Posts tagged as:

harmless lawsuits

According to attorney Jeffrey Newman in the Times of Trenton, New Jersey law allows class actions and consumer fraud suits to be based on paperwork infractions with no showing of actual harm, creating openings for opportunistic litigation:

As an attorney, I have defended numerous business owners against frivolous claims in which the plaintiff could prove absolutely no injury and he or she had received whatever service or product that was promised. Yet there was language in the purchase agreement that was found to be considered “non-compliant” with the Contractors Registration Act and the Consumer Fraud Act’s Home Improvement Contract regulations.

…Contractors who choose to use boilerplate contracts often sold in office supply stores are playing with fire, as such agreements would never withstand the scrutiny of the state’s consumer protection laws. When contractors use these forms and are sued, the courts can rule that they have to hand back to the consumer every penny — even the money they laid out for materials to do the job. … In another case, we represented a contractor whose advertisements were not in compliance. Even though the plaintiff never bought anything, our client was still sued!

I’m quoted in Sandra Pedicini’s report on the settlement (with $9 appetizer vouchers) of a lawsuit charging the Olive Garden restaurant chain with “printing the last six digits of customers’ credit-card numbers on receipts. The limit under the Fair and Accurate Credit Transactions Act is five.” Under FACTA, lawyers need not show that class members suffered actual damages from the violation; instead, they can claim statutorily prescribed damages, multiplied by the (usually large) number of customers involved. In most such cases, there are no reports of any identity theft because of the breaches: “It’s like reckless driving in which no one had an accident and except for the lawyers, no one even noticed the car speeding,” I’m quoted as saying. ["Olive Garden diners may be eligible for $9 voucher", May 19]

{ 4 comments }

Even in California, you may not be able to sustain a class action lawsuit against a product that worked fine and didn’t harm you [Cal Biz Lit, Drug & Device Law]

Overlawyered readers may remember the problem of FACTA lawsuits when a poorly drafted federal law led to attorneys seeking $1000 for every occasion when a credit-card slip showed an expiration date.

Stroock & Stroock’s Daniel A. Rozansky and Scott M. Pearson have an op-ed in today’s San Francisco Chronicle discussing problems with a similar California law. California prohibits businesses from requesting or requiring “personal identification information” while accepting a credit-card payment; this includes address and phone number, but doesn’t specify what else. Entrepreneurial trial lawyers are asking courts to hold that it includes harmless information like ZIP codes: since the statute provides for $1000/violation damages in the absence of a showing of harm without a cap, extortionate lawsuits are easy to create–and a further drag on the already-suffering California economy.

{ 15 comments }

October 14 roundup

by Walter Olson on October 14, 2008

  • Don’t miss Roger Parloff’s tour de force coverage in Fortune blowing whistle on that dodgy suit in Moscow against Bank of New York Mellon, adorned by participation of lawprofs Dershowitz and Blakey [PoL overview, main article]
  • Digital remixes and copyright law [Lessig, WSJ]
  • Surgeon at Connecticut’s Greenwich Hospital revealed as drug abuser, Koskoff, Koskoff & Bieder now pressing suit on behalf of general class of patients, which sounds like it means “whether harmed or not” [Greenwich Time, Newsday via TortsProf weekly roundup]
  • Chicago sheriff halting foreclosures, or maybe not, reportage is confused [Reuters, big discussion at Steve Chapman blog] And is Obama taking the idea national with bid for 90-day moratorium on foreclosures? [AP]
  • Foie gras-style financial gavage? “None of banks getting government money was given a choice about it, said one of the people familiar with the plans.” [Bloomberg, Bernstein @ Volokh] More: Ann Althouse, Kuznicki/Cato at Liberty.
  • Trey Allen law firm in Dallas agrees to pay $840,000 restitution after profiting from staged car crash scheme, but Allen’s lawyer says client wasn’t aware of any fraud [ABA Journal]
  • Smoking bans, alcohol taxes contributing to steep decline of English village pubs [Newsweek]
  • Bias-law panel rules Wal-Mart within its rights not to hire a female applicant for Santa Claus position [eight years ago on Overlawyered]

