Zippers, coffee, Twitter and very tender man parts

I don’t really have time for this. I have two briefs due this week. The first is an opposition to a motion for summary judgment in a product liability case. The second is a reply brief in our consumer fraud class action against BP for failing to disclose debit card charges to Oregon gas purchasers. And if that’s not enough, I have legislative meetings this week on consumer legislation that would help end insurance abuses by covering Oregon insurance companies under the Unlawful Trade Practices Act.

All of that is an over-long explanation of why this post is going to be quick and somewhat dirty. Too many things.

So on the Twitter, I wandered into a conversation–if you can call it that–between Nicole Augenti (@Nicole1515), a Connecticut trial lawyer, and Ted Frank, @tedfrank*, a lawyer who I understand devotes most of his practice to objections in consumer class actions. Ted also blogs at the Manhattan Institute’s Point of Law blog, a blog that is supported by the Manhattan Institute, a well-known corporate-funded think tank devoted to re-design of the U.S. civil justice system to make it more corporate friendly. “Corporate friendly” is a euphemism. These smart people reportedly funded by the Koch brothers and a number of large corporations are bent on destroying the civil justice system through radical restrictions of the right to trial by jury.They do so through a number of initiatives, with allies like The Federalist Society, think tanks, blogs, coordinated message points, etc.

They are doing this through “tort reform”–an insidious notion that they know better than juries whether corporations should be held responsible when they misbehave. They are doing so through mandatory arbitration to ensure that consumer and employee claims never make it into the courtroom. And they are doing it through allied media and public relations firms.

So against this backdrop, Mr. Frank is called out for this particularly inane blog post. Ms. Augenti comically tweets: “So, Ted Frank (TORT REFORMER!) is mad he can’t sue for penis zipper injuries?? http://www.pointoflaw.com/archives/2013/03/zippers-and-mcdonalds-hot-coffee.php … ” The Twitter back and forth starts with a very smart, accomplished intellectual of the caliber of Ted Frank accusing Ms. Augenti of illiteracy and wondering whether she isn’t a walking malpractice trap.

But the point, which he doesn’t want to address, is how messed up Mr. Frank is on the law of product liability. He is too busy taking swipes at another pal of mine, Susan Saladoff, for her seminal work on the great documentary, Hot Coffee, the Movie.

So now let’s get to the errors of Mr. Frank’s analysis. That’s why I am writing this, after all.

According to Ted Frank, if Stella Liebeck, the consumer in the McDonald’s case, can sue because she burned herself on hot coffee, so can men who suffer injuries to delicate organs (informally referred to as the Johnson, the little brain, the schlong; more formally known as the penis) when using zippers.

How does Mr. Frank get to the schlong injury claim? He oversimplifies and misstates the law of product liability.  According to Mr. Frank, Susan Saladoff, who had a great run as a capable Oregon trial lawyer, advances the theory that product liability claims exist anytime someone or many people get injured by a product. He knows that he has oversimplified Susan’s point. She doesn’t say that.

What Mr. Frank ignores is that the consumer must prove that a product is unreasonably dangerous to pursue a product liability case. “So coffee is hot and everyone knows that,” is the prevailing knock on the McDonald’s case. What people don’t realize is that the coffee temperature was not hot, it was HOT. McDonald’s sold it at a temperature that caused major, horrible burns when spilled on humans. And they did it knowing that this was a problem, based on the hundreds of prior injuries.So it’s not that coffee can burn, but that McDonalds set the temperature at an unexpected and unreasonably high temperature that is a danger.

And now Mr. Frank wants to talk about zipper injuries to the schlong. So let’s talk. Here is how it works. If the manufacturer sells a dangerous product and the danger could be eliminated by design, then the manufacturer is responsible. After all, it is up to manufacturers who profit from selling products to take steps to avoid needlessly injuring consumers. I assume even the Manhattan Institute agrees with that basic principle, but maybe I am wrong.

So if a manufacturer uses razor sharp edges on his new, hip jeans, and Mr. Frank slices off his Johnson, he can sue. I imagine every guy would agree that such an injury would be horrifying…. But apart from the sensitive topics, the consumer–here Mr. Frank–must prove that the product was dangerously defective, usually by design. Mr. Frank knows this. He simply does not like that such cases exist.

