Sunday, July 15, 2007

Sher Value: Class Actions-A Matter of Business

One of the amazing things about the promotion of capitalism and free economy is that even what are ostensibly service sectors get into the act of making money. Back in the 1960’s the idea of a class action suit was to reduce litigation costs and to bring some equity into the claim process should the class action be successful. It was a bold legal principle meant to champion the cause of the under privileged and the poor who could not afford a battle against a corporate giant.

Fifty odd ears on and class actions have become a business; some banks also have created private equity funds that back the legal and associated costs of class action battles. The result is that mushrooming of court dockets with class action cases some of which have little to do with justice than with the issues of commercialism.

The case of the case against Wal-Mart, Dukes versus Wal-Mart, filed in 2001 indicates how an employee, Betty Dukes, who was reprimanded by a female supervisor for prolonged lunch breaks, brought a $11 billion class action suit against the company on the basis of alleged sexual discrimination at work. Seven years later the battle continues with major funding backing Dukes s the idea of preying on a corporate giant is appealing to many; irrespective of the merits of the case.

Class action lawyers are not the sort of folk I will have for dinner, (does that mean I have violated some right of theirs), not because I question their social or legal skills, but simply because its too predatory a practice for me to accept. I am all for the underdog, I am all for justice, but can I accept the fact that most class action lawyers will take close to 60% of the settlement in cash. In some cases we find that some of the plaintiffs end up with ‘coupon settlements’ where all they get is coupons to buy more of goods and services from the defendant company, while the lawyers, nit surprisingly, have walked off with most of the cash settlement.

The expansion of this phenomenon has developed two aspects, one is where lawyers are trying to establish international jurisdiction of US courts for class action cases and secondly a move is under way to expand class action norms into the European legal system. This is a dangerous trend as it makes a mockery of what were essentially legal principles to establish fairness and equity. There is talk of bringing class action cases against a number of countries over issues of labor law and other human rights issues. While I am all for fair treatment of people I do have a major problem with American lawyers taking such aggressive positions ignoring their own track record. Have forgotten that some of the ‘Black Code’ laws of the Southern States in the US were formally abolished only about a decade back. Perhaps there is an argument for a class action case against Mississippi for allowing the Jim Crow laws and the Black Codes to continue so far into the progress of human history, and why not file that case in New Delhi? But then this is business not justice.

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