Blog Relocation

If you've been looking for the updates on this blog, my bad! While it's not yet completely done, the David v. Goliath blog has moved to our web page, www.pspc.com. Here's the url: http://www.pspc.com/blog/

We're still tweaking it a bit as of today, Monday, March 3. But it's functional and up and full of continuing coverage of the issues that matter to consumers.

So I won't be posting here anymore. But I've continued at pspc.com and look forward to seeing you there.

David F. Sugerman
www.pspc.com

Comcast Gets Popped Right Here in River City

Goodness, what with all the Western Culinary Institute back and forth, I've missed a favorite sleeper story about Comcast. Last week, metropolitan Multnomah County's Mt. Hood Cable Commission announced that it was fining Comcast $43,899 for failing to notify Oregon subscribers about changes in their cable service.

Here's the url to the press release: http://www.mhcrc.org/docs/PressRelease30dayViolation.pdf

Comcast has roughly 150,000 subscribers in Multnomah County. In October 2007, Comcast unilaterally moved five popular basic cable channels to a more expensive digital tier. You want to continue MSNBC? You get to pay at least a dollar more per month. According to the Cable Commission, Comcast made the changes without giving 30-days notice to subscribers. Subscribers apparently received notice 10 to 20 days late.

Full disclosure: the author represents consumers in a case against Comcast over what the consumers claim were illegally charged late fees. One of the allegations in the case is that Comcast failed to provide timely notice before levying late fees.

Interestingly, the Cable Commission prefers that Comcast provide a credit to affected subscribers. But in the alternative, Comcast can pay the fine of $43,899 to the Cable Commission.

Should be interesting to see what happens next on this one.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

CEC/Western Culinary-Consumers Taking Action

Wow, here's something cool about how the internet is providing consumers with new tools to fight corporate abuses.

I stumbled on a Facebook group devoted to consumers' concerns over CEC, the owner of many private trade schools, including Portland's Western Culinary Institute. The man behind the group is Charles Hobbs. I'm in awe of his energy and organizing ability. While I don't know his story directly, I'm guessing that he got burned by one of the CEC programs and decided to take action.

Here's his IADT Truth Advocates facebook page: http://www.facebook.com/group.php?gid=5604847490

And if that's not enough, the page reports that CBS is coming out with a news piece on CEC and some of the claims made by consumers.

It's refreshing to see Mr. Hobbs and others using the internet in a constructive way to provide information to consumers. The networking process provides a great tool in fighting those businesses that seem committed to doing things the wrong way. Nothing like good old fashioned information to help consumers make smart choices.

David F. Sugerman
Paul & Sugerman, PC
www.pspc.com

Looking for Western Culinary Institute Witnesses

I have been retained to investigate possible consumer fraud and breach of contract claims against Western Culinary Institute. Along with my friend and colleague, Portland attorney Brian Campf, I am interested in talking to students (current and past) of WCI about their experiences there.

Feel free to contact me: dfs@pspc.com.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

Oregon Supreme Court Affirms Verdict Against Philip Morris-Again

Today, the Oregon Supreme Court affirmed for a second time the verdict rendered by a Portland jury in 1999 in favor of the family of Jesse Williams. Full disclosure: the author of this blog represented on a pro bono basis the Oregon Trial Lawyers Association, one of the amicus curiae in the case.

Nine years after a jury found that Philip Morris had acted with wanton disregard for Jesse Williams, the Oregon Supreme Court had to re-visit the case a second time because the U.S. Supreme Court remanded the case.

In the nuts and bolts department, the case came down to a simple rule in Oregon. A party's request for a jury instruction must accurately summarize the law in all respects or it should not be given.

At trial, Philip Morris requested a jury instruction on punitive damages that was not given. It was not given because it misstated the law. Every Oregon lawyer knows that's the end of the game. Yet Philip Morris still insisted that it was entitled to some sort of special treatment.

