Class Action Law Suits
Allen R. Yates One of the most fascinating aspects of business law is the class action lawsuit. I find this intriguing because class action law suits are often litigated on the same principles as other types of civil action suits, however, the outcome of the class action lawsuit often may have a deep impact on our society, as well as our legal system as a whole. In a normal civil lawsuit, where the plaintiff is the victor, said plaintiff is typically well compensated for their respective damages. Thus it can be viewed that is how justice is served in these cases. In the class action lawsuit where the plaintiffs win, often the individual is not proportionately compensated for their damages as compared to the victor in the average civil suit. In fact there have been class action law suits that have been held in favor of the plaintiffs, damages have been rewarded by the courts, but the individual did not receive a cent of monetary compensation. Yet, in these cases, justice has still been adequately served on the basis of morality. . In this paper, we are going to take a look at class action lawsuits. This paper will cover the history of class action lawsuits, what exactly a class action law suit is, how a class action suit is filed, and we’ll take a look at some of the more famous and impacting class action lawsuits in our nation’s history. The history of most of the United States legal system is deeply rooted in the heart of English common law, and class action lawsuits are no exception. The origins of class actions suits actually go back to medieval times, around the year 1200 in England. During that period of time, a form of what is called by modern observers as “group litigation” was very common. Basically, a group of people conglomerated on some form of societal structure (i.e. village or town), and would be suing another person or group, or the conglomeration was being sued by another person or individual on some issue involving the common law of the time. An interesting fact to mention is that unlike in today’s modern courts, it was quite common that a small group of people, or an individual for that matter, could bring suit or represent the larger group when the group was being sued, without question of the validity of that person or group being able to represent the larger group as whole. This unquestionable ability of an individual or small group of individuals to represent the larger group has been attributed to the poor communication, transportation, and administrative systems of the medieval times. The fact is it was nearly impossible for the English sovereign (a.k.a. the king and the courts) to manage the entire country in terms of “individuals”. Hence this collectiveness known as group litigation was widely accepted and applied because it was much easier for the King, his judges, and lawyers to impose obligations on groups of that time, rather than an individual. By the year 1700, group litigation went from being the norm in England, to the exception. This developed mainly due to the concept of the corporation, which in turn led to the development of what is still known in the modern day as the concept of the unincorporated or voluntary association. During this period of time, the English court system was basically gridlocked. Out of the confusion and turmoil of the times, the Court of Chancery emerged, and handled all group litigation. To say the least, the cases litigated by the Chancery where a shamble. More or less the cause of this frazzled mess was due to the fragmentation of the individual, and group litigation cases where no longer viewed as a consent of representation of the group, but as what was in the best interest of the group, a problem of group litigation that exists to this very day. In the early to mid-1800’s, the English parliament had passed several statutes on a case by case basis which removed the driving force in regards to group litigation. By 1850, group litigation in England was all but dead. Despite group litigation’s demise in England, it survived in the United States. Credit for this is almost solely given to a Supreme Court Associate Justice by the name of Joseph Story. Story gave light to group litigation in summary discussion during a two of his equity treaties, as well as his opinion in the case of West v. Randall (1820), which has been noted as one of the first class action lawsuits in the United States. In 1833, Story was a key architect in manifesting Equity Rule 48, which allowed representative suits in situations where there were too many parties involved. Even though Story was highly versed in the merits and precedents of English common law, he did not learn from the mistakes and failings of the Court of Chancery. Equity Rule 48 did not allow these representative suits to bind similarly situated absent parties, which relinquished its intention, and made the rule useless. In the early twentieth century Equity Rule 48 was replaced with Equity Rule 38, which in turn was renamed Rule 23 of the Federal Rules of Civil Procedure (FRCP) during the restructuring of the federal