Class Action Lawsuits: A U.S. Import Europe Should Do Without
It isn’t the world’s sexist subject, but the issue of whether to institute U.S.-style class-action lawsuits is raising controversy in Europe.
With regulators poised to institute such a system, the same kind of debate that has repeatedly erupted in the United States is raised in this editorial from France’s Le Figaro Newspaper.
“One notes today the devastating effects of this system: businesses suffer frivolous lawsuits and are forced to settle [out of court] to avoid exorbitant legal fees. And consumers and investors benefit little from these trials, while attorneys charge huge fees and initiate ever-more lawsuits. As a result of the settlement of a class action against an American video rental enterprise, attorneys received $9.25 million and their clients only a few discount coupons.”
“At a time when the United States has assessed the dangers of class actions, what country would want to follow the American ‘model,’ change its own legislation and expose itself to such abuses? … The United States, if only as an old friend of Europe, must inform Europeans about the danger of this Made in the USA ‘product?
EDITORIAL
Translated By Sandrine Agoerges
June 7, 2008
France – Le Figaro – Original Article (French)
Lisa Rickard, president of the Institute for Legal Reform (U.S. Chamber of Commerce, Washington), warns against this procedure, which would result in more lawyers than clients.
It may seem surprising that the U.S. Chamber of Commerce would warn Europeans about the danger of a “product” made in the USA: the class action lawsuit. For over forty years, this procedure for collective action has permitted individuals to sue on behalf of those who have suffered a similar harm, sometimes even in the name of millions of consumers.
Originally, businesses, consumers and investors praised this concept as a way to reduce legal costs and speed compensation to consumers or investors.
One notes today the devastating effects of this system: businesses suffer frivolous lawsuits and are forced to settle [out of court] to avoid exorbitant legal fees. And consumers and investors benefit little from these trials, while attorneys charge huge fees and initiate ever-more lawsuits. As a result of the settlement of a class action against an American video rental enterprise, attorneys received $9.25 million and their clients only a few discount coupons.
Worse, as occurred during a class action brought against an American bank, the victims won the trial but lost the money! Following this transaction, the 700,000 “complainants” received just a few dollars. A year later, sums ranging from $90 to 140 were withdrawn from their bank accounts to settle their attorney fees, which amounted to some $8.5 million.
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