Contact: Mike Vallante
Phone: 626-824-8927
August, 2001
The 18 million American's who each just won 38 cents in the
latest class action lawsuit scam ought to invest their winnings
in a postage stamp.
That, in turn, should be put on a letter to
their Congressional representative, pleading for some change that
will bring our civil justice system under control and end this
kind of obscenity.
For those who missed it, a well-known class
action attorney recently sued First USA Bank. Apparently, some
credits to the accounts of its card holders may have been posted
a day or two late, thereby costing cardholders a day or two of
interest. Rallying to the cause of consumers, this attorney managed
to obtain a settlement that got cardholders a whopping 38 cents
back from First USA. The attorney got $2.5 million.
What's worse is that most of the people who
won the 38 cents had no idea they were in a lawsuit. Their names
and other personal information were simply used without their
permission to extort $2.5 million from a company. And as thanks,
their "lawyer" sent them chump change. How appropriate.
It's a far too common occurrence in our legal
system today, and it's to the point that the settlement letters
that class action lawyers send would be more appropriate if the
envelope said "You may already have sued some big company."
The parallels between our class action system
and sweepstakes contests are as disturbing as they are a plea
for reform. First, there are millions of consumers who don't know
how "fixed" the system is, and they really think they might win
the jackpot. Second, the real outcome for most of them amounts
to little more than a booby prize. Third, the only real winners
are those who organized the event, in this case, the class action
lawyers.
The class action system, once envisioned as
a means of streamlining the civil justice system, called the key
to the courthouse door, has been perverted into the class action
lawyers' key to the legal lottery. The rules of engagement are
fairly simple: find or invent some form of liability, file a class
action on behalf of consumers, agree to a settlement and collect
your winnings. The First USA case was a textbook example.
In most cases, consumers aren't even informed
they're a member of the class until it's all over. Or if they
are, it's usually on a 4-page document written in 6-point font
that tells them they need to write a letter asking to opt-out
if they want no part of it.
Anyone who fails to notice this statement, or
who can't read English, or who is out of town on vacation, is
automatically included as a member of the class. In their name,
attorneys then proceed with lawsuits with no objective other than
to line their own pockets. Examples are everywhere:
· In a class action lawsuit against Cheerios
cereal over a food additive with no evidence of injury to any
consumers, lawyers were paid nearly $2 million, or roughly $2,000
per hour. Consumers received coupons for a free box of cereal.
· One consumer learned he'd been involved in
a class action when he received notice that his mortgage bank
would be paying him $2.19 as compensation, but $91.33 would be
deducted from his bank account to pay the lawyers' fees of $8.5
million.
· Recently, manufacturers settled a class action
lawsuit over the size of computer monitor screens. Each class
member received a $13 rebate toward the purchase of $250 in new
computer equipment, while the attorneys received $5.8 million
in fees.
Today's class action system is a far cry from
what early pioneers envisioned, as consumers are now being made
victims a second time by their own lawyers.
We need reforms that will serve consumers better.
Judges should be required to carefully evaluate attorneys fees
to determine if the class members are truly benefiting from the
action. An "opt in" reform to replace the "opt out" requirement
would ensure consumers aren't used as cash cows and that only
cases with real merit are brought.
Consumers, and the nation, would be better served if the lottery mentality is removed from the class action system, and replaced by a mystical concept I like to call justice.
IMPORTANT NOTE: If you would like a CALA
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organization's newsletter, let us know today.
Citizens Against Lawsuit Abuse (CALA) is a non-profit,
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and professional people, consumers and others dedicated to the
reform of our civil justice system. If you would like to be added
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