We Finally Got Sued!
We finally got sued! And we lost! And it was because of our "I Got this Shirt on Sale" shirt. Seriously...
(BTW: this post isn't that long, but if you think, "I ain't readin' all this" and want to hear Mike explain it, he made a video for that)
We always thought we'd get sued for something spicy like defamation. Heck, our first insurer dropped us because they thought we were a defamation risk.
We've also gotten plenty of cease and desist letters. A few heated phone calls had threats of lawsuits, but now...
Our "I Got This Shirt On Sale" shirt was, we thought, an obvious joke. It was perpetually on sale. That was the point.
But this perpetual joke sale apparently violated "The District of Columbia's Consumer Protection Procedures Act (DC Code 28-3901)."
That code explains that if an item is on sale for too long (they use 90 days as an example), then the original price is essentially voided, making the sale price deceptive.
We can see the logic when it comes to deceptive pricing, but the enforcement of this law is left up to private lawyers and groups, so...
A lawsuit was filed against us in DC. And we were served papers in person in Des Moines! A guy walked in with the papers, Mike signed for them, and it began.
Our first hearing was scheduled for June 26th, 9:30AM in DC with a "Judge Darlene M Soltys" -- who we're sure is a nice person.
The "victim" of our crime is The Institute for Truth in Marketing, Inc.
This esteemed institution of consumer protection has a website with no contact information. It has an "Anthony Berry" listed as their president (who we couldn't find). But its founder, as listed in legal filings, is a "Jared Zecco."
Jared is so proud of his work that he has a LinkedIn page with 0 followers and no activity.
The lawyers representing ITM is a "firm" called The DC Consumer Law Group. We put "firm" in quotes because, as you'll see later, none of the lawyers in the "firm" seem too excited to be associated with it?
We learned from several sources that the lawyers charge over $1,200 per hour in cases like this.
That hourly rate puts them in the top 2,000 highest paid lawyers in Washington, DC, which has the highest paid lawyers in America!
Wowzers! Talk about being able to make your monthly Volvo payment!
The whole operation is pretty streamlined, and they break down the math and the threats and cover themselves pretty efficiently:
- $1,500 per violation;
- plus legal fees;
- that's $12,000 demanded from RAYGUN (they bought 6 shirts);
- but ITM "seeks to promote the public interest,"
- so they're "willing to settle" (of course they are!);
- but if we don't settle, they are prepared to "vigorously litigate" (sounds expensive!);
- because they need to "protect the public"
Thank you for your service, DC Consumer Law Group! I didn't realize you were really working for me, as a member of the public!
Though not a single member of the public who is an actual customer has ever filed a complaint against us for deceptive pricing, ITM and DC Consumer Law Group want to get ahead of what might be a massive fraud.
You wouldn't be able to tell all the good these guys do for the world by some of the press they've gotten.
The ABA Journal wrote about the DC Consumer Law Group and ITM, they say some business owners describe this as a "shakedown."
In the Journal, DC Consumer Law Group lawyer Joshua N Rose explains that they're, "simply capitalizing on a law that allows for private enforcement."
Don't hate the player, hate the game!
And a little lawsuit-based-cottage-industry has popped up around this "capitalizing:" there are other firms that read the court filings in DC and then reach out to companies sued by ITM and the DC Consumer Law Group.
These firms, like Briones, then offer their services in helping to negotiate a settlement -- for the low-low price of $700+ per hour (again, that is about triple what we pay lawyers!).
We got the email from Briones before we even got physical papers served to us!
But these guys are pros at leverage.
They picked the perfect number: $12,000.
It's a lot. But then you figure they'll come down to $8,000 to settle.
Still a lot, but if you try to fight them, you'll spend about $6,000 in fees for DC lawyers -- as a Midwest company, we don't currently have any DC lawyers on retainer!
What's worse, if you fight and lose, you'll be on the hook for the DC Consumer Law Group hourly fees, so you may spend over $50,000 to fight this.
Did we think about fighting? Sure! You can read this blog post or article in Rolling Stone to know that we don't just wilt under pressure.
This whole case seems fishy from several angles: a Maryland resident named Jeremy Morton bought the product and had them sent to ITM -- though the lawyers claimed ITM's president bought them.
What's more, using a local consumer protection law against an out of state business might be a violation of the Constitution's Commerce Clause -- which sounds crazy until you realize how far the Commerce Clause has been stretched by big business to stifle local regulations.
But, in the end, we caved. Like so many others. The math wasn't on our side, and we were out of our depth with a ticking clock heading toward a default judgement motion where the DC Consumer Law Group could run up fees beyond $12,000.
Scanning court records show that they seem to file a couple of these a month.
If everyone is settling for about $10,000, an operation of just 2 lawsuits a month could be draining $240,000 a year from small businesses.
Now, to the DC Consumer Law Group, $10,000 is only 7.6 hours of work. But to RAYGUN, we have no employees who make that much in an entire month.
This legalized, predatory behavior is the kind of economic cholesterol that slows the whole economy down.
Which makes us ask: why would a group of lawyers in DC, living in the most corrupt political and corporate environment in recent history use their talents to sue small businesses?
The DC Consumer Law Group has 3 lawyers we know of who went to UNC, Arizona, and Georgetown Law.
And this is what they dedicate their time to?
As a business, RAYGUN has advocated for health care reform, for increasing the minimum wage, for family leave, and even consumer protections!
We are a unionized workforce who takes our commitment to employees, customers, and the community seriously.
So the dark irony of lawyers using a well-intentioned consumer protection law to extract money from our company is not lost on us!
There are those who do what is right, and those who do what is convenient. If you are the DC Consumer Law Group, fighting a truly evil company like Amazon would be the right thing to do. But fighting a company like RAYGUN is much more convenient -- and much more profitable.
There they are! Joshua, Lorenzo, and Kelli got your hard earned money.
We just ask them to spend it in small businesses! One idea of where to spend our money: with us!
We have shirts with your firm's name on it, guys, and guess what: THEY'RE ON SALE!
Spoiler alert: we will not ship them to DC, but if you have a friend in Baltimore, they can order your size and drive it down to you.
As always, we turn to humor so the rage we feel toward those who prey on others doesn't totally devour us!
And if you're a reporter or lawyer in DC looking to drain part of the swamp, the DC Consumer Law Group and Institute for Truth in Marketing might be a good place to start!
Lawyers like this, in our opinion, are at the core of the rot in this country.
They look at their community as a source of economic extraction, not something they can add value to.
At RAYGUN, we will keep building, keep contributing, and if we have to dump salt on a few leeches along the way, that's the way it has to be.