Partisan attacks on class actions unfounded: Vanderbilt law scholarby Liz Entman Oct. 29, 2019, 4:11 PM
The class action lawsuit—where one person sues on behalf of everyone who has been harmed the same way by a company or an individual—is a potent way for ordinary people to force powerful entities to comply with the law, says Vanderbilt law professor Brian Fitzpatrick. However, he said, they’ve wrongly become the target of partisan attacks, and in today’s polarized climate, they may soon face extinction.
He argues against this politicization in a new book, The Conservative Case for Class Actions. The book blends theoretical and empirical research to examine partisan arguments against class actions, and then proposes statutory tweaks that could address legitimate criticisms while preserving these suits as a recourse for large groups who have been wronged.
“While liberals tend to embrace class actions, conservatives have become skeptical of them over the past 40 years,” Fitzpatrick said, noting that most objections have come from those concerned about how abuse and overreach could harm businesses. “But I argue that privately enforcing the law through class action lawsuits is actually a fundamentally conservative approach to justice.”
Fitzpatrick, who himself is politically conservative and represented corporate clients in private practice before entering academia, said the most common concerns voiced by his fellow conservatives are belied by the data. “When I was in private practice, I had a very negative view of class actions, but once I became an academic and I started doing actual research into the system, I realized that the horror stories that we often hear do not line up with the data,” Fitzpatrick said. “The system is actually working pretty well, and the abuses we tend to hear about are outliers.”
Using new analyses as well as reviews of existing literature, Fitzpatrick examined three of the leading arguments against class actions.
“One of the main criticisms of class actions is that they tend to be frivolous,” Fitzpatrick said. “But when you dig into the data, you find that only a tiny percentage are deemed meritless by judges. The vast majority do have merit.”
Another criticism is that class actions are more lucrative for the lawyers than they are for the plaintiffs. “This, too, is belied by the data,” said Fitzpatrick. “If you add up all the attorneys’ fees and compare it to all the money that is distributed to class members, the lawyers only get about 15 percent—that’s less than they would get pursuing individual litigation.”
“While liberals tend to embrace class actions, conservatives have become skeptical of them over the past 40 years. But I argue that privately enforcing the law through class action lawsuits is actually a fundamentally conservative approach to justice.”
The last argument he addresses is the assertion that class actions don’t actually prevent future wrongdoing. Fitzpatrick reviewed a number of leading studies on the impact of class actions, and found that this is not the case. “There are a number of outstanding empirical studies that show that as companies gain more exposure to class action liability, their misconduct declines,” he said. “So we have good evidence that the threat of a lawsuit causes people to pay attention and be more reluctant to do bad things.”
However, he said, that doesn’t mean there isn’t room for improvement.
First, he said, one of the reasons conservatives bristle at class actions is because they oppose many of the underlying laws class actions seek to enforce. He suggests that Congress could limit the types of laws eligible for class action lawsuits to violations with broad consensus across the political spectrum, such as price fixing, fraud and breach of contract. Furthermore, he said, litigation expenses and the risk of a jury trial might incentivize companies to overcompensate class members in a settlement. “If a company does $1 million in harm, we want them to pay that amount,” he said. “We don’t want to drive them out of business entirely.” To address that, he proposes a number of procedural tweaks that could address this, including reforming class action trials and penalizing lawyers who file meritless claims.
In exchange for these and other reforms, Fitzpatrick says he’d like to see conservatives in Congress support amending the Federal Arbitration Act to disallow companies from using class-action waivers—the fine print on, for example, a mobile phone or credit card contract that forbids consumers from entering into class actions in the event of a grievance.
“Class actions are a powerful component of the justice system,” Fitzpatrick said. “With just a few tweaks, they should be acceptable for everyone.”
Read Fitzpatrick’s op-ed about class action reform in the National Review.