For those of us in the trenches representing consumers in class actions, it’s always nice to find good information resources in the law blog world. I’ve stopped by the Complex Litigator a few times. I only caught this post on a consumer class against Wells Fargo because of a Twitter post alerting me to it.

The case, Gutierrez v. Wells Fargo Co., 2010 WL 1233810, 2010 U.S. Dist. Lexis 29082 (N.D.  Cal.  Mar. 26, 2010), arises out of allegedly illegal banking practices that led to improper assessment of overdraft fees. The federal court certified a class, and Wells Fargo filed a motion to decertify the class.

Digression: In representing consumers in class action cases, I privately think of motions to decertify as “Waah! motions,” as they often stand on the same arguments that didn’t succeed, and they frequently employ heated prose to attempt to change the Court’s mind on a decision previously rendered.  In my experience, they are often an expensive waste of time.

Complex Litigator points out that the court found the small amounts at stake to be important in finding a class action would be superior. This was true when the court certified the class and remained true in the decertification motion. The small-stake problem is an important concept that sometimes gets lost in the heated U.S. Chamber of Commerce talking-point criticisms of class actions.

The nickel and diming effect is one that I’ve written about before, but the short version is that consumer class actions provide a means of stopping illegal practices that take small amounts from a large number of people. A corporation that illegally takes a few bucks from a million people makes a few million. Handsome profit if it’s not stopped.

The more interesting part of the CL blog post quotes the court.  As a side note, I’m a bit confused, as it appears to be a quote from an earlier opinion in the case, or maybe I’m missing something. I don’t see the quoted language in the cited Lexis opinion. Likely, it’s my confusion due to insufficient coffee. Nevertheless, I’ll take as a given that CL correctly quotes the court.

Wells Fargo sought decertification because–it argued–the class did a poor job of modeling class-wide damages.  As CL explains,

“It is interesting that the weaknesses in defendant’s transaction data was used by the court to nullify challenges to the methodology used by plaintiffs’ expert to assess damages for the class.  The court found that the same flaws in data would impact an individual’s attempt to prove damages.  The opinion contains a detailed discussion, with an example, of the allged (sic) practices and the damage extrapolation methodology used by plaintiffs’ expert.”

The underlying data problem is one that I see from time-to-time in consumer class actions.  Defendants often resist production of class membership and damage data in large consumer class actions. And once they produce it , they sometimes go so far as to attack the class’s damages model because of the insufficient underlying data. That’s  one of those ironic arguments that I love to see defendants make.

Anyway, kudos to Complex Litigator for pointing out the opinion. Interesting reading for class action practitioners, especially those who handle consumer class actions.

This is an update report for those following our Comcast late fee class action.  In this certified class action, Oregon Comcast cable television subscribers claim that Comcast illegally assessed late fees for cable TV service. The class seeks damages. Here is the last update on the case. Go to my old blog, here, if you want a copy of the class certification decision.

So Friday, Tim Quenelle and I returned to court to argue discovery and pleading motions. We did something a bit unusual and filed motions to strike various affirmative defenses raised by Comcast.

Judge Baldwin ruled today. He granted the class’s motions to strike the following eight defenses:  Reduction of damages based on losses Comcast claims to have suffered (Sixth Affirmative Defense); Subscribers’ breach of their cable TV subscription agreements (Ninth Affirmative Defense); Failure to timely assert rights under the late fee statute (Tenth Affirmative Defense); Estoppel (Eleventh Affirmative Defense); Laches (Twelfth Affirmative Defense); Ratification (Thirteenth Affirmative Defense); Reservation of Rights; and Comcast’s prayer for attorney fees.

Judge Baldwin denied the class’s motions as to four affirmative defenses: standing of the class representatives, voluntary payment, unclean hands, and set-off for class members’ unpaid balances.

Judge Baldwin’s rulings limit Comcast’s defenses and narrow the scope of the case. It’s another step forward for the class. While there is still far to go, we’re counting it as a great day.

