Center for America

Speaker's Resource: 7. Class Actions, p 2

 

 

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Key Reference Citations (KRC)

 

Purpose of Class Actions

  • “When used correctly, class actions allow courts to resolve in one action many smaller, similar claims that might otherwise remain unheard because the cost of any particular suit would exceed the possible benefit to the claimant.” (KRC: Hantler, “Seven Myths…”, p. 12)

  • “When used incorrectly, class actions can provide incentives that pervert the civil justice system:  injuries need only be perceived, not real; attorneys hire plaintiffs, they are not hired by plaintiffs; settlements are driven by cost, not justice; and the plaintiffs’ attorneys receive money, plaintiffs may not.”  (KRC: Hantler, “Coupon Settlements…”, p. 1343)

  • “Class actions also allow defendants to focus their energies on resolving all claims in one lawsuit, and prevent courts from being flooded with duplicative claims.” (KRC: Hantler, “Seven Myths…”, p. 12)

  • “Class action lawsuits were originally intended to encourage more efficient utilization of the legal system by joining together similarly aggrieved parties into a common legal claim.  But with the relatively lax certification standards extant in many states, class actions have become a tool for litigating cases that might otherwise lack merit.”  (www.namic.org, State and Legislative Resources, “Tort Reform: An Overview of State Legislative Efforts to Improve the Legal System”; Class Actions; as accessed on September 27, 2002)

  • Class actions were conceived as an expeditious way for people with similar grievances to join in a common suit and get compensated for injuries.  But class actions have evolved into a favored means for Trial Lawyers, Inc. to launch predatory assaults on businesses and large institutions, often in the name of clients who don’t even know they are being represented.”  (KRC: Manhattan Institute, Trial Lawyers, Inc., p. 8)

Trends

  • Of the class action lawsuits filed in 1995-1996, 58 percent were filed in state courts and 42 percent were filed in federal courts. (www.instituteforlegalreform.com)

  • “It is believed that a key contribution to increasing tort costs is the rise in class action claims.  From 1997 to 2000, just a three year period, class actions filed against American companies in federal court increased 300%, and class actions filed in state court increased 1,000%.” (KRC: Nicolaides, “U.S. Tort Reform and the Implications…”, July 2004, p.10, citing Jim Copland, “The Tort Tax”, Wall St. J., June 11, 2003)

  • The 327 securities class action lawsuits filed in 2001 represented a 60 percent increase over the number of filings in 2000, and the companies sued in 2001 lost more than $2 trillion in market capitalization, a 157 percent increase over losses suffered by the 204 firms sued in 2000.  (www.instituteforlegalreform.com)

  • A 2004 study by two law professors explored the relationship between attorneys’ fees and recoveries in class action litigation. The data was based on published opinions in state and federal class actions from 1993 to 2002 that specifically discussed the magnitude of the attorneys’ fees. Some of the study’s findings include:

    • The average class action recovery over the ten-year study period was $138.6 million

    • The average recovery of the top 20% of cases was $613 million

    • The average recovery of the top 10% of cases equaled $1.08 billion

    • Looking at the cases in the study, the aggregate class action recoveries averaged $5.13 billion per year

    (George L. Priest, “What We Know and What We Don’t Know About Modern Class Actions:  A Review of the Eisenberg-Miller Study”, Manhattan Institute for Policy Research, Civil Justice Report No. 9, February 2005)

 

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Please Note:  The material presented in this Speaker's Resource has been collected from a wide variety of sources.  You are welcome to use this material for quotations and factual material in your speeches, presentations and articles.  To the best of our ability, we have provided original citations so that you can document the comments you use.  If you become aware that any of the citations or facts presented in this collection are inaccurate or outdated by newer information, please send an email to Speakers@lawexec.com to tell us so that we can update this material.  The materials cited are generally copyrighted by the original author and when you quote from their material, you should include the original attribution to acknowledge their role as authors.  Original material © 2005 American Justice Partnership.