Looking back at the Americans with Disabilities Act, passed by Congress in 1990, one has to be struck by the extent to which the ADA’s lofty sentiments have been overwhelmed by its adverse results. If it’s true that the road to hell is paved with good intentions, then the ADA is a veritable Autobahn of wishful thinking gone awry. Yet no one seems inclined to reroute the ill-fated traffic; some states are even widening the highway with additional lanes.
The unexpected retirement of Judge Janice Rogers Brown, 68, from the U.S. Court of Appeals for the D.C. Circuit will trigger a well-deserved celebration of her extraordinary judicial career, both as a federal appellate judge (since 2005) and previously as a member of the California Supreme Court (1996 to 2005). It will be difficult for President Donald Trump to appoint a replacement that comes anywhere close to filling the shoes of the of the forceful, fearless, and independent Brown, whose nomination by President George W. Bush to the nation’s second most influential court in 2003 was delayed for two years by Democratic opposition.
In Sunday’s New York Times, Gretchen Morgenson bemoans the Delaware Supreme Court’s recent decision permitting corporations to adopt bylaws that shift the costs of unsuccessful shareholder litigation to those who bring the suit. Such rules allow a corporation that prevails in a shareholder suit against corporate malfeasance to collect attorneys’ fees. She quotes only experts who share her views that Delaware law should be amended to prevent such fee shifting provisions.
But my initial review of the issue suggests that it would be a mistake to immediately prohibit such bylaws. Substantial agency problems arise between the class action lawyers who typically bring such shareholder suits and the shareholders who are supposed to benefit.
In the Energy Star Program, the Energy Department rates energy-efficient and otherwise green appliances. The New York Times has reported that government officials in charge of Energy Star did not do a good job of monitoring compliance with the program’s standards and valorized a host of products that fall far short of the proclaimed criteria. In addition, some of the companies actively misled government officials.
Trial lawyers are now in the wings, ready to sue companies that they allege were serpentine rather than stellar. According to the Times, a congressman who represents a district where a company that used the Energy Star program has a large factory has introduced legislation to prevent class action lawsuits from being brought in connection with the Energy Star program.
In general, I believe that class actions for failure of a product to meet its quality claims are a mistake.
This Liberty Law Talk is with Ted Frank on reforming class action litigation and, in particular, the settlements plaintiffs receive under the current system. Frank, the founder of the Center for Class Action Fairness, argues that class-action suits contribute little to plaintiffs and substantially benefit only their lawyers. Monitoring and agency problems reign because most plaintiffs lack the incentives to ensure that the class's lawyers are actually representing their interests and not the lawyer's monetary desires. We also discuss the turn to arbitration by companies as an exit from class actions and Frank's work that contests egregious attorney fee awards…