Monitor, etc.): see our Jun. 25 report.)

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The Madison County scent

That was quite an editorial from the St. Louis Post-Dispatch: “The scent of fish in Madison County finally reached the noses of the Illinois Supreme Court judges. It’s about time. The court should crack down on venue rules that make Madison County a Mecca for plaintiff’s lawyers and a ‘judicial hellhole’ for corporations.” (“Plug the hellhole”, Sept. 19). See Kevin McDermott, “Penchant for attracting class-action suits is damaging business climate, petition says”, St. Louis Post-Dispatch, Sept. 9 (industry and legal experts petition for venue rules restricting plaintiffs from strategic selection of Madison County). A ruling last month has lawyers on both sides hopeful/fearful that venue reform may be coming in Illinois: “In a case involving a 1997 collision in Macoupin County between a truck of Union Pacific Railroad and a tractor of a private individual, the justices overturned lower court rulings that the case be heard in Madison County. The Supreme Court said a judge must consider more than just where a plaintiff would like the case heard. Judges must also weigh other factors, such as where the event that led to the suit occurred and where the parties live or work.” (Trisha L. Howard, “High court orders case moved from Madison County”, St. Louis Post-Dispatch, Aug. 21) (see recent John Stossel coverage, and our earlier coverage).

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Class action roundup: tires, Western Union, jam

At the new multi-author blog Marginal Revolution, Alex Tabarrok writes that he’s angry: “The lawyers will get $19 million, the plaintiffs have no damages and I have been involved in an abuse of justice. I received notice yesterday that I was a plaintiff in a class action lawsuit against Bridgestone/Firestone that is about to be settled. I was never injured by Firestone but that’s ok because injured people have their own lawsuit the one I am involved in is for people who were not injured. The lawsuit reads ‘Plaintiff Does Not Seek To Represent And This Litigation Does Not Involve Any Person Who Alleges That He or She Suffered Any Personal Injury or Property Damage Because Of A Failure Of One Of The Tires’ (capitalization in original.) Bear in mind that Firestone has already replaced all four of my tires with a competitor’s brand for free and similarly for many of the other plaintiffs.” (Sept. 16) Co-blogger Tyler Cowen at the same site isn’t any happier to discover that he is a member of the class in a suit against Western Union over its wire-funds-abroad service charging that, according to the legalese, “…the Defendants [made] misrepresentations about or otherwise failing to disclose to customers the fact that they received a more favorable exchange rate for converting U.S. dollars to foreign currency and foreign currency to U.S. dollars than they provided to their customers.” “Imagine that” — writes Cowen — “a middleman buying and selling at different prices!” (Sept. 17). (More: see KrazyKiwi, Oct. 8).

Meanwhile, a Wisconsin man has filed an intended class action lawsuit against jam maker J.M. Smucker after the Washington-based anti-business group Center for Science in the Public Interest published a report claiming that Smucker’s “Simply 100 Percent Fruit” products were falsely labeled because only a minority of the actual contents of a jar of strawberry or blueberry “Spreadable Fruit” consisted of those berries, the remainder consisting (as Smucker’s labeling makes clear) of syrups, concentrates and extracts derived from other fruits such as apple, grape, lemon and pineapple. (“Smucker’s Spreads Not All Fruit, Lawsuit Says”, AP/FoxNews, Sept. 5 — if you’re looking for a deceptive claim, how about the one conveyed by that headline?). The food-industry-defense Center for Consumer Freedom levels an interesting accusation against CSPI, namely that bounty-hunting lawyers suing under California’s Proposition 65 law seemed to have mysterious psychic powers to divine in advance exactly what was going to be in a CSPI report on supposed killer french fries — either that, or CSPI shared the information with them before it went public with its allegations. See “We, the jury, find the defendant ‘starchy'”, CCF, Jul. 17 (third from last paragraph); “CSPI: 100 Percent Litigious”, CCF, Sept. 8; “Latest Acrylamide Panic Based on Fudged Numbers” (press release), CCF, Jul. 10. For more on the French fry suit, see Dec. 27-29, 2002.

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“N.C. Jury Clears HP in Printer Lawsuit”

In the first trial of 34 state class actions brought against Hewlett-Packard for selling printers with “economy cartridges” that did not have a full reservoir of ink, a jury took two and a half hours to clear the company against a plaintiffs’ attorney seeking $11.5 million for alleged misrepresentations. (AP, Sep. 12). Lead plaintiff Staples Hughes “acknowledged he didn’t think about the cartridges or how much ink was in them until a co-worker told him her father, attorney Adam Stein, was looking for a plaintiff in a class-action lawsuit against Hewlett Packard. After talking with Stein, Hughes said he agreed to be that plaintiff. ‘I didn’t know I had a grievance until I really discussed the situation with Mr. Stein,’ said Hughes, who is, himself, an attorney, with the state’s appellate defender office.” Since bringing the suit, Hughes has bought another HP printer. (Beth Velliquette, “Suit: Firm filled ink cartridges halfway,” The Herald-Sun, Sep. 5).

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Class action roundup: lap dances, Register.com, Poland Spring

Houston attorney David George has filed intended class-action lawsuits on behalf of local resident Paul Brian Meekey against three strip clubs, claiming the clubs violated Texas law by adding a $5 credit card surcharge to the $20 price of a lap dance. The suit demands a refund of all such charges paid over the past four years, plus attorney’s fees. According to attorney George, state law flatly forbids merchants from imposing surcharges on credit card transactions, even, presumably, in cases where those transactions are costly for merchants to provide because of a high later dispute rate. “Another lawyer tried filing similar cases in 1999 but abandoned them, in part out of fear that clients would only be angry when they received notice at home about refunds.” (Mary Flood, “Seeking a redress of lap-dance surcharges”, Houston Chronicle, Aug. 31). (Update May 3, 2005: appeals court lets suits proceed).