Worse, he chides Saladoff and those of us who dare to call out corporations for misconduct by misstating what we must do to prove our cases. It’s not enough to show that 700 or thousands are injured while using a product. While that fact is interesting, and it may bear on what the corporation should have known, it does not prove the case. The 700 instances in McDonald’s coffee litigation was part of the factual showing, but if that’s all that was proved, the case would not have gone to the jury.

Two things gall me about the Manhattan Institute and their ilk. First, they invariably think they know better than juries. Ted Frank is a smart guy. I mean that genuinely and in a non-snarky fashion. He is accomplished, well-educated and highly credentialed. That said, he is not smarter than a jury. No single person is.

I say that as someone who has won and lost case. I’ve won very big verdicts, and I’ve lost in heartbreaking fashion. But at the end of the day, I am prepared to accept the judgment of the jury. That was the genius of our founders. It is what is enshrined in the Seventh Amendment. In my experience, those who try cases on both sides recognize the wisdom of the jury. This is true of my colleagues who represent corporations in the courtroom.

Along those lines, I would be surprised if Mr. Frank or anyone else at Point of Law has much jury trial experience. (Open invitation: Please let me know if I am wrong.) But even so, they are smarter than juries?

I said there were two things that galled me. The second is something I’ve seen many times in the decades in my law practice. A person is injured,  a consumer is wronged, a family is harmed. The injury may be a result of something as simple as a dangerous, inattentive driver causing a wreck, or a corporation wrongfully taking money to which it not entitled. Or it may be something as complicated as injury from toxic chemicals. The injured person often looks at me and says, “Well, I’m really injured, not like so many of those people you hear about….” I try to remain neutral and gracious and ultimately attribute it to an old adage: Comedy is when you slip on a banana peel; tragedy is when I slip on a banana peel.

So all this is the long answer to Ted Frank and why from time-to-time he gets push back from me on Twitter. Ted is obviously a true believer. But he is wrong to believe that he knows better than the founders who gave us the Seventh Amendment and more than a group of jurors who listen to the evidence and render decisions.

___

*Was going to provide a link to Ted Frank’s Twitter feed, but apparently he blocked me. Sadz, as the kids say.

Update: Le Cordon Bleu Portland/Western Culinary Int. and Career Education Corp case on hold for appeal

From a recent blog comment and email, I realized that we did not update our blog on this case. The Court of Appeals denied our motion to dismiss. As a result, the case is on hold, and the January trial date is off.

The news came while I was in trial on Bixby v. KBR and in the tumult of that case, the need to update readers here fell of my radar. My apologies to all who are waiting for news.

The Court of Appeals’ denial of our motion to dismiss means that we must go through the long process of appeals. My guess is that we’ll have the case briefed and argued this year, but a decision and final return to the trial court might not happen until 2014 or even possibly later.

The appeal is over whether some people in the class–those who signed later enrollment agreements–must go to arbitration. It’s particularly aggravating because approximately half the the class who signed early versions of the enrollment agreement are not impacted by the appeal.

We are disappointed, of course. This early appeal appears to be part of Career Education Corp’s plan of delay. While the case may be delayed, the legal team remains fully engaged and committed. Our day will come.

Please let us know if you have questions. But keep in mind that we don’t provide legal advice via blog comment.

David Sugerman

Update: Consumer fraud class action against Career Education Corp and Western Culinary

This is a longer update on our case against Career Education Corp. and Western Culinary Institute/Le Cordon Bleu Portland. It’s an update for those following the case, including members of the class.

Brian Campf and I were back in court Friday. Judge Baldwin issued a number of rulings from the bench.  As well, Career Education Corp. defendants are trying to appeal Judge Baldwin’s previous decision denying their motion to compel arbitration of the claims of roughly half of the class. Let’s take these dense things one at a time.

1) The Friday motions and rulings: Judge Baldwin heard and decided three motions on Friday. First, he granted in part our motion to compel production of discovery from an investigation report of Career Education Corp placement practices that had been disclosed earlier. This is a win for the class. We’re looking forward to reviewing this information.

