The Ninth Circuit, bound by California Supreme Court precedent, struck down a class-action waiver in an arbitration clause in a Cingular cell-phone contract. As I note to Business Week, forcing consumers to keep legal rights that they may not want ex ante raises prices: better to permit consumers and businesses the choice of how best to arrange their business affairs through freedom of contract. This is largely unpopular with the 17 commenters to the article.
Posts Tagged ‘arbitration’
Breaking: Wood v. John O’Quinn ruling
Courtesy of one of the winning attorneys, Overlawyered is the first to have the July 18 arbitration ruling on-line, which, as we reported earlier, rejected O’Quinn’s affirmative defenses and finds that O’Quinn’s overbilling and breach of fiduciary duties to his clients requires him to pay $35.7 million in damages plus interest and attorneys’ fees. Not a great number of surprises in this if you’ve been following our previous coverage (Apr. 15, Jun. 9, Jul. 19), but there is one interesting disclosure: note how O’Quinn used $3 million of plaintiffs’ money to surreptitiously fund a “Baylor study” on breast implants and make it seem like it was something other than a litigation-generated study.
Once again, let us note the irony that trial lawyers recognize the value of mandatory arbitration agreements, even as they wish to deprive other professions of the ability to use them.
Breaking: John O’Quinn ordered to refund $35 million
Houston plaintiff lawyer John O’Quinn has been ordered to refund at least $35.7 million to more than 3,000 former breast implant litigation clients, according to an arbitration panel decision released today.
With interest and attorneys’ fees, O’Quinn could owe almost $60 million.
O’Quinn required his former clients to agree to mandatory arbitration (a money-saving option the plaintiffs’ bar wishes to preclude other businesses from using). “[I]mproper general expense deductions included professional association dues, flowers, fundraising, other lawyer’s fees, and overhead, the arbitrators said.” A dissenting arbitrator suggested that O’Quinn should also be liable for using money to fund a public relations campaign on his work. (Mary Flood, Houston Chronicle, Jul. 19).
Overlawyered broke this story Apr. 15, and had a followup post June 9.
In Detroit, protected road menaces
The city of Detroit’s Department of Transportation, which runs 500 buses, budgeted a whopping $16.1 million this year to cover lawsuits and injury claims arising from its operations (yes, that amounts to $32,000 per bus per year). The city is finding it unusually difficult to reduce those numbers:
Matt Allen, spokesman for Mayor Kwame Kilpatrick, explained that Detroit is self-insured, which means money is set aside annually in an account earmarked for settlements, damages and other mishaps involving city-owned vehicles and drivers.
Meanwhile, the city, particularly the Detroit Department of Transportation, is struggling with union rules and arbitration cases that make it difficult to terminate even the most accident-prone drivers.
In one case, a bus driver was involved in 30 mishaps, hit a bicyclist resulting in a $1.4 million lawsuit settlement and, in a separate incident, had her driver’s license suspended. The city tried to fire her, according to records, but an arbitrator ruled she had to be rehired.
(David Josar, “Workers’ crashes cost Detroit”, Detroit News, Jun. 11).
New at Point of Law
If you’re not reading our sister site, you’re missing posts about federal indictments in the Ky. fen-phen scandal; great moments in labor arbitration; a big embarrassment (and maybe even liability?) for Yale Law School; more cosmetics from John Edwards on med-mal; New Jersey and Missouri high courts rule against lead-paint nuisance suits; federal judge refers for possible prosecution criminal contempt charges against Pascagoula potentate Dickie Scruggs; lots of Stoneridge coverage; and much more.
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.
New Jersey Turnpike Authority v. Local 196
Tim Sandefur has an amusing account of an arbitrator’s appalling decision to reinstate a tollbooth collector fired for shooting paintball guns in moving highway traffic. The arbitrator’s decision is wrong, but I’ll disagree with Tim and agree with the New Jersey Supreme Court’s decision that it’s not the court’s place to substitute their judgment for that of the arbitrator’s. The benefit of having arbitration is the lower cost of ensuring finality in decisions and avoiding litigation, and permitting appeals destroys that benefit if matters are simply going to be relitigated in court. If an arbitrator is consistently more wildly wrong than a litigation system (a questionable proposition) such that those lower costs are not justified by the higher error rate the remedy is to negotiate for different dispute resolution procedures in future union contracts. And that goes even when the arbitrator mistakenly rules in favor of the plaintiff.
Heads I win, tails don’t count files: Ohio HMO suit
The US Supreme Court denied certiorari on United HealthCare’s attempt to enforce an arbitration agreement in its contracts with doctors who filed an Ohio class action over reimbursements. The underlying class action is essentially identical to one that a federal court threw out as meritless in July, though this isn’t mentioned in the television coverage, much less that from Bizarro-Overlawyered. The Class Action Fairness Act effectively ends this sort of Russian-roulette game where plaintiffs get multiple chances to win a gigantic class action by filing in multiple jurisdictions, but does not apply to class actions (like this one) filed before 2004.
The AMA has supported these lawsuits, which is disappointing, to be sure; as I noted on Point of Law in July, “Next time the AMA complains about the costs of excessive meritless litigation, they can perhaps look in the mirror.”
The plaintiffs’ attorney is Overlawyered favorite Stanley Chesley: see Jul. 4, Mar. 6, Aug. 24, 2005, et cetera.
Guesting at Above the Law
I’m guest-blogging for the entertaining David Lat at his Above the Law site today. Here’s a sample post:
“At one arbitration, there were 35 lawyers”
What happens when buyers discover their expensively bought condos aren’t really any more solidly built than plain old apartments? For one thing, lots and lots of litigation (Karen Youso, “Luxury living or glorified apartment?”, Minneapolis Star-Tribune, May 22)(via Housing Bubble).