The bigger news is that this was a large punitive damage verdict. Juries assess punitive damages only when a defendant has engaged in outrageous misconduct. There was plenty of that in this case--destroyed documents, falsified and hidden research, junk science used to create a controversy about whether smoking was harmful. All of it undertaken by Philip Morris. So it should come as no surprise that the jury did the right thing.

The story that rarely gets told is that 60 percent of punitive damages assessed in Oregon cases go a crime victims' assistance fund. Punitive damages are assessed based upon the misconduct at issue. They also have to be significant enough to teach the bad actor a lesson. It's a little bit like parenting. A little child gets told no when she misbehaves. The teenager that takes the car on an alcohol-fueled joy ride needs to suffer far greater consequences. That's because a wayward toddler needs gentle correction, and a wayward teen needs a big stick.

In much the same way, Philip Morris only pays heed if the assessed amount crosses into the tens or hundreds of millions. Everything else is just noise.

In a perfect world, Philip Morris would pay the judgment and get on with its legal business in a way that is acceptable to society. I don't think anyone expects Philip Morris to do anything other than to try once again to get its friends on the Supreme Court to bail it out. Let's hope that the Supreme Court stays with the rule of law instead of applying the perverse version of the golden rule. Say it with me now: The guy with the gold makes the rule. If the U.S. Supreme Court reads the Oregon court's opinion and follows the existing rules, the Williams family will see justice.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

Vytorin-More Details on Consumer Claims

For consumers who have taken Vytorin, here's a good summary of the problem from the New York Times: http://www.nytimes.com/2008/01/15/business/15drug.html

Interestingly, the companies have apparently known since April 2006 that their higher-priced drugs were not more effective than generics. But they sat on that information until Congress pressured them to release their study this month. In the meantime, the manufacturers continued to sell the higher-priced less effective drugs.

I don't routinely pay close attention to such things, but I have to wonder whether the companies ran some of those glossy TV ads for Vytorin. Sure would be interesting to see what they said. I suppose that will be part of the discussion as the various consumer class actions move forward.

One other thing. A google search also turned up a fairly hostile editorial in Wall Street Journal. According to the writer, these cases are inappropriate because no one has been injured. I guess the Journal is bound to side with its friends on Wall Street and not consumers. But you would think that even the Journal's editorial writers could appreciate the obvious point.

Taking money from consumers by way of deceptive trade practices IS an injury. Sure, it's not a big deal to the well-heeled at the Journal. But of course, if we're talking about $30 per month per person, and you're selling this thing everyday to consumers across the nation, that's a lot of money. Maybe it looks too much like business as usual to the Journal?

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

FDA Investigating Vytorin

Coming on the revelations that Vytorin is no more effective than generics, the FDA announced that it would investigate the drug and its manufacturers,Merck & Co Inc. and and Schering-Plough Corp.

Here is the url for more information on FDA action: http://www.msnbc.msn.com/id/22847409/

The press accounts don't specify the scope of the investigation, but based upon an earlier study released this month, it appears that the companies knew that Vytorin was no more effective than generic drugs in treating cholesterol issues.

Consumer laws, like Oregon's Unlawful Trade Practices Act give consumers a way to obtain refunds when a drug manufacturer falsely represents that its new drug is more effective than a less expensive generic. While there is certainly more to this story, it looks as if consumers are filing class actions in multiple states.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

Zetia and Vytorin Subject of Consumers' Class Actions

New studies released earlier this month raise troubling questions about the effectiveness of two prescript medications used to control cholesterol. The generic products Ezetimibe--marketed under the registered trademark Zetia--and Ezetimibe/Simvastatin--marketed under the registered trademark Vytorin--apparently aren't effective, as represented by their manufacturers.

Disclosure: the author of this blog routinely handles consumer class actions and may become involved in this litigation in the future.

Consumers are lining up in various states to pursue claims for reimbursements and refunds for money spent on these drugs. According to a complaint filed in U.S. District Court of Kansas, the drugs are alleged to increase the formation of fatty plaques, which raises the risk of heart attack.

