When consumers think of class actions, they often picture a personal injury case involving serious injury or death, as in the cases being brought against Merck, the manufacturer of the painkiller Vioxx.
But you don't necessarily need a life-and-death-issue. Sometimes poor snacking habits will do. There's currently a guacamole class action being whipped up in California -- that's right, the avocado dip. A Los Angeles consumer attorney is assembling a class of plaintiffs commonly wronged by buying "guacamole" dips containing mostly lemon juice, tomatoes and spices.
If you're a qualified snacker who bought the right dip from household giants like Kraft or Marzetti's, you can dip a chip into this green fraud perpetrated on unsuspecting munchers.
Fortunately, most class actions fall somewhere between grievous injury and unsatisfying snacking. Typical class actions address many injustices: securities fraud, consumer fraud, human and civil rights violations, employee benefits disputes, and so-called "mass torts" -- highly-publicized cases involving oil spills or defective drugs/medical devices.
An ideal example of a consumer class action is the Martha Stewart glass-top patio tables case now working its way through the courts. There is a significant economic injury -- the tables cost hundreds fo dollars, but it's not really enough to justify a lengthy and expensive lawsuit by each individual consumer.
"In addition to the damage already done to thousands of consumers, there is an on-going risk of injury -- the tables are still being sold -- that mandates that something be done, and not on a small scale," said attorney Richard Doherty, who is representing purchasers of the tables.
Another "ideal" class action was last year's case in New Jersey that resulted in a settlement for consumers who bought or leased a new or used vehicle from one of more than 397 dealerships in the preceding eight years. They would eligible for a $100 discount on the purchase or lease of a new or used vehicle. Some class members could receive higher refunds and a discount on parts and service. Not all that dramatic, but not chicken feed either.
To qualify as a class action, a lawsuit must affect a broad class of individuals, all similarly harmed by the defendant's action or inaction. This is important: it can't just be a bunch of consumers with a collection of grievances against a single company.
The court will appoint a "lead plaintiff" to represent the class. This person is basically the canary in a cage, someone who serves as an example to illustrate how all the class members were harmed.
Many cases are brought in Federal Court under Rule 23 of the Federal Rules of Civil Procedure. For this to happen, either
1) a claim must arise under federal law ("federal question") or
2) the plaintiff and defendant must be from different states ("diversity.")
They may also be brought in state courts. The conventional wisdom is that federal courts favor defendants and state courts plaintiffs, although there are exceptions.
Before a suit can go forward in either court, a judge must "certify" the class as having enough in common to proceed against a defendant. The defendant, naturally, will argue against certification. Class members get the chance to "opt out" of the class before litigation begins and pursue individual relief instead.
Some things the court looks at in deciding whether or not a class action is appropriate include
1) whether individual lawsuits are impractical due to the number of potential plaintiffs;
2) whether the plaintiffs have enough legal or factual claims in common to truly be a class;
3) whether the lawyers representing the plaintiffs are up to the task of a complex lawsuit requiring time and lots of paper.
What are some "ideal circumstances"in which a class action is a good fit?
• Individual claims are too small to justify a separate lawsuit. For example, say I buy a digital camera whose memory card continually fails. The camera cost $499 -- about 2 to 3 hours of a lawyer's time, unless I want to battle it out in small claims court myself. But if 250,000 -- plaintiffs have the same memory card problem, we're much more likely to get action from the camera company through the class action process. A similar case against Canon is now working its way through the courts.
• Class action lawsuits are a practical way to combine a lot of small wrongs into one more high-powered lawsuit -- like Girls Gone Wild voyeurs who claim they were overcharged for their role in exploiting young women. In essence, a class action allows the case to be tried once rather than numerous times. This is especially important because of time and money considerations -- expert witnesses, depositions, legal briefs, etc. This is one reason big companies usually prefer to fight it out one case at a time: they can outspend and outlast a ragtag band of individuals.
