Consumer fraud class action update: Western Culinary Institute, Le Cordon Bleu, Career Education Corp.

Late yesterday, Career Education Corp and Western Culinary Institute/Le Cordon Bleu Portland filed a motion to compel arbitration in our consumer fraud class action. More on the case here.

Short version is that three years after we filed the case, after the trial court certified a class action, after class notice went out, and after the opt out period ran, the defendants filed a motion to compel arbitration. The motion will require a lot of work from the class legal team, but of course, that is why we are here.

It’s a bit hard to fathom why the Career Education Corp and its school waited so long to file their motion. Their story is that they could not have won their motion until the U.S. Supreme Court decided AT&T Mobility v. Concepcion. For reasons best left to the briefing, they are so very wrong in a number of ways.

In many places in their brief, they make arguments that remind me of this video:


I suppose in the end we are talking about delay. But of course that’s a problem that bites them as hard as it bites the class. They are on the hook for prejudgment interest if we prevail. That means that every day of delay is more interest on the amounts at issue. With approximately 2500 in the class, we are talking about a lot of money.

Comcast Oregon cable TV late fee class action settlement update

This seven year old consumer class action case is coming into its final stages. The time to file claims ended. Next Monday, July 11, the money for fees and charitable contributions gets paid. A month later, August 11, 2011, consumers who made claims should begin to see credits on their bills for those who continue as Comcast subscribers and checks for those who are former subscribers.

Keep in mind that Comcast can dispute claims. We have not been notified that Comcast intends to do so. We continue to serve the class through the claims process in case there are any problems.

We’ll keep watching, of course. If you made a claim and do not receive your credit or check. Keep in mind that Comcast is entitled to off set unpaid balances.

Feel free to contact us if you have questions.


At the tipping point: Have our rights to trial by jury been taken away?

Last night’s HBO premier of Hot Coffee, The Movie provided a great summary of all the ways in which the U.S. Chamber of Commerce, large foreign corporations, and political operatives have banded together to end the right to trial by jury. Filmmaker Susan Saladoff did a masterful job of showing how deliberately falsified talking points, loaded memes, anti-consumer legislation, court packing, and forced mandatory arbitration have been used to deprive consumers of their rights to trial by jury.

Things have only gotten worse since production of Hot Coffee. As I have noted previously, the U.S. Supreme Court rendered two pro-business/anti-consumer opinions this term. This one makes consumer class actions even harder to maintain, and this one makes forced mandatory arbitration even harder to avoid. The picture painted by by Susan Saladoff’s brilliant film gets more finely defined by the Supreme Court’s recent term.

At home, I watched Hot Coffee with my beloved, who has been my biggest supporter for all of the years I have struggled to do what is right for consumers in our civil justice system. She also took me to task over language in my recent blog posts–she’s something of a message genius. She points out, correctly, that I must stop using the language and the memes of the corporate shills who seek to corrupt the civil justice system.

Okay my beloved. You win. I will listen to your wise counsel. So no more use of their memes, talking points and phrases.

Instead, let’s focus on what they have done. Through a deliberate campaign hatched by the cynical pro-corporate strategists, our precious right to trial by jury hangs on the edge.

They cannot accept a justice system that grants consumers and ordinary citizens the power to call corporate wrongdoers to account. They cannot allow the rest of us to have access to justice.  By a cold and deliberate strategy, they have simply chosen to nullify the Seventh Amendment, in order to eliminate consumers’ rights to trial by jury.  The question becomes whether we allow this to happen or fight back to protect our rights.

One of my heroes, Erin Brockovich, pointed out long ago that the problem with giving up constitutional rights is that they are gone forever. The right to trial by jury protects us from government abuse and from corporate misconduct. It looks to me like we are in fact tipping back, and consumers are beginning to to understand the importance of these issues. We can only hope.


Hot Coffee, frivolous lawsuits and HBO

HBO premiers Hot Coffee, The Movie tonight. The documentary is Oregon attorney Susan Saladoff’s labor of love. Susan put aside her law practice to will this film into being. She is a force of nature.

Susan makes no bones about her point of view. Like me, she is an Oregon consumer-side attorney who represents injured Oregonians in tough cases. I’ve tracked her cases over the years–we’re buddies–and she is the real deal. Susan grew weary of the fog machine’s distortion of the civil justice system. So she set out to make a film to publicize some of the misconceptions of our system.

By all accounts, she had no real experience as a filmmaker. I imagine that many thought her to be a modern-day Quixote riding off to do battle with the menacing windmills. As with any audacious plan, there are many ways to fail. But she is a force, and her improbable work wound up at Sundance with great recognition.

