Faces of Lawsuit Abuse

Dec 31, 2008

U.S. Chamber Tells Small Business Stories

The stories of frivolous lawsuits impacting mom-and-pop businesses have largely gone untold-until recently. A Web site of the U.S. Chamber Institute for Legal Reform features stories of lawsuit abuse that have damaged the bottom line and reputations of small businesses and forced layoffs. Read more stories or tell yours at www.facesoflawsuitabuse.org.

Kelly Reed and Howard Weiss of Rockville, Maryland, were served with papers after a wild goose snapped at a woman in front of their store.

In the spring of 2003, two Canada geese landed in the planter outside of Contemporary Watercrafters, a small pool maintenance business in Maryland owned by Howard Weiss. After several weeks, Weiss and his business manager, Kelly Reed, asked the Humane Society to have the geese relocated because they were pooping in front of the store.

Because the geese were protected under the Migratory Species Act, Weiss and Reed were told that it was illegal to disturb them. So they put tape around the planter, posted signs, and waited for the geese to hatch their goslings and move on.

Unbeknownst to Weiss and Reid, the male goose had flapped his wings, honked, and snapped at a woman walking to the fabric store next door to Watercrafters. Startled, she fell on the sidewalk.

Two years later, Weiss and Reid were served with papers announcing that the woman was suing Watercrafters for $750,000, alleging that the goose was Watercrafters' responsibility. Watercrafters was forced to go to trial. Fortunately, the jury determined that Watercrafters had not been negligent. "It's possible that if this lawsuit had come away with a large verdict, it could have caused us to close our doors."

Weiss says that the costs of lawsuit abuse to small businesses are not just financial. They include "the time taken away from your business and the way you run your business. You start to second-guess how you do business because you're worried about the next lawsuit, and that's not the way to run a company." 

Jacksonville, Florida, small business owner Charles Terrizzi was sued by a reckless driver who hit his company's van.

In 2007, Charles Terrizzi, owner of an air-conditioning company in Jacksonville, Florida, was working in a customer's attic when he received a call from his service crew. He learned that a vehicle had veered into oncoming traffic and hit a Chase Air van head-on. The police determined that the accident was the other driver's fault. But that didn't stop the ticketed driver from hiring a lawyer to file a claim with Terrizzi's insurance company, threatening to sue if it didn't pay for the damages that, according to the police report, he himself caused.

The insurance company decided that, not withstanding the facts of the accident, it would be more costly to fight and win in court than simply to pay a settlement, so it gave the driver $10,000.

After receiving the money from Terrizzi's insurance company, the driver and his lawyers sued the young man who was driving the Chase Air van. That case is still ongoing.

Speaking about the cost of lawsuits to American businesses, whether in the form of higher insurance costs, out-of-court settlements, or expensive legal fees, Terrizzi says, "All these things factor into our ultimate price to our consumers, and everybody has to pay for it."

According to Terrizzi, one lawsuit could easily put his small start-up company out of business. "Justice needs to be served, but not at the expense of innocent people-that wouldn't be justice, would it?"

Rick Popp of Springfield, Missouri, spent some $10,000 defending himself against a customer's frivolous lawsuit.

"We've always built our business based on service after the sale," says Rick Popp, the second-generation owner of Ozark Outdoors, a lawn and garden equipment company in Springfield, Missouri.

After a customer bought a $6,000 riding lawnmower in the spring of 2000, Popp's company provided its usual high-quality service, twice servicing small repairs covered by the warranty during the heavy-use spring and summer mowing season. At the end of the season, the customer had the lawnmower picked up for minor repairs. But it turned out that he had something else in mind.

"Instead of basically having us return it to him, we got a letter in the mail from his lawyer saying that he didn't want it anymore and simply wanted his money back," Popp says. "I'd never had anybody use a mower all summer, then decide to ask for his money back."

The customer claimed that the literature for the lawnmower stating that it was "built tough" was a misrepresentation, suggesting that it should always be repair free. After a few months and several letters back and forth between lawyers, Popp decided to give in to the customer's request.

By that point though, the customer wanted even more. He took Ozark Outdoors to court. However, he was awarded only his original request—a refund for the purchase price of the lawnmower.

"I was out my attorney fees, plus I had to buy the lawnmower back and resell it at a discounted rate," says Popp. "The total cost for my lawyer ended up being a little over $10,000."

The cost of the lawsuit wasn't just financial. "It took time away from our business; it took time away from our lives," Popp says. "Not to mention the stress of having to deal with it. It's really something we shouldn't have had to do or worry about."

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