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Have questions about class-action lawsuits and your consumer rights? Join us as we ask a lawyer.
There’s a dark side to recalls that companies don’t want you to know about. Their desire for secrecy is so strong that most of the litigation around the issue ends in confidentiality agreements as a part of settlement. That secret is cost/benefit analysis.
When companies learn that one of their products is defective, some will sit down and run the numbers. They’ll ask:
• If we issue a recall, how much will it cost us to replace or repair the product?
• What will be the cost of post-recall customer dissatisfaction?
• Will this open us up to lawsuits or replacement costs for customers who otherwise would not have sued or complained?
• What will be the costs of litigation if we issue a recall?
• What will be the costs of litigation if we do not issue a recall, but take on serious injury or death suits individually without notifying the public?
This running of the numbers is called a cost/benefit analysis. If the recall will cost them 2-3 times more than settling individual claims, even claims for serious personal injury or death, they will avoid the recall, keeping the public in the dark. That’s according to John M. Phillips, Board Certified Civil Trial Lawyer. Phillips has seen these cases first-hand, and relates that they commonly occur with tires, rollovers, and pharmaceuticals.
“Big businesses have a moral, ethical, and legal obligation to inform consumers when there’s a defect.”
-John M. Phillips, B.C.S.
“Big businesses have a moral, ethical, and legal obligation to inform consumers when there’s a defect,” Phillips says. “For years, decades, they didn’t.” What is being done about this alarming practice?
That’s where litigation comes into play.
While it’s common to lament that we live in a sue-happy culture, that ability and willingness to pursue our rights in court is what holds companies accountable. Laws are useless unless enforced. The litigation process is how we enforce them.
The problem is that major corporations have a huge budget, and a litigation team ready and waiting. Individuals attempting to represent themselves in this process are almost guaranteed to fail. They need a legal expert. “That’s the benefit of trial lawyers,” explains Phillips. “The work done, particularly in the automobile industry, has saved lives, and changed the way big businesses operate.”
Behavior-changing litigation in these situations doesn’t typically start with a single case. Instead, these shifts are spurred by class-action lawsuits. You’ve heard of them. You’ve probably gotten a postcard or letter in the mail inviting you to take part in one before. To fully understand the process and your rights as a consumer, we’ll start with that little card.
How do I know this is a legitimate case?
When it comes to identity protection in our day and age, justified concerns abound. If you receive an invitation to join a class-action lawsuit, asking you to provide personal information, your first reaction may be skepticism.
It’s a legitimate reaction. In order to protect yourself from those who would attempt to steal your personally identifiable information, Phillips advises to remain wary of queries requesting any of the following:
• Social Security Number
• Credit Card Number
• Date of Birth
• Checking Account Number
“You never have to pay to be a part of a class action,” he emphasizes. “Anything asking you for confidential information, to Western Union, or to pay anything is something you should take with a grain of salt.”
“You never have to pay to be a part of a class action.”
-John M. Phillips, B.C.S.
Lawyers will send out these cards for legitimate suits, though. They do this because the case is in the preliminary stages of settlement, and the court needs to collect data to determine if the settlement is fair to all claimants.
On these cards, you will also be given the option to opt-out. When you join a class action, you are giving up your right to sue that company at any point in the future over the same issue, as the class-action payment is your settlement. If you opt-out, you won’t receive payment from the settlement, but you also retain your arbitration rights into the future.
Phillips uses Red Bull’s recent class-action suit as an example. On these forms, potential claimants were asked questions like the last time they purchased the product, and how often they did so. These are the types of questions most litigators are interested in, as it helps them determine whether you are, indeed, a claimant, and calculate how much you will receive in the settlement.
What to expect after you join as a claimant
After those postcards are sent out, the final approval of settlement is typically issued after a month and a half to two months. However, if any of the claimants objected to the settlement, they have a right to file an appeal. If there are appeals, they can take a year or longer to resolve. After they are resolved, payment will be issued to claimants.
Payout to individual consumers in most cases doesn’t breech $100, and many times hovers around $5-$10. Viewing the small stipend as the reward can feel deflating, but when you view the message sent to the company and any precedents that may arise through the lawsuit as the reward, participation becomes more important.
What do I do if there is no class-action lawsuit?
If you’ve been hurt or run into other issues with a defective product, you may be wondering what to do next. This is especially true if there currently is no class-action suit, and no open recall. If this is the case you should lodge a complaint with the company, and the regulating agency that oversees the product.
No open recall and no class action? Lodge a copmlaint.
If that does not get you results, you are looking at litigation.
You reach the same conclusion if you are unhappy with a company’s efforts to right things through a recall. “Every consumer has rights up to what the company’s offering,” advises Phillips. “You don’t have to take no for an answer.” You can attempt to ask the company for more. “That said, if you can’t agree, then you’re looking for a class-action lawyer.”
How should I pick a lawyer?
