Class Action

Creating A Class Action System–What A Country Should Consider

By Michael J. Hassen

An Introduction To Issues That Must Be Addressed By Any Country Considering Enacting Or Modifying Class Action Legislation

Several countries are considering the use of class action lawsuits. This article?s purpose is to identify the important issues one should consider in evaluating the fairness and efficacy of class action litigation.

A class action lawsuit can be devastating. The staggering costs of merely defending against one ? let alone the cost of actually losing ? have forced many American corporations into bankruptcy or caused their management teams to be replaced. The U.S. Supreme Court has recognized that class action discovery can be a form of extortion; it can force a company to surrender and settle a lawsuit, because it cannot afford to properly defend itself.

When it devised the class action lawsuit as a procedure to streamline civil litigation, Congress did not anticipate it would be used as a weapon to injure companies which may have technically violated that law, but not caused any harm. In California, alone, up to 100 class action lawsuits are filed every week ? thousands every year. Most are not properly class actions in the true sense; they are not legal proceedings in which persons represent interests common to a large group of persons who have been actually injured. Instead, most are premised on the technical violation of some statute, where the supposed violation has not actually harmed anyone. Frequently, an attorney files a class action so he can compel defendants to settle it, and he can demand attorney fees as a direct result. Essentially, most class action lawsuits are ?attorney fee motions? disguised as ?legitimate? lawsuits.

A country considering implementing a class action system should learn from our flawed system. The author cannot address all of the factors a country should consider in determining whether to implement a class action procedure, or what limits to impose to prevent lawsuits from being filed for the sake of generating attorney fees rather than helping injured people. But the author hopes it will give legislative bodies pause to consider consequences that follow class action litigation.

Full post as published by Class Action Defense Blog on March 19, 2011 (boomark / email).