The central function of the class action in American law is to bestow upon an individual the power of an army of similarly situated individuals in order to vindicate his rights against an otherwise overwhelming opponent. The class action finds its roots in Anglo-American notions of equity and remains a vital tool for protecting individuals in our court system today.
Congress, in enacting the 2005 Class Action Fairness Act, observed the following in the Act’s preamble:
“Class-action lawsuits are an important and valuable part of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.”
The need for a mechanism to promote “fair and efficient resolution” of individual claims stems from two realities often seen in a corporate-consumer context: 1) corporations have exponentially greater resources than a consumer to fight a legal case; and 2) the bare costs of bringing a legal action often extinguish any benefit an individual consumer might receive from his case.
Let’s take an example. John Doe buys a top-of-the-line lawn mower from ACME Industrial. The purchase price is $400. But little does Doe know, ACME–in an attempt to cut costs and raise its profits–has used cheap plastic parts in all of its lawn mower engines. The parts survive the first few months of service, but inevitably break on every single one of the ACME lawn mowers.
John Doe is incensed. He has been cheated out of $400. Under South Carolina’s laws, he could successfully sue ACME for the damages he has incurred.
But does it make sense for John Doe to bring his individual claim? Honestly, no. Merely filing a complaint in South Carolina will cost Doe $150. A traditional 1/3 attorney’s fee will cost Doe another $133. A single deposition transcript will run $300. Translation: in even the simplest of cases, Doe’s possible recovery from ACME will be eliminated almost as soon as he files suit.
Here’s where the class action empowers Doe to fight for his individual rights. Let’s say ACME Industrial has sold 10,000 of its inherently defective lawn mowers. In a class action, Doe can file on behalf of himself and all other individuals who have similarly suffered at the hands of ACME’s defective design. Now, the amount in controversy is $4 million instead of $400. Filing costs are now a mere fraction of this potential recovery and the attorney’s fee is spread over the entirety of the class.
Without the threat of the class action, ACME would be free to operate without the threat of being sued because it would know no customer would have a financial incentive to do so. With a class action, however, an individual customer is empowered to fight for his own rights by banding together with others. As such, the class action plays an important role in promoting individual liberty.
Graham Newman, an attorney with Chappell Smith and Arden, P.A., focuses his practice on non-traditional litigation in areas such as class actions and statutory claims.