Transcripts For CSPAN2 Brian Fitzpatrick The Conservative Case For Class Actions 20240713

Series 17 to 200 claims please welcome christopher. [applause] our next panelist is the professor himself who wrote the book he is a graduate of notre dame where hes a runnerup valedictorian. But he made up for that when he went to Harvard Law School and won the fay diploma for being top student to graduate in his class. a its a lot easier. Hes been a lawyer and professor including back at harvard for a while. Currently at vanderbilt and the author of this book makes a compelling case as to the classaction mechanism and will hear more from him in a bit. Our moderator today is judge on the night circuit, he is a graduate, a korean immigrant to start with and came to this country and graduated from i believe cornell and also Harvard Law School. Round of applause for judge kenneth lee. [applause] thank you for the introductions. I think we will have a great debate here. We have two experts on class actions. Little bit of format, i will give professor fitzpatrick the floor and let him speak for about 10 to 15 minutes to make his case and mr. abwill get another 10 to 15 minutes to rebut and after that we will open the floor for questions. Brian and i were classmates in law school we in fact live in the same dorm floor and i can tell you back in the day at harvard if you are a rockefeller republican, you were treated as if you were to the right of attila the hun. [laughter] brian more libertarian but he is very sterling conservative credentials. And stall work of the federal society. This is a very long way of asking him how does a member of the right wing conspiracy write a book in support of class actions . [laughter] thank you for that kind introduction. The reason i think conservatives support class actions is because we have to ask ourselves what the alternative is. The alternative was told to us in an amicus brief filed by the United States chamber of commerce in 2010. This amicus brief really is what inspired me to write the book that you have in front of you today. The case with the Supreme Court is called at t the conception. I suspect many of you know about this case the question was,. The u. S. Supreme court said yes. My old boss Justice Scalia wrote the opinion and the court says you can ask someone to waive their right doing it classaction. If you enforce these classaction waivers then people had been injured small amounts by corporations small frogs, small breach of contract, small pricefixing injuries, people with small harms would have a very hard time Holding Companies accountable for those harms because if you have to go it on your own, not many people are going to do it. Everyone knew this in 2010 and the chamber of commerce filed an amicus brief to calm everybody down. The u. S. Chamber said dont worry if the classaction goes away. There is Something Better than the classaction federal regulators. Federal regulators should be policing our marketplaces. As judge lee mentioned, ive been a member of the vast right wing conspiracy for very long time. Ive been going to these federal Society Members a meetings, for 20 years. Ive never wanted any of these gatherings heard anyone say that federal regulators were a solution to any problem. The conservative way to police the marketplace is classaction lawsuits, not federal agencies. I start the book with some quotations from Milton Freeman who reminds us that for all of the virtues of the United States chamber of commerce they are often not very conservative. He has a wonderful passage that i quote in the book where he says, listen, big businesses often wax poetic about the Free Enterprise system and they are off on a plane to washington dc asking for special legislation for their company. Let chris i represented many members of the chamber of commerce when i was a lawyer at Sibley Austin washington dc. Im very grateful for all the companies do for our economy and our country but they are not the best place to find what conservative principles suggests we should do to police the marketplace. My book is built upon people like Milton Freeman. Like friedrich hayek, let gary becker, like george stigler, like frank easterbrook. Like richard epstein. Conservative and libertarian economists, scholars, lawyers, judges, and what did they say . This is what they say. We have to have some policing of our marketplace. Not even friedrich hayek, the Austrian School of economics believed in complete laissezfaire markets. In the very least, even libertarians say we need three rules in our markets no fraud, no breach of contract, and no price fix. We cannot have vibrant markets if companies can breach their promises to us if they can lie about what they are selling and if competitors can get in cahoots with one another. At least we need those rules. The question then is how are we going to enforce and abutment those rules. What i argue in the book is the conservative way to do it is through the private enforcement of the law. I go back to the literature on privatization that was very popular during Ronald Reagan and margaret thatchers times in this literature basically says we want to privatize everything. Therefore, why should we want to privatize enforcement of the law as well . I identify six reasons why. This literature advocates privatizing, private solutions over government solutions. All six of these reasons apply to private enforcement of law. We lack Smaller Government. Everything else being equal we want Smaller Government means lower taxes and means fewer government bureaucrats looking around for things to do. This is consistent with private enforcement of the law. If we didnt have classaction lawyers Holding Companies accountable for misdeeds, we have to hire thousands of more government lawyers to pick up the slack. Thats more taxes and more people looking for things to do. We like selfhelp, thats reason number two, we like to build selfreliance among our citizenry, people rely on themselves and their neighbors when things go wrong, not waiting around for the government to save them and bail them out. This is consistent with private enforcement of the law. Reason number three, better incentives, would like to privatize because private sector purchase of goods are motivated by profit and we think that galvanizes them to do a better job in government bureaucrats to get paid the same no matter what they do. This is consistent with private enforcement, classaction lawyers and contingency fees. These are terrific motivators so we would expect and i will explain in a moment, there is data to confirm this. We would expect classaction lawyers to do better job of enforcing the law the government lawyers do. Number four, better resources, the private sector is better resources than the government does. The government is always strapped for cash, budgets are always being cut enforcement budgets are the least sexy thing in the budget the first thing to go, the private sector can find financing for any profitable venture and we would expect the private sector to be able to bring much better resources to bear in enforcing the law. In the data is consistent with