Bully Lawyers & Shoplifting Civil Recovery Letters: Who’s Going to Stop Them?
For roughly 30 years, some Canadian lawyers have been engaging in a practice that other Canadian lawyers have vociferously criticized as “extortion with letterhead,” “bullying and intimidation”, a “predatory practice” and “an example of legal strong-arming.” Members of the public have also chimed in, characterizing the practice as “morally wrong” and “like being stabbed in the back”.
The practice at issue is the sending of shoplifting demand letters. In short, this involves lawyers acting for retailers sending letters to alleged shoplifters and/or their parents demanding the payment of money.
To take one example reported in the media, in 2004, one mother received a letter from a lawyer for a retailer four months after her daughter was caught trying to steal lip gloss. The letter “demand[ed] [the mother] pay $379 to help defray the cost of shoplifting or face the consequences, threatening a civil lawsuit for as much as $900.” To take another, more recent, example, in 2012, an eighteen year old paid $610 in response to a demand letter after she was caught stealing just over six dollars in cosmetics.
In both of these cases, it appears that the stolen goods were recovered. Indeed, the hundreds of dollars demanded did not represent any particular loss suffered by a retailer but, rather, an attempt to recover a portion of the total amount of money spent each year trying to ward off and apprehend shoplifters. This type of pro-rated demand is typical in shoplifting demand letters. As explained by Edward Prutschi in a previous Slaw column:
Essentially, the retailer argues: “even though we caught you and recovered 100% of what you tried to take from us, you owe us compensation for all the trouble we went to in catching you. Oh, and throw in a few bucks to cover the losses we incur for those folks we don’t catch.”
There is nothing wrong, of course, with a lawyer writing a demand letter on behalf of a client. Lawyers routinely send demand letters in an effort to obtain efficient results for clients and to avoid protracted court battles. Materially misleading demand letters, however, are wrong.
As I have written in a recent article on the topic of shoplifting demand letters, when lawyers send letters that mislead the public as to their legal obligations, there is a strong case that these lawyers are breaching rules of professional misconduct by, among other things, knowingly assisting their clients in dishonest conduct and violating their obligations to act in good faith and practice law with integrity. This obligation includes a mandate that one’s conduct as a lawyer “should reflect inspire the confidence, respect and trust…of the community.”
How do shoplifting demand letters mislead the public? In the article linked to above, I engage in an extended analysis of the tort law dimensions of these letters. The analysis in the article is lengthy and sets out a thorough account of the viability of legal claims advanced in shoplifting demand letters. Two of the major concerns with the letters that I review in the article are that they (1) advance claims rooted in parental vicarious liability and (2) demand damages for a pro-rated portion of overall security costs incurred by a retailer, as discussed above.
On the first issue, it is well-recognized that parents are not vicariously liable for torts committed by their children. The specific question of whether a parent could be vicariously liable for damages arising from a child’s shoplifting has been expressly considered and answered in the negative (B (DC) v Arkin, (1996) 111 Man R (2d) 198). It appears there is no good faith basis for suggesting, as a number of shoplifting demand letters do, that a retailer has a cause of action against a parent for theft and conversion because of a child’s shoplifting.
Similarly, on the second issue, Canadian courts have rejected claims by a retailer to a pro-rated amount of general security costs. For example, Justice Hess observed in Southland Canada Inc v Zylik, 1999 ABPC 107,
the damages claimed are not as a result of any wrong committed by the defendants, but rather in anticipation that they would be members of a group of then undetermined individuals who might do something wrong. I know of no instance where a plaintiff has succeeded in a claim for damages suffered before the occurrence or in anticipation of a tortuous act. The argument of the plaintiff, as I understand it, is analogous to seeking reimbursement from a trespasser for the cost of constructing a fence designed to keep him out.
Notwithstanding the fact that many shoplifting demand letters contain what appear to be invalid claims, many members of the public who receive such letters give in to the demands. One media report, for example, cites court documents indicating that the Hudson’s Bay Company and Zellers recovered more than $1 million in the first three years of using this technique.
It is not surprising to me that people pay. Why wouldn’t people assume that money demanded by a lawyer in a letter is money that the lawyer’s client has some good faith basis for demanding? Moreover, the context of shoplifting can be a very stressful one (particularly for parents). Paying a few hundred dollars to make the problem go away is an understandable course of action.
