Overlawyered: Chronicling The High Cost Of Our Legal System

John O’Quinn scandal update

As we reported in April, trial lawyer John O’Quinn is subject to a potential contempt hearing for allegedly improperly withholding $18.9 million of settlement money from his breast implant clients. It turns out that this wasn’t the first mention of the scandal in Overlawyered. In August 1999, Walter reported:

As one of the wealthiest and most successful plaintiff’s lawyers ever, Houston’s John O’Quinn has been known to call press conferences at which he’s leveled charges highly damaging to his opponents’ reputations, accusing them (for example) of conspiring to “remain silent, conceal or suppress information” about problems with their products and operations. So what happened June 4 when O’Quinn was himself sued by a group of unhappy former breast-implant clients seeking class-action status against him? As Brenda Jeffreys reported in the June 14 Texas Lawyer, O’Quinn “didn’t hesitate before pummeling the class action lawyers with a libel suit” charging the lawyers with “encourag[ing] the news media to disseminate false, slanderous and libelous comments about Plaintiff” — said encouragement consisting of their press release about the lawsuit, and the press conference they were planning that would have explained it further.

Had the lawyers challenging O’Quinn succeeded in holding their press conference, interesting questions might have been aired. Their suit charges that a group of women numbering at least 2,000 were wrongfully overcharged tens of millions of dollars in claimed expenses, and that the firm of O’Quinn and Laminack breached its fiduciary duty to them; it sought a fee forfeiture totaling $580 million. But O’Quinn’s firm rushed to court to ask for a temporary restraining order to prevent the lawyers from holding a press event, and on June 7, while a judge was considering that motion, they agreed to a gag order and called off the conference they’d scheduled for that day. The whole process — from the first public notice of the suit to the gag order in hand — had taken only three days. “O’Quinn’s quick action may have prevented a firestorm of public attention to the class action suit,” writes the Texas Lawyer’s Jeffreys. It is not recorded whether any of the defendants O’Quinn has sued have ever tried, let alone succeeded in, such a tactic against him.

Here’s an entertaining wrinkle we haven’t reported: the case was sent to an arbitrator, because trial lawyer O’Quinn had required his clients to sign a binding arbitration agreement in the event of disputes! (The irony here is far greater than any Judge Bork personal injury suit.)

The Houston Chronicle reports that the three Houston attorneys on the arbitration panel determined in March that O’Quinn’s deduction was not authorized by his contracts with his clients, and that they are now deciding damages. The former clients, now represented by Joe Jamail, are asking for O’Quinn to completely disgorge all of his fees, a legitimate possibility under the Burrow v. Arce decision, which would be over half a billion dollars. Arbitration decisions are generally not appealable. It’s unclear what has happened to O’Quinn’s countersuit against his clients alleging libel. (Mary Flood, “O’Quinn’s law clients win round against him”, Houston Chronicle, Jun. 9 (h/t W.F.)).

Arbitration is generally quicker than litigation, but O’Quinn seems to have successfully stalled this case for over seven years, not to mention avoid any publicity from it. To date, we are the only media source that has even mentioned the contempt hearing.

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Debra Saunders on eHarmony suit

The San Francisco Chronicle columnist quotes me on the lawsuit (Jun. 1) filed by Linda Carlson against the online matchmaking service eHarmony.com because it won’t fix her up with a gal. I’m quoted saying that “Diversity in theory is the enemy of diversity in practice” and that although existing dating services catering to lesbians would be far likelier to get the plaintiff what she’s looking for, nowadays “It’s not just that you get the choices you want, but also choices you don’t approve of have to be taken away.” Also, a new nickname for Overlawyered: eDisharmony.com. (At some point the paper will presumably get around to correcting the misrendering of my name.) Among others quoted as commenting on the suit:

Mark Brooks, spokesman for the gay online matchmaking service myPartnerPerfect.com, said of eHarmony, “I think they’re having a bit of an unfair time of it. I think it’s their right to have a niche focus, but they’ve not quite said the right thing, and their underlying tone has riled people up.”

The best line comes when Saunders brings up the earlier case (Mar. 29, 2006) of the attorney who sued eHarmony because it wouldn’t let married guys like him look for dates: “Married and litigious — what a catch, girls.” (“Disharmony: The new tolerance”, Jun. 7). More: Rick Sincere, John Corvino.

