A law firm “announced today that it has filed a class action lawsuit in the Court of Common Pleas in Cuyahoga County, Ohio on behalf of all persons and entities residing in the United States who lost electrical power during the massive energy blackout that began on August 14, 2003.” (PR Newswire/Yahoo, Aug. 18). “The Great Blackout of 2003 is sure to generate countless lawsuits aimed at holding someone liable for the massive economic losses it caused – but experts said yesterday the only ones cashing in may be the lawyers.” (William Neuman, “Only Lawyers To Get a $$ Surge From Big Losses”, New York Post, Aug. 16; Adam Liptak, “Plaintiffs Face Hurdles Proving Liability”, New York Times, Aug. 15)(more on law firm Cauley Geller: Stephen Taub, “The Suing Game”, CFO.com, Jun. 15, 2001; Wesley Brown, “Predatory Law Firms Hover as Company Woes Are Made Public”, Northwest Arkansas Morning News, Dec. 23, 2001 (PDF first, second pages)).
Posts Tagged ‘class actions’
Bakker settlement: lawyers get $2.5 M, clients $1.2 M
A federal judge has ordered a settlement fund to pay $6.54 each to nearly 165,000 people who lost money in a real estate venture promoted by disgraced PTL ministry founder Jim Bakker. Claimants “said they gave a $1000 each for four-day vacations at a resort that was never built. Their attorneys won $2.5 million.” (“165,000 in PTL-Bakker class action each win $6.54 settlement”, AP/WIS-TV, Jul. 31; “Briefly … Tort Reform?” (editorial), Winchester Star, Aug. 4).
“Kiss ladies’ night goodbye”
Although the California Supreme Court ruled as long ago as 1985 that the state’s civil rights law prohibits “Ladies’ Night” discounts at bars, various San Diego taverns apparently hadn’t gotten the word. That created a perfect opening for Steven Surrey and Alfred Rava to make the rounds of nightspots in the county, demanding similar discounts for themselves and taking note when they were refused. The Unruh Civil Rights Act provides $4,000 fines for each violation plus “one-way” attorneys’ fee awards (pay if you are a losing defendant, collect nothing if you win). The next step was for lawyers to swoop down and obtain $20,000 settlements from six errant bar owners and $5,000 from a seventh that was going out of business. “One of the [complainants] is a California Western School of Law classmate of the two lawyers who filed the suits on their behalf. The other is a paralegal. When asked about the social merits of these lawsuits, Erik Jenkins, one of the attorneys who filed the suits, made comparisons between ladies night discounts and the discrimination faced by African-Americans in the South.” (Alex Roth, San Diego Union-Tribune, Aug. 3).
In other news of California bounty-hunting, the Long Beach Press-Telegram (Aug. 2) has editorially cited our editor’s recent WSJ op-ed in upbraiding local Assemblywoman Martha Escutia for advancing a measure that masquerades as reform of the state’s notorious section 17200 law but in fact would give lawyers even more scope to use it for shakedowns (see Jul. 28).
