High stakes cases involving hundreds of millions or even billions of dollars are in the news as corporations become targets of what leading mass action defense attorney Rob Herrington calls Jackpot Justice. Here is our conversation. [more]
IP: What exactly is a “Mass Action”?
Rob Herrington: A "mass action" is any form of aggregated litigation, where multiple parties (usually plaintiffs) are pursuing similar claims against a common defendant or defendants. The most well known form is the class action, where one or more named plaintiffs seek to represent a class comprised of thousands of individuals who have similar claims. The common denominator of all mass actions is their size and attendant expense. Along with claims for punitive damages, mass actions and class actions form the trial lawyers' "nuclear" arsenal.
IP: Can you give us some examples?
Rob Herrington: Many Internet, telecom and technology companies are dealing with lawsuits alleging privacy violations or deceptive advertising and those claims typically are filed as class actions. Many consumer products companies are dealing with lawsuits alleging that their products contain some type of defect and those cases often are brought as class actions. Financial services and insurance companies often have to deal with cases alleging that their business practices or advertising are unfair or deceptive and those cases usually are filed as class actions.
IP: It sounds like mass actions would be a good recourse for consumers but you say many claims are spurious. What do you mean by this?
Rob Herrington: There is no question that mass actions and class actions are a powerful tool for consumers. They often create negative media attention for the company. And, if not dealt with effectively, class actions can create massive expense and exposure for a company. Some mass actions have merit. But too often they are filed with the hope of using them as form of legalized blackmail in an effort to force a company to pay to settle marginal (and sometimes spurious) cases.
IP: Doesn’t our legal system have built-in safeguards against false claims?
Rob Herrington: Sure. But they are not particularly useful for dealing with class actions (which generally settle) and they are not as robust as in some other countries. Our system is set up in a way that makes it incredibly expensive and time consuming to reach the point where a company can prove that a claim is spurious. Often times, companies will settle to avoid the expense, distraction and uncertainty of litigation. In contrast to the U.S., many countries have a "loser pays" model, where the party that loses the lawsuit pays the other side's attorneys' fees. That can be a powerful deterrent for spurious claims. But in the U.S., just the opposite is true. Typically, each side pays its own fees. And in consumer class actions, the defendant often can be required to pay the plaintiff's fees when the plaintiff wins (but the reverse is seldom true).
IP: Does the system work well for legitimate claims? Do claimants get appropriate recoveries?
Rob Herrington: I wish I could say it does. But it really varies from case to case. Because class actions attempt to administer justice on mass basis, there invariably are claimants receiving less or more than they really should, simply because the system is not set up to deal with variability between class members. And that does not even begin to take into account the massive attorney's fees paid to the trial lawyers who file these cases - awards that often dwarf the recovery of class members.
IP: You talk about “Jackpot Justice” in your new book Verdict for the Defense. How does this fit in?
Rob Herrington: One of the most powerful forces at work in a class action or mass action is leverage. A plaintiff's lawyer can take a relatively small or insignificant claim of one or two individuals and use the class action device to leverage that claim into a massive class action prosecuted on behalf of thousands, where the company faces potential exposure in the hundreds of millions and sometimes billions of dollars. That is a powerful tool, but it is ripe for abuse. When the potential recovery - i.e. the jackpot - is big enough, plaintiffs will sometimes pursue marginal or even spurious claims because, even with only a small chance of the success, it is worth it. The potential payoff is massive or the plaintiff is hoping the defendant will decide not to take the risk and settle. That is jackpot justice and it is a real problem.
IP: Tell us more about the book. Why did you decide to write it?
Rob Herrington: The book began with a simple idea. Through my years of defending class action and mass action lawsuits, I kept seeing relatively simple steps that a company could have taken to dramatically improve its chances of success in litigation or even avoid the lawsuit altogether. As I continued to see the massive monies companies were spending to defend and settle mass action litigation, I began looking at ways companies could implement processes and systems to help prevent or at least better manage the costs and risks of this type of litigation. That led to the concept for the book and the Liability Firewall Process.
IP: Do you expect reforms to come about in the realities of state and federal mass action cases?
Rob Herrington: If you look at the history of the modern class action, there is some type of reform effort about every ten years. The last major reform was in 2005, when the Class Action Fairness Act expanded federal jurisdiction over class actions and instituted additional safeguards to help curb abuses in settling class actions. Ten years before that, we had the Private Securities Litigation Reform Act of 1995, which made it harder to pursue securities class actions. And ten years before that, there was an effort to reform the way class actions were used in mass tort and product liability litigation. I fully expect we will see another effort to reform class actions in the next few years.
IP: What’s the message you hope readers take away from Verdict for the Defense?
Rob Herrington: The message is very simple: businesses have more choices than they think they do. Sure, efforts at tort reform are important, but that is a slow and unsure process. And paying defense firms millions to continually litigate mass action lawsuits is a drain on cash flow, human capital and other resources. Through a little advance planning and risk management, a company can implement a systematized process that helps prevent (or at least limit the impact of) mass action litigation, saving millions in fees and lost productivity, while perhaps even improving certain aspects of the business and benefits to consumers at the same time.
About Rob Herrington: An experienced mass action defense lawyer, Rob is known for helping companies create liability firewalls to prevent unfounded mass claims. His firm represents a Who’s Who of United States and global companies. For more information about Rob Herrington www.robherrington.com