that. Reason number five, less centralization. We prefer private solutions because they are less centralized than government solutions. We dont want all our eggs in one basket. What if we dropped the basket and we get a bad result for everybody . We like to hedge our bets by decentralized solutions to problems thats why we like federalism and its why we should like different classaction lawyers all over the country filing lawsuits before different judges instead of one federal agency in washington deciding what the law should and should not be. Lastly, the reason we like private solutions because private solutions are more independent than government solutions. In the academy we often teach about something called agency capture, conservatives have the word for it, a term for it, crony capitalism. Government agencies are often captured by the people they are supposed to be policing. Campaign contributions, the revolving door of personnel, this makes our Government Agencies less independent and more biased. The private sector doesnt have that problem. The private sectors focused on profits and contingency fees in my view thats purer than the government which is often focus too much on who gave who money. All six of the reasons we normally like to privatize leads to the conclusion that private enforcement of the law is preferable to the u. S. Chambers federal regulators. As i said, the Empirical Data supports the theory. If you compare classaction lawyers and securities fraud classaction lawyers and antitrust you find the classaction lawyers are recovering more money then the government lawyers are recovering. Securities fraud is tender one in every given year securities fraud lawyers recover 10 times as much as the sec does. A lot of that is because securities fraud lawyers file more cases but even if you look at the exact same cases to go out to the exact same people for misconduct, the private bars still collects four times as much as the sec does. The theory supports private enforcement and the data suggests private enforcers are doing a better job. Of course it is true that the private sector can go too far. The profit motives can go too far. And people can abuse the system in order to eke out more profits. This is not a reason to turn everything over to the government. Corporations can abuse the system in pursuit of profit. We dont say, therefore, lets have the government do everything instead of corporations, no. We say we will put rules into place to harness the profit motive so its directed toward the public good. We can do the exact same thing with classaction lawyers, we have a lot of power over classaction lawyers by regulating those contingency fees they earn in their cases. Every of those awards must be approved by federal judge and we can direct classaction lawyer profit motives for the public good by ensuring that we only award fees when the cases are good and the lawyers get good recovery from the case. I dont think the fact that the profit motive can sometimes lead people to go too far is reason to turn things to the government. Its reason to put rules in place to make sure the profit motive is planned in the right direction. What i argue in the book as i think we largely already have rules in place. We can always improve the system and i have a few reforms i advocate in the book but for the most part i think our system is working. I consider a few of the main arguments the chamber makes against class actions and i bring data to bear on the arguments and i conclude the chamber is basing its advocacy against class actions more on myth than realities. Let me give you a few examples. The chamber says we got so many meritless classaction cases being filed all the time. Some of the subway footlongs were only 11 inches and some classaction lawyer sued alleging Consumer Fraud. This was a frivolous lawsuit. But is this subway footlong a representative classaction or is it an outlier . In one chapter of the book i try to do a deep dive into the data and i conclude no matter how you slice it, subway footlong is an aberration, its not a typical case. The truth of the matter is this, its never been easier in the history of america to dismiss a meritless case in court. After the United States marine corps decided twombly and iqbal, this is the golden age of motions to dismiss if you cannot dismiss the subway footlong case after twombly and hit ball, thats on you. It is not on our classaction system. I also take a look at the chambers on lists of the 10 worst classaction atrash the 10 worst cases filed every year in america. 10 most for list cases, there were 10 classaction cases, subway footlong, some cases against starbucks because there was too much ice in the ice coffee or to eat too much foam in the latte. There were three cases on the chambers list the other seven classaction gondolas were not even frivolous. There was a case against mastercard because they ran a promotion that said if you use your mastercard we are going to donate a percentage of your purchases to charity. They didnt tell people the amount of money they would give to charity was kept at a certain level and they hit that point at month three in the year, there were nine more months they were running the promotion, use your mastercard we are contributing to charity. It wasnt true. This is at least a debatable case of misleading consumers. Most of the cases on the chambers on list fall into that category where its at least debatable. What i say in the book is this, if in five years the United States chamber of commerce can only find three classaction cases that are clearly meritless, we do not have a problem with meritless cases in our system. But im willing to meet the chamber halfway so one of the things i propose in the book is we can tamp down even further on meritless cases if youre not happy with twombly and iqbal theres other things we can do. We can put an automatic stay of discovery in place when emotion dismisses is pending. Most judges do this now but some dont. We can make it automatic. Im even willing to give defendants an interlocutory appeal. Just to make extra sure that the case is not meritless. Im willing to tweak the system a little bit but i really dont think we have a meritless case problem. What about attorneys fees . This is another big argument the chamber makes. The only people getting any money and classaction lawyers. The class members get nothing. You can find one or two or three cases were class members get nothing and lawyers get everything, these cases exist. But i submit to you, these are outliers, extreme outliers in my empirical work as a professor i have added up every single dollar the defendants pay out in class actions and ive compared it to every single dollar judges award lawyers and fees and you know what the percentage of what defendants pay out is awarded in fees . 