Class action lawsuits a thing of the past?

[KingMerv00]

...and be at least equal to 100 time the cost of the initial product per person.

And before somebody start and say me that would ruin the corporation, well copyright infringement can be 10000 time the cost of the product as damage, so what#s good for the goose is good for the gander too.

Two wrongs don't make a right. I agree with you on copyright law but trying to fit hard line rules to damages will always have negative unintended consequences.

 

[JamesDillon]

To the extent that the claim is premised upon a purported company-wide policy of improper discrimination (as the suit was here), then there had better be proof of it. This opinion sets the standard for such proof to be pretty high, some say impossibly high.

Some say that, but I don't think there's much basis for it. Wal-Mart's structure delegates broad discretion for pay and promotion decisions to individual store managers. The Court's point was that, in the absence of any overt discriminatory policy at the national level, it was highly implausible to assume that each individual store manager exercised his or her discretion in a uniformly discriminatory way, and the plaintiffs provided no sufficient evidence to support that implausible proposition, without which the commonality prong of 23(a)(2) was not met. That strikes me as pretty reasonable. It still allows for class actions at the individual store level, and also allows for class actions at the company-wide level where the company either concentrates pay and promotion authority at the corporate HQ or narrowly constrains the discretion of individual store managers through some discriminatory firmwide policy.

I do agree with the general tone of the thread though. Class actions for damages screw the plaintiff and enrich the lawyer. The only upside is that the wrongdoer is punished but that's cold comfort to the victims who need money. The system needs a massive rework.

But the whole point of a class action is that individual damages are too small to be worth pursuing in an individual action-- and where that isn't the case, class members are free to opt out of the class action to pursue their individual claims. It's true that the main social benefit of a class action for damages is deterrence of wrongdoing rather than individualized compensation for injury, but I'm not sure that's an entirely bad thing where the alternative would seem to be neither deterrence nor compensation.

 

[KingMerv00]

a class action is that individual damages are too small to be worth pursuing in an individual action-- and where that isn't the case, class members are free to opt out of the class action to pursue their individual claims. It's true that the main social benefit of a class action for damages is deterrence of wrongdoing rather than individualized compensation for injury

You are right about some cases being too small to persue but you forgetting something. When multiple small suits are rolled into a class action the court is more likely to impose punitive damages for repeated and widespread misconduct. It helps balance the scales a bit. Not always enough but hey better than nothing.

...but I'm not sure that's an entirely bad thing where the alternative would seem to be neither deterrence nor compensation.

To which alternative to you refer? I didn't refer to any. I just know the system is broken.

 

[JamesDillon]

You are right about some cases being too small to persue but you forgetting something. When multiple small suits are rolled into a class action the court is more likely to impose punitive damages for repeated and widespread misconduct. It helps balance the scales a bit. Not always enough but hey better than nothing.

I don't think I understand what you mean by this. I have no idea if it's statistically the case or not that courts are more likely to award punitive damages in class actions than in individual cases, but if that's true, isn't that an argument in favor of class actions-- i.e., that each plaintiff is likely to be awarded proportionally more than they would be bringing an individual case? But, without looking at statistics, my impression is that the vast majority of class actions end up settling, so punitive damages aren't an issue. I guess I'm not clear how the existence of punitive damages in class actions is an argument against the existing class action structure?

To which alternative to you refer? I didn't refer to any. I just know the system is broken.

You didn't refer to one, but the obvious alternative would seem to be forcing each plaintiff to bring an individual action, the impracticalities of which being why we have class actions in the first place. I'm still not really seeing how the system is "broken" when individual class members, who virtually by definition have relatively small individual claims in the first place, receive a comparatively small damages award in settlement. Again, any individual plaintiff who believes that his or her claim is worth enough money to pursue at the individual level is free to do so; if they don't want to, then the class action, at least in theory, has the effect of punishing wrongdoing that would otherwise go unpunished by incentivizing lawyers to pursue a large number of small claims in the aggregate. I'm just not seeing the down side to this.

