Looks like a class action to me
February 29, 2012
Class actions are always in the news. Either we read about them in the paper, or we receive a notice in the mail telling us how to file a claim.
People think that class actions are just cases that involve a bunch of people. There is lot more to it than that.
I have handled quite a few class cases over the years. So, here’s the deal.
My friend and fellow lawyer, Jamey Holmes, and I developed what we humbly call the Woodfin-Holmes class action test. We use this test whenever a potential case presents itself. It is a simple way of understanding how the process works. To be viable, the case must meet each prong of the analysis. Here it is:
1. Are they doing it?
2. Is it against the law?
3. Are they doing it to a lot of people?
4. Is it the sort of thing that gets people worked up when they hear about it?
Let’s look at each point.
1. Are they doing it? Let’s say you buy an insurance policy and the bill looks like it is a hundred dollars more than you thought it should be. There is a tendency to think that the insurance company has a computer program in place that automatically overcharges people. Maybe, but it could be that someone just hit the wrong key when he entered the data.
2. Is it against the law? There are plenty of things that strike a person as unfair but which are not illegal. Suppose you have an adjustable rate mortgage, and you get a notice that your interest rate is increasing. If the mortgage contract allows for it, the mortgage company can increase the rate, even though it may strike the customer as unfair.
3. Are they doing it to a lot of people? Class cases are about identical small wrongs committed against many people by the same person or company. They deal with what are called “negative value claims.” These claims are too small for one person to litigate because the cost of the litigation would out weigh any financial recovery. A class action only works if thousands or tens of thousands of people have been cheated the same way.
4. Is it the sort of thing that gets people worked up? A guy talked to me about a case he wanted to bring because he had determined that the grocery store was charging him for the weight of the plastic bag he put his vegetables in. He had calculated that the practice cost him an extra penny each time he bagged his onions. Okay, maybe that meets the first three prongs of the test, but so what? No one cares enough about that to get worked up. It doesn’t offend anyone’s sense of justice. I told him no thanks.
So let me give you an example of the sort of thing that does make a good class action. A few years ago, I represented a class of insurance salesmen all of whom worked for the same company. The company was shorting them on their commissions.
Let’s look at the test: 1. yes, 2. yes, 3. yes, 4. hell yes.
So, the next time you get one of those class action notices in the mail, apply the test and see who was cheating whom.
And, by the way, if you happen to be a writer, you will find a lot of material to work with in the class action genre.
I’ll see you in the produce aisle.