Addendum: Lest anyone doubt that highly entrepreneurial applications of section 17200 remain alive and well despite the downfall of the Trevor Law Group, John Sullivan at the Civil Justice Association of California reprints a recent letter (PDF) from a Bay Area law firm demanding $6500 in legal fees in exchange for not filing a 17200 lawsuit over an allegedly erroneous advertisement; the law firm does not claim to represent any clients injured by the ad, but does state that “A substantial percentage of this firm?s practice is devoted to prosecuting UCL violations.” (“17200 Abuses don’t stop with Trevor: Shakedowns Head North”, CJAC press release, Jul. 23)
Alaskan salmon suit: picking at the bones
On May 23 a 12-person jury unanimously rejected a price-fixing suit brought against ten American and Japanese seafood companies over prices paid to fisherman in Alaska’s Bristol Bay. By that point, however, other defendants had paid $40 million to settle out of the case. But fishermen shouldn’t expect to see much of that $40 million: their lawyers want $16.5 million as their contingency share, while the defendants who prevailed at trial want at least $11 million to pay their lawyers (Alaska, unlike the 49 other American states, follows a modified loser-pays system, though it seems the state legislature passed a special bill to clarify its application in this case). “Jack Keane, a veteran Bristol Bay fisherman who lives in Anchorage, said he’s not surprised the lawyers might take much of the money. ‘The cynics kind of said, “Well, that’s the way it would go anyways,”‘ he said. ‘God, it’s a messy legal thing.’ … The leading commercial fishing trade group, United Fishermen of Alaska, has said it doesn’t support an appeal and hopes the seafood companies recoup their legal expenses to plow back into an industry they say suffered major damage from the lawsuit in the key salmon market of Japan.” (Wesley Loy, “Lawyers on both sides of salmon case want to get paid”, Anchorage Daily News, Jul. 30).(& see updates Dec. 14, Feb. 22).
Calif. bounty-hunting, again
The Los Angeles Times’s Michael Hiltzik doubts that the cleanup of the Trevor Law Group spells an end to shakedown litigation under California’s Section 17200: “As I write I’m looking at a letter sent two weeks ago by a Bay Area lawyer to a San Jose pool company, offering to settle a potential 17200 claim over a supposedly deceptive newspaper advertisement in exchange for a ‘reasonable attorney’s fee’ of $5,000” (“Consumer-Protection Law Abused in Legal Shakedown”, Jul. 21). Hiltzik also relates an amusing anecdote about how the Trevor lawyers helped seal their fate: “The group also made the mistake of picking on the wrong victims; thinking that it was suing only ma-and-pa service stations, it named, apparently unwittingly, a couple of repair shops owned by the big tire maker Bridgestone/Firestone North American Tire, which took umbrage and put Sybesma [experienced defense lawyer Edward Sybesma of Costa Mesa’s Rutan & Tucker] on the case. ‘How was I supposed to know this was Bridgestone/Firestone?’ Sybesma recalls one of the Trevor lawyers lamenting one day — a line one wouldn’t be surprised to hear during an episode of ‘America’s Dumbest Criminals.'”
The Wall Street Journal’s free OpinionJournal has now posted our editor’s op-ed on section 17200, which appeared in the paper last Tuesday and was linked here in different form last week (see Jul. 22). (Walter Olson, “The Shakedown State”, OpinionJournal.com, Jul. 27.) Reader comments, too. And Baseball Crank (Jul. 27) quotes extensively and informatively from Justice Stephen Breyer’s dissent in the Supreme Court’s recent refusal to hear the 17200 case against shoemaker Nike.
Welcome Wall Street Journal readers
Our editor has an op-ed in today’s Journal on the latest developments in California’s “shakedown lawsuit” scandal, in which law firms were discovered to be mass-mailing demand letters holding up small businesses for thousands of dollars apiece under the state’s uniquely liberal “unfair competition law”, otherwise known as Business and Professions Code 17200. In brief, the Democratic leadership of the state legislature in Sacramento is using the scandal as an excuse to push through legislation that, along with a bit of window-dressing reform directed at the more obvious shakedown artists, would actually increase lawyers’ leverage to obtain settlements from defendants under section 17200. (Walter Olson, “The Shakedown State”, Wall Street Journal, Jul. 22). We covered the scandal earlier on Jan. 15-16 and Mar. 3; for more on California’s bounty-hunting Prop 65, follow these links and in particular our post for Nov. 4-5, 2002. More: The Civil Justice Association of California maintains a lot of information on the status of section 17200 legislation, especially here, here and here.