Peter Goodman of The New York Times does a nice job here of looking at the problem of for-profit trade schools. The story mentions our class action against Western Culinary Institute/Le Cordon Bleu College of Culinary Arts in Portland.  And while it’s all exciting to see the case written up in the Times, that’s hardly the point.

The Goodman article points out the disparity between the costs of trade school education and expected earnings.  I was taken by a Sr. Vice President, Brian Williams, comment, “You go in the industry and work your way up.”

I don’t have any idea how much Mr. Williams knows about labor statistics. But the cold reality is that there are very few high-paying jobs in the culinary field–at least as compared to the scads of low-wage kitchen jobs that require no training. In short, there isn’t much “up” to reach.

Some suggest that this is not different from an expensive law or medical degree or a BA in liberal arts from a four-year school. I suppose it’s tempting to take that view, but in reality the differences are profound.

Let’s look at them.

Western Culinary Institute/Le Cordon Bleu say in their catalogs that they provide entry level training. In the lawsuit, we take issue with what they don’t tell students.  A culinary degree doesn’t provide a student much in the way of qualifications for an entry level kitchen job. By comparison, you simply can’t practice law or medicine without degrees and licenses.

In marketing the program, the school tells its prospective students about high placement rates–above 90 percent. But they don’t talk about the pay.  The school collects initial placement and earnings for its graduates. As the New York Times article explains, the vast majority of students earn very low wages upon graduation. Those low earnings won’t allow most students to repay their loans.

Defenders of for-profit trade schools also cite the profoundly expensive four-year bachelors degree problem. They are right about the high cost of four year schools, but wrong to compare the two. Ivy league schools cost far in excess of most middle income families’ abilities to pay, leading many students to incur heavy debt loads.

But several things are different.  The liberal arts program doesn’t sell itself as “vocational training.” Nor does it tout its placement statistics or skill-based career training as the reason to attend. And the universities aren’t run by billion dollar corporations who are concerned about their Wall Street performance.

Our case has taken two years so far. If we succeed, students who suffered losses will recover money that will help pay down their debts.

We need better oversight of these schools, these loans and these lending practices, as students who enroll at for-profit trade schools often are underwater from the day they graduate.  Effective oversight of trade school programs and educational loans would prevent these types of abuses.

Yesterday, the Oregon Senate passed legislation that provides Oregon consumers with a powerful tool to fight bank fraud.  HB 3706 amends the Oregon Unlawful Trade Practices Act so that banking and credit practices are now included in Oregon’s signature anti-fraud law.

The bill previously passed the Oregon House. But there were a few amendments along the way, so I believe that there will need to be a reconciliation process before the governor can consider it.

Rep. Nick Kahl pushed the bill on the house side. He’s proving himself a tireless advocate for working Oregonians. On the senate side, Sen. Suzanne Bonamici (D. Beaverton) championed the bill, continuing her great work for Oregon consumers. News report here. Our Oregon stood up for consumers on this bill. They deserve our appreciation.

The bill is important for consumers because it ends special rights for banks. The Unlawful Trade Practices Act sets modest standards that protects Oregon consumers from fraud. For years, banks and insurance companies have been exempted from it.  Why shouldn’t they be held to the same standards as car dealers and cable TV companies? If a bank engages in fraud, it should have to answer to consumers. This is not particularly difficult.

I’m especially taken by some of the grumbling from those who opposed this legislation. I guess its easy to forget bank bail-outs, CEO salaries, and the lack of meaningful banking reform.  The legislature provides consumers with modest protections against nickel and diming and fraud, and banking industry cheerleaders complain that it will simply cost banks more? Amazing. Maybe they were asleep or comatose when the economy melted down.

So at bottom, it’s a good day for consumers because Salem showed leadership.

