A Needed Fulcrum for Fairness in Class-Action Litigation
By Marion Edwyn Harrison ESQ. | February 24, 2005
Class actions are here to stay. The question, then, is to how to make them fairer without damaging the federal, a state or local judicial system.
Last Thursday I was among those honored to accept an invitation to witness President George W. Bush’s signing in the East Room of the White House the optimistically – one hopes, not euphemistically – named Class Action Fairness Act of 2005.
As layman and lawyer alike know, a class action is litigation in which a handful of plaintiffs sue a defendant on behalf of themselves and huge numbers – sometimes tens or hundreds of thousands – of other people who allegedly suffered materially the same injury from the same defendant.
The arguments in favor of allowing a class action primarily are twofold (although the first is not always applicable). (1) Few, if any, of the plaintiffs could afford to sue solely on their own behalf because ordinarily the damage to one plaintiff is small but multiply by thousands of people and the damage is large. (2) Thousands or tens or hundreds of thousands of individual cases, even if (as often would be necessary) filed in local small-jurisdiction courts, would jam court dockets out of control.
The arguments against allowing a class action are more extensive. (1) Class actions are rife with abuse, usually to the great monetary advantage of the so-called “trial lawyers” – that is, the lawyers who recruit those people who are the named plaintiffs (and many of which lawyers nowadays are career “trial lawyers,” a fancier name for plaintiffs’ contingency-fee attorneys). (2) Often the plaintiffs get a pittance, the lawyers a windfall. (3) Often the injury to a plaintiff is so minimal as not to be worth the aggravation of trying to redress it. (4) Occasionally a defendant is ruined for life if an individual, the company bankrupted if a corporation, all beyond the evil of the offense. (5) Sometimes the affect upon interstate commerce, local commerce, employees, pensions, shareholders is devastating.
Notwithstanding the fact the rest of the world does not have class actions as we know them, for the foreseeable future they are here to stay in our country. The question, then, is to how to make them fairer without damaging the federal, a state or local judicial system.
President Bush and a bipartisan – yes, there is some bipartisanship left – Congress thus enacted the Class Action Fairness Act. The President over time doggedly has been working for this type of legislation. The House of Representatives approved it 279 – 149. Of note, several veteran Democratic Senators supported it, among them Christopher J. Dodd, Connecticut, Dianne Feinstein, California, Charles E. Schumer, New York. (Maybe the first two are not that surprising. Both, and especially Mrs. Feinstein, from time to time digress from the liberal path for something pragmatic; not surprisingly, both are popular with their colleagues. Maybe Senator Schumer isn’t surprising either inasmuch as New York State by and large has a competent judiciary and reasonably realistic jurors.) The rabid, real and imagined “consumer” groups, of course, opposed the Act, as did House Minority Leader Nancy Pelosi, of San Francisco and John Conyers, of Detroit – geography tells a lot, doesn’t it?
What does the new law do and why?
When interstate commerce is involved, as it is with most class actions, the Act confers jurisdiction upon the Federal Judiciary to try the case. Depending upon where you live, federal judges and juries may not be any more objective and respectable than state judges and juries. However, in many states, and jurisdictions within states, judges and juries aren’t up to that level. The trial lawyers know where to sue. If the alleged offense is sufficiently pervasive, they can find a nominal plaintiff some place: Let’s try where the juries are unrestrainedly sympathetic; judges are elected; trial lawyers are powerful, affluent and generous with political donations to such judges.
Would anybody have guessed that Madison County, Illinois, only 1/19th of the population of the State of Illinois, is a popular class-action litigation forum or that the President of the United States would be talking about it?
The President wisely mentioned that the new law will not cure all the evil and that, among other things, the law must be improved as to medical malpractice litigation. Physicians’ net incomes are down – in some places very dangerously down – and patients are paying higher fees. (If you can access them, you might want to review our NOTABLE NEWS NOW columns of April 23, 2004, “The Contemporary American Jury – Confusion, Chaos, Corruption,” and April 29, 2004, “Litigation, Victimization and the Corruption of Culture,” reprinting Senator Mitch McConnell’s sage and witty remarks at a Free Congress forum.)
Meantime, here are extensive excerpts from President Bush’s remarks in the East Room. For brevity, much of his introduction and some of his delightful humor is omitted. His three anecdotal examples are included, in part because they speak volumes about the evils of unrestrained class-action litigation.
THE EAST ROOM, 11:37 AM EST, THURSDAY, FEBRUARY 20, 2005
THE PRESIDENT: . . . Welcome to the people’s house. Glad you’re here for the first bill signing ceremony of 2005. [Applause.]
