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  1. #1
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    CLASS ACTION LAWSUITS: Sensible reforms?

    I have been the recipient of several class action award checks this year -- you know, the kind which happens automatically on your part, as part of a sweeping settlement against a large corporation.

    This most recent one required action if I wanted to participate, so, I looked through it. It concerned some labeling issues on certain supplements. It is not alleged that any physical harm was caused, so far as I can tell, but some buyers may have been deceived.

    I read through the details, and found out that each consumer who was supposedly deceived can be awarded between $3 and $12, unless they kept meticulous records including receipts for the supplements, in which case the award can be from $5 to $50.

    The total awarded to the settlement class will be $2 million, plus $5,000 each to something like 6 named plaintiffs in the lawsuit.

    The class counsel -- that is, the lawyers who brought the suit -- will be awarded $4.5 million, though technically the amount is "not to exceed" that figure as a "reimbursement" for legal expenses.

    This seems needlessly wasteful to me. Yours truly and the consumers of these settlements are not made materially better by ten dollars.
    Surely the costs of settling this lawsuit will end up being passed down to customers in the forum of higher future prices.

    Does anyone think this sort of class action suit is reasonable?

    How do we reform the tort system without restricting the ability to legitimately aggrieved parties to seek redress?

    These class-actions suits seem a good place to start. Perhaps if each class member could not claim a certain amount of money -- perhaps one thousand dollars -- the suituld be considered "Minor" and the legal fees awarded could not exceed, say, $100,000.

    Other ideas? Perils? Anyone think the current system is fine and dandy?

  2. #2
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    Quote Originally Posted by Argentius View Post
    Anyone think the current system is fine and dandy?
    The subject of class action lawsuits has been hotly debated among lawyers, judges and academics for years. In 2003, Rule 23 of the Federal Rules of Civil Procedure, which governs class actions in federal court, was amended. in 2010, the American Law Institute approved and published the Principles of the Law of Aggregate Litigation. There is tons of commentary regarding both the 2003 federal rule change and the 2010 ALI project. I agree with your basic premise -- that the legal fees need to be controlled better in cases in which there is a de minimis injury. But, the devil is in the details.
    I try to be perfectly civil, until someone really pisses me off.

  3. #3
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    Re: CLASS ACTION LAWSUITS: Sensible reforms?

    Agree with Mark. We need reform but not sure what. Maybe a cap on the percent that lawyers can take. Maybe a loser pays system. But both have drawbacks.

  4. #4
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    Typically, it seems, class action suits benefit no one more than they do the attorneys that bring them.

  5. #5
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    Thanks, Mark. I will do some googling for the commentary you mention, but, can you summarize the 2003 and 2010 changes? Any thoughts on the matter that you can share? I realize that for professional reasons you may not be able to be completely forthright.

    Thinking back, my household has been part of something like 5 of these suits in the last year, sometimes with a check, sometimes with more instructions, always for somewhere between one and ten dollars. Another one against a service provider, which nobody had used for years, awarded either more free service, or, something like $12, if you kept the original form you were looking at and mailed it back with a request in 6 months. At the time, I thought, who comes up with this stuff?

    While I am well aware this has been debated for some time, I would still be curious if the PO community had any ideas what reforms would be useful.

    I imagine some would say "abolish class action lawsuits," but, for those who have suffered significant injury -- from asbestos, thalidomide, and the like -- I think have genuine interests which should not be ignored.

    Can you think of some simple changes which would limit the economic drag both from "de minimis" injuries, as you mention? The next topic on my mind after that would be what I will call, for lack of a better term, fishing. Next on my list is patent trolling.



    Quote Originally Posted by MarkS View Post
    The subject of class action lawsuits has been hotly debated among lawyers, judges and academics for years. In 2003, Rule 23 of the Federal Rules of Civil Procedure, which governs class actions in federal court, was amended. in 2010, the American Law Institute approved and published the Principles of the Law of Aggregate Litigation. There is tons of commentary regarding both the 2003 federal rule change and the 2010 ALI project. I agree with your basic premise -- that the legal fees need to be controlled better in cases in which there is a de minimis injury. But, the devil is in the details.

  6. #6
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    Quote Originally Posted by Argentius View Post
    I have been the recipient of several class action award checks this year -- you know, the kind which happens automatically on your part, as part of a sweeping settlement against a large corporation.

    This most recent one required action if I wanted to participate, so, I looked through it. It concerned some labeling issues on certain supplements. It is not alleged that any physical harm was caused, so far as I can tell, but some buyers may have been deceived.

