It’s time for Congress to derail the gravy train for unscrupulous lawyers who are profiting from the country’s broken class action legal system.
In June, the House of Representatives passed legislation that will begin to rein in this abusive system. As early as this week, the U.S. Senate could vote on tort reform legislation.
Class action lawsuits developed as a way for wronged consumers to seek amends from companies whose practices or products have done them damage. The suits are intended to create a level of corporate accountability and allow large numbers of people with a similar complaint to join together in a single case. Legitimate public health, public safety and consumer protection gains have been made using class action lawsuits. Think asbestos, tobacco and exploding cars.
But the system has been distorted into high-stakes blackmail. Actually wronged individuals have been replaced by lawyers who shop for clients and friendly venues in order to pursue large settlements from companies, some of which have done nothing wrong.
Just last week, Poland Spring proposed a settlement in one of 11 class action lawsuits filed against the water bottler. In that case, Poland Spring will pay $12.1 million and admit no wrongdoing, while continuing the very policies that, according to the claim, caused the suit in the first place. The lawyers in the case will receive $1.35 million plus expenses, while the principal claimant in the case will receive $12,000. The class, which includes the water drinking public, will receive coupons and discounts.
A similar case involved Blockbuster. In the deal reached last year, lawyers received $9.25 million in fees and expenses. Movie renters, who the lawyers were supposed to be representing, each received two free movie rentals and a $1 coupon.
There are numerous other examples that demonstrate the flaws in class action law that should be fixed. The bill that awaits Senate action is moderate in its scope and allows great latitude for plaintiffs to take on misbehaving corporations.
The Class Action Fairness Act of 2003 makes it easier for defendants to move suits into federal courts, where national standards can be applied. The current system allows lawyers to shop around for jurisdictions, and even individual judges, who are more receptive to class action lawsuits. Under the legislation, a class action could be moved to federal court if it seeks more than $5 million in claims and involves people from multiple states.
Opponents have cast this debate in the harshest of terms. They argue that these reforms would weaken the public’s ability to hold corrupt companies accountable. That’s simply not true. Tort reform eases the unfairness that has crept into a system intended to give normal people the clout to fight huge, powerful interests involved in wrongdoing.
There are still wrongs that class action lawsuits can right. There is still injustice and corporate abuse. But when the legal system allows some to greatly profit at the expense of real justice, that is wrong. The Senate should restore the balance in the class action system. Until there is change, the current system amounts to little more than sanctioned extortion.
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