Types of Relief
The one thing a class action won't do is put anyone in jail. It's strictly a civil affair, which means the "relief" granted by the court is most likely to fall into one (or more) of three categories:
• Compensatory damages -- money, in other words. The amount is determined by the damages plaintiffs have suffered.
• Injunction -- a court order forcing the defendant to stop doing whatever it was that harmed the plaintiffs -- dumping chemicals into a nearby river, for example.
• Declaratory judgment -- the judge throws up his or her hands (often literally) and rules from the bench that one side or the other is so obviously right that there is no need to argue further.
To put it mildly, there are those who think class actions are a despicable distortion of the legal process. Their objections include:
• Legal fees -- typically 20% of the award -- eat up a lot of the settlement.
• Small damage recovery for plaintiffs, "coupon settlements" for example. The Blockbuster case is a fairly notorious case in point, as is a recent Netflix settlement.
• Lawyers don't work too hard -- there's often little or no discovery involved.
• Lawyers settle for low-ball settlements.
To overcome some of these objections, and to keep its corporate sponsors fed and watered, Congress passed the Class Action Fairness Act of 2005, which is supposedly the "first step" in President Bush's promise to reform tort law. Of course, tort law has been evolving for centuries, so eight years may not be long enough to put much of a dent into it.
One goal was to remove class action lawsuits from jurisdictions historically known for granting large judgments for plaintiffs, such as Madison County, Illinois, the "judicial sinkhole" infamous for granting huge awards in cases that might generously be described as marginal. It does this by giving federal courts sole jurisdiction over class actions which involve amounts over $5 million, or actions in which any plaintiff is from a different state than any defendant.
In other words, if fewer than 66% of class members are residents of a foreign state and no significant defendants are citizens of the state in which the action was brought, there's sufficient "diversity" for removal to federal court. As a result, many cases now heard in state court will be transferred to federal.
Of course, plaintiff's attorneys are almost exclusively Democrats -- like, oh, John Edwards -- while corporate attorneys, like their masters, are almost exclusively Republican but Congress would never stoop to any such simplistic motive as impoverishing the wealthy trial lawyers who are big donors to Democratic candidates, now would it?
All this is potentially bad news for plaintiffs, as federal courts are known for being more reluctant to certify a class and more likely to reject class action settlements.
Theoretically, a group of plaintiffs could get through the preliminary stages of a trial and work their way to a proposed settlement, only to have a judge scuttle the deal. Also, transferring more cases to federal courts will likely clog already full dockets and cause longer trial delays.
It's also possible for the defendant to stage a last-minute end run around class action plaintiffs, as Ford did in 1999 when it derailed a class action suit over defective Windstar engines. The company issued extended warranties to some of the plaintiffs and convinced a judge to dismiss the suit, leaving other plaintiffs past and future out of luck.
What's A Consumer To Do?
Consumers are constantly writing to ConsumerAffairs.com, wanting us to put them in touch with others who bought a bum lawn mower, lousy lipstick or rotten cheeseburger. "Then we can all get together and file a class action lawsuit," they exclaim.
Well, maybe, but in practice it doesn't work that way. Rather than searching for other plaintiffs, an aggrieved party who has reason to think his or her slight is a common one is better off contacting an experienced, successful plaintiff's attorney whose practice consists largely of class actions.
The attorney will evaluate the case -- and the plaintiff -- and decide whether or not to go forward. Something plaintiffs often don't realize is that the attorney is the one taking the risk, since if the case is not successful the lawyer doesn't get paid.
Prosecuting a major case can take years and literally cost a firm millions of dollars. The big fees are the ones you hear about; you don't hear about the law firms that have gone into bankruptcy or simply dissolved after a few unsuccessful cases.
So what's the best way for you to settle your grievance?
