Empirical Evidence of the Effectiveness of Class Actions
Data Shows Societal Benefits
Statistical data demonstrates the effectiveness of class actions in achieving two important goals: (1) compensation for persons who have suffered economic injury and (2) deterring corporate misconduct. Indeed, the statistics show that nothing else compares to the efficiency of class actions in maintaining fairness in the marketplace – not the government and not arbitration. Vanderbilt Law School Professor Brian T. Fitzpatrick shares the empirical proof in his book The Conservative Case for Class Actions.
Here’s what the data shows:
- Class actions have merit. Defendants overwhelmingly move to dismiss class actions at the first opportunity. Results indicate that less than 20% of the time are such motions granted. Statistics on settlement offers also reveal the merit of most class actions. Data indicates an average “nuisance” settlement just to avoid the nuisance of defending against any suit (with or without merit) is around $1-3 million but the median class action settlement was over $5 million over a two-year period of federal court class action settlements reviewed by Prof. Fitzpatrick.
- Class action settlements and awards go to victims. Professor Fitzpatrick found that the same sample of 688 class action settlements in federal court resulted in over $33 billion recovered from defendants. Class members received 85% of this money after attorneys’ fees and costs. The recovery rate for those who suffered economic injury was higher than if they had been forced to bring individual suits even on a contingency basis.
- Class actions deter wrongdoing. Empirical evidence proves generally that the threat of a lawsuit deters misbehavior. This is especially true of class action lawsuits. As one example, Prof. Fitzpatrick analyzed the effectiveness of class action private enforcement of anti-trust price fixing law versus the success of government agency enforcement efforts. Data revealed that settlements in class action price fixing cases were ten times greater than government fines. The effect was virtually immediate and real: widespread price-fixing schemes that existed prior to the invention of the class action lawsuit largely disappeared.
The empirical evidence confirms what the plaintiffs’ litigators at Evans Law Firm know from their own class action experience: cases have merit, result in real compensation for economic injury, and deter misconduct. Next week we will review Professor Fitzpatrick’s recommendations for legislation to make class actions even stronger. Stay tuned!
Ingrid M. Evans and the other plaintiffs’ lawyers at Evans Law Firm, Inc. represent plaintiffs in class action lawsuits, financial elder abuse cases, consumer fraud cases, cases where consumers are sold unsuitable insurance policies or investment products, and whistleblower and qui tam actions for fraud against agencies of the United States government or the State of California at (415) 441-8669, or by email at <a href=”mailto:firstname.lastname@example.org”>email@example.com</a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.