courts in 1938. Through all this change to name and structure, the original Rule 48, now known has Rule 23 remained more or less the same, with slight variances. In 1966, a major revision of the FRCP gave revolutionary changes to Rule 23. As in the medieval times that started the very essence of group litigation, the changes to Rule 23 bound all members of the class regardless of whether they all actually appeared in court or not. Note: the contrasting difference in modern times versus medieval times is today an individual or individuals can actually appear in court, and state that they do not wish participate in the suit, hence opting out of the current litigation. This allows an individual to seek litigation on behalf of themselves against the defendant for the same injury that the class action suit was filed for, but in a different case. Thus, modern day class action lawsuits where born. We now have a brief idea or where class action lawsuits originated, so let’s take a look at what exactly a class action lawsuit is. Our text book, Business Law; The Ethical, Global, and E-Commerce Environment 14th ed., defines a class action as “an action brought on behalf of the plaintiff and others similarly situated.” In layman’s terms, it means that a large group of people as a collective bringing a suit or a claim to the courts against a class of defendants that are being sued. A wonderful example is the case that we have been intermittently discussing throughout this term, Dukes v. Wal-Mart, a.k.a Women v. Wal-Mart. In this case a female employee is suing Wal-Mart Stores for sexual discrimination under Title VII of the Civil Rights Act of 1964 claiming that after several years of excellent work evaluations she was denied a promotion. The case was converted to class-action status to represent every female employee from 1998 onwards, and is currently awaiting certification of being a class action lawsuit from the Supreme Court. If the Supreme Court allows this case to go forward as a class action lawsuit, it will be the quintessential example of a class action lawsuit because it has all of the basic elements: the large group: almost a million women; bringing a claim: discrimination; against a class of defendants: Wal-Mart. A class action lawsuit may be brought up in either the state or federal courts. Traditionally thinking indicates that the state courts favor the plaintiffs in class action suits, whereas the federal courts tend to favor the defendants, so many class action lawsuits start at the state level. However, often times federal jurisdiction applies, and this is where the suit ends up. Today in United States federal courts, class action lawsuits are governed by the fore mentioned FRCP Rule 23. A class action lawsuit may be brought in federal court if a claim arises under federal law, or the federal courts have original jurisdiction if the amount in controversy exceeds $5,000,000.00 as well as either one of the following criteria are met in accordance with 28 USCA § 1332 (d): (1) any member of the class of plaintiffs is of a different state of residence than any defendant (2) any member of a class of plaintiffs is a foreign state or subject of a foreign state and any defendant is a citizen of a State (3) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state. The procedure for filing a class action lawsuit is a lot like filing a claim in any other civil suit, however there are some stark differences. In a class action, an individual files the suit, with at least on named plaintiff on behalf of a class that consists of a group of individuals or business entities, that have suffered the same or similar injuries inflicted upon them by a specific defendant or class of defendants. After the complaint is filed, the plaintiff must move to have the class certified, after which the defendants have the option to contest the validity of the claim to move forward as a class action. In federal civil procedure law a class action lawsuit must meet the following guidelines: (1) the suit must be so large that it makes individual suits impractical *Note: this is one of the many reasons for gridlock under England’s court system during the 1700’s, (2) there must be legal and or factual claims in common, (3) The claims or defenses of the plaintiffs or defendants must be typical, (4) the representative parties must protect the interests of the class, (5) the common issues between the class and the defendants will predominate the proceedings, versus an specific individual(s) issues predominating the proceedings, (6) that the class action, instead of the individual litigation is the superior vehicle for resolution for disputes at hand. This is the gist of what a class action lawsuit is. Typically they are extremely complicated and far reaching, thus what has been described here are the basics of the basics. Understanding the basics of class action lawsuits allows us to take a look a few cases that have either helped to form our society, shape our laws, or due to their respective intricacies have brought some form of fame or light upon them. So, let’s take a