A major lawsuit filed by Ford Motor Company in federal court today is the latest response to rampant lawsuit abuse and fraud by plaintiffs’ firms, according to the American Tort Reform Association.
Ford’s lawsuit against Quill & Arrow LLP, a plaintiffs’ firm that files thousands of “Lemon Law” cases per year, accuses the firm of fraud, fabricating attorney billing records, unauthorized practice of law, and deliberately obstructing Ford’s ability to fulfill its warranty obligations. The complaint characterizes Quill & Arrow as “a fraudulent and illegal billing factory, conceived and constructed to exploit the Lemon Law’s fee-shifting provisions.”
Among a litany of violations under California Penal Code Section 496 and California’s Unfair Competition Law, Quill & Arrow is accused of artificially inflating their own attorney fees by using unregistered foreign attorneys to practice law in California while billing at California attorney rates for work performed entirely by non-lawyers earning as little as $13 per hour. According to the complaint, the firm filed more than 20,000 cases under California’s “Lemon Law,” or the Song-Beverly Act, in just five years, pocketing an estimated $50 million in attorneys’ fees out of $100 million paid by Ford.
“While California’s ‘Lemon Law’ was originally intended to provide consumers quick resolution for defective vehicles, a handful of law firms have created a cottage market abusing the law to target perceived deep pockets for their own gain,” said Lauren Sheets Jarrell, vice president and counsel for civil justice policy at ATRA.
Companies increasingly are left with no options but to file lawsuits against unchecked law firms who exploit the law, as uncovered by ATRA’s recent report, “Sanctionable: The unsupported, exaggerated, and suspicious claims plaguing our nation’s courts.” These “response” lawsuits expose how loopholes in the “Lemon Law” allow plaintiffs’ lawyers to systematically exploit the fee-shifting provision by artificially inflating billable hours to maximize their own payouts.
The American Tort Reform Foundation’s Judicial Hellholes® report long has reported on the lemon law abuse in California and specifically in Los Angeles, currently ranked the nation’s worst Judicial Hellhole® at No. 1.
“This massive billing scheme is just the tip of the fraud iceberg,” Sheets Jarrell said. “Judicial Hellholes® has chronicled for years how California’s ‘Lemon Law’ has been twisted into a predatory, automated fee-generating ‘fraudemic’ machine. Trial lawyers are running amuck, facing little to no risk as they manipulate one-way fee-shifting loopholes and pocket millions for themselves while consumers with legitimate claims wait in line.”
Families in California pay one of the most expensive “tort taxes” in the nation at $10,268 for a family of four, or $2,567 per person. For families in Los Angeles, the figure jumps more than 50% to $15,888 for a family of four, or $3,972 per person. Excessive tort costs across the state result in a loss of 850,915 jobs per year, sending families packing to places they can afford to live.
“The abuses in California’s legal system have reached a tipping point — leaders must address the exploitation that is impacting hardworking families who are just trying to make ends meet,” Sheets Jarrell said. “It is time to hold those accountable who have created predatory lawsuit mills that manipulate the law to line their own pockets while families foot the bill. When law firms treat courts like a lottery, the entire civil justice system loses its integrity.”
