|
|
Press |
|
|
|
$65 Million Pants Example Of Litigation Nightmares
PRI in the News
6.20.2007
Tyler Morning Telegraph (TX), June 20, 2007
Most shoppers know there can be a significant difference in the cost of two different pair of pants, but who could possibly imagine a figure of $65 million being mentioned for a single pair?
Yet a Washington, D.C. - based lawyer has filed a $65 million lawsuit against a local dry cleaner for a missing pair of his pants. That was even after the pants were found and owners of the dry cleaner attempted to settle the dispute.
Instead of considering a reasonable settlement of the matter, the lawyer brought a suit claiming the shop was violating consumer protection laws.
"This attorney is also an administrative judge, so you'd think he would understand how frequently the legal system is abused and be sympathetic to its victims," said Todd Stottlemyer, president of the National Federation of Independent Business, the nation's largest small-business advocacy group.
"Instead, he apparently chose to join the ranks of plaintiffs who target small business," Stottlemyer declared.
The attorney alleges the cleaning shop's "satisfaction guaranteed" and same-day service guarantee were not met and therefore, the dry cleaner is liable for $1,500 per day, per violation, per person. He is suing the shop owner, his wife and their son, adding in $500,000 for emotional damages, $542,500 in legal fees (even though he is representing himself) and other costs for a total of more than $65 million.
Sounds like a distorted effort to really take someone to the cleaners. As outrageous as this appears, Stottlemyer observed, it is not surprising that the defendant is a small business.
Small business is the target of lawsuits because trial lawyers understand they are more likely than a large corporation to settle a case rather than go to court, Stottlemyer said. Small firms don't have in-house lawyers to inform them of their rights, to write letters responding to allegations made against them, or to provide legal advice.
"They don't have the resources to hire an attorney, nor the time to spend away from their business fighting these small-claim lawsuits," he continued. "Often they don't even have the power to decide whether to settle a case - their insurance company makes that decision."
Most of the time for the small business with five employees or fewer, the problem isn't the million-dollar verdict variety that makes the news. Typically they are $5,000 and $10,000 paid to settle a suit which might appear no more damaging than the loss of a pair of pants.
When it is considered that many small businesses gross $350,000 or less a year in general, $5,000 to $10,000 can significantly impact a small business owner's bottom line.
If a small business is faced with such outlays it likely means the entrepreneur will not have available money to spend on other needed expenses, such as providing health insurance.
A recently released report by the Pacific Research Institute called "Jackpot Justice" estimated the social and economic costs of the nation's legal liability system. The PRI estimated the annual price tag for a family of four is $9,827 in costs and lost benefits.
The additional health care costs associated with legal liability, the estimate said, added 3.4 million Americans to the list of those without health insurance.
Literally hundreds of cases can be found of small businesses that have been subjected to frivolous lawsuits, Stottlemyer said.
"Our 'sue first' culture is hurting small business owners and slowing job creation across the country," he explained. "The growing number and costs of lawsuits threaten to significantly stifle the growth of our nation's economy by hurting this important segment to that economy."
This ridiculous case of the $65 million pants is just one of the more flagrant examples of the kind of frivolous lawsuits that make arguments of a need for more serious reform of the nation's civil justice system legitimate.
As Stottlemyer sums it up, "A true system of justice shouldn't fly by the seat of anyone's pants."
|
|
|
|
|
 |
