Along for the Ride

Daily Business Review

October 2000

Darren Blum sits at the head of a polished oak table in the borrowed conference room of a lawyer friend in North Miami Beach. “These offices are nicer than my Hollywood office,” he explains to a visitor, his hand seemingly attached to the cellular phone on the table. The phone rings frequently – or, rather, sounds a ditty frequently. “My clients know they can always get me on the phone. I give all of them my cell phone number,” he says. “That’s why they love me.”

Blum, a 31-year-old solo practitioner, in August became one of the first lawyers in the country to file a class-action lawsuit against Bridgestone/Firestone and Ford Motor Co. He made sure to do so in Miami-Dade Circuit Court – the same place that Stanley and Susan Rosenblatt won a jury verdict of $145 billion against the tobacco companies.

“Miamians subscribe to the theory of punishment of corporations,” says Blum. “If a jury is going to give $145 billion to someone who smoked, I think we can get twice that when they hear what Firestone and Ford did. They don’t want the case here. They’re terrified to come here. There are a lot of retirees here, there are no huge corporations. South Florida is like the Wild Wild West. It’s crazy here. “

If South Florida is the Wild Wild West of the class-action world, then the region’s posse of plaintiff lawyers are the cowboys. Some of the wealthiest, most prominent power brokers in the community, these litigators have turned South Florida into a hotbed for class-action lawsuits. And they are busy lassoing their latest quarry: Ford and Firestone.

Consider:

Nearly 45 of the nation’s top plaintiff law firms have filed suit against the nation’s HMOs in Miami. Some of the big-name barristers involved include David Boies of Microsoft fame; Richard Scruggs, the Mississippi lawyer who won $366 million in attorney fees from Big Tobacco and was featured in the film “The Insider”; Aaron Podhurst, best known for winning huge verdicts for families of plane crash victims; and Steven N. Zack, former president of the Florida Bar.

The $145 billion award won by the Rosenblatts, the largest in history, was handed down by a Miami jury, ruling in favor of thousands of sick Florida smokers.

Eight of 47 class-action suits against Ford and Firestone were filed in South Florida, more than in any other jurisdiction in the country, prompting some plaintiff lawyers to suggest the cases be consolidated here. (Ford and Firestone argued Tuesday before the Judicial Panel on Multi-District Litigation in Washington, D. C. , that all the cases be consolidated in Chicago, near Firestone’s main office. )

Recognizing that Florida has become an important venue for litigation, Boies, whose main office is in Armonk, N. Y. , recently opened offices in Fort Lauderdale, Hollywood, West Palm Beach and Orlando.

The national firm Milberg Weiss Bershad Hynes & Lerachi, the granddaddy of all class-action law firms, opened an office in Boca Raton two years ago.

“We came down here because of the number of class-action cases we were seeing in Florida, particularly South Florida,” says Abe Rappaport, a partner at the Boca office. ” South Florida has a high proportion of elderly residents who fall victim to financial and other types of scams. “

Roy Oppenheim, a Weston lawyer who has filed a class action against Ford and Firestone in Miami, agrees.

“South Florida is perceived as a good place to file these kinds of actions, Dade County in particular,” he says. “I think anti-corporate sentiment is in the wind now. People don’t trust corporations. Even the New York firms are coming to town to file lawsuits. “

Class-action lawsuits typically are brought by an individual or individuals – class representatives – who file on behalf of a large group of people who share similar damage or injury claims. They are often confused with mass tort cases, which are filed on behalf of a specific number of injured parties, as in plane crashes. Once a class is “certified” by the court, other plaintiffs can join in.

Class actions have been around for decades, but the Internet has fueled them. Web sites such as www. firestoneattorneys. com draw in new clients, allowing them to sign up by computer; sites like www. notice. com and www. classaction. com catalog class actions as a resource for the public.

The Internet has also made it cheaper and easier for lawyers without deep pockets to file massive class action lawsuits. They can download mountains of discovery off the Internet without having to depose one $200-an-hour expert witness. In fact, many lawyers suing Big Tobacco around the nation obtained discovery documents by downloading them from Internet sites devoted to the issue.

In addition, lawyers suing over securities fraud can now learn everything they need to know about a company off its Web site and in investor chat rooms in a half-day’s time, says Tom Tew, a partner with Tew Cardenas Rebak Kellogg Lehman DeMaria & Tague in Miami, which specializes in securities’ classes. “You used to have to fly all over the country to get information about a company,” notes Tew.

For years, attorneys focused primarily on securities class actions filed on behalf of mostly elderly investors defrauded by one scheme or another, which likely explains in part why there is such a strong plaintiff bar in South Florida. Says Bill McCarty, Oppenheim’s partner: “In Florida, you’ve got a bunch of hungry, shark attorneys – they smell blood and they go.”

