Class actions were developed as a form of lawsuit in which a group of people claiming similar injuries or damages could sue the same organization, benefiting legitimately aggrieved individuals by allowing them to more easily seek efficient legal relief. Nowadays, however, many class actions are not being prosecuted to seek justice, but rather to essentially shakedown a defendant – hurting businesses and damaging the American economy.
Originally a vehicle for civil rights litigation, class actions quickly spread to such areas as product liability, consumer fraud, and employment discrimination cases. The sheer size of some classes is enormous; thousands, tens of thousands and, in some cases, millions of individual claimants have been brought together in single class actions. The large size of some classes, and the resulting large potential payouts, make these cases very risky for businesses. As a result, most business defendants seek to settle class actions before going to trial. Unfortunately, plaintiffs’ lawyers have exploited businesses’ understandable caution by filing many questionable or meritless class actions – all with the goal of scaring businesses into large settlements.
These large settlements provide highly lucrative fee awards to plaintiffs' lawyers. Meanwhile their purported "clients," the class members, must fill out paperwork to obtain small, often token, compensation. Moreover, because participation in these settlements is often quite meager, much of the fund remains unclaimed. The end result is that the supposed beneficiaries of class actions rarely obtain meaningful benefits.
Notwithstanding U.S. Supreme Court rulings tightening the requirements for class certification, certain courts of appeals have been less rigorous than other circuits in certifying class actions. Specifically, a growing chorus of federal courts is certifying classes consisting of plaintiffs who have not been injured in the same way as the purported class representative.
NAMIC supports commonsense reforms to the civil justice system that will restore balance and fairness in liability issues.
NAMIC opposes unnecessary expansion of liability in statutes and court decisions.