Class Action Lawsuits

Though I'm a lawyer, I don't claim to be an expert on class action lawsuits, but I've read plenty of complaints about them (usually from Republican circles). The complaints generally allege that class actions are somehow frivolous ways for lawyers to get huge, undeserved legal fees while giving consumers token coupons that are basically worthless as part of a class action settlement.

I'll address each one of those complaints in turn.

First, the notion that somehow class actions are generally frivolous. Any discussion of "frivolous" lawsuits should begin with a discussion of the fact that actually filing a friviolous lawsuit - heck, just a frivolous notion within a legitimate lawsuit - opens a lawyer, his or her law firm, and even the client, to sanctions and penalties. It could be argued that the sanctions aren't levied often enough, but the threat of them is there. More to the point, any filing that is truly frivolous also doesn't have a chance in hell of actually going anywhere. The court will rule against it, and in the off chance there is an idiotic judge who does not, it will be quickly reversed on appeal. Simply put - filing a frivolous motion of any kind has a whole lot of downside with not really much in the way of upside. Even if it is just dismissed, you'll very likely have pissed off the judge, or at least lowered the judge's estimation of your abilities, making it less likely the judge will look kindly on even a more legimate motion.

Beyond that, one has to wonder about those who call class actions with settlements frivolous. It is true that sometimes it is cheaper and easier to settle to make a complainant go away than it is to go to trial and win, but the aggregate costs of most class actions are so high that one would think it would always be much cheaper to go to trial if the suit is so weak as to be frivolous. In other words, it is not very likely that a class action suit where there has been a settlement was frivolous - just the opposite, in fact. So claims of frivoloty about such suits are bullshit, plain and simple.

Second, there is the notion of huge, undeserved legal fees for lawyers in class action suits. It is true that lawyers typically get anywhere between 30 and 40% of a suit that is done on contingency. But keep in mind that there is also the chance that they will lose and then get nothing. What it means is that the lawyer or law firm assumes the risk of the lawsuit. What is great about this is that it allows even people with no money to get top-flight legal representation that can go toe to toe with the richest of tortfeasors. Were this not the case, one could stomp all over the propety rights of those with no money with wild abandon without any fear of being taken to account over it. With this system, even the mightiest of billion dollar corporations still needs to worry about not injuring even the most poor among us (though for various reasons, they still have less to fear about injuring the poor than the well-off, but that is a digression I'll leave alone for now).

I call this an unambiguous good that makes our society a whole lot safer than those societies without such a system. There's a reason that when some minor disaster happens in the US, you see minimal deaths and injuries but that in some other nations, such things cause thousands or even millions of deaths. Class action lawsuits are a small but significant part of that.

Dealing with the second part of the lawyer fees - whether they are "deserved" - I say that they clearly are. Were it not for those fees, as noted above, the poor could be trod upon with impunity (as it is, they still often are, but it would be much much worse without this). Putting together a class action suit is hard work that requires specialized lawyers with years of experience and also requires spending a lot of cash upfront on the part of the law firm. Only a large, rich law firm can handle class action suits for that reason. Veteran lawyers with highly specialized skills are needed. They don't come cheap, for good reason. They work hard, working long hours, sometimes for years, and all with the chance that in the end, they will get nothing. So the winning cases not only have to pay them for their time for those cases, they also have to cover all of the money spent on losing cases or on cases that, despite winning, still did not cover the cost of their actual time spent. In short, they deserve every penny - they work hard for it. Which brings us to the next point.

Third, there is the notion that these suits are scams because after paying all of those legal fees, the actual consumers (who can number in the hundreds, thousands, or even millions, depending on the suit) often don't get much more than a coupon or something that seems somewhat worthless. But this is overlooking some very important points. First, lawsuits are meant to make plaintiffs whole. Which means that they are meant to restore a plaintiff (monetarily) to where they would be if they hadn't been cheated out of money (or otherwise damaged) in the first place. So in many cases, where there is a class action, there might only have been a small amount of damage to each individual consumer - so the coupon really does make them whole. (And more on that later). But not all class actions result in coupons. I've been a member of class action suits - probably at least a half dozen of them. And I did not get just coupons or peanuts from them. Several netted me about $50. One, involving my title company (for my home mortgage) resulted in around $300. Not exactly chump change.

But consider this. Even if all consumers get is a coupon for ten dollars off some product, or something else of negligible value, this still matters. Because if class actions were limited to cases where each individual consumer (and there could be millions as noted above) got a significant amount of settlement money, you'd essentially be granting a license to steal. Because then all companies would have to do is come up with scams that cheat consumers out of only an amount equal to or less than the threshhold amount for class action suits. It might not seem like much, but when multiplied by ten million consumers, it can really add up. Say the threshhold is $100 - that is a license to find a way to steal $99 from each consumer, and if you have in excess of ten million consumers that you get this from, then that's a billion dollars you just made - and all without fear of any lawsuit forcing you to pay it back. Because though each consumer could still sue you individually, even for $99, it isn't worth the time, hassle, and cost of a lawsuit to get it back. Hell, unless it is thousands of dollars, it isn't worth it. (True, there is small claims court, but even that isn't worth the time and hassle if the amount is that small - for some, it already costs more than $99 just to take time off work for a day to go to court).

So without class action suits, this sort of theft would be entirely unchecked. Thus, you should take satisfaction even with a dollar coupon payout from a class action suit - because you will have been a party to preventing a company from getting away with such a scam. That, I think, is the primary benefit of class action lawsuits - it allows claims that would otherwise never be made because they are of too low a value to support a lawsuit to come to fruition because, in the aggregate, they matter.

I just wish that these simple points of refutation would be brought out every single time a bullshit complaint about class action suits is trotted out of the GOP talking point box. I know I'm dreaming (given the right-wing stranglehold on the MSM) but I think it is good to dream.