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

Serving. Watch booktv this weekend on cspan2. I am very delighted to welcome you to our event today. Its on the conservative case for class actions a book written by professor fitzpatrick that galvanized this debate. We have three outstanding speakers, panelist i should say. Our first is the head of the class action practice here at gibson, dunn crutcher. Is litigated and defended countless class actions including over 20 dismissals of class action cases. You may have a sense of where his position is on that. He is a graduate of georgetown, undergraduate, and University Virginia law school where he was on the long review, and is alo the author of the chapter in the popular guide series on so please welcome christopher chorba. [applause] our next panelist is the profession selfie wrote the book. He is a graduate of notre dame where he was runnerup valedictorian, but he made up for that when he went to Harvard Law School and one the diploma. [inaudible] a lot easier, a lot easier. And he has been a lawyer and a professor, including back at harvard for well. He is currently at vanderbilt and the author of this book, makes a compelling case as to class action mechanism and will do more from him in just a bit. At our moderator today is judge on the ninth circuit. He is a graduate, a korean immigrant i should start with an came to this country and graduated from i believe cornell and it also Harvard Law School. For you guys classmates . Classmates. Magna cum laude and worked at a large law firm, was associate white House Counsel and to the judiciary of the senate and recently pointed to the ninth circuit. Surround of applause for judge kenneth lee. [applause] michael, thank you for the introductions. I i think will grant of a great debate here. We have two experts on class actions. Just a little bit of format. I will give professor fitzpatrick the floor and let them speak for about ten, 15 minutes to make his case. Chris chorba will get another ten, 15 minutes to rebut and after that we will open the floor for questions. As michael mentioned brian and i were classmates in law school. We infect lived on on the same dorm floor, and i can tell you i can the day at harvard if you were a rockefeller republican you were treated as if you were to the right of attila the hun. Brian was to the right of attila the hun. I said in jest. Brian was more libertarian but he is very sterling concert credentials. He clifford judge poe skeleton for Justice Scalia, work for senator john cornyn of texas and is a stalwart of the Federalist Society. This is a very long way of asking him, how does a member of the vast rightwing conspiracy why to book in support of class actions and plaintiffs lawyers . [laughing] well, thank you for the kind introduction, judge lee. [laughing] the reason that i think conservatives support class action is because were 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, and this amicus brief really is what inspired me to write the book that you have in front of you today. The case with the Supreme Court is called at t versus conceptual. I suspect many of you know about this case. The question was our class action waivers that are embedded in arbitration agreements enforceable . The u. S. Supreme court said yes. My old boss Justice Scalia wrote the opinion and the court says you can ask someone to waive the right to join a class action so long as you do in arbitration clause. 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 enforced these class action waivers, and people who have been injured small amounts by corporations, small fraud, small breach of contract, small pricefixing injuries, people with small arms would have a very hard time Holding Companies accountable for those harms. Because if you have to go on your own, not many people are going to do it. Everyone knew this in 2010 201t the chamber of commerce filed an amicus brief to calm everybody done. The u. S. Chamber said dont worry, if the class action goes away. Theres Something Better than the class action, quote, federal regulators. Federal regulators should be policing our marketplaces. As judge lee mentioned, i have been a member of the vast rightwing conspiracy for a very long time. Ive been going to the Federalist Society members, meetings, for 20 years. Ive never once at any of these gatherings heard anyone say that federal regulators were a solution to any problem. And they are not a solution to this problem as well. The conservative way to police the marketplace is class action lawsuits, not federal agencies. I start the book with some quotations from Milton Friedman who reminds us that for all of the virtues of the United States chamber of commerce, they are often not very conservative. He had the wonderful passage that i quote in the book where he says listen, big businesses often wax poetic about the Free Enterprise system, and theyre all on a plane to washington, d. C. Asking for special legislation for their company. So like chris, i represented many members of the chamber of commerce when i was a lawyer in washington, d. C. Im very grateful for all the companies you for our economy and for our country, but theyre not the best place to find what the conservative principle suggests we should do to police the marketplace. What is the best place to find what conservative principles say . My book, its built upon people like Milton Friedman, like friedrich hayek, like gary becker, like george stigler, like easterbrook, like richard epstein. Conservative and libertarian economists, scholars, lawyers, judges. What do they say . This is what they say. Number one, we do have to have some policing of our marketplace. Not even friedrich hayek, the Austrian School of economics, leak in complete laissezfaire markets. At the very least, even a libertarians say we need three rules in our markets. No fraud, no breach of contract, and no pricefixing. We cannot have vibrant markets it companies can reach the promises to us if they can lie about what theyre selling and if competitors can get in cahoots with one another. At least we need those rules. So the question then is how are you going to enforce and implement those roles . 