Let Consumers Sue Companies
nytimes.com
nytimes.com
Consumers can usually sue corporations at a court in their own jurisdiction. Many European countries also allow class action law suits. Yet, we have few law suits against corporations. There are other reasons for this:
- consumers are not awarded punitive damages,
- court fees are higher (usually a percentage of what you ask for),
- if the consumers lose they pay not only their own lawyer, but (to an extent decided by the court) also the lawyer representing the corporation,
- many European countries have consumer "watchdogs" / ombudsmen, i.e. public entities that have the authority to start cases against corporations,
- many European countries have a variety of consumer complaint boards that handle small claims efficiently and at low cost.
Few who know consumer matters in both the US and the EU would trade the European system for the American.
I disagree. It is true that it is harder for EU consumers to sue a corporation, but in general I feel that consumer rights are generally stronger in the EU than in North America (OP's point about consumer watchdogs), so there is less reason for an EU consumer to sue a corporation.
IANAL, but I'd say the EU system is anti-litigious, not anti-consumer.
I agree with this, I feel the same. However, it seems to me, that if there is a customer related problem already in place, US will find it and react to it faster. To put an example here, all of the major automotive recalls of the last few years were exposed in the US, while Europe reacted to them with a delay (Volkswagen diesels, Takata airbag, Toyota accelerator pedal).
Given how extreme the American reaction to the VW scandal was I do wonder what the response would have been if that company had been GM, Ford or Chrysler. A part of me is really happy that the US brought this to light and made VW pay for their transgression, a part of me feels that the asymmetry between the damage VW has done to Americans and the damage that America has done to other countries is so extreme that it feels as though this is simply a cheap trick to extract some $ from VW and to harm their brand relative to US brands.
Even so, stupid on the part of VW and it should have never happened.
> Given how extreme the American reaction to the VW scandal was I do wonder what the response would have been if that company had been GM, Ford or Chrysler
There were recalls related to GM (GM ignition switch recall - 30M cars worldwide) or Chrysler (just recently [1]) too. ..you are right, these are more dangerous things like cheating the emissions. However, I believe they are not showing favor toward US companies. There are recalls of Fiat-Chrysler cars too because of cheating on emissions [2]. However, they are not affecting millions of cars as in VW case.
[1] https://www.cnbc.com/2017/07/14/fiat-chrysler-recalls-1-poin... [2] https://www.nytimes.com/2017/05/19/business/energy-environme...
People know VW was promsing something they couldn't hold.
That certainly doesn't make it right. But it is a mitigating factor. That said, I'm super happy it got exposed so that mileage numbers might actually have meaning in the future.
Consumers should be able to sue corporations if they really need to, which is what the article is about. But it's even better if they don't need to sue in the first place.
The article doesn't discuss the American problem of frivolous lawsuits.
The EU system is very pro-consumer and is doing a lot of things to make life easier for consumers ditching roaming is just one of them. With regards to lawsuits the EU system takes the need out of much of that by having fairly strict rules for corporations and giving consumers much more legal backing when it comes to the return of goods, protection from harmful chemicals in food etc.
It's just a different way to look at it than the US.
No, they simply pass those costs on to the consumers.
I believe this is a false narrative spread by those who want to reduce consumer access to courts.
Businesses don't price their goods at (cost + profit). They price them at the level that will maximize profit. Sometimes that's at a loss, sometimes that's around break even, sometimes it provides a healthy profit, and sometimes they make extraordinary profits (what do you think the cost is for that $4 soda at the movie theater?).
But the price is already set to maximize profits. If the seller's costs increase, raising the price won't increase profit or help them at all - it would merely reduce revenue due to the negative impact on sales volume. And if their costs go down, they of course don't lower the price, they take more profit.
You are free to believe whatever you want but that's a quote straight from a conversation with the CEO of a very large manufacturer of consumer goods, who - in my experience - tended not to speak stuff that wasn't true.
There are exceptions and complexity, of course. In health care, raising the price of a good with inelastic demand such as, say, Epipens, might attract social and political penalties. On the other hand, pricing such goods (e.g., pills that cure terminal diseases) at very high levels to begin with is an accepted practice.
The ways discussed in the article and in this thread, as examples.
Can you source, or explain, this? I'm Conservative, and in all the Conservative circles I've run in, I can't recall ever hearing something like this.
In fact, I usually hear more about how ridiculous it is that everyone sues about everything.
I, and the circles I've been in, would not necessarily do that. We would reject regulations that are too strict (which, lately, most environmental regulations have been). We would also reject the Federal Government being involved, since it would be a violation of the 10th Amendment in cases that don't cross the state lines. When they do cross the state lines, we'd still prefer it be left to the states, and the Federal government should keep their nose out of it unless the states just can't deal with it. As for State and Local governments, we would accept them implementing regulations when the factory and local residents are unable to come to an agreement on their own.
Note, I'm a US citizen, so I'm referring to that Government. :)
Failing direct negotiation you say states and localities should enact regulations where state boundaries aren't crossed. Essentially no environmental regulations deal with things that do not cross state boundaries. Water and air don't respect lines on a map. Nor do ecosystems.
Worse yet, that isn't even really your position. You say "most" environmental regulations are too strict. So you actually don't think states and localities should regulate the environment. You think we should remove federal regulations and states should not replace them. So really you are parroting the exact positions we have described above without recognizing their true import.
First off, the conservative/libertarian discourse is not "childish" or "uninformed." Libertarian thought has been in development for centuries beginning with classical liberalism. [https://en.wikipedia.org/wiki/Libertarianism#History]
Second, the commentor clearly indicated that states and localities can be involved in regulation but only when local discourse fails. The commentor only stated that "most" environmental regulations are too strict, but that doesn't mean we should not have sane ones driven by local (not nationwide cultural ebb and flow demands of the day)!
Third, apparently you are not very familiar with environmental regulation. Environmental regulations need not cross state boundaries (we can regulate water and air from entities in in our own states). Unfortunately, we do not have that capability to balance the locality's needs and the environment's. The current system leaves little if any recourse for citizens or small businesses against government. Who do we go against? Oh yes, the EPA which is nearly or more difficult to reason with than a court system.
