Center for America

Speaker's Resource: 7. Class Actions, p 1

 

 

Speakers Home Page | Next Page

 

Key Reference Citations (KRC)

 

Chapter 7:

Class Actions

 

 

Introduction

 

Class action lawsuits have become a primary means by which the trial bar has been able to "game" the civil justice system by filing abusive lawsuits in "magic jurisdictions" on behalf of allegedly-harmed plaintiffs, thereby generating millions or billions in fees.

 

While the Class Action Fairness Act of 2005 has addressed some of the most egregious abuses of class action rules and procedures, most observers believe that additional major reforms at the state level will be necessary to restore fairness and predictability to the civil justice system.

 

Fast Facts

  • “The class action suit. . . is the deputation of the nation’s lawyers as “bounty hunters” to sue whomever they can legally assert has engaged in conduct injurious to large groups of individuals. In practice, it amounts to the lawyers suing whomever they believe vulnerable to a settlement and capable of paying large attorneys’ fees.”  (KRC: Hensler, “Class Action Dilemmas…”, fn 3,  p. 402, quoting Larry Schonbrun, “The Class Action Con Game”, Regulation, Fall 1997, pp. 50-51)

  • “Class action cases are designed to address relatively small but numerous losses for which individual suits would be impractical.  However, when the class is large enough, even claims that are trivial individually can have a significant effect on particular firms and even whole industries.” (KRC: Congressional Budget Office, “The Economics…”, Chapter 2, p. 5)

  • “[T]he substantial power that plaintiffs gain from class litigation derives from certification of the class” ... “As is well known, a principal concern regarding the operation of class actions is that the certification of a class itself, often based upon satisfaction of relatively undemanding procedural requirements, will bludgeon a defendant into a massive settlement.” (George L. Priest, "What We Know and What We Don’t Know About Modern Class Actions:  A Review of the Eisenberg-Miller Study”, Manhattan Institute for Policy Research, Civil Justice Report No. 9, February 2005) 

  • "Few people, other than lawyers, know that virtually every certified class action ends in settlement. Why does this happen? The reason, as Alabama Attorney General Pryor noted, is simple: to face a class action is to risk the corporate death penalty." (KRC: Hantler, “Seven Myths…”, p. 21)

  • "That is why corporations tend to settle class actions before they get to juries. To go to jury trial can make a game of Russian roulette seem like a reasonable gamble."  (KRC: Hantler, “Seven Myths…”, p. 22)

  • “Class-action suits had a reputation as a magnet for unpleasantly hardball or cynical operators, in part because no constituency of actual clients was looking over the lawyers’ shoulders.”  (KRC: Olson, “The Rule of Lawyers”, p. 87)

  • “Because of the huge financial exposure associated with these mega-lawsuits, manufacturers say they feel forced to settle damage class actions, rather than contest them. The end result, they claim, is to drive good products from the market and to deter investment in developing other beneficial products.” (KRC: Hensler, et. al., “Class Action Dilemmas…”, p. 50)

  • “Judicial Hellholes are venues plaintiffs’ lawyers choose to bring their cases because of their reputation for pro-plaintiff decisions and high verdicts, their lower standards for the admissibility of expert testimony and the certification of class action lawsuits.” (www.atra.org  Press Room, “Federal Class Action Bill Passes Senate Judiciary, Scheduled For Debate Next Week”, as accessed on Sept. 19, 2005)

  • “Other suggested abuses of the class action system include collusive settlements between plaintiffs’ attorneys and defendants in which class members get little of value – often coupons – and plaintiffs’ lawyers get large fees; payments of ‘bounties’ to a few class members at the expense of other members; and incomprehensible class notices that have lead some consumers to sign away their rights.” (KRC: Nicolaides, “U.S. Tort Reform and the Implications…”, July 2004, p.10, citing Institute For Legal Reform, Issues – Class Action, available at www.legalreformnow.com /issues)

  • “Class actions allow for the convenient and efficient grouping of plaintiffs sharing a common complaint to link up in a single lawsuit….. But the perverse incentive of contingency fees has warped class action litigation.” (KRC: Hantler, “Seven Myths…”, p. 12, 13)

  • “Equally disturbing, some class-action lawyers had a reputation for striking deals with the companies they sued—some called them “sweetheart deals—which provided little benefit to the class but major fees to the lawyer.” (KRC: Olson, “The Rule of Lawyers”, p. 87, 88)

  • “Predatory class action lawsuits are getting significant traction from Trial Lawyers, Inc.’s sophisticated marketing tactics.  Websites help trial lawyers troll for class members online: ‘Justice is now just a click away’ announces a headline on ClassActionAmerica.com, where for $8.95 a month consumers can get information on hundreds of class action ‘opportunities’ and sign up to get ‘the money that you may be due’.”  (KRC: Manhattan Institute, Trial Lawyers, Inc., p. 8, see www.classactionamerica.com )

Class Actions Contents | Speakers Home Page | Next Page

 

 

Please Note:  The material presented in this Speaker's Resource has been collected from a wide variety of sources.  You are welcome to use this material for quotations and factual material in your speeches, presentations and articles.  To the best of our ability, we have provided original citations so that you can document the comments you use.  If you become aware that any of the citations or facts presented in this collection are inaccurate or outdated by newer information, please send an email to Speakers@lawexec.com to tell us so that we can update this material.  The materials cited are generally copyrighted by the original author and when you quote from their material, you should include the original attribution to acknowledge their role as authors.  Original material © 2005 American Justice Partnership.