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 the literature on privatization that was very popular during Ronald Reagan and margaret thatchers times. And this literature basically says we want to privatize everything. And, therefore, why should we want to privatize enforcement of the law as well . Identified six reasons why. This literature advocates privatizing, private solutions over government solutions. All six reasons applied to private enforcement of the law. Number one, we like smaller government. Everything else being equal, we want a smaller government, lower taxes, 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 copies the campbell chemical for misdeeds, we have to hire thousands of our government lawyers to pick up the slack. Thats more taxes and more people looking for things to do. We like selfhelp. Its reason number two. We like to build Self Reliance among our citizenry. People rely on themselves and their neighborhoods when things go wrong, not waiting around for the government to say that and bail them out. This again is consistent with private enforcement of the law. Reason number three, better instances there would like to privatize because private sector participants are motivated by profit and we think that galvanizes them to do better job and government bureaucrats they get paid the same matter what they do. This is consistent with private enforcement. Class action lawyers and contingency fees. These are a terrific motivator. And so we would expect that ill explain in a moment theres data to confirm this. We would expect class action lawyers do a better job enforcing the law then government lawyers do. Number four, better resources. The private sector is better resources than the government does. The government is always strapped for cash. By like it or always been cut. Enforcement budgets are the least sexy thing in the budget. Its the first thing to go. The private sector and find financing for any profitable 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 number five, less centralization. We prefer private solutions because they are less centralized than government solutions. We dont want all our eggs in one basket. What if we drop the basket and we get a bad result for everybody . We like to hedge our bets i having decentralized solutions to problems. Thats why would like federalism and its why we should like different class action lawyers all over the country filing lawsuits before different judges instead of one federal agency in washington deciding what the law should and should not be. Lastly, the reason we like private solutions is because the private solutions are more independent than government solutions. In the academy we often teach you something called agency capture. Conservatives have a word for it, a term for, crony capitalism. Government agencies are often captured on the people they are supposed to be policing. Campaign contributions, the revolving door of personnel. This makes our Government Agencies last independent and more biased the private sector doesnt have that problem. The private sector is focused on profits can focus on contingency fees. In my view that is more pure than the government which is often focused too much on who gave you money. All six of the reasons we normally like to privatize leads to the conclusion that private enforcement of the law is preferable to the u. S. Chambers federal regulators as i said, the Empirical Data supports the theory. If you compare class action lawyers and securities fraud, class action lawyers and antitrust, you find that class action lawyers are recovering more money than the government lawyers are recovering. And securities fraud it is ten to one. A lot of that is because Security Fund lawyers by a marchesa but if you look at the exact same cases with regard to the exact same people for the misconduct, the private bar still collects four times as much as the sec does. The three supports private enforcement and the data suggest the private enforcers are doing a better job. Of course it is true that the private sector can go too far. The profit motive can go too far. People can abuse the system in order to eke out more profits. This is not a reason to turn everything over to the government. Corporations can abuse of the system in pursuit of profit. We dont say, therefore, lets have the into everything instead of corporations. No, we say we going to put rules into place to harness the profit motive so it is directed towards the public good. We can do the exact same thing with class action lawyers. We have a lot of power over classaction lawyers by regulating this contingency fees that they earn in their cases. Every one of those awards must be approved by a federal judge, and we can direct classaction lawyer profit motives towards the public good by ensuring that we only award fees when the cases are good and the lawyers get a good recovery from the case. And so i dont think the fact that the profit motive can sometimes lead people to go too far is reason to turn things to the government. If the recent put rules in place to make sure the profit motive is pointed in the right direction. What i argue in the book is i think we largely already have rules in place. We can always improve the system and have a few reforms that advocate