    I read through the details, and found out that each consumer who was supposedly deceived can be awarded between $3 and $12, unless they kept meticulous records including receipts for the supplements, in which case the award can be from $5 to $50.

    The total awarded to the settlement class will be $2 million, plus $5,000 each to something like 6 named plaintiffs in the lawsuit.

    The class counsel -- that is, the lawyers who brought the suit -- will be awarded $4.5 million, though technically the amount is "not to exceed" that figure as a "reimbursement" for legal expenses.

    This seems needlessly wasteful to me. Yours truly and the consumers of these settlements are not made materially better by ten dollars.
    Surely the costs of settling this lawsuit will end up being passed down to customers in the forum of higher future prices.

    Does anyone think this sort of class action suit is reasonable?

    How do we reform the tort system without restricting the ability to legitimately aggrieved parties to seek redress?

    These class-actions suits seem a good place to start. Perhaps if each class member could not claim a certain amount of money -- perhaps one thousand dollars -- the suituld be considered "Minor" and the legal fees awarded could not exceed, say, $100,000.

    Other ideas? Perils? Anyone think the current system is fine and dandy?
    It seems I've typically received one or two per year of this type of notification in mail. Because I don't see them as being worth my time I always immediately deposit them into one of my circular files. I suspect a large percentage of other people who receive these same notices do the same.

  7. #7
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    I bet you're right.
    if there were extra funds in the $2m account after a date, class members who did step forward got a slightly larger slice .

    the counsel earned its $4.5m regardless ...

  8. #8
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    Quote Originally Posted by Argentius View Post
    I bet you're right.
    if there were extra funds in the $2m account after a date, class members who did step forward got a slightly larger slice .

    the counsel earned its $4.5m regardless ...
    And here we reach the point of diverging opinion.

  9. #9
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    Quote Originally Posted by TerminatorX91 View Post
    It seems I've typically received one or two per year of this type of notification in mail. Because I don't see them as being worth my time I always immediately deposit them into one of my circular files. I suspect a large percentage of other people who receive these same notices do the same.
    I do the same, plus I have a real distaste for most of them.

  10. #10
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    Quote Originally Posted by Argentius View Post
    I bet you're right.
    if there were extra funds in the $2m account after a date, class members who did step forward got a slightly larger slice .

    the counsel earned its $4.5m regardless ...
    As irrational as it seems and probably is, even if potentially my slice of the award might increase twofold to the $6 to $24, for whatever reason I still don't feel sufficiently inclined to step forward.

    The analysis of this behavior seems like a potential subject for Freakonomics.

  11. #11
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    How can anyone look at the huge disparity between what the lawyers get in these cases and the relatively negligible awards that go to the injured parties with approval, and then say the disparity between workers and CEO's is obscene?

  12. #12
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    Quote Originally Posted by NJBiker72 View Post
    I do the same, plus I have a real distaste for most of them.
    It all seems trivial and remote. My concern about these things rates at about where my concern is for keep track of pennies (and fractions of pennies) or tiny nicks and scrapes is at. On every occasion I've bothered to read the description of what the litigation is about I've felt no real connection or interest.

  13. #13
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    Re: CLASS ACTION LAWSUITS: Sensible reforms?

    Quote Originally Posted by TerminatorX91 View Post
    It all seems trivial and remote. My concern about these things rates at about where my concern is for keep track of pennies (and fractions of pennies) or tiny nicks and scrapes is at. On every occasion I've bothered to read the description of what the litigation is about I've felt no real connection or interest.
    Agreed. If I actually felt some sense of being wronged by the alleged actions I might sign on but never have.

  14. #14
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    Here's another case that may give you good cause to look at class action lawsuits from another point of view.

    This is the sort of evil shite that makes my blood almost boil and certainly gives me further cause to look askance at Whirlpool and Sears.


    The Case of the Moldy Washing Machines - The laundry litigation that could determine the future of class-action lawsuits. Slate

  15. #15
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    the problem is unethical lawyers (but I repeat myself) troll around looking for things to sue companies over to they can rake in millions.

    Civil grand juries might be the answer.
    Whenever the legislators endeavour to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people who are thereupon absolved from any further obedience, and are left to the common refuge which God hath provided for all men against force and violence - John Locke

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  16. #16
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    Quote Originally Posted by Andy69 View Post
    the problem is unethical lawyers (but I repeat myself) troll around looking for things to sue companies over to they can rake in millions.

    Civil grand juries might be the answer.
    I kind of get what you're saying on a very basic level. You don't trust trial judges alone to weed out lawsuits without merit. California has impaneled civil grand juries for each county but only to investigate specific local governments or government agencies or institutions.

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