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Jon Christian Ryter
Copyright 2002 - All Rights Reserved
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once said that if you put enough liberals together in one room you
will always end up with a crisis. How many liberals are enough? Two if
one is a class action lawyer and the other is a judge. Put 12 more in
the jury box and you will always end up with a crisis of catastrophic
proportions in the form of a multi-million verdict against someone who
likely did nothing wrong. But since that "someone" will invariably
be a large corporation with deep pockets, there is no outcry against the
legal blackmailing and robbery. Everyone thinks: "Ah...they can afford
it..." not realizing that ultimately they--the consumer--pay for
every verdict through higher prices.
Class action lawsuits are nothing like one-on-one
personal injury lawsuits which may sometimes go to the extreme themselves.
Take the case of the elderly woman who purchased a
cup of hot coffee from the drive-through at McDonalds, and set the cup
her legs as she drove off. Even though you buy hot coffee because it's...well...hot,
the woman was awarded an obscene multi-million dollar judgment (later
reduced) because a jury felt it was McDonald's fault that the container
was not marked with a warning label that said "contents may be hot."
Or the man who sued BMW because his brand new showroom BMW had been repainted
by the dealer after it was scratched in shipment. His multi-million dollar
award went all the way to the U.S. Supreme Court where the verdict was
upheld because the dealer failed to advise the buyer that his new car
had been repainted.
Neither of those awards should have been
allowed to stand. In both instances, the judges hearing those cases should
have set the verdicts aside. But, we have become a litigious society.
Filing lawsuits today is like buying lottery tickets. It costs almost
nothing to file them, and every now and then a plaintiff hits the jackpot.
Lawyers as a class are probably less respected
than any other profession--including the world's oldest one--since they
have no problem prostituting themselves for money. But among attorneys
themselves nothing is worse than a class action lawyer--and there is no
parasite on Earth (except perhaps a liberal politician--most of whom are
lawyers) that is lower. Granted, most class action lawyers are masters
of their trade who earn millions of dollars a year from legal actions
whose victims--the defendants--are more afraid of bad publicity that will
diminish their worth on Wall Street than they are their actual guilt from
negligence or wrongdoing. Defendants are generally selected not so much
for their "guilt" but for their vulnerability and also their
ability to pay large out-of-court settlements to avoid litigation.
That is not to suggest that all class action
lawsuits are frivolous.
Many are not.
The asbestos class action lawsuit against
Johns-Mansville is one such action. Lawsuits filed against the pharmaceutical
industry over a myriad of drugs that either cause birth defects, damage
organs in those taking them, or cause death are justified when evidence
exists that the pharmaceutical giants either had knowledge of adverse
side effects and concealed that knowledge, or used their lobbyists to
rush a drug to market because of its profit potential without taking adequate
steps to make sure the drug was reasonably safe before putting it in the
drug stores of America.
Greedy merchants should always be held accountable.
Yet, I do not believe that class action lawsuits should ever be allowed
since they feed only the lawyers that file them.
If you think otherwise, look at these recent
class action settlements:
Jefferson County, Mississippi has become
a Mecca for class action lawsuits even though Mississippi does not have
a class action law. But smart lawyers have used Rule 20 of the Mississippi
Rules of Civil Procedure to file what in Mississippi is termed "mass
action" lawsuits. Lawyers have discovered that Mississippi's unique
laws allow them to secure jurisdiction over transnational pharmaceutical
companies--and Jefferson County, Mississippi's uneducated, and very poor
"jury pool" have shown a propensity to render huge compensatory
and punitive damage awards.
Under Mississippi law, all "mass action"
lawsuits must be local. That means, before the lawyers can file their
actions in Jefferson County, they have to find "victims" who
have purchased those pharmaceutical products at the Bankston Drug Store
since it is the only pharmacy
in the county. You can pretty much guess that the Bankston Drug Store
is not a mega chain with deep pockets. Located on Main Street in Fayette
since 1902, the drug store is a remnant of America's past. Antique cabinets
line the walls, and ice cream is still hand-dipped at the soda fountain
where Fayette's citizens sit and gossip over coffee, Coca Cola, or chocolate
malts. Fayette or Jefferson County is not a "profit center"
that would attract CVS or Rite Aid, yet this rural farming community has
become ground zero for some of the most famous class action lawsuits filed
in America. America's best known health supplement lawsuit--Fen-phen--was
filed here. So was the lawsuit against Rezulin and Propulsid. A jury in
the Propulsid case that went after the deep pockets of Johnson & Johnson,
the parent company of Janssen which developed heartburn drug, awarded
the plaintiffs in Pickard's court $100 million.
