Debate about the future of class-action lawsuits continues to swirl on Capitol Hill.
Long considered a way for consumers to monitor corporations, several Washington politicians including Republican U.S. Sen. Lincoln Chafee, have proposed changing the laws that govern these suits, which some argue have become a breeding ground for greed and deceit.
Known as the Class Action Fairness Act, the measure has already been approved by the House. If passed by the Senate, it would move all inter-state class-action lawsuits to the federal court while at the same time creating a consumer class-action bill of rights.
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The reform, supported by many in the business community, has not been embraced by one critical organization – the Association of Trial Lawyers.
"Part of the problem is that it takes the issue out of local control, presuming that the state courts are ill equipped to handle this sort of thing," said Mark B. Morse, president of the Rhode Island Trial Lawyers Association. "I think the legislation proposed tends to diminish the protection already in place."
James M. Wootton, president of the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce, disagreed.
"This bill is aimed at frivolous litigation," said Wootton. "(If passed) this bill would make justice faster, fairer and simpler. It will create a system with a level playing field."
Just how wide spread is the issue? In a recent survey conducted on behalf of the Institute for Legal Reform, nearly half of the 400 people polled had received a notice in the mail advising them of a class-action suit. Fifty-eight percent of respondents reported hearing or seeing something about class-action suits.
And according to Wootton, the problem isn’t just how many new cases there are every year, but where they are being filed. In the last decade, class-action filings at the federal level have grown by more than 300 percent. Filings at the state level have surged by more than 1,000 percent.
The disparity, Wootton said, is a direct result of individual state laws governing class-actions, where some are more "friendly" than others are.
For example, in Madison County, Ill., more than 50 class-action lawsuits were filed last year. The town, which has a population of 258,941 has become a haven because of its "more sensitive judges," according to US News & World Report article.
"A lawyer sues a local connection just to keep these cases in certain states," Wootton said. "Essentially, a company gets trapped in the state and needs to buy its way out."
Still few plaintiffs in class-actions suits see any monetary reward.
For example, in a settlement reached with movie rental giant Blockbuster last year, trial lawyers on the case received $9.25 million in fees and expenses, while the plaintiffs got only two movie rentals and $1.00 off coupons, the chamber reported. The settlement involved class-action lawsuits filed in Texas that alleged unfair charges for overdue video rentals.
"This type of thing is changing the legal profession," Wootton said. "This is becoming for some lawyers a business. They are going out to look for these clients."
According to Morse, it’s not about lawyers getting rich.
"The whole purpose of a class-action suit is to right a wrong," he said. "The attorney receives a proportionate fee to each of the clients and when you look at the overall size of the claim attorneys aren’t making out with a windfall. It’s not the perfect solution (to issue coupons) but it’s a solution. I guess the result is what is the best interest of the consumer and the company."
A spokesperson for Senator Chafee’s office said more needs to be done to protect the consumer.
"This is a consumer-friendly bill," said Jeff Neal of Chafee’s office. "It will protect consumers from being made part of suits that they know nothing about and will likely gain nothing from. What we are proposing is a very necessary, very obvious, technical fix."
According to Democrat U.S. Rep. James R. Langevin, it’s not the right fit.
"While I understand the need to protect businesses and consumers from frivolous lawsuits, I have concerns that this measure may discourage or delay worthy class-action lawsuits," he said. "Currently, class-actions suits provide access to justice for thousands of consumers and small businesses that would otherwise have no realistic means of taking their case to court.
"By federalizing class-actions, it would make it more burdensome, expensive, and time-consuming for groups of plaintiffs to obtain access to justice … Further, our federal court system is already overburdened with excessive caseloads and unfilled judgeships, and the addition of class-action suits would aggravate this situation," said Langevin.
Ironically, Wootton said, while federal law requires that most interstate court cases be heard in federal court, it doesn’t include class-actions.
"Our polling showed that 70 to 80 percent of people supported moving these cases to the federal court," he said. "They believe they will be treated more fairly, so why aren’t we?"