As good an argument for the Class Action Fairness Act as any: Trial lawyers sued Compaq in Texas over an allegedly defective disk controller, though none of the plaintiffs had ever suffered a malfunction or a loss of data, alleging a violation of Texas consumer fraud law on behalf of a nationwide class.  No dice: the Texas Supreme Court threw out the case, noting that Texas law did not permit the sort of nationwide class action contemplated by the plaintiffs.  End of story?  Nope: the same trial lawyers filed the same complaint again, this time in Oklahoma state court, and asked the Oklahoma state court to apply Texas law to a nationwide class.  “Sure thing!” the court rubber-stamped–applying an ersatz version of Texas law rejected by Texas courts.  The forum-shopping was able to extract $40 million in attorneys’ fees from a questionable coupon settlement, as an Overlawyered post noted August 6.  The Summer 2008 issue of State Court Docket Watch includes my essay discussing why this is a constitutionally problematic set of decisions by Oklahoma courts–written before, though published after, the Anthony Caso analysis for WLF.

{ 2 comments }

Two readers have written to alert us to this settlement (PDF), including frequent commenter Todd Rogers:

I received notice in the mail [this month] that I’m party to a class action suit against VW USA. I drive a Passat with a “Smart Key.” According to the suit, VW has been naughty because they did not make the key duplication apparatus available enough to locksmiths, third party key duplicators, and the like, in the event that I (we) want to make another key. What would my settlement be? I’m the benefactor of “greater communication” from VW USA.

What do you know…owners of Mercedes Benz suffered the same injury and it was the same firm, Lurie & Weiss, who helped make them whole, as well. Who’s next?

Objections and requests for exclusion must by filed by the end of August, and a fairness hearing is scheduled for Sept. 22 in the courtroom of the Hon. Audrey B. Collins in federal court in Los Angeles.

{ 25 comments }

July 6 roundup

by Ted Frank on July 6, 2008

  • Beck and Herrmann fisk a NEJM anti-preemption editorial. [Beck/Herrmann; NEJM]
  • Lessons of the Grasso case. [Hodak]
  • You think BigLaw has it bad? Plaintiffs’ attorney who invented the benefit-of-the-bargain theory for pharmaceutical class actions where no one has suffered any cognizable injury, has made his firm tens of millions, but still hasn’t made partner. “Zigler said he never meets most of the people he represents in these high-profile cases.” [St.L. Post-Dispatch; related analysis from Beck/Herrmann]
  • Speaking of harmless lawsuits, “an atrocity in Arkansas,” as Arkansas Supreme Court ignores basic principles of due process and civil procedure to certify an extortionate pre-CAFA class action from MIller County. [Hmm, that's Beck/Herrmann again; General Motors v. Bryant; related from Greve]
  • Speedo competitor: unfair competition to say your innovative swimsuit has an advantage just because 38 out of the last 42 world records (as of June 30) were broken in the suit. [Am Law Daily]
  • Background on bogus shower curtain scare story (earlier). [NYT; related AEI event]
  • EMTALA-orama: don’t discuss payment in the emergency room if you don’t want to get sued. [ER Stories]

Walter’s post about Tehmina Haque‘s lawsuit against American Airlines over her “fear” of an unrealized peanut allergy is not the first time her attorney, Kenneth Mollins, has attempted such a tactic.

[click to continue…]

{ 6 comments }

Tehmina Haque’s four-year-old son apparently did not suffer any allergic reaction, but mom got really stressed about the possibility he would so she’s suing American Airlines anyway. The airline says it never promises peanut-free flights, if only because it cannot keep other passengers from bringing their own peanut snacks on board. (Zachary R. Dowdy, “LI woman sues over in-flight peanuts”, Newsday, Jun. 2).

{ 7 comments }

We now know how many people signed up for the Grand Theft Auto: San Andreas class action settlement out of the millions of members in the purported class.

