Transcripts For CSPAN2 Brian Fitzpatrick The Conservative Case For Class Actions 20240713

Popular runner guide series on 17 200 claims and constitutional law claims please welcome christopher torok. Our next panelist is the professor himself wrote the book, he is a graduate of notre dame where the was a runnerup valedictorian but the made up for that when he went to Harvard Law School and won the diploma for being top student to graduate in his class. He is, its a lot easier. A lot easier. And he has been a lawyer and a professor including back at harvard for a while, hes currently at vanderbilt and hes the author of this book. It makes a compelling case for the class action mechanism and we will hear from him and our moderator today is the judge of the ninth circuit. He is a graduate of, a korean immigrant i should start with came to this country and graduated from Ivy League Cornell and then also harvard lawschool. His classmates, magna cum laude and works at block tell, works at the associate white House Counsel i believe in a special counsel to the Judiciary Committee and recently appointed to the ninth circuit so round of applause for judge kennedy. Thank you for the introduction. I think were going to have a great debate here. We have two experts on class actions. Just a little bit of the format, i will give professor fitzpatrick the floor and let him speak for about 10, 15 minutes tomake his case. And mister torvill will get another 10, 15 minutes to relax and after that we will open the floor for questions here. I think as michael mentioned, brian and i were classmates in law school, we in fact lived in the same dorm floor. And i can tell you that back in the day at harvard if you were a rockefeller republican, you were treated as if you were to the right of attila the hunt. Ryan in law school was to the right of attila the han. I say that in just, brian is actually more libertarian but very sterling,s credentials, works for judge scanlon, or Justice Scalia, worked for editor john cornyn of texas and is a stalwart of the Federalist Society so this is a long way of asking him how does a member of the vast rightwing conspiracy write about insupport of class action . Thank you for that kind introduction. The reason that i think conservatives should support class action is because we have to ask ourselves what the alternative is. And the alternative was told to us in an amicus brief filed by the United States chamber of commerce in 2010, this amicus brief is what inspired me to write the book that you have in front of you today area in the case before the Supreme Court is called at t versus conceptionon, many of you know about this case. The question was our class action waivers embedded in arbitration agreements enforceable . And the us Supreme Court said yes. My old boss Justice Scalia of the opinion and the court said you can ask to leave classaction as long as you do it in arbitration cause, any state laws to the contrary are preempted and it was apparent to everybody in 2010 that if you got rid of the class action, if you enforce these class action waivers , people who had been injured in small amounts by corporations, small fraud, small breach of contract, small pricefixing injuries, people with small arms would have a very hard time pulling Companies Accountable for those farms because if you have to go in on your own , not many people are going to do it. Everyone knew this in 2010 and the chamber of commerce island and amicus brief to calm everybody down. The us chamber said dont worry if the class action goes away. Theres somethingbetter than the class action. Quote, federal regulators. Federal regulators should be policing our marketplaces. As judge lee mentioned, ive been a member of the vast rightwing conspiracyfor a very long time. Ive been going to these Federalist Society members or 20 years. Ive never once in any of these gatherings heard anyone say that adderall regulators were a solution to any problem. And theyre not a solution to this problem as well. The conservative way to police the marketplace is class action lawsuits, not enteral agencies. I start the book with quotations from Milton Friedman who reminds us that for all of the virtues of the United States chamber of commerce , they often not very conservative. He has a wonderful passage that i quote in the book where he says listen, big businesses often waxed poetic about the Free Enterprise system and theyre off on a plane to washington dc asking for special legislation for their companies. So like chris, i represented many members of the chamber ofcommerce. When i was a lawyer in washington dc, im very grateful for all the companies do for our economy and for our country, but they are not the best place to find what the conservative principles suggests we should do to police the marketplace. What is the best place to find what conservative principles say often mark my book is built upon people like miltonfriedman, like friedrichhayek , like gary becker , like stigler, like frank easterbrook, like richard epstein, conservative andlibertarian economists , scholars, lawyers, judges and what do they say often mark this is what they say. Number one, we do have to have them policing of our marketplace. Not even friedrich i, the Austrian School of economics believed in complete laissezfairemarkets. At the very least, even the libertarians say we need three rules in our markets. No fraud, no breach of contract, no pricefixing. We cannot have vibrant markets if companies can reach their promises to us. They can lie about what theyre selling and if competitors and includes with one another read at least we need those rules. And so the question then is how are we going to enforce and implement those rules and what i argue in the book is the conservative way to do it is through the private enforcement of the law and i go back to literature on privatization that was very popular during Ronald Reagan and margaret thatchers time and this literature basically says we want to privatize everything. And therefore why shouldnt we want to privatize enforcement of the law as well . Identify six reasons why. This literature advocates privatizing, private solutions over Government Solutions. All six of these reasons apply toprivate enforcement of the law. Number one, wed like mueller government, Everything Else being equal we want smaller government. It means fewer government bureaucrats looking around for things to do. This is consistent with private enforcement of the law. If we didnt have class action lawyers holding Companies Accountable we have to hire thousands more government lawyers to pick up the slack. As more taxes and more people looking for things to do. We like selfhelp, thats reason number two. We like to build selfreliance among our citizenry, people relying on themselves and their neighbors when things go wrong, not waiting around for the government to save them and mail them. This again is consistent with private enforcement reason number three, better incentives. We like to privatize because private sector participants are motivated by profit. And we galvanize them to do a better job than government bureaucrats get paid the same no matter what they do. This is consistent with private enforcement, plaque classaction lawyers on contingency fees, theseare a terrific motivator. And so we would expect that ill explain in a moment the data to confirm this. We would expect last action lawyers to do abetter job enforcing the law than government lawyers do. Number four, better resources, private sector has better resources than the government does, the government is always tracked for cash, budgets are being cut, enforcement budgets are the least seeking and budget, thats the first thing to go. The private sector can find