A battle of the lobbying titans is taking place in the nation’s capital, where business interests and trial lawyers have squared off over class-action lawsuit reform.
The attorneys are billing it as David vs. Goliath II, with powerless consumers trying desperately to hang onto the only weapon they have to prevent the wrongs of greedy corporations.
The Class Action Fairness Act of 2003, however, won’t curb consumers’ ability to seek judicial remedies. What it will do is threaten a cash cow that’s been very, very good to trial lawyers. It’s an effort to reign in abuse by moving most class-actions from state courts to federal courts, where they’d be more likely to receive equal treatment. It will also ban settlements in which amounts are so low that the plaintiff suffers a net loss.
Class-action suits are a useful tool when used properly — to streamline the legal process when many people have the same beef with a single entity, or to bring accountability to a corporation for widespread wrongdoing that wouldn’t amount to much for a single plaintiff.
The problem is that the system is being abused by attorneys who go shopping from state to state in search of a friendly venue to file claims that usually result in minimal restitution to consumers but millions in fees for the lawyers. It has become a form of judicial blackmail. The thousands of consumers who receive a discount coupon in a settlement can hardly be called big winners, but corporate defendants — and, by extension, consumers who end up paying higher prices because of big settlements — are clear losers.
Examples of abuse abound. A class-action settlement in Texas last year netted consumers who believed they were charged unfair late fees by Blockbuster, the video-rental chain, two free movie rentals. The lawyers pocketed more than $9 million in fees and expenses. In a California case against computer manufacturers accused of misrepresenting the screen size of computer monitors, some 40 million consumers received $13 rebates or $6 in cash while the lawyers got nearly $6 million.
The reform measure passed the House earlier this month, and is now in the Senate. Rep. Rick Larsen was the only Democratic member of the state delegation to support the bill. "I concluded that this is a narrow, achievable remedy that doesn’t blow a hole in our class-action system," Larsen said. That may not win campaign contributions from trial lawyers, but it’s a moderate, sensible decision that senators should follow.
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