 

[ZirconBlue]

Quite the contrary, what he said is a perfectly valid general overview of how most successful class action suits turn out. Giant payouts for the lawyers, next to nothing for us. You have been given examples throughout the thread.

Oopsie for you!

That's what you got out of this post?

Yeah cuz we don't have enough ******** "gimme free money" lawsuits going on already in sue-happy America. No evil greed there, nossireebob.

Edited by LashL: 

To properly mask profanity. Please see Rule 10.

 

[Brown]

You are right about some cases being too small to persue but you forgetting something. When multiple small suits are rolled into a class action the court is more likely to impose punitive damages for repeated and widespread misconduct. It helps balance the scales a bit. Not always enough but hey better than nothing.

I think it's worth mentioning that the purpose of a class action, in theory, is not to help give an advantage to the little guy. One of the players who is supposed to get the advantage is the judge!

One of the basic rationales for a class action is judicial economy: if an issue affects a group of people in pretty much the same way, it makes sense to litigate that issue once in one lawsuit rather than multiple times in multiple lawsuits. Not only do you get key issues decided in one fell swoop, you get consistency, and judges like that, too!

If there are several plaintiffs having similar cases but with different circumstances--as was the case in the Wal-Mart dispute--then a class action does not serve judicial economy. Class actions are still viable--perhaps even preferred--for some types of lawsuits in which judicial economy may be served.

 

[Brown]

A recent class action in Iowa has been decided. Story in the Des Moines Register.

(Disclosure number 1: I know some of the people involved and may have mentioned them directly or indirectly, but not by name, elsewhere in this forum. Disclosure number 2: I have not reviewed all of the documents in the case, but have only seen news reports, which I deem presumptively unreliable. Only recently was a link to the actual decision supplied.)

Basically, the allegations here were that African-Americans suffered racially based discrimination in hiring in Iowa. The issue was litigated in a class action lawsuit. "(I)s this a cognizable claim," asked Judge Blink, "and has it been proven?" The answers, it turns out, are "No" and "No."

Basically, the charge was that African-Americans, equally (or better) qualified with others, got fewer job offers and lower pay from state administrative agencies. There was no overt racism, but all of the nefarious discrimination was unconscious, and it resulted in an unequal impact, with African-Americans getting the worst of the inequality.

Judge Blink devoted several pages to a discussion of history and law, before getting to the facts of the case before him. The alleged discrimination, he said, was "systemic rather than particularized." It seems that this means that there was no actual proof of individual acts of discrimination, but viewed as a whole, the results were discriminatory. And therein lay the problem, for the case was to try to prove racial discrimination without any showing of actual individual instances of racial discrimination. The plaintiffs said that it was not possible or necessary to identify any particular offending practices, but the judge disagreed: "Plaintiffs were required to specifically prove a particular employment practice that caused a disparate impact. They elected not to do so," and this strategic choice was fatal to their case.

There were other failures of proof in the plaintiffs' case as well, Judge Blink mentioned many of them.

This case shows that much of what the US Supreme Court said in the Wal-Mart case had truth in it. (Judge Blink does not rely on the Wal-Mart case, but he mentions the practical considerations many times.) Case like this are difficult to decide when treated as a group concern, without regard to individual facts and circumstances. And what started as a class action (likely to try to leverage a large settlement, with a correspondingly large attorney fee) ended up backfiring. The class lawyers didn't present anything like a decent case, and ended up losing it all. They lost, and all their clients lost. And the State of Iowa is going to lose too, as it will no doubt continue to be accused of bigotry by those who didn't even try to prove a single instance of it, as this case heads up to appeal, an appeal that the State will very likely win.

 

[Brown]

According to a follow-up story,

Chief plaintiff attorney Thomas Newkirk pledged to expand another wave of lawsuits by adding up to 300 new plaintiffs who believe they were denied state jobs or promotions because of their race. Newkirk also promised to appeal after Judge Robert Blink shot down their admittedly “uncommon approach” in the case ....

So, the idea, apparently, is to take a plan that didn't work the first time, add some more people, and try it again? Well, good luck with that.