But legislation passed in 1995 made it more difficult to sue for securities fraud, so litigators turned their attention to product liability cases. And prospered mightily.

The big cases handed lawyers millions of dollars in attorney fees: carcinogenic asbestos, toxic breast implants, the diet drug fen-phen, the contraceptive Norplant, the pesticide Benlate and, of course, tobacco. Health maintenance organizations, Ford and Firestone are the most prominent recent targets.

But while the lawsuits can make attorneys millionaires, the money often doesn’t trickle down to the plaintiffs.

“Most class actions are for lawyers – that is, they are the only ones who will make money from the litigation,” says Chuck Kline, executive partner of White & Case’s Miami office. Case in point: According to the National Center for Policy Analysis, a nonprofit public policy research institute, attorneys in five cases involving Wells Fargo Bank received $14 million. The average award to class members was $9. 07.

Stories like these spurred Congress and think tanks to cast a close eye on class-action reform. One bill proposed last year and now dormant called for all class action lawsuits to be tried in federal court. Not surprisingly, the Association of Trial Lawyers of America vigorously opposes the bill, which they say is being pushed by big business. Corporations, trial lawyers say, want to reduce their costs by consolidating suits in federal court under one set of rules and one judge instead of fighting a host of trials in state courts around the country. The trial lawyers also argue that business prefers federal judges over state court judges, who run for office and have constituencies to please.

Brian Boyle, the attorney for Humana, argues that Walter Olson, a senior fellow at the Manhattan Institute, a conservative think tank, funded by corporations, foundations and individuals, argues that lawyers are using class-action lawsuits to, in effect, pass legislation.

“Tobacco is one of the scandals of our era,” he says. “Those lawyers manipulated various branches of government and carefully orchestrated a brilliant media campaign. What we got was a tax increase – not by legislation but by settlement. And it was only done behind closed doors.”

Plaintiffs lawyers, however, argue that class actions keep the courts from becoming clogged with masses of individual lawsuits and give average people the ability to extract justice from a large corporation. “You can’t file a lawsuit for $85, no lawyer would take it,” says Podhurst, one of the most prominent plaintiffs lawyers in the country, who is involved in several suits against Ford and Firestone – one on behalf of Venezuelan families – and has ongoing suits against Big Tobacco and numerous airlines. “There are some class actions that are bad, that are an embarrassment. But class-action lawsuits have a very good, positive effect besides money for lawyers. “

Podhurst is one of the lawyers who has turned South Florida into a leading class-action locale, in the process becoming such a power broker in the community that he was among the lawyers representing the Miami relatives of Elian Gonzalez, the Cuban boy who was rescued at sea and who sparked a highly publicized custody battle.

The HMO suits in which Podhurst is involved in Miami federal court – which allege health care companies have secretly offered doctors incentives to bypass procedures – could change the way HMOs do business and are turning the eyes of the nation on South Florida. The multidistrict litigation panel already has consolidated numerous Humana lawsuits in Miami under U. S. District Judge Federico Moreno, and the plaintiff lawyers want cases against eight other health care companies consolidated in Miami – something the defense lawyers have fought. A decision by the panel is pending. If the case is consolidated, it will cover 80 million subscribers.

Plaintiff lawyers say they want the cases in Miami because they like Moreno, who is known for keeping cases moving quickly.

“We’re known for having the best federal court system in the country,” added Podhurst.

But corporate insiders believe the plaintiff lawyers want Moreno for another reason: Another major class action before him – one against a grocery diverter that defrauded investors out of $255 million – resulted in a $141 million verdict. That case, along with other successful classes in South Florida, could be prompting some lawyers to file Ford and Firestone cases here, as well.

Take Oppenheim, the West Broward lawyer. He got involved when his hair stylist complained she could not get new tires for her Ford and didn’t have $500 laying around or credit cards on which to charge them.

“I got infuriated and agreed to help her,” he says. “It wouldn’t make sense to file one suit. With a class action, we thought we could do well and do good at the end of the day. “

Oppenheim – who says he only takes cases “that make my blood boil and the hair on the back of my neck stand up” – and McCarty hadn’t done any major class-action lawsuits and decided the prudent thing to do would be to team up with a firm that had. Besides, they knew financing the case alone could be tricky. They chose Kluger Peretz Kaplan & Berlin, a larger firm in Miami that has done numerous class actions.

