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Class Action Dilemmas

Pursuing Public Goals for Private Gain

by Deborah R. Hensler, Nicholas M. Pace, Bonnie Dombey-Moore, Elizabeth Giddens, Jennifer Gross, Erik Moller

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Class action lawsuits — allowing one or a few plaintiffs to represent many who seek redress — have long been controversial. The current controversy, centered on lawsuits for money damages, is characterized by sharp disagreement among stakeholders about the kinds of suits being filed, whether plaintiffs' claims are meritorious, and whether resolutions to class actions are fair or socially desirable. Ultimately, these concerns lead many to wonder, Are class actions worth their costs to society and to business? Do they do more harm than good? To describe the landscape of current damage class action litigation, elucidate problems, and identify solutions, the RAND Institute for Civil Justice conducted a study using qualitative and quantitative research methods. The researchers concluded that the controversy over damage class actions has proven intractable because it implicates deeply held but sharply contested ideological views among stakeholders. Nevertheless, many of the political antagonists agree that class action practices merit improvement. The authors argue that both practices and outcomes could be substantially improved if more judges would supervise class action litigation more actively and scrutinize proposed settlements and fee awards more carefully. Educating and empowering judges to take more responsibility for case outcomes — and ensuring that they have the resources to do so — can help the civil justice system achieve a better balance between the public goals of class actions and the private interests that drive them.

Table of Contents

  • Institute for Civil Justice

  • Board of Overseers

  • Foreword

  • Figures

  • Tables

  • Acknowledgements

    Acknowledgments

  • Section I

  • Chapter One

    "Attention: All Persons or Entities"

  • Chapter Two

    A Matter of Some Interest

  • Chapter Three

    Virtues and Vices

  • Section II

  • Chapter Four

    Into the Fishbowl

  • Chapter Five

    Contact Lens Pricing Litigation: Roberts v. Bausch & Lomb, Inc.

  • Chapter Six

    Bank Brokerage Product Litigation: Pinney v. Great Western

  • Chapter Seven

    Collateral Protection Insurance Litigation: Graham v. Security Pacific Housing Services, Inc.

  • Chapter Eight

    Cable TV Late Fee Litigation: Selnick v. Sacramento Cable

  • Chapter Nine

    Credit Life Insurance Premium Overcharging Litigation: Inman v. Heilig-Meyers

  • Chapter Ten

    Insurance Premium Double Rounding Litigation: Martinez v. Allstate and Sendejo v. Farmers

  • Chapter Eleven

    Blood Clotting Products for Hemophiliacs: In Re Factor VIII or IX Concentrate Blood Products

  • Chapter Twelve

    Toxic Chemical Factory Litigation: Atkins v. Harcros

  • Chapter Thirteen

    Oriented Strand Board Home Siding Litigation: In Re Louisiana-Pacific Inner-Seal Siding

  • Chapter Fourteen

    Polybutylene Plumbing Pipes Litigation: Cox v. Shell Oil

  • Section III

  • Chapter Fifteen

    The Great Big Question About Class Actions

  • Chapter Sixteen

    Achieving the Objectives of Rule 23(b)(3) Class Actions

  • Appendix A

    Rule 23 of the Federal Rules of Civil Procedure

  • Appendix B

    Database Construction

  • Appendix C

    Qualitative Interview Methodology

  • Appendix D

    Case Study Methodology

  • Appendix E

    Calculations for Case Study Settlements, Structures, Costs, and Distributions

  • Index

"Allowing few individuals to represent the legal interests of many who do not participate in the lawsuit but are nonetheless bound by its outcome is the defining and controversial feature of class actions… Conducted by Hensler et al, this Rand report, the result of a four-year study on class action litigation in the US, provides policy and legislative recommendations based on systematic empirical research… The data portray a telling image of mass action suits as money-gorging enterprises benefiting lawyers who are 'motivated by the prospect of substantial fees for relatively little effort'… This is an exceptionally rich resource on the current state of the American class action system for policy makers, legal practitioners, researchers, and graduate students."

- CHOICE Magazine

"Class action suits often provoke extreme reactions in people: some see them as the ultimate guarantors of justice in David-and-Goliath type situations, while others see them as nothing more than a cover for large-scale money-grabbing by avaricious lawyers. The truth probably lies somewhere in-between, as this magisterial study on the subject reveals… One of its main conclusions is that 'judges hold the key to improving the balance of good and ill consequences of damage class actions.' To this end, the study makes a number of well-thought out recommendations which deserve serious consideration."

- The Commonwealth Lawyer

"A keen and generally neutral observer of the torts war has been the Institute of Civil Justice (ICJ) a research program within RAND… Class Action Dilemmas is an ambitious attempt in this tradition to assess the costs and benefits of class action lawsuits…"

- Law and Politics

"This in-depth, benchmark study examines newly compiled information about class action law suits and offers a thoughtful discussion of current trends in mass litigation and their implications for the future…Class Action Dilemmas is a very highly recommended addition to professional, governmental, academic, and judicial reference libraries."

- Wisconsin Bookwatch

This report is part of the RAND Corporation Monograph report series. The monograph/report was a product of the RAND Corporation from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

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