The length of time that a school of philosophy has been around does not relate whatsoever to how people talk about it today. See, e.g., flat earthers.
>Third, apparently you are not very familiar with environmental regulation.
I used to practice environmental law.
> Environmental regulations need not cross state boundaries (we can regulate water and air from entities in in our own states).
That would make sense if the air and the water themselves did not cross state boundaries. Turns out they do. Speaking of the classical liberalism you are so fond of, you should really check out this crazy new theory called "the tragedy of the commons."
This is a childishly uninformed discussion because you do not (and I am sure cannot without googling) refer to any specific regulations. Would you care to discuss the Clean Water Act and how you think it is too strict? Do you take issue with the "surface water connection" jurisdictional test for defining the navigable waters of the United States and thus the geographic limits of the CWA? Do you think the National Pollutant Discharge Elimination System defines "impaired waters" too broadly? Are NPDES Total Daily Maximum Loads set unreasonably low? Do you think joint Army Corps of Engineers and EPA jurisdiction over impaired waters leads to excessive enforcement bureaucracy? These are not things I just googled but rather regulations I have helped draft, administer, enforce, and even challenge. I am happy to debate the finer points and would be thrilled to see that debate on a national level.
But the debate on the national level is instead childishly uninformed because conservatives argue in nebulous generalities, using catch phrases and talking points, but do not engage with the specifics of the policies in question. The vagueness of their claims allows them to avoid rigorous standards of proof or argumentation.
Statements like "Unfortunately, we do not have that capability to balance the locality's needs and the environment's." This is simply a nonsense talking point, which wholly disregards the non-local nature of the environment. Localities don't get to choose to prioritize their needs over the environment's because they share their environment with other localities. So those localities get together and decide as a group how to regulate the environment via this fancy new invention called the federal government.
What precisely do you even mean? The ability for localities to decide they want more pollutants discharged into the environment? What needs are not being respected? Their need to have lower costs for businesses in order to keep jobs? Which they can only have at the expense of their neighbors, by emitting pollutants into the environment which then flow into their neighbors' jurisdictions and by taking jobs from neighbors who choose not to poison their own and others' land, water, and air?
It's also nonsense because it's factually untrue in many cases. Take NPDES. States enforce it, with the exception of four direct implementation states that have elected to allow the federal EPA to enforce it. The federal EPA simply sets standards and partially funds enforcement via block grants.
Worst of all, your argument does not contribute anything useful to the discussion. "There's too much federal regulation of the environment and more needs to be done at the local level." Ok, fine, let's unpack that statement and see where the argument takes us and why it is so damaging to our national discourse. What federal regulations are excessive and need to be moved to the local level? Your answer will likely be the result of something you recently googled, but let's assume you make a legitimate, well-informed point and identify one federal regulation that should be moved to the local level. I will then point out another ten regulations that clearly need to remain at the federal level. Assuming we then go through every federal regulation on the environment and make this assessment, we are left with a list of some regulations that need to be changed and some that don't. Great. So we then reform the EPA and localities start regulating more efficiently etc. etc. That would be a really awesome result of a national political debate.
This has not happened nationally because we are not having a discussion with that specificity. Conservatives simply argue that the EPA is bad and has to go. Even if they admit in argument that theoretically some regulations should be federal, the practical manifestation of their ideology is a concerted effort to abolish the EPA. See, e.g., Scott Pruitt's current activities.
And that's the real problem with your vague talking points. They drive poisonous, poorly thought out policy-making which does not even reflect your own stated positions. This is why we have Trump, the master of spewing vague generalities. A man wholly unprepared to be president, who is incapable of engaging with policy details on even the most superficial levels, resulting in absurdly awful legislative proposals and a complete absence of legislative progress.
Please, point to specific regulations or policies that you think unreasonably burden localities. That would be a productive contribution to the national debate about environmental regulation. Perhaps the regulation needs to be revised, or perhaps there is a justification you are not considering. Either way, the conversation is worth having. Regurgitating talking points doesn't.
Nor is it an issue that can be addressed at a state level. The Chesapeake Bay watershed encompasses New York, Pennsylvania, Maryland, Delaware, Virginia, and West Virginia. Water flows to the ocean. The mining industry in West Virginia and the farming industry in Pennsylvania dump pollutants into waterways that affect the tourism industry on the Eastern Shore. The former have every incentive to maximize the externalities they can dump on the latter; the latter has no ability to control how much pollutants are dumped into waterways by the former.
Litigation is not the only option. A group of people can get together and go talk to the owners of the factory directly. No need for lawyers at all. Just individuals working together to come to an agreement.
It's only when that fails that Government should get involved. Either by passing a local law that enacts proper regulation, or via litigation if that's the best option. I seriously doubt there's a one size fits all solution...
I did address issues that cross state borders. Again, I only used the environment related example because you did so first.
What?!
There are no rules against dumping limitless amounts of CO2 into the air, how is none too much?
Or do you reject the scientific premises of climate change?
I don't think anyone who has been involved in litigation would use these words in the same sentence, or paragraph. Whose theory says it's efficient?
I suspect that the thinking is that it's efficient in the sense that you don't have the wrong regulation. ie. in the sense that wrong regulation is extremely expensive.
And if people was always employing an optimal strategy, then litigation would rarely be needed as the outcome would be predictable. But I guess people aren't optimal :)
How efficient is it to regulate the behavior on a case-by-case basis, taking years and often millions of dollars for each case, and with all the unpredictable outcomes of a lawsuit? Maybe one ruling by an expert regulator rather than many by inexpert judges and juries isn't such a bad idea after all.
It sounds like a rationalization for deregulation.
> if people was always employing an optimal strategy, then litigation would rarely be needed
If people did that, we wouldn't need government at all. We could live in happy anarchy with all our well-meaning, honest, optimizing neighbors!
Just saying, that's how it's rationalized...
Fairly incredible actually if you think about it for a while.
