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

Reviving the plutocracy–U.S. Supreme Court ends consumer class actions


A win for the plutocracy*

Yesterday’s decision in AT&T Mobility LLC v. Concepcion represents a breathtakingly bad opinion that does profound harm to consumers. It’s a bit geeky, but the takeaway is that this is a huge win for the rich and powerful.

The problem-One of the favorite great business abuses of consumers is the nickel and dime charge. It’s no doubt happened to you. Your bank, credit card company, phone provider, utility, car dealer or cable company has incorrectly charged you a few bucks. Maybe it was a one-time $10 fee on your checking account, or maybe the cable TV company illegally collected a six dollar late fee. But of course, in this era of massive corporate sizing, you are one of a million customers. So at the same time you got billed ten bucks, so did a million other customers. And zotz…just like that…the bank has collected $10 million illegally from its customers.

Here is the tally for those keeping score at home: Bank illegally enriched $10 million. Consumers hosed. That’s why consumers have class actions. With capable counsel and a willing representative, consumers had the tools to fight the nickel and diming problem.

The ruling: The Court effectively ended future consumer class actions with yesterday’s decision. The Court broadly interpreted federal preemption under the Federal Arbitration Act. The Federal Arbitration Act requires courts to enforce valid arbitration agreements. State courts have been ruling that arbitration agreements that limit consumer remedies and ban class actions are not valid under state law. The U.S. Supreme Court decided that those state law rulings were entitled to no deference and were of no effect. Here is the bottom line: No state law may prevent a corporation from: 1) requiring arbitration of all disputes between the consumer and the business; and 2) from prohibiting class actions for those disputes.

What it means for consumers. The problem is that now there will be no class actions for nickel and diming cases, so when a bank, cable company, cell phone provider or car dealer illegally charges a million customers $10, their arbitration clause will be upheld, and consumers will not be able to band together into a class to recover the money.

This will take place soon with emails and letters from cable companies, credit card providers, banks, cell phone companies and the like. It will start with revisions to your credit card agreements, cell phone terms and conditions, and cable terms of service. Buried in that long document will be a change in terms that will add or change the arbitration clause. They will all contain class action bans. Thanks to the Supreme Court, they will likely be enforceable.

Consumers have now been stripped of their abilities to enforce state consumer laws by an over-zealous Supreme Court. Consumer protection will stand and fall on state regulation and state enforcement. Have you seen the state budget lately? I’m sure there’s plenty of extra cash available for consumer protection enforcement. Even with those states that can afford enforcement, the Supreme Court has forced states to increase regulation if states want to have consumer protection. Because God knows–or at least the Roberts Court knows–that private enforcement by consumer class action lawyers is bad for business.

We will either see more regulation, or–more likely–we will see no control. Most businesses operate rationally. If you tell someone that ripping off consumers for $10 million may subject them to a class action case that will cost them that much or more, they will act to avoid facing that liability. But if bending the rules gets you $10 million without consequences, we all know how it ends.

Load up the troughs and get out of the way. Those hogs are hungry!

It’s a win for the plutocrats.


*Plutocracy: “[Gk ploutokratia, fr. ploutos wealth] 1: government by the wealthy 2: a controlling class of rich men.” Webster’s New Collegiate Dictionary, p. 878 (1979)


Our own worst enemies-lawyer ads, solicitation letters and internet marketing

Via Twitter, the law blog world and a few local lists, I’ve spent the better part of a week thinking about lawyer advertising. First thing: I am biased. I believe that the law is a profession.  As such, our clients come first, the justice system next, and we come third.

The U.S. Supreme Court long ago said that truthful lawyer advertising is subject to First Amendment protection. There is good reason for that rule. But–and this may seem like heresy–too many believe that the inquiry ends there. The rights secured by the First Amendment are critically important. But so are the 5th amendment rights of equal protection, the 6th amendment rights of the accused, the 7th amendment right to trial by jury, and the 14th amendment right to a fair trial.

The problem is not advertising, but the content and methods that lawyers use to reach prospective clients. A recent discussion with a nameless younger lawyer highlights the problem. He proudly sends accident solicitation letters to Oregon drivers who have been in motor vehicle collisions. He defends the process by saying that he provides important information to consumers, that insurance companies will take advantage of unsophisticated consumers, and that he is sticking it to the man.

The same young attorney trumpets on his website his aggressive and hands-on approach to handling motor vehicle collisions. The same young attorney recently posted on a local list a question about motor vehicle collisions that revealed a stunning lack of mastery of the subject matter area.

In discussions about lawyer advertising, the one thing that lawyer advertising advocates invariably mention is that they have to make a living, too. Sometimes they add that we who criticize are really just trying to squelch competition because we got ours.

Whatever success I’ve had in building a law practice has come through years of hard work. It took me nearly a decade to attain basic mastery in the practice of law. I am in my 25th year of practice now. My particular areas of practice are such that some years I earn a lot of money, and some years I do not. There are simply no guarantees of fabulous income.

