Collecting What's Owed

Lawmakers move to fix a gaping hole in class action lawsuit awards.

Earlier this month, Oregon consumers won a stunning victory over BP West Coast Products.  

A Multnomah County circuit jury found customers of BP-franchised service stations are owed as much as $580 million in a class action verdict for being charged a hidden fee on debit-card gasoline purchases.  

The only problem for consumers: Under current Oregon law, BP will probably never pay most of that money.  

"That's unfair," says state Rep. Tobias Read (D-Beaverton). "If a defendant is judged to owe money, they should have to pay. Otherwise, there's a real incentive to do something wrong.” 

Although February legislative sessions were designed to consider budget tweaks and low-stress legislation, Read and Rep. Jennifer Williamson (D-Portland), are pushing a contentious bill to tackle the long-standing issue.

They have the support of Oregon Attorney General Ellen Rosenblum, the Oregon Trial Lawyers Association and the Campaign for Equal Justice, and the opposition of Associated Oregon Industries, numerous business groups and Oregon's most politically connected law firm.

Currently, if a court finds that a class of people has been wronged and awards them financial damages, those people typically need to fill out forms to claim their money. For a variety of reasons, however, many do not. As a result, they don't get their money, and under Oregon law, the funds remain with the defendant. 

In the BP case, for instance, the plaintiffs' lawyer, Portlander David Sugerman, showed that records that would have allowed identification of most of the 2.9 million customers affected were destroyed. That means many may never claim the $200 they each have coming. (That figure is prescribed by law for reckless violations of the Oregon Unlawful Trade Practices Act.)  

In 48 states, BP would have had to pay anyway, but just two states—New Hampshire and Oregon—allow the unclaimed money to revert to the wrongdoer. 

Read and Williamson have sponsored legislation—House Bill 4143—that would allocate unclaimed damages in class action suits to Legal Aid of Oregon. Initially, Read and Williamson proposed sending the unclaimed funds to Oregon's rainy-day fund. After the bill's first hearing, they amended the beneficiary to Legal Aid, which provides free legal assistance to low-income Oregonians.  

"We just felt there was more of a nexus between a judgment and the provision of legal services," Williamson says.

The legislation is not new—Oregon lawmakers have introduced similar legislation three times since 2005.  

The legislators' solution displeases many business interests, but none more influential than Dave Frohnmayer and Bill Gary—two lawyers for the Harrang Long firm who circulated a floor letter opposing the changes.  

"The bill authorizes unconstitutional procedures, is unfair to class members and to defendants, and is fundamentally unworkable," Frohnmayer and Gary wrote in the Feb. 14 letter. "It will have undesirable and unworkable consequences.”  

Those words carry a lot of weight. Frohnmayer was Oregon's attorney general from 1980 to 1990 and president of the University of Oregon from 1994 to 2009. He still teaches law at UO. Gary, who served as Frohnmayer's deputy at the Oregon Department of Justice, is one of the state's top lawyers, representing Nike, for instance, in the 2013 special legislative session that gave the sporting-goods giant special tax treatment.  

Williamson says the objections are “absurd,” simply rehashing old criticisms of class action lawsuits.  

She and Read take specific exception to Frohnmayer and Gary's letter because it makes no mention of the fact that their firm represents cigarette manufacturer Philip Morris in a current case before the Oregon Supreme Court, as well as BP in the oil company's appeal of the $580 million Oregon verdict.  

“I believe that should have been disclosed,” Williamson says. “They are interested parties in the outcome of any vote.”  

"House rules require legislators to disclose potential conflicts of interest," Read adds. "If they were held to that standard, they'd have to disclose those client relationships.” 

Gary says proponents of the bill are erring in trying to address a complex legal matter in a brief session.

He says as currently written, the bill does more than just distribute unclaimed funds to Legal Aid, and could change the amount owed.

As for the floor letter, which was distributed to all House members, Gary says it should have included a disclosure that his law firm represents clients who have a financial stake in proposed legislation.

"If that wasn't made clear in the floor letter, it was because things were moving quickly on Friday when it went out," Gary says. "We represent multiple clients who have an interest in the bill."

HB 4143 passed the House on Feb. 17 by a 36-21 vote and is now in the Senate.