Since earning his J.D. from Columbia Law School, Mr. Stone has amassed extensive legal expertise, dating back to his earliest experience as a law clerk for the Honorable Charles Sifton of the United States District Court for the Eastern District of New York. Rick is a former partner at one of the countries oldest law firms, Cadwalader, Wickersham & Taft. He has been Lead Counsel on several major high profile successful consumer and securities class actions.
VIDEO - DUwHF #1274 - Rick Stone
AUDIO - DUwHF #1274 - Rick Stone
Rick dedicates a substantial portion of time to philanthropy and is involved with numerous local and national charities such as the Community Foundation for Palm Beach and Martin Counties. Currently, Rick serves on the executive committee of Junior Achievement of the Palm Beaches, and teaches economics at Palm Beach Lakes High School as part of its volunteer program that teaches pre-law programs at local high schools.
Rick is an adjunct law professor at Shepard Broad Law School, Nova Southeastern University. He is President and Co-Founder of the Palm Beach Investment Research Group Inc., a membership based not-for-profit corporation comprising a group of family offices and other active investors.
Howard: It is just a huge honor for me today to be podcast interviewing Rick Stone since earning his JD from Columbia Law School Rick stone has amassed extensive legal expertise dating back to his earliest experience as a law clerk for the Honorable Charles siftin of the United States District Court for the Eastern District of New York. Rick is a former partner at one of the country's oldest law firms cadwalader wickersham and taft he has been lead counsel on several major high-profile successful consumer and securities class actions. Rick dedicates a substantial portion of time to philanthropy and is involved with numerous local and national charities such as the Community Foundation for Palm Beach and Martin counties currently Rick serves on the Executive Committee of the junior achievement of the Palm Beaches and teaches economics at Palm Beach Lakes High School as part of its volunteer program that teaches pre-law programs. Rick is an adjunct law professor at Sheppard brought law school of Nova Southeastern University he is president co-founder the Palm Beach investment research group inc a membership-based not-for-profit corporation compromising a group of family offices and other investors. I'm so honored to have him come on the show because obviously the biggest news and controversy in dentistry is with smiles Direct Club I don't think dentists could go a day without talking about it and the man we're talking to is doing a class-action lawsuit I knew he wouldn't go on the show because no one's ever gonna talk about something that's going to trial but he came on the show so I'm a dentist I'm not a lawyer so Thank You Rick so much for coming on the show today.
Rick: Thank you
Howard: and I thought it was amazing so, so first of all I'm their dentist we're good at geometry and trig and root canals but not really a class-action lawsuit what would what are you actually doing you've recently filed class action on behalf of orthodontist the Smiles Direct Club what does that actually mean?
Rick: So Howard I'm gonna be very careful about what I say another in part because smile direct has been very aggressive in my opinion in defending their interests and I don't want to be in the other side of one of those actions so first let me say what a class action is a class action is in litigation involving a group of people who suffer a similar injury so in our case we have two groups of people we have orthodontist and dental providers of orthodontic care and we have consumers who have used the smile direct aligner system so we have two groups of people who comprise two separate classes within that class action.
Howard: So it's orthodontists and patients
Howard: and so what is the what is the goal of this so what is the goal?
Rick: The goal of every class action is to recover money for the injured parties in that case and occasionally to cost changes in business practices to cause them to comply with what we believe are applicable regulations and rules.
Howard: and there's a couple of law firms on this who's on your there's one in Nashville that's it so you're working with two other law firms your and Florida ones in Atlanta and ones in Nashville?
Rick: Ones in Birmingham the Spotswood law firm which is an excellent plaintiffs firm than in Birmingham and then in Nashville working with the bone law firm which is a litigation firm that does both plaintiffs and defendants work in Nashville are they're effectively our local counsel for working on the case in Nashville.
Howard: Some would say and and I think it's a fair game that this is really all about the old-timers protecting the way it always was in stifling creative innovation how do you see how do you see it as you know protecting the way it was versus innovation to a new way of tella dentistry that's faster or lower-cost?