in the book but for the most part i think our system is working. I consider a few of the main arguments the chamber makes against class actions and entering data to bear on the arguments and i conclude the chamber is basing its advocacy against class actions more on myth than reality. Let me give you a few examples. The chamber says we have so many meritless class action cases being filed all the time and i was like to point to the subway football case. You probably read about this in the paper. Some of the subway footlong were only 11 inches, and some class action lawyers sued alleging Consumer Fraud. This was a frivolous lawsuit, but if this subway footlong of representative class action or is it an outlier . In one chapter i try to do a deep dive into the data and i conclude no matter how you slice it, subway footlong is an aberration. Its not a typical 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. After the United States Supreme Court decided twombly, this is a golden age of motions to dismiss. If you cannot dismiss the subway footlong case after twombly, that is on you. It is not on our class action system. I also take a look at the chambers own list of the ten worst the ten worst cases filed every year in america. They have ten most frivolous cases list they put out every your a look at five years of the list. There were ten ten class action cases on there. Subway footlong, a couple of cases get starbucks because there was too much ice in the ice coffee or too much foam and a latte. There were three frivolous cases. The other seven class actions on these lists were not even frivolous. There was a case against mastercard because the rent a promotion the said if the user mastercard we will donate a percentage of your purchases to charity. They didnt tell people the amount of money it would give to chad was capped at a certain level and they hid that at month three in the year. There were nine more months they were running the promotion. This is a least a debatable case of misleading consumers. Most of the cases on the chambers unless fall in that category were it is at least debatable. What i say in the book is in this. If in five years the United States chamber of commerce can only find three class action cases that are clearly meritless, we do not have a problem with meritless cases in our system. But im willing to meet the chamber halfway as one of the things i propose in the book is we can tap down even further on meritless cases. If enough happy with twombly, theres other things we can do. We can put an automatic stay of discovery in place when in motion dismiss is pending. Most judges do this but some dont. We can make it automatic. Im willing to give defendants and interlocutors appeal and a class action case when a motion to dismiss is denied just to make extra sure that the case is not meritless. Im willing to tweak the system but are really dont think we have meritless case of it. What about attorneys fees . Another the argument the chamber makes. The only people getting any money and class actions are the lawyers. The class members get nothing. Listen, you can find one or two or three cases again where class dems get nothing in the lawyers get everything. These cases exist but i submit to you these are outliers, extreme outliers. And in my empirical work as a professor, i added up every single dollar that defendants pay out in class actions, and i compared it to every single dollar judges awards lawyers in fees and you know what . The percentage of what defenders pay out is awarded in fees . 15 , 15 is what the lawyers are getting. This is that everything. This this is far from everything. Its far from even a normal individual case contingency fee. We dont have a problem with lawyers making too much. I argue in the book if you want to be good law and economics conservatives, we are probably hang paying class action lawyers too little. We have all kinds of ways to tap the incentives in ways in the market no client would want their lawyers incentives to be capped. We dont have a problem with fees. It is true that not many class members recover from Class Action Settlements in a lot of cases. In consumer cases the claims rates are low. The ftc came out with a very well researched study where they show the meeting claims rates any consumer class action is 9 . That means 91 of consumers are not getting any compensation from class actions. That doesnt mean the money is all going to the lawyers. We split the money up among the 9 who filed claims for or begin some leftover money to charity. But it is true in a lot of cases the class action is not very good at compensation. I admit that but two things about that. Number one, remember the alternative is the government. Is the government going to be better at Getting Compensation to people when they go after wrongdoers . To begin with most of the time they come it goes after wrongdoers they are prohibited by law from distributing the money to the victims. It has to go into the u. S. Treasury. On vacations on the occasions ww permits the government to distribute money to victims, what you think the government does . They hired the same people the class action lawyer hires to distribute their settlements. Regardless claimant is 9 , too. So the governor is no better at compensation. Thats the first thing to note. Number two, the case of the class action is not dependent upon compensation. Even when not everybody is getting their money back, the class action still serves an important function. Deterrence. If Companies Know theyre going to have to pay when you do something wrong, they are less likely to do bad things to begin with. This is a conservative law and economics degree. Weve been teaching it for 50 years, and its another reason