15 percent. This is not everything, this is far from everything, its far from even a normal individual case contingency fee. We dont have a problem with lawyers making too much, actually argue in the book if we want to be good law and economics conservatives we are probably paying classaction lawyers too little. Weve all kinds of ways we kept their incentives. We dont have a problem with fees. It is true that not many class members recover from classaction settlements in a lot of cases. In consumer cases the claims rates are low, the ftc just came out with a very well researched study where they show the median claims rate in consumer classaction nine percent that means 91 percent of consumers are not Getting Compensation from classaction. That doesnt mean the monies all going to the lawyers, we split the money up among the nine percent that file claims or we give leftover money to charity. But it is true in a lot of cases the classaction is not very good at compensation. I admit that. But two things about that, remember the alternative here, folks, its the government. Is the government going to be better at Getting Compensation to people when they go after wrongdoers . To begin with, most of the time the government goes after wrongdoers that are prohibited by law from distributing the money to victims. It has to go into the u. S. Treasury. On the occasions where the law permits the government to distribute money to victims, what you think the government does . They hired the same people the classaction lawyers hired to distribute their settlements. The governments claim rate is nine percent too. The government is no better at compensation. Thats the first thing to note. Number two, the case of clocks action is not dependent on compensation. Even when not everybody is getting the money that the classaction still serves an important function, deterrence, if companies no youre going to have to pay when they do something wrong, they are less likely to do bad things to begin with. This is a conservative law and economics theory we been teaching for 50 years. Its another reason why the classaction is valuable and there are actually some very good empirical studies that show that went classaction threat goes up, corporate misconduct goes down. So im willing to rest the case of the classaction on deterrence alone but in a lot of cases we also at least have the side benefit of compensation. I think when you look at the data we look at the theory the conservative way to police our marketplaces is not fed your regulators. My view on this was really the conservative view for most of the 20th century we can talk in the q a about why things change but until Ronald Reagans time, the conservative view was private enforcement is better than the government and i will give you one example on that. In 1978 there was a bill introduced into the congress that would have abolished consumer class actions. This is the chambers dream bill today in 1978 a bill was introduced to abolished consumer class actions. This bill was introduced by ted kennedy. At the behest of jimmy carter. Because they were going to create a federal agency to do the Consumer Fraud policing instead. What i say in the book and what i say to you today is we should not be taking advice from ted kennedy and jimmy carter. Thank you very much. [applause] very thoughtprovoking i didnt write a book on this but ive been doing it for about 20 years and i certainly applaud professor fitzpatrick contrary in thinking, his creative thinking on the subject. Suffice it to say i respectfully disagree. I do that from a conservative perspective. My perspective is one know of actually spending the bulk of my career defending these types of actions, litigating them in the trenches and its something im very proud to do. I work for these companies, i fundamentally disagree that the aim of these companies is to cheat consumers to take advantage of consumers, certainly we can all find highprofile examples were that has occurred and professor fitzpatrick cites a few highprofile examples in his book. But by and large the companies and privilege to defendant my firms privilege to defend value their relationship with the consumer can evaluate much more than the plaintiffs classaction lawyer, i can assure you of that. From my perspective, one of the greatest threats we face in civil litigation today is the threat of the classaction. I think its been taken from its historical intended purposes and it has been taken to such an extreme that i dont think anyone really intended. From a conservative perspective i reject the nanny state i reject the notion that consumers need the government whether in the form of a law or federal regulation or federal agency or in the form of the statute thats been used in private litigation. I think this business in this country is considerably overregulated. We have been one of the most hostile business climates in the country in this particular state. I was speaking with some folks before this program began, i dont know how a company survives in this particular climate, we have wage and hour laws in the state which make it impossible to comply. If you comply with one statute, you are violating another regulation. You have the rest of federal government coming in and using federal statutes to say that the violation nonetheless. I think the classaction is used as a procedural mechanism to take advantage of this in the consumer context and the employment context in the antitrust context. What im describing to you is real. Its not something that just theoretical, thing that happens on a daily basis. I guess i would respond to professor fitzpatricks thesis with four principal critiques, let me outline them. First, i think his theory presents a false economy. You will not hear me advocate that we should supplant the classaction with greater federal regulation, i did not write the amicus brief you reference, my firm was not involved in the amicus brief. I dont think the choices that we face are between class actions as they exist today or even as modified reformed versus government enforcement. There is a third way and i think its a critically important tool in the use of private enforcement and thats industry selfregulation. That can take many different forms. We are all familiar with the Better Business bureau they actually have a division called the National Advertising division where members can go and petition if someone crosses the line if they are advertising a product in a way that a competing business feels crosses the line the industry works together and in that particular scenario the resolution of those disputes may often lead to file on class actions or file a lawsuit but thats a situation where the business regulates itself. Im not suggesting we replace class actions with this but i think this is an underutilized tool. Theres also competitor litigation. There are many federal statutes that are used if not exclusively almost exclusively by competitors. Dilemma mac which is a federal false advertising law is used most often following those nad pretty proceedings that i reference. The Robinson Patman act which is a corollary to the federal antitrust laws often used by Small Businesses who are suing larger businesses in ways that they view as anticompetitive for all familiar with ip suits, infringement suits, breach of contract suit, some of the largest trials weve seen in recent years polevaulting classaction, dave and between competitors acase that resolved