Actions including over 20 dismissals of classaction cases so you may have a sense of where his position is on that. Hes a graduate of georgetown and university of Virginia Law School where he is also the author of a chapter in the popular letter guide series on the claims. [applause] the next panelist is the professor that wrote the book. He is a graduate of notre dame. He made up for that when he went to graduate school and was the top graduate in his class. He makes a case into class action mechanism and we will hear more from him in just a b bit. [applause] we are going to have a great debate with experts on class actions. Brian and i were classmates in law school they are more libertarian. To write a book in support of classaction complaints. [laughter] thank you for that kind introduction. The reason i think conservatives should 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 and amicus brief which inspired me to write a book you have in front of you today. The case went before the Supreme Court called at t the conception. I suspect many of you know about this case. The question was our classaction waivers embedded in arbitration. The Supreme Court said yes. Justice scalia wrote the opinion of the court says so long as you do it in an arbitration clause. It was appearing to everybody in 2010 that if you got rid of the classaction and enforced it these class action waivers people that have been injured small amounts by corporations, small fraud, small breach of contract, small injuries, people would have a very hard time Holding Companies accountable because if you have to go on your own but many people are going to do it. The u. S. Chamber said dont worry if the classaction goes away. Theres Something Better than the classaction. Federal regulators. Federal regulators should be policing the marketplace is. Now, as judge lee mentioned, ive been a member of the vast rightwing conspiracy for a very long time. Ive been going to the Federalist Society members meetings for 20 years. Ive never once at 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 Friedman 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 i quoted above where he says listen, big business is often black Free Enterprise system and they are off on a plane to washington, d. C. Asking for special legislation for their company. So, like chris, i represented many of the chambers of commerce when i was a warrior in washington, d. C. Im very grateful for all the companies do, for the economy and for the country, but they are not the best place to find what the conservative principles suggest we should do to police the marketplace. What is the best place to find what the conservative principles say . Well, my book is built upon people like Milton Friedman, like frederic kayak, like gary becker, like george stigler, frank easterbrook, richard epstein, conservative and libertarian economists, scholars, lawyers, judges. And what do they say . This is what they say. Number one, we do have to have some policing of the marketpla marketplace. But even frederic kayak the Austrian School of economics believed in common pleas was a fair market. At the very least, even the libertarians say we need three rules in the markets. No fraud, no breach of contract and no price fixing. We cannot have vibrant markets of the companies can bridge the promises to us if they can lie about what they are selling and its competitors caitas competito cahoots with one another and least we need those rules. So the question then is how are we going to enforce and implement those rules and 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 the privatization that was very popular during Ronald Reagan and margaret thatchers times and this literature basically says we want to privatize everything. And therefore, why shouldnt we want to privatize the enforcement of the law as well. I identified six reasons why. This literature advocates privatizing solutions over the government solutions. They look around for things to do. This is consistent with private enforcement of the law. If we didnt have the classaction lawyers holding them accountable we would have to hire thousands of more government lawyers to pick up the slack. We like selfhelp, its reason number two. We like to build selfreliance among the citizenry and relying on their neighbors when things go wrong not waiting for the government to save them and bail them out. This is consistent with private enforcement of the law. Reason number three, better incentives we like to privatize because the private sector participants are motivated by profit and we think that galvanizes them to do a better job in the government bureaucrats get paid the same no matter what they do. This is consistent with private enforcement. Class action lawyers are in contingency fees. These are a terrific motivator. So, we expect and i will explain in a moment there is data to confirm this classaction lawyers do a better job enforcing the law and the government voyeurs. Number four, better resources. The private sector is better resourced than the government. The government has always strapped for cash, governments are always being cut. Enforcement is the least sexy thing in the project. Itbudget. Its the first thing to go. For any venture and therefore we would expect the private sector to be able to bring much better resources to bear in enforcing the law and the data is consistent with that. We prefer private solutions because they are less centralized. We like to hedge the bet that is why we should like different classaction lawyers all over the country following lawsuits before different judges instead of one federal agency in washington deciding what the wall should and shoullawshould. 