The class lost two motions filed by Career Education Corp. Judge Baldwin granted in part a motion to allow the Career Education to do a survey of class members by mailing a questionnaire to members of the class. We opposed only because we believe that the form of the survey was confusing and potentially misleading. Judge Baldwin limited the questionnaire but has allowed them to go forward. While we disagree with Judge Baldwin’s ruling, we respect his authority and will cooperate with the process so that we can move forward to trial.

Judge Baldwin also granted a motion that removes approximately 300 people from the class. The 300 or so stopped attending and did not withdraw and thus were dismissed for attendance or academic reasons. The Court concluded that they should not be part of the class. We argued against the motion. While we disagree with this ruling, we recognize that Judge Baldwin has authority to make the choices that he made. As part of the process, those who are no longer part of the class will be sent notice informing them that they are out.

2) The new appeal: We learned on Friday that the Career Education defendants are appealing Judge Baldwin’s prior ruling denying their motion to move approximately half of the class into individual one-case-at-a-time arbitration. We won that argument and believe that Judge Baldwin correctly denied their motion. At the same time, the Career Education defendants sought to stay proceedings in the trial court while the appeal goes on. Appeals can take years, so it’s pretty apparent that they are simply trying to avoid our January trial date.

We’re in the process of moving to dismiss the appeal. We believe that they are not allowed to appeal the order in question. This is a technical, dry area of the law involving concepts of procedure and jurisdiction. We remain optimistic that the appeal will be dismissed and that we will stay on schedule. But even if the appeal goes forward, we will fight there too. So the bottom line on this is know that we are continuing forward, that we remain confident, and that Career Education Corp. can hire more lawyers, file more motions, and try to delay more. But they will not shake us off this case.

3) Parting thoughts: One of the things about the cases that we handle is that I have the luxury of choice. I will not take on a case unless I believe that it is right, and I will not pursue a case unless I believe it is important. But once we commit, we dig in. Stonewalling only makes us more determined. And so we dig deeper. And so we go on.

I’ll update when we have more news. By the way, we do more frequent and shorter updates on our major cases on Facebook. You can get that news if you are a Facebook user by liking us here. When I post on this blog, I generally leave a note on the FB page, so it’s also an easy way to keep up with this blog. As well, you can always follow me on Twitter @DavidSug, though that’s more of a personal account. I don’t always self-censor, so it’s definitely not for everyone.

Thanks for your continuing interest in this case and our work. We’ll let you know when we know more.

David

Judge denies defense motions in Career Education Corp Western Culinary Institute class action

Happy to report that Judge Baldwin denied defendants’ motions for summary judgment and to decertify the class in Surrett v. Western Culinary Institute, our consumer fraud class action for former Western Culinary Institute/Le Cordon Bleu Portland students. We’re very pleased.

The gist of Judge Baldwin’s ruling is that there is sufficient evidence for a jury to decide whether the school and its parent corporation, Career Education Corp., defrauded students by failing to disclose important information. We’re very pleased. Now a bit more discovery and then full-on trial preparation.

It does look like we will be moving into mediation later this month. We had an early attempt at mediation long ago, and it failed miserably. Much  has happened since. Watch this space for updates or–for quicker information–like us at on Facebook here. We tend to post quicker updates there.

Memo to the Oregon Legislature: Healthcare Transformation Starts with Patient Safety

The Oregon Legislature is back in session and grappling with proposed health care transformation. Yesterday, we learned that some legislators are more concerned about “defensive medicine” and putting an arbitrary limit on access to justice for Oregonians who are on the Oregon Health Plan or Medicaid rather than they are about keeping patients safe.

Did you know that more than 98,000 Americans die every year from medical errors?  Here is some context: That number is equivalent to a 747 jet liner crashing every day of the year killing all on board. So when we talk about healthcare transformation, shouldn’t we really be talking about patient safety?