Tier 1 (up to $35.00) (no exchange required): 416
Tier 2 (up to $17.50) (exchange required): 22
Tier 3 ($10.00) (exchange required): 131
Tier 4 ($5.00) (no exchange required): 2,050
Disc Exchange w/o cash: 57

2676 total claimants, receiving a total cash value of at most $26,505, though likely even less than that, given that the plaintiffs’ attorneys record no actual cash distribution.

The seven “representative” class members are asking for approval to receive another $24,500, or nearly half of the total cash recovery.

Of course, as we’ve discussed, none of these people had a legitimate cause of action or suffered any legally cognizable injury. But how much are the plaintiffs’ attorneys (from thirteen different offices of twelve different law firms!) asking for for this travesty of a lawsuit and settlement–one that was entirely redundant of the taxpayer-funded investigation conducted by the Los Angeles district attorney? They claim their time devoted to the litigation was worth $1,317,433, but are “generously” claiming a 28% discount for a total fees-and-costs request of $1 million.

Recognizing that this 3774% contingent fee looks fishy to the least scrutinizing of judges applying Rule 23 review, the plaintiffs have sought to inflate the appearance of accomplishment through a $870,000 cy pres award to the National PTA and ESRB. (As I’ve discussed, cy pres awards that do not directly benefit class members should not be used to justify fee awards.) They also inflate the award by claiming that the costs of notice, administration and disk replacement should be attributed to the size of the accomplished result, thus puffing matters up to over $2 million, consisting nearly entirely of empty calories for the plaintiffs they purport to be representing.

Alas, I was the only class member to docket a formal objection to this rip-off. (While it was my idea to object, I can take no credit for the objection brief, which was written by my attorney, Larry Schonbrun.) On Thursday, the plaintiffs’ attorneys filed a brief defending the settlement, with many cites to Overlawyered as ad hominem attacks on the objection. The court’s hearing is June 25.

{ 12 comments }

May 2 roundup

by Walter Olson on May 2, 2008

  • Contriving to give Sheldon Silver the moral high ground: NY judges steamed at lack of raises are retaliating against Albany lawmakers’ law firms [NY Post and editorial. More: Turkewitz.]
  • When strong laws prove weak: Britain’s many layers of land use control seem futile against determined builders of gypsy encampments [Telegraph]
  • “U.S. patent chief: applications up, quality down” [EETimes]
  • Plenty of willing takers for those 4,703 new cars that survived the listing-ship near-disaster, but Mazda destroyed them instead [WSJ]
  • “Prof. Dohrn [for] Attorney General and Rev. Wright [for] Secretary of State”? So hard to tell when left-leaning lawprof Brian Leiter is kidding and when he’s not [Leiter Reports]
  • Yet another hard-disk-capacity class action settlement, $900K to Strange & Carpenter [Creative HDD MP3 Player; earlier. More: Sullum, Reason "Hit and Run".]
  • Filipino ship whistleblowers’ case: judge slashes Texas attorney’s fee, “calling the lawyer’s attempt to bill his clients nearly $300,000 ‘unethically excessive.'” [Boston Globe, earlier]
  • RFK Jr. Watch: America’s Most Irresponsible Public Figure® endorses Oklahoma poultry litigation [Legal NewsLine]
  • Just what the budget-strapped state needs: NY lawmakers earmark funds for three (3) new law schools [NY Post editorial; PoL first, second posts, Greenfield]
  • In Indiana, IUPUI administrators back off: it wasn’t racial harassment after all for student-employee to read a historical book on fight against Klan [FIRE; earlier]
  • Fiesta Cornyation in San Antonio just isn’t the same without the flying tortillas [two years ago on Overlawyered]

{ 3 comments }

For being the first Overlawyered blogger to have a post cited in a federal case. In Taylor v. XM Satellite Radio, Inc., 533 F.Supp.2d 1151 (N.D. Ala. 2007), XM argued that the class action demanding a refund for a 24-hour outage was moot because they offered refunds well before the class certification motion was made. Plaintiffs disputed this, arguing they did not know about the refund offer until after they moved for class certification. One questions the relevance of the time of the certification motion (and, indeed, the court found this factual claim irrelevant) given that the refund offer was to the entire class rather than just to the named plaintiffs, but one reason that the court expressed skepticism at the attorneys’ claims was the existence of an Overlawyered post by David discussing the refunds and the ludicrousness of the suit. Case dismissed for mootness, though the court also noted that XM had no contractual obligation to provide continuous uninterrupted service.