why the class action is valuable. Theres some very good empirical studies that show when class action threat goes up, corporate misconduct goes down. So im willing to rest the case on deterrence alone, but in a lot of cases we also least have to decide the side benefit of compensation. I think when you look at the date, when you look at the theory, the conservative way to police our marketplace it is not federal regulators. My view on this was really a conservative view for most of the 20th century. We can talk in that you would if you want about why things change, until Ronald Reagans time, the conservative view was private enforcement is better than the government. Ill give you one example on that. In 1978 there was a bill introduced into the congress that would have abolished consumer class actions. This is the chambers dream bill today. In 1978 1978 a bill was introdo abolish 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. What i say in the book and what they see today is we should not be taking advice from ted kennedy and jimmy carter. Thank you very much. [applause] very thought provoking. Your response. I didnt write a book on this, but ive been doing it for about 20 years and i certainly applaud his contrary thinking, his creative thinking on the subject. But suffice to say i respectfully disagree. And again i do that from a conservative perspective. My perspective is one though of actually spending the bulk of my career defending these types of actions litigating them in the trenches, and something a very proud to do. I work for these companies. I finally disagree the aim is to cheat consumers come to take offense of consumers. We can all find highprofile examples where that has occurred, and professor fitzpatrick sites if you high profile examples in this book. But by and large the companies im privileged to defend and my firm is privileged to defend, value the relationship with the consumer, value it much more than the plaintiffs class action lawyer i i can assure you of t. And from my perspective, one of the greatest threats that we face in civil litigation today is the threat of the class action. I think its been taken from its historical intended purposes, and its been taken to such an extreme i dont think anyone really intended. And again from a conservative perspective i reject the nanny state. I reject the notion consumers need the government whether its in the form of outlaw or a federal regulation or a federal agency, or in the form of the statute that is then used in private litigation. This business in this country is considerably overregulated. We have one of the most hostile business climates in the country in this particular state. I was speaking with some folks for this program begin. I dont know how a company survives in this particular climate. We of wage and hour laws in this state make it impossible to comply. If you comply with one statute, your filing another regulation. And yet the risk of a federal government coming in and, or a plaintiff were using federal statutes to say okay, thats, nonetheless. I think the class action is used as a procedural mechanism to take advantage of this in the consumer context, in the employment context, in the antitrust, text. What im describing israel. Set something thats just theoretical, its something happens on a daily basis. I would respond to professor fitzpatricks thesis with four sensible critiques of an outline them. First, i think history presents a false economy. You will not hear me advocate that we should supplant the class action with greater federal regulation. I did not write amicus brief your reference. My firm was not involved in that amicus brief. I dont think the choice we face are between class actions as they exist today or even as modified and reformed versus government enforcement. There is a third way, and he think its a critically important tool in the use of private enforcement, and that industry selfregulation. That can take many different forms. We are all familiar with the Better Business bureau. They have division called the National Advertising division where members can go and petition if someone crosses a line from if you are advertising a product in a way that a competing business feels crosses that line, the industry works together, and in that particular scenario, the resolution of those disputes may often lead to file on class actions or lawsuits but thats a situation where the basis kind regulates itself. Im not suggesting we replace class actions with this but i think this is an underutilized tool. Theres also a competitor litigation. There are many federal statutes used if not exclusively, almost exclusively, by competitors. Its use most often following those nad in a deep proceedingt a reference. The source of the larger businesses in ways that the best as i can better all familiar with eyepieces, Patent Infringement suits, breach of contract suits, some of largest trials weve seen in recent years have not been class actions. They been between competitors, the apple qualcomm case the result just earlier this year is just one of the latest examples. I view these private lawsuits where the incidence of public of money. Companies not go forward. Let me give you an example of a company that i believe mr. Connolly overboard. A few years ago palm Wonderful Institute a number of proceedings and visited a number of false advertising laws under the act were sued all of its competitors and argued that their pomegranate juice wasnt pure pomegranate juice. It was labor day advertising when palm wonderful if they would only ones that were manufacturing pure pomegranate juice. So they eschew all of these lawsuits. That quite a bit of success. The industry got to get a start going after Pom Wonderful