We need to focus on the real problem with health care delivery and that is keeping patients safe and informed.  Recently, Legacy Emanuel participated in a national study where they implemented simple procedures and check lists for all hospital staff to follow.  You know, things like washing your hands between each patient, making certain all medical equipment is accounted for before finishing a surgery, that the patient is the same person as the chart on the end of their bed.  According to the Oregonian’s report on that study, Legacy saved over $13 million in one year, cut down on medical errors and significantly lowered their infection and injury rates.  Imagine the cost savings if these check lists and procedures were implemented in every Oregon health facility. Imagine the health improvement and lives saved from real health care transformation that starts with patient safety.

Instead of focusing on patient safety, we have legislators holding forth about something they call “defensive medicine,” They are using that label as a tool to put arbitrary monetary limits on patients’ rights. Here is a modest proposal: If we’re going to talk about things like this, let’s resolve to get the facts straight.

The label “defensive medicine” presumably refers to tests ordered by a provider for purposes of preventing or defending against a lawsuit. A provider who orders testing with no therapeutic value commits insurance fraud, violates Oregon law, and ignores the first rule of medical ethics to do no harm. The doctor who orders unnecessary tests puts the patient at risk by subjecting the patient to an unnecessary medical procedure.  And legislators think that Oregon doctors routinely order unnecessary tests, committing Medicare or insurance fraud and putting patients at risk because what? To keep insurance premiums lower? Really?

In the same opinion piece there was a second solution to “the problem.” There is a reason for the quotes: No one has ever identified the problem. Even for lack of a problem, some Oregon legislators seek to impose a two-tier justice system.  Under the plan that is a solution in search of a problem, the two-tier system would mean two levels of justice. The first tier is reserved for individuals with private insurance. The second tier is for patients on the Oregon Health Plan (OHP).

The new legislation would strip OHP patients a basic constitutional right to trial by jury and instead and would limit or cap how much OHP patients can sue for when they are injured due to negligent, substandard medical care. That’s right, under the solution to the non-problem OHP patients claims would be limited even when a provider gives care that is proven to be negligent.

The legislators pushing this agenda presumably are doing it in the name of lower doctor malpractice premiums. What they are not saying is that this solution to non-problem has been tried in other states. The result: No noticeable effect on doctor liability insurance premiums.

Under this emerging plan, if you have the good fortune to have your own insurance, you would be able to hold a negligent care provider accountable for substandard or negligent care. If a surgeon mistakenly amputates the wrong leg and you are on OHP, the two-tier system of justice would limit your access to justice, no matter how egregious the negligence, no matter how high your lifetime medical costs, no matter your life situation.  And this limit would take the form of a fixed limitation set by the Oregon Legislature. Because those who believe that their solution is necessary are also dead certain that the Oregon Legislature is better able to set damages in all cases than a jury that decides each case on the evidence.

It’s time that the political agenda of the few take a back seat to patient safety. It is time to make certain that health care transformation puts patient safety first.

Twitter from the jury box in Brooklyn

My sleepy Monday started with full-on Twitter commentary emanating from a courtroom in Brooklyn. It seems that Ryan J. Davis (@RyanNewYork), a Brooklyn social media-active guy had gotten pulled into court for jury duty.

Mr. Davis was live-tweeting voir dire–AKA jury selection–from the court room. That’s to say, he was broadcasting his observations on Twitter while sitting on a case. He explained:

Ryan J. Davis

@RyanNewYork Ryan J. Davis

“Nobody had told me not to tweet, everyone can see me clearly on my phone.”

Some of his tweets were amusing and harmless, but at least a few crossed the line, including one regarding the merits:

Ryan J. Davis

@RyanNewYork Ryan J. Davis
“Apparently the woman suing the nursing home has been in like 6 accidents and is always suing. Raises some flags.”

And then there was this somewhat ominous appraisal of one party’s attorney:

Ryan J. Davis

@RyanNewYork Ryan J. Davis

“Plaintiff’s attorney said “you won’t see me on any late night tv ads'” I don’t believe him.”

Ryan, being a skilled social media user, quickly saw that a small group of trial lawyers were talking about what he was doing. He was eventually told by the judge that he should not be posting on Twitter, and he wondered whether one of us had complained to the judge.

Through the limited space of Twitter posts, I explained that I had not and promised to elaborate on the complicated problems of jurors and social media.

So now we’re caught up, and Ryan this is for you.

