The Need for Class Action Reform

Class action lawsuits are a valuable part of the legal system. When properly used, they can permit the efficient resolution of suits involving multiple parties. Class action lawsuits were originally designed to benefit consumers by allowing them to more easily join together and seek legal relief as a group or "class". In recent years, however, the class action system has become severly abused. Why?

For one thing, we have seen an explosion in the practice of "forum shopping", in which plaintiffs' lawyers bring numerous national class actions in friendly state courts that often have little or no connection with the controverys. And while businesses often are the losers in state class actions, plaintiffs-- at least most of them--aren't always the winners. There have been a number of recent high-profile cases in which class members have "won" coupons while theier lawyers have won millions. A RAND Institute for Civil Justice study of state class action settlements found that attorneys' fees and administrative costs account for nearly half of any settlement or award.

To help correct these abuses of the class action system, Congress passed the Class Action Fairness Act of 2005, signed into law by President Bush on February 18, 2005. The bill is designed to help curb forum shopping by moving many large class actions out of state courts and into the federal court system. It will also help ensure that settlements are in the best interest of the class members--not attorneys.