look at just a few of these infamous cases. Anderson v. Pacific Gas & Electric- This class action case was made famous by the movie Erin Brockovich (2000). The history behind the case is in California in 1952 Pacific Gas & Electric (PS&G) started disposing a chemical called Chromium XI into their unlined wastewater ponds, which ended up in the local water supply due to seepage and runoff. This contamination was not discovered until a routine check of the local water supply in 1987. In the early 1990’s PG&E undertook an expensive cleanup process to clear up the pollution to the local water supply. Many residents had been drinking, bathing, and swimming in the contaminated water for over twenty years. Shortly thereafter, an egregious number of residents began to come down with ailments that where linked to the chemical Chromium XI. In lieu of the rampant sicknesses, residents of Hinkley, California filed claim against PG&E. These lawsuits consisted of 36 claims by over 650 residents of Hinkley. Ultimately, the residents won their suit in arbitration to the tune of $333 million, yet it is undisclosed as to how much each individual resident received. This landmark case has since set precedence on the liability of large companies in regards to disposal of the chemicals that are used during industry and manufacturing. AOL Time Warner Litigation- In 2002, Investors in AOL Time Warner stock sued the company in over thirty class action lawsuits in three different federal court districts for fraud under the Federal Securities Act of 1933. The company was alleged to have improperly accounted for dozens of advertising transactions between 1998 and 2002. The alleged transactions created the appearance that they were generating revenue when, in reality, were just shifting money back and forth. The alleged false earnings statements inflated the company’s value by $1.7 billion. The case went on for nearly three years, ending in July of 2005 when an agreement in principle of $2.5 billion was reached to settle the Securities Class Action. Exxon Valdez- This class action lawsuit related to the Exxon Valdez oil spill which occurred on March 24th, 1989 off of the coast of Valdez, Alaska. The oil spill affected thousands of people, more than 1,300 miles of coastline, and had a very deep and lasting impact on wildlife and the ecosystem of the area for many years afterwards. The ship was commanded by Captain Hazelwood, who was known to have issues with drinking alcohol. ExxonMobil knew of Captain Hazelwood’s drinking problem, but allowed him to pilot the gigantic oil rig anyways, and the rest is environmental history. A federal judge found ExxonMobil and Captain Hazelwood liable for the atrocious disaster, and ordered ExxonMobil to pay punitive damages and interest to thousands of commercial fishermen, cannery workers, land owners, Alaska natives and others who were harmed by the spill. This class action lawsuit is often viewed as the cookie cutter for environmental justice. In summary, this paper covered the meager beginnings of class action lawsuits as group litigations during medieval times, through the tribulations fraught upon group litigations via the struggle of English common law, to the culmination of what is the modern day class action lawsuit in the United States. This paper also covered exactly what a class action lawsuit is, the basic criteria it must meet, as well as how a class action suit is filed. The discussion was summed up by a look at some of the most famous and deep impacting class action lawsuits in recent history. Class actions lawsuits have been a part of our legal system in some form from the very beginning of what is considered common law. Typically, these suits are complicated, taking many years to litigate, and the outcomes are unpredictable to say the least. Class action lawsuits are more often than not far reaching, and have helped to shape our society as we know it. In the end, there is no doubt that class action lawsuits will continue to be a stringent part of our legal system, impacting not only business law itself, but the businesses and people on to which they effect, as well as our day to day lives.

References
Class Action Lawsuits
Allen R. Yates
References:
Business Law; The Ethical, Global, and E-Commerce Environment, 14th edition; Mallor/Barnes/Bowers/Langvardt

Websites:
Class Action http://legal-dictionary.thefreedictionary.com/Class+action+lawsuit Dukes v. Wal-Mart http://scholar.google.com/scholar_case?case=7023771032625911493&q=dukes+v.+wal-mart&hl=en&as_sdt=2,44&as_vis=1
Women v. Wal-Mart http://abcnews.go.com/Politics/women-walmart-supreme-court-decide-millions-female-employees/story?id=13215351 Anderson v. Pacific Gas & Electric http://law.justia.com/cases/california/caapp4th/14/254.html
AOL Time Warner Litigation http://www.aoltimewarnersettlement.com/aolbackround.html
Class Action http://en.wikipedia.org/wiki/Class_action Exxon Valdez http://scholar.google.com/scholar_case?case=11632309141529010848&q=exxon+valdez+class+action+lawsuit&hl=en&as_sdt=2,44&as_vis=1

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