Our civil justice system stands and falls on the jury and the integrity of the process. The injured woman sought access to justice because she believed that the nursing home should be held accountable for maintaining its facility in a way that was safe for those entering the business. Whether she is right or wrong, injured or not, it is up to the jury selected to hear the evidence and render a verdict. My worry is that Twitter and social media disrupt that process.

You engaged in the very human process of forming impressions on things that mattered (the woman’s credibility based upon someone’s claim that she had made prior claims) the credibility of her counsel (based upon his appearance and conduct). You did that without the benefit of actual evidence.

I imagine that happens to many potential jurors, so you’re still in an unremarkable position. But then those are broadcast to tens of thousands of people who follow you and beyond. Until earlier today, I did not follow you; I only picked up on the stream because someone flagged it for me.

So we’ve taken the initial impressions that aren’t based on evidence and broadcast them outward from the courtroom. I imagine some of your 30,000+ followers responded, retweeted, etc. and next thing you know the merits of a case in Brooklyn are grist for the social media mill.

Now if it seems like I’m picking on Ryan, that’s not my intention. Assuming Ryan accurately heard all and correctly tweeted the lack of instructions regarding use of Twitter, the problem is upstream with the court and counsel. But it is a problem.

It goes back to the foundation of the civil justice system–the jury. The parties need to know that their case will be tried on evidence in the courtroom. Put another way, if I am trying that case, I know how to put on a case, challenge through cross-examination witnesses who are adverse, and analyze and argue the evidence. But I can’t argue with information and influence that enters the jury room through Twitter and other social media.

Some in the social media world may say, “Tough luck, pal. This is the new world; get used to it.” To which I say, “Not without a fight.” Because the civil justice system is what levels the playing field between oligarchs, corporations and consumers. Do you have any doubt about a large, institutional corporate nursing home’s chain ability to influence via social media jurors who are willing to listen during trial? Do we doubt for a moment the power of protected corporate interests to exploit these channels?

So at the risk of sounding pompous (or worse), we need to figure out how to divorce social media from the jury box. To do otherwise is a loss for consumers who count on the integrity of the civil justice system as a uniquely American means of leveling the playing field between the oligarchs and the rest of us.

Ryan, if you catch this, thanks for the teachable moment. Hope that I’ve explained my concerns and the stakes adequately. Happy to discuss in detail if this is of further interest.

David

 

 

A modest proposal: Close your Umpqua Bank account

Great coverage here in today’s Oregonian by Brent Hunsberger regarding Umpqua Bank’s decision to cram mandatory arbitration down the throats of Umpqua customers. If you’re an Umpqua Bank customer, you might want to seriously consider moving your funds to a credit union.

By way of background, the U.S. Supreme Court decision last year in AT&T Mobility v. Concepcion touched off a race to the bottom. The Court gave corporations great power to require customers to take any disputes to arbitration, while banning class actions.

The Court fell for the old Lucy, Charlie Brown and the football argument that arbitration is cheaper, easier and better for consumers. Arbitration is none of those things to consumers–especially in small consumer cases. In those cases in which the amount at stake might be $20-200, arbitration filing fees, hearing fees and arbitrator payment fees effectively bar individual consumers from pursuing their claims.

When the likes of Umpqua Bank and ATT Mobility engage in small-dollar rip offs of many consumers, they earn large amounts of money. To put it concretely, if a bank illegally charges five dollars each year to a million customers, it earns $5 million per year in illegal profits. In the past, consumer lawyers have stopped that nickel and diming by pursuing class actions. If a class of a million consumers collects $5 per consumer plus attorney fees and costs, does anyone think the bank will continue the illegal practice?

Banks–and those who represent them–dislike class actions. They settled on a simple strategy. Ban class actions and require consumers to go to arbitration. Ending consumer class actions is a bit like filling the slop pit for a bunch of hungry swine. They’ll be all over that deal.

Once the Supreme Court decided ATT Mobility v. Concepcion, banks, cell phone providers, credit card companies–hell, almost any big business that sells things or services under a written contract–all rushed in for the feeding frenzy. So I guess it is no surprise that Umpqua wants to get in on the action.