June 8 roundup

  • Litigation as foreign policy? Bill authorizing U.S. government to sue OPEC passes House, and is already contributing to friction with Russia [AP; Reuters; Steffy, Houston Chronicle; earlier here, here, and here]

  • Albany prosecutors charge boxing champion’s family with staging 23 car crashes, but a jury acquits [Obscure Store; Times-Union; North Country Gazette]

  • New at Point of Law: Bill Lerach may retire; Abe Lincoln’s legal practice; Philip Howard on getting weak cases thrown out; “Year of the Trial Lawyer” in Colorado; and much more;

  • Multiple partygoers bouncing on a trampoline not an “open and obvious” risk, says Ohio appeals court approving suit [Wilmington News-Journal]

  • Skadden and its allies were said to be representing Chinatown restaurant workers pro bono — then came the successful $1 million fee request, bigger than the damages themselves [NYLJ]

  • Who will cure the epidemic of public health meddling? [Sullum, Reason]

  • Turn those credit slips into gold, cont’d: lawsuits burgeon over retail receipts that print out too much data [NJLJ; earlier]

  • Lawprof Howard Wasserman has further discussion of the Josh Hancock case (Cardinals baseball player crashes while speeding, drunk and using cellphone) [Sports Law Blog; earlier]

  • “Women prisoners in a Swedish jail are demanding the ‘human right’ to wear bikinis so they can get a decent tan.” [Telegraph, U.K.]

  • Disbarred Miami lawyer Louis Robles, who prosecutors say stole at least $13 million from clients, detained as flight risk after mysterious “Ms. Wiki” informs [DBR; earlier at PoL]

  • Indiana courts reject motorist’s claim that Cingular should pay for crash because its customer was talking on cellphone while driving [three years ago on Overlawyered]

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Bork sues the Yale Club

Before someone accuses us of playing this down, let me be out front and say that I find Judge Bork’s slip and fall suit against the Yale Club embarrassingly silly. The Wall Street Journal has the complaint. Judge Bork, speaking at the Yale Club, attempted to climb a raised dais that had no stairs or handrail; the 79-year-old failed to do so, and fell back, and hurt himself severely. I sympathize with Judge Bork’s serious injuries, but it’s beyond me what his lawyers are thinking in asking for punitive damages. And if any danger is open and obvious such that there is an assumption of the risk, surely the absence of stairs to reach a lectern on a dais is—especially if the dais is of the “unreasonable” height that the complaint alleges it to be.

(Bork used to be a fellow at AEI; and Walter and I have dined at the Yale Club.)

Update: Bloomberg has some relevant (and some not-so-relevant) quotes from Bork.

Update: More from David Bernstein. (The “Olson” quoted is Ted Olson, not Walter.)

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California Supreme Court: Ladies’ Nights are Lawyers’ Nights

Last week, the California Supreme Court handed down yet another victory for abusive “antidiscrimination” litigation, ruling in favor of a California attorney who makes a business out of suing legitimate businesses for violations of California’s absurdly broad Unruh antidiscrimination law. Marc Angelucci and three of his fellow travelers sued the Century Supper Club, a nightclub, for charging women less than men on several occasions in 2002; although two lower courts found reasons to rule against them, the California Supreme Court ruled that their claims had merit. (Court decision: PDF)

Unfortunately, as a matter of law the Court is right. The Unruh law is written ridiculously, and it has no exception for bogus plaintiffs. (What’s the big deal? Just this: Unruh provides for a minimum of $4,000 damages, plus attorney’s fees, for successful plaintiffs, thus providing an incentive for Angelucci to turn an anti-Ladies’ Night crusade into a career. Even the California court recognized that its interpretation of the law improperly rewarded “professional plaintiffs and bounty-hunting attorneys,” but it (correctly) held that rewriting laws is for the legislature, not the courts.

Oh, and one of the plaintiffs’ lawyers in this case? Our old friend, Morse Mehrban. (Most recently covered: Apr. 17, and see links therein.) Mehrban and Angelucci have teamed up on these cases many times before.

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Particles in power steering fluid not responsible for crash

Many of the frivolous suits we cover here on Overlawyered are laugh-out-loud outrageous; but (as the plaintiff’s bar will trumpet in self-defense) these represent only a small fraction of lawsuits. (Of course, even at a small percentage, there’s enough of them for us to blog about them nearly every day.) Most of the suits that make up the “high cost of our legal system” are much more mundane — though not necessarily any less legally ridiculous or less costly. Take a decision handed down last month by the Fourth Circuit Court of Appeals involving a lawsuit against Nissan. (PDF)

In August 1997 — note the date here — a bunch of high school kids were driving around after school in a 1987 Nissan Sentra. The driver, who may or may not have been “speeding and driving recklessly,” depending on who you believe, lost control of the car. The car flipped over, and one of the passengers, Troy Boss (who, by the way, wasn’t wearing a seat belt), ended up paralyzed.

Thus endeth the tragic story, and thus beginneth Boss’s quest for deep pockets. (Which was also tragic, but only for Boss’s victims.) First, Boss settled his claims against the person actually responsible for the accident — Stacy Harmon, the driver of the car. Then, hunting around, Boss and his attorney decided that the only truly deep pocket they could find was Nissan, which somehow was responsible for a teenager crashing a 10-year old car. So, in February 2002 — five years after the accident — he filed a $50 million suit in Baltimore against Nissan, Jiffy Lube (which had done an oil change on the car), a company called Eberle Enterprises (which had done the state auto inspection when Harmon bought the car), and a woman named Elizabeth Aldridge (who had sold the used car to Harmon several months earlier for $750). The theory that Boss came up with? That Nissan manufactured the car defectively, in such a way that “particles” in the power steering fluid mysteriously jammed the steering mechanism in some way, causing the car to swerve.

