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Archive for March, 2009

I finally found a few moments the other day to organize the teetering stack of professional journals, magazines, and flyers that had been piling up in my inbox.  I was pleasantly surprised to find that the most recent issue of the ABA Commercial & Business Litigation section’s Winter newsletter is a collection of articles focusing on class action issues.  The compelling list of titles include “What to Tell a Panicked Client about Class Actions,” “CAFA and its Impact on Class Action Litigation,” “The ‘Holistic’ Approach to Scienter under Tellabs,” “Alternative Privilege Log Techniques in an E-discovery World,” and Recent Rulings Limit Plaintiffs’ Choice of Forum Tactics.”

http://www.abanet.org/litigation/committees/commercial/newsletter.html

Speaking of class-action related materials, here are some good print publications focusing on class actions:

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According to Tricia Bishop of the Baltimore Sun, a U.S. District Court Judge has certified a class of people who allegedly have been subject to being detained and strip-searched by officials in Baltimore’s Central Booking and Intake Center.  Bishop quotes the attorney for the class, William Claiborne, as saying that the decision means “everything” to arrestees because of the difficulties facing any given individual in convincing a jury that he or she is telling the truth about the allegedly unconstitutional strip searches: 

It’s difficult for an individual to persuade a jury that he’s telling the truth, [but] when you have 50 or 60 or 100,000 people coming in, it changes the balance, it really changes the balance of power.  It’s like having a union.

In other words, more than just giving the powerless the financial resources to take on powerful government interests, pursuing civil rights relief as a class action may also serve to bolster the credibility of the witnesses whose testimony is necessary to prove the underlying claims.

See the link below for the Baltimore Sun article:

http://www.baltimoresun.com/news/local/baltimore_city/bal-md.classaction23mar23,0,4747739.story

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An article by Karina Barrymore published March 16, 2009 in heraldsun.com offers some interesting insights into trends in securities class action litigation in Australia.  The article discusses the impact of the poor economy and the increasing interplay between securities regulators, plaintiffs’ firms, and litigation funders in fostering an environment ripe for securities class actions.

http://www.news.com.au/heraldsun/story/0,21985,25190226-664,00.html

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A perfect storm of work, family, and other professional obligations have left me with less time than I would like to dedicate to this blog, so I’ve had to give up the Class Action Blogosphere Weekly Review columns for the short term.  Hopefully CABWR will be back this summer.  In the meantime, I’ll try to provide links to any class-action blog posts of particular note.

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Forbes.com published an insightful article on March 11, 2009 discussing trends in securities class action lawsuits.  Citing statistics from the Stanford Securities Class Action Clearinghouse, the article discusses various factors that may explain why the total amount of securities class action settlements has fallen from $16.3 billion in 2006 to $3.1 billion last year.  Among the possible reasons: a dwindling pool of deep pockets and the difficulties in proving impact from alleged fraud when the entire market is collapsing. 

The article discusses various other trends in securities class actions, including which industries are being targeted and which plaintiffs’ firms are handling the most cases.

Here’s a link to the article:

http://www.forbes.com/2009/03/11/class-action-lawsuit-business-securities.html

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This report from Jim Williams of Chicago’s CBS affiliate, CBS 2, illustrates a common quandry facing lawyers in consumer class actions.  The report discusses a class action settlement involving allegations that packaged chicken contained excessive amounts of water, resulting in consumers getting less chicken for their money than advertized.  The article criticizes the settlement because class members are required to provide receipts as proof that they purchased the chicken, in order to obtain a 3% refund as part of the settlement.

Williams takes issue with the practical difficulties with requiring consumers to provide receipts for low-value purchases made years in the past.  He credits a law school dean with the stating the obvious, that the receipt requirement is “unrealistic.”

What was the alternative?  Should the plaintiffs worked harder to force the defendant to pay for the alleged harm caused by its conduct, whether or not that payment would ever reach the hands of those who suffered the alleged harm?  Or should the case never have been filed in the first place?

For those who see the primary purpose of class actions as retribution or deterrance for corporate wrongdoers, the proof of purchase requirement may seem as an unnecessary barrier to justice.  But class actions are a procedural device in civil lawsuits.  In other words, they are disputes between private litigants for redress of private wrongs.  Punishment and deterrance can be accomplished through criminal and admininstrative enforcement schemes.  Moreover, in a settlement, the parties are reaching a comprimise of disputed claims.  Typically, the settlement occurs before there has been a determination of whether the defendant did anything wrong.

If compensation is the primary objective, then there are few better alternatives for meeting that objective in a case involving the manufacture of retail products.  Possible alternatives in civil settlements, such as a cy pres award to charity, may serve to punish, but they do nothing to compensate actual alleged victims.  The parties could have allowed claims through sworn statements rather than documentary proof in the form of a receipt, but the news report suggests a scenario where many purchasers would have no memory of whether they ever purchased the products at issue in the case.

This dilemma raises the question whether there is a social benefit to allowing private attorneys to pursue a class action on behalf of a class of alleged victims whose identies can never reasonably be ascertained (note that most jurisdictions have procedural requirements that should prevent certification of classes whose members are not ascertainable, but how effective those requirements are in practice is a matter of some debate).  Even assuming that the wrongdoing can be proved, does forcing a defendant to pay money to private lawyers, a charity, or a random group of self-reporting consumers serve a societal benefit that would not be achieved through other means?  The answer to that question may have a lot to do with how much one trusts government regulators, attorneys general, and prosecutors to protect consumer interests–and of course how much one trusts trial lawyers to do the same.

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