{ 2 comments }

The National Law Journal gets around to discussing the problem of FACTA lawsuits in the April 7 issue; Overlawyered readers are well ahead of the curve. See also my Liability Outlook on the subject.

April 2 roundup

by Walter Olson on April 2, 2008

  • Judge expresses surprise at how many law firms want in on fees in Visa/MasterCard issuer settlement [NYSun]
  • Mississippi bill would require a lawyer’s presence at real estate escrow closings; so rude to cite the profession’s self-interest as a factor [Clarion-Ledger]
  • Following Coughlin Stoia’s lead, Mark Lanier announces he’s expanding into intellectual property litigation [The Recorder]
  • Maryland legislation would require state-aided colleges and universities to report on what they’re doing to advance “cultural diversity” [Examiner via Bader/Open Market]
  • New era at UK pubs? Under new directive, “employers will risk being sued if a bar worker or waitress complains of being called ‘love’ or ‘darling’, or if staff overhear customers telling sexist jokes.” [Daily Mail]
  • ACLU just sued city of San Diego and snagged $900K in legal fees, but that’s no impediment to the city’s council’s enacting a special day of tribute to the group [House of Eratosthenes]
  • George Wallace, who’s guestblogged here, hosts twin editions of Blawg Review #153 at his blogs Declarations & Exclusions and A Fool in the Forest, on piratical and Punchinello themes;
  • Obama won’t support lowering drinking age [Newsweek]
  • Such a shame for entrepreneurial plaintiffs, post-Proposition 64 if you want to sue a California business you might actually need to have been injured [CalBizLit]
  • Time mag appeals $100 million Suharto libel ruling [IHT]
  • Hey, no fair enforcing that fine print disclaiming liability for sweepstakes misprints [three years ago on Overlawyered]

{ 1 comment }

February 11 roundup

by Walter Olson on February 11, 2008

{ 1 comment }

Back in 2005, when the first lawsuits were filed over the Grand Theft Auto hot coffee mod, I wrote:

Me, I’m just amused by the thought of class action attorneys trolling for a named plaintiff parent who will testify that, while she was okay for her little Johnny to buy a game involving drug dealing, gambling, carjacking, cop-shooting, prostitution, throat-slashing, baseball-bat beatings, drive-by shootings, street-racing, gang wars, profanity-laced rap music, violent homosexual lovers’ quarrels, blood and gore, and “Strong Sexual Content,” she is shocked, shocked to learn that the game also includes an animation at about the level of a Ken doll rubbing up against an unclothed Barbie doll with X-rated sound effects…

Alas, Take Two games has given in to the blackmail and settled the case, but a sense of how frivolous it was can be seen from the following deposition excerpt of lead plaintiff Brenda Stanhouse, a schoolteacher in Belleville, Illinois, who will receive $5000 for her role in the litigation. Recall that Mrs. Stanhouse is alleging she was defrauded because she would not have bought a game that could be modified to include “pornography,” but take a look at pp. 67 ff. of the deposition, where she makes clear she didn’t have the faintest idea what was in the game that she did buy. Readers: type your favorite Stanhouse deposition excerpts in the comments.

{ 8 comments }

My latest Liability Outlook looks at the abusive litigation created by a statutory drafting oversight: a bill designed to protect against identity theft has instead become a mechanism for the entrepreneurial plaintiffs’ bar to attempt to bankrupt innocent businesses that haven’t harmed anyone.

{ 2 comments }