What or whom is causing society to go out of its way...? Litigation?
Sounds like you should move to Somalia, land of the free market -- it's quite untouched and unregulated by nanny bureaucracies, in fact. Lots of opportunities to make money, I'm sure. Or perhaps you'll be lucky enough to break both your kneecaps and die on the streets, or get sold into slavery!
I can only imagine the reason you wouldn't do this is due to being a needy snowflake yourself. Hmmm....
It's hard to imagine any legal system where a claim to recover a $10 or $20 injury in an individual lawsuit (or arbitration) could be efficient. Such claims could be aggregated in class actions, if consumer contract terms didn't prohibit it. Class action lawyers often think of themselves as doing "social engineering"; forcing companies to pay for injuries they cause in situations where nobody is likely to bring an individual suit at all (e.g., small harms).
Class actions don't normally result in much of a recovery at all for individual consumers, both because amounts for each individual are typically quite small, and because costs of litigation and attorney fees eat up huge percentage of claims defendant corporations are forced to pay. But at least if there were threat of class actions it could scare corporations into not violating terms of consumer agreements. So even if class action suits do end up mostly enriching lawyers, they still help consumers by giving corporations a strong incentive to honor consumer agreements. Class action lawyers as "social engineers".
Law should be as efficient and precise and cheap and scalable as code. Hell, that's why they use the term "codified" when they talk about laws on the books.
The difference is that consumers don't usually get rich from suing companies, we don't have a 'legal lottery' for every little thing that spoils your day and that you feel grieved about. That higher barrier keeps the courts free for stuff that is important and at the same time makes sure that we don't end up with a climate where everybody is suing everybody else all the time.
By what measure?
Now obviously the United States is huge and there is huge diversity between the various demographics and localities but it is beyond dispute that consumers in Europe are doing fine (and that consumers in the United States are not doing much worse on average).
It would be strange to find anything different, taking into account that we're talking about the wealthiest segment of the world.
They have stats for anything and everything, most renewed annually, in all 3 working language, in complete free access, and provide aggregate for EU17 and EU28.
Here is a link to their "browse stats by theme" page: http://ec.europa.eu/eurostat/data/browse-statistics-by-theme
Thanks for the data point. I'll point out that consumer satisfaction depends on many things in addition to what we are talking about in this thread.
European consumer law is full of mandatory rules (rules that you cannot derogate from in contracts or in your terms of service). Half of the clauses in your standard American terms would be tossed out by a European court.
European consumer law is far from perfect but I wouldn't trade it for the US system (and I represent corporations).
The closest that we have in the US is the attorney general in your state. Don't expect a quick action from them.
When the profits are in the billions, even a fine of 600 million is a paltry line item. You either should fine in an amount relative to the amount made by the illicit activity, or even better, go after the executives behind it directly with said fines or prison. As long as these slimeballs can conduct illegal activity and sail away after "resigning in disgrace" with an 80 million golden parachute, while the company pockets several hundred million, they will continue to do so as has been evident so far for anyone paying attention.
https://en.m.wikipedia.org/wiki/Qui_tam
Here's a list of some of the largest, $16.5B by Bank of America; $3B GlaxoSmithKline (illegal kickback); $2.2B Johnson&johnson (illegal kickback); pfizer $2.3B (illegal claims); Merck (illegal kickbacks); HCA has 2 of the top 10 totaling near $1.5B (illegal billing, up coding; illegal kickbacks); and on and on it goes
https://www.google.com/amp/s/www.qui-tam-attorney.com/amp/10...
The claim however does not seem to be true, even in 2010 before Florida took a variety of opioid-related actions. For example, California has approximately twice the population of Florida, but probably no(t much) less than half the oxycodone prescription rate. It was hard to find specific numbers, but for example it appears that at its worst (in 2010) some people claim Florida prescribed 650 million pills per year; at the same time, Pennsylvania definitely prescribed over 200 million pills per year. (Pennsylvania has approximately half the population of Florida.)
The closest approximation to the claim that I can find that might have been true is "in 2010, Florida prescribed ten times fewer oxycodone pills than all other states combined". If the factor of ten is exact, then this would still imply that Florida's prescription rate is higher than the other states, as Florida has less than one-tenth of the population of the other states. In any case, it appears that Florida's prescription rate is now around or below the national average.
1. Russians began opening pharmacies in Russian neighborhoods throughout the UD (yes, Russian neighborhoods are a thing);
2. The pharmacies would deliver drugs to the medicare patients and in those deliveries included certain gifts anything from Russian newspapers, magazines, to sometimes Russian caviar;
3. As they do CVS identified the success and bought the network of pharmacies;
4. After the sale a lawsuit was brought, because a pharmacist at just one of these pharmacies mentioned that these additions to the drug deliveries violated anti-kickback laws and as a result the pharmacy took retaliatory action (I believe day shift to night shift and reduced hours)
The US government would never have known if it weren't for the pharmacist, and it's the exact behavior prohibited by the Anti-kickback Statute, but I'd challenge you to articulate the injury to the government (in fairness I know you could, but I think you see the strong counter arguments).
Whether or not the Pharmacy put extra gifts in with the Rx delivery Medicare was not effected. Moreover, the gift has no bearing on Medicare, patients, physicians or reimbursements.
To highlight the distinction, say a Dr. prescribed a drug to be filled at the pharmacy, and the patient never actually got it filled, but the pharmacy filed the claim for the Rx with Medicare anyway to get paid for the drug as if the patient had gotten it filled, the harm to the Government is obvious, they just paid a claim for a drug that was never actually dispensed. In fact, when that actually happens, the pharmacy usually double dips, and rips the label off the unfilled drug, sells it to another patient and still gets paid on the claim as if the original Medicare patient picked it up. Anyway sometimes the harm is obvious and sometimes its invisible, but it all illegal.
Notably, in the EU, the tendency is to have more "ask for permission before doing something" regulation, and less "ask for forgiveness after doing something wrong" litigation. E.g. unlike in the U.S., there are laws setting forth detailed safety requirements for consumer products, and agencies responsible for enforcing those requirements. I suspect that approach yields the desired level of product safety at lower cost than the American approach. Similar approaches could, of course, be applied to consumer financial products.