Rick: Our case has nothing to do with defending the status quo or with opposing innovation or challenge our case has to do with whether or not smile direct is correctly representing and completely representing the efficacy of their product and whether or not by not doing so as we allege in the complaint they are injuring customers and competitors orthodontists and dentists who provide a different type of level of service and connects us with orthodontistry.
Howard: So where are we at in this process are we just at the place where you just started this filed it as where is this at in its journey?
Rick: Well we're at the beginning of the case but the beginning of the case was a journey because we spoke with dozens of orthodontists dozens of patients and gathered our factual information from those conversations as well as public documents filed by small direct including the registration statement the document that they use to become a public company a few weeks ago.
Howard: The ADA I just I always post the updates on this but now all right she says ADA well do you look for the American Dental Association and the American Association of orthodontists out of st. Louis or these you have two law firms were you in Birmingham and Nashville is this something that you want to do with the ADA and then the orthodontist or is a separate or...
Rick: It's completely separate we have no relationship direct or indirect with the ADA or the American Association of orthodontists have we spoken with some dentists or orthodontists or members of those organizations, we have but we don't represent the ADA or AAO interests in any way shape or form.
Howard: and who would be your customer is it the orthodontists paying you to go forward or...
Rick: Cases like this are done on a contingency so the lawyers effectively front the expenses and don't get paid for their legal time and there's very substantially legal time in a case like this unless and until they win the case.
Howard: and what do you think um what do you think your average orthodontists and dentists I mean there's two hundred and eleven thousand Americans who have a license to practice dentistry what do you think they don't know about this case and everything that you do?
Rick: I think they probably don't know a lot about the case I think they probably know a lot about smile direct and have opinions about smile direct and the efficacy of that product I don't think they know a lot about the case and that's part of the reason I came on because I want to educate them and I want to communicate with them we know how have a pending case pretty much every day for the past two weeks since we filed the case I have received phone calls and my co-counsel received phone calls from professors at various universities who teach dentistry in orthodontics, dentists in various locations customers who claim they have injury from smile direct so we've had a steady communication and we really want that to continue we want to hear what the orthodontic community thinks and what their experience has been and what the patient experience has been with smile direct that's going to help us pursue this case effectively and correctly.
Howard: Okay so to all those listening what do you want them to do if they just heard you say that and they have a patient that is not happy or they're not happy, what would they do next?
Rick: As crazy as it may seem I'm gonna give you my email address.
Rick: I still use AOL you probably think that's very old-fashioned big you that but I have been a professor at various law schools for more than a decade and I have students for many years ago who left the country they move around and they can always communicate with me with that email they come in to Florida they email me and there it is so my email is rstoneesqataol.com.
Howard: OKay I'm sorry but what is the difference between sometimes a lawyer at the end of his name will say JD and in your case it's esq for Esquire what is the difference in JD and Esquire?
Rick: JD stands for juris doctor and that's the degree you get when you go to a three year law school in the United States so I don't think it's the custom for people to sign letters so and so JD esq is a term that's applied to all lawyers in the United States and in Europe Esquire esq.
Howard: So the best way to contact you would be your email rstoneesq for Esquire at aol.com?
Howard: and what are you looking for what would be the sweet spot like what would you like to receive is it more...
Rick: I would like to hear people's experience with smile direct orthodontists and dentists experience with the product happy or unhappy satisfied or unsatisfied fixing a problem or not fixing a problem and then the customer experience as well. As I've said we've had hundreds of calls in total and there are thousands of comments on the internet oh the Better Business Bureau website on Facebook and on other websites where people are expressing their opinion with respect to the product we want to make sure that we hear all the members of the class and what they have to say.
Howard: and is this the fact that you were in Florida and Birmingham and Nashville is this a was that a United States statement I mean what if they're in Canada or England or and you know the Internet's very international.
Rick: I'm happy to speak to them those non-us people are not included in our case as of now.
