Trial lawyer payoffs axed 

Here’s 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 court’s 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 it’s 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 won’t bring the crummy cases in the first place. They’ll 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.

Frank’s 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.

Columnist David Freddoso is The Washington Examiner online opinion editor.

About The Author

David Freddoso

Bio:
David Freddoso came to the Washington Examiner in June 2009, after serving for nearly two years as a Capitol Hill-based staff reporter for National Review Online. Before writing his New York Times bestselling book, The Case Against Barack Obama, he spent three years assisting Robert Novak, the legendary Washington... more
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