It mostly fixes the whole "read this and click continue" insanity because it makes any clause that isn't law anyway unviable.
And click-through contracts are usually also void, at least in Germany.
Withdraw limiting regulations and replace them with market based compeititve mechanisms.
Except somehow the second part inevitably seems to get forgotten about...
You're completely misunderstanding the purpose of class actions, and are using an oft-repeated error. The article itself explains the value of class actions.
Class actions are an ideal instrument for redress of harm where the harm to any individual is small, but the harm is widespread, meaning that a company is cheating or hurting many people but it's not worth any one individual's effort or expense to sue them.
This is the source of the fallacy you commit: the idea that this involves large compensation for consumers. Consumers ARE compensated in class actions, it's just that their individual harm is small so their individual payout is small.
So if, say, Comcast has been secretly overcharging customers $10/month, it's not a big enough problem for any one of them to sue. But as a class of millions of Comcast consumers, it may be worth it, and can have a real punch at that level.
This is the other part of your error: of course class actions are "lawyer-driven" because, again, the harm to any individual is small. It's the lawyers and firms pursuing the class action that are doing the work and organizing the action, often on contingency. Related to your first mistake, you and many others see the lawyers getting a big payment as "stealing" from the class when they are being compensated for the work they did and winning restitution for harms that no individual consumer would pursue, and the class members STILL get fairly compensated for the small harm done to them.
Finally, and perhaps the largest part of your error, this does and, in the US, is really the only way to, deter illegal conduct because, again, this illegal conduct is premised on the idea that it's too small for any person to care or find it worthwhile to fight. By organizing a class action you enable consumers to hit back and stop this kind of behavior, and put companies on notice that they can't try these underhanded tactics without risk.
I agree that a regulation model would be preferable to this kind of litigation, but until we have regulation we must use the litigation tools we have available.
Be very wary of screeds against class actions, they're almost certainly corporate propaganda.
He's basically saying class actions don't work the best if your goal is greater consumer protection. There are other ways to do it that are more effective.
I mean, the very article he's commenting on directly refutes his points about class actions resulting in less compensation for consumers and only or largely benefiting lawyers.
You make some statements here that are arguable - for example, that 'class actions are an ideal instrument for redress of harm where the harm to any individual is small, but the harm is widespread, meaning that a company is cheating or hurting many people but it's not worth any one individual's effort or expense to sue them.'
That's not always true. Legislation or regulatory oversight are often better solutions as they occur faster and have broader implications. You even acknowledge that later in your comment as you agree that regulation is better.
I don't think anybody in the thread is arguing that individual arbitration is a better method. The question is whether class-action suits is the final method or if we should be considering different regulatory controls.
No one, myself included, is saying class actions should be "the final method", just that it's wrong to argue against them when they are currently generally the only method available to consumers for certain kinds of harm. I'd be the first to support robust regulatory protections that protect consumers to the point that they render class actions redundant, but sadly we don't live in that world.
Class actions are a poor substitute for good regulation. They are the bare minimum, or somewhat less than the bare minimum.
How much would you pay to somebody to ensure that a big evil corporation is not cheating their ~10M customers by $10/year (100M/year in total)? $10M? $50M?
This doesn't mean it's the ideal solution to widespread consumer harm, but it's a tool we have at our disposal NOW instead of hypothetical legislation or regulation we might have at some point in the future...
>In reality, lawyers collect a small portion compared with consumers, and only if they succeed. For every $10 that a company pays out for wrongdoing, we found about $8 goes to consumers and $2 goes to pay legal costs.
Of course we could take issue with this study, but unless someone can present some evidence in its favor the notion that only the lawyers ever profit from class actions seems like received wisdom "everyone just knows".
If you think of litigation in economic-theoretic terms, yes, that's the purpose of class actions. But while you're in that head space, you also need to consider the principal-agent problem: https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble.... Where the claims are small and the class members are unsophisticated, the principals (the consumers) don't have sufficient incentive to control their agents (the lawyers).
That manifests in class action litigation in two ways. Class action lawyers are incentivized to bring cases that are marginal on the merits: http://www.abajournal.com/news/article/posner_opinion_blasts.... They also are incentivized to settle good cases for for a fraction of potential damages.
The end result is a system that doesn't do a great job of really anything. Consumers get only a tiny fraction of what they've lost. Companies aren't deterred--they just treat the occasional payout as the cost of doing business.
Class action lawsuits are a crappy solution, but often better than the alternative, which is often nothing.
(In some cases, mass direct-action lawsuits are superior, but coordinating those also has substantially increased overhead, and they gave some of the same settlement incentives; OTOH, because they are positive approval rather than opt out, it's less likely that a small-fraction settlement gets approved.
I was referring to the alternatives available in the status quo legal system in the US, but I disagree that more powerful regulatory agencies are a complete replacement for class actions, though they are perhaps independently desirable.
> 'Doing nothing' is a false dichotomy unless you subscribe to libertarian/corporatist philosophy. (Which would, if it could, abolish the position of the attorney general.)
No, it wouldn't (at least, most libertarians and even more so pro-corporate types recognize a role for government and a role for AGs within that government, though a narrower role than the status quo for each.) It might eliminate state causes of action on behalf of consumers, but those aren't the whole (or even main) thing that AGs, who are the state or federal government's chief legal counsel and law enforcement officer, do.
(Also, you seem to be missing “corporatist” to mean “pro-corporation minarchist capitalist”; corporatism is a disinct politico-economic philosophy that is about as far from libertarianism/minarchism as possible.)
And looking at the American political landscape, there are far more dyed-in-the-wool anti-human corporatists holding power then there are libertarians.
Not to mention that the article offers data to refute this idea that only the lawyers benfit (from a study the author commissioned in 2010 while at the Consumer Financial Protection Bureau):
>Opponents also claim that the rule benefits lawyers rather than consumers. In reality, lawyers collect a small portion compared with consumers, and only if they succeed. For every $10 that a company pays out for wrongdoing, we found about $8 goes to consumers and $2 goes to pay legal costs. In any event, banks choose to hire lawyers to file class-action lawsuits, and ordinary people deserve to make the same choice.