earlier this year is the latest examples. I view these private lawsuits where the incentives are actually perfectly aligned companies will not go overboard, let me give you an example of a company i believe may have gone a little overboard. A few years ago Pom Wonderful institute a number of nad proceedings instituted a number of false advertising laws under the lanham act were sued all competitors and argued that their pomegranate juice wasnt pure pomegranate juice it was flavored. They were advertising as pomegranate when Pom Wonderful believe they were the only ones manufacturing pure pomegranate juice so they instituted all the lawsuits they had quite a bit of success in the industry got together and started going after Pom Wonderful with nad proceedings because the companies felt that paul was crossing the line in the way advertisers products. This is a private way in a free and fair marketplace for businesses to regulate themselves and for businesses without distributing the windfalls from those results to the wrong group, namely plaintiffs classaction lawyers. As a child of the cold war actually believed in this concept we all studied which is mutually assured destruction it worked in the nuclear age i think it can work here as well. I think the problem we have in this country is over litigation. Theres too much litigation theres too much litigation over if we might disagree where we draw that frivolous line there are way too many instances where folks are taking advantage of very broad laws and regulations and bringing classaction based on that and im going to discuss a few i read about or have the privilege of defendant. My second critique is what i describe as the law of unintended consequences. One of the most fascinating things i read and learned in professor fitzpatricks book and i would encourage all of you to read about is the history of the classaction it was news to me that the bills introduced abolishing consumer class actions was introduced by ted kennedy. I did not know that. Certainly i dont want to take that side of this debate but the world has changed quite a bit since 1978. If you look, lets remember, classaction is a procedure. You dont bring a classaction and say, im bringing a classaction. Its a procedural mechanism for a plaintiff to group together with other similarly situated plaintiffs and bring a lawsuit for a violation of law. So you have to have the substantive law underlying procedure of using classaction. Without it you dont have a classaction. You dont have any lawsuit state or federal court. What if the law will click today as opposed to what it was like in 1978 . I would argue we were more regulated in 1970 i would say today we are even more overregulated and thats the fundamental problem is what you are seeing the Business Community react to these days is the fact that the classaction is being used in all those different scenarios to enforce privately statutes that were never really designed or intended to be enforced in a classaction. By all objective measures, class actions are more significant class actions and more in total number file today the 1978. abdoes an annual study of class actions and if you read this on an annual basis even if yeartoyear the aggregate filing numbers may dip in the ebb and flow quite a bit, these are being concentrated more and more on what they call the highstakes classaction. The way they define the most Significant Company litigation is a little different than the way our clients define it. The not talking about multibilliondollar lawsuits are talking about lawsuits that are tens of millions of dollars. If you look at the history that professor fitzpatrick lays out its a lot different today as it was back then. I certainly agree as he outlined in his book that the core laws that all conservatives believe in the law breach of contract, the laws of fraud, and the antitrust laws are all sensible regulations, any free marketplace needs a baseline so that a company or individual that looks to start a business wants to ensure the marketplace is free and that the marketplace is fair. Professor fitzpatrick uses an example in his book of a company that is struggling because there are seeds sold the south American Country and there can be no assurance that the seeds are actually going to work. The market is flooded with fake seeds and theres no recourse to the legal system. Thats not our problem. Our problem is the other one where the companies cant even begin a business because they have to comply with all these federal and state regulations to even start a business and once they do and achieve the success, they are immediately hit with a classaction stop i remember a few years ago meeting with the client downtown and he was about to present to the board, it was their first classaction, he was furious, he had no idea why is my company being hit were good company were trying to make it to get some of the bigger players in the industry i mentioned to him, i was in your lobby waiting to meet you there is this industry magazine and i saw your big smiling face on the front of it. The reason you are hit with classaction is because you did anything wrong its because you are successful. His view on it change a little bit in ways i wasnt really appreciating. He was proud all of a sudden that he had a classaction exit no, this is not something to be proud of. Please dont misunderstand me. But that anecdote tells you a lot about the way the plaintiffs bar views these not going after truly legitimate cases but going after deep pockets. He talked to these lawyers over a beer at the end of the case that they tell you thats what theyre looking to do. I also would reject the notion that business communities has this organized lobby and is have lobbyists and they are trying to lobby congress, of course thats happening. But in my experience in my world which is largely consumer class actions i find that the plaintiffs bar is far more organized and far more strategic about how they lobby our governments particularly the california assembly. To get laws to change. Look at example the california privacy act fifth impasse, modeled after the eu privacy regulation for which advocates freely acknowledge there is not a set of guidelines is not a regulations to explain companies, heres what you need to do, heres how you comply me heres a safe harbor if you do this you will not abno, they tell you wait until we enforce it a few times wait until we go ahead and have some scouts on the walls the way they put it then you will know how to comply with the law. Thats no way to regulate any modern economy but thats whats happening in this country. I wouldnt model any of our laws after the eu thats exactly what happened. Whats interesting about this law you look at its history, who lobbied for . Who passed it, if the plaintiffs classaction board you go through the details of this particular statute there is no requirement you show actual injury theres an automatic entitlement to attorneys fees if you prevail and what goal is that advocating or advancing on behalf of consumers . Its not. Its the interest of the private classaction bar. My third critique is several times