The Litigators

CHAPTER 49


The facility was one in a long row of modern warehouses that covered acres and seemed to stretch endlessly west from Des Plaines and the Chicago suburbs. Thanks to his GPS, David found it with no trouble, and at 10:00 Monday morning he escorted Soe and Lwin Khaing through the front door of a redbrick office complex stuck to the side of a massive warehouse. They were immediately led through a hallway and into a conference room where coffee, pastries, and juice were offered. They declined. David’s stomach was flipping, and his nerves were on edge. The Khaings were thoroughly overwhelmed.

Three well-dressed corporate types entered the room: Dylan Kott, chief counsel; Carl LaPorte, CEO; and Wyatt Vitelli, chief financial officer. Rapid introductions were made, and then Carl LaPorte asked everyone to have a seat and did his best to reduce the tension. More offers were made of coffee, juice, and pastries. No thanks. When it soon became apparent that the Khaings were too intimidated to converse, LaPorte grew somber and said to the parents, “Well, first things first. I know you have a very sick boy and he is not likely to improve much. I have a four-year-old grandson, my only grandchild, and I cannot imagine what you are going through. On behalf of my company, Sonesta Games, I take full responsibility for what has happened to your son. We did not make the product, this Nasty Teeth toy, but we own the smaller company that did import it from China. Since it’s our company, it is our responsibility. Any questions?”

Lwin and Soe shook their heads slowly.

David watched in amazement. In a trial, these comments by Carl LaPorte would be fair game. An apology by the company would be admissible into evidence and carry great weight with the jury. The fact that he was accepting responsibility, and doing it without hesitation, was important for two reasons: first, the company was sincere; and, second, the case was not going to trial. The presence of the CEO, CFO, and top lawyer was a clear sign that they had brought their checkbook.

LaPorte continued: “Nothing I can say will bring back your little boy. All I can do is say I’m sorry and promise you that our company will do all that we can to help you.”

“Thank you,” Soe said as Lwin wiped her eyes. After a long pause, during which LaPorte watched their faces with great sympathy, he said, “Mr. Zinc, I suggest the parents wait in another room down the hall while we discuss matters.”

“Agreed,” David said. An assistant suddenly materialized and led the Khaings away. When the door was closed again, LaPorte said, “A couple of suggestions. Let’s take off our coats and try to relax. We could be here for some time. Any objection to using first names, Mr. Zinc?”

“Not at all.”

“Good. We’re a California company, and our culture leans to the informal.” All coats were removed and ties loosened. Carl continued, “How would you like to proceed, David?”

“You called the meeting.”

“Right, so a little background might be helpful. First, as I’m sure you know, we’re the third-largest toy company in America, sales last year of just over $3 billion.”

“Behind Mattel and Hasbro,” David said politely. “I’ve read all your annual reports and a ton of other stuff. I know your products, history, financials, key personnel, divisions, and long-term corporate strategy. I know who insures your company, but of course the limits of liability are not disclosed. I’m happy to sit here and chat as long as you guys would like to. I have nothing else planned for the day, and my clients have taken off from work. But to move things along, I suggest we get down to business.”

Carl smiled and looked at Dylan Kott and Wyatt Vitelli.

“Sure, we’re all busy,” Carl said. “You’ve done your homework, David, so tell us what you have in mind.”

David slid across Exhibit 1 and began, “This is a summary of brain damage verdicts over the past ten years, kids only. Number 1 is a $12 million verdict in New Jersey last year for a six-year-old who ingested lead by chewing on a plastic action figure. The case is on appeal. Look at Number 4—a $9 million verdict in Minnesota that was upheld on appeal last year. My father sits on the Minnesota Supreme Court and is fairly conservative when it comes to upholding large verdicts. He voted to affirm that one, as did the rest of the court. Unanimous. It was another lead-poisoning case—a kid and his toy. Number 7 involves a nine-year-old girl who nearly drowned when her foot got caught in the drain of a brand-new swimming pool at a country club in Springfield, Illinois. Jury deliberated less than an hour and awarded the family $9 million. On page 2, look at Number 13. A ten-year-old boy was hit with a piece of metal flung from a commercial Bush Hog with no chain guards. Severe brain damage. The case was tried in federal court in Chicago, and the jury awarded $5 million in actual damages and $20 million in punitive damages. The punitive award was cut to $5 million on appeal. I don’t need to go through every case, and I’m sure you guys are familiar with this territory.”