>Consumers get only a tiny fraction of what they've lost.
But the whole point is that consumers have, individually, lost very little. If you were overcharged $20 and got $10, or $5, the company in aggregate has still been forced to pay out a lot. Any individual consumer isn't going to receive significant compensation even in a 100% win.
The article again offers data to refute this idea that consumers don't get fair compensation through class actions:
>First, opponents claim that plaintiffs are better served by acting individually than by joining a group lawsuit. This claim is not supported by facts or common sense. Our study contained revealing data on the results of group lawsuits and individual actions. We found that group lawsuits get more money back to more people. In five years of group lawsuits, we tallied an average of $220 million paid to 6.8 million consumers per year. Yet in the arbitration cases we studied, on average, 16 people per year recovered less than $100,000 total.
>Companies aren't deterred--they just treat the occasional payout as the cost of doing business.
This is true of any litigation, yet we don't usually see arguments against the very concept. It still at least forces companies to consider one more bar to abuse.
Until we have better regulation, this imperfect tool is something consumers have available to them to fight abuses of a type that normally wouldn't be addressed because of their nature. Without this tool, consumers would have no recourse. As the article says:
>As one judge noted, “only a lunatic or a fanatic sues for $30.”
>When a bank charges illegal fees to millions of customers and then blocks them from suing together, a result is not millions of individual claims, but zero. So the bank gets to pocket millions in ill-gotten gains.
Arguing against class actions makes no sense until we do have legislative or regulatory alternatives.
Actually, you are misunderstanding the purpose of class actions. You may see it as s some ideal, but it's not why they were created. They were created to simplify similar cases into one case for the purpose of not having two trials when you could have one.. That's it. It was literally for the efficient administration of justice. Not to do what you suggest the purpose is. Take a gander at the history of the federal rules of civil procedure, this is very widely documented and known.
This is one reason the supreme court was able to say "no more". They are just a collection of court rules.
I'd also argue they are not the ideal instrument, as they rarely actually achieve any real gains for the individuals.
I can't say whether or not the process is ideal, but I can say that the benefit to individuals is irrelevant. The COLLECTIVE - the whole society - benefits in a big way when the behavior of a large corporation doing very small harm to thousands or millions of individuals is punished and deterred. The bar for success can't always be directed at individuals; there are very positive societal level benefits that are small to individuals but huge to the whole ecosystem.
Again, never the original purpose, and while a good goal, class actions are surely ineffective at this.
" The COLLECTIVE - the whole society - benefits in a big way when the behavior of a large corporation doing very small harm to thousands or millions of individuals is punished and deterred."
Also as mentioned, I think this is very true, but class actions have pretty much not had that effect at all. There are very few areas where class actions have been effective at accomplishing this.
Yes.
Second, just in in what sense? If the questions affecting everyone are the same, there's no point in having 5 trials about it.
"(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if: .. (3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. "
The Advisory Committee that drafted the new Rule 23 in the mid-1960s was influenced by two major developments. First was the suggestion of Harry Kalven, Jr. and Maurice Rosenfield in 1941 that class action litigation by individual shareholders on behalf of all shareholders of a company could effectively supplement direct government regulation of securities markets and other similar markets. The second development was the rise of the civil rights movement, environmentalism and consumerism. The groups behind these movements, as well as many others in the 1960s, 1970s and 1980s, all turned to class actions as a means for achieving their goals.
https://en.wikipedia.org/wiki/Class_action
Also, it's somewhat misleading to cite to the history of the class action and ignore current justifications. This is like arguing that U.S. democracy is bad because it was originally a method for a small group of wealthy landowners to control the country, while ignoring the fact that currently anyone can vote. The history of class actions in England, although interesting, does not make the GP comment incorrect. If the modern purpose is only to simplify similar cases, we already have coordination and consolidation.
A just resolution would be for each customer to get $120/year they were with Comcast PLUS Comcast should have some penalty for their fraud.
Instead what happens is Comcast agrees to a "huge" $30 million fine that works out to $12/customer per year if everyone opts in to the lawsuit and the lawyers take 50% for their efforts, so the lawyers get $15 million, the customers who sign up get $12 back and the ones who miss the memo get $0.
The customers don't have any recourse to say "no, that's a shitty settlement, we want 100% of what we're owed not 10% of it" or "hey, 50% is too much for the lawyers, I'd rather take $0 than the shitty deal we were offered".
A just system would make the corporation pay the lawyer fees (as part of their punishment for doing illegal things) and the customers/victims would be made 100% whole.
They definitely do, they can decide to opt-out, and retain the right to sue the company on that issue. But those who opt-out would have to go start their own lawsuit. For small matters where you were wronged by $120, and you only get $30 back, this is definitely not worth it to start your own lawsuit, the best action here is to take the money and boycott that company if possible. For bigger amounts, like lemon-law cars, it might be worth it, especially if the payouts look too small. For instance, $300 refund if you had to do multiple transmissions repair on your car doesn't seem that great, given that a transmission repair can cost from $500 to thousands of $ each. In that case it can make sense to opt-out.
> or "hey, 50% is too much for the lawyers, I'd rather take $0 than the shitty deal we were offered".
The article says they usually get $2 for $10, which can still look high I agree, but definitely not 50%.
I do find it gratifying to see VW employees being indicted. But the arrest of executives who commit wrongdoing is far too rare these days.
Also, by reading this you agree all disputes between us will go through an arbitration firm of my choosing.
Everyone wants more judicial capacity, no one wants to pay for it.
The courts don't care what your litigation costs are, the only thing they care about is having as few cases on their docket as possible (i.e. They care about their own costs and their own workload).
Works in most jurisdictions since both parties have to agree to the contract.
On the other hand, the car dealership refused to allow me to redline their contract. I was fortunate that I could -- and did -- walk away, and I was able to find another dealer that didn't yet have a MBA clause.
https://www.rt.com/business/man-outsmarts-banks-wins-court-2...