Howard: So it's purely a United States lawsuit right?
Howard: Yeah and now for you to take this on a contingency you either I mean you have to have some faith in it and I mean you wouldn't just throw money down the toilet wait why would you take on the case of this size contingent?
Rick: You know I'm gonna stick to what we've said in the complaint I think the complaint forty pages or so with exhibits a strong case with respect to misrepresentations made by Smile Direct which have changed over time with respect to the description of their product and its efficacy and lays out a strong case with respect to whether or not they have obtained proper FDA approval not of the product itself but of their marketing and distribution of that product so I stick with what we say in the complaint I'm not going to add to that but I believe that we have laid in a very strong case in that regard.
Howard: Their IPO wasn't smooth at all either I mean seems like even having a I mean that was that was some see people say their IPO was a disaster what were your thoughts on that?
Rick: I would say it was a disaster squared in my to my knowledge it was the worst performing IPO of the last decade at least I think the stock closed at eleven and change today which would mean it was down more the 50 percent in three weeks or so from the IPO price.
Howard: and why do you why do you think that was I mean what white where do you think they went wrong in the IPO?
Rick: So this is pure speculation I'm not a market guru I do invest and I have people to invest with so what I'm saying is not fact it's it's speculation and opinion on my part I think that the market is questioning the efficacy of the business model and whether or not this business model can stand up to regulatory and litigation scrutiny over the long period of time.
Howard: It's gonna be interesting um does it also make you have worries about tella dentistry in general I mean there's a lot of people thinking this is tella dentistry is a neat thing and then you have AI around the corner i mean between tella dentistry and artificial intelligence well they still need dentists and doctors in the future?
Rick: I'm not an expert in tella dentistry, having just had a knee replacement I'm pretty sure we'll need doctors in the future because doing that at home won't work and I'm sure there's a role for using Skype and communication on the Internet to facilitate communication between doctors and patients and to address certain issues, especially in places where doctors don't exist but I'm not expert enough on tella dentistry to tell you what I think the future will be.
Howard: because a lot of Wall Street people describe smiles direct businesses as a tella dentist play you know that that's and it's one of their big buzz words.
Rick: You know that I think that smile direct describes its businesses tella dentistry and its underwriter JP Morgan and their most their report of two or three days ago describes it as tella dentistry I think there are other people who say that it's not tell addenda Street that it doesn't meet the industry standard definition of tella dentistry.
Howard: Yeah I'm sure everybody I know from my college that went to law school said that after they graduated law school they'll never think the same way again so I imagine I imagine the all these words mean something totally different to you then I'd say a normal person right.
Rick: I would agree that lawyers are very careful about the words they use yes.
Howard: Yeah so do you think this could be I mean if they had a really bad IPO their stocks down the last thing they need is a huge class-action lawsuit that this do you think this could be you know then the final straw for them?
Rick: Well I don't have an opinion on that they have a lot of litigation they have our case and they have separately securities class action or more than one filed against them related to that initial public offering and representations in their prospectus so they have a big litigation docket right now and in the not-too-distant future we will have a good picture on how those cases will proceed.
Howard: A lot of people in the price you know it's always smiles direct Club and Invisalign in the same paragraph I mean that those are the two big ortho companies publicly traded is there really any connection with smiles direct Club and Invisalign in your lawsuit or the class-action or just in general or they just have to be two players in the same space?
Rick: There's no connection we don't work for Invisalign directly or indirectly we haven't even communicated with him in connection with the case I don't think they're the same business model at all though Invisalign to my knowledge one of my children have it, uses the orthodontist on a regular and continuous basis to adjust the treatment to space the teeth correctly using manual tools and there's a continuing interaction with the orthodontist directly over the course of using the aligners so I think it's a different business model than the smile direct business model.
Howard: and so it seems like they've had less lawsuits and of that matter correct, I mean Invisalign it doesn't seem to be as controversial?
