[bradleyjg]

Class action lawsuits are either opt-out (23b3) or in some cases (23b1-2) mandatory with no choice but to be bound. This is especially problematic because the actor in the driver's seat -- the lawyers that bring the suits -- have very different incentives from thier nominal clients. In fact, thier incentives are more closely aligned with the defendant. The defendant wants a quick resolution and global peace, the lawyers want a quick resolution and a large fee, so the settlements tend to offer global peace for a large fee. The class gets worthless injunctive relief, or a coupon, or a charity of the lawyers' choice gets some money, or maybe class members get $10 each but only if they fill out a bunch of paperwork. Class actions rarely ever go to trial. In theory the judge is supposed to protect absent class members but usually they act as a rubber stamp.

Class actions do not comport with due process and should be abolished. If lawyers want to bring mass tort suits let them sign up clients.

[Consultant32452]

Class actions work well when a great number of people are harmed for a relatively small sum each. Let's say company XYZ screwed up something in their product that is worth about $100 damage per incident, but it impacts 250k customers. It's really not worth it for any one person to sue XYZ for $100. But with a class action at least XYZ will feel some pinch for their wrong-doing.

[Domenic_S]

Work well for whom? The outcome of cases like your example are the lawyers getting $$$$ and the class members getting a 20%-off-your-next-purchase coupon.

[Consultant32452]

Well, compared to the individual suing which would cost them potentially tens of thousands of dollars in lawyer fees for their $100 verdict, they did pretty darn well to get your coupon for a free frostie.

[spenrose]

Wow, does your last sentence turn 180 from the (otherwise excellent) analysis. If class actions don't help plaintiffs enough, shouldn't we be looking for a stronger solution?

[geebee]

I'm trying to understand these issues better, but my initial inclination would be to treat class actions similar to antitrust lawsuits. Individuals can bring anti-trust lawsuits for specific damages, but my impression is that broad antitrust lawsuits are generally initiated by federal/state attorneys general.

This makes sense when the plaintiffs are, for example, "everyone who buys gas". But in this particular "no hire" case, I do think that the the harm done here is pretty extensive - it may well extend to people who never applied for positions at these companies. Obviously, you were harmed if you were specifically prevented from switching jobs, and you were harmed if you were were passive but specifically never contact about a new position. But what if you might have had a chance to move up in a company if someone else had moved on to a new job at a different company? What if your own staff was aggressively targeted by a recruiter who would otherwise have tried to hire from google or apple, because your engineers were fair game and there's weren't as part of a secret collusive (and absolutely illegal) agreement? What if you applied for a job at these places and might have had a crack at if if there had been more turnover?

Collusion is very, very damaging to a free economy. This is broad and far reaching. I think this might be better handled by an atty general who doesn't stand to profit personally from the outcome.

[bradleyjg]

I tend to agree with you (see my sister comment about regulators regulating) but it's worth noting that in this particular case the Justice Department did pursue the case but agreed to the most ridiculous settlement terms possible (the companies in question promised to follow the law for five years -- something they were already obligated to do.)

Edit: DOJ Press release http://www.justice.gov/opa/pr/2010/September/10-at-1076.html

[geebee]

I wasn't aware of that, though now that you mention it, I do have a vague memory about this. Would you post a link?

[fiatmoney]

"Strength" is not a metric here. There is a principal-agent problem because the lawyers are able to convince a court to give them the right to represent the class. They then have a much lower standard of responsibility to the class.

You need a solution that aligns the plaintiff's interests and the lawyer's interests - one way to do that is to have them negotiate with the plaintiff rather than the defendant to get paid.

Of course, this puts a greater burden on potential defendants - you'd probably see lower volume of suits and higher damages / penalties. It's unclear how the total would shake out.

[spenrose]

[Edit: I misunderstood fiatmoney.]

Strength is not a metric if your goal is to require moral perfection from those representing workers before placing any burden on law-breaking capitalists -- a not uncommon perspective among those concerned about "fiatmoney". If, on the other hand, your goal is to allow the rare employment market in which workers actually have some power to function as a free market, then you might treat legal principal agent problems as issues to be managed rather than excuses to allow capitalists to break the law with effective impunity.

[fiatmoney]

Who said anything about "moral perfection"? And how is changing the relationship between a lawyer and their putative clients not "treating it as an issue to be managed"? Whatever you do, if you make it more difficult for a lawyer to cash out early (via bullshit "settlements" like this, or the ever popular "here's a coupon for our products" or "here's a donation to the lawyer's friend's charity"), there will be fewer suits brought. That's a good thing on balance if the ones that remain actually have a deterrent effect - currently class-actions are more or less a cost of doing business. Whether that happens is more or less a technocratic problem.

For what it's worth, I hope Devine is successful. It would have been better had there been prosecutions all around with appreciable jail time, but unless a state AG wants to get involved, remitting the full damages and a significant penalty will have to do.

[bradleyjg]

Having clients in the driver's seat is a stronger solution. If lawyers had to solicit clients, and settlements had to be approved by them, would cy pres or coupon settlements ever happen? Would the case we are discussing right now have been settled for such a small amount per plaintiff?

It's true that some other cases, where the harm to each individual is tiny, won't be brought at all, but I tend to think such harms are better suited to be ameliorated by regulators rather than through the misuse of the tort system.