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 a word for it, crony capitalism. Capitalism. Government agenciegovernment agn captured by the people that are supposed to be policing. Campaign contributions, the revolving door of personnel. This makes our Government Agencies less independent. And for biased. The private sector doesnt have that problem, the private sector this focus on profits, focused on contingency fees and in my view that is pure in the government that is focused too much on who gave who money. All of the reasons we 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, begindoublequote data supports the theory if you compare classaction lawyers sensitivity fraud, classaction lawyers and antitrust, defined the classaction lawyers are recovering more money than the government lawyers are recovering and security fraud is tim1 and they recovered ten times as much. A lot of that is because of the security they fail more cases but even if you look at the same cases where they go after the same people for misconduct, it still collects four times as much as the sec. The data suggests the private enforcers are doing a better job. Now of course this trip they can go too far. The profit motive can go too far into the abuse the system to get forprofits. This is not a reason to turn everything over to the government. The corporations can now use the system in pursuit of profit. We dont say therefore lets have the government do everything instead of corporations. We say we are going to put rules into place to harness the profit motive so that it is directed towards the public good. We have a lot of power over classaction lawyers by regulating those contingency fees if they are in their cases. Every one of those awards must be approved by a federal judge, and we can direct the motives towards the public good by ensuring that we only award fees when the cases are good and the lawyers get a good recovery from the case and so i dont think that the fact it can lead people to go too far is any reason to time things to the government. Its a reason to put things in place to make sure the profit motive is pointed 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 reforms ive advocated in the book but for the most part, i think that the system is working and i consider a few of arguments by bring data to bear on the argument and i conclude it is basing its advocacy more on myth and reality. They say we have so many meritless cases title of time and i like to point to the subway footlong case you probably read about this in the paper, some of the subway for forms were only 11 inches in some classaction lawyers sued alleging Consumer Fraud. This was a frivolous lawsuit. But this is a representative ree class action or an outlier. 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, it isnt a typical case. The truth of the matter its never been easier in the history of america to dismiss a meritless case in court after the United States in court decided this is the golden age of motions to dismiss. If you cannot dismiss the subway footlong case that is on you, it is not on our classaction system. I also take a look at the chambers list of the ten worst titles in america. The ten most frivolous cases they put out every year i looked at five years of the listed at over ten classaction cases, subway footlong, a couple of cases against starbucks because there was too much ice in iced coffee or tea much foam on the law say. The other seven 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 they would give was capped at a certain level and they hit that point month free in the year and there were nine more months they were running the promotion we are contributing to charity and it wasnt true. This was a debatable case misleading consumers, so most of the cases on th the chambers onn list to that category and are 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 meritless, we do not have a problem with meritless cases in the system. But im willing to meet the chamber halfway so one of the things i propose in the book is we can tap down even further on the case is if you are not happy with all these other things we can do weeken we can put an autc stay of discovery in place when a motion to dismiss is pending. Most judges do this now with some dont. We can make it automatic. Im even willing to give defendants in interrogatory appeal in a classaction case in a motion to dismiss is denied just to make sure the case is not meritless. Im willing to tweak the system a little bit but i dont think we have a meritless case problem. Attorneys fees is another argument the chamber makes. The only people getting any money and class actions are the lawyers. Class members get nothing. You can find one or two or three cases again where the class members get nothing an mathemats get everything. The cases do exist but i would assert it to you that these are outliers, extreme outliers in my work as a professor i have added up every single dollar that defendants pay out in class actions and icon. To every single dollar judges award voyeurs and fees and you know what the percentage of what the defendants pay out is awarded fees, 15 is what the lawyers are getting. This is far from everything and far from even a normal individual case contingent fee. We dont have a problem with lawyers making too much. I actually argue if we want to be good economic conservatives and youre probably paying too little. We have all kind of ways to cap the incentives in ways that in the market no clients would want their lawyers incentives to be kept. We dont have a problem with fees. It is true that not many class members to recover from Class Action Settlements in a lot of cases. And consumer cases, they are low. They came out with a very well researched study where they showed the median claims raised in the consumer class action is 9 . 