It's going to be interesting to see how this plays out.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

Finally-The Press Asks OHSU the Hard Questions

I have to say that Steve Duin's column in today's Oregonian (24 January 2008) is a breath of fresh air. Here is the url: http://www.oregonlive.com/news/oregonian/steve_duin/index.ssf?/base/news/1201137918314500.xml&coll=7&thispage=1

The back story is that the Oregon Supreme Court ruled recently that Oregon Health Sciences cannot cap a child's damages at $200,000 when OHSU's negligent treatment causes profound brain damage.

Rather than take responsibility, OHSU started up the scare machine. We were treated to a parade of horribles. OHSU will be forced to limit or cut care, it will be closing clinics, and it will be laying off many people all because of--they claimed--Jordaan Clarke.

Steve Duin's column debunks the myth. I mean, for crying out loud, can you say, "Aerial tram"? And don't even get me started on the OHSU waterfront developments. Or how about the recent loss of the biotech research group to Florida? The reality is that OHSU hides from public scrutiny by claiming to be private and hides from market reality by claiming to be public.

The best part of Steve Duin's article is this quote from Sen. Walker (Eugene): "They've finally found a way for people to overlook years of financial mismanagement," state Sen. Vicki Walker, D-Eugene said, "and it's Jordaan Michael Clarke. It's a great PR move, but it's ridiculous. And it's a snow job."

Couldn't agree with her more.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

Supreme Court Cases Focus on Whether Corporate Actors Must Answer to Juries

The Supreme Court recently announced that it will hear two cases that may impact consumers. Two cases address a troubling area--federal preemption. Both threaten to further restrict consumers' abilities to obtain compensation when wrongdoers cause harms and losses.

In Wyeth v. Levine, the Supreme Court will decide whether state law claims for injuries that seek payment for harms and losses caused by a dangerous drug are preempted, when federal law requires a warning on the drug. In the Levine case, Ms. Levine lost her arm as a result of complications from defendant's drug. The jury awarded money to make up for Ms. Levine's harms and losses. Now Wyeth argues that federal law protects it from answering for harms and losses caused by its misconduct.

In Altria v. Good, the Supreme Court will decide whether requirements that relate to the labels on cigarettes preempt consumers claims that they were deceived when Philip Morris sold Marlboro Lights. In the case--arising in Maine--consumers claim that Philip Morris failed to disclose that Marlboro "Lights" that were "lowered tar and nicotine" are only "light" when smoked by a machine. (Full disclosure: The author of this blog has been pursuing a similar claim on behalf of Oregon purchasers of Marlboro Lights.) In Altria, Philip Morris wants the Court to put a stop to these consumer cases because--Philip Morris claims--its labels were regulated by federal rules.

Nice try. Actually, nothing in any federal rule or law required Philip Morris to claim that its cigarettes were light or lowered tar and nicotine. They made that choice. And they also chose not to disclose that the "light" and "lowered tar and nicotine" labels apply to machines, not to people.

Still, this court seems to tilt in favor heavily in favor of corporate interests. As well, this court seems to distrust the jury's ability to hear and weigh the evidence and decide whether a consumer's harms and losses were caused by misconduct.

I long ago stopped making predictions about what any court will do. It's a waste of energy and time, and I imagine that I'm about as good at predicting as I am at calling heads or tails. Still, if these cases go the wrong way, consumers could find themselves with nowhere to turn when corporate misconduct causes serious harms and losses.

David F. Sugerman
Paul & Sugerman, PC
www.pspc.com

Initiative Signature Gathering Questioned

In today's Oregonian, there's a thoughtful letter to the editor under the heading, "Sizemore should be banned" from Mark Sturbois of Southeast Portland. Mr. Sturbois points out that Mr. Sizemore has been convicted of improprieties relating to the initiative process. But even so he's back again with more bad ballot measures.

Coincidentally, the back page of the same Metro section (Oregonian Jan. 10, 2008) reports on an important ruling by Marion County Circuit Judge Dennis Graves. In that case, a number of professional petitioners challenged new laws that regulate how signatures are gathered for initiative petitions.

