How to avoid future $54 million pants suits

On December 18th, the D.C. Court of Appeals denied the appeal of former Judge Roy Pearson’s lawsuit demanding $54 million from his local drycleaner for a temporarily misplaced pair of pants.

Jin and Soo Chung, the owners of Custom Cleaners, were sued by Judge Pearson because of an allegedly misleading “Satisfaction Guaranteed” sign hanging in the window of their shop.

After being hired to alter a pair of Judge Pearson’s pants, the Chungs misplaced the pants for a short period of time. Upon recovery, they attempted to give the pants back to Pearson who refused to take them and demanded payment instead.

Via lawsuit, Judge Pearson informed the Chungs that his satisfaction would not be guaranteed unless they paid him an exorbitant sum, which was argued down to the still exorbitant sum of $54 million.

Judge Pearson’s outrageous interpretation of the Chung’s “Satisfaction Guaranteed” sign is apparent. The Court of Appeals’ agreed: “We agree with the trial court that Pearson’s expansive interpretation of ‘Satisfaction Guaranteed’ is not supported by law or reason.”

The denial is certainly good news for the Chung family, but it is difficult to call them the winners. The time, cost, and energy of fighting this case has cost them two of their three dry cleaning shops. Prior to Judge Pearson’s lawsuit, the Chungs had grasped success after 14 years of hard work.

Christopher Manning, the attorney representing the Chungs, shared his mixed response with ALEC: “While the Chung family and I are happy with the trial verdict and the denial of Mr. Pearson's appeal, the fact remains that business-killing frivolous litigation similar to this could easily happen again if changes aren't made to our legal system. In particular, the vague and often unfair D.C. Consumer Protection Act, and similar laws in other states, must be amended to not encourage meritless lawsuits like this case.”

Manning is on point in his assessment of the vague D.C. Consumer Protection Act. In the federal equivalent of a Consumer Protection Act (the Federal Trade Commission Act), to bring a claim, one must show proof of a false statement, an intent to deceive, reliance on the statement, and, of course, actual harm.

The D.C. Consumer Protection Act, however, only requires a plaintiff to suggest that any statement made by the defendant had a “tendency to mislead.” Mr. Pearson’s claim is not quite as farfetched under this ambiguous language.

The problem does not stop in D.C.  Numerous other state-level Consumer Protection Acts only require similar minimal proof.
The American Legislative Exchange Council (ALEC) has developed its Private Enforcement of Consumer Protection Statutes Act to safeguard against such troublesome abuse.

Legislators in Illinois, New Hampshire, Missouri, and Massachusetts are working to mend their broad consumer protection statutes this year using the ALEC model because it will help avoid outrageous claims like the $54 million pants lawsuit in their home states.

After seeing the dangerous abuse of consumer protection legislation first hand, Manning has articulated the problems these legislators aim to fix. “Consumers certainly deserve protection but businesses large and small also deserve protection from frivolous lawsuits brought by unscrupulous consumers."

American laws should not keep entrepreneurs from achieving the American Dream.

Amy Kjose is director of the American Legislative Exchange Council’s Civil Justice Task Force.