Pickard is a controversial liberal judge.
Plaintiff attorneys love him. Defendant attorneys fear him. Pickard allows
emotional testimony to be admitted that most judges would refuse. And,
Pickard wants speedy justice in his courtroom. Most cases filed in his
courts--even complicated multi-jurisdictional suits that should never
be heard in his courtroom because they
deal with defendants in other States--are rushed through Pickard's court
at breakneck speed. Pickard rigidly enforces a Mississippi rule that allows
plaintiffs to go to trial in 90 days from filing, sharply limiting the
defense's discovery rights and handicapping the defendants.
Because of Pickard, "...Jefferson County
is a magnet for highly speculative litigation that wouldn't get traction
in other courtrooms in the United States," declares Michael C. Hotra,
the public relations director of a tort reform group.
These cases originate in Jefferson County
because of the State's unique tort laws. Plaintiff's lawyers are eager
to file their lawsuits in Fayette because of the size of the awards granted
by Jefferson County's uneducated jury pool. Five years ago pharmacist
Traci Swilley bought the pharmacy from the family of its deceased owner.
Since that time she has been named in every pharmaceutical lawsuit that
has been filed. "My lawyers tell me that we're only sued because
they want to stay in Jefferson County because the verdicts are so high,"
she said. "The people don't realize they're suing me," she added.
"They're told by these big-time trial lawyers that '...you're not
hurting the pharmacy. This isn't against Traci.' They are told they are
suing the huge pharmaceutical corporations..." that can afford to
pay. In reality, being sued is bankrupting Swilley because even though
she is invariably dropped from the suits after they gain mammoth proportions,
she must still hire a lawyer and file an insurance claim. Her insurance
rates have skyrocketed and she is obligated to keep a lawyer on retainer.
The local newspaper, according to Swilley, is choked with ads from attorneys
seeking local plaintiffs from which they can launch massive class action
In Mississippi, as long as a lawyer has
a "local" plaintiff, he can keep the case out of federal court
where most class action lawsuits are actually laundered--and most are
dismissed as frivolous.
v R.J. REYNOLDS
In 1999 a trial before Pickard combined
the synergy claims between tobacco and asbestos and lung cancer. What
made this "tobacco" case interesting was that Pickard simultaneously
heard cases against six tobacco manufacturers and an asbestos defendant-jointly-with
each defendant stigmatizing the other. After the asbestos case was filed,
a group of minority plaintiffs argued that R. J. Reynolds and five other
cigarette manufacturers targeted blacks by advertising in magazines that
were predominantly sold in black communities-which Fayette was. The plaintiffs
(many of whom could not read and never bought the magazines in which the
ads purportedly appeared) sued for $5 billion in compensatory damages
and unspecified punitive damages.
On November 23, 1999, six tobacco manufacturers
agreed to pay the Fayette plaintiffs $160.6 million to settle the first
of the two Jefferson County lawsuits. The asbestos defendants settled
by agreeing to pay each of the plaintiffs in Jefferson County and the
surrounding area $263 thousand. By grouping the asbestos case with the
new villain-tobacco-the asbestos victims received settlements 19 times
greater than the settlements received by asbestos victims in Indiana,
Ohio, and Pennsylvania. Fayette was ripe for another tobacco lawsuit-and
Pickard was eager to hear the case.
The new lawsuit, Thomas v R.J. Reynolds
was filed in Pickard's court on June 18, 2000. Reynolds expects to lose
the action before they ever walk into the courtroom.
A Chamber of Commerce sponsored seminar
in Jackson, Mississippi dealt with the horror stories of gigantic verdicts
for out-of-state law firms against national and transnational corporations
that were streaming through Mississippi courtrooms. Alabama trial lawyer
Jere L. Beasley acknowledged that many of the 41 lawyers at his Montgomery
law firm had recently taken the Mississippi bar exam.