because these kind of us felt that they were crossing the line in the way it advertised its products. And so this is a private way in a free and fair marketplace for businesses to regular themselves and for businesses without distributing the windfalls from those results to the wrong group, namely latest class action lawyers. As a child of the cold war i believe in this concept that we all studied which is mutually assured destruction. Worked in the nuclear age. I think he can work years well. And i think the problem with in this country is over litigation. Theres too much litigation come to its litigation over who might disagree what we draw that frivolous line is there a way to the instances where folks are taking advantage of very, very broad laws and regulations, and theyre bringing class actions based on that. Im going to discuss if you ive read about or ive had the privilege of defending. My second critique is what i described as law of unintended consequences. One of the most fascinating things that ive i read and tht alert in professor fitzpatricks book and i would encourage all you to read about is the history of the class action. It was news to me that the bill to introduce abolishing consumer class action was introduced by ted kennedy. I didnt know that. So glad to want to take that side of this debate, but i think the world has changed quite a bit since 1978. If you look at, but remember, class action is a procedure. You dont bring a class action and you say im bringing a class action. Its a procedural mechanism for a plaintiff to group together with other similar situated plaintiffs and bring a lawsuit for a violation of the law. So you have to have the substantive law underlying the procedure using the class action. Without it you dont have a class action. You have any lawsuit in state or federal court. What if the law looks like today as opposed what look like in 1970 . I would argue we were overregulated and they to 70. I would say today we are even more overregulated. What youre you seeing the buss committee react to these days is the fact that the class actions in use in all these different scenarios to enforce privately statutes that were never really designed or intended to be enforced in the class action. By all objective measures class actions, there are more significant class actions and more in total number file today than in 1970. A law firm does an annual study of class action and if you read this on an annual basis this idea which also noted is even if yeartoyear the aggregate filing numbers may dip, the ebb and flow quite a bit, what you find is these are being concentrated more and more and what they call the highest stakes class action. For those of you the work and law firms like mine, you would be surprised to see the way they define the most significant i think is different from the way our clients we defined. Theyre not time of the multibilliondollar lawsuit. The telecom lawsuits that attains the millions of dollars. That thats what which are finally. If you look at the history that professor fitzpatrick that its a lot different today than it was back then. I certainly agree as he outlined in his book that the sort of core laws that all conservatives believe in, loss of breach of contract, loss of fraud and antitrust laws are all sensible regulations. Any free marketplace needs a baseline so that a company or individual looks to start a business wants to ensure that the marketplace is free and that the marketplace is fair. Professor fitzpatrick uses an example in his book of a company that is struggling because there are seats that are sold in a south American Country and there can be no assurance that the seeds are going to work here the market is flooded with fake seat and theres no recourse through the legal system. That is not our problem. Our palm is at one with the company can begin the business because they have to comply with all of the federal and state regulations to even start a business and once they do, they achieve that success, they are needed hit with a class action. I remember a few zika meeting with the client downtown, and he was about to present to the board. It was the first class action and he was serious. He had no idea, why is my company being hit . Were a good company. We are trying to make it against some of the bigger players in this industry. I mentioned to him while is in your lab i was to meet you. There was this industry magazine and i saw your big smiling face on the front of it. The reason youre hit with a class action isnt because because you do anything wrong. Its because youre successful. His view change a little bit in ways i wasnt appreciated. He was proud all of a sudden that a class action. I told him no, no. [laughing] this is that something to be proud of. Please dont misunderstand me. That anecdote i think tells you a lot about the way the plaintiffs are views of these, not after truly legitimate cases that going after deep pockets. You talk to these lawyers over a beer at the end of the case, thats what people tell you that is what youre looking today. I would reject the notion that Business Community has this organized lobby and is a public, has lobbyists and their time to Lobby Congress for fable lost. Of course thats happening. In my experience in my world which is largely consumer class actions, i find the plaintiffs bar is far more organized and far more strategic about how the lobby our governments can particularly the California Assembly to get lost to change. Look at the california privacy act thats been passed modeled after the eu privacy regulation, for which advocates for you acknowledge there is not a set of guidelines, not a set of regulations to explain companies, heres what you need to do, heres how