Ever buy, you know, pretty much anything? Better hold on to your wallet.
The U.S. Chamber of Commerce and its minions are on the march again to prevent corporations that defraud consumers and sell faulty products from being held accountable. The latest attempt is a bill in Congress with the Orwellian name “Fairness in Class Action Litigation Act of 2015.” What’s it about? Its proponents claim it’s necessary to reign in “no injury” class actions over faulty products that include people who never had a problem with a product. But its real goal—and real effect—is to make it impossible for consumers to join together in a class action to sue corporations that swindled them unless each one suffered the same harm in the same way.
Why should class actions matter to you? These days, we buy most of the products we use—the food we eat, the fridges where we store it, the ovens in which we cook it, the plates we eat it on, the dishwasher we clean them with and on and on—from large corporations that sell the same products to millions of Americans. Most companies, of course, have integrity, and when a problem arises—as it can and does even to the best of them—they stand behind their product and their promise, and resolve the problem. But some are not so honest. And others may set out with good intentions but, when a problem arises, refuse to stand behind their product, or even blame the customers.
A lawsuit is, in some cases, the only way for the consumer to get what they paid for. But here’s the thing: a single consumer who was bilked out of $30 or even $300 often cannot afford to bring a lawsuit. Lawsuits are costly, and risky. And cases involving products usually require complex and expensive expert work. No consumer could afford to bring such a case on his or her own, and even if they could, the costs would overwhelm any recovery. As Judge Richard Posner—a leading jurist appointed by President Reagan and the most cited judge in America—put it, “only a lunatic or a fanatic sues for $30.”
Enter class actions. Their entire purpose is to address this imbalance—to enable many consumers to band together in a “class,” or group, to take on Goliath. The idea is that instead of each suing for $30, many join together to share the costs and risks of holding a corporation accountable. It’s about leveling the legal playing field a bit.
Which, of course, is why the U.S. Chamber of Commerce and big corporations hate class actions. Because it’s much easier to beat lawsuits brought separately by individual consumers than a group of consumers suing together. Of course, a corporation will never really face lots of lawsuits from individual consumers (lunatics and fanatics aside), because nobody could afford to take on a corporation alone. So, per Judge Posner again, “the realistic alternative to a class action is not 17 million individual suits, but zero individual suits.” Which is what the Chamber really wants.
So . . . back to the “no injury” part of this equation. It’s a great sound bite— who could possibly think someone with “no injury” should get to sue for money? Makes sense then, to ban that practice, right? Except: what does the Chamber mean by “no injury?” They mean no physical injury. But what about just being ripped off?
Imagine you buy a trailer advertised as capable of towing a full-sized car. Only to learn—after you get home—that while your trailer can tow that car, if you want to brake safely while towing, you have to pay hundreds of dollars for supplemental brakes. Or suppose you pay a premium to buy a boat marketed as 100% fiberglass. Only to discover it’s a much less durable wood hybrid. Or you see an ad for pure one-ounce gold bars for $1000, and you buy one. Only to find out later that it’s a silver bar painted gold and worth about $10. Or, worse, you never find out—you just store it away for a rainy day or to pass down to your kids.
In each case—and the trailer and boats are actual cases—the Chamber wants you to believe that because consumers were just cheated out of their money (and may not even know it) there is “no injury,” and there should be no class action.
Aside from defying common sense, this argument is contrary to core consumer protection and warranty laws enacted in all 50 states decades ago. The very purpose of such laws was to do away with the old “buyer beware” rule, which shifted the risk and burden of faulty products from seller to buyer. To put a stop to unfair business practices. To make sure corporations stand behind their products and promises. To, well, protect consumers.
But now, under the guise of “fairness” in class actions, the Chamber wants to do away with these protections, to push the risk and burden back on to the unsuspecting consumer—to you. And the way they do that is by saying there can be no class action unless every buyer knows they were harmed, and were harmed in exactly the same way. So if one person learns they bought fool’s gold, but another never finds out, they cannot join together to sue, even though both were ripped off. Without the ability to join together, none can afford to take on the corporation. So no one gets relief, and the corporation walks away scot-free.
Once upon a time, we had a golden rule about doing unto others as we would have done to us. That may have been replaced some time ago by a new golden rule: the one with the gold makes the rules. But can’t we at least make sure that if they sell us that gold, it’s really gold?
Selbin is a partner in the New York office of Lieff, Cabraser, Heimann & Bernstein, LLP, where he has litigated consumer protection class actions for the last 20 years.