Rick: I'm unaware of them having had any lawsuits except the lawsuit that they had with smile correct.
Howard: Exactly so can you tell us what that was all about the lawsuit between smiles direct and Invisalign?
Rick: I'm not completely up to speed on that that was resolved prior to my litigation so I'm not I'm not comfortable speaking better cuz I just don't know.
Howard: Yeah so I know you're I know this is a trial most people they always say why I can't speak on this so but mostly you came on to you'd like to get more information from dentists to contact you via email is there anything else you can talk about our without getting yourself in trouble?
Rick: Well that's important not to get yourself in trouble not really I think this is this is an important issue this is a consumer product issued by hundreds of thousands of people over time if the business model succeeds millions of people and who it's appropriate for and how it works and whether there are people that shouldn't be using the product and whether it is correctly described to the disadvantage or advantage of direct versus orthodontist are important issues so we want to hear people's experience good or bad an orthodontics experience people who have had patients who've come in and said it worked fine for me or didn't work fine for me we need to hear from those people they're members of our class and we think this is a good way for us to communicate with them so that they can contact us at their in their discretion.
Howard: It's funny because when orthodontist you know where I've been worried that you know this is gonna you know be the end of their demise or put them out of business or whatever I say well yeah it's gonna put you out of business because when you go to work you don't do anything I just look confused are you kidding me I I work my butt off all day long and I go home exhausted and I said there you go it's not gonna be that's what you do. So these class-action lawsuits I mean I'm a dentist I read about root canals on class actions but I was looking up on these things I go back to the 13th century in England and in that they said the you know they talked about the largest class-action lawsuit was with Dow Corning so but so is class-action lawsuits is that something that's been around since the 13th century and here 600 years always will be are they getting bigger they used more or less what's the status of class-action lawsuits today?
Rick: Yeah I would say I'm not so familiar with them being used in the 1300s I think they were probably 800,000 people in England in those days 330 million in the U.S. so it's a good mechanism to join people who have a common interest and reduce overall litigation costs and court time and expense we can't have a hundred thousand cases but we can't have one case that involves a hundred thousand people so I think used correctly subject to the supervision of a federal court judge which our case is and all most federal most cases are in federal court it works well and so I think it is a good and effective mechanism although most European countries today do not have that mechanism so it is not uniquely American but it is largely America.
Howard: Yeah this article the five biggest class action settlements verdicts ever number one the tobacco in 1998 number two Enron three worldcom for Exxon Valdez five dow corning breast implant litigation this is Dentistry Unsensored now I want to ask the controversial things, a lot of people obviously I don't know who America doesn't like going to the dentist or lawyers or they're more are there more dentists jokes or lawyer jokes out there I'm not sure I'm not sure who is lower on this totem pole in fear or whatever but I'm what is your letter grade of the legal system the United States I mean I give I would give my dentists a solid A I really would I I think they're they try hard they're doing good they they go home exhausted they weren't so many hats there is no way I would not give my dentist an A what would you give your lawyers?
Rick: Tough question I'm an academic because I teach law school so I have a certain perspective and then a lawyer actively practices and I'm a business person I think that many class actions are very important and serve an important function because the Securities and Exchange Commission and the FTC and other regulatory agencies just can't do it on their own so you took the Enron case I'm very familiar with that it was involved in that quite a massive fraud a sixty billion dollar loss in equity value important that someone went after the people who were liable for that to get back money for the institutions and individuals at stake, Dow Corning involving breast implants a lot of physical injury important that someone went after them and recovered the money and on the other hand in all honesty there are some class actions which are not significant and are challenging fairly insignificant mal conduct and wind up getting limited or very little relief for the class and I think there you do have consumer complaints or a perspective that the case might not have been worth it personally I stay away from those cases but there is a certain element of the legal community that does involve themselves in those type of cases.