A Lipstick-Up
Various cosmetic companies settled a class action suit today. They were accused of price-fixing and collusion, the rank enemies of a competitive market. The companies, by and large, settled — it’s probably cheaper to do that than to litigate, given the chance (however slight) of a jury giving the class a bonanza of a deal. So, what do all the wrong customers get? One (1) item. Enough lipstick to last a few weeks. What do the lawyers get? The AP didn’t mention it, but I’m sure it’s a lot more than a tub of mascara and some blush. Would anything make a class action lawyer blush? (“Settlement could give away $175 million in cosmetics,” AP, Jul. 22). Update Apr. 14, 2004: settlement challenged; May 19: more details; Dec. 3, 2004 and Mar. 14, 2005: judge approves settlement.
Beaumont and its reputation
Lawyers and judges in Beaumont, Texas are far from pleased to hear their city called a “judicial hellhole” and “the Barbary Coast for class-action litigation.” “Defense lawyer James R. (“Jay”) Old Jr. says the county has unfairly gotten a reputation as a place where ‘the plaintiffs and defense bar work together to combine for the greatest amount of billables for the defense lawyers and the greatest recoveries for the plaintiff'”. Why, sir, the very idea is preposterous! Besides, there’s a silver lining in the city’s reputation as a forum-shopping destination for lawyers around the state and country: “In fairness, it represents to us an industry. It puts a lot of people to work here,” says Jim Rich, who heads the Beaumont Chamber of Commerce. However, things might be changing: recent elections have shifted the three-member appeals court that oversees Beaumont to a 2-1 Republican edge, from 3-0 Democratic. (Terry Maxon, “Beaumont known for torts”, Dallas Morning News, Jul. 20).
Update: intimidating tort reformers
Madison County, Ill. class action lawyer Bradley Lakin has withdrawn his subpoenas aimed at four organizations that had spoken out against lawsuit abuse in the Madison county courts: the U.S. Chamber of Commerce, Illinois Civil Justice League, American Tort Reform Association and Illinois Chamber of Commerce (see Jun. 9). Lisa Rickard, president of the Chamber?s Institute for Legal Reform, called the subpoenas “an illegitimate attempt to silence the critics of lawsuit abuse.” The ICJL, which has filed a sanctions motion against Lakin, has its own press release as well as links. (Further update Jul. 26: sanctions motion dropped)
Merrill Lynch cases tank
Whoops, there goes another Eliot Spitzer project: last week federal judge Milton Pollack dismissed investor lawsuits against brokerage Merrill Lynch based on emails dug up by the New York AG and widely billed in the press at the time as “smoking guns” providing “slam dunk” litigation potential for private plaintiffs. “Judge Pollack used scathing language in his decision in favor of Merrill Lynch released Tuesday in which he explained why he thought plaintiffs had no case. He described the plaintiffs as ‘high-risk speculators’ who lost their money ‘fair and square’ during the bull market of the late 1990s. (Greg Cresci, “Investors blaming Wall Street should think again”, Reuters/Forbes.com, Jul. 2). Meanwhile, a bill pushed by Wall Street firms in Congress would rather cleverly direct the proceeds from massed state-AG regulatory actions away from state budgets and toward the putative victims, namely investors (via the federal Securities and Exchange Commission). State governments in general were not big losers from the challenged Wall Street practices, yet Spitzer’s settlement arranged to spray large sums of money in their direction, winning him lots of gratitude-chits from the political class. Spitzer and his friends are howling foul at the proposed change, thus raising the question of to what extent their crusades have really been motivated by the welfare of mom-and-pop investors after all (Greg Farrell and John Waggoner, “House bill would steer Wall Street fines away from states”, USA Today, Jun. 10). More: a New York Times follow-up points out that what got thrown out were cases brought by nonclients of Merrill, an unusually lame category of claimant, and that actual Merrill clients can still proceed on claims that they lost money relying on deceptive research, though some of the judge’s findings, such as that Merrill’s research was “replete with risk warnings”, will still prove helpful to the firm in defending those claims. (Landon Thomas Jr., “Legal Reprieve for Wall Street Is Not Likely to Last Long”, New York Times, Jul. 4)