in his book professor fitzpatrick outlines how the consumption decision the at t case that upheld arbitration causes classaction waivers in these agreements are ultimately going to lead to the demise at one point in his book even suggests that that state Court Class Actions are all but irrelevant these days and thats coming from a practitioner standpoint that is not consistent. We can all cite around this table im sure we could spend the whole session discussing frivolous classaction suite either read about or had to defend im here to tell you red bull does not actually give you wings. Im also here to tell you that froot loops does not contain actual fruit. [laughter] nor does crunch berries, subway footlong sandwiches Committee Example the assessor fitzpatrick uses, may not measure exactly 12 inches when the bread is actually baked, those are obviously ones we all laugh about, we joke about and i agree, they are relatively rare but a few observations, those are not always dismissed mike professor fitzpatrick i dont blame you if you bring a motion to dismiss and they are not because i can tell you most of the cases where i defended, it basically jump ball as to whether or not the cases to be dismissed on the pleadings. Notwithstanding abi would note most judges when you talk to them im interested in judge lees perspective on this, they have twombly fatigued or tired of seeing his motion because they see them not only frivolous cases but they see them in every case. Its very difficult to get the case dismissed on the pleadings before any discovery. Part of that is, it isnt the skill of the advocate in making the argument, in my humble experience in my humble opinion my experience a lot of judges are predisposed to let these cases go into discovery. Most federal judges do not have judge lees background only worked at a firm and saw the enormous costs and sediment pressures that getting a case in the discovery places on a defendant. Subway actually reached the Appellate Courts because it settled the case and i didnt represent subway wasnt involved in the case but i can only assume it wasnt the lack of skill of the advocate but rather their assessment of the risks of that case going into discovery was why they settled that particular case. So there are the obviously frivolous ones but there are the ones that may be on the surface you might look and say, this might actually have some merit. In one example that i would give you is our firm was defending a major Motor Vehicle manufacturer in a case involving the breaks in these hybrid vehicles. One day after the client and asked to recall of those vehicles to do what youd expect any responsible Corporate Citizen to do to address an issue i wasnt a safety issue but involve the vehicles brakes they wanted to fix it one day later after its not to get hit with a classaction. The classaction alleges that your recall is for this generation of vehicles and we are not going to have a claim to those it must be that the earlier generation vehicle brakes are defective as well. It was a completely different model a completely different brake system in the two vehicles. In this case went on for three years. There were multiple millions of dollars of discovery that this defendant had to face it had to turn over its source code to the plaintiffs lawyers to allow them to probe through and try to find something to support their claims. They couldnt do it. It was only when our firm was brought in to take over the appeal we got into the ninth circuit and the ninth circuit left the plaintiffs outofcourt. They said this theory is ridiculous it has no merit. The court shouldve thrown a lot on pleadings and it didnt but that was only after my client had to invest millions of dollars. Its a rare client that will actually do that. It has the resources and the commitment to actually see those particular cases through. My third critique is i do not think class actions are on the road to demise, if anything, i think theres even more incentives for plaintiffs to bring these cases today than there were many years ago. I also think as i noted that state Court Class Actions are just as vibrant today as they were after the passage of the class action fairness act of 2005. This is a law that Congress Passed one of the most single which signature tort reform changes at least at the federal level in my lifetime in the time ive been practicing on the goal was to take these National Class actions and move them into federal court, why . Because companies were finding themselves stuck in some hometown jurisdictions where the plaintiffs lawyer were really chummy. Ive been to hearings in texarkana were in many of she you have as well where the judge comes out of chambers with his arms around the plaintiffs lawyer and they are best friends. The father of the plaintiffs lawyer went to law school with the judge. The naked on the record and the judge the first ruling on the motion to dismiss all this discovery is produced, just exorbitant settlement pressure is placed on the defendant. The goal was where you have multiple you have very large multistate class actions crossing state lines, those belong in federal court. Bringing statewide classaction in texas, and try out and see how it goes and then a settlement as best they can. Wage and hour lawsuits are almost exclusively in state court in my experience. Not exclusively but almost exclusively. So i think that point is one that we shouldnt gustables over. I think classactions are abusive and continuing to rise. Any fourth and final critique, not going to defend the chambers advocacy of more federal regulation but i want to give you a slightly different perspective that businesses have. And that is its very, very difficult these days for companies to achieve global peace. It used to be if you settled a major National Classaction you get the release of all class members and you can count on the fact you were putting the issue behind you. Thats the motivation for the reason a lot of clients pay really big dollars to settle something, get it behind them. My first point, why i dont thinking this is a dichotomy between federal enforce. And private classaction enforce. , its both. Clients were sued in classaction and then the state regulators coming after them and then you have the copycat classaction and there is no easy mechanism under the constitution or law tore a company to basically buy global peace unless it brings all of the people to the table. What kind of incentive is senate you get an auction between the two, trying to get more than the last. Im finding that local city attorneys, especially in california, and even state ags, are partnering now with private plaintiffs classaction lawyers and bringing these bounty lawsuits inch california at least under the unfair competition law, private parties cannot get civil pents and what a civil penalty is is if you establish for example, use the crunch berries case of the if earn nude a class action to get their three dollars back for the career careery. Its a violation of the false advertising laws you can get up to 2,500 per violation and enhance. S if you are a an elderly person and you purchased