U.S. sues KBR, Inc. over its Iraq billings

I haven’t seen the complaint yet, but multiple media reports indicate that the U.S. Department of Justice filed a False Claims Act case against KBR, Inc. and its subcontractors over allegedly improper bills for security in Iraq. Here is the CNN report.

I’m taken by this KBR quote reprinted from the linked article:

“The government fails to acknowledge that the Army breached the contract by repeatedly failing to provide the necessary force protection and, in fact, frequently left KBR, its employees and its subcontractors unprotected,” KBR said.

As one of the lawyers representing Oregon National Guard soldiers who claim to have suffered toxic exposure injuries while protecting KBR employees in Iraq, I have a point of view. Regardless, I’m guessing that National Guard soldiers who provided security to KBR employees at Qarmat Ali site in Iraq might have a slightly different view.  Or perhaps KBR is forgetting about the soldiers that provided security at the Qarmat Ali site?

Fair to say I’ll be interested in how this one turns out.

Western Culinary Institute class action featured in New York Times story

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.

Toyota cover-up much worse than the acceleration problem

The Toyota acceleration problem has gotten a lot of press play. Most recent is yesterday’s story about a Prius that went berserk on a California interstate.  Looks like the engineering staff at Toyota doesn’t yet have this thing corralled.

One of the interesting things about the work I do representing consumers is that I’ve learned that juries are often fairly forgiving of institutions and mistakes. Here is what I mean. In court when businesses, hospitals, or government agencies admit to mistakes, my experience is that jurors are very understanding.

On the surface, it appears that Toyota is taking this, “mistakes were made” approach to defending the sudden acceleration cases.  But underneath is a story that so far has not gotten much play.

Apparently, Toyota has known for years about the problems with its cars. Not a big surprise.

But much worse, Toyota may have hidden the defects and may have violated all sorts of court rules and orders by hiding evidence and stonewalling in cases.  At least that is what one of Toyota’s former lawyers claims.

If this is true and if the story gets traction, Toyota is in major trouble.  Apart from sales issues, their liabilities will go through the roof when–not if–these Book of Knowledge documents are ordered produced.  Seems like their only hope is to completely discredit their former counsel.  I suppose it’s possible that everything he says in the linked CNN interview is fiction. But I doubt it.

The linked story talks about Toyota’s trade secrets.  Toyota thinks it doesn’t have to disclose those in injury cases. Toyota is wrong.

But as long as we’re on the subject, here is a trade secret from a consumer-side lawyer who toils in the trenches. Representing an injured consumer in a  design defect case is tough.  It’s hard to communicate the technical parts of the case. Leading the jury through the thicket of complexity to a just result for the injured consumer is a major challenge.  On the other hand, when that complicated design defect case becomes a case about hidden or destroyed evidence, the business is very likely in big trouble should the business choose to go to trial.

Senator Wyden supports expanded benefits for Iraq war vets exposed to sodium dichromate

In Portland last week, Senator Wyden held a press conference to announce his support for expanding VA benefits for soldiers exposed to toxic chemicals in Iraq.  This arguably sounds bland.  It is not.

Senator Wyden and Oregon National Guard Vets

It’s important for a few reasons. Let’s talk first about history. Senator Wyden and I are a few years apart, but I believe that we both share the haunting memories of our Vietnam era vets exposed to Agent Orange. That was the impetus for me in joining this fight. I imagine it plays on Senator Wyden, as well. We owe our soldiers many debts. It is good that Senator Wyden sees the world this way and has committed to the fight.

I’ll be the first to admit that I don’t always agree with Senator Wyden. But that is little more than a footnote. I share his sense of mission and want to thank him for his commitment to these issues.

And that brings me to the other reasons why this is important. Senator Wyden’s commitment to these issues provides profound comfort to our injured vets. At one point during the press conference, Senator Wyden opened the mic to any of the sick vets who wanted to comment. A soldier, Sgt. (retired) Matt Hadley, moved toward the mic. He hesitated briefly–Matt is a soldier and not the kind of guy you would find hugging a mic at a press conference. He developed asthma and was forced to retire from the Oregon National Guard.

