Sunday, 13 Jun 2021

Bogus lawsuits another burden on NY small businesses — and it may get worse

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Even the pandemic didn’t slow the growth of “consumer” class-action suits in New York state, which have tripled over the last three years and are on track to set a new record in 2021 — yet another hurdle for businesses looking to recover from a year of hell.

That’s the takeaway from “Class Action Chaos: The Rise of Extortionate Consumer Class Action Lawsuits in New York,” a new report from the nonpartisan New York Civil Justice Institute.

The complaints center on fuzzy issues like allegedly false advertising, and most are filed by a handful of lawyers who mainly seem to be looking to get paid to go away. In fact, one lawyer has filed more than 200 of the roughly 750 suits since 2015.

As the report notes, the claims “range from the absurd to the ridiculous. Do New Yorkers think a 200-tablet bottle of Advil will have more pills based on the size of the bottle? Are they concerned about the type of cocoa in their Cocoa Pebbles? Are they buying ‘Yumions’ snacks for the health benefits of onions?” 

As Tom Stebbins of the Lawsuit Reform Alliance of New York notes, “You would be hard-pressed to find a reasonable person, as the courts often note, who hired an attorney to sue over vanilla flavoring or a bag of chips. New York is the new class-action hot spot because laws meant to protect consumers have become a cash cow for settlement-chasing law firms.”

At the current pace, the state will see 340 of these suits this year, smashing the previous record. And it could get worse if the Legislature passes the proposed Consumer and Small Business Protection Act, which (as the report notes) “would subject businesses of all sizes to a broader range” of these suits.

Lawmakers should be looking to rein in this kind of legal blackmail, not encourage it. New York’s small businesses have enough troubles as it is.

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