More twisted justifications for Pearson’s pants-suit

by Ted Frank on June 28, 2007

As I have repeatedly noted, the only reason the Chungs can be said to have been vindicated is that Judge Roy Pearson is more delusional and less sinister than the typical trial-lawyer extortionist. Had Judge Pearson accepted the $12,000 settlement the Chungs felt forced to offer between the expense of litigation and the small risk of Pearson mounting a case that successfully resulted in the giant fines imposed by DC consumer-fraud law, Pearson would have had a five-digit profit, and the Chungs would be out tens of thousands of dollars in litigation and settlement expense without any hope of recoupment. As Michael Greve demonstrates in “Harm-Less Lawsuits”, this is more than hypothetical: in consumer-fraud lawsuits alone, billions of dollars have been extracted from innocent defendants.

DMI’s Kia Franklin’s defense of her claim that the travesty of justice we have seen in Pearson shows that the system works? “Now, had Pearson collected the $12,000 settlement, we would have a whole new hypothetical and a whole new set of questions about the terms of the settlement (Would we have known the settlement amount? Would they have been able to publicize this? What were the lawyers’ strategies?) and the consequences thereof. So we can’t prematurely say that it would pay off for him.” Franklin goes on to deny that trial lawyer abuse even exists—a perhaps necessary position for her to take, given that the top of any list of abusers would include the indicted law firm Milberg Weiss, which funds her fellowship, in part from the successful extortion of billions of dollars using the same in terrorem tactics as Pearson.

As Peter Nordberg notes in the Overlawyered comments, “If [Pearson] is indeed representative, there should be thousands of cases just like it, and we may as well get to discussing those.” And indeed we should.

{ 9 comments }

1 NAC 06.28.07 at 9:11 am

There is NO justification for what Pearson did, other than his own egotistical delusions. Is there any word on whether he will actually be removed from the bench? I’m hopeful, but that hope is tainted with the knowledge that the American tort system is generally farked. I do live in Canada, so this doesn’t even affect me directly, but we seem to be slowly inheriting an American-style tort system. Which is bad.

2 Peter Nordberg 06.28.07 at 9:37 am

I have followed the links, and now I’m confused. All class actions are “just like” a suit seeking $67 million from a small laundry over an allegedly missing pair of pants?

3 Ted 06.28.07 at 10:14 am

The abusive class actions documented in Point of Law and Overlawyered share with Pearson’s case (1) the ability to force unjust settlement offers through in terrorem litigation tactics and/or (2) demands for damages divorced from economic reality and/or moral culpability, sometimes without even a lost pair of pants to justify the action.

4 Peter Nordberg 06.28.07 at 4:31 pm

I see. It’s not that all class actions are “just like” the Pearson case. It’s not even that any particular class action is. It’s that you believe class actions in general — or at least a subset of them described as “the abusive class actions documented at Point of Law and Overlawyered” — to satisfy certain extremely broad and subjective descriptions also satisfied by Pearson, or to feature certain tactics also employed in Pearson.

It sounds then, as though Pearson is of only the most tangential relevance to them. Maybe Pearson would be a footnote to some carried-to-its-logical-extreme argument that might be made within a broader analysis of minimum statutory damages in consumer fraud legislation. Even then, though, the question would still arise: How typical is Pearson?

To make it typical, I suspect, you’d have to move to a pretty high level of abstraction, stripping away much of the detail that makes Pearson so egregious. No complaining about a powerful administrative law judge misusing his legal knowledge to conduct an bizarre vendetta against a hardworking Korean-American family that runs a dry-cleaning establishment (because that certainly isn’t typical). No railing at the absurdity of leveraging a “Satisfaction Guaranteed” sign into a multi-million dollar ad damnum clause, in a situation where sane and decent human beings would have pressed, at most, for the value of the pants (because whatever you may say, that’s not typical either). And no invoking Pearson as an example of how frivolous consumer fraud cases result in enormous, frivolous verdicts (because the Chungs, of course, prevailed).

You’d still have your stop-me-before-I-offer-to-settle-again argument, I suppose. But even that much-diminished parable would seem atypical. The $12k settlement offer in Pearson, I’ll confess, is something of a bafflement to me. It would begin to approach a plausible approximation of the discounted value of this ridiculous claim, perhaps, for a risk-neutral defendant who actually had $67 million in assets on the line. But if the Chungs are that wealthy, it has escaped press attention.

Of course, the offer might have been driven by other rational considerations — e.g., risk-aversion arising from fears of bankruptcy, and/or the prospect that the Chungs’ legal fees would continue to mount, at the margin, by as much as $12k. But there too, the typicality of the case seems questionable. I am certain that Christopher Manning is an excellent lawyer, who did an excellent job for the Chungs. I’m less certain that he’ll sue the Chungs to collect for legal fees that reportedly “may run” to as much as $100k. I am highly confident that if this happens to the Chungs again, I could refer them to some lawyers who might be able to defend a case like this for less than $100k.

Should there be some limits or safeguards to prevent ruination of small businesses by enormous awards of minimum statutory damages out of all sane proportion to any harm inflicted, when the alleged violations seem stretched and technical at best? Maybe so, and Pearson might be germane to a potentially productive discussion of that issue.

But if treating Pearson as an opportunity to hurl vague imprecations at “class actions” is more to people’s taste, I suppose it’s a free country.

5 Ted 06.28.07 at 5:39 pm

Well, certainly one can be sophistic and change the question of what level of generality one looks at Pearson

If one disingenuously suggests that the issue is “How often does a divorced African-American city judicial official sue a Korean dry-cleaner in Washington, DC, over gray pants tailored by Hickey-Freeman and take the case to trial where he breaks down on the stand in tears?”, then obviously Pearson is sui generis.

But if the question is “How often are lawyers able to abuse litigation to impose huge expense and extort unjust settlement offers?”, then Pearson is a tiny fraction of a much much larger problem.

6 Peter Nordberg 06.28.07 at 6:43 pm

Sophistic, Ted? You don’t think that people’s reaction to the Pearson case is colored (quite naturally and appropriately, I would say) by the all-too-human details?

Okay. As I say, it’s a free country. But I’m still not completely clear on what “one” would allegedly be “chang[ing]” the “level of generality” from. If the level of generality is (say) “class actions” or “large damage demands,” then the degree of abstraction needed to make the connection seems quite high — so high, in fact, that the effort to make the connection, perhaps undertaken with the hope of imbuing “one’s” points with the derivative glow of the Pearson case’s larger scandalousness, might itself seem …

7 Ted 06.28.07 at 7:12 pm

William Lerach’s tactics are objectively more scandalous than Roy Pearson’s, which is one reason why I’m so offended at ATLA’s hypocrisy on the issue.

8 Peter Nordberg 06.29.07 at 10:48 am

Point of clarification: By “larger scandalousness” I meant the larger collection of scandalous aspects of the Pearson case. I meant no comparison, one way or the other, between that case and any other.

9 Deoxy 07.02.07 at 12:02 pm

PN,

This case is indeed a graet example of the problms of the legal system generally, with the problems so exposed being PARTICALLY abusable in class actions.

That is, it exposes the ability of a lawyer to extract a settlement offer in a case that almost everyone acknowledges is patently absurd.

If it can be done here, with a single pair of pants, imagine what can be done with “12 million potential plaintiffs”, or some such.

I believe that is the point here: whatever can be abused in the singular to giv you enough pressure to force a settlement can be multiplied by the class action to be even worse.

Comments on this entry are closed.