ATRA URGES REFORM OF CONSUMER PROTECTION LAW AS INFAMOUS 'PANTSUIT' IS APPEALED AGAIN

Says Statute Contributes to D.C.'s 'Hostile to Small Business' Reputation

Washington, DC, October 21, 2008 -- As tort lawyer and former judge Roy Pearson is poised to pursue yet another appeal of his infamous $54 million “pantsuit” tomorrow morning in the D.C. Court of Appeals, American Tort Reform Association president Tiger Joyce reminded taxpayers and policymakers of the toll that a consumer protection law “badly in need of reasonable reform” is taking on the District of Columbia.

Joyce joins small business advocates everywhere in denouncing Pearson’s now notorious lawsuit against the Chung family, owners of a local dry cleaner, in connection with a pair of suit pants that were allegedly misplaced years ago.

“That the District’s consumer protection statute allows an absurdly disproportionate case like this to go on as long as it has should be a wake-up call to the mayor and every member of the city council,” Joyce said. “Regardless of the appeals court ruling, every small business owner, every consumer and every D.C. taxpayer has already paid a price as the cost of doing business has gone up and court resources have been wasted.

“Small businesses are often targeted by lawsuit abuse like this because they don’t have the resources to defend themselves as larger companies do,” Joyce continued, explaining that “state consumer protection laws are particularly attractive to plaintiffs’ lawyers because they provide for statutory damages or the tripling of actual damages, and for an award of attorneys’ fees. And many judges have begun interpreting these laws rather loosely, too, wherein plaintiffs don’t even need to claim an injury or loss, much less knowledge of or reliance upon the allegedly ‘unfair or deceptive’ commercial practice.”

In Pearson’s case, Joyce noted, “The District’s law allowed him to seek $1,500 for each day that the dry cleaner displayed signs stating ‘Satisfaction Guaranteed’ and ‘Same Day Service,’ regardless of whether these signs had anything to do with his missing pants. Pearson’s lawsuit also sought a half-million dollars to compensate for the hours he spent attacking honorable small business owners and litigating against them in court. His suit even suggested that D.C. law allows him to receive damages for mental suffering and rental car costs.

“So if D.C. Mayor Adrian Fenty, Council Chair Vincent Gray and other council members want to limit the abuse of the city’s consumer protection law and thus make it easier for honest, hardworking small business owners like the Chungs to thrive, they – along with like-minded state lawmakers around the country who face similar problems with abuse of their own consumer protection laws – should make some simple changes that would go a long way in restoring fairness,” urged Joyce.

“By requiring that a plaintiff prove that he or she 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 basic window signs 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. In Pearson’s case against the cleaners, for example, his out-of-pocket costs, at most, would have included the price of a replacement suit, alterations and any reasonable legal expenses,” Joyce concluded.

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The American Tort Reform Association (ATRA) is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation. ATRA's membership includes non profits, small and large companies, as well as state and national trade, business, and professional associations.