The regulations allow the State to enforce existing rules that ban paying signature gatherers by the signature. The professional petitioners--the Sizemores of our lives--challenged the rules and asked the judge to enjoin enforcement. Judge Graves refused to do so.

I'm not privy to the particulars, and you always have to be a little careful about news reports of cases. Still, it seems reasonable to me that the State can enforce rules that regulate signature gathering for initiatives. After all, we want a transparent process that Oregonians can trust, not one that encourages or promotes signature fraud. It seems like Judge Graves' ruling goes the right way on this important issue.

So back to Mr. Sturbois. Seems like he's got a well-founded and well-articulated beef with the Sizemore efforts. Let's hope that the latest round of rules helps cure us of this ill. While the right to petition is an important one, we're all entitled to have the petitioning process remain open and honest. So maybe some fraud-proofing will stop the cascade of lousy ideas?

David F. Sugerman
Paul & Sugerman, PC
www.pspc.com

Countrywide Makes it Up

Here's a fun one. According to a report in today's New York Times, Countrywide admitted that it fabricated--or in its lawyers words, "recreated"--documents in a bankruptcy case. Countrywide used three letters that it claimed to have sent to the borrower and used them as the basis for claiming that the borrower owed Countrywide $4,700.

Here's the url for reference. http://www.nytimes.com/2008/01/08/business/08lend.html?_r=1&ref=business&oref=slogin

Countrywide's claim that the borrower owed money is particularly problematic. According to the news report, the borrower had successfully completed her bankruptcy plan, a plan that Countrywide passed on without objection. After completion of the bankruptcy plan, Countrywide sent the borrower a notice of intention to foreclose based on the fabricated documents.

Countrywide sent the borrower's lawyer "copies" of three letters sent previously. Or so Countrywide claimed. Interestingly, the oldest of the three letters was addressed to an office address that the lawyer would move into well after the date of the first letter. Nice work at the documents department.

In the predatory lending crisis, there are those who want to put all of the blame on borrowers for failing to take responsibility. While there will be plenty of blame to go around before the whole story comes out, this story doesn't exactly bathe Countrywide in a righteous light. It will be interesting to see whether this type of conduct was widespread, or whether it was a rare instance of misconduct.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

De Beers Class Action Settlement

One of the better class notices I've seen appeared in Parade Magazine on Sunday, January 6, 2008. It announced a $295 million settlement of a diamond market price fixing class action lawsuit against De Beers diamonds.

The notice provides a nice summary of the class settlement with plenty of information on how class members can learn more about the case. The settlement fund totals some $295 million. It covers diamond purchases from Januay 1, 1994 through March 31, 2006. Additional information can be found at www.diamondclassaction.com.

Paul & Sugerman did not participate in this case and has no connection to the claim.

The size of the settlement fund suggests that class counsel did a great job in putting together what must have been a tough case. But more important, it's an impressive job of providing notice.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC

FTC Wins Fraud Case Against Infomercial Marketer

In a decision released yesterday, the Seventh Circuit Court of Appeals affirmed a multi-million dollar judgment against QT, Inc., the seller of the Q-Ray Ionized Bracelet.

QT made millions selling the product to desperate consumers, claiming its "Q rays" were a miracle cure that relieved all sorts of chronic pain. Independent medical research found that it was about as effective as a placebo.

A federal judge heard the evidence and stuck the company with fines and ordered refunds, as well. The numbers run into the tens of millions.

News reports scattered around the internet today point out that the company filed bankruptcy, and yet it continues to sell the product using product testimonials.

The opinion--written by Judge Easterbrook--makes for amusing reading. He labels the company's claims about biofeedback, Q Waves and energy balancing as "blather." In affirming the trial court, the appeals court concluded that the judge hearing the case was in the best position to weigh the evidence.

I'm reminded of a film I saw quite by accident a few months ago. It was a Spanish film called Ladrones Robben Ladrones (Thieves Rob Thieves) in which the bogus marketing of a miracle cure is at the heart of a terrific heist film. It's one of those good guys win in the end films. Sort of like this case.

David F. Sugerman
www.pspc.com
Paul & Sugerman, PC