financing for any operable venture. And therefore we would expect the private sector to be able to bring much better resources to bear in enforcing the law and again, the data is consistent with that. Reason numberfive , less realization. We prefer private solutions because theyre less internalized than Government Solutions area and we dont want all our eggs in one basket. What if we drop the basket . Then we get a bad bet for everybody, we like to have decentralized solutions, that why we like federalism and is why we should like the class action lawyers all over the country, filing lawsuits before different judges instead of one adderall agency in washington deciding what the law should and should not be. Lastly, the reason why we like private solutions is because the private solutions are more independent than Government Solutions. In the academy we often teach about something called agency capture. Conservatives have a term for it, crony capitalism. Government agencies are often captured by the people they are supposed to be policing. Campaign contributions, the revolving door of personnel read this makes for Government Agencies less independent and more biased, the private sector doesnt have a problem read the private sector focused on profit or focus on contingency fees and in my view that furor government is often focused much on who gave who want. All six of the reasonswe normally privatize. Leads to the conclusion that private enforcement of the law is preferable to the us chambers federal regulators. As i said the Empirical Data supports the theory that if you care classaction lawyers and securities fraud, classaction lawyers and antitrust, you find classaction lawyers are recovering more money than the governments lawyers are recovering. And securities fraud can do one in any given year, securities fraud or sometimes as much as the sec does read a lot of that is because the securities fraud lawyers file more cases but even if you look at the same cases where they go after the exactsame people or misconduct , the private bar still collects four times as much as the sec does. The theory supports private enforcement and the data suggest that private enforcers are doing a better job. The course is true that the private sector can go too far. Profit motives can go too far. People can use this system in order to out more profits. This is not a reason to turn everything over to the government area corporations can abuse the system in pursuit of profits. We dont say therefore lets have a government do everything instead of corporations read number we say were going to put rules in place to harness the profit motive so it is directed towards the public good. We can do the exact same thing with classaction lawyers area we have a lot of power over classaction lawyers by regulating those contingency fees that they earn in their cases read every one of those awards must be approved by a federal judge. And we can direct classaction lawyer motives for the public good by ensuring that we only award fees when the cases are good and the lawyer a good recovery from the case. So i dont think the fact that the profit motives can sometimes lead people to go to far is reason to turn things the government. Its reasonable rules in place to make sure the profit motive is pointed in the right direction but i argue in the book that i think we largely already have rules in place. We can always improve the system and i have a few reforms that i advocate in the book but for the most part i think our system is working and i consider a few of the main arguments the chamber makes against class actions and i bring data to bear on the arguments and i conclude the chamber is facing its advocacy more on myth than reality. Let me give you a few examples. The chamber says we got so many meritless classaction suit being filed all the time and they like to point to the subway footlong case, you read about this in the paper. Some of the subway footlong are only 11 inches and some classaction lawyers sued alleging Consumer Fraud. This was a frivolous lawsuit but, but is this subway footlong a representative class action or is it an outlier and in one chapter i do a deep dive into the data and i conclude no matter how you slice it, subway footlong is an aberration. Its not atypical case. The truth of the matter is this, it has never been easier in the history of america to dismiss a meritless case in court. At the United States Supreme Court decided calmly, this is the golden age of motions to dismiss. If you cannot dismiss the subway footlong case after twombly and a bar, that is on you. It is not on our classaction system. And i also take a look at the chambers own list of the 10 worst class action, the 10 worst cases filed every year in america, the 10 most ruthless cases list i put out every year, i looked at their list and there were 10 class action cases on there, subway footlong and there were a couple of cases against starbucks that there was too much ice in the ice coffee and too much foam in the latte, there were three frivolous cases, the other seven actions on the list were not even frivolous and there was a case against mastercard because they ran a promotion that said if you use your mastercard, were going to donate a percentage of your purchases to charity. They didnt tell people the amount of money they would gifted charity was capped at a certain level and they hit that point at month three in the year, there were nine more months and they were running the promotion. It wasnt true. There was at least a debatable case of misleading consumers so most of the cases on the chambers list fall into that category where its at least debatable and what i say is this, if in five years the United States chamber of commerce can only find 3 class action cases that are clearly meritless,we do not have a problem of meritless cases in our system but im willing to meet the chamber halfway. Thats one of the things i propose in the book is that we can tap down even further on meritless cases, if youre not happy with twombly and igbaugh theres other things we can do. Wecan make it automatic. Im even willing to give defendants an interlocutor appeal in a classaction case when their most in dismissal just to make extra sure that the case is not meritless so im willing to tweak the system a little bit but i dont think we have a meritless case. What about attorneys fees . This is another big argument the chamber makes, the only people getting any money in class actions are the lawyers, the class members get nothing and listen, you can find one or two or three cases again where class members did nothing and the lawyers get everything, these cases existbut i submit to you, these are outliers , extreme outliers and in my empirical work as a professor, i have added up every single dollar that the defendants pay out in class action and i had compared to every single dollar judges award lawyers and fees and you know what the percentage of what defendants pay out is awarded in fees . 