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“Class Actions for
Non-Class Action Lawyers.”- This seminar advertised by a
California lawyer group tells you plenty about the trial lawyer
industry’s hope for expanding a major profit center in
California.
Two years ago a
significant federal class action reform passed that sent many
national cases into federal courts where judges usually are
better able to handle cases that cut across state lines and have
thousands of “plaintiffs.”
But California, with
a population of 36 million and a large number of U.S. companies
based or substantially operating here, continues to be a hot
spot for state-court class action lawsuits.
One example of the
problem, last year a hardware materials company discovered that
two San Francisco Bay Area lawyers were advertising to solicit
clients who “may have” a claim for failing outdoor decking
screws – all before the lawyers even filed their class action
lawsuit.
We weren’t surprised
to find a plaintiffs’ lawyer web site with 31 pages explaining
how California law is more plaintiff-friendly than the law in
federal courts.
So it’s no surprise
that in a recent Harris Poll, business lawyers around the
country ranked California’s class action lawsuit system 46th
worst in the nation.
We’ve found in
talking with likely voters most have received some kind of
notice that they are part of a class action lawsuit. Some don’t
realize it until they get a complicated form which, if correctly
filled out, entitles them to a coupon or discount worth a small
amount – if they even use it. Most don’t bother wrestling with
the form.
The lawyers, on the
other hand, usually do very well – their fees are measured in
millions of dollars. By simply threatening to tie up a company’s
time, employees and resources defending the suit, lawyers can
force a company to settle for huge fees and negotiate for little
more than coupons for the so-called victims they represent. In
California, they can even get fees for the hours they spend
arguing for higher fees!
As if the process was
not already pro-plaintiffs’ lawyer, it appears some lawyers have
been greasing the process by buying their clients. Several
investigations are under way of law firms who may have solicited
and illegally hired people to be the lead plaintiffs in their
class action lawsuits.
While consumers and
small business people usually don’t collect money from dubious
class actions, they certainly have to pay for them in higher
costs for goods and services. Class action attorney fees
contribute to the “litigation tax” that a 2005 Tillinghast-Towers
Perrin study found costs a family of four $3,500 every year.
Even though many
countries are doing just fine in protecting their citizens
without class action lawsuits, this litigation method is not
going to go away in America any time soon. Done right, it can be
a positive process for business and consumers alike.
A few simple changes
in California law would restore some class to class actions.
For starters, judges
here need simple, clear rules for deciding whether a lawsuit
should be “certified” as a class action. Do the members of the
proposed class of plaintiffs have the same kind of loss? Does
the evidence that proves the loss apply to all the proposed
class members? Are the lawyers bringing the suit fit for the
job?
When it comes to the
“certification” decision, the deck is stacked against defendants
in California. Here, if a judge says a case doesn’t qualify as a
class action, the plaintiffs’ lawyer can immediately appeal to a
higher court to get that ruling overturned. But a defendant
cannot make the same immediate appeal of a certification ruling;
a defendant business has to go all the way through a costly
trial on the facts of the case before being able to challenge
its being brought in the first place!
Most states don’t
operate this way – certainly not the federal system.
There is no shortage
of people in the new California Legislature who recognize the
importance of good infrastructure and better health care
coverage to the state’s economy and the well-being of its
citizens.
A fair, predictable
legal system in the class action area should be on the
improvement list in Sacramento as well.
John H. Sullivan
President
Civil Justice
Association of California
Co-Chair
Californians to Stop
Shakedown Lawsuits - Yes on Proposition 64
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