There's nothing wrong with trying again, provided that a different strategy is pursued the second time. Actually, I should clarify: the LAWYER can try again; but the clients who lost their case because they stuck with this same lawyer's first-time foolish strategy, they cannot try again. They're stuck.

The new strategy might go something like this: Prove your case. The old strategy was to point out disparities without a showing of actual improper conduct, or any showing of proximate cause (the disparites, or parts of them, might be due to things other than racial discrimination, you know), and expect the judge to award you a ton of relief. Most lawyers ought to know that such a strategy is--shall we say--unlikely to succeed. A better strategy is to prove your damned case.

 

[Beerina]

As for the thread topic, Congress controls contract law, and put arbitration clauses solidly into it with the Federal Arbitration Act, which A. trumps California law and B. sufficiently covers this situation.

If you don't like it, ask your Congressman to re-write the law.

Congress does not control contract law. The FAA's authority comes from the commerce clause. Congress has no say over contracts that do not affect interstate commerce, and even as far as that goes Congress has been mostly silent.

From the ruling:

Held: Because it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” Hines v.
Davidowitz, 312 U. S. 52, 67, California’s Discover Bank rule is preempted by the FAA. Pp. 4–18.

 

[Suddenly]

From the ruling:

No, that is from the Syllabus, and past that doesn't say anything seeing "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" fails to specify exactly where or how Congress obtains the power. It is consistent with the power coming from the commerce clause.


Besides, the very text of the FAA notes that it's power comes from the commerce clause.

 

[Beerina]

My point was your original objection seemed to be to my statement, "If you don't like it, talk to your congressman." (To get the law changed.)

My quote showed the incident overlapped the intent of Congress with its law.

My statement still stands.

 

[Muldur]

Some say that, but I don't think there's much basis for it. Wal-Mart's structure delegates broad discretion for pay and promotion decisions to individual store managers.

Which is nothing but a legal "fig leaf" for WM to hide behind, since every other policy is geared towards pressuring those same managers to do anything and everything to "cut costs" (read wages to employees).

Wal Mart will never outright tell a manager to discriminate against women, or "edit" payrolls to delete overtime, or any of the other BS things they do. What they do is make it so that the store manager's bonus is directly tied to "profitability", and send in the inquisitors from Bentonville to any store whose profits aren't up to snuff with HQ's expectations. It's a policy of "constructive" coercion as opposed to explicit coercion.

 

[luchog]

I've been a party to three class-action lawsuits; all of which were decided in the plaintiff's favour.

One was with my bank, who was sued for manipulation of exchange rates and charging hidden fees on international transactions (truly hidden fees, not "you should have read the fine print" stuff); so anyone who had made an international purchase or other transaction in the previous... 5 years I believe, was eligible for the class. The judgement in that one was for actual damages; that is, all members of the class were awarded the exact amount they had been overcharged, plus court costs and lawyers' fees of course. I ended up getting a cheque for a bit over twenty dollars. Unlike the usual opt-out format, the mailing I received was opt-in, and required simply filling out and signing the provided letter-of-intent form and mailing it back. That was probably the best example of a class-action suit that I've ever seen.

One of the other two was with my cell phone service provider, for a price-fixing suit; and I forget who the third was. The notification on both of these was of the opt-out sort. I didn't really care about either one much, and didn't really pay attention to the suit. I do recall that one of them ended up paying out some pittance, less than ten dollars IIRC, and required some pretty ludicrous effort on the part of the class to claim it. The other paid nothing except to the lawyers.

 

[Brown]

Today, the US Supreme Court agreed to hear the case of Comcast Corp. v. Behrend, on the following issue: "Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis." The case should be decided next term.

 

[Beerina]

That sounds like an uncontroversial nuts-and-bolts case.

 

[Brown]

That sounds like an uncontroversial nuts-and-bolts case.

Yes, I agree.

Or to put it another way, the way the question is framed seems to suggest the likely answer.

But there are at least two things I don't know. The first is what the case itself is about, and in particular, the facts of the case and its procedural posture. The second is the legal landscape on this particular question, and how the legal issue from this case fits into that landscape. Usually, the Supreme Court won't take a case on certiorari unless there is something special about legal landscape, such as inconsistent decisions from lower federal courts. This case may turn out to be more controversial than it appears at first.