So where are consumers in this? If you care about this issue and you are an Umpqua customer, the best response is to vote with your feet. Move it to a consumer-friendly credit union. Because if enough Umpqua customers move, I’m guessing they will get a little nervous. And if a lot of Umpqua customers move, I’m thinking they might get a lot of nervous.

So do it if you can. If they can’t treat us better than slops in a trough, seems to me they don’t deserve our business.

Oregonian on BP consumer fraud class action

The Oregonian picked up the filing of the BP class action. Their report is here on OregonLive. More on the case–including a copy of the initial complaint (pdf)–is here. A few clarifications:

1. The case covers only debit card purchases of gasoline at Oregon ARCO and AM/PM minimarket stations.

2. Under Oregon law, we must give defendants 30 days’ notice and allow them the opportunity to fix the harm that they have caused. If they do not do so within the time, we may seek money damages for the class. We will amend to seek damages for the proposed class, unless BP wants to make things right quickly.

3. If you have questions or stories you would like to share, please use this contact information to give us a shout. (We’re a small outfit,  so it may take us a while to get back to you.)

Honda civic hybrid class action settlement faces social media backlash

It sounds like a lousy class action settlement, though it is possible that it is not as bad as it sounds. This report in the LA Times, about a pending class action settlement on behalf of consumers who bought the Honda Civic Hybrid, raises some eyebrows.

I don’t know anything about the case or the settlement, but a class action for car buyers that gives class members a coupon for purchases on future cars is almost always a problem. If the problem isn’t apparent, here is a stupid question: How often do you buy a new car? Consumers also get cash, but it’s apparently as low as $100 per purchaser.

Lest anyone accuse me of being totally one-sided, it’s worth noting that there are times when cases don’t work for one reason or another, and a modest settlement is appropriate. I doubt this is how the case went because the attorneys for the consumers are getting a large fee, according to the same report. Even so, I am not licensed in California, and I have no information on the case. I haven’t seen the notice or the settlement agreement, so I’m not very informed.

So all this background leads me to Heather Peters, one of the consumers who is not happy with the settlement. Through her website, Ms. Peters is campaigning to get the word out to consumers who are affected by the settlement. She’s also on Twitter here.

Props to Ms. Peters for a few reasons. First, bad class action settlements are a problem. While I still don’t know enough to know about this one, it smells bad from here. More important, Ms. Peters is apparently providing consumers with information about alternatives, including opting out and small claims.

I’m intrigued by Ms. Peters’ campaign. I hope to learn more about the merits of the settlement and whether it’s as bad as it sounds. My guess is that her pioneering use of social media may become a model for future problem class action settlements.

Update: My Twitter pal, George Wallace, aka @foolintheforest, provides helpful California law context here at his Declarations and Exclusions blog. Besides being endlessly amusing on Twitter, George brings his A-game to the world of California insurance law and civil law issues beyond. In the linked post, George asks some compelling questions about things lurking in the shadows of the LA Times report.

 

 

Career Education Corporation and the terrible, horrible, no good, very bad day

Last week, Career Education Corporation’s stock took a breathtaking fall. It started with the resignation of Gary McCullough, the CEO. That happened so quickly, he did not even have time to offer the usual walk-the-plank rap that he was leaving to spend more time with his family.

The next day, November 2, the company provided earnings information to investors in their earnings call. The earnings call reportedly included revelations that about an internal  investigation by outside counsel.

It seems that independent counsel reviewed the calculation of placement rates at some of CEC’s schools. CEC revealed that placement rates at some of its schools were improperly calculated. That is when CEC’s stock took its breathtaking fall.

The upshot is that Career Education Corporation is facing serious problems. Or, in the words of a favorite kid’s book, CEC had a terrible, horrible, no good, very bad day. Against this backdrop, we continue to pursue our consumer fraud class action against Career Education Corp. and the Western Culinary Institute/Le Cordon Bleu Portland for former culinary students at the Portland campus. The calculation of placement rates is one of the major issues in our case.

I’ll be interested to see what else comes out from these investigations. Regardless of what else comes out, we’re getting ready to complete depositions and get ready for trial.

Update: NPR did a story two days ago. Access it here

Updated: 9 Nov 2011