The well-known McDonald’s hot coffee case serves as a starting point for her film. While everyone knows the McDonald’s case, Susan gets the evidence and shows why the jury correctly decided it and how the pro-corporate fog-machine turned it into a cause by totally misrepresenting the facts. After watching some of the early cuts of the film-in-progress, I was awed by how she brought the evidence to life. Once you see this movie, you will never think about the McDonald’s hot coffee case the same way again.

The corporate fog machine’s favorite catch phrase, “frivolous lawsuit,” is at issue here. It’s a bastardized meme, arising from the rules of civil procedure. It used to mean that a case had no legal or factual basis and that the lawyer pursuing the matter did so in bad faith. Now it has come to mean any case in which a consumer seeks justice for wrongs heaped upon them.

Corporate interests took aim at the civil justice system because our civil justice system provided the only means through which consumers and members of the middle class could hold wrongdoers accountable. In doing so, the frivolous lawsuit meme has nullified the Seventh Amendment right to trial by jury. The film is part of a growing movement to restore the Seventh Amendment and consumers’ access to the civil justice system.

I am planning to watch it tonight and planning to record it as well. Susan is a jewel for her commitment and her achievement. All of us who work in the trenches of the civil justice system are indebted to her.

Wal-Mart v Dukes: Supreme Court changes rules on class actions

I was not surprised by the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, No. 10-277 (June 20, 2011). Even so, how the Court got there reveals more agendas. It also bodes poorly for consumers.

About class actions: While class actions are often criticized, the reality is that they are one of the few tools available to consumers and middle-income Americans to fight wide-spread corporate abuse. When a bad corporate actor engages in a pattern of misconduct, the class action device allows consumers to band together to fight abuse.

About the case: The story about the case has been widely told. Wal-Mart’s female employees sought to proceed in a class action to address corporate-wide wage disparities. They claimed that Wal-Mart engaged in a pattern and practice of gender discrimination by paying female employees less and providing fewer promotions. That’s illegal discrimination under Title VII, the federal Civil Rights Act of 1964.

What the Court decided: The Court decided that the case could not go forward as a class action. Part of the opinion was unanimous, but the guts of the problem are in Part II of the Court’s opinion, and that part was 5-4. Part II radically revised class action rules, and that’s where consumers are at risk.

A new standard: Class actions are complicated. But at the front end, a class action has several requirements. They are that the class is numerous (“numerosity”) , that the named-plaintiffs’ (people who bring the lawsuit) claims are typical (“typicality”), and that there are one or more common questions of fact or law (“commonality”). Depending on the type of class, there are other requirements, but the Court did not reach those additional requirements.

Writing for the majority, Justice Scalia announced a new standard, deciding that commonality–which was always a simple showing–would now become very complicated. Now, it’s not just that there must be common questions, but, says the Court, there must also be common answers.

Ironically: For years, Justice Scalia has harangued the Court and the profession about the need to limit decisions to the text of the written law. The judicial philosophy is known as strict constructism. Funny thing: The text of the applicable part of the rule makes no mention about answers to questions. Instead it reads, “[T]here are questions of law or fact common to class.” FRCP 23(a)(2). The lack of textual support for an anti-consumer ruling causes Justice Scalia little pause, as the Court engaged in similar over-reading of federal law in AT&T Mobility LLC v. Concepcion, the case that likely ended consumer class actions.

The bigger problem: This is a tough day for the women from Wal-Mart. But apart from that the Court is slamming the door on class actions. When you add this ruling to AT&T Mobility and then add on a few other doctrines, it’s clear that the goal is to radically curtail class actions. Before Wal-Mart, the U.S. Supreme Court made clear that the merits of a consumer’s claims did not enter in to the consideration of class certification. That day is over. Without overruling prior case law, the U.S. Supreme Court examined, weighed and determined the sufficiency of the Wal-Mart plaintiffs’ evidence.

Some years ago, Congress caved to corporate interests and passed the so-called Class Action Fairness Act (“CAFA”). CAFA provides that most class actions may be removed to federal court. A few years later, the U.S. Supreme Court changed the rules on pleadings and required more specificity of those who file cases in federal court. The new pleading standards under Iqbal make it harder for consumers to proceed in federal court.

For years, federal courts have limited discovery in class action cases to issues related only class certification. But now consumers seeking to pursue class actions must make a showing on the merits. Between CAFA, Iqbal, Daubert (scientific evidence case), AT&T Mobility (mandatory arbitration) and Wal-Mart, the Court has erected great barriers to consumers seeking to proceed in class actions.

Lousy day.


The long fight ahead: Consumer advocates gear up on mandatory arbitration

In their recent decision in AT&T Mobility v. Concepcion, the U.S. Supreme Court gave a hearty five thumbs up to anything-goes arbitration clauses. The Court’s opinion means that consumers will trade their 7th Amendment rights to trial by jury for expensive, secret, pro-big business private arbitration. At least some members of Congress are engaged. Sens. Franken and Blumenthal and Rep. Hank Johnson have taken on the task by re-introducing the Arbitration Fairness Act.

