Beyond "It Just Ain't Worth It": Alternative Strategies for Damage Class Action Reform

By Hensler, Deborah R.; Rowe, Thomas D., Jr. | Law and Contemporary Problems, Spring-Summer 2001 | Go to article overview

Beyond "It Just Ain't Worth It": Alternative Strategies for Damage Class Action Reform


Hensler, Deborah R., Rowe, Thomas D., Jr., Law and Contemporary Problems


DEBORAH R. HENSLER [*]

THOMAS D. ROWE JR. [**]

I

INTRODUCTION

We begin with the premise that private class actions for money damages can yield significant social benefits. Class actions for damages can provide compensation for modest but non-trivial losses suffered by widely dispersed but similarly positioned persons as a result of the negligence or illegal behavior of others, allowing recovery for losses that cannot practically be achieved through individual litigation. In this way, damage class actions can deter such injurious behavior and thereby supplement regulatory enforcement by administrative agencies that are under-funded, susceptible to capture by the subjects of their regulation, or politically constrained. Damage class actions also may provide efficient management and resolution of large numbers of similar claims when individual litigation is feasible, but its costs would be extraordinarily high. [1]

Despite these benefits, however, the financial incentives that fuel private class action litigation have the potential to undermine these goals. Private litigation that duplicates effective regulatory enforcement may impose additional costs without commensurate benefits. Non-meritorious class actions filed by lawyers who expect defendants to be willing to pay something simply to ensure that the class counsel will "go away," as well as class action settlements that bear little relation to the merits of the claims, dilute the deterrent effect of class action litigation. Settlements designed in ways that make it unlikely that the defendants will deliver all of the benefits they have pledged to pay class members will not achieve their asserted compensation objectives. The efficiency gains flowing from global resolutions of claims may be outweighed by settlements that invite vast numbers of product users with weak or questionable claims to apply for benefits. During the 1990s, as damage class actions grew in numbe r and scope, both scholarly and public policy discourse on this subject focused on such negative outcomes.

The theoretical bases for the concern that the goals of representative litigation may be thwarted have been well developed. To avoid litigation costs and small risks of large judgments, some defendants are willing to settle even very weak claims for their nuisance value. The incentive to settle nuisance claims--always present in litigation--is particularly great in large-scale representative litigation, with its higher-than-average risks. Recognizing this, some plaintiffs' attorneys search out defendants who can be easily persuaded to settle such claims, often earning attorneys' fees that are disproportionate to the modest effort and expense required to achieve these settlements. Conversely, some defendants who face stronger claims may seek out plaintiffs' attorneys who are willing to settle such claims at less than their true value in exchange for fees that arguably are more generous than they deserve, given what they have obtained for their class clients. In both instances, the defendants buy res judicata at an inappropriate price: In the first instance, they pay too much (and the plaintiffs' attorneys pocket the premium); in the second, they pay too little (and class members suffer the loss). In both instances, because clients in representative litigation usually cannot effectively control their attorneys, unfaithful plaintiff attorney-agents are free to pursue their own interests. In addition, the deterrent signals of litigation are distorted because the costs of the harms that are imposed on the class are not properly reflected by settlement outcomes. [2]

The empirical evidence that supports the theoretical concerns is not as fully developed. No comprehensive assessment of the costs and benefits of damage class actions has been compiled, and no such assessment is in progress. [3] Empirical investigation of a small number of cases suggests, however, that the merits of some class actions are questionable and that some class action settlements provide more benefits for class counsel and defendants than for class members. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Beyond "It Just Ain't Worth It": Alternative Strategies for Damage Class Action Reform
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.