The video rental/sales chain recently settled
a class action lawsuit filed against them in another Jefferson County-this
one in Texas. This class action suit questioned the "fairness"
of the video chain's late charges-even though those charges were clearly
posted in each Blockbuster outlet and even though the store policy is
explained to to consumers who rent their videos. Under the terms of the
settlement, Blockbuster customers would receive coupons and gift certificates
totally around $20 each. The lawyers who filed the class action lawsuit
received $9.25 million. The lawyers claim that the suit netted consumers
some $460 million in rebates if they chose to exercise them. Blockbuster
estimated that fewer than 10% of their customers would. Further,
the settlement did not require Blockbuster to alter their late charge
policy. I guess the lawyers wanted to keep their options open to come
back to Texas and sue Blockbuster again-after they finished similar lawsuits
filed by them against Blockbuster in California, Delaware, Florida, Illinois,
Maryland, Massachusetts, New York, New Jersey, Pennsylvania, Tennessee
and Washington, DC. When Business Week covered the Blockbuster settlement
they concluded that "...the real winners in the settlement are the
lawyers who sued the company [and] who [were] paid in cash, not coupons."
When class action attorneys sue, they don't
mind if the plaintiffs are paid off with in-store coupons as long as they
are paid in hard cash. And that proved to be the case when class action
lawyers filed a lawsuit against Toshiba Computers in Beaumont, Texas.
of a theoretical defect (i.e., never quite substantiated) in the floppy
disk controllers used in Toshiba laptops. In fact, not a single Toshiba
customer had ever reported a tangible loss attributable to this particular
"defect." In tests, Toshiba's engineers could only replicate
the purported defect (that would cause the user to lose stored data) when
they saved a file to floppy as they simultaneously did other memory-intensive
tasks-something which the average user would never do. However, apparently
two Toshiba users had, in fact, did that very thing and lost some stored
data-and sued. Had Toshiba's customer service department worked swiftly
and replaced the "defective" computers, Toshiba would have been
out-of-pocket by about $10 thousand. Instead, a lawsuit was filed with
a sharp attorney who realized the claim of one or two people was negligible
and barely worth the lawyer's time. So the lawyer begin running ads to
see if anyone else had a Toshiba laptop and was experiencing problems.
Over a period of time the lawyers built their lawsuit. When they filed,
Toshiba-with two complaints-faced a potential $10 billion liability.
Toshiba settled the case by paying the lawyers
$147.5 million and giving the two initial plaintiffs $25,000.00 each.
All of the other plaintiffs who joined the lawsuit but had never experienced
any problems received a small cash award and discount coupons on new Toshiba
The award to the lawyers was 200 thousand
times greater that the "recovery" of any individual plaintiff
in the class action. Commenting on the success of such a frivolous case,
Law professor Lester Brickman said: "The single most important thing
these lawyers did was
bring the case in Beaumont." As it turned out, Jefferson County,
Texas was not much different than Jefferson County, Mississippi. The lawyers
receive cash-the plaintiffs get coupons. And the consumers get screwed.
The $147.5 million paid to the lawyers eventually came from the pockets
of the consumers who bought Toshiba computers in the future.
Most county prosecutors wanting to be either
Attorneys Generals or governors know that all it takes is one good high
profile case to get noticed by the media. However, when you live in Coossa
County, Alabama (population 11,000 and no crime) you will have to manufacture
the opportunity if you want to make headlines. Coossa prosecutor Smith
did just that. Coossa County-without a single car dealer in the entire
county-decided to file a class action lawsuit to protect 20 million consumers
with certain types of airbags in their cars. The suit argued that these
"certain types" of airbags supplied by Chrysler, Ford and GM
were faulty-although the design of those airbags was approved by the federal
government, and the government mandated that they be installed in each
and every GM, Ford and Chrysler car manufactured.
The County asked the court to order the
auto industry to pay every car owner in which these airbags were installed
a sum of $500. The county also asked the court to to dictate a national
airbag safety policy. When Coossa County lost, they appealed and the case
ended up in the Alabama Supreme Court. The high court dismissed the case.
