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Class Action Reform
Issue:
Whether the current class action system needs to be
reformed to operate fairly and efficiently.
Problem:
There has been a significant increase in class action
litigation in state courts in recent years. Recent studies
report that in the last thirty-six months, representative
corporations have been facing a 300 to 1,000% increase in the
number of class actions filed against them. Abuse of the class
system includes: frivolous claims, gaming of the system to
keep cases in state courts, and collusive statements.
Frequently, the suits are an attempt to force settlements from
corporate defendants that are not guilty of any wrongdoing. In
addition, many settlements offer little compensation to
plaintiffs, while plaintiffs' lawyers receive enormous
fees.
Background:
Class actions emerged in the 1980s as a result of mass
marketing of products which increased the American
population's exposure to potentially harmful products and
substances. At the time, there were also weaknesses in the
FDA's regulatory process that resulted in meritorious class
action claims. Since then, the class action system has been
severely abused.
One of the major reasons that there has been a sharp rise
in the number of class action suits is that a number of
states' certification standards for these suits have become
much more lax. Judges often have an "anything goes" attitude
when reviewing potential suits. In many cases, classes that
have no parallel foundation in federal law are certified in
state court. Therefore, plaintiffs' attorneys file actions in
state courts that they would not have considered just five
years ago, and they work diligently to ensure that these cases
remain in state court. In addition, many of these cases
involve plaintiffs and defendants from different states, and
some state courts, which frequently do not have the complex
legal experience or support staff to handle such multi-state
suits, may violate the due process rights of out-of-state
corporate defendants.
Rationale:
Ideally, class action suits, by enabling individuals with
similar grievances to file a single claim, would allow for a
more efficient legal system. Unfortunately, with the present
system in state courts, the opposite is true: trial lawyers
are able to try cases with little or no merit, and the
plaintiffs themselves often only receive negligible
compensation. Large corporations are also forced to fend off
countless meaningless suits a year.
Possible Course of Action:
To make the class action system more just and predictable,
proposed legislation would authorize federal courts to hear
class actions when they have a significant interstate
character--that is, where at least some members of the
plaintiff class are citizens of states different from those of
defendants. In addition, other legislation would provide that
attorneys' fees be limited to a reasonable percentage of
actual damages and costs of plaintiffs when complying with the
terms of a settlement agreement. Finally, to prevent meritless
lawsuits, mandatory sanctions would be filed against attorneys
for filing such frivolous suits.
As of June 30, 2000
ALABAMA
1999--SB 72
Sets procedures to certify class actions.
1) Codifies Supreme Court rulings to ensure that a
defendant receives adequate notice prior to class
certification. 2) Provides for an immediate appeal of any
order certifying a class or refusing to certify a class, and
for an automatic stay of matters in the trial court pending
such appeal.
LOUISIANA
1997--HB 1984
Updated Louisiana class action laws by providing
objective definitions of class action terms, and detailed
procedures for class action cases.
OHIO
1998--HB 394
Related Documents
Current Award Trends in Personal Injury, 1997 Edition
Personal Injury Valuation Handbook. Horsham, PA: LRP
Publications, 1997 | 
