ATRA WELCOMES APPELLATE COURT DECISION ENDING D.C.'S INFAMOUS 'PANTSUIT'

Urges D.C. Mayor, Council and AG to Reform Easily Exploited Consumer Law

Washington, DC, December 18, 2008 -- As the D.C. Court of Appeals today rejected plaintiff Roy Pearson Jr.’s appeal of the infamous $54 million “pantsuit,” 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 again joined 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 did 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.”

Noting a December 13 Washington Post article headlined “D.C. Files Suit Over Special-Ed Case It Calls Frivolous,” Joyce said “D.C. Attorney General Peter Nickles is now on record, taking a stand against the kind of lawsuit abuse perpetrated by what he called ‘a very aggressive plaintiff’s bar,’ here in the District. And certainly Roy Pearson’s relentless, years-long assault on the Chungs’ honorable dry cleaning operation was about as aggressive as they come.

“But the Chungs certainly aren’t D.C.’s only small-business victims, just as Mr. Pearson isn’t the only perpetrator of such anti-business litigation,” Joyce continued. “Unfortunately, the District’s well-intentioned consumer protection law invites similarly speculative and economy-sapping lawsuits, and Mr. Nickles, the mayor and the city council ought to do something about it before other community-building businesses are sued out of existence, too.”

He explained that, like other state consumer protection laws, D.C.’s law is particularly attractive to plaintiffs’ lawyers because it provides for statutory damages or the tripling of actual damages, and for an award of attorneys’ fees. Judges elsewhere have begun to interpret similarly written 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.”

“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 should make some simple changes that would go a long way in restoring fairness,” Joyce urged.

“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.