I’m far from the first to raise concerns about this practice. In addition to Edward Prutschi’s column mentioned above, Alice Woolley has written a number of compelling blog posts on this topic (see, here, here, and here). And, of course, Gerry Laarakker was disciplined by the Law Society of British Columbia after making “discourteous and personal remarks” about another lawyer who was sending shoplifting demand letters.
The critiques have been strong and steady. The problem is that these critiques have done little to stop the practice. A large number of these letters are still going out: a single Toronto legal aid clinic reported to me that, in the first six months of 2014, they received 50 calls about shoplifting demand letters.
Legal aid clinics have been working hard to try to educate the public about SCRLs. For example, Justice for Children and Youth, a non-profit legal aid clinic located in Toronto, has published helpful information on its website.
But what about law societies? To my knowledge, no Canadian law society has publicly disciplined lawyers sending shoplifting demand letters or publicly condemned the practice.
Law societies should act on this issue. Not only are individual members of the public at risk of suffering harm, but the reputation of the legal profession is also stake. What message are we sending to the public when we allow lawyers to engage in “bullying and intimidation” with apparent impunity?
… and the only response by a Law Society in Canada is the Laarakker case, where they disciplined the lawyer who blew the whistle. Misplaced priorities…
One of the criticisms made in the Ontario Legislature (at about 13:45) of the current Bill 52, the Protection of Public Participation Act, which provides a fast-track review of alleged ‘strategic litigation’ or SLAPP suits, is that it does nothing to prevent the threatening letters from lawyers that often have the desired chilling effect without the need for a lawsuit that could be subject to the review.
Is there a legislative fix for that, really?
That is a great judgment but it would seem Judge Hess was undone by his spell-checker: surely the act in question was tortious, while the arguments in favour of the claim were tortuous.
“Law societies should act on this issue.”
What do you propose?
I ask that because I can’t tell from this post or the other commentary where the line is between a legitimate demand letter and a demand letter that is offside. Is it just about making misleading statements of law in the letter, or is it the bullying tone that would be offensive? Or is this just about regulating a single activity (shoplifting demand letters).
This is an areas where the law societies should tread lightly. I don’t ever want to be defending myself for failing to use “if you please” enough times or ending a demand letter too sharply.
Concerns with mass demand letters has come up in a copyright context in several jurisdictions (UK, USA and Canada at least)as well. In the UK I believe it lead to a firm being sanctioned by the regulatory authorities (but can’t find the cite at the moment), in the US it has led to judicial costs sanctions. Canada has not had as much of an issue, and no formal consequences of which I am aware.
Generally the line where law society regulation needs to come in seems to be where a firm is sending demands threatening suit based on dubious or greatly exaggerated cause of action, seeking a settlement amount greater than the client would likely be entitled to at law, with the goal that a significant portion of recipients of the demands will settle to avoid the costs of court and embarrassment of the subject matter (the copyright claims often involve allegations of downloading various forms of pornography).
There does need to be care in how far the law societies regulate demands. That said, if a firm’s entire business model appears to be to send such demands and collect a % of the payments received, it shouldn’t be unreasonable for the law society to at least make a basic inquiry as to whether the claim has any foundation of law, and whether there is any possibility of the threats ever proceeding to trial.
A recent review of groundless legal threats (and causes of action against those who make them) in the IP context in the UK can be found at http://lawcommission.justice.gov.uk/docs/lc346_patents_groundless_threats.pdf
which includes this section:
PROTECTING LEGAL ADVISERS FROM PERSONAL LIABILITY
9.48 In Chapter 7 we recommended that legal advisers should not be personally liable
for threats when they act in their professional capacity on client instructions. This
change in the law would remove the opportunity for disputing parties to use the
threats provisions tactically, to create
tension or conflicts between advisers and
clients. Advising a client would be more straightforward as there would no longer
be a need to explain the complexities of how an indemnity works or why one is
needed. It would also make it easier for small businesses to engage with alleged
9.49 We anticipated that the costs that might result from this reform would be minimal.
Although the risk of liability may currently act as a disincentive for advisers to
misuse threats to sue, we thought that this could and should be dealt with as
professional misconduct. The reform might introduce a risk that where a rights
holder is impecunious, a person aggriev
ed by a threat issued on their behalf
would be left without a remedy. However, we thought that this would be rare.
9.50 We asked consultees whether they agreed with our analysis
The lawyers who write these letters know or ought to know that the amounts they demand bear absolutely no relation to the damages their clients suffered, and that the recipients are likely ignorant of their rights and unable to obtain legal advice. This is why they should not send them.