and deceived or part of some other protected category. So, now each three dollar box of several is a 2,500 becomes, enormous settlement pressure. The law today only Public Officials can pursue penalties for false tide and the ms be direction tote then forcement of unfair competition of false advertising laws. What that that done in the primary as private lawyers were always marketing ourselves to new clients, trying to pitch new cases. What is the plaintiffs bar doing . Theyre making pitches to Public Officials and saying, mr. City attorney, how other would you like to be attorney general and then for then president . Hears the statute and i can bring it on a contingency fee basis, and i can actually enforce it, whether or not theres a class action or a classaction soul settlement and ill bring the plate you can keep every dollar, at 2,500 a pop and you get to build this little Enforcement Unit in your office, and bring all this money into the state. Now, that is a little bit beyond the probable hem were talking about today. But thats the perspective of the Business Community today, and some of the risks that theyre facing, on top of the classactions and makes is very difficult to achieve global peace which i think is part of the conservative case for why you would want class actions, operate enforce. And get some global peace. The most basic level, i would say again i applaud professor fitzpatricks their rhythm its creative. I love the contrarian thinking behind it. Personally i dont view the as a liberal verse conservative issue. I mate be a tee bait between capitalism and socialism. Im not calling professor fit patrick a socialist. Would never do. That please, understand me. Dont think this is necessarily a conservative or liberal issue. Think this is a smart government, its maybe considered pro business perspective but from the perspective in which i operate, i think companies are trying to do the best they can to deliver great products to consumers, and to survive in a hypercompetitive environment and an overregulated economy. And as you noted i dont think comforts are for ending all classaction. The history of the country, classaction played a celt cal role for people getting justice but if you look at where he are today versus where we were 505 years ago i dont think anyone would say this is the right way to set up an economy, the right way to align incentives amongst lawyers and amongst the Business Community and consumers. So again, id say some of the most obvious poster children for the tort Reform Movement happened to be class actions some theres a reason for that. Thank you. [applause] thank you for the very thought. Counterpoint. I want to open it up to the floor and see if anybody has any questions for either. [inaudible question] do you find that ruling is leading to more federal regulation or is it do you fear it will lead to more the second question is, is there a rhythm to where sometimes the private attorney general system works better than the public functioning and vice versa, and for that reason, you need to have both and you need to be working on pecking both because at certain times one will fill in gaps the other doesnt. I can take a stab at answer. That, your second question first. Absolutely we need both. My book is not for private enforcement only there are times when the government is going to be the best enforcer, and sometimes theres not a lot of frost be made in private enforcement and those cases, if we want any enforce. We have to rely on the government, and one of the something things i found in the data on the sec versus the private bar is the sec actually brings lots and lots of cases against very small fraudsters because they know the private bar will not go of those people. So theres an interesting synergy developed between the government and the private bar. So i think you dod in both and i know chris notes, you can have both in the same case and that piling on, i think it can be piling on. Absolutely think that companies should not pay more than the harm theyve caused. And so if they pay out fully in case one, they dont have an offset in case two i and i agree we need to make sure were not overdeterring companies. On the first question, interesting empirical question which we regulators have become more active as class actions have defined. I dont think ive seen anyone try to gather data like that. I will note that after the sbc kicked into it iger because they were worried that class actions going would make it hard for consumers to get a fair shake. Now we have a change in administration i dont know how active the sbpb is. For a while there was some notion that because the class action is going away the cfpb needs to pick up the slack. Dont know if that thought has continued. I questions from my perspective, the become i think das really nice job walking through the potential impact of concepcion and will it will affect. From any perspective litigating cases its lead to if anything more litigation and what you found is the plaintiffs lawyers arent just going to good away you have a whole industry in this state in particular but other states as well, that made their livelihood made a lot of money on consumer class actions. Well, concepcion didnt just wipe those away. First of all you need to have a contractual relationship with your customer, food and beverage is a huge area of litigation. Despite my best attempts my clients still wont put an arbitration clause on the fruit loops. Yet theyre being sued for breach of warranty which is a contract claim, burt nevertheless, what youre finding is number one, its only that class of cases where theres an express contractual relationship with the customer. You need to actually have the contract to have the waiver to have the arbitration. What we have been litigating the plaintiffs lawyers first attack contract formation, and airing didnt understand the contract, i didnt read the contract, the arbitration clause at the end instead of the beginning, it was in black text and wasnt capitalized instead of being red text and up a caps. You see with online commerce, most of now interact with Companies Via apps and the whole click wrap arguments and those things. You also saw this is what let to concepcion in the first place, the reason why the Supreme Court reviewersed the california Supreme Court in the nine inch signature is because the states started using a contractual defense which is the unditch your case one sided or you didnt disclose certain things, its a state law doctrine and you can invalidate a contract because it procedure ie or sub standly unconscionable. And the court started invalidating clauses in the employment context and con tumor context as unconscionable. The Supreme Court said we meant what we said in concepcion. Had to take five or six cases since. Youre finding more and more ways in the plaintiffs bar to attack those andy you host mostly have concept shin with the most force is consumer and employment context and today in the ninth circuit you dont have a single case that delivers a Silver Bullet win to a plaintiff and thats because in any Prime Minister case youre also going to find a