“You go in with your best cards,” says Oppenheim. “You’re going up against Ford and Firestone. Most plaintiffs have three, four, five law firms. It may be egotistical to think just two law firms can do this. “

The firms agreed to pair up after a conference call on Thursday, Aug. 10, “worked like dogs” all weekend and filed the suit Monday morning, Aug. 14. They wanted to be one of the first on the scene and, with the help of an aggressive public relations firm, held a press conference to announce the suit.

But Blum had beat them to the punch and to the press, filing his suit Wednesday, Aug. 9, the day after the recall was announced, stopping at a newspaper office to deliver a copy before heading to the courthouse. He is upfront about his reason for filing so quickly. If the multidistrict litigation panel does decide to consolidate the cases, the lawyers who filed first and have the most number of people signed have the best chance of being named lead counsel. And the lead counsel are the ones who wind up with the fattest attorney fees.

Being first has another benefit, too: It brings clients. Blum says he received “hundreds of calls” from new clients after he appeared on TV and in the newspapers.

Like Oppenheim, Blum says he got involved when a friend with a Ford Explorer contacted him. Unlike Oppenheim, he decided to go solo on the lawsuit.

Blum, who’s been practicing law only five years, says he is certain he can handle the case. He has experience with only one other class-action lawsuit, filed against Sprint on behalf of cell phone users in Miami-Dade, Broward and Palm Beach counties who allegedly received inferior service. The $25 million case is awaiting class certification in Broward Circuit Court.

But Blum assures his clients he has enough of his own money to finance the Firestone case – although he is unsure of how much it will cost – and he says he has two clerical workers who are devoted full time to this and is hiring a third.

“Some of my clients have said, ‘You’re not a big law firm, are you sure you can handle this? ‘ ” he says. “I say, ‘Absolutely. ‘ My clients love me ’cause guys like me live to stick it to companies like Firestone. It’s like David and Goliath. “

But others aren’t so sure. They see young lawyers, visions of Stanley Rosenblatt in their heads, jumping into the Firestone frenzy unprepared. And that’s simply irresponsible, they say.

“I would never try a products liability or personal injury case, for instance,” says attorney Mark Raymond with the Tew Cardenas law firm. “I would refer it to another lawyer. It’s not my area of expertise. If it were my family that was injured, I would ask the lawyer, how many class actions have you done? And how will you finance this? As a result of the tobacco case, people are saying ‘Me, too. ‘ Well ‘Me, toos’ can be dangerous. We need a better-informed consumer. “

Podhurst agrees that Big Tobacco successes have spurred on a new class of lawyers who might get in over their heads.

“What Stanley Rosenblatt did was a remarkable undertaking,” he says. “But it would be a mistake for a young lawyer to try and emulate Stanley Rosenblatt. He was well-established and had resources. You could get into seven figures in costs. It could go over a million. “

While some Miami lawyers are just getting into class actions, Louis Robles has specialized in them since 1974. He’s raked in millions in fees by finding his own class-action lawsuits and getting in on the ground floor, not by following the pack and then fighting to become lead counsel. Robles was among the leading lawyers in the 100,000-case asbestos class action, the largest in history, handling 1,000 claims, before moving on to fen-phen and then Norplant. Now he is turning his attention to Rezulin, a diabetes drug now banned by the Food and Drug Administration that could cause severe liver damage, and Propulsid, a remedy for severe indigestion that in some cases can cause heart damage and death.

Robles’ recipe for success: Find a good case – he won’t reveal exactly how, calling that proprietary information – spend hundreds of thousands of dollars on advertising on daytime television and in the National Enquirer, set up a Web site (like www. rezulinlegalclaims. com) and sign up masses of clients.

While some lawyers won’t advertise – “I’m not a sophisticated ambulance chaser,” sniffs Oppenheim – Robles has no problem with it. “If people are injured and don’t know they are injured, I’m doing a public service in letting them know,” he says.

Would Robles and his class action colleagues be as successful outside of South Florida? Marvin Dunn, chairman of the Psychology Department at Florida International University and an expert on South Florida communities, doubts it.

“Just look at the demographics here,” he says. “You tend to get more sympathy from plaintiffs in minority communities. Sixty percent of Miami-Dade County is Hisanicor black. Plus, there are no corporations here. That’s another factor. “

Darren Blum agrees.

A former pit broker on Wall Street, he deliberately chose South Florida when he decided to become a lawyer. Though he was far from the top of his class at Nova’s law school, and spent summers toiling in the pit rather than at law firm internships, he knew that it was turf where even a self-described “kid from New Jersey” could become a millionaire legal cowboy.

“I think we get larger awards in South Florida,” he says. “It’s the style of Miami. There’s not too many places in the country where you see Rolls-Royces and Ferraris on the street, and a Sylvestor Stallone mansion. A lot of the action is down here. “