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The Wall Street Journal Europe.

The Great American Pants Suit
June 18, 2007

By WALTER OLSON

When attorney Roy Pearson filed suit demanding $67 million from the Chung family, whose Washington dry cleaners had mishandled his pair of trousers, he must have felt he was sitting pretty. Menacing a merchant who's annoyed you with terrifyingly high legal penalties—that's the way to show who wears the pants, right?

Mr. Pearson probably had no idea that his Great American Pants Suit—the trial of which just wound up in a Washington courtroom last week, with a verdict expected this week—would stir commentary around the world and come to symbolize the extent to which lawsuits in America can serve as a hobby for the spiteful and a weapon for the rapacious.

It all began two years ago when Mr. Pearson walked into Custom Cleaners, a Northeast D.C. establishment owned by Jin Chung, Soo Chung and Ki Chung. He laid down $10.50 to have a pair of pants altered. The results dissatisfied him: The job wasn't finished on time, and he says the pants he was given were someone else's, which the Chungs deny. He demanded $1,150 for a new suit; the Chungs demurred. So it was off to court, with the claimed damages subject to alterations, in an expansive direction.

How billowy did those damages get? Well, it seems Mr. Pearson needed to be paid for 10 years' worth of weekend car rentals so that he could patronize a different dry cleaner. He wanted $500,000 for emotional distress and—though representing himself—$542,000 in legal fees. Best of all, he claimed that the signs on display at Custom Cleaners, "Satisfaction Guaranteed" and "Same Day Service," were fraudulent, entitling him to damages of $1,500 each per day under D.C. consumer law. He multiplied 12 violations by three defendants by 1,200 days, and soon was up over $65 million (later cut to a mere $54 million).

The Chungs offered Pearson $12,000, which he turned down. The family says the suit has run through their savings in legal fees and harmed their credit, to say nothing of their peace of mind; they've even considered returning to their native Korea, which they left in 1992. But what really gave legs to the story was this: while his lawsuit was afoot, attorney Pearson himself was overcoming a two-year spell of unemployment to win appointment as an administrative law judge in D.C.

So don't dismiss him as just some random bully with a law license. For those in our nation's capital, he represents the majestic face of the law itself.

A few observations:

• Phrases like "Do you realize I'm a lawyer?" uttered in the course of routine disputes with storekeepers, neighbors, school principals, etc., probably account for more of the legal profession's aggregate unpopularity than any number of scandals in the actual representation of clients.

• David and Goliath talk notwithstanding, legal action is often a powerful dis-equalizer of the playing field, as those who know how to work the system fleece the outsiders, the novices, the distracted and the trustful.

• Pretty much every other advanced country would have afforded the Chungs better protection against a lawsuit like this. Under proper "loser-pays" rules, the Chungs would be correctly construed as having won even if Mr. Pearson proves damages of, say, $1,000, since they would have prevailed on the actual issues in dispute. D.C. does have a weak "offer of judgment" rule that might let the Chungs recover some miscellaneous court costs—but not their major expense, lawyers' fees—if Mr. Pearson loses or wins but a token sum. So even if they win, they're bound to lose.

• The other source of Mr. Pearson's power -- his ability to hold the threat of huge penalties over the Chungs' heads—arises from consumer laws that encourage complainants to multiply the stated penalty for a single infraction by the whole universe of a business's clientele, or by all the days in the calendar, with no need to prove actual injury.

This sort of mechanical damage-multiplication has been a key engine in shakedown scandals in California (where roving complainants have mass-mailed demand letters to small businesses over technical infractions); in "junk-fax" litigation demanding billions from hapless merchants in Texas, Illinois and elsewhere; and in important sectors of litigation aimed at bigger businesses, including claims against credit-card providers and purveyors of "light" cigarettes. Whole dockets'-worth of opportunistic litigation would dry up if we revised these laws so as to require a showing of actual injury. Doing so would require overcoming epic resistance from the litigation lobby.

It's nice to see that even the organized plaintiffs bar piously deplores Mr. Pearson's abuse of the law. It would be even nicer if they agreed to stop opposing reforms that would give the Chungs of the world a fighting chance the next time around.

Walter Olson is senior fellow at the Manhattan Institute and edits Overlawyered.com.

©2007 The Wall Street Journal

 


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