you comply. There is a safe harbor, if you do this. No, they tell you wait until we enforce it a few times. Wait until ransom scalps on the wall 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 model any of our lost after the eu but yet thats exactly what happened. Whats interesting about this lot is you look at its history. Who lobbied for it, who passed it is the plaintiffs class action bar. You go through the details, as the requirement you show actual injury. Theres an automatic entitlement to Attorney Fees if you prevail. And again, what goal is that advocating or that the other half 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 concepcion decision, the at t case that upheld arbitration clauses and class action waived in this in these agreements are openly going to lead to the demise. At one point his book even suggests that state Court Class Actions are all but irrelevant these days. That is just again, from a practitioner standpoint, that is just not consistent. We can all site around this table, surely spend the whole session discussing frivolous class actions that we either read about or weve had to defend. Im here to tell you that gold is not actually gives you wings. [laughing] im also here to tell you that froot loops does not contain actual fruit. [laughing] nor does crunch berries. Subway footlong sandwiches, the 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 him and i agree. They are relatively rare. But a few observations. Those are not always dismissed on the pleadings and unlike professor fitzpatrick i dont blame you if you bring a motion to dismiss and they are not. Because i can tell you most the cases where i have defended its basically a jump ball as to whether or not the case is going to be dismissed on the pleadings. Notwithstanding twombly, most judges when you talk to them, im interested in judge lees perspective, they have twombly fatigue. They see them not only in the frivolous cases, they see them in every case. It is difficult to get a case dismissed on the pleadings before any discovery. Part of that is it is at the skill of the advocate making the argument. In my humble experience, my opinion, a lot of judges are predisposed to let these cases go into discovery. Most federal judges didnt have judge lees background with her work at it from this all the enormous cost and settlement pressures that getting a case into discovery. Place it on a defended. Subway actually reached the Appellate Courts because it settled the case. I didnt represent subway. I wasnt involved in the case but i can only assume it wasnt the lack of skill of the advocate but rather their assessment of the risks of the case going into discovery is why they settled that particular case. There are the frivolous ones but there are the ones that may be on the you might look and say this might actually have some merit. In one example that i would give is our firm was defending a major Motor Vehicle manufacturer in the case involving the brakes in these hybrid vehicles. One day after the client announced a recall of those vehicles to do what you would expect in a responsible Corporate Citizen to do to address an issue, wasnt a safety issue but nevertheless, involve the vehicles brakes. They want fix it. One day later, they get hit with a class action. The class action alleges that your recall is for this generation of vehicles, and work whenever claim for those but it must be the earlier generation vehicle brakes are detected as well. It was a completely different model, a completely different brake system in vehicles. Something to support their claims. They couldnt do it. It was only when our firm was brought in to take of the appeal we brought in the ninth circuit. It has absolutely no merit, that was only after my client had to invest millions of dollars. It is a rare client that will do that, that has the resources and commitment to see those cases through. So my third critique is if anything, for plaintiffs to bring these cases today, then there were many many years ago. I noted state class actions are as vibrant today as they were after the passage of the class action fairness act in 2005. For those not familiar this was a law congress passed, one of the most signature tort reform change is at least at the federal level in my lifetime in the time i have been practicing in the goal is to take National Class actions and move them into federal court. Companies were finding themselves stuck in hometown jurisdictions where they were really chummy. Many of you were as well, the judge comes out of chambers with his arm around the plaintiffs lawyer and they are best friends, they went to law school with the judge and they get on the record and the judge first ruling on the motion to dismiss so all the discovery is produced, exorbitant settlement pressure so the goal was where you have multiple very large multistate class actions crossing state lines those belong in federal court. They were unable to bring those into federal court because traditional rules and diverse be jurisdiction, citizens of different states, you need complete diversity and couldnt aggregate the claims. Each claimant had a claim of 5 and there were 10 million class members that is a 50 million claim by any stretch of imagination but under traditional rules you couldnt aggregate. Everyone predicted and even judges in la predicted, i spoke with many of them, predicted we are not going to have class actions. Ask any practicing lawyer today if that is the case. What you have seen is more concentration, plaintiffs are being strategic and bring in statewide classaction from california, new york, illinois and other populous states to try out and see them extract the settlement as best they can. Waging our lawsuits almost