private attorney general acts or paga claim, which the Supreme Court has held you cannot arbitrate. Allows any individual to bring an action as a private attorney general, get their attorneys fees and it is not subject to arbitration. The second is in california, even more ridiculous in my own personal view, is theres an argument that if you as a consumer are seeking what is described as public injunctive relief. In the Food Labeling context, you have to get the company to chang the label in a by a you allege or contend is no longer deceptive. Thats considered public injunktive relief. Thats sought in every single consumer class action ive ever seen. That cannot be arbitrated. You have in case where you have a rock solid arbitration agreement, its enforceable, its the in the employment context, the pada claim is sheared off. That stays in court. And the public injunctive relief claim in a consumer case is shaved off and stays in court. Courts are kind of mixed whether they have those go first or the arbitration in first. But i dont think concepcion has had the impact people predicted. I just want to add one thing to. That when the paga dispute goes to the United States Supreme Court, they are going to rule that it cannot withstand arbitration and that they will order arbitration, if the u. S. Supreme court ever rules on it. But i do want to emphasize one source of agreement that chris and i have, and i too talk about in the book and that is we do have way too many laws on our companies. Way too many legal constraints on our companies. Were way beyond freed rick hayaks contract fraud and price fixing and what i say in the book, i agree, we are overregulating, and all i advocate for is this. Say, rather than class action waivers which are a very blunt instrument, you can insulate yourself from liability for wrong doing in any kind of case with a class action with waiver. Rare than allow this brunt instrument, why dont woe focus on the laws you dont like and say you cant use clangses in those situations but allow the contraction for the laws we do like, fraud, breach of contract and price fixing. I advocate we should breach the principle that the rules rules f civil procedure is based on transsubstantivity. We dont have to have the exact same rules and procedure in every case, career to what we learned contrary to what we learned. Has not been handed down by god that prim. We can chane it. I say lets use rule 23 for the laws we think should be in place and should be enforced robustly. And so i agree, we have way too many laws if the answer is not get rid of all class actions, which class action waiver threatens. Instead lets limit where we can use class actions. Any other questions . One question for professor fitzpatrick. Its n my experience, most of the majority of class actions brought with an individual plaintiff is not a plaintiff that walked across the transesome of a lawyers of said ive been done wrung to the tune of 3 and can you please represent me. Theyre generated by lawyers and does that trouble you at all in terms the class action mechanism and i have a comparable question for mr. Chorba. I doesnt trouble me. Ask class action yards and have been surprise out how often people do actually come to them and say, ive been mistreated. This cant be right. But even in a case where the class action lawyers figure out theres a problem, and then find someone to stand in as representative, i dont really have a problem with that because we need sophisticated. Intelligent, wellresourced people to sometimes uncover wrongdoing, and i dont begrudge the class action lawyer for being that time of policemen. Im talked to classaction lawyers who have done analysis to figure another whether theres price fixing going on in an industry. Its hard for any particular consumer to know theres price fixing going on, but if you do investigations, that expensive and sophisticated, sometimes you can uncover these things. I we want to police the marketplace we ought to be encouraging people with the resources resources and sophisticates to find the wrong doing. I teach in europe and i know that the concept is quite foreign there just starting to arrive. I of you were designing the system for european country, lets say, and you could have some element of a class action to that degree would it rue September Bell the United States system and what would you chang. Its interesting because the debates are going on in europe and i handled a couple of cases which involve copycat cases in other countries, and i think its very much prove fitzpatrick rightly describes the liberal tradition, big l, small l, and we our country is founded on the liberal tradition which in todays politics would be viewed more conservative, certainly in europe, politically, and in those countries the perspective that they take on class actions the modern classaction which arode out of the 1960 mid1960s amendments to rule 23 and what we know today as the class action. And youve have to affirm tvly opt out. In these other countries its the exact opposite. Its the way our system used to be. You have to affirmative live opt in to the class action, i cant represent you even if a court says im similarly situated to you unless you give me your permission. So you have more mass actions and optin and that presents challenges and benefits to defendants in Business Community. You have fewer smaller class actions, but then people dont opt in they wait and see how the case goes and its a lot more difficult to get global peace. To answer your question i dont think either system is perfect but i think if i were designing something i would borrow from the uk who i think are having a pretty important election today, i would borrow from them and have of system of lose are pays. What i think that would do and again, brian has very good ideas in his book how we can implement these reforms and i agree with most of the reforms he advocates. By the way. Theyre great. There needs to be some skin in the game and i understand the contingency fie is part of that put that it only be investing if they were recovering a handsome sum on their investments. I think for example with respect to discovery requests, brian talks how a plaintiff lawyer cant just ask for you to been warren is a trial lawyer at theirs femur and i learned under his wing and he said these discoveriy requests the practical of grabbing my client by the ankle and shaking until every single penny falls out of his pocket. A stark image but what we experience in civil stove. Irtheres a loser pay system or a more robust cost shifting, i dont know hough eye would feel but the opt, in versus opt, out. I he hsieh benefit to our system but would have the am of our climates climates to get our fees back we have to endure defend against thieves cases. Any other questions . L. I have a question. In your experience, the class action defense lawyer, what purge of the case does you believe or frivolous and of those, how many of them were dismissed by the courts . Ill say stipulate its not has no berg on your ability as a lawyer. Thank you. I appreciate that. Thats an important caveat. Every lawyer would say 100 meritless. Lets