Binding arbitration serves to resolve the dispute. If you can go through binding arbitration and then still go on to sue in court, then it isn't really very binding, is it? So, in order for binding arbitration to be binding, it has to be possible to legally contact too resolve a dispute by binding arbitration. In doing so, you contract to abide by the judgement and waive your right to pursue further legal action (with potentially a handful of exceptions). It is often beneficial for both parties to go through the accelerated process of binding arbitration rather than drag disputes through the overworked court system.
We see this on TV.
Those court shows (Judge Judy, People's Court, Judge Mathis, etc) are not actually "real" court, but are binding arbitration. By agreeing to arbitration both parties who appear in those forums "win" in some way no matter the outcome. The judgement is paid by the show instead of the defendant, both parties get an appearance fee plus an all expenses paid trip to Los Angeles or New York (depending on the show). So the plantiff is guaranteed quick payment if they win the case and the defendant is guaranteed not to have to pay even if they lose.
Another benefit is the plantiff doesn't have to express any effort trying to collect the judgment (like appearing in court again to get an order to garnish the defendant's bank accounts) and the defendant won’t have any civil judgement on their record (they can show up on your credit report and can negatively affect your credit score)
On top of all this the audience is entertained, Judge Judy is one of the most popular daytime shows.
(Also the judges on these shows are [usually] MORE experienced than the magistrates who hear cases in small claims court)
For just about any fundamental right, you can come up with scenarios where it would be advantageous in that scenario to be able to sign them away. But we generally don't allow this, because those fundamental rights are more important than whatever advantage might come from signing them away.
I don't see that the "binding" in "binding arbitration" is necessarily in conflict with the ability to sue. Contracts themselves are considered to be "binding," yet we can still sue over them. If binding arbitration were similar to that, then you could still sue over the result, and the court's job would be to look at the result of arbitration and decide whether it was correct or not. If the arbitration is truly beneficial to both parties then neither one will sue.
I can choose to speak while under arrest, but I cannot give up my right to silence. I can choose not to own property, but I cannot give up my right to own it.
So I see hardly any advantage for the individual customer who got some individual issue of magnitude and is forced to choose between this or arbitration outside of the juidical system.
One can never be forced to sign a contract.
F.I, in the Netherlands it's often stated in rent agreements that pets are not allowed, but this is not permitted to be in the contract by a judge, since such statements are too generic and restrictive.
A bit off topic here but this is IMHO a great challenge for AI: making a lawyer affordable for the masses when they are bullied by banks, airlines, etc.
If it costs you $5 , why not sue for $30 ?
Chasing a return with a potential risk of loss several orders of magnitude higher is insane.
And we could say turn to the blockchain and smart contracts which market themselves as replacements for both real money and real lawyers, but we saw what happens when real techies write the smart contracts (case in point $150M DAO scam and then a fork of the blockchain itself), so we are definitely going to need to replaces software makers and coders with AI too.
I don't think there's any simple or easy solution to these problems. They're messy human problems with vested interests, and smart people are going to have to work hard, together, to implement even partial solutions.
Government and politics are unpleasant and can go horribly wrong. But I've come to distrust all simplistic answers that begin, "All you need to do is X", whether "X" is "privatize everything" or "invent benevolent AI" or "allow the state to wither away in favor of an enlightened proletariat." No, I think we need to work very hard, be smart, and try to find common ground with as many other people as we can. And if merely sort of works, we should count ourselves lucky.
That isn't a great challenge for AI. That's a rotten legal and regulatory system. Why band-aid over society's real problems with software?
If the AI makes it expensive to take advantage of the problem then they'll simply stop doing so.
Of course the race will be on to be the first person to work out how to trick the AI, that person could make a boat load before it is fixed or self-corrects.
The usual way to deal with a $30 fee that wasn't valid in my experience is request a chargeback on your credit card and dare the company to come get it from you. That works often enough that court isn't really necessary IMO.
In India, even if you know you will win the case, it is not worth it. It will take your mental peace. Although I highly recommend to sue companies in other countries, In India we should think twice before suing anyone.
If people cannot bring the power of government to enforce appropriate costs against players with more market power government of the People, by the People, and for the People has failed.
Have the wealthy really captured the courts, or have the government, judges, and lawyers set up a situation in which only the rich get justice?
Then why should it matter if plaintiffs want to act collectively (ie, put themselves at a disadvantage according to the quote above)--wouldn't that benefit the opponents?
There is no reason similar laws wouldn't work for consumers privacy. Tort law needs to be applied aggressively to data privacy.
How exactly does that source support the FACT? The words "liable" and "liability" appear nowhere in it. They credit the reduction in workplace fatalities to a number of factors, including technology, expanded enforcement powers of federal inspectors, mandatory standards, and the creation of OSHA and NIOSH. They make no mention of product liability or tort laws.
At 40,000 inspections/yr it wasn't much OSHA with their tiny, often negotiated fines that caused the decline. ANSI is pretty much the gold standard for safety, not OSHA regs, so their non-mandatory standards don't get a lot of credit. It wasn't a magical fairy tapping a gossamer wand atop a dangerous machine.
It was thousands of plaintiffs attorneys suing the shit out of manufacturers who designed and sold products that could be made more safely. It was the tort laws that let them to sue. It was the insurance companies who extracted hefty sums to write products liability policies on manufactured machinery. And it was the innovators who used sensors, locking mechanisms, new training methods and private inspection procedures that have made the US a workplace safety leader.
The government legislated accountability. The free market made it happen. It can be the same with data privacy.
Maybe a better compromise is to allow for binding arbitration UNLESS the company is found guilty of fraud or other illegal activity, such as Wells Fargo.
Alternatively, perhaps tort reform to prevent frivolous lawsuits would remove the need for arbitration.
https://www.unifiedpatents.com/news/2016/5/30/2015-patent-di...
Some notes:
- Tort reform is largely a concept pushed by big business trying to avoid getting sued when they do wrong.