exclusively in state court, not exclusively but almost exclusively. I think that point is one we should not just glass over. They are abusive and continuing to rise. My fourth and final critique, im not going to defend the chambers advocacy of more federal regulation but i want to give you a different perspective many businesses have when it comes to this issue. It is difficult for these days to achieve global peace. It used to be if you settle the major National Class action you get the release of all class members and you could count on the fact that you were putting this issue behind you. That is the motivation for a reason a lot of clients pay big dollars to settle something, just get it behind them. My first point, why i dont think this is a dichotomy dichotomy between federal enforcement and private classaction enforcement it is actually both. Our clients are being sued in class actions and state regulators are coming out for the man being pursued by federal state regulators. There is no easy mechanism under our constitution or laws for a company to buy global peace alyssa brings all those people to the table. What kind of incentives is that . To get an option between the two. Local city up, in california and state ags, and classaction lawyers in bringing these lawsuits under fair competition law and private you cannot get civil penalties. And the crunch berries case, 3 back from the serial under civil penalty theory. 2,500 for violation. If you are an elderly person and part of some of the protected category. Each box of cereal has become a 2,500 box. The law is only Public Officials may pursue those civil penalties. This is directed to the enforcement of the unfair competition, what has that done, we are marketing to new client and pitch new cases, what is the plaintiff doing . What they are doing is they are making pitches to Public Officials and saying mister City Attorney how would you like to be attorney general, then governor. I can bring it on a contingency basis and enforce it whether theres classaction or classaction settlement. Every dollar recover at 2,500 a pop. You get to build this little Enforcement Unit in your office, bringing money into the state. That is a little beyond the problem we are talking about. That is the perspective of the Business Community on top of these class actions, that is difficult for them to achieve global peace which is part of the conservative case for why you would want classaction, private enforcement. The most basic level i applaud professor fitzpatricks theory, the contrarian thinking behind it. It is a conservative issue, it may be a debate between capitalism and socialism, i would never do that. I dont think this is a conservative or liberal issue. I think this is a smart government, may be considered probusiness perspective. The perspective in which we operate, companies are trying to do the best they can, to survive in hypercompetitive environment and overregulated economy. That is not my position. And the critically Important Role in bringing justice to people who would ordinarily not be entitled to it. If you look at where we are today versus where we are 50 years ago i dont think anyone would say this is the right way with setting up an economy. Among lawyers and the Business Community and conservators. I say some of the most obvious poster children for the tort Reform Movement happen to be classactions. Thank you for the responsible counter point. Opening up to the floor, for professor Brian Fitzpatrick or christopher chorba. Is an empirical matter. And do you fear, and the private attorney general, you need to be working on that. At certain times. Your second question first. My book is not for private enforcement only. There are times the government is going to be the best enforcer. Sometimes theres not a lot of profit to be made, those cases if we want any enforcement we have to rely on the government. One of the interesting things, the date on the sec versus the private bar is the sec brings lots of cases. The private bar will not go after those people. An interesting synergy has developed so i think you do need boast. Sometimes you have both in the same case. I absolutely think companies should not pay more than the harm it caused. And offset in that. We need to make sure we cannot over deter the companies. An interesting empirical question, classaction testifying. And gather data like that. It kicks it into high gear. Class actions going away, makes it hard for consumers. We had a change in administration, some notion the classaction going away, i dont know if that thought is continuing. The book does a nice job walking through conception and where it will affect from my perspective but if lead to anything it, if not more litigation. You have the whole industry on this date in particular. We made a lot of money on consumer class actions. Conception didnt wipe those away. You need to have a contractual relationship with your customer. Food and beverages a huge area of litigation. Despite my best attempt, clients wont put an arbitration clause through. Yet they are being sued for breach of warranty which of the contract but nevertheless what you are finding is number one, where theres an express contractual relationship with the customer, you need to have a contract and arbitration. Even in those cases what we have been litigating for the last 10 plus years, plaintiffs attract conflict information, i didnt understand the contract, didnt read the contract, the arbitration clause was in the end instead of the beginning, it was in black text and not capitalized. You also see online commerce, most of us now interact with Companies Via apps. The whole click wrap argument and those things. You also saw what led to conception in the first