Class action lawsuits date back to the middle ages, but the abuse of power in these cases is a recent phenomena and today the Supreme Court did something to stop the abuse of power by many of these lawyers and law firms.
The decision was 5-4 with Justice Gorsuch writing the majority opinion and this is what the court held: Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise. In other words, The U.S. Supreme Court ruled Monday that employment agreements forcing workers to sign away their rights to pursue class action claims are legal, rejecting the National Labor Relations Board’s position that class waivers violate federal labor law.
Gorsuch wrote: “The policy may be debatable but the law is clear: Congress
has instructed that arbitration agreements like those before us must be enforced as written.”
U.S. Class action laws go back to the 1840’s but it was Rule 23 of the Federal Rules of Civil Procedure in 1966 that gave birth to the modern class action lawsuit. It made the opt out clause the standard option.
You probably have gotten notices in the mail about companies that you may have done business with and a class action suit has filed against that company. They give you the option to opt out, but many people just throw away the paper, not wanting to read the legal language, but they become part of the suit anyway. And that’s all the law firms need is a large amount of people to throw their weight around. Then they collect a big payday, possibly bankrupting a company, and the ‘class action litigants’ many times receive nothing.
According to Wikipedia. Among the criticisms “for example, in the United States, class lawsuits sometimes bind all class members with a low settlement. These “coupon settlements” (which usually allow the plaintiffs to receive a small benefit such as a small check or a coupon for future services or products with the defendant company) are a way for a defendant to forestall major liability by precluding a large number of people from litigating their claims separately, to recover reasonable compensation for the damages. However, existing law requires judicial approval of all class action settlements, and in most cases class members are given a chance to opt out of class settlement, though class members, despite opt-out notices, may be unaware of their right to opt out because they did not receive the notice, did not read it, or did not understand it.”
Of course in the same article, they address the problems of ethics. “Class action cases present significant ethical challenges. Defendants can hold reverse auctions and any of several parties can engage in collusive settlement discussions. Subclasses may have interests that diverge greatly from the class, but may be treated the same. Proposed settlements could offer some groups (such as former customers) much greater benefits than others.”
Today the Supreme Court gave a win to ethics and the law in stopping a lot of this injustice.