(The Return of) Ignatz, by Sam Heldman

Monday, November 18, 2002

Class actions

As the New York Times reported (here and here) yesterday, corporate lobbyists are hard at work on new bills to reduce the availability of class actions to redress corporate and governmental malfeasance of various sorts. A class action, as you probably know, is a case in which one or a few individuals sue not only on their own behalf, but on behalf of – i.e., seeking redress for – all others similarly situated. There has been a concerted effort by corporate lobbyists, lawyers, and PR folks to portray the class action system as unfairly tilted against corporations.

The current proposal, discussed by the Times, is to allow removal of state-court class actions to federal court, even when each individual class member's claim is tiny. That is currently not allowed, but corporations want to change the law in order to allow it. It's sort of funny, in a sick way, that this proposal is seen as making headway – now that we are governed by the party that nominally loves state sovereignty – just weeks after the Supreme Court unanimously reminded us that an over-broad view of federal removal jurisdiction is an affront to the "rightful independence of state governments". But I'm well accustomed to the fact that state's rights rhetoric is just a tool, used when convenient, to put a happy face on interest-group power grabs, and discarded when inconvenient; I hope that you are accustomed to that, too, and can see through the political uses of that rhetoric.

How truly significant this expansion of removal jurisdiction would be, on its own, is subject to debate I suppose. But don't make the mistake of thinking that this change would come on its own; instead, it would be one of many bricks in a new wall of laws designed to make it harder to bring class actions. Having corralled such suits into federal court, lobbyists will work for even more new federal rules to make such actions substantively and procedurally more difficult. This is just interest group politics, pure and simple.

So, speaking in terms of interest group politics, the company lobbyists would like to portray the relevant groups as "class action lawyers" vs. "the rest of the nation". Being (as one part of my practice) a class action lawyer myself, I have a different view. And my view, I like to think, comes not only from being a class action lawyer but from being a consumer, like the other hundreds of millions of my American readers out there. Now, I recognize that class actions are sometimes an imprecise and imperfect way of redressing corporate or governmental misconduct. But until some better way is unveiled and made widely active – and none has been, so far – the real question (at least as to class actions against companies) becomes "do you think that corporations are being overdeterred, or underdeterred, from dicking over large numbers of consumers?" If you think that companies are overdeterred, then class actions should be made less available; if you think that companies feel too free to cheat us without real fear of consequences, then you should favor greater availability of class actions. When a company cheats a million people out of 10 or 50 or 500 or even a couple of thousand dollars each, there is of course no real prospect of a wave of individual lawsuits by the cheated. Nor is there any governmental agency that can keep an eye on all such shenanigans. It's class actions, or nothing. Would you prefer "nothing"?

My view as a consumer – and again as a class action lawyer – is that companies are grotesquely underdeterred from dicking us over en masse. It happens all the time, in my experience. For instance, a couple of months ago my cable company called me and asked if I would like HBO free for 60 days. Being a suspicious sort, I cross-examined the salesperson and determined that I really wasn't going to be charged anything so long as I cancelled it on the 59th day. A couple of days later I called to see when my free HBO would be turned on, and cross-examined a second representative and got the same assurance. So the 59th day came this week, and I called the cable company and was told that the deal had been 30 days and they'd been charging me for the last month; and sure enough my bill just came and I've been charged. Now it is conceivable I suppose that this was an isolated mistake that happened only to me, somehow. But it's quite possible that this affected hundreds or thousands; and it is even possible that it was intentional. If you find that inherently implausible, I've got a bridge I'd like to sell you. And of course this is a relatively petty example. Bigger examples abound, in reported cases; and that's why the companies are working hard to defeat the class action bar.

If your experience is like mine – teaching you that corporations assert the unbridled power to dick us around for a few dollars here and there or even for lots of dollars, and that there's nothing you can do about it but gripe at some low-level employee wearing a telephone headset – then I suggest that your interests are more aligned with us class action lawyers than with corporations. And you, like me, should oppose corporate-driven legislation to curb such lawsuits. This is not to say that the current system of class actions is perfect; nothing is perfect. But the corporate drive for "reform" isn't designed to make it perfect from anyone's perspective other than the corporate one. Please try not to be fooled by their rhetoric and horror stories.

posted by sam 8:21 AM 0 comments


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