put it that way. 100 were meritless. But i would say its frivolous is a has a a legally charged term and means theres no good faith or objective basis for bringing a lawsuit, and candidly in the consumer connell text i would say its context i would say its half of them and im not saying frivolous in the sense it has to rise to the level of the fruit loops or something completely silly red bull gives you wings but theres nothing there and the was no good faith basis for bringing it. There was a news report, one customer came to them and complained about something, and they launched a class action, and of those 50 , i have defend many hundred laws, class action lawsuits, thats about 250. Id say getting it dismissed on the pleading where that dismissal was upheld, its less than a quarter. And its extremely rare to get a case knocked out that early. Its extremely rare you get the case knock out that early and then guess up to your court and the Court Affirms it. Im not speaking anything out of turn here. Its just morse courts that drs most courts in this circuit view it as very high were to get a case dismissed on the pleadings. They want folks to have their day in court and the certain of operating presumption with most judges before whom i have appeared, is that well if a lawyer puts his or her name on this document and under rule 11 certifies its brought in good faith and i have no basis before me today to question that, and if youre on the pleadings theres been no discovery usually isnt a basis to get that into the record, they believe lawyers bring lawsuits in good faith. So, from that perspective, even if its superficially frivolous, the subway sandwiches case. Let take that as an example. Im not saying i wouldnt have moved to smith in that case. Probably would have. But im sympathetic with the defense lawyer who informed their client that theyd face an uphill battle. Subway youre advertisingor sandwiches as footlong sandwiches. It says 12inch and 6inch on the menu. Every law in the country has a law that prohibits false or deceptive advertising. Its at a minimum deceptive. You expect n and thats pictures explaining the sunday baked. Theres no disclaim ever. Im not defending the lawsuit but would we characterize that as ive just framed it as objectively frivolous . And what is the law or decision that subway could cite to the federal judge to say, they have not stated a claim, they cant get the discovery, you must smith it. We all listened to this and say, come on, its absurd, its ridiculous, everybody knows. And thats what the judge did with the starbucks case. Everyone knows when you by a venti latte and you get it with ice, the ice is going to consume some volume and went be exactly 22 occupantses 22ounces and the judge look at and that applied common sense. I. I applaud that. Those instances are extremely rare in my experience, and its unfortunate. I think we need more of that and that would alleviate a lot of problems. I want to say one thing that also i think emphasizes an area of agreement that chris and i have. One thing that frankly ive learned as ive been on this book tour, because i am a professor and i dont get to practice in our courts as often as chris does, and one thing i have learned is that lawyers are not very careful about what theyre willing to allege, and i have a very good friend who is a very liberal Federal District court judge, and he told me recently that every year he asks his law clerks, what this thing that surprises you most about your clerkship . And he said, every year its almost unanimous, the same answer he gets, how willing lawyers for lie. And so i do think that we may have a problem with people not doing any investigation before the file complaints at theyre supposed to too under rule 11, and just taking a shot and see what might happen. I think that is a problem. And we probably do need to do something to strengthen rule 11 sanctions and the rule 11 procedures, so that people cant just make up a fact, because it is true if youre making up facts its harder to get the cases dismissed. Judges hate to order rule 11 sanctions, and theres been effort inches the past to try to change that, and theyve been unsuccessful. I dont know if you have any idea what could be done to make rule 11 sanctions more of a deterrent to lawyers, but i have been persuaded by things you have said and things ive heard on this book tour we may node to do something with rule 11 as well. One last question. Prove fitzpatrick, you make the conservative case for tcpa, class actions and id like to hear chris rejoinder asian. Its interesting you ask me i say in the book in my last chapter where i advocate for reforms, the tcpa should be one of the laws we do not alaw class actions to enforce. Telephone Consumer Protection act that says if you get a robocall or a robo text, youre entitled to 500 or 1,500 every time. Though this when you combine those bounties which have no relation so how much we are actually harmed from the robo calls, with the class action, you end up threatening companies with massive overdetorrent, some tcpa cases where the defendant is facing not making this up a trillion dollars of liability. So, thats ridiculous, and it give you incredible settlement link youre the plaintiffs lawyers and you can bankrupt the company with a robocall case. So, i say that we should not use the class action twist device when it results results resultsn overdeterrence. Punitive damage cases are not appropriate in my view for the class action device. Will say this, however. When ive gone around to other federal society audiences and i have mentioned the tcpa as one of the things we shouldnt use the class action for because it can result in overdeterrence, the reaction i usually get is professor fitzpatrick, its not resulting in overdeterrence. Im still getting role bow calls and robo texts all the time. We need to doubledown, triple down, more class actions; so, thats the theory and the reality maybe dont meet. I suppose its fitting we end on a point of agreement because vowels live i obvious live i agree and professor fitzpatrick does walk through nat this book, and shows why even those who practice, can find a lot of areas areas of agreement with thesis and the purpose of the statutory damageses because Congress Said its very, very hard to quantify youre eating dipper and disrupted. A very hard damages case to make so well set the statutory damages, statutory penalties at an amount to encourage individuals to bring claims, Small Claims Court or wherever. I its an abuse of the congressional intent and abuse of the statute to lawyer the class action procedure over that particular law to lead to trillion dollar i have defended many of those lawsuits and the client an asks who is my potential expose sure here, i find out how many allegedly spam texts theyve sent by the way, 90 of the time its in response to your request to get a text or opt in and adds up very, very quickly. I want to thank professor fitzpatrick and mr. Chrorba for a thought provoking discussion. Thank you. [applause] youre watching booktv on cspan 2. For a complete television schedule, visit booktv. Org. You can follow along