When you’re looking for potential representation, you want to make sure the lawyer has trial experience in the appropriate field. One of Phillip’s go-to sayings on the matter is, “”A lawyer’s biggest enemy is what he doesn’t know.”
It’s surprising how specified these fields can be. There are lawyers who specialize in:
• Products liability
• Car defects
• Tires
• Ladder defects
• Medical claims
• Injury Claims
• Consumer Fraud
This list is by no means all-inclusive, but does demonstrate the wide range of niches, and how specific they can be.
How much will it cost?
Compensation in class-action lawsuits is almost always contingency based. This means that you will only pay the lawyer if the case is won. Phillips relates that when a case is certified, the settlement includes terms of payment for the lawyer, which may be around one-third of the distribution.
Compensation in class-action lawsuits is almost always contingency based; you will only pay the lawyer if the case is won.
He acknowledges that legal fees appear exorbitant when compared to distributions. The reason for the excess is the enormous amount of time and effort required to coordinate and litigate these cases. Not only do legal teams have to identify members to join the class, but they also have to manage each class member’s individual situation within the entire suit for the duration. The process is complex and time-consuming. The same power in numbers that makes class-action suits possible serves to simultaneously complicate the science of pursuing them with each additional class member.
Why did the lawyer deny my case?
When you contact a trial lawyer, they may initially deny your case. “We get that one call all the time,” says Phillips. “’I feel like I overpaid for this,’ or, ‘I feel like my Snickers bar didn’t have 8.4 ounces in it,’ or, ‘I feel like this drug has a side effect that I wasn’t aware of.’ Whatever it is, oftentimes we’ll farm that case out to that particular specialist, and let them determine from what they’ve seen if there’s a bigger problem. But not every problem is a class-action make.”
His firm is currently working on a case involving medical malpractice. A local dentist had been extracting teeth from children unnecessarily, and without parents’ consent in order to get paid per tooth by Medicaid. Phillips turned down the first mother that called him in December of 2014.
He told her that one case would be too difficult to pursue when the focus was medical malpractice. He still stands by that opinion. She posted her story on Facebook, and got another lawyer. Her post brought other parents out of the woodwork, saying their children had suffered the same consequences at the hands of the same dentist.
With the knowledge that this was a widespread issue, and not isolated to one incident, Phillips took her on as a client, and the class representative, in May of 2015.
What is a class representative?
The class representative is the first person involved in the lawsuit. They are the person that has the courage and wherewithal to initiate the case. Because of this, they are compensated at a much higher level than the other members of the class. They “get rewarded in settlement and by the court for being the brave soldier who went first,” as Phillips puts it. “The point is to try to encourage someone with an issue to step forward and fight for others.”
Class representatives are compensated at a much higher level than the other members of the class.
How does a lawsuit turn into a class action?
“Crazily enough it’s oftentimes a class-action lawyer’s decision as to whether they’ll certify a class, if they have enough claimants (people that something similar has happened to) to make it worth fighting the fight from the consumer’s end,” shares Phillips.
Initially, there are typically 3 or 4 people filing the same suit. When a lawyer, or the court, recognizes this, they can work to consolidate them all into one suit. Another way this can happen is if three or four people approach the same lawyer with the same suit. The attorney will recognize the similarities, and consolidate.
Lawyers need to prove that there are at least 40 people affected in exactly the same way to file a class-action case. Since lawyers are not permitted to solicit potential claimants individually, they advertise. One example that Phillips cites is commercials for cases in the medical realm. If you’ve ever seen one, asking if you’ve been hurt by a particular drug or circumstance, and telling you that you may be eligible for compensation, you’ll recognize it as an essential recruitment call for claimants in a class action.
Reporting: Another avenue
When a high number of complaint reports are lodged with the overseeing regulating agency, that’s another red flag that a class-action suit may be appropriate. If the company is slow to recall after these complaints, it may even be a case of cost/benefit analysis in action.
Reporting is important, according to Phillips. One person filing a report is not enough. Even two people on a national level is not sufficient to raise red flags, but once you get three or four people together with the same problem, you start to have a voice. “If you can get a regulatory authority on board, that adds a voice that can be heard.”
Regulating authorities in the United States include the National Highway Traffic Safety Administration (NHTSA) for vehicles, the United States Department of Agriculture (USDA) for meat, poultry and eggs, the Food and Drug Administration (FDA) for all other food, pet food, and pharmaceuticals, and the Consumer Product Safety Commission (CPSC) for consumer goods, including baby and children’s products.
Like singing in the choir
Phillips relates class-action suits to a choir. If choir members sing individually, their voices will be drowned out, much like one person with a legitimate reason to sue a corporation is not likely to be able to effect massive change.
When you get all of those individual members together, and a litigation team is able to coordinate them to sing in concert, laws can start to be enforced. “The thing about the choir is it’s heard, and it’s powerful, and when they’re in harmony, it’s big.” Their complaints, which before were not enough to realistically compete, are now large enough to be brought before the scales of justice.