In other news, Register.com has settled a class action over its supposedly deceptive former practice of initially pointing newly registered domain names to a “Coming Soon” Page which included advertising. Class members will get a $5-off coupon toward future Register.com services, named plaintiff Michael Zurakov will get $12,500, and the lawyers will ask for up to $642,500. Thanks, lawyers! (settlement notice; Ed Foster, The Gripe Line, InfoWorld, Aug. 27; Slashdot thread). And Nestle’s Poland Spring bottled water subsidiary “has negotiated a proposed settlement for a class-action lawsuit alleging that the company’s bottled water does not come from a spring and is not completely safe. … The settlement calls for Poland Spring to offer discounts or free water worth $8,050,000 over the next five years, contribute $2.75 million to charities during the same period and step up its monitoring of water quality. It also would pay the two lawyers involved in that case $1.35 million.” The deal is drawing peals of outrage from lawyers pushing ten similar class actions who are upset that the class was not properly represented — being angry about the possibility of being cut out without fees has absolutely nothing to do with it. “Each of the lawsuits contends that Poland Spring’s water is not actually natural spring water because it is drawn from wells.” (Edward D. Murphy, “Poland Spring makes deal on lawsuit”, Portland Press-Herald, Sept. 3; notice of settlement (PDF)). Update Jun. 25: how much did consumers actually get? Darned if one columnist can find out.

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Class Action Fairness Act on ABC

Though the “20/20” web page is featuring Macaulay Culkin’s new role as “a cross-dressing, gay, sociopathic killer,” the ABC program will also have a John Stossel segment on Friday, September 5, on “magnet county” state courts and on S. 274, the Class Action Fairness Act of 2003. The bill would expand federal jurisdiction over class actions, limiting the ability of plaintiffs to file multiple class actions in multiple state courts in hopes of finding a court willing to certify a nationwide class. Earlier discussion: June 25 and here (scroll to “Madison County”). Addendum: transcript of Stossel show is here.

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Why doesn’t Arnold…?

…tell us what he thinks about California’s bounty-hunting s. 17200 law? Timothy Sandefur wonders (Aug. 27)(see Jul. 28, Aug. 4, Jul. 22). And the Manhattan Institute (with which our editor is affiliated) has just published the proceedings of an Oct. 24, 2002 conference on state unfair competition statutes, of which California’s s. 17200 is perhaps the most extreme. Among the conferees: prominent attorneys Sheila Birnbaum and Elizabeth Cabraser, Duke law prof Francis McGovern, and Federation of Defense and Corporate Counsel president Robert V. Dewey, Jr. Our editor moderated a panel (“Unfair Competition and Consumer Fraud Statutes: Recipe for Consumer Fraud Prevention or Fraud on the Consumer?“)(PDF)

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Update: Ness Motley to fight misconduct verdict

Not unexpectedly, the billionaire tobacco/ asbestos plaintiff’s law firm says it will contest a jury’s $36 million verdict, including $28 million in punitive damages, for having allegedly placed its own financial interests ahead of those of its clients in a class action settlement over a Canadian telemarketing swindle (see Jul. 7). The verdict is said to be the second-largest against a law firm in the past ten years: “‘Anytime you see an award of that magnitude, you can expect the jury senses lawyer greed, and that angers them,’ said Joe McMonigle, a San Francisco attorney and former chairman of the American Bar Association’s committee on lawyers’ professional liability.” (Frank Norton, “Reputations hinge on Ness Motley appeal”, Charleston Post & Courier, Aug. 3; “Lowcountry law firm contesting verdict in legal ethics case”, AP/The State (Columbia, S.C.), Aug. 4).

Meanwhile, two lawsuits by former Ness Motley attorneys are painting an unattractive picture of life inside the giant firm, which is now known as Motley Rice (more than two dozen attorneys and employees quit and formed a second firm, Richardson, Patrick, Westbrook and Brickman.) In one case, dissident attorneys have asked a judge to ground a $13 million Dassault Falcon used by star lawyers Ron Motley and Joe Rice; in another, a female attorney charges a pattern of sexual harassment and misconduct at the firm, which it strenuously denies (Tony Barthelme, “Court filings shed light on Ness Motley schism”, Charleston Post & Courier, Aug. 22).

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$550 million? We’re worth it

Or was it the miles? “Lawyers who represented millions of retailers in their suit against Visa and MasterCard on debit card processing costs said on Tuesday they are seeking among the highest class action legal fees ever for nailing down $3 billion in combined settlements.” Plaintiffs’ lawyers led by New York’s Constantine & Partners want $550 million plus expenses, per Reuters (“Retailers’ Lawyers Want $550 Mln in Fees”, Reuters, Aug. 19); $609 million plus expenses, per the New York Times (Jennifer Bayot, “Lawyers Seek Big Fee for Negotiating Credit Card Deal”, New York Times, Aug. 19). The lawyers have hired well-known Columbia law professor John Coffee to review(/defend) their fee. According to a press release from the lawyers, the deadline for class members to object is Sept. 5, and the fairness hearing in federal court in Brooklyn is scheduled for Sept. 25. (settlement website)

Read On…

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