Pants Suit: ATRA & the Fundraiser for the Chungs

By July 24, 2007Briefly Legal

Sherman “Tiger” Joyce, president of the American Tort Reform Association, has issued a typically sharp news release on the occasion of this evening’s fundraiser for the Chungs, the D.C. drycleaners hounded by Administrative Law Judge Roy Pearson and his $54 million lawsuit over lost pants. Joyce makes the important point that the Chungs were sued under D.C.’s Consumer Protection and Procedures Act, the kind of statute that invites abuse:

State consumer protection laws are particularly attractive to plaintiffs’ lawyers because they usually provide for minimum statutory damages or the tripling of actual damages, and for an award of attorneys’ fees. Some judges also have begun interpreting these laws rather loosely, wherein plaintiffs don’t even need to claim an injury or loss, much less knowledge of or reliance on the allegedly ‘unfair or deceptive’ commercial practice.

If D.C. Mayor Adrian Fenty, Council Chair Vincent Gray and other City Council members want to limit such outrageous manipulation of the city’s well intentioned consumer protection law in the future and thus make it easier for honest, hardworking small business owners to thrive, they can legislate some simple changes.

By requiring plaintiffs to prove that they actually relied on a supposedly fraudulent or deceptive advertisement or representation, lawmakers could drastically reduce this kind of lawsuit abuse. After all, Roy Pearson’s claim against Custom Cleaners alleged that the display of a basic ‘Satisfaction Guaranteed’ sign somehow constituted a willful fraud punishable by a mind-boggling, potentially bankrupting civil damages award.

Policymakers also would do well to limit plaintiffs’ claims for damages to out-of-pocket costs, except in cases when it can be proved that a defendant’s actions were knowingly and willfully fraudulent or deceptive. If Pearson had simply limited his claim against the Chungs to the cost of a new suit, alterations and any reasonable legal expenses, we wouldn’t be here right now and this case wouldn’t have become internationally infamous.

We appreciate Joyce providing the broader context and offering recommendations. It’s easy — and entertaining blog fodder, admittedly — to express horror at Pearson’s excesses, but the fact is, only his excessiveness is unique. These kinds of tortious claims against small-business owners are all too common.

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