15 percent, 15 percent is what the lawyers are getting, this is not everything. This is far from everything. Its far from even a normal individual case contingency fee. We donthave a problem with lawyers making too much. I actually argue in the book if we want to be good law and economic conservatives, where probably a classaction lawyers too little. We have all kinds of ways we their incentives in ways that in the market no client would want their lawyers incentives so we dont have a problem with these area it is true that not many class members recover from Class Action Settlement in a lot of cases. And instant consumer cases, the claims rates are low. The ftc just came out with a very well researched study where they showed a median claims rate in a consumer class action is nine percent read that means 91 percent of consumers are not getting any compensation on class actions but it doesnt mean the money is all going to the lawyers. We split the money up among the nine percent that filed claims or less money to charity that it is true in a lot of cases the class action is not good at compensation, i admit that but two things about that, number one, remember the alternative here, folks is a government. It the government going to be better at gettingcompensation to people when they go after wrongdoers. Indian with, most of the time the government goes after wrongdoers , they are prohibited by law and distribute the money to the victims you it has to go into the u. S. Treasury area on the occasions where the law permits the government to distribute money to victims, what you think the government does mark they hire the same evil the class action lawyer hired to distribute their moment. The government claim rate is nine percent you. So the government is no better at compensation, thats the first thing to note, number two, the case of the class action is not dependenton compensation. Even when not everybody is getting their money back, the class action still serves an important function. Deterrence. Companies know theyregoing to have to pay when they do something wrong , they are less likely to do that bad thing to begin with this is a conservative law and economics theory, weve been teaching it for 50 years and its another reason why the class action is valuable and there are actually some good empirical studies thatshow that when classaction press goes up , corporate misconduct those down and so im willing to rest the case of the classaction on deterrence alone but in a lot of cases, we also at least have the side benefit of compensation area so i think you look at the data, when you look at the theory, the conservative way to police our marketplace is not federal regulators, and my view on this was really a conservative view for most of the 20th century, we can talk in the q a if you want to about why things change but until Ronald Reagans time, the conservative view was private enforcement is better than the government and ill give you one example, on that. In 1978, there was a bill introduced into the congress that would have abolished consumer class action. This is the chambers dream bill today. In 1978 a bill was introduced to abolished consumer class actions. This bill was introduced by ted kennedy. At the behest of jimmy carter. Because they were going to create a federal agency to do the Consumer Fraud policing instead of what i say in the book and what i say to you today is we should not be taking advice from ted kennedy and jimmy carter. Thank you very much. Very thoughtprovoking. Your response. I didnt write a book on this, but ive been doing it for about 20 years and i certainly applaud professor fitzpatricks contrary and thinking, his creative thinking on this subject. But suffice to say i respectfully disagree. And again, i do that from a conservative perspective. My perspective is one though of actually sending the bulk of my career ending these types of actions, litigating them in the trenches and its something im very proud to do i work for these companies that i fundamentally disagree that the aim of these companies is to cheat consumers, to take advantage of consumers. Certainly we can all find highprofile example where that has occurred and professor fitzpatrick site a few highprofile examples in his book. But by and large, the companies that im privileged to defend and my firm is privileged defend value their relationship with the consumer, value it much more than the plaintiff caused action lawyer i can assure you that. And from my perspective, the one of the greatest threats we face in civil litigation today is the threat of the class action i think its been taken storable intended purposes and its been taken to such an extreme that i dont think anyone really intended. And again, from a conservative perspective, i reject the nanny state, i reject the notion that consumers need the government whether its in the form of a law or a federal regulation or a federal agency in the form of a statute thats been used in private litigation. I think this business in this country is considerably overregulated. We have one of the most hostile Business Climate in the country in this particular state. I was speaking with folks before this program began, i dont know how a company survives in this particular climate that we have wage and hour laws in the state which make it impossible to comply. If you comply with one statute, your violating another regulation and then you have the risk of a federal government coming in and a plaintiff lawyer using federal statutes to say that a violation nonetheless. And i think the class action is used as a procedural mechanism to take advantage of this and the consumer context, in the employment context, in the antitrust context and this, what im describing to you is real is not something thats just theoretical, its something that happens on a daily basis and i like us respond to professor fitzpatrick thesis with four principal critiques read and let me outline them. First, i think his theory presents a false dichotomy. You will not hear me advocate that we should supplant the class action with greater federal regulation, i did not write amicus brief that he referenced, my firm was not involved in amicus brief. I dont think the choices that we face are between class actions as they exist today or even as modified reforms as government enforcement. There is a third way, and i think its a critically important tool in the use of private enforcement that industry selfregulation. And that can take many different forms. Were all familiar with the Better Business bureau, they have a division of the National Advertising division where members can go and they can petition if someone crosses the line, if their advertising a product in a way that a competing business eels crosses that line, the industry works together and in that particular scenario, the resolution of those disputes that often lead to file on class actions or file on lawsuits at the situation where the business kind of regulates itself read im not suggesting we replace last actions with this but i think this is an underutilized tool area theres also competitor litigation, there are many federal statutes use if not exclusively, almost exclusively by competitors, the lanham act which is a federal false advertising law is used most often following those nad proceedings that i referenced. The Robinson Patman act which is a corollary to the federal antitrust laws is used by Small Businesses doing larger businesses in ways that they view as anticompetitive, we are all familiar with Patent Infringement suits, breach of contract suits, some of the largest trials that weve seen in recent years have not been class action, they been between competitors. The apple qualcomm case that resolved this year is one of the latest examples and i view these lawsuits where the incentives are perfectly aligned. Companies will not go overboard. Let me give you an example of a company i believe may have gone overboard. Palm Wonderful Institute nad proceedings and a number of false advertising loss although its competitors argued that their pomegranate juice wasnt pure, granite juice, it was flavored. They were advertising as pomegranates when Pom Wonderful believed they were the only ones manufacturing pure pomegranate juice so they instituted these lawsuits, had quite a bit of success and the industry got together and started going after palm wonderful with actions and nad proceedings becausethe company felt they were crossing a line in the way that it advertised its products. And