But if that was Boss’s theory, you might wonder why Boss sued all those other defendants. What does an oil change have to do with power steering fluid? What does the prior owner of the car have to do with power steering fluid? What does a routine car inspection — which does not, by state law, involve power steering fluid — have to do with anything? The answer to all three questions? Nothing at all. So why were they in the case? One reason, and one reason only: by fraudulently joining them as defendants, Boss hoped to keep the case in state court, to destroy diversity. Under federal law, once the case has been in state court for a year, regardless of how fraudulent the reasons are, the case can’t be removed to federal court — and there was testimony in the case that Boss’s attorney had admitted he was deliberately stalling to get beyond the one year mark.

Read On…

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Are consumers and businesses enemies?

A reader writes: “Am I wrong to believe that businesses and consumers are natural enemies in that their economic interests are diametrically opposed?”

Yes, you’re wrong. Transactions don’t occur unless both parties are better off. Businesses thus only profit if they can create consumer surplus—the ability to sell a product at a price that is less than what a consumer values the good or service. Businesses’ interests are thus aligned with consumers who seek consumer surplus. Businesses more often prosper by creating satisfied consumers who become repeat customers who promote the business’s reputation rather than trying to extract every last ounce of wealth from them in a single transaction. This is why brand names and advertising are so important, because they are market signals of long-term commitment to customer satisfaction. It’s not profitable to invest in creating a brand name if one intends on having a bad reputation. (Note the key word “intends” there; no doubt one can intend to have good customer service and fail to achieve it, and I’m looking at you, Comcast.) And one will note that businesses that tend not to have repeat customers or rely on word of mouth are more likely businesses that have reputations of indifference about customer satisfaction: tourist traps, traveling carnivals, etc.

This is why it’s frequently a mistake to characterize pro-plaintiff actions as “pro-consumer” actions. This is not a zero-sum game, and making businesses worse off can quite often also make consumers worse off. Even if consumers come out ahead retroactively in one particular transaction because they got a coupon in a class action that they wouldn’t have otherwise, or because one consumer realized a jackpot award for their misuse of a product, consumers can be losers in the long term in litigation because of higher prices and fewer choices, and this is true even if corporations don’t entirely pass the higher costs on to consumers and force the widows and orphans who are their shareholders to suffer reduced profits as well.

I support reforms that make consumers better off. I oppose the ones that don’t.

Update: Judge unseals Shell case fee carve-up

Updating our Apr. 9 item about the New Orleans federal judge who sealed the division of fees in the settlement of a class action:

Five attorneys who served on a closed-door committee that helped U.S. Judge Ivan Lemelle decide how to divvy up $6.6 million in legal fees in a settled federal lawsuit over tainted gasoline steered nearly half the money to their own firms, court records unsealed this week show.

Of 32 plaintiff’s attorneys and law firms involved in the case over fuel-gauge damage caused by contaminated gas made at Shell-Motiva refinery in Norco, the four top fee recipients — set to collect between $480,000 and $1.1 million — each had a member on the five-lawyer team that Lemelle formed last fall to recommend how much to pay the 79 lawyers who worked on the case. …

Dane Ciolino, a Loyola Law School ethics professor who petitioned the court to unseal the records on behalf of attorneys who claimed they were shortchanged, said Tuesday he was intrigued by the money roster.

“I think it’s very interesting that of five attorneys on the fee committee — those five out of the 32 firms (in the case) — managed to get roughly half the fees,” he said. “Being on the fee committee apparently is good work.”

The New Orleans Times-Picayune had also petitioned to unseal the records. (Michelle Krupa, “Lawyers steered settlement money to own firms”, New Orleans Times-Picayune, Jun. 5).

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Tobacco suit stresses race angle

“Accusing tobacco companies of preying on black people, a Miami attorney is seeking $1 billion in damages on behalf of a Coral Springs, Fla., woman whose mother and grandmother both died of smoking-related health problems.” Reporter Forrest Norman of the Daily Business Review, the south Florida legal paper, quotes me expressing skeptical opinions about the suit. In Florida’s earlier Engle tobacco litigation, plaintiff’s lawyer Stanley Rosenblatt came in for sharp criticism at the appeals level for the way he demagogued the racial angle; I covered the case here, here and here. This week’s case was brought by solo practitioner J.B. Harris, who said of the tobacco-company defendants, “If I could, I’d try to have them charged with genocide.” (“Suit Accuses Tobacco Firms of Targeting Black Consumers, Seeks $1 Billion in Damages”, Jun. 6).

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