Saturday, September 15, 2012

Class Actions--The Basic Problem

While I've tended to support the concept of class actions in the federal courts (and in any state courts where they exist), largely because they are one of the few means of countering total domination of our legal system by the large corporations as well as to secure recompense for flagrant disregard of public safety and even life by these corporate malefactors, it's become harder and harder to continue to justify that support. And the principal offenders are the lawyers who make huge profits from these cases -- the corporations do well too, because they expend a few million to make what could be much larger claims disappear. 

But the lawyers get huge payoffs while the members of the class, presumably the people who have been victimized and whom the whole process should be designed to make whole, get ridiculously little from the inevitable settlements. The courts have been complicit in this process by approving the settlements, although restrictive appellate rulings have left the trial courts little leeway in this regard.

Increasingly, the trial lawyers who specialize in these matters appear to be just as greedy and mercenary as the corporate defendants. I probably get a few notices a year telling me that if I bother to go to a huge amount of effort assembling documentation for transactions that usually occurred years ago, I may receive a paltry amount by way of my settlement payout. So neither the victims get much of anything nor do the corporations who perpetrated the offensive behavior-- and make no mistake, it usually is egregious -- pay much compared to what they might face if any of these actions ever went to trial. Of course, they might beat the rap entirely but either way, they suffer little.

Here's an example of the payment section of a notice I received today which indicates how ridiculous and insulting the treatment is that claimants receive:

"A cash payment of Twelve U.S. Dollars and Fifty Cents (U.S. $12.50) to each Settlement Class Member who submits a valid Claim Form in accordance with the procedure set forth below. In addition, the Settling Defendants have agreed to pay Class Counsel’s attorneys’ fees and costs not to exceed U.S. $1,200,000.00, Incentive Awards to the Class Representatives collectively totaling $3,000.00, and the administrative cost of the Settlement."

So the mightily profiting lawyers and corporate defendants give even the tiny number of named claimants a quick three grand and are off and running to enjoy their very ill-gotten gains. One despairs of any real reform of this system because corporate lobbyists will merely use the disproportionate reward of plaintiffs' counsel to restrict use of class actions further. In this respect, Ralph Nader -- who has lost my support mostly for his helping Bush steal the 1980 election by running as a third-party candidate -- has been right to support the use of class actions. But I do think that plaintiffs' counsel could show a bit of good faith to the best traditions of the bar by acting to increase the share that goes to claimants coming from the lawyers' huge payout and yes, from getting the corporate defendants to pay up more for the good deal they are getting, despite their cries of oppression. They should only know what oppression really is.

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