Howard: Your a professor at Nova Southeastern University Shepard broad college of law Nova Southeastern University also has a dental school if you go get an MBA program one of the course curriculum is business law I know my dentist we were too busy taking geometry and calculus we didn't get any business law you're talking to a lot of dentists right now if you had to put your business law hat onto a bunch of dentists what advice would you give them as pertaining to their practice of Dentistry and the law?
Rick: I actually taught the business law course right now at FAU Florida Atlantic University and I taught business law and securities law at Nova Southeastern you know I have a different perspective you my experience with dentists and I'm friends with quite a few is that they are fairly astute business people they have a lot of practice software they keep abreast of new developments and they've moved their practices forward over time from cavities to sophisticated cosmetic dentistry procedures and related procedures that the marketplace demands so I think it's a profession where people have done a good job in self innovation.
Howard: Yeah so do you is there any advice you give to the young kids oh that or just come out of school that will be setting up a dental office to keep them out of legal trouble?
Rick: I think most dentists understand the legal risks of their business and have form agreements and the like that limited as best as they can, I'm not an expert in that arena though.
Howard: Yeah, well is there anything else you can talk about or want to talk about or is there any questions you wish I asked I didn't ask?
Rick: No I think we've covered it as I said my purpose of being on the show was not to talk too much about the merits of the case to stick to the complaint we're pleased and feel it's well researched well thought-out it's a result of a lot of due diligence and conversations.
Howard: So walk me through the post...
Rick: We do want to hear from people on an ongoing basis.
Howard: Well something tell me exactly how to say it, should I say Rick Sone is the, yeah you tell me tell me how I should put this out Rick stone is the attorney...
Rick: One of the attorneys
Howard: is one of the attorneys on the
Rick: Smile direct class action
Howard: On the okay so Rick Stone Esquire is one of the attorneys on the so I think recently filed a class action in just a class action?
Rick: That's fine recently photo this fine.
Howard: Okay on the recently filed a class action on behalf of orthodontist against smiles direct Club
Rick: and consumers
Howard: and consumers
Howard: and if you have any tell me what to write if you have any information...
Rick: Exactly if you want to communicate with us about your experience that is the email address to do that.
Howard: Okay so I have Rick stone Esquire is one of the attorneys on the recently filed class action on behalf of orthodontists and consumers against smiles direct club if you have any information and once you communicate your experience please email Rick stone at firstname.lastname@example.org.
Howard: You know I knew when I was reading this in the news I knew and I sent you an email I said well I'm just wasting my time there's no way he's gonna come on this show and all that kind of stuff I didn't I didn't think about that that was that was that that was the reason and so I'm glad that's a reason and is the information flowing in good now or...
Rick: Yes we receive calls every day orthodontist dentist end consumer so people are interested they want to hear what other people's experiences were sometimes they cost for advice which we can't give but yes that's very helpful for us to build up a foundation of additional knowledge with respect to the product in its efficacy.
Howard: Is there any a website to go to or just stay with the email?
Rick: There will be it's just not up yet because the cases is us you pointed out new but there will be a website and I will email that information to you.
Howard: Okay and like say I'm I was looking forward to this podcast at the end of the day so bad just because I was so curious why you came on the show and I feel like Albert Einstein that I finally figured it out because nobody talks about a case and you came on the show but hey thank you so much for doing this I guess at the end my opine on this is what I believe in more than anything is just checks and balances I know unchecked power you know absolute power leads to absolute corruption and if you I mean even Abraham Lincoln said if you want to test someone's character just give them absolute power and you know it usually makes a monster and if there's one thing I will never budge on is that humans do better with transparency and checks and balance when nobody knows what you're doing in a room and you can do anything it's just trouble and I just think humans do so much better when other people are aware what they're doing and when someone has the ability to come out and tap you on the shoulder and say you know quit doing that so right or wrong I just love the system I love the solid institutions I love it when government's broken up into different branches of checks and balances I love the transparency so I you're just part of the competitive landscape to try to keep everybody honest and being good and so thank you for what you're doing and best of luck to you.
Rick: Thank you very much I appreciate the opportunity.