The first question is whether there was grievous personal injury or death resulting from the defective product or the actions of others. If the answer is yes, then you should consult the best-known, most ambitious and most highly regarded trial attorney in your area. If you find the right attorney, she or he will take your case on contingency (the lawyer gets a percentage of the settlement but you pay nothing if the case fails).
If no one was killed or injured (we don't mean to sound crass but this is a real-world discussion we're having) and the damages were in the few-thousand-dollar range, you are almost always better off going to small claims court. You do not need a lawyer, the company you are suing will very possibly not even appear to defend themselves and you have a good chance of winning, assuming you have a good case. See our state-by-state guide for more information.
Before rushing off to court, ask yourself if your loss might be covered by insurance. If your microwave oven started a small fire in your kitchen, your homeowner's policy will probably cover most of it. Yes, of course, you want "justice." We all do, but filing an insurance claim is a lot easier than fighting it out in court. Remember, if you have a loss that is not covered by insurance, including any deductible, you can probably take a "casualty loss" deduction on your next income tax return. Ask your accountant.
If none of these options will work, a class action may be for you. The simplest first step is to file a complaint with ConsumerAffairs.com. Experienced class action attorneys review every complaint and hundreds of cases have been filed as a result. This costs you nothing and exposes your potential claim to attorneys who are looking for a good fight.
What else can you do? Possibilities include:
• Consult local attorneys with class action experience. The truth, however, is that most successful class actions are filed by a handful of big firms with vast experience. It is difficult for a local firm to effectively take on major corporations.
• Scour the Web for news stories about successful class actions. Contact the David who slew Goliath.
• Nobody likes advertisements but they can sometimes be helpful. Most consumer sites, including this one, are crawling with ads placed by class action lawyers looking for business. It can't hurt to check them out but don't do business with anyone who wants money upfront or wants you to divulge personal information (like checking account numbers) on the first call.
But remember -- in a class action, you are just another plaintiff, most likely one of thousands. You won't get any special payoffs for your trouble. You're potentially doing a big favor for your fellow plaintiffs but it would be, ahem, unethical and illegal for anyone to cross your palm with any special payments for so doing. The term for this is "kickback," not a pretty sight.
"Joining" a Class Action
Consumers often ask how they can "join" a class action. As explained above, the first thing that needs to happen before a class action can proceed is that a court has to "certify" the class after determining that the case has too many plaintiffs to be named individually.
After certification, notices are sent to potential class members, whose names are gathered from whatever source is appropriate in a particular case: product registration information, pharmacy patient information, records of car sales, complaints filed with ConsumerAffairs.com, etc.
If a class member is notified and wants to join the case, he or she just returns the notice. So you don't really "join" a class action lawsuit; if you qualify as a plaintiff, you are automatically included, assuming you have been identified through one of the methods mentioned above, unless you "opt out."
Some people don't want to be included in class actions. If you decide that you'd rather pursue justice on your own or if you think -- as many apparently do -- that consumers should not defend their rights, you simply opt out of the class, removing your name from the list of plaintiffs. If you fail to opt out, you could be bound by the results of the class action suit -- meaning that you would not be able to pursue an individual action against the company.
So, are consumer class actions guaranteed to deliver the pound of flesh you want and deserve? Obviously not, but in an era when individual rights are being extinguished by a lobbyist-driven Congress and White House, they're one of the few arrows in the quiver. Breathe deeply, aim straight and you may just hit the target.
In print ...
• "A Civil Action" by Jonathan Harr (Vintage, 1996) -- $14.95. A classic, it showcases the lawsuit and discovery abuses of large corporations that place economic interests above those of individuals, and shows what is oftentimes the futility of litigating against deeply entrenched, well-financed corporations that can afford to wage a war of attrition.
• "Class Action: The Story of Lois Jenson and the Landmark Case that Changed Sexual Harassment Law" by Clara Bingham & Laura Leedy Lansler (Anchor, 2003) -- $15.00
Joan E. Lisante is an attorney who writes frequently on consumer issues.