I know some of you may wonder why CALA pays attention to class action lawsuits and their absurd settlements when there are so many types of lawsuit abuse out there. Well, partly it is because class action lawsuits offer huge opportunities for trial lawyers to abuse our legal system and in the end it costs each and every one of us. Just in the past month I have noted four class action settlements giving trial lawyers a windfall and the customers little to nothing.
To make my point about how abused the system of class action lawsuits is, let me tell you about the Currency Conversion Fee Antitrust Settlement(CCF Settlement). I mention this one, because I am betting that some of you reading this probably participated in this class action, since more than 10,000,000 claims were submitted.
The lawsuit concerns the prices charged to Visa, Mastercard or Diners Club cardholders to make transactions in a foreign country, or with a foreign merchant, between February 1, 1996 and November 8, 2006. Plaintiffs claimed that these credit card companies and their member banks conspired to set and conceal fees, typically of 1%-3% of foreign transactions, and that Visa and Mastercard inflated their base exchange rates before applying these fees. That was a mouthful, but you get the point.
This lawsuit has been rumbling along for quite some time and I am betting those of you who sent in claims are wondering when you are going to be getting your check. My wife and I traveled to Europe and Canada many times during this ten-year period, so you might think that since we spent thousands of dollars there would be a rather large check coming our way. We documented it and sent in the claims.
Recently, our big day arrived. Two checks from the CCF Settlement Fundarrived at our door. Woo hoo, this will cover our Christmas, it is going to be a big day! Not so fast. We received two checks totaling $18.04 each. A whopping $36.08. So it looks like Christmas is back on us.
Here is the final tally. The settlement amount was $49.5 million. The two class members split $70,000 and the lawyers walked away with $13.875 million, plus $1.5 million for expenses. And the Scotts get $36.08. Plain and simple, the consumer/customer never wins in a class action. The only people who win are the lawyers. Period.
Other than the federal Class Action Reform Act of 2005, which reduced “forum shopping” by plaintiffs’ attorneys and increased federal scrutiny procedures for the review of class action settlements, there has been little to no reform of class action lawsuits in this country or California. The lack of reforms means abusive class action lawsuits continue to clog our legal system, slowing justice for those who are truly injured and costing businesses millions, which is in turn passed along to customers.
Class actions need to be reformed and voters and consumers need to make their voices heard on this issue. We need to elect representatives at the state and federal level that support legal reform. We will have that opportunity in 2012 and I implore each of you to find out where your candidate stands on legal reform before heading to the ballot box.