“It should be obvious, David, that we would like to avoid a trial and jury.”

“I understand, but my point is that this case has tremendous jury appeal. After the jurors spend three days looking at Thuya Khaing strapped into his high chair, they might bring back a verdict larger than any of these. That potential should be factored into our negotiations.”

“Got it. What is your demand?” Carl asked.

“Well, a settlement should include several areas of compensation, some relatively easy to tally, others not so easy. Let’s start with the financial burden on the family to care for the child. As of now, they’re spending about $600 a month on food, medications, and diapers. Not much money, but a lot more than the family can afford. The boy needs a part-time nurse and a full-time rehab specialist to at least attempt to retrain muscles and reprogram the brain.”

“What’s his life expectancy?” asked Wyatt Vitelli.

“No one knows. It’s a moving target. I didn’t put it in my report, because one doctor says a year or two, off the record, and another one says he could live to be an adult. I’ve talked to all the doctors, and no one thinks it’s smart to predict how long he might live. I’ve spent some time with him during the past six months, and I’ve noticed a slight improvement in some functions, very slight. I think we should negotiate as if he has twenty years left.”

All three men nodded, quick to agree.

“It’s obvious that his parents do not earn a lot of money. They live in a small, cheap apartment with two older daughters. The family needs a home, with plenty of space and a bedroom outfitted for Thuya’s special needs. Nothing elaborate—these are simple people, but they have dreams.” At this point, David slid across three copies of Exhibit 2, which were quickly snatched off the table.

David took a deep breath and plowed forward. “This is our settlement proposal. First, you see the specific damages. Number 1 covers the expenses I mentioned, plus a part-time nurse at $30,000 a year, plus the mother’s lost salary of $25,000 a year because she would like to quit work and stay home with the boy. I’ve also added the cost of a new car so they can take him to and from rehab on a daily basis. I’ve rounded it off to $100,000 a year, for twenty years, for a total of $2 million. You can buy an annuity at today’s rates for $1.4 million. Rehab is a gray area because I’m not sure how long it would continue. As of today, it runs about $50,000 a year. Assuming twenty years, the annuity will cost you $700,000. Next is the issue of a new home, in a nice neighborhood, with good schools—$500,000. The next item deals with the Lakeshore Children’s Hospital. Their care saved his life and was free, at least to the family, but I think the expenses should be paid back. The hospital was reluctant to give me an estimate, but there it is—$600,000.”

David was at $3.2 million, and none of the three executives had removed a pen from a pocket. There were no frowns, no head shaking; nothing to indicate they thought he’d lost his mind.

“Moving on to the nonspecifics, I’ve listed the kid’s loss of enjoyment of life and the emotional distress of the family. I know these are vague areas, but they are compensable damages under Illinois law. I suggest the sum of $1.8 million.”

David folded his hands together and waited on a response. No one seemed surprised.

“A tidy sum of $5 million,” Carl LaPorte said.

“What about attorneys’ fees?” Dylan Kott asked.

“Gee, almost forgot about those,” David said and everyone smiled. “My fee is not taken from what the family gets. It’s extra. Thirty percent on top of what you’re looking at there, or $1.5 million.”

“That’s a nice payday,” Dylan said.

David almost mentioned the millions each of the three had earned the previous year in salary and stock options, but let it pass. “I would like to think I could keep it all, but that will not be the case.”

“Six and a half million dollars,” Carl said as he laid down his copy of the report and stretched his arms.

“You guys seem intent on doing what’s right,” David said. “Plus, you don’t want bad publicity, just like you don’t want to roll the dice with an unsympathetic jury.”

“Our image is very important,” Carl said. “We don’t pollute rivers or make cheap handguns or deny insurance claims or bilk the government on bad contracts. We make toys for kids. It’s just that simple. If we get the reputation for harming children, we’re dead.”

“Can I ask where you found these products?” Dylan asked.

