Class-action attorneys have targeted bad water, poor auditing and a case of mold in an apartment complex.
They have taken on faulty tires, police strip searches and even the beer served at the Portillo’s hot-dog chain in Chicago, where a promised “12-ounce” glass held only 10.6.
By enabling the many to sue as one, class-action lawsuits have reshaped the nation’s economic and social landscape, upholding civil rights in some cases while delivering dollar-off coupons in others.
A Chicago Tribune analysis of more than 300 state and federal class-action settlements over the past three years shows that nearly one-third prompted reforms of improper practices–from forced overtime to the use of inferior auto parts in repairs.
But the Tribune also found that in nearly one out of 10 cases, victims received awards of little economic value, while their lawyers reaped substantial cash fees.
All too often, plaintiff’s attorneys faced strong financial incentives to put their interests ahead of their clients by allowing defendants to dispose of legal problems for a fraction of the actual damages. Victims played little role in a complicated game where insiders were calling the shots.
No one has developed an objective method for separating the good settlements from the bad, and some judges admit they have trouble telling the difference.
“We never know,” U.S. District Judge James Zagel remarked during a hotly fought Chicago case involving a top class-action law firm. “When I approve settlements in class actions … it’s just a big black hole.”
Now Congress is mulling legislation the Bush administration supports to combat class-action abuses.
The measure pits large corporations that call the system a legal extortion racket against trial lawyers and consumer advocates who equate class action with democracy in action.
Those eager to change the rules have won the upper hand, and momentum is building for one of the biggest shake-ups of the class-action game in almost 40 years.
At the center of the debate lies a critical information gap. No government or private agency tracks these often complex and long-running cases. As a result, no one can say for sure if the number of frivolous class actions has skyrocketed, as their opponents contend.
The Tribune analysis draws on settlements reported by the Association of Trial Lawyers of America and the Class Action Litigation Report as well as court documents. It shows an array of inconsistent results.
Some 46 settlements targeted allegations of civil rights abuse, for instance, while the fraud case against Portillo’s was among 18 that ended with customers getting discount coupons or vouchers for a free product or service.
Americans get involved in class actions all the time these days, often without knowing it until a confusing settlement notice arrives in the mail promising a modest amount for those determined enough to respond. In practice, victims can serve merely as a pretext for filing lawsuits.
The franchise players in the class-action game are the companies anxious to limit their exposure to costly legal judgments, and the attorneys willing to take a big gamble in exchange for an even bigger reward.
Like other lawyers who work on a contingent-fee basis, class-action practitioners get paid only when litigation concludes successfully. These large-scale cases often require a steep upfront investment of time and money, with no guarantee of any return.