- The number of frivolous lawsuits in the US is actually pretty low.
- The lady burned by the McDonalds coffee was really hurt, and was only one of many many people burned by McDonalds coffee, who refused to serve it less hot.
[0] http://www.hbo.com/documentaries/hot-coffee/synopsis.html
And many of these were sequential, so McDonalds had been told multiple times that their coffee was too hot, and they just refused to do anything about it.
1. The coffee spilled on the lady's lap in her car, buring her right through her jeans, the burns were so bad she required skin grafting throughout her upper thighs. It's also worth noting the coffee spilled because the McDonald's employee did not fasten the coffee lid;
2. As you mention during litigation it was discovered multiple people had been badly burned by the coffee from this McDonald's and others, and in prior cases the courts ordered McDonald's to turn the temp down based on expert testimony;
3. mcDonalds refused to comply with prior court orders, because a cost benefit analysis, you see truckers love their coffee boiling hot bc it stays hot longer, and it made financial sense to keep there main market happy and pay these lawsuits out rather than truckers potentially go elsewhere for coffee;
4. To punish McDonald's for ignoring prior court orders they awarded the woman punitive damages (while not rare is out of the norm), and she was awarded (I think) $3M in punitive damages which equals 1 day of McDonald's coffee sales;
5. Lesser known is McDonald's appealed the judgement and it was reduced, they and all other big companies took the original award and created the anti-litigation PR campaign we all know today, lady spills hot coffee and court awards millions
The legal arguments are simple, presumably if there are employees who burned themselves, they would have: a.) likely set the coffee temp themselves (above the recommended temp); b.) at least been aware of the temp and risk; and c.) presumably have some responsibility for spilling the coffee on themselves. These facts would remove intentional/reckless/gross negligence on the part of McDonalds.
And I already know the counter arguments; However, if I'm actually wrong feel free to show me an a single case of a McDonalds employee suing McDonald's in civil court outside of workers compensation laws as the result of scalding coffee.
What the documentary left out, was that it happened over a 10 year period where 700 out of 171 BILLION customers got burned from mcdonald's coffee. This is statistically nothing.
> Tort reform is largely a concept pushed by big business trying to avoid getting sued when they do wrong.
While I do not know who created the youtube video you posted, the "Hot Coffee" documentary that is frequently mentioned about the liebeck case is actually created by a special interest group, "Association of Trial Lawyers of America". If you think this movie doesn't have an agenda as well, I have a bridge to sell you. A video that does a better job of clearing up the misconceptions of the case is here: http://www.hotcoffeetruth.com/ .
> The number of frivolous lawsuits in the US is actually pretty low.
I have a hard time believing this. Frivilous lawsuits are easy to do in america and my friends (annoyingly) do them all the time. In fact, they brag about the ease of doing it. My personal estimate is around 70% of "I was injured" lawsuits from my friends were just made up to cash out.
Finally, "hot coffee" lawsuits happen all the time in america at temperatues as hot or hotter than what was given in liebeck case. And the cases almost always get thrown out by judges and juries because they are regarded as "frivilous". Source: https://en.wikipedia.org/wiki/Liebeck_v._McDonald%27s_Restau...
The liebeck case was the exception, not the rule.
Your appeal to this website is just as bad really.
That is the problematic thinking right there. You are sacrificing 700 people to be burned so badly by coffee they require skin grafting based on it being statistically insignificant.
While no doubt many cases settled, many didn't and in those cases McDonalds was ordered to turn the temp down so spilled coffee would at least not result in scalding that require skin grafting. It is not small thing or statistically insignificant that McDonalds ignored many court orders, but why did they ignore the court order? Because the same cost benefit analysis you presented, they'd happily continue their practicies of selling 171B coffees and paying out 700 claims, than change the coffee temp and potentially lose any coffee market share.
As I mention above this well known case is unique because it awarded punitive damages, equaling 1 day of coffee sales, solely because the company repeatedly ignored court orders (i.e. Told the court to go fuck itself), further what is never mentioned consistent with the anti-litigation PR is that the judgement was appealed and ultimately lowered.
1. There aren't 171 BILLION customers on the planet.
2. So I can run around throwing boiling water over 10 out of the 300 MILLION people in the US, and it's totally cool because it statistically didn't happen? Good to know!
Uh...there are <8 billion people on the planet; where did that number come from?
[1] http://www.sandiegouniontribune.com/sdut-federal-law-may-lim...
Maybe it gives consumers a good feeling to be able to sue everyone, but is it actually helping anything?
Even in the past, people were not able to sue the telecoms or banks into having good customer service, or into not doing illegal things. Rarely, if ever, have they recouped the profits these companies made doing whatever. Instead, all the companies just treat it as "cost of business". I'm not sure it's really been a vehicle for effective change anymore.
Certainly arbitration won't be either, but maybe groups of super annoyed people may have better luck forcing the government into action than people placated by class actions where the government can wash its hands say "well, they already took care of it!"
They didn't return anywhere near a good amount of money to wronged parties. Lawsuits were being settled for not even pennies on the dollar. (arbitration also isn't cruft, but it's definitely getting an undeserved bad rap)
Actually, the situation i long for is before the creation of the LLC, where shareholders were responsible for paying for the corporations lawsuits. LLCs are fairly recent invention, and also one that hurt consumers a lot.
IMHO, No better way to get wells fargo to stop doing illegal things than have the people who own X% be forced to pay for it. That'll change a board right quick.
Full liability of owners isn't feasible in the current system, because it would expose every single investor to unlimited liability.
Errr, the company is liable as a separate entity from the owners. That's the whole point. Ignoring insurance, etc, the owners/shareholders will not be liable. The entity will be, completely and legally separate from the people you are talking about.
If I own a company, and my bank account has a billion dollars in it, and the company has 1 million, and they end up fined for 2 million, even as the owner, i don't pay.
"As long as the company isn't bankrupt, incorporation doesn't change anything."
Of course it does. Your argument is a very indirect one, since the owners/shareholders quite literally don't pay. Thus, any payment by shareholders comes in lost money in the market or something, which is both a very indirect thing, and rarely matches the actual cost.