David told the story of Soe Khaing purchasing the first set of Nasty Teeth a year earlier, and of his search high and low in Greater Chicago for similar packages. Carl described the company’s efforts to track them down too and admitted that Sonesta Games had settled two other similar cases within the past eighteen months. They were cautiously hopeful that all lead-painted samples had been removed from the market and destroyed, but not certain. They were at war with several factories in China and had moved most of their production to other countries. The purchase of Gunderson Toys had been a costly blunder. Other stories followed, as if both sides needed a break to think about the settlement proposal on the table.

After an hour, they asked David to step outside so they could huddle in private.

David drank a cup of coffee with his clients, and after fifteen minutes the same assistant asked him to return to the conference room. She closed the door behind him, and David was ready to cut the deal or walk away.

When they were situated and poised, Carl LaPorte said, “We were prepared to write a check for $5 million and put this matter to rest, David, but you’re asking for a lot more than that.”

“We will not accept $5 million, because the case is worth twice that much. Our number is $6.5 million, take it or leave it. I’ll file the lawsuit tomorrow.”

“A lawsuit will take years. Can your clients afford to wait?” Dylan asked.

“Some of our federal judges use this Local Rule 83:19, nicknamed the Rocket Docket, and believe me, it works. I can have this case before a jury in a year. The last case was far more complicated, and it went to trial ten months after it was filed. Yes, my clients can survive until the jury brings back the verdict.”

“You didn’t win that case, did you?” Carl asked with his eyebrows arched, as if he knew everything about the Klopeck trial.

“No, I did not, but I learned a lot. I had a lousy set of facts. This time, I own the facts. By the time the jury hears everything, $6.5 million will seem like a bargain.”

“We’ll offer $5 million.”

David swallowed hard, glared at Carl LaPorte, and said, “You’re not hearing me, Carl. It’s $6.5 million now, or a lot more a year from now.”

“You’re turning down $5 million for these poor Burmese immigrants?”

“I just turned it down, and I’m not negotiating. Your company is well insured. The $6.5 million is not coming off your bottom line.”

“Maybe, but the insurance premiums are not cheap.”

“I’m not haggling, Carl. Deal or no deal?”

Carl took a deep breath and exchanged looks with Dylan Kott and Wyatt Vitelli. Then he shrugged, smiled, surrendered, and offered a hand. “A deal.” David grabbed his hand and shook it firmly.

“On the condition that this is extremely confidential,” Carl said.

“Of course.”

Dylan said, “I’ll get our guys in Legal to prepare an agreement.”

“Not necessary,” David said as he reached into his briefcase. He pulled out a file, removed four copies of a document, and passed them around. “This is a settlement agreement that covers everything. It’s pretty straightforward and includes all manner of language about confidentiality. I work for a tiny law firm, but it has some complicated problems. It’s in my best interests to keep this quiet.”

“You had a settlement agreement prepared at $6.5 million?” Carl asked.

“You got it. Not a penny less. That’s what this case is worth.”

Dylan said, “This settlement has to be approved by the court, right?”

“Yes. I’ve already established a guardianship for the kid; his father is his legal representative. The court must approve the settlement, and over the years it will supervise the money. I’m required to prepare an annual accounting and meet with the judge once a year, but the file can be sealed to ensure secrecy.”

They reviewed the agreement, then Carl LaPorte signed it on behalf of his company. David signed it, then Soe and Lwin were brought into the room. David explained the terms of the settlement to them, and they signed under his name. Carl apologized again and wished them well. They were shell-shocked, overcome with emotion, and unable to speak.

As they were leaving the building, Dylan Kott asked David if he could have a moment to discuss a matter. The Khaings moved on and waited by David’s SUV. Dylan deftly slid a white unmarked envelope into David’s hand as he said, “You didn’t get this from me, okay?”

David placed it inside his coat pocket. “What is it?”

“A list of other products, mainly toys, with histories of lead poisoning. Most were made in China, but there are some from Mexico, Vietnam, and Pakistan. Made somewhere else, but imported here by U.S. companies.”

“I see. And might these companies be your competitors?”

“You got it.”

“Thanks.”

“Good luck.”