place was the reason the Supreme Court, reversed california Supreme Court in the ninth circuit because the states had started using a contractual defense which was the unconscionability doctrine. If your contract is overly 1sided or in the formation process you didnt disclose certain things the state law doctrine you can invalidate a contract because it is procedurally or substantively unconscionable. Ironically after conception you had a resurrection of that doctrine and immediately thereafter the court started invalidating clauses in the implement context of the consumer context as unconscionable. Those cases made their way to the Supreme Court, the Supreme Courts agreement would be sitting conception, please listen to us. They had to take 5 or 6 cases since conception but my point is you are finding more ways to attack those and when you have conception having the most forces in the consumer context and employment context and in the ninth circuit you dont have a single case that delivers a Silver Bullet to a defendantbased on a classaction waiver arbitration clause and that is case number one and in the employment case you will find the private attorney general, the Supreme Court has held you cannot arbitrate. Allows any individual to bring an action as private attorney general, get their attorneys fees and it is not subject to arbitration. The second is in california even more ridiculous, there is an argument that if you as a consumer are seeking what is described as public injunctive relief, in the Food Labeling context if you want a company part of your actions to get the company to change the label in a way you allege is no longer deceptive. That is considered public injunctive relief. That is sought in every consumer classaction i have ever seen. That cannot be arbitrated. What you have even in cases where you have a rocksolid arbitration agreement, it is the employment context, the open argot claim stays in court and the consumer case is shaved off and stays in court. Courts are mixed whether they have those go first and have the arbitration go first but i dont think conception has the impact a lot of people have. Go ahead. I want to add one thing to that. I think when the bhopal the dispute goes to the United States Supreme Court they are going to do that it cannot withstand arbitration and they will order arbitration if the us Supreme Court of the rules on it but i want to emphasize one source of agreement that i talked about a lot in the book and that is we do have too many laws on our companies, too many legal constraints on our companies, we are way beyond frederick kayaks contract for art and pricefixing. What i say in the book is i agree, we are overregulating. I advocate for this. Rather than classaction waivers which are a blunt instrument, you can insulate yourself from liability for wrongdoing in any case. Rather than allow this blend instrument, why dont we focus on the laws we dont like and say you cant use classaction in those situations but allow the classaction for the laws we do like, fraud, pricefixing, i advocate in the book we should breach this principle the rules of civil procedure is based on trends substantively. We dont have to have the same rules of procedure in every case contrary to what we have learned all these years, hasnt been handed down by god. We can change it. Lets use rule 23 for the laws we think should be in place and should be enforced robustly. We have too many laws, the answer is not get rid of all classactions. What classaction waiver threatens to do, instead, lets just limit where we use the classaction. In my experience, most of the majority of class actions front with an individual plaintiff walked across the office saying to the tune of 3, 3 or whatever, they are generated by lawyers. Does that for you at all, the classaction mechanism. It doesnt trouble me. I asked classaction lawyers where they get the cases and representative plaintiffs from and i have been surprised how often people come to them and say i have been mistreated, this cant be right, even in cases where classaction lawyers figure out there is a problem and find someone to stand in his representative. I dont have a problem with that. We need sophisticated, well resourced people to uncover wrongdoing. I dont begrudge the classaction lawyer for being that type of policeman. I talk to the classaction lawyers who have done years and years of analysis with professors to try to figure out whether there is pricefixing going on in an industry. It is hard for any particular consumer to know there is pricefixing going on but if you do investigations, it is expensive and sophisticated and sometimes you uncover these things. If you want to police the marketplace, we ought to be encouraging the resources and sophisticated to find that. It seems to me a specialty of the United States that didnt originate here, the concept is quite foreign their. If you were designing the system for european country lets say, you have some a lot of classaction, what reasonable the United States system and what would you change . These the baits are going on in europe. I had a couple cases that involve copycat cases in other countries and it is very much, professor fitzpatrick describes the liberal tradition, big l small l and our country is founded on the liberal tradition which in todays politics would be more conservative in europe politically. In those countries the perspective they take on class actions, the modern classaction arose after the mid1960s amendments to rule 23 and what we know today is the classaction is called the opt out classaction. So you are presumptively in when a class is certified and if you dont want to be part of that you have to affirmatively opt out. In these other countries