As far as most people were concerned, an idiot filed an idiotic lawsuit,
but no harm was done. Ignored was the millions of dollars-passed on to
the consumers in the form of higher prices on their new Ford, Chrysler
or GM vehicle-that had to be paid to defend an action that should never
have been allowed inside a courtroom.
Far too often today judges feel they are
obligated to hear even the most frivolous actions when they should haul
the attorneys into court and fine them for wasting the court's time with
BANK OF BOSTON
In this class action suit the plaintiffs
were "victimized" twice-first by the villainous bank and then
by the villainous lawyers who brought the action "in their defense."
The action began as a handful of homeowners believed their mortgage escrow
accounts were being mishandled by the Bank of Boston. Lawyers filed the
class action suit in a State court in Alabama utilizing the same type
of mass action laws that made it desirable to file class action suits
in Fayette, Mississippi and Beaumont, Texas. A settlement was reached
between the Bank of Boston and the attorneys that resulted in the bank
paying the lawyers $8.5 million in attorney fees and costs. The plaintiffs
would each receive a small settlement-from $2 to $100 or so each with
a handful receiving slightly larger settlements. However, when the money
was distributed to the plaintiffs, the lawyers came up short. To collect
their $8.5 million fee, the attorneys assessed each plaintiff $91.33.
When Dexter Kamilewicz received the statement from the lawyers detailing
his settlement, he discovered his "award" of $2.19 had been
assessed $91.33. He owed the lawyers $89.14.
The only one who is guaranteed payment in
a class action lawsuit are the lawyers.
That is, after all, why lawyers file class
It certainly isn't to benefit the plaintiffs.
A disgruntled tourist triggered a class
action against Renaissance Cruises, Inc. in Broward County Circuit Court
under Florida's Deceptive and Unfair Trade Practices Act. The suit alleged
that Renaissance passengers who traveled between 1993 and 1996 were assessed
"hidden" port charges of between $295 to $395 per person. The
case was settled when Renaissance agreed to give each passenger in the
class action a $60 rebate voucher to be used on their next cruise-and
paid the plaintiff's attorneys $1.35 million plus expenses. Renaissance
was just one more example of class action lawyers negotiating token settlements
for their clients as they negotiated mega fees for themselves.
Who actually paid? The unfortunate tourists
who took a Renaissance cruise over the next five years-many of whom were
the same "plaintiffs" whose $60 rebate voucher did not by any
stretch of the imagination offset the increased fares necessitated by
the $1.35 million paid to their lawyers.
The next time you read in the local newspaper
about the multi-million dollar settlement made by this national company
or that, just remember: the only people making any money are the lawyers.
And worse, YOU end up paying the settlement in the form of higher prices.
The consumer always loses-even those not involved in the lawsuit.
On March 13, 2002, on roll call 62, the
House of Representatives passed the Class Action Fairness Act of 2002
by a "yea and nay" vote of 233 to 190. On March 14 the bill
was sent to the US Senate where it was read twice and referred to the
Committee on the Judiciary. Since this committee is headed by Edward Kennedy
[D-MA] who is in the hip pocket of the Trial Lawyers Association it will
not "fly" through the Senate. We can expect Kennedy to bottle
this legislation up and keep it from the Senate floor.
The central provision of the Class Action
Fairness Act makes it easier to move large, multi-state "mass action"
lawsuits from biased State courts into the federal court system and preventing
'venue shopping" by trial lawyers such as those cases you read above.
Key elements of the Class Action Fairness Act are those which would require
class action settlement proposals to be written in "plain English"
so that the plaintiffs-usually average citizens and not lawyers-can understand
who is getting what before they sign off and discover the lawyers received
all the money and they get movie tickets to the feature film "Lawyer
Larry Does Boston." The Class Action Fairness Act would further prohibit
settlements in which the class members actually lose money to pay attorneys'
fees-and ensure that moneys awarded are adequately distributed to all
plaintiffs. And most of all, the Class Action Fairness Act would prevent
lawyers from settling for coupons for the plaintiffs while they take all