Recently, Multnomah County Circuit Court Judge Richard Baldwin signed this order (pdf) certifying an Oregon consumer fraud class action against Western Culinary Institute and Career Education Corp. It took us a while to get to an order. That’s not unusual in class action cases.

There is a quiet feature to his ruling that has an important impact on the case. Judge Baldwin refused Western Culinary Institute and Career Education Corp’s request to allow an immediate appeal of his decision.

That’s important for class members because each appeal can add years to the life of a case.  Judge Baldwin also ordered the parties to present a proposed notice plan, so the next step on the case should be notice to the class.

It’s good news for Western Culinary Institute alums who are drowning in debt.  For our part, it’s a great day. Brian Campf and I continue to push forward. It’s been a long road. There is still far to go. Onward.

If you attended WCI (now known as Le Cordon Bleu Portland) on or after March 2006, and you haven’t been in touch, feel free to use the contact information to connect. We can answer questions about the status of the case and also get you into our tracking system.

David Sugerman

For those interested, here is an update on the Oregon late fee class action against Comcast. The short version is that with my co-counsel, Tim Quenelle, I filed a class action against Comcast for its illegal assessment of cable TV late fees in Oregon.

We filed this case in July 2004. No, that’s not a typo. The case will turn six this summer. More background on the history of the case  here and here.

While Comcast disputes this, the class claims that Comcast illegally billed cable TV late fees in Oregon for years. Comcast claims that it’s done nothing wrong, or if it did, these were simply technical violations. Comcast has many other defenses. That’s their choice, of course.

So the latest–the update–is that Comcast is asking the court to allow it another appeal. This time Comcast wants to appeal the court’s decision to allow the class to seek statutory damages of $200 per person.  Comcast already lost an earlier appeal on whether it could require mandatory arbitration of these claims.

While no one has said this directly to me, it’s pretty apparent that the defense is really to drag this out as long as possible. In that respect, the litigation strategy is ironically the opposite of the speedy internet service that Comcast advertises.  But of course, Comcast makes those choices. I suppose it makes sense if the alternative is facing the prospect of payment of millions to Oregon subscribers.

To hear some self-appointed experts talk, consumer class actions are nothing more than stick-’em-up get-rich opportunities. The damages at issue in this case are calculated in the millions. Comcast billed late fees in six dollar increments. While few consumers lost large sums of money, when you total the numbers you come to realize that billing six bucks a pop from many people is a great way to make money.

Meantime, of course, the lawyers pushing the case soldier on. We get paid if and when we bring the case to a successful conclusion, based on a fee that the court must approve as reasonable and fair. And in the six years we’ve been pushing the case, we’ve invested time and money to move it forward.

If you doubt the wisdom of that, let’s consider the alternatives. We deregulated our economy beginning in the 1980s.  So regulation isn’t an option. Even so, I imagine we can all agree that allowing businesses to illegally collect money is unacceptable.  So what’s left, other than the courthouse, when corporations rip off consumers?

For Comcast Oregon cable TV subscribers who paid late fees, all I can say is that we’ll see this through to the end. That may be another 10 years, but so be it.  My son and I were talking the other day, and he related that he’s been accused of being stubborn. “You come by it honestly,” I replied. The reality of our world is that obstinate consumer class action lawyers are one of consumers’ best weapons against corporate greed running amok.

This is an update on the Oregon consumer fraud class action against Western Culinary Institute and Career Education Corp. that I am handling with co-counsel, Brian Campf.  Lots of background here and here.  I know many people have questions about where we are on this.

We’re in the process of getting an order signed that’s the next step forward. It’s a bit of a slow process. My hope is that we’ll have the formal order entered in the next week or two and will start the process of providing notice to the class.

If you attended Western Culinary Institute/Le Cordon Bleu Portland after March 2006, you may be eligible to particpate in the case. If you haven’t contacted us, it would be helpful to hear from you. Feel free to use the contact button to find us.

I’ll continue to post updates on this site.

David Sugerman