 

[Brown]

On 16 April, 2013, the US Supreme Court dealt another blow to actions by groups for damages (opinion here). As I have said repeatedly, I am no fan of class actions for damages, but what five members of the Court did here has me scratching my head.

Technically speaking, the lawsuit was not a class action, but was a "collective action" lawsuit under the Fair Labor Standards Act (FLSA) on behalf of an employee and other "similarly situated" employees. The Supreme Court noted that some see considerable similarity to class actions, but that "Rule 23 actions [class actions] are fundamentally different from collective actions under the FLSA."

Basically, the employer decided NOT to pay employees for 30 minutes of their shifts, treating these deductions as meal breaks. The named plaintiff, Symczyk, actually worked and wanted to be paid for her work; so she filed the FLSA "collective action" lawsuit on behalf of herself and others. Her employer, in a shrewd move, offered to pay her off one hundred percent on her claim (about $7,500, which would be awarded as a judgment under Federal Rule of Civil Procedure 68), and thereby moot the entire case. Symczyk turned down the offer.

The lower court ruled that, even though Symczyk turned down the offer, as she was allowed by law to do, her claim was mooted, so there was no case or controversy, and the lawsuit was dismissed. Thus, she lost her case and got NO money even though she was in the right... and the whole "collective action" was killed as well! The company walked away scot-free.

In an opinion by Justice Thomas (part of a 5-4 majority), the Court recognized that this sort of technique maybe ought not to work with a class action, but in the case of a "collective action," it was perfectly okay. In a stunning display of technicality over substance, the Court "assumed, without deciding" that Symczyk's claim was indeed moot. From which it followed that the whole shootin' match was a dead issue.

In dissent, Justice Kagan chided the majority for not understanding something that ought to be pretty basic:

When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court's ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect. As every first-year law student learns, the recipient's rejection of an offer "leaves the matter as if no offer had ever been made." ... Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that "[a]n unaccepted offer is considered withdrawn." Fed. Rule Civ. Proc. 68(b). So assuming the case was live before—because the plaintiff had a stake and the court could grant relief—the litigation carries on, unmooted. (emphasis added)

Justice Kagan isn't kidding about the "first-year law student" stuff; this is pretty basic. Although the majority said that its ruling does not apply to class actions, it is a virtual certainty that this same tactic will be tried to head off a potential or certified class action. If, say, a thousand named plaintiffs sue a company on the grounds that the company cheated them (and tens of millions more in the class) out of a dollar each, could the defendant company kill the potential class action by offering to confess judgment to the named plaintiffs for $1000, thereby killing their claims and the claims of the putative class, even if the offer was refused? Justice Kagan seemed to suggest that such a tactic would not work, whether in a class action or in a "collective action":

So a friendly suggestion to the Third Circuit: Rethink your mootness-by-unaccepted-offer theory. And a note to all other courts of appeals: Don’t try this at home.

 

[Brown]

It struck me later that the settlement offer could be termed, legally, "an offer you cannot refuse."

 

[This is The End]

Wow.

At least some of the members of the SCOTUS are sane...

 

[Muldur]

Want to see class action suits for damage disappear overnight? Pass a law limiting lawyer compensation to $10,000 total (both sides, all lawyers, all paralegals, and including all courts costs and filing fees).

That would virtually eliminate suits of all kinds, let alone CA suits.

And the point isn't always about directly compensating the victims (though that should always be part of the consideration), but about punishing the business for wrong-doing.

If businesses would stop doing wrong things (defective products they KNOW are dangerous but sell anyways, stealing employee hours by doctoring pay records, etc) then they'll stop getting judgements against them.

Yeah cuz we don't have enough ******** "gimme free money" lawsuits going on already in sue-happy America. No evil greed there, nossireebob.

Again, you can't have a judgment absent wrongdoing by the defendant. Are you saying that when a business (esp a big corporation) does wrong, society has no right to demand punishment for that wrong, and compensation for those wronged?