So as Matt moved to the podium, I wondered what he would say and do. He paused and then called out Senator Wyden by name. He delivered the most heartfelt thanks that anyone could imagine. I would have remembered it and reported it word-for-word, except that I was busy losing the struggle to remain dry-eyed. Sgt. Hadley gave voice to many in that brief moment, and what I heard was that our vets were thankful that they don’t fight alone.

The last reason why all of this is important is that Senator Wyden is taking up the mantle of leadership on these issues. Senator Wyden has been supportive of the vets throughout, but he has deferred to his colleagues, Senators Dorgan and Bayh.  Both are leaving the senate. So Senator Wyden’s leadership on this issue will be important.

All of this takes place as we move forward in the legal fight against KBR. Our soldiers protected KBR at the tainted Qarmat Ali site. And now they face a lifetime of health problems. As we look at these problems going forward, I’m struck by the contrast. Our soldiers did their jobs at Qarmat Ali. They didn’t complain about putting themselves on the line to protect KBR assets and personnel. And now that they are sick, I can’t help but grow angry at KBR’s refusal to cover our soldiers’ backs.

I guess that’s why God invented juries and why I have a job.

Comcast late fee class action update–reflections of a consumer class action lawyer

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.

Oh Yes he did: President Obama calls out Supreme Court

Much is being written about President Obama’s first State of the Union address. I didn’t hear the whole thing, but thanks to the miracle of the interwebs, video clips are up. One has already caught my eye.

First some background. Here is an overview of the Court’s stunningly activist decision in Citizens United, which struck down key components of campaign finance reform. As a result of the decision, corporations may directly give to campaigns from their treasuries because corporations have expansive First Amendment rights. It’s a bizarre ruling that attributes to fictional entities rights that were never intended.  The holding of Citizens United appears to give all corporations these overbroad First Amendment rights, even those controlled by foreign interests that might be hostile to our national interests.

So in the State of the Union, President Obama questioned the Court’s Citizens United ruling. Here is what he said:

“With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests, including foreign corporations, to spend without limit in our elections.”

This video clip gives a much better feel than the text.  The video cuts to the Court members sitting somberly as members of Congress give a standing ovation. Better, it shows Justice Alito shaking his head and quietly mouthing what looks like, “It’s not true.” To Justice Alito’s credit, he’s no Joe Wilson, as he didn’t shout or interrupt.

So what are we to make of this? Keep in mind that Obama was a law professor before he entered politics. He showed as much with his reference to separation of powers that acknowledges the fundamental constitutional roles of the three branches.  Take note, as well, that the State of the Union is a power and prerogative of the President. U.S. Constitution, Art. II, Sec. 3.

While I’m no pundit or close watcher of presidential pageantry, it seemed remarkable to me that he was using the State of the Union to call out the Court.  The words may look light and bland, but insitutionally, this is closer to the old Saturday Night Live Point-Counterpoint routine with Dan Ackroyd and Jane Curtin:

Nice to see that the President calling the Court out on this. It’s a dreadful decision by an activist majority hell bent on allowing corporations to run amok.

David Sugerman

This free speech case brought to you by….

This isn’t my usual gig. After all, to paraphrase one of my heroes, Senator Sam Ervin, I’m just a simple trial lawyer. I am no federal constitutional scholar. Nor am I ever likely to argue in the U.S. Supreme Court. I’m not even an expert on the First Amendment, though I’ve handled my share of speech-related cases.

Still, the stunning decision last week by the U.S. Supreme Court is mind-boggling. Now corporations are free to fund election campaigns out of their treasuries. You can expect this in the next electoral cycle: This seat brought to you by your friends at…. This Senate seat paid for by the Philip Morris…  Another Governor for KBR.

