ShareThisGrassroots Advocacy Efforts Lead to Passage of Class Action Reform
Why NAMIC Supported Class Action Reform
Inreasingly, plaintiffs’ attorneys “forum- shop” by taking advantage of lax certification standards to bring class action suits in selected state courts. Many of these suits are interstate in nature and more appropriate in federal court. As a result, the proliferation of questionable class certification standards in state courts has created an unfair system that enables plaintiffs’ attorneys to use class action to achieve a desired result because of the settlement pressures facing defendants after a class is certified. The true winners in these cases are the plaintiff’s lawyers who receive large fees, while the class members receive a minimal recovery.
In a class action suit in Texas, Toshiba was sued for a defect in the “floppy disk controllers” of its laptops – even though the defect had never actually resulted in injury to any of its users. In the face of potential liability of billions of dollars, Toshiba settled by paying the two named plaintiffs $25,000 each, giving the other class members small cash payments and coupons, and paying the plaintiffs’ lawyers $147.5 million in fees.
In he settlement of a class action lawsuit brought in an Alabama state court against the Bank of Boston, the named plaintiffs received no more than $8.76 each, which was added to their mortgage escrow accounts. However, in order to pay the over $8.5 million in attorneys’ fees, the class members also had $91 deducted from their accounts.
In a class action lawsuit against an airline, the plaintiff class members received $25 coupons to use when they purchased another airline ticket for over $250 from the same airline. The attorneys, however, received over $16 million in fees.
In a class action lawsuit against General Mills, the maker of Cheerios, in which there was no evidence of injury to any consumers due to a food additive in the cereal, the lawyers were paid almost $2 million in fees. The plaintiff consumers received coupons for a free box of cereal.
In a settlement of a state court class action involving toxic pesticide fumes from a chemical plant, the residents of a New Orleans neighborhood each received an average of $6,658. The class action lawyers, however, received over $25 million in legal fees and expenses.
Posted: Friday, April 01, 2005 12:00:00 AM. Modified: Wednesday, September 07, 2005 2:42:26 PM.
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