Class actions developed as a form of litigation in which a group of people claiming similar injuries or damages could band together to sue the same defendant. Nowadays, however, these cases are often pursued with the sole intention to shakedown a defendant—hurting businesses and damaging the American economy. Read More...
The sheer size of some classes is enormous—thousands to sometimes, millions of individual claimants come together in single class actions. The large size of a proposed class could result in huge damage awards, making these cases very risky for businesses despite strong defenses. Consequently, once a court decides that a case can proceed as a class action, most defendants end up settling the case instead of risking a trial—even if they have not done anything wrong.
Unfortunately, plaintiffs’ lawyers have exploited businesses’ caution by filing many meritless class actions—all with the goal of scoring a jackpot settlement where consumers receive minuscule amounts, and lawyers walk away with huge fees. For example, the Telephone Consumer Protection Act (TCPA) and our securities laws have sparked enormous class action lawsuits that significantly damage legitimate American businesses all while benefiting plaintiff lawyers. Even more alarming are cy pres cases where some or all of the settlement proceeds go to a charity rather than the class members. The U.S. Department of Justice recently ramped up efforts to review abusive class action practices to curb further exploitation.
The Class Action Fairness Act of 2005 (CAFA) helped curb many class action abuses by moving most large, interstate class actions to federal courts, where examination of class actions is generally more rigorous than in state courts. To help address the problems not resolved by CAFA, the Institute for Legal Reform (ILR) believes The Fairness in Class Action Litigation Act (FICALA) would help to ensure that class actions are fulfilling their intended purpose. FICALA aims to bring fairness to the current state of class action litigation by closing various loopholes that increase meritless cases, limiting conflicts of interest between these plaintiffs’ attorneys and their class member clients, as well as bringing needed reforms to multidistrict litigation and fraudulent joinder standards.