The Roberts Court showed its true colors last week when it issued its opinion in Citizen United v. Federal Election Commission, Case No. 08-205 (Jan. 21, 2010). Apologies for the slow-loading pdf format, but I wanted this tribute to intellectual dishonesty to come from the original source.

There are many reasons to be profoundly troubled by this decision.  Let’s start from the beginning with the Court’s overreaching. The case that came to the court involved a simple question about the limits on broadcast of a DVD critical of then-presidential candidate Hillary Clinton. But the conservative wing of the court–the one that espouses judicial restraint, loyalty to stare decisis and precedent–decided that this was the case to consider a corporation’s free speech rights and the continuing vitality of campaign finance reform.  As Justice Stevens–God bless him–explained in his dissent, the majority flatly ignored the posture of the case to reach the questions it wanted to answer.  That is not the stuff of conservatives.

I can imagine that the historic intellectuals of the Court’s conservative wing–giants like Justices Harlan and Frankfurter–are turning in their graves over this one. I suspect they would fairly spit at the notion that the majority of the Roberts Court is conservative as they understood that word.

It’s a comic moment in faux intellectualism. The majority consists of judges who purport to criticize activist judges. And here they are taking a case far outside of what was presented and using it as a vehicle to actively push the free speech rights of corporations.

And then there’s the underlying premise of a corporation’s first amendment rights. Last I checked, a corporation was a fictitious identity created for the protection of shareholders and preservation of capital.  The common law always viewed corporations as inert entities. I can recite the instructions given to juries in my sleep, “A corporation may act only through its officers and agents.”  But now we’re told that they have expansive free speech rights.

They are not people. They cannot act. Justice Stevens points out in his dissent that they can neither vote nor run for office, and they can be controlled by foreign entities whose interests may be hostile to our democracy. I would add that they can’t be imprisoned or executed, though on rare occasions, some deserve both.

I am reminded of this statement about the role of the Chief Justice of the United States Supreme Court:  “And I will remember that it’s my job to call balls and strikes and not to pitch or bat.” U.S. Senate Judiciary Committee, Opening Statement of Judge John Roberts (Sept. 12, 2005) (confirmation hearing for nomination to serve as Chief Justice), reprinted by CNN here.

Seasoned trial lawyers know that sometimes the court rules with you, and sometimes you lose. Those of us who believe in the rule of law acknowledge the authority of the court and do so with grace whether we have won or lost on any particular day. That professional grace is necessary. Still, this ruling marks a sad day for those of us who believe in the rule of law and who want to believe in the moral authority of the U.S. Supreme Court.

For those interested in a more pointy-headed discussion of the ideological demise of our current Supreme Court, here’s the link to a relatively short law review article by a law professor, David Strauss, that provides some thoughtful analysis on how far off the tracks the so-called conservative wing of the court has wandered.

For my part, I can only shake my head at the triumph of corporations running amok.

David Sugerman

Revised: 26 Jan 2010. See comment

Iraq-era veterans losing a champion in the Senate

Senator Byron Dorgan (D.  N.D.) announced yesterday that he will not seek re-election.  I’ve never been to North Dakota, and I had only passing awareness of Senator Dorgan until this summer.  That changed as a result of my work on behalf of Oregon National Guard soldiers exposed to sodium dichromate in Iraq.

Senator Dorgan has chaired the Democratic Policy Committee. In that role, he has held hearings on Army and Army National Guard soldiers’  exposures to sodium dichromate at the Qarmat Ali facility.  Those hearings have been instrumental in exposing wrongdoing by KBR and others.

Senator Dorgan has proved himself a friend of our soldiers and their families.  This is not simple bumper sticker “support our troops,” stuff.  In comments made at the hearing in August 2009, Senator Dorgan made it clear that he is motivated by the simple proposition that we owe our vets more than pats on the back.

So I read this news with a heavy heart.  Those of us who dare to challenge KBR for their misconduct have taken on a big and powerful foe. As every guy knows, when you’re in a barroom brawl, there’s nothing more welcome than a friend by your side.  Thanks Senator Dorgan for your great work. We’ll miss you as we push forward.