So there are a few things nagging at me here. The problem is the advertising lawyer who resort to ads that make you and me wince do not recognize any obligation to the justice system.

Here are some not-very-far-fetched examples. How about screaming, boosted volume TV ads: CALL 1-800 LETS SUE!!! Or how about the snake-oil peddlers who sell internet marketing for lawyers and then spam the firm web page across the internet. Or there’s the unsolicited letter mailed or emailed to people who have been in motor vehicle accidents about how “I can help you and/or your loved ones in this time of need” for a mere third of the recovery.

Don’t get me wrong. I see fabulous web pages out there. I know attorneys who provide great information about their practices and their areas of law by use of advertising. I see some of my colleagues’ use of media and think that they are doing great work. But none of them are racing to the bottom through the bad ads.

Invariably, those who are running in the race to the bottom use one or all of the following excuses: 1. “Everyone is doing it.” 2. “It’s perfectly legal.” 3. “I’m just trying to make a living.” The problem is that each one of these “legal” marketing approaches cheapens the justice system.

Trial lawyers wonder why the public holds them in low regard. Part of the answer comes from the work of very powerful and wealthy interests dedicated to making sure that consumers surrender their rights to trial by jury. If you’ve heard the phrases, “frivolous lawsuit,” or “lawsuit lottery,” you’ve been exposed to their handiwork.

And we who dare to represent consumers know this. We know it in our bones. Still the advertisers are so intent on getting theirs that they simply do not care. Because that’s what it’s about at the bottom: Getting theirs. So the mass marketers run ads to collect cases that they will never try and in doing so give the Cato Institute and various anti-consumer forces great material for their campaigns to lock consumers from our courthouses.

For those of us dedicated to the proposition that this is a profession, every bad, screaming ad, every invasive solicitation letter, every SEO spam comment is another nick in a badly damaged system of justice. Even so, those of us who dare to demand higher standards will not go quietly into the night.


Quick away

Maybe the hardest thing about my busy solo law practice is taking time off. Between one child still at home, a busy, hard-working spouse and the demands of my case load, I am hard-pressed to get away.

So I jumped at the chance when our schedules aligned. Even with all we have going in our professional lives, Janet and I decided that we could squeeze out a 5-day vacation.

I’m not sure exactly who said it first–maybe it was me, “When the going gets tough, the tough go on a road trip.”

We’re off to Southern Oregon. We won’t go too far–a lodge on the Rogue River and a few nights in Ashland–but I’m sure it will be the perfect tonic for two overly-busy people who share a life. So I’ll be dark and quiet from my usual interwebz haunts for the next several days.

I won’t be far or gone for long. While I’m away, I know that Marla and Kristen, my awesome and reliable team, will keep things on track. They’re good that way. Very, very good.


Nero fiddles: Oregon House passes Code of the West

My coffee-spitting moment came early this morning while reading The Oregonian. Apparently, the Oregon House of Representatives passed the “Code of the West” yesterday.

We are in a major budget crisis. We face huge issues over health care coverage and school funding, our public structures are crumbling for lack of investment, and predatory businesses want to destroy consumer protection. All of that is in play. Yet, the Oregon House wants to ignore the people’s business.

There are actually two offenses here. First is the offense against the people and the treasury of Oregon. Each day the House is in session, we spend money. On them. So if they are going to convene, the House owes it to us to spend the time and money on things that matter.

Let me be clear. I generally respect the work of the Oregon Legislature. If you wander the halls, you will find quiet workers and visionary leaders. Calling out the Code of the West goofiness should not be viewed as indictment of all that is good there.

The proponents of this Grand Action have a bigger problem and more egg on their face. Those of us who grew up in the western U.S. know that we do not need politicians to pass laws to tell us how to live. I imagine most true Westerners are laughing heartily at this idea. Think about it: A group of self-important jerks gets ahold of  a pen, finds some paper, drafts a bill, amends the draft, holds hearings, debates, and then votes. And that vote is simply to enact the values that Oregonians live by. Kids-your clown noses do not look pretty.

Memo to the Oregon House: Get to work or go home. We don’t need this kind of foolishness.

Culinary schools face regulatory pressure

Here is the link to a recent NPR story regarding culinary schools and the disconnect between culinary careers and the costs of culinary school. Interesting quote from the of Career Education Corp. executive Kirk Bachmann about the calculations of placement rates. He notes that CEC schools do not include Starbucks barristas in their placement rates. As we say at the beginning of a deposition, “Swear the witness. I have a few questions.”

On a side note, Le Cordon Bleu Portland/Western Culinary Institute recently announced plans to drop its associates degree.  We’ll be interested in finding out more about that as well.

Meanwhile, our class action case continues forward against these defendants.  Cases like this are slow, but we are on track.