91 of the consumers are not getting any come in station. We split the money up among those that filed the claim to give to charity but it is true if the class action isnt good for competition, i admit that but two things about that. Remember the alternative here its the government. As the government going to be better at getting the compensation to people when they go after the wrongdoers . Most of the time the government goes after wrongdoers they are prohibited by law from distributing the money to the victims. It has to go into the u. S. Treasury. On the occasion when the law permits the government to distribute money to victims, what do you think the government does . They hired the same people the class action in higher to distribute their settlements. And actually there are some good empirical studies to show that class action goes up corporate misconduct goes down. I am able to rest the case on deterrence alone been a lot of cases we have the side benefits of compensation. So look at the theory would look at those federal regulators. And in the q a until Ronald Reagans time the conservative view was private enforcement is better than the government. So in 1978 there was a bill introduced into congress to abolish consumer class actions this is the chambers dream bill today in 1978 a bill was introduced to abolish consumer class actions 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 of what i say to you today we should not taking advice from kennedy and carter. Thank you very much. [applause] [laughter] very thoughtprovoking. [laughter] i didnt write a book on this but i have been doing this for about 20 years in a certainly applied the professors contrary in and creative thinking on the subject but suffice it to say i respectfully disagree. I do that from a conservative perspective. My perspective is one that i have spent the bulk of my career defending these actions and litigating in the trenches and i am proud to do. I work for these companies i fundamentally disagree the aim of the companies is to cheat consumers and take advantage of consumers certainly we can all find high profile examples were that has occurred and the professor has those examples in his book but those that we are privileged to defend value the relationship with the consumer much more than the classaction lawyer i can assure you of that. From my perspective, one of the greatest threats we face of civil litigation today is the threat of the classaction. It has been taken from the historical intended purpose and to such an extreme it is not from what was intended from a conservative risk perspective i reject the notion consumers need the government whether in the form of a law or federal regulation or agency or in the form of a statute used in private litigation i think the businesses in this country is considerably overregulated we have one of the more 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 we have wage and hour laws in the state which make it impossible to comply if you comply with one then you violate another then you have the risk of the federal government to say thats a violation nonetheless and classaction is used as a procedural mechanism to take advantage of this of the antitrust context and what im describing to you is not theoretical it happens on a daily basis. I would respond to the thesis with four principal critiques that we outlined. First his theory presents a false dichotomy you will not hear me advocate we should supplant the classaction with great one greater litigation. We were not involved in the amicus brief i dont think the choices we face are between class action as they exist today or even modified versus government enforcement. There is a third way and i think its critically important in the use of private enforcement of industry selfregulation and that could take many different forms. We are all familiar with the Better Business bureau they have a National Advertising division were members can go if somebody crosses the line advertising a product in a way competing business deals crosses the line then industry works together and in that scenario the resolution of those disputes may often lead to file a classaction or a lawsuit but thats where the business regulates itself im not suggesting we replace classaction but its an underutilized tool. There is also a competitor litigation if not exclusively that almost by competitors of false advertising law is used most often following those proceedings. The robinson act which is a corollary to the federal antitrust laws is used in Small Business in ways they view anti competitive we are all familiar with the Patent Infringement suits the breach of contract suits some of those that have not been class actions that the qualcomm case that was reserved earlier this year is the latest example. But where the incentives are aligned companies will not go overboard. To give you an example of a company that may have gone overboard a few years ago there was a number of nad proceedings and false advertising laws and all the competitors argued their pomegranate juice wasnt peer her juice it was flavored but they believe they were the only ones making peer pomegranate juice. All these lawsuits had success. Than the industry went after palm wonderful because they felt they were crossing the line they advertised as products. So this is a private way in a free marketplace for businesses to regulate themselves without