"Full liability of owners isn't feasible in the current system, because it would expose every single investor to unlimited liability."
The first part seems very disconnected from the second. The fact that every investor has unlimited liability does not make it infeasible. Maybe unwanted by the investor, but not infeasible. Right now, the risk of them going bankrupt/etc has been foisted on everyone else who they may injure. I get why the investors don't want that risk. That's their problem.
I'd be fine with "LLC up to some amount of revenue/profit, you must convert to liable corp afterwards".
Er, what? Shareholders are not responsible for paying corporate liabilities (except in rare circumstances where the corporate form is part of a fraud). The creation of the LLC as a new form of business changed nothing in this regard.
You are a bit confused here. The liability shield for corporate shareholders is as old as the joint stock company, and older than the US.
The LLC is a newer business form that includes a similar liability shield for its members to the one corporations do for their shareholders, but differs in other mechanisms from both corporations or partnerships.
> IMHO, No better way to get wells fargo to stop doing illegal things than have the people who own X% be forced to pay for it.
Even without a liability shield, the shareholders personal finances would only be touched of the assets of the corporation itself were exhausted; while liabilities which would destroy a corporation and still leave an unpaid balance for unshielded shareholders do happen (see, MtGox for instance), none of Wells Fargo’s shenanigans have reached that level of proven liability (if they had, Wells Fargo would have gone into bankruptcy), so they wouldn't likely have been constrained by exposing shareholders to liability.
What is the deal with class action lawsuits WRT the monies lawyers get vs the plaintiffs.
I was a victim of fraudulent banking practices in 2008/2009 which resulted in the illegal foreclosure of my home in San Jose. I "won" my class action lawsuit and was "awarded"$1,100 for my victory on having a $489,000 house stolen from me by the bank. (Never missed a payment, never late, had credit score of 780 - this experience ruined me)
So I "won" that legal battle - but was unable to have my credit score fixed through the win...
So the question is: class-action lawsuit victories look to me to be a complete sham, so why would we value them as anything other than a "fuck you for not having enough money" enterprise - and where do the lawyers get off on their "right" to profit off such actions at the expense of others?
https://www.consumerfinancemonitor.com/2017/08/22/director-c...
Talk about a schedule overrun. That project should have been finished in 2011.
From my understanding, the argument for allowing settlements is to help one or both parties somehow save face, time, or money. However, what everyone (including people who are not affiliated with either party) loses out on is the possibility to establish a precedent. Some of the cases that come to mind are the HSBC case where some people who were following the court proceedings started to sense and publicly state the real possibility of actual criminal wrongdoing (https://www.wsj.com/articles/hsbc-agrees-470m-settlement-ove...). Compare that to a guilty plea by BNP Paribas here (https://www.theguardian.com/business/2014/jun/30/bnp-paribas... and https://www.justice.gov/opa/pr/bnp-paribas-sentenced-conspir...).
In comparison, see what happens to an individual (https://www.cnbc.com/2014/03/19/soc-gen-rogue-trader-kerviel...), and how people try to avoid it (https://www.bloomberg.com/news/articles/2017-06-09/ex-socgen...).
TL;DR: Big companies get to settle all to easily in cases brought forward by government attorneys without admitting guilt or wrongdoing, which is in contrast individuals (even wealthy ones) who often basically become the targets of what effectively becomes (sometimes faux) moral crusade. Companies end up:
1. Doing something that breaks the law, but in a sufficiently obfuscated manner. 2. Getting caught by government usually via the observation and study by keen citizens and/or outright whistleblowers. 3. Involving their legal team to both prepare for fighting the case, and to give PR guidance and statements. Marketing and salespeople downplay the concerns from both consumers and customers. 4. When the case becomes sufficiently uncomfortable, settle it with government for some fraction of the total estimated damages and not admit to wrongdoing. 5. Write off the settlement amount in the most tax-friendly manner possible via in-house or third-party accountants. 6. Get praise internally and externally for being scrappy and disrupting the establishment/government/noun-used-as-a-pejorative (yes, you too dear HN contributor/lurker). 7. Rinse and repeat 1-6.
I think a few of the things that Uber and AirBnB have had to settle essentially map to the steps I outlined above.
Note: a. The sources above that I cite might not be the best ones to support my claim, but the general issue and the unwillingness to resolve it properly remain. b. I realize that step 6 is mean/snarky/typecasting. My aim was to remind the reader that audible/silent praise/rebuke do have power, and that doing nothing does register as a signal in some situations.
This makes zero sense. It's on par with saying "dude just turn off javascript".
Is the answer to political corruption buying a boat and taking refuge in the pacific ocean, or is actually correcting the problem?
That's what you actually should do, I use NoScript and it's perfectly fine. Stop bitching and demanding people force others into the things YOU want.
at least 5-10% of websites shit the bed on me with uBlock turned on. can't imagine what noscript is like.
What we need instead is for the government to pursue these crimes on our behalf. The fines should be draconian with no options for them to dilute it the way the SEC does. And the fines should go towards some fund that specializes in charities instead of going to government coffers so that we don't incentive behavior like civil forfeiture.
First, I think you misunderstood what litigiousness means.
Second, merely labeling something as litigious doesn't make it a bad thing.
Litigiousness refers to frivolous lawsuits not legitimate ones. However large corporations have done a campaign of trying to label everything litigious to try and save money.
Personally, I like the fact that courts exist to let people redress wrongs. If regulation was so effective at stopping bad behavior, how did banks, one of the most regulated industries in the world, manage to open up phony bank accounts for customers with no regulatory involvement? In fact how did they cause the financial crash with no regulatory intervention?
Regulation is a bad joke and I'm convinced it's just a PR stunt by the government to make it look like it's doing something.
If the government did that, the need for consumers to continue to sue will mostly go away. Once we have real government protection of consumers the need for consumers to take justice into their own hands (so to speak) by suing would go away all by itself.
In the meantime, let consumers protect themselves.
Can you expound on this? Any examples?