Last night, I highlighted a Boston.com story about a Harvard Business School professor, Ben Edelman, who apparently decided to terrorize a local Chinese restaurant after discovering he had been overcharged $4 for takeout. The guy was obviously a jerk.1 But it turns out, he was probably wrong about the law, too.
A brief recap: Edelman, who has a J.D. from Harvard and is a member of the Massachusetts bar, according to his website, emailed the proprietors of Sichuan Garden to complain after he noticed that every dish he ordered turned out to be about a dollar more expensive than advertised on the website. The restaurant apologized, said that the online menu was out of date and that they would fix it. At that point, things escalated.
Edelman is invoking the concept of “treble damages,” which awards victims who bring winning lawsuits three times whatever money they lost due to the defendant’s misbehavior (“treble” is just British-speak for “triple.”). It often comes up in antitrust, patent, and consumer-protection cases, and is meant to punish bad actors while discouraging them from repeating any illegal activity in the future. Bilking your customers is less appealing if you know you’ll have to pay through the nose should you get caught.
But as Georgetown University law professor Adam Levitin wrote last night, Edelman is probably invoking the principle incorrectly. Conveniently, Levitin teaches the statute that Edelman cites, MGL 93a, in one of his classes. First, he notes that the law doesn’t actually require treble damages. Instead, a judge can choose to award them in cases where the defendant committed a “willful or knowing violation” or “if the defendant refused in bad faith to settle.” (Also, there’s technically a $25 minimum for any and all damages.) The thing is, Sichuan Garden very quickly offered to refund Edelman what he’d been overcharged. According to Levitin, that should have put them in the clear:
MGL 93a(9)(3) requires that before bringing suit the plaintiff send a demand letter to the business asking for rectification of the unfair or deceptive act or practice. That gives the business a chance to settle things for something like actual damages. The whole purpose of the demand provision is to encourage settlement and to act as a control on damages. (Refusal to parlay is one of the hooks that can result in treble damages.)
If the defendant’s offer of settlement is rejected by the plaintiff, the defendant can introduce its offer (and its reasonableness) at trial. Here, the restaurant offered the professor a full refund of the overcharge in response to his email (which is fairly understood as a demand letter). Thus, in a lawsuit, if the defendant made a reasonable settlement offer, the court must limit damages not to the $25 minimum, but to the restraurant’s reasonable offer. See Kohl v. Silver Lake Motors, Inc., 369 Mass. 795 (Mass. 1976). I don’t see how the professor gets to treble damages here.
It’s fun to play gotcha with an unnaturally pissed off Harvard prof, but there’s actually a bigger point here. Yesterday, a few #Slatepitchy souls argued that, despite his dislikable approach, we should applaud Edelman for standing up against a restaurant that was, in some small way, cheating consumers. But whatever good he did was outweighed by his personal comportment. Lawyers have a lot of power in that they understand how to work the legal system and don’t need to pay anybody to write up a lawsuit on their behalf. And that power can very easily be abused, because it can still be expensive and time-consuming to defend against a crap case. Yesterday, I mentioned the notorious example of former administrative judge Roy Pearson, who sued a Washington, D.C., dry cleaner for $67 million after losing his pants. Ridiculous? Of course. But Pearson pushed his case all the way to a trial (where, thankfully, he lost).
Thankfully, Edelman hasn’t done anything nearly that rash—he told Boston.com he simply contacted local authorities and was contemplating further action. But even shaking down a Chinese joint for $12 based on a bad reading of the law is, in a small way, abusive. Again, here’s Levitin:
Indeed, just reading the statute carefully ought to have given the professor some pause. While he makes a big deal in one of the emails about being ethically bound to deal only with an attorney if the restaurant is represented by counsel, it strikes me as a possible ethical problem to be mng demands (particularly on an unrepresented party) for which one lacks a legal basis. I don’t think negligent belief about the law helps the professor here.
Update, Dec. 10, 2014, 5:19 p.m:
Edelman has posted an unequivocal apology on his personal blog. It reads:
Many people have seen my emails with Ran Duan of Sichuan Garden restaurant in Brookline.
Having reflected on my interaction with Ran, including what I said and how I said it, it’s clear that I was very much out of line. I aspire to act with great respect and humility in dealing with others, no matter what the situation. Clearly I failed to do so. I am sorry, and I intend to do better in the future.
I have reached out to Ran and will apologize to him personally as well.
Credit to Edelman, who was still defending his emails yesterday, for rethinking things. The Internet has done its job for the day.
Footnote1: It seems some readers took me seriously when I suggested that we should “applaud” Edelman and urged him to “fight the power.” I thought that alluding to Public Enemy was an obvious joke. My apologies to the confused.