The Chamber’s Class Action Ad Campaign: The Real Facts

 

The Chamber’s Class Action Ad Campaign: The Real Facts

 

On September 6, the U.S. Chamber of Commerce launched another round of ads designed to undermine public support for the legal system so that corporations will be less likely to be held accountable for wrongdoing. The print ad suggests that in class action settlements plaintiffs’ lawyers make out like bandits while their clients get a coupon worth next-to-nothing. Public Citizen has challenged more class action settlements than any other organization to ensure that consumers get a fair shake when defense and plaintiffs attorneys settle class actions. The fact is that in the vast majority of class action settlements plaintiffs’ attorneys fees are reasonable. Unfortunately, the Chamber’s ad is another example of false advertising and is part of a campaign designed to make it harder for consumers to prevail in class actions against companies that injure or defruad them. Here are the real facts about class actions:

Attorneys’ Fees Must Be Reasonable. The Chamber suggests that it is wrong for attorneys’ fees to exceed the monetary benefit that a class action award provides to individual consumers. There is nothing unusual about this; the Wrigley Company earns $600 million each year from selling 25-cent packs of chewing gum. Judges determine the class attorneys’ fees based on the entire sum of benefits provided to class members, not the small amount that each class member was chiseled.

Consumers Hit with Out-of-Pocket Costs: A One-Time Occurrence. The Chamber ad refers to the infamous Bank of Boston case, an abusive class action settlement that resulted in some consumers having to pay money out of their own pockets. However, this is the only known instance of such an occurrence. In the vast majority of class actions, consumers receive refunds for overcharges, unauthorized fees, and other scams. Most importantly, class actions result in changes to business practices, which cheat or threaten the health of consumers.

The “Class Action Bill of Rights”: A Trojan Horse. The Chamber trumpets the “Bill of Rights” provisions of H.R. 2341, legislation in the U.S. House, that would require “judicial scrutiny of coupon settlements” and require notices to be written in “plain English.” What the Chamber neglects to say is that stronger versions of these same provisions are already due to take effect in 2003. On September 24, the U.S. Judicial Conference is expected to ratify amendments to class action rules that will impose greater scrutiny of all class action settlements, require plain English notices, and make other reforms crafted by a blue-ribbon panel. Redundant provisions are included in H.R. 2341 simply to mask its true, anti-consumer nature.

The Chamber’s Real Agenda: To Make It Harder for Consumers to Prevail. The primary effect of H.R. 2341 will be to give businesses a leg up by moving class actions from state courts to federal courts. There, defendants will enjoy these advantages: new, unlimited appeal rights; dockets crowded with drug and immigration cases that have priority, moving consumer cases to the back of the line; judges who are inclined to interpret state law conservatively. The result would be that more corporate fraud and other wrongdoing will go unpunished.

September 10, 2002