Here is what’s at stake. After seven years of work, we favorably settled a multi-million dollar consumer class action against Comcast. My guess is that the case would have failed had it been brought after AT&T Mobility.

Those of us who protect consumers will follow this legislation carefully and work to assist. Meantime, if you’ve been shut out of court by a one-sided arbitration clause, I would love to hear about it. Use the comments or ping me via email.



The Rakofsky Standard

I missed the initial Rakofsky story in the Washington Post because I was unplugged on vacation. Short version, via Twitter friends and the internet, is that a young attorney in New York represented a man accused of murder in a Washington D.C. criminal case. There were a few issues with the representation from the get-go. Mr. Rakofsky had apparently never tried a case before. And he was not admitted to practice in Washington D.C.

Things did not improve during trial. Mr. Rakofsky apparently did not understand the technical requirements for admission of scientific evidence. As a result, he could not get into evidence important information about the accused’s use of drugs. The case ended in a mistrial. Mr. Rakofsky mistakenly believed that was a good thing. It was not, as his client faced re-trial on the same very serious charges.

Going from trying no cases to handling a murder case is a bit like deciding after medical school that you are now qualified to perform coronary bypass surgery. As with performing surgery, trial of cases is a skill best learned slowly with tutelage. You start after training with small and easy matters–traffic court, for example, or misdemeanors, or small-scale property damage claims–and then you build up over time.

As licensed professionals, attorneys have certain responsibilities. Here is a simple rule: Attorneys may only accept employment on matters on which they are competent.

Mr. Rakofsky did not understand the standards for admission of scientific evidence–here toxicology. By his own account, he offered key toxicology evidence, which the trial judge rejected. Mr. Rakofsky apparently did not completely understand the rules of scientific evidence. To be fair, they are technical and sometimes hard to understand. But that’s why young attorneys need to handle small and simple cases before they can try complicated high-stakes matters.

Various law bloggers correctly picked up on Mr. Rakofsky’s shortcomings and, more important, what the story says about internet marketing of legal services. A nice collection of of blog posts can be found here at The Trial Warrior Blog.

A wiser young lawyer would have treated this whole sordid affair as a time to re-think. Sadly, Mr. Rakofsky has not yet come upon wisdom. Instead, an attorney acting on his behalf sued The Washington Post and various law bloggers, including bloggers Antonin Pribetic (The Trial Warrior Blog), Scott Greenfield (Simple Justice), Jamison Koehler (Koehler Law Blog), Mark W. Bennett (Defending People), Brian L. Tannebaum (My Law License), Carolyn Elefant (My Shingle), Eric L. Mayer, Above the Law, the American Bar Association, ABA Journal. Sorry to all omitted from the list. The complaint, in what has been labeled Rakofsky vs. The Internet*, is a triumph of ridiculously poor lawyering.
I have not counted, but I am told there are 74 defendants.

The complaint admits to some of the goofiness. It sets out the toxicology problem I noted above. It alleges irrelevant allegations. It implicitly posits a standard of practice that I think is fairly labeled as The Rakofsky standard.

There is a glaring problem from the outset. Scott Greenfield, Mark Bennett and Antonin Pribetic point out that young Rakofsky and his Rakofsky standard plaintiff’s counsel do not understand New York jurisdiction. They have sued out-of-state defendants and even the Canadian Trial Warrior in New York on a defamation claim. A problem:  New York long arm jurisdiction does not apply to defamation claims.That likely spells quick ending for all but the New York defendants.

The case has generated a lot of well-deserved ridicule on Twitter and from law blogs. As a casual observer, I can only laugh at the young man and his current counsel. They have taken a bad experience and compounded it by a factor of 10 by filing this case. While the Rakofsky standard is generous, I am betting that their future work on this case may violate it.

For my Twitter friends and the Rakofsky 74, I have volunteered to serve on the defense team. True, I have never handled the defense of a defamation claim in my 25 years of experience. As well, I am not admitted to practice in New York. But under the Rakofsky standard, I am totally competent to try their case.


*Scott A. Greenfield a New York criminal defense lawyer who writes the pretty damned amazing Simple Justice law blog claims credit for having coined the phrase.

The other blogs listed above contain some of the best damned law writing out there. Even though I do not practice in Canada, I regularly read The Trial Warrior Blog. Ditto for Bennett at Defending People and Tannenbaum at My Law License work and Simple Justice. The latter three focus on criminal law but consistently hit deeper and more important issues in the justice system.