so this is a private way and a free and fair marketplace for businesses to regulate themselves and for businesses without disturbing the windfall from those results to the wrong group, namely plaintiffs classaction lawyers. And the child of the cold war, i actually believed in this concept that we studied which is mutually assured destruction, it worked in the nuclear age and i think it can work here as well and i think the problem that we have in this country is over litigation, theres too much litigation, too much litigation over if we might disagree, where we draw that frivolous line. Their argument instances where folks are taking advantage of very broad laws and regulations and their bringing class actions based on that and im going to discuss a few that ive read about or ive had the privilege of defending area my second critique is what i described as the law of unintended consequences. One of the most fascinating things that i read that i learned in hazard fitzpatrick spoke and that i would encourage all of you to read about is the history of the classaction, it was news to me that the build to introduce abolishing consumer class actions was introduced by ted kennedy, i did not know that and certainly i dont want to take that side of this debate. But i think the world is has changed quite a bit since 1978 area as you look at, lets remember class action is a procedure. You dont bring a class action you say im bringing a class action is a procedural mechanism or a plaintiff to group together with other like similarly situated plaintiffs and bring a lawsuit for a violation of a law. So you have to have the substantive law underlying the procedure of using a classaction area without it, you dont have a classaction, you dont have any lawsuit, in state or federal court. What does the law look like today as opposed to what looked like in 1978 . I would argue we were overregulated, today we are more overregulated and thats the fundamental problem is i think what youre seeing the Business Community react to these days is the fact that the class action is being used in all of these different scenarios to and privately statutes that were never really designed or intended to be enforced in a classaction. For those of you who work in law firms like mine you would be surprised to see the way they define the most Significant Company type litigation. Its different than the way our clients would find it. Not talk about the multibilliondollar lawsuit, talking lawsuits that are tens of millions of dollars. Thats what youre finding. If you look at the history that professor fitzpatrick leads lie its different than back then. I agree as outlined in his book that the core laws that all conservatives believe in, breach of contract, the loss of fraud and antitrust laws are sensible regulations. Any free marketplace needs a baseline so that a company or individual that looks to start a business wants to ensure the marketplace is free and fair. Professor fitzpatrick uses an example in the book up a company that is struggling because there are seats that are sold in the south American Country and there can be no assurance that seeds are going to work. The market is flooded with fake seeds and theres no recourse. That is not our problem. Our problem is the other one where the companies cant even begin a business because he had comply with all of these federal and state regulations to even start a business once they do it and the achieve that success, they are hit with the class action. I remember eating with the client downtown and he was about 2 to the board, it was a first class action and he was come get no idea, white mike company pinkett . Were tried to make it again some of the bigger players in this industry. I mentioned to him i was in your lobby waiting to meet you, it was this industry magazine and i saw your big smiley face on the front of it. The reason youre hit with the class i can because you didnt do anything wrong. Its because youre successful. You want to change all of it in ways i wasnt appreciated. All the sudden a class action. [laughing] theres lobbyists and theyre trying to Lobby Congress for fable laws. Of course thats happening. In my experience which is largely consumer class actions, i find the plaintiffs bar is far more organized and far more strategic about how the lobby our government, particularly the california assembly. Look at the california privacy act thats been passed modeled after the eu privacy regulation for which advocates freely acknowledge theres not a set of guidelines, not a set of regulations to explain companies. Heres what you need to do, heres how you comply. Heres a safe harbor if you do this you will not. They tell you wait until we enforce it a few times can wait until we have some scalps on the laws the way they put it and then youll know how to comply with the law. That is no way to regulate but thats whats happening in this country. I wouldnt want any of our lost after the eu but yet thats exactly what happened. Whats interesting about this law is you look at its history, who lobbied for it, who passed it . Its the plaintiffs class action bar. You go to the details of this statute, this new requirement you show actual injury, theres an automatic entitlement to attorneys fees if you prevail, and again what goal is that advancing on behalf of consumers . Its not. Its the interest of the private class action bar. My third critique is several times in his book, professor fitzpatrick outlines how the at t case that a failed arbitration waivers in these agreements are boldly going to lead to the demise. One point in the book even suggests that state Court Class Actions are all but everyone these days. That is just again from a practitioner standpoint that is just not consistent. We can all site about this table im sure we could spend the session discussing frivolous class actions we either read about or had to defend. Im here to tell you red red bl does not give you wings. Im also here to tell you that froot loops does not contain actual fruit. [laughing] nor does crunch berries. Subway footlong sandwiches, example that professor fitzpatrick uses may not measure exactly 12 inches when the bread is actually baked. Those are obviously once we all laugh about, we joke about. I agree there relatively rare but a few observations. Those are not always dismiss on the pleadings and unlike professor fitzpatrick i dont blame you if we bring up motion to dismiss because i contend most of the cases where i defended its basically a jump almost whether not the case will be dismissed on the pleadings. Notwithstanding i would note most judges when you talk to them, im interested in the judges perspective, they are tired of seeing these motion because they seem not only the frivolous cases but the see them in every case. It is difficult to get a case dismissed on the pleadings before any discovery. It isnt the skill of the advocate and making the argument, in my experience. A lot of judges are predisposed to let these cases go into discovery. Most federal judges that that have back ground with a saw the enormous cost and celebration getting a case in discovery, places on a defendant. Subway reached the Appellate Courts because it settled the case. I was involved in the case but i can only assume it wasnt for lack of skill of the advocate a rather their assessment of the risks of the case going into discovery was why they settled that particular case. There are the frivolous ones but there are the ones that may be on the surface you might look and say this might actually have some merit. One example i would give you is our firm was defending a major Motor Vehicle manufacturer in a case involving the breaks in these hybrid vehicles. One day after a client announced a recall although