The bill I’m about to sign is a model of effective, bipartisan legislation. By working together over several years, we have agreed on a practical way to begin restoring common sense and balance to America’s legal system. The Class-Action Fairness Act of 2005 marks a crucial step toward ending the lawsuit culture of our country. The bill will ease the needless burden of litigation on every American worker, business and family . . .
. . . [Tribute to various Democratic and Republican Senators and Representatives.]
. . .
Class actions can serve a valuable purpose . . . They allow numerous victims of the same wrongdoing to merge their claims . . . When used properly class actions make the legal system more efficient and help guarantee that injured people receive proper compensation . . . an important principle of justice. So the bill . . . maintains every victim’s right to seek justice and ensures that wrongdoers are held to account.
Class actions can also be manipulated for personal gain. Lawyers who represent plaintiffs from multiple states can shop around for the state court where they expect to win the most money. . . . I visited Madison County, Illinois, where juries have earned a reputation for awarding large verdicts. The number of class actions filed in Madison County has gone from two in 1998 to 82 in 2004 – even though the vast majority of the defendants named in those suits are not from Madison County. Trial lawyers have already filed 24 class actions in Madison County this year – we’re in February [Laughter] – including 20 in the past week . . .
Before today, trial lawyers were able to drag defendants from all over the country into sympathetic local courts, even if those businesses have done nothing wrong. Many businesses decided it was cheaper to settle . . . rather than risk a massive jury award. In many cases lawyers went home with huge pay-outs while the plaintiffs ended up with coupons worth only a few dollars. By the time [of] settlement in at least one case . . . plaintiffs actually owed their lawyers money.
. . .
Over the past few years I’ve met people . . . who know the importance of class-action reform firsthand, and three of them are with us today. Marylou Riget lives in Connecticut, yet a class action involving her faulty roof was resolved by a judge in Alabama. The award covered only a fraction of the cost of new shingles but that wasn’t Marylou’s biggest problem. She had no idea she was part of the class action in the first place and no one contacted her about her award. She only learned by accident when she called the company about her warranty . . . then she found out there was nothing she could do.
Hilda Bankston is with us. And her late husband used to own a drugstore in Fayette, Mississippi. Their business was doing well until the store got swept up in massive litigation just because it dispensed prescription drugs for a certain drug . . . She had to sell the pharmacy six years ago. But she’s still getting dragged into court . . . Here’s what she said: “My husband and I lived the American Dream until we were caught up in what has become an American nightmare.”
Alita Ditkowsky is with us. She was part of a class action against a company that made faulty televisions. When the case was settled in Madison County, Illinois, Alita’s lawyer took home a big check while she got a $50 rebate on another TV, built by the same company that had ruined the first TV [Laughter.] . . . [S]he said: “I’m still left with a broken TV.” [Laughter.] “He got $22 million. Where’s the justice in this?”
. . .[The bill] moves most large, interstate class actions into federal courts. This will prevent trial lawyers from shopping around for friendly local venues. The bill will keep out-of-state businesses, workers and shareholders from being dragged before unfriendly local juries or forced into unfair settlements. . . .[T]hat’s good for our system and good for our economy.
. . .[T]he bill provides new safeguards to ensure that plaintiffs and class-action lawyers are treated fairly. The bill requires judges to consider the real monetary value of coupons and discounts so that victims can count on true compensation . . . It demands settlements and rulings to be explained in plain English so that class members understand their full rights.
. . .
There’s more to do. Small business owners . . . fear that one junk lawsuit could force them to close their doors for good. Medical liability lawsuits are driving up the cost for doctors and patients and entrepreneurs . . . Asbestos litigation alone has led to the bankruptcy of dozens of companies and cost tens of thousands of jobs, even though many asbestos claims are filed on behalf of people who aren’t actually sick
Overall, junk lawsuits have driven the total cost of America’s tort system to more than $ 249 billion a year, greater than any other . . . nation. It creates a needless disadvantage for America’s workers and businesses in a global economy, imposes unfair costs on job creators and raises prices to consumers.
We have a responsibility to confront frivolous litigation head on. I will continue working with Congress to pass meaningful legal reforms, starting with reform in our asbestos and medical liability systems.
. . .
And now it is my honor to sign the Class Action Fairness law. [Applause, the audience rising, the ceremony concluding.]
Memorable moments in the quest for fairness in litigation.
With the President’s continued leadership, further congressional bipartisan cooperation and adequate funding of the Federal Judiciary (as to which note the February 17, 2005 NOTABLE NEWS NOW, “The Chief Justice’s Annual Report . . .”), much more can be accomplished, especially in calming the trial lawyers’ costly assault against the medical profession and its patients and in curbing the asbestos litigation excesses.
Guest columns do not necessarily reflect the views of Accuracy in Media or its staff.