City of Portland takes a pass on enforcing housing discrimination laws

Another great coffee-spitting moment brought about by political wisdom. This one from my friend and former colleague, Nick Fish. According to this Oregonian article, a study commissioned by the City of Portland found widespread discrimination in housing rentals. In 50 tests, 64 percent of Black and Latino renters encountered discrimination in rental housing.

Commissioner Fish waffles a bit, but the upshot is that it looks like Portland is simply not going to enforce fair housing violations. Instead, the City defaults to education of wayward landlords.

This is wrong in more ways than I can count. Teachable moments come in many forms, but most notably they include the process of enforcement.

As a trial lawyer, I am much more effective at changing an adversary’s thinking and obtaining resolution if I can point to serious and concrete consequences of misconduct. “Yes, Mr. Jones, I understand that you don’t think you should follow the law like the rest of us. Neither did Mr. Smith. After that jury issued its verdict, Mr. Smith seems to have…uh…changed his thinking on the subject.”

Commissioner Fish’s conduct sends a couple of poisonous messages. First, every landlord who practices racial discrimination just got a love letter saying that there are no consequence for flaunting the law. Bad move. Second, every person of color just got a bureaucratic brush off letter. (“Oh, gee that’s bad. Good luck to you.”) That’s a helluva a message to send, huh?

The ironic part of all of this is that city officials and good liberals wring their hands over the lack of diversity in this way-too-white metropolis. And yet we have elected officials choosing to ignore enforcement of civil rights laws. Seriously?

While it’s not nearly as effective as City enforcement, private citizens can file lawsuits for race-based housing discrimination. So I suppose I should be pleased because I represent consumers for a living and handle discrimination claims. Those who loudly complain about lawsuits and the litigious nature of American society frown on such notions. Worse, those who the laws protect have every right to expect that the government will actively enforce racial discrimination laws.

The truth is that I have more work than I know what to do with, given the nature of unregulated greed in our society. It’s time for the City to get serious about enforcing anti-discrimination laws. A few high-profile enforcement actions would go a long way toward stopping abuse.

My hope is that we see some push back and that the backlash on this causes the City to reconsider and enforce our civil rights laws. This reflection on this morning’s coffee-spitting moment is my modest contribution toward that goal.

David Sugerman

Career Education Corp and Western Culinary Institute consumer fraud class action: Notice out

We finally moved to the next phase in our Oregon consumer fraud class action against Western Culinary Institute/Le Cordon Bleu Portland and its parent, Career Education Corporation. Class notice went out last week. It took longer than expected because of a few unanticipated changes in the class brought about by the trial court’s rulings.

Here is a link to the class notice website if you have questions about the case. As class counsel, I represent all members of the class. Feel free to call or email us if you have questions about the case–it is part of my job as class counsel to respond.

My co-counsel, Portland attorney Brian Campf, and I have been working on this case since 2008. We are now engaging in merits discovery. That means reviewing thousands of pages of documents and taking depositions of defendants’ employees.

Trial lawyers often dream about trial. This is one of those dream-inducing cases. While we don’t yet have a trial date, I am eager to move us forward. It’s been a long road, and there is far to go. The good news is that last week represents major progress.

Comcast Oregon late fee class action settlement receives final approval

On Monday, May 2, 2011, Multnomah County Circuit Court Judge Henry Kantor granted final approval to the class settlement entered between Comcast and Oregon consumers billed cable TV late fees. Under the terms of the settlement, Comcast pays $16 per late fee to claiming class members, up to $23 million, together with attorney fees and costs of $5 million, and a $75,000 charitable contribution split between the Oregon Food Bank and the United Way.

Class counsel decided to leverage the charitable giving by adding $100,000 from our fees to be divided between five groups that provide legal services to low and moderate Oregonians and national groups that advocate for consumers. The five non-profits that will split the legal team’s contribution are Oregon’s Campaign for Justice, St. Andrews Legal Clinic, Oregon Law Center (through the Campaign for Justice), National Consumer Law Center, and Public Justice Foundation. We’re really pleased to be able to make these contributions.

If you’re a consumer who was billed a late fee you need to file your claim before July 1. Here is the link to the claim form. Fill it out. If you paid one or two late fees, you only need to sign it and return it. If you paid more than two, you need to sign the claim form in front of a notary or provide documentation of how many late fees you paid.

Under Oregon law, unclaimed monies are returned to Comcast. So if you paid a cable TV late fee in the class period and you want to make a difference, it would be a good thing to make a claim.

As this thing winds to completion, it’s hard not to reflect on the ups and downs of a long (seven year!) case. It’s been a tough haul, but we knew it would be. In the end I am pleased with the outcome. It’s a big settlement, and a win for consumers. Those are rare, so we savor them.

If you’re class member and you have questions, feel free to contact me, as I will work with class members to make sure that you get your claim filed.

David Sugerman