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.