Archive for August 23rd, 2008

A few sources, including Slate and American Thinker, have reported on a CNBC interview of bajillionaire Warren Buffet yesterday in which he suggested that donors to John Edwards’ presidential campaign file a class action against him for solicing contributions, knowing that reports of his extramarital affair with videographer Rielle Hunter would eventually come to light:

it might be kind of interesting if somebody, some contributor, would bring a class-action suit on behalf of all these people who essentially were led to send money to a man under totally false circumstances, false pretenses, and where he knew it and didn’t tell them the truth.

The expression on Buffett’s face suggests the proposal was at best half serious, and his comments appear to have been motivated mostly by a desire to illustrate the irony in a successful trial attorney doing something that could open himself up to a class action lawsuit.  (See interview transcript: “QUICK: Hm, that’d be ironic for a trial lawyer…  BUFFETT: Yeah.  QUICK: …to have a class-action lawsuit brought against him.”).  But even a comment made in jest from a man who could sink a Fortune 500 company with his words may be enough to make Edwards nervous.  Buffett himself won’t be serving as a class representative, though.  He threw his weight behind Barack Obama early on in the campaign.

Buffett may be the best investor of our time, but a class action expert he is not.  Even with his endorsement, a class action against Edwards by those who donated to his Presidential campaign would be an uphill battle.  Fraud cases are fraught with the potential for the kinds of individualized fact questions that make a case unsuitable for class treatment.  Usually, at least one of the elements necessary to prove liability for fraud is inherently individualized.  In Edwards’ case, donors likely made contributions for all sorts of reasons, and many no doubt would have donated despite earlier revelations of his infidelity, making it unlikely that common elements of fraud, like the materiality of the nondisclosure, reliance on the nondisclosure, or the causaton of injury, could be proven by common, classwide evidence.  Even setting aside the procedural hurdles, perhaps an even bigger challenge is a practical one.  How many members of the trial lawyer’s bar would be willing to pursue a class action against one of its most respected and high profile members?

Buffett’s statements reflect a common misconception about what makes a good class action lawsuit.  Many nonlawyers, even very sophisticated ones, tend to assume that any case where a misrepresentation or omission of fact has occurred that has the potential of harming a large group of people makes a strong candidate for a class action.  Of course, the same misconception often holds true with lawyers and judges who are not familiar with Rule 23.  So, it may not make any difference whether Buffett’s proposed class action could ever technically satisfy all of the requirements for certifying a class action.  As he observed during the interview, “I’ve seen a lot of class-action suits with less to it than this particular case.”

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