Small claims instead of class actions
Mitch Lipka, Reuters:
‘Heather Peters’ win in a Los Angeles small claims court against Honda Motor Co has all the makings of a David vs. Goliath battle, but some experts are sceptical it will spur angry consumers nationwide to do what she did: abandon complaint lines, class-action suits and lawyers, and just go it alone through the legal system.
Peters won a $9,867 judgement against the automaker after she complained that her 2006 hybrid only got 30 miles to the gallon, not the 50 she said Honda (7267.T) led her to expect.
To file the suit, she opted out of a class action that included some 200,000 consumers and that is proposing a settlement that would amount to a fraction of her judgment amount.
"The wonderful news here is consumers can fight back. The headline is: ‘Consumers win this round,’" says John Mattes, a San Diego-based consumer attorney who runs his own practice. "She opened the door for consumers all over the country. The consumer army marching into small claims court is a very powerful force."’
This is what Modria is aiming to do. Much more efficient than going through a multi-year class action process.
I’m not the biggest fan of class action lawsuits in the world, but still I have to ask how can it possibly be more efficient for 200,000 people to file 200,000 separate lawsuits, in which they and the company both have to prepare and show up in court to present their individual cases, than a single lawsuit that resolves these issues one time for everyone.
You could argue that each individual might get a larger award in small claims court, but efficiency? I don’t think so. From any individual plaintiff’s point of view, it’s way more efficient to sit back, do nothing, let the lawyers do all the work, and then get a check or coupon in the mail. Compare that to all the time and effort required to try a case by yourself, and then handle the appeal (don’t forget that Peters hasn’t received a penny yet, and may still have to fight layers of appeals), and then the premium for doing it yourself might not appear so large.
It’s like selling your car yourself versus trading it in at the dealer. Yes, you’ll get more for it, but it’s such a hassle to deal with the advertising and showing it and negotiating with buyers, that most people just take what the dealer gives them.
Joe–
I get your point, but I think in many respects the class action system is broken. Check out my most recent class action award:
http://www.modria.com/images/onecentcheck.jpg
A check for one cent. They spent 44 cents to send me that one cent check. But I guarantee the lawyers made millions.
There needs to be a way to aggregate claims, I agree. But I think having a streamlined system to enable consumers to get quick justice is more likely a better path to redress than requiring them to go through interminable class action channels.
rah
They spent way more than 44 cents to send you that 1 penny check. The system can only be justified as a way to deter companies from violating the law, not as a way to provide compensation to victims. If we just wanted to compensate victims of false advertising, for example we could set up a government agency to process claims and pay out the money, and we wouldn’t have to bother with any sort of expensive lawsuits. Remember that most victims never get compensated anyway, since the wrongdoer usually disappears or files bankruptcy or something. The point of lawsuits is to scare companies into compliance with the law, not to provide compensation for victims.
But like I said, I’m not a big a fan of class actions. In most cases, we would be better served by better regulatory enforcement and fines, than any sort of law suits for these kinds of small claims.
Yeah, I just checked out the details on http://ebaymotorsfeeclassaction.com/
It was a $30m settlement, and the lawyers got 25% of that — or $7.5m. They listed their expenses as being about $150,000 to prosecute the case.
The two guys who brought the original case got $15k each.
The argument was that eBay should have charged the eBay Motors final value fee on eBay parts and accessories instead of the eBay standard final value fee. eBay refused to admit wrongdoing.