sickles to do what you would expect in a responsible Corporate Citizen to do to address an issue was a safety issue but nevertheless, involved the vehicles breaks they wanted to fix it. One day later after they got hit with a class action, and the class action alleges while you recall is for this generation of vehicles, with a kind of the claimant for those but it must be the earlier generation vehicle breaks for the effective as well. It was a completely different model, a completely different brake system. This case went on for three years. There were multiple millions of dollars of discovery at this defendant had to face. It had to turn over its source code to the plaintiffs lawyers to allow them to probe through and tried to find something to support their the claims. They couldnt do it. It was only when our form is provided to take over for the appeal we got into the ninth circuit and a laughed the plaintiffs out of out of corpoe of this theory is ridiculous. It has no merit. The court shouldve thrown out on the pleadings. It didnt. But again that was only after my click had to invest millions of dollars. Its a rare client that will do that. That has the resources and commitment to see those particular cases through. So again my third critique is i do not think class actions are on the road to demise. If anything, i think theres more in sinister plans to bring these cases today than there were many, many years ago. I also think as a noted state Court Class Actions are just as vibrant today as they were after the passage of the class action fairness act in 2005. For those of you not to know if this is a law that Congress Passed a major window signature changes at least at the federal level in my lifetime, and the goal was really to take these National Class actions and move into federal court. Why . Because companies were finding themselves stuck in some hometown jurisdictions where the plaintiffs lawyer were really chummy with the judge comes out of chambers our brand plaintiffs lawyer and their best friends. The father of the planes lawyer went to law school with the judge, then they get on the record and the judge defers the ruling on the motion to dismiss as all this discovery is produced, just exorbitant settlement pressure placed on the defense. The goal was we have multiple or very, very large multistate class actions, crossing state lines, those belong in federal court. Defendants were unable to bring this into federal court because under traditional rules of diversity jurisdiction, with citizen from different states, unique complete diversity and you also could aggregate the claims so each claimant, each plaintiff, each classroom had a claim for five dollars and there were 10 million class members, thats 50 million claimed by any stretch of the imagination. But under the grecian rules you couldnt aggregate. The class action fairness act change that. Everyone predicted and even judges in l. A. Predicted i spoke with many of them after this was bascom addicted well just not have class actions anymore. As in a practicing lawyer today if was the case. What youve seen as more concentration, plaintiffs lawyer think strategic dont bring a statewide classaction in california. It will bring when a texas, in new york, illinois and other more popular states to try and set goes and extract a settlement as best they can. Wage and hour lawsuit are almost exclusively in state court in my experience. Not exclusively but almost exclusively. I think that point is when we shouldnt just gloss over. Class actions are abusive and they are continuing to rise. My fourth and final critique, im not going to defend the chambers advocacy of more federal regulation by want to give you may be a slightly different perspective that many businesses have when it comes to this issue. Its very, very difficult for companies to achieve global peace. It used to be if you settle a major National Class action, you get the release of all class members and you could count on the fact you are putting this issue behind you. Thats the motivation for the reason why a lot of clients pay big dollars to settle something, just get it behind them. But again why dont think this is dichotomy between federal enforcement and private class action enforcement, im finding its both. Our clients are being sued in class actions and then the state regulators are coming after them. They are also being pursued by the federal or state regulated s and then you have the copycat class actions. There really is no easy mechanism under our constitution or our laws for a company to basically fight global peace unless it brings all those people to the table. You could basically an auction between the two on to get more than the last. Im finding local city attorneys especially in california, and even state ags, are partnering now with private plaintiffs class action lawyers and bring these bounty lawsuits. In california lease under the unfair competition law, private parties cannot get civil penalties. If you establish, for example, you use the crunch berries case, if a foreign sued in a class action to get the three dollars back for the serial, under civil penalty theory if its established thats a violation of the false advertising laws you can get up to 2500 per violation and the enhancements if you are an elderly person and you purchased and you deceived or you are part of some of the protected category. Now each three dollars box of cereal has become a 2000 2500 box. An enormous settlement pressure. That money must be directed to the enforcement of the unfair competition and false advertising laws. What has that done . Primary, as private lawyers we are always marketing ourselves to new clients trying to pitch new cases. What is the plaintiffs bar doing . They are making pitches to Public Officials and saying, mr. City attorney, how would you like to be attorney general and then governor and thenpresident . Hears this statute and and i cn bring it on a contingency fee basis and i can enforce it whether or not theres a class action or settlement. I will go ahead and bring this lawsuit, and you get to keep every single dollar we recover at 2500 2500 a box. You get to build this little Enforcement Unit in your office and bring all this money into the state. Thats a little bit be on the problem were talking about today. Today. Thats the perspective of the Business Community and some of the risks they are facing on top of his class actions. It makes it very difficult for them to achieve global peace to get i think as part of the conservative case for why you would want class actions, private enforcement and get some global peace. So whats the most basic level i would say again i applaud professor fitzpatrick said theory. I think its created. I love the contrary in thinking that way behind it. Personally i dont view this as a liberal versus conservative issue. It may be a debate between capitalism and socialism. I am not of course calling professor fitzpatrick a socialist. I would never do that, please understand me, but it dont think this is necessarily a conservative or liberal issue. This is a smart government, its may be considered probusiness perspective but i think i can from the in which i operate i think companies are trying to the best they can to deliver great products to consumers and to survive in a hypercompetitive environment in an overregulated economy. And as he noted i dont think conservatives are for ending all class actions. Thats not my position. I think and look at history of this country certainly during the civil rights era, class action played a critical Important Role in bringing justice to people who would ordinarily not have been entitled to it. If you look at what we are today versus where we were 50 years ago, i dont think anyone