DETROIT — Sending a stern warning to plaintiffs' attorneys, Chrysler Corp. on Tuesday took legal action against five lawyers who allegedly acted improperly in filing what the auto maker claims are frivolous class-action lawsuits.
Chrysler portrayed its unusual move as a corporate call to arms against baseless class-action suits, which officials say cost U.S. companies and consumers billions of dollars a year. The company said it is preparing more such actions.
"We hope other companies take note and decide that this is a good thing to do," said Lew Goldfarb, assistant general counsel for Chrysler.
But legal experts saw Chrysler's offensive as less an assault on the broad problem of frivolous lawsuits than a more narrow attack on allegedly unethical behavior by some trial lawyers.
"This appears to be more about ethics than tort reform," said Victor Schwartz, a Washington attorney and expert on product liability law.
Still, Chrysler's action appeared to represent a more aggressive stance by corporations as the issue of tort reform heats up in Washington and around the country, particularly in California. The U.S. Senate recently passed a tort reform bill that President Clinton has threatened to veto. Californians voted Tuesday on three propositions that seek to rein in plaintiff lawyers.
Class-action suits have become increasingly troublesome to major companies, which claim that attorneys manipulate the system not to help consumers but to win huge legal fees. Big business often settles the cases--even those considered frivolous--rather than face costly and lengthy litigation.
Goldfarb said there has been "an alarming surge" of class-action lawsuits in recent years. There are about 15 class-action suits pending against Chrysler, and he said that a third of them are without merit.
Paul Huard, lobbyist for the National Assn. of Manufacturers, said litigation is increasingly perceived by big business as a growing and costly problem. "It's not limited to product liability, but also in securities and class actions," he said.
Class actions typically begin as lawsuits by a single plaintiff. But if certified by a judge as a class action, other consumers in a similar situation can reap a proportional share of any settlement or damages award by a jury.
In the action taken Tuesday, Chrysler is seeking sanctions against three attorneys in Seattle and two in St. Louis for allegedly unethical actions relating to two class-action suits. The company also has filed bar ethics complaints against the lawyers.
In the Seattle case, attorneys Steve Berman, David Krull and Clyde Platt filed a class-action suit over a paint defect in 1994 and 1995 Chrysler vehicles. But Chrysler said the suit was filed without the knowledge of the plaintiff, Susan Cowden, who settled with the auto maker when it agreed to replace her defective 1995 Eagle Talon with a new one.
Chrysler said the class-action was dismissed, but Berman said that he would pursue it with other plaintiffs. He alleged that Chrysler had bought off Cowden with a lucrative settlement in an effort to avoid a larger class-action lawsuit.
"This is an attempt to discourage us from going forward with the class-action," Berman said. "It's a publicity ploy, but we won't give up."
The Missouri case was filed against St. Louis attorneys John Carey and Joseph Danis who had represented the auto maker in some product liability class-action suits. But when the lawyers formed their own firm, they filed several similar class-action suits against Chrysler.
Chrysler alleged that they acted unprofessionally and breached their legal duty to a client by using information gleaned from their defense work for the company to file class-action suits against the auto maker.
Carey said Chrysler's charges were baseless and that the cases he filed against Chrysler involved different product defects than those he previously defended Chrysler against.
"Rather than defend the claims, Chrysler is making a personal attack on the lawyers in an effort to intimidate them," said Carey.
Chrysler said it is seeking recovery of its legal costs and, in the Missouri case, $50,000 in damages. The company expects to file similar actions in the next few months against other attorneys involved in groundless class-action suits, Goldfarb said.