Jay Laub
December 8, 2010
Business law I
Class Action Lawsuits

Class action lawsuits, sometimes called “multiple litigation lawsuits”, can be used when many individuals have been injured by the same product or action of a single defendant. The individuals can come together to seek justice when “their injuries have been cause by defective products, including pharmaceutical drugs, motor vehicles and other consumer products, and medical devices. Other types of conduct over which people have sued as a class include consumer fraud, corporate misconduct, securities fraud, and employment practices.” Class action lawsuits are most useful to individuals who by themselves could not bring a lawsuit against a large company because the damage done was relatively small. It enables many people to come together and sue as one “class”, and only one case has to be made on behalf of the group of plaintiffs. Legal fees are significantly reduced when the case only has to be made once, even if the damages to each individual in the class were very small. If, for instance, a company was to sell a mouthwash that did not work as it was supposed to, one person would probably not attempt to sue for damages if the amount was only twenty dollars. If one million people who are entitled to remuneration of twenty dollars each come together, it becomes feasible to sue the make of the mouthwash when twenty million dollars is at stake. A class action lawsuit can occasionally be of some benefit to corporations as well. If the maker of that defective mouthwash was to be sued by even one thousand of those million people who bought the product it would be impractical for the company to litigate all one thousand cases. The company would probably have to settle with each individual out of court just to avoid the costs of disputing the claims even if the company was not really liable to pay any damages. To bring a class action lawsuit against a company in court it must be approved by the court. The court will approve a group to sue as a “class” if it can prove that there are questions of law or fact common to the class and that a party with claims typical of the class can be found to represent the class adequately (called the “named plaintiff” or “lead plaintiff”). There is currently a group of women trying to bring a class action lawsuit against Wal-Mart for gender discrimination. The case was originally filed in 2001 by six women who claimed that Wal-Mart discriminated against them by paying men more money and promoting them faster inside the company. It has turned into a group that could be as many as 1.5 million current and former Wal-Mart employees, who’s jobs ranged from greeter to manager. A Trial judge originally allowed the case against Wal-Mart to proceed as a class action lawsuit so that the courts would not be flooded with these gender discrimination lawsuits against the company, and in April the U.S. Court of Appeals for the 9th Circuit affirmed that decision. The Supreme court has taken the case and will soon hear oral arguments from both parties on the merit of a class action lawsuit in this case and decide if the group can sue as one class. Wal-Mart’s attorneys contest that “There is simply no possible way that tens of thousands of managers making decisions all over the country could have affected millions of employees in the same way, and that is what would be required for a class action lawsuit.” One of the dissenting Judges of the 9th Circuit Court of Appeals said that the group should not be considered a “class” because the women “held a multitude of jobs...with a kaleidoscope of supervisors...subject to a variety of regional policies that all differed depending on each (potential) class member’s job, location and period of employment.” Once permission to start a class action suit is granted by a judge, everyone who might be affected by the outcome must be notified that the action has started. “The court will order that the class representative, through his or her attorneys, make reasonable attempts to notify any unknown class members by general media such as television, an advertisement in a magazine or newspaper, or a posted flyer.” The type of notice can vary on how geographically spread out the potential class members may be. Yaz is a brand name birth control pill that has been found to cause among other things blood clots, pulmonary embolisms, and emergency gall bladder removal in many women who use it. There are commercials on television advertising that if a woman has been injured by taking Yaz she can join the class action suit against the maker of the drug, Bayer incorporated. The commercials in this case are to serve as notice to potential class members that the action has started. Class action lawsuits serve to keep businesses accountable for their products and actions. A business man knows that if he causes injury to customers that he will be held accountable, even if the damages caused are small. They give consumers confidence that they will receive quality products because they know that they can hold the manufacturer or seller to a high standard. There is no specific verse in the bible about class action lawsuits, but if a business operates according to biblical principals there is not much need to worry about having a class action lawsuit brought against it. God holds us liable for the things we do to others, Romans 14:12 says “Yes, each of us will give an account of himself to God.” The Bible calls us to respect and care for others, and that applies when making business decisions too. A Corporation might make a decision on whether a drug is safe or not based on how much money can be made from sales of the drug, if it sells a drug that is only marginally safe it may make a great deal of money while harming others. If a company decides to sell something that may not be safe, and it is liable for the damages caused to consumers there needs to be a way for consumers to recover damages even if the amount is small. This lines up with the principal that all people are responsible for their own actions, even the little things. This week the Supreme Court will hear a case that will have a major impact on the ability of consumers to to join in a class action lawsuit, and the ability of companies to block them from doing so. The case, against telecom company AT&T, originated in 2006 when a couple signed a contract for wireless phone service when they were told it included free phones. They later found out that there were various charges for the phones that were not clearly disclosed when they signed the contract. AT&T put an arbitration clause in the contract that prevents customers from joining a class action lawsuit, and instead binds them to arbitration. Lower level courts have struck down the clause, ruling that “class action bans are unconscionable and contrary to public policy.” If the Supreme Court, who of late seems to be against class action suits, decides to uphold AT&T’s contract would strike a major blow to the public’s ability to join class action suits. All large companies would be able to put a ban on class action suits in their contracts, and in turn limit their liabilities because they could have a confidence that they would never actually be held liable for small discrepancies. This case along with Wal-Mart’s case are sure to have an impact by either affirming or reshaping the standards for class action lawsuits. In the next year the Supreme court will rule on whether companies can block customers from joining class action lawsuits against them, and more clearly define what the requirements are to be able to start a class action lawsuit.
Sources
informational article on class action suits from www.findlaw.com
“Gamemaker for Facebook named in proposed privacy class action” published October 27, 2010 by the National Post
“High Court weighs on Wal-Mart class action case” published November 22, 2010 by USA Today
“Lawsuits target Yaz pill: contraceptive alleged to cause health problems” published March 13, 2010 by The Gazette (Montreal)
“our right to file class actions is in jeopardy” published November 5, 2010 by Los Angeles Times
“The Subprime meltdown, rating agencies and privilege” published March 1, 2008 by the Metropolitan Corporate Counsel