would say that this is the right way to set up an economy, this is the right way to align incentives amongst lawyers and amongst the Business Community and consumers. So again i would say some of most obvious poster children for the tort Reform Movement happened to be class actions, and theres a reason for that. Thank you. [applause] thank you very thoughtful counterpoint. I would open up the floor and see if anybody has any questions for either professor fitzpatrick or chris. [inaudible] [inaudible question] as an empirical matter do you find the movement is leaning to the more deregulation . Do you fear that it will be marked . My second question is, is very e kind of a rhythm to where sometimes the private attorney general system works better than the public policy, and vice versa . And for that reason, you need to have both, need to be worked on perfecting both, and one will fill in gaps that the other wont . I can take a stab at answering that. The second question first. Absolutely, i think we need both. My book is not for private enforcement only. There are times when they government is going to get the best enforcer. Sometimes theres not a lot of profit to be made in private enforcement, and those cases if we want in a enforcement, we have to rely on the government. One of the interesting things i found the data on the sec versus a present for, the sec brings lots and lots of cases against very small fraudsters because they know the private bar will not go after those people. Theres an interesting synergy that its built between the government and the private bar. You do need both. Chris notes sometimes you can have both in the same case, isnt that piling on . I think can be piling on. I absolutely think that companies should not pay more than the harm they have caused. If they pay out fully in case one, they dont have an offset in case number two site agree with him we need to make sure we are not over deterring to companies. On the first question, its an interesting imperial go question of whether regulars have become more activist class action that decline. I dont think ive seen anyone try to gather data like that. I will note that after conceptual, the cfpb kicked it into high gear for a while because they were worried that class actions going away would make it hard for consumers to get a fair shake. Since we had change in administration i dont know how active the cfpb is in more but for while i think there was notion that because a class actions going way that cfpb needs to pick up the slack. I guess that dont know if that has continued. From my perspective, again the book of think is thats really nice job walking through the potential impact of concepcion and workable effect. From my perspective mitigating these cases its late you can think more litigation. What you found is the plaintiffs lawyers are not just going to go away. You have a whole industry in this state in particular but other states as well that made their livelihood and a lot of money on consumer class actions. Concepcion didnt just like those way. First of all you need to have a contractual relationship with your customer. Food and beverage is a a huge a of litigation in the state despite my best to test my client still put an arbitration clause on froot loops. [laughing] yet theyre being sued for breach of loyalty which last time i checked as a contact claim but nevertheless. What you find in number one, its only that class of cases where theres an express contractual relationship with the customer. You need to have the contract of the waiver to have the arbitration. Even in those cases what we been litigating for the last ten years is the plaintiffs lawyers first attack contract formation. They argued i didnt understand the contract, i didnt read the contract the arbitration clause was at the end instead of the beginning. It was in black text and not capitalize instead of the read text and all caps pick you also see with online commerce most of us with apps and that sort of thing, all click wrap argument of those sorts of things. You also saw, this is what led to concepcion in first place is reason why the Supreme Court reversed the covered Supreme Court in the case in the ninth circuit was because the states started using a contractual defense which is the unconscionability doctrine. If your contract is overly onesided or information process you didnt disclose certain things, you can invalidate the country because it is procedurally or substantively unconscionable. Ironically after concepcion you have a resurrection of that doctrine and immediately thereafter the course start invalidating clauses as an employment context and the consumer concept as unconscionable. Those cases made her way to the Supreme Court. Theyve had to take five or six cases since concepcion not my point is you are finding more and more ways for the plaintiffs bar to basically attack those. Where you mostly have concepcion having its most force is a consumer context and the employment context. At least today in the ninth circuit you dont have a single case that a think delivers a Silver Bullet to it a defendant based on a class action waiver. Number one, in any publication or confined a private attorney general claim which the Supreme Court is held you cannot arbitrate. A basic list any individual to bring an action as a private attorney general, get their attorneys fees and its that subject arbitration. The second is, in california, even more ridiculous and my own personal view, is theres an argument if you as a consumer are seeking whats described as public injunctive relief, and Food Labeling context if you want a company part of your action is to get the company to change the label in the way you allege are content to sobotka deceptive, thats considered public injunctive relief. That is sought in every single consumer class action ive ever seen. That cannot be arbitrated. What you have even in cases where every rock salt arbitration, its enforceable. That stays in court and the public injunctive relief case stays in court. Courts are mixed as weather than those the first of the arbitration go first. I dont think concepcion has had, in fact, a lot of people have predicted. I wanted to add one thing to that and i think when the dispute goes to the United States Supreme Court, they are going to rule that it cannot withstand arbitration and that they were ordered arbitration if u. S. Supreme court ever rules on but i do want to emphasize one source of agreement that chris and and i have added you talk about about in the book and that is, we do have way too many laws on our companies, way too many legal constraints on our companies. Went away beyond contract fraud and pricefixing. What i say in the book is i agree we are over regulating. All i advocate for is this. I say, rather than clacks action waivers, which are very blunt instrument, you can insulate yourself from liability for wrongdoing in any kind of case of a class action waiver. Rather than allow this blunt instrument, why do we focus on the laws we dont like and said you cant use class actions in those situations, but allow the class action and for the loss we do like, fraud, breach of contract and pricefixing. I advocate in the book we should breach this principle that the rules of civil procedure based on trends substituted with one have to have the exact same rules of procedure in every case, contrary to what we have learned all these years. Hasnt been handed down by god, that principle can we can change it. Lets use rule 23 for the laws we think should be in place and should be enforced robustly. And so i agree with way too many laws. The answer is not get rid of all class actions. I say instead lets just limit what we can use the class actions for the loss we like. Any other questions . I have one question. In my experience, most of the majority of class actions brought with an individual plaintiff is not a place to walk across the board offices that i did wrong to the tune of three dollars, 30, whatever, whatever. Could you please represent me . Them generated by lawyers. Does that tell you at all in terms of the class action mechanism . It doesnt trouble me. I ask class action lawyers with a get the cases, when they get their representative plaintiff from, and i been spies often people who come to them and say ive been mistreated, this cant be right. But even in the cases where the class action lawyers figure out theres a problem and then find someone to step in as a representative, i dont have a problem with that because we need sophisticated intelligent well resourced people to sometimes uncover wrongdoing. I dont begrudge the class action lawyer for being the type of policeman. I have talked to class action lawyers who have done years and years of analysis with professors to try to figure out whether theres pricefixing going on in the industry. Its hard for any particular consumer to know that theres pricefixing going on, but if you do investigation, its expensive and sophisticated and sometimes you can uncover these things. If we want to police the marketplace, we ought to be encouraging people with the resources and the sophistication to find the wrongdoing. The class action mechanism seems to me a specialty of the United States. I teach in europe and i know the concept is quite foreign there. Its just starting to arrive. If you were designing a system for european country, but they could have some limited class action, to what degree would resemble the United States sets of and what would you change about . Ive handle a couple of cases which involve copycat cases and other countries. Its very much, professor fitzpatrick whiteley rightly ds the sort of liberal tradition, big our country is found on liberal tradition which in todays politics would be view more conservative. In those countries a perspective that they take on class actions, again a modern class action which arose after the 1960s amendments, to rule 233 of what we know today as the class action is called the opt out class action. You are presumptively in with a class is certified, and if you dont want to be part of that you have to opt out. In the of the country its the exact opposite. The way our system used to be is you have to affirmatively opt in to the class action. In other words, i cant represent you even if a court says that i similarly situated to you, and lets you give permission. You have more mass actions, the opt in and that presents both challenges and benefits to defend its. Your fewer, smaller class actions but then what you have is people dont opt in they wait and see of that case goes and its a lot more difficult to get global peace. To answer your question, i dont think either system is perfect but i think if i were designing something i would borrow from our friends in the uk way think having a pretty important election today, i would borrow from them and i would have system of loser pays. What i think that we do, and again brian has very good ideas in his book about how we can implement some of these reforms and i agree with most of the reforms he advocate they are great. There needs to be some skin in the game for the lawyers bring these cases. Right now i understand the contingency fee is part of that because theyre taking a risk of investing but only investing if they were recovering a handsome sum underinvestment, at least the successful ones. For example, with respect to discovery request, brian talks about how a plaintiff lawyer cant just ask for you to bob work is a trial lawyer at this room and when i started i learned under his wing and he said these discovery requests, if i bring my client by the anklets shaken to every penny falls out of his pocket, its what we experience in civil discovery. If there was a loser pays system or some more robust cost shifting, if i were designing a class action system, i dont know how i would feel about the opt in versus opt out. I see benefits to our system but i would have the ability of our clients to get some of our fees back that we have to incur to defend against these cases. Any other questions . I have a question. In your experience, the class action defense lawyer, what percentage of the cases you believe are frivolous . And of those how many of them were dismissed by the court . I will stipulate it has no bearing on your ability as a lawyer. Thank you. Thats an important. Everyone would say 100 meritless. I was in 100 were meritless. But i would say frivolous has, is a legally charge trial. It means theres no good faith or objective basis for bring a lawsuit. In the consumer context i would say its probably at least half of them. Im guessing frivolous in the sense it has to rise to the level of the froot loops or just something completely silly, red bull gives you wings but theres nothing there and there was no good faith basis for bringing it. It was a news report. There was one customer came to them a complaint about something as he launched a class action. Of the 50 , many hundred lawsuits come class action lawsuits, but said that about 250. I would say getting it dismissed on the pleadings what that dismissal was upheld, its less than a quarter. Its extremely rare to get a case knocked out that early. Its extremely rare to get the case knocked out that early and it goes up to your court and the Court Affirms it. And again on the speaking anything out of turn here. Its just most courts especially in the circuit, they view it as very high bar to get a a case dismissed on the pleadings. They want folks to have their day in court and the operating presumption with most judges is that if a lawyer puts his or her name on this document and under rule 11 certifies it is brought in good faith, that i have no basis before me today to question that. If you are on the pleadings there is no discovery. They believe lawyers bring lawsuits in good faith. From that perspective even if its superficially frivolous, the subway sandwiches case, okay, lets take that as an example. Im not saying i wouldnt have moved to dismiss in the case. I probably would have but im sympathetic with the defense lawyer who informed their client to face an uphill battle. Subway, your advertising your sandwiches as the long sandwiches, not large submarine sandwiches pick your advertising them is the long. You go to the store and is has 12inch sub, sixinch sub when you look at the menu. Every state in this country has a lot that prohibits false or deceptive advertising. Even if that is not outright false it is automating deceptive. You expect and his pictures displaying the subs already bigger they dont show a lump of dough. Theres no disclaimer. Im not defending the lawsuit, but when we characterize that as i have just framed as objectively frivolous . What is the law or decision subway could cite to the federal judge to say they have not stated a claim, they cant get the discovery, you must dismiss it. We all listen to this and say its absurd, ridiculous. Everybody knows and thats with the judge did with the starbucks case. Everyone knows when you buy a latte at starbucks and if you get it with spice the ice will consume some of the volume. When not exactly 20 ounces or 2. The judge looked at that and applied commonsense. I applaud that. But those instances are extremely rare in my experience and its unfortunate. We need more of that and i think that would alleviate a lot of the problems we have discussed today. I do want to say one thing also i think emphasizes an area of agreement that chris and i have. One thing ive learned since ive been on this book tour because i am a professor and i dont get to practice in our courts as often as chris does. One thing i have learned is that lawyers are not very careful about what they are willing to allege. I have a very good friend who is a very liberal Federal District court judge, and he told me recently that every year he asks his law clerks, what is the thing that surprises you most about your clerkship . And he said every year its almost unanimous, the same answer he gets, how willing lawyers are to lie. And so i do think we may have a problem with people not doing any investigation before they file complaints as theyre supposed to do under rule 11, and just taking a shot and see what might happen. I think that is a problem and we probably do need to do something, to strengthen rule 11 sanctions and the rule 11 procedures so that people cant just make up a fact it because it is true if youre making up the fact its hard to get those cases dismiss. I know judges hate to order rule 11 sanctions, and theres been efforts in the past to try to change that and they been unsuccessful. I dont know if you have any ideas what to be done to make rule 11 sanctions more of a deterrent to lawyers, but i have been persuaded both i i think u said the things i have heard elsewhere on this book tour that we may need to do something with rule 11 as well. One last question. Professor fitzpatrick, you made the conservative case for pc p. A. , class actions and id like to hear its interesting that you asked me about that because i explicitly say in the book in my last chapter right advocate for reforms, that the tcp should be one of the laws that we do not allow class actions to enforce. Tcp eight is the Telephone Consumer Protection Act this is if you get a robocall or robo text youre entitled to 500 or 1500 every time. When you combine those bounties which have no relation, which we are harmed from the robocalls with the a class action, you ep threatening companies with massive over deterrence. Theres some tcp a cases where the defendant is facing, im not making this up, 1 trillion of liability. Thats ridiculous and gives you obviously incredible settlement leverage if youre the plaintiffs lawyers and you can bankrupt the company with a robocall case. I say we should not use the class action device when it was open over deterrence. Statutory damages cases, travel damage cases, punitive damage cases are not appropriate in my view for a class action device. I will say this, however. When i got around to other Federalist Society audiences and i have mentioned that tcp a as one of the things that we shouldnt use the class action for because it can result in over deterrence, the reaction i usually get is, professor fitzpatrick, its not resulting in over deterrence. I am still getting robocalls and mobitex all the time. Triple down, more class actions. [laughing] so, you know, thats where the theory and the reality may be dont meet. I suppose its fitting end on a point of agreement because obviously i agree. [laughing] and professor fitzpatrick does walk to the indie book and it shows why even those of us who practice can find a lot of areas of agreement with his thesis. Look, the purpose of the statutory damages is because congress it is very, very hard to quantify your eating dinner and disrupted. Its hard damages case to make so well set these statutory damages, penalties in an amount to encourage individuals to bring these lawsuits, small claims court, wherever you want to do. Its an abuse of the congressional intent, abuse of the statute to lay of the class action procedure over that particular law to lead to these trillion dollar i have defended many of this lawsuit and client often asks, whats my potential exposure . I find out how many allegedly spam text they have sent. By the way, 90 of the time its a response to your request your text to opt in and it adds a very, very quickly. I want to thank professor fitzpatrick and mr. Chorba for a very thought provoking discussion. I think everyone learned quite a bit today. Thank you. [applause] [inaudible conversations] heres a look at some authors who recently appeared or will be appearing soon on booktvs after words, our weekly Author Interview program. That includes bestselling nonfiction books and guest interviews. For those of buzz tour in the upper middle class and above what very well educated, lease graduate from high school, from college, we have a pass a fairly white path ahead of us. So if we fall, we pick ourselves up. But many of these people especially the small towns around america in the rural areas around america, people e walking on a tightrope. One miss and the fall. Theres no safety net. After words airs saturdays at 10 p. M. And sundays at 9 p. M. Eastern and pacific on tv on cspan2. All previous after words are available as podcasts and watch online at booktv. Org. The Founding Editor of National Affairs visited politics and prose bookstore in washington, d. C. I want to because i dont think the problem to be solved is people dont trust institutions enough. The problem to be solved is our institutions are not trustworthy enough. Its also important to recognize that theres some serious reasons to be careful and skeptical about institutions in american society. Theres a lot of ways in which institutions can be oppressive. They limit our freedom of choice, and post hierarchies on us, they can be slow to change it hard to move. More than that some institutions can be literally oppressive. The term institutionalized racism is not a metaphor. Its on the reality of American Life. The disposition against strong institutions arose for serious reasons, the argument for transparency for individualism emerged as corrective to excessively rigid and appeal institutions. Words like that are series. We have to be see the populism individualism and i at the institution in boston stratus per institutions can be terribly oppressive and yet we cant do without them. Its true they can reinforce the rule of the strong for the privilege in our society but its also true without functional institutions, the week have the hope of indicating their rights. Our institutions sometimes embody a pressure but they about our highest ideals, to defend visitation is not to defend the status quo or the strong are the privilege. Functional institutions are most important for people who dont have power or privilege. Those who do will be fine whatever happens. Institutions can become cold and bureaucratic, their essential to active on our warmest sentiments without that we go isolated, and the data, dissolution. We see that around us. This is the irony we confront now in American Life. The failure of her institutions have let as to demand they be upgraded or demolished we cant address those failures without renewing and rebuilding those very institution. Were right to be fed up with them we need them to be respectful and legitimate. Its right at the institutionalism should guide our reactions against the excesses of institutional strength in American Life that our problems today are much more like excesses of institutional weakness. To watch the rest of this Program Visit our website booktv. Org. Starting out on booktv journalist kate aronoff discuss the history of socialism and what democratic socials might look like in america. Check your guide for more information. Houdini everyone. Thank you so much for coming out tonight to Mcnally Jackson books here at the seaport. We are really happy you came out, and tonight were celebrating the release of we own the future democratic socialism american style. We are excited to have with us kate aronoff and Michael Denzel smith discussing how capitalism and neoliberalism have failed the working class. Particularly people of color and other marginalized