Skip to comments.Trial lawyer payoffs axed
Posted on 08/24/2011 12:42:13 PM PDT by SmithL
Heres a tip for you: Listening to really, really loud sounds over long periods of time can damage your hearing.
Perhaps you already knew that. But a few years back, a group of clever trial lawyers decided they could make some serious money by arguing in court that you are too stupid to know it yourself.
They filed 26 consumer-fraud lawsuits in multiple states against Motorola and other manufacturers of Bluetooth headsets. They alleged that consumers were not warned sufficiently about the dangers, and that they would not have purchased their Bluetooth headsets but for defendants false advertising.
That led to a single class-action case in federal court, in which the plaintiffs sought refunds, restitution and punitive damages. And attorneys fees, of course.
The case was pretty light on the merits in fact, Apple recently got a similar nuisance case thrown out of court over its iPod product line. But millions of people had purchased Bluetooth headsets, and so the potential for liability was high.
And these kinds of nuisance cases often cost a lot of money to defend. Most deep-pocketed defendants would rather spend a million dollars making a case like this one go away than spend millions more in litigation.
For the lawyers, this case was simple: File a lawsuit, then get a settlement agreement which they did. Under its terms, a hearing-loss charity was to get $100,000, the lawyers were to get $800,000. And those who cranked up the volume full blast until they lost their hearing? They would basically get nothing.
But this week, the U.S. Ninth Circuit Court of Appeals put a damper on the business model of legal extortion by trial lawyers filing frivolous lawsuits. It sent this particular class-action settlement back to the lower court for reconsideration. It was the courts first failure to rubber-stamp such a class-action settlement in eight years.
Ted Frank of the Center for Class Action Fairness had filed the objection to the settlement. We have been saying all along that this is an abuse of the class action process, Frank told me. He said that the case could be a milestone in his fight to prevent such abuses.
A defendant is willing to throw a million dollars at a case to make it go away, because its often more expensive to defend it, Frank said. And the attorneys are OK with settling for that million dollars, if they get the million dollars. But if most of the money has to go to their clients, they wont bring the crummy cases in the first place. Theyll only bring meritorious cases.
Frank has become the proverbial fly in the trial lawyers ointment, objecting again and again to bogus nuisance settlements that make up the bread and butter for some. In January, his objection helped convince a court to throw out a settlement between Classmates.com (the online social site with the annoying popup ads) and some users who felt they had been duped into signing up.
In that case whose merits appear much stronger than the Bluetooth case the lawyers had negotiated $117,000 for the aggrieved class, and a million-plus dollar fee for themselves.
Franks organization, a nonprofit 501(c)(3), is currently fighting settlements that are overly generous to trial lawyers in cases against Kellogg, Volkswagen and Toys R Us, among others.
He has also filed an objection to a settlement in an antitrust case against Sirius XM radio, which provided nothing zero for the plaintiffs, and $13 million (or 100 percent of the monetary settlement) for the attorneys.
The message for certain trial lawyers is that their days of self-serving deals and sponging off deep-pocketed defendants are numbered.
What were they axed?
I am completely and utterly astounded that it was the Ninth Circuit Court of Appeals that made this ruling.
“...the U.S. Ninth Circuit Court of Appeals put a damper on the business model of legal extortion by trial lawyers filing frivolous lawsuits.”
A “damper” is good, but not near enough.
How about real penalties with teeth, like “Loser pays” and other tort reforms.
Trial lawyer scum have been allowed to operate worry-free, as top of the food chain sharks, for far too long.
I have an idea: let's go to loser pays system and put the lawyers on the hook for part of the court costs along with the complaining party.
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