An action with class

“Class action law­suits are an impor­tant part of our legal sys­tem. All cit­i­zens should have the right to band together and set­tle griev­ances with big­ger companies.”

— Sen. Tom Carper

“Today marks the cul­mi­na­tion of nearly a decade of leg­isla­tive efforts to end sys­tem­atic abuse of our class action system.”

— Rep. James Sensenbrenner

On pas­sage of the Class Action Fair­ness Act —

Hav­ing spent last week simul­ta­ne­ously on vaca­tion and under the weather, I found myself watch­ing a lot more tele­vi­sion than I nor­mally would. I was sur­prised by sev­eral things that I saw, includ­ing the pro­lif­er­a­tion of day­time “court” pro­grams (I pined for Judge Wap­ner), the fact that dur­ing some hours the com­mer­cials relat­ing to the 2012 Pres­i­den­tial elec­tion out­num­ber all oth­ers com­bined and the incred­i­ble num­ber of ads from national law firms ask­ing peo­ple to call and opt in to class action set­tle­ments involv­ing mesothe­lioma, post-surgical dial­y­sis and the use of cer­tain med­ical equip­ment dur­ing surgeries.

In each of these cases, pools of money exist or may exist because of what are known as class action law­suits. A class action suit is brought on behalf of a small num­ber of named plain­tiffs and an esti­mated, but large, num­ber of unknown plain­tiffs who are thought to have been injured by the same action or activ­ity. In rarer cases, they may claim that a group of defen­dants should be grouped together for hav­ing com­mit­ted that harm. The plain­tiff then asks the court to cer­tify the class of per­sons who should be grouped together.

Class actions may be filed in state court, but are often filed in fed­eral court or moved from state to fed­eral court when the plain­tiffs and defen­dants are from dif­fer­ent states. In order to be a valid class action, the class must be large enough to make it unrea­son­able for each per­son to bring an indi­vid­ual law­suit and the per­sons in the class must have the same or sim­i­lar claims or defenses.

Class action law­suits are intended to allow large groups of peo­ple who might not be able to bring a law­suit indi­vid­u­ally so all can be rep­re­sented. They are also thought to more ade­quately pun­ish com­pa­nies for wrong­ful actions by pool­ing those who have been injured and allow­ing them all to recover dam­ages at the same time. They are also thought to sig­nif­i­cantly reduce the strain on the civil jus­tice sys­tem, since it would obvi­ously take sig­nif­i­cantly longer for 10,000 defen­dants to each sue indi­vid­u­ally than it would for them all to attempt to recover in a sin­gle suit.

Oppo­nents of class actions argue that attor­neys some­times set­tle for dam­age awards that result in an insignif­i­cant pay-out to each plain­tiff but pay large legal fees to the attor­neys. Oppo­nents also argue that class action law­suits some­times force defen­dants to set­tle even when they have done no wrong, sim­ply because the threat of a huge ver­dict is too over­whelm­ing. Seven years ago, Con­gress sought to pre­serve the good points of class actions and guard against the bad when it passed the Class Action Fair­ness Act of 2005.

Despite the 2005 leg­is­la­tion, con­cerns remain and courts must approve class action set­tle­ments. Just last week a fed­eral appeals court rejected a set­tle­ment that had been reached in a class action law­suit again Kellogg’s. The suit had been brought over claims that eat­ing Frosted Mini-Wheats would make chil­dren smarter. The set­tle­ment would have allowed con­sumers to claim a $5 refund on up to three boxes of cereal for a max­i­mum set­tle­ment of $15 per con­sumer up to a total of $2.75 mil­lion. It would also have required Kellogg’s to donate $5.5 mil­lion in food prod­ucts to var­i­ous char­i­ties. The court rejected the set­tle­ment because it would have paid more than $2 mil­lion to the lawyers who han­dled the case, which the court com­puted to be an hourly rate of $2,100. One of the judges in the case com­mented, “Not even the most highly sought after attor­neys charge such rates to their clients.” A new set­tle­ment will have to be reached.

Sev­eral web­sites have now been cre­ated to link con­sumers to var­i­ous class actions suits and set­tle­ments. Most of them can be found sim­ply by typ­ing the words “class action” into an Inter­net search engine.

David Hej­manowski is a mag­is­trate and court admin­is­tra­tor at the Delaware County Juve­nile Court and a for­mer assis­tant pros­e­cut­ing attor­ney. He ate Frosted Mini-Wheats for break­fast all last week and doesn’t feel any smarter.

Posted by Dave Hejmanowski on Jul 19 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.