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The unfairness of settlement class action lawsuits

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  1. Introduction.
  2. The source of the ethical challenges and difficulties surrounding settlement.
    1. Rule 23 of the Federal Rules of Civil Procedure.
    2. Rule 23 in settlement class actions.
    3. The forfeiture of a hearing upon settlement which creates a problematic situation.
  3. The case of General Motors.
  4. The three major positions taken on settlement classes.
    1. Settlement classes are beneficial and should be encouraged.
    2. Settlement classes are bad policy.
    3. Settlement classes are unconstitutional.
  5. Countering the Third Circuit decision.
  6. The flawed exception that is applied to settlement class certifications.
  7. Going forward without litigants being involved.
  8. Conclusion.

When settlement class action lawsuits followed the rise of mass tort class actions and gained acceptance, they eliminated the ability of plaintiffs' counsel to represent cases fairly, threaten trial as a bargaining tool or protect future plaintiffs from attorney conflicts of interest. This created a tension between protecting the rights and claims of the clients and created such a disadvantage in bargaining that attorneys representing members of a settlement class action were sometimes tempted to collude with the defendants' counsel in order to compensate for the inherent disadvantage in the interaction. Two minor ethical issues that arise in class action lawsuits involve marketing in order to recruit members of a class and how best to work with the "no contact" rule, however, the primary areas of legal ethics that need to be discussed are settlements and conflicts of interest. Much of this stems from the fact that settlement class actions are constructed merely to be settled and not to be litigated (Pastor 774). The subject is of interest because the problems that become obvious are similar to the problems that class action lawsuits were designed to prevent.

[...] The exception that is applied to settlement class certifications interferes with the right to litigate and future claimants are unable to decide whether or not they want to be involved because they may be completely unaware of the issues, injuries or damages. As personal injury claims for exposure to asbestos, tobacco, silicone gel, and other professed toxins threaten to swamp the torts system, many commentators have begun promoting the class action as a solution to the heavy court burdens, high transaction costs, and delayed benefits endemic to traditional mass tort litigation[5] (Franklin 163). [...]

[...] Settlement class action lawsuits differ from traditional class actions in many ways, creating the arena for a wide variety of ethics problems. In the original terms of class action lawsuits, a group of plaintiffs would file suit against a defendant or group of defendants. The group consisted of plaintiffs with similar concerns being represented collectively. At first, this approach was seen as advancing victim's rights and streamlining a traditionally cumbersome process. In the beginning, defendants challenged the validity of class action suits because they believed that a single suit to resolve an entire issue in one decision would create the potential for blanket liability that could in turn open a doorway to a near infinite judgment or financial settlement. [...]

[...] A New Approach for Monitoring Class Action Lawyers." The Review of Litigation. Vol P Franklin, Darren M., "The Mass Tort Defendants Strike Back: Are Settlement Class Actions a Collusive Threat or Just a Phantom Menace?" Stanford Law Review 53.1 (2000): 163. Questia. Tidmarsh, Jay., "Mass Tort Settlement Class Actions: Five Case Studies." Federal Judicial Center 1998. Franklin, Darren M., "The Mass Tort Defendants Strike Back: Are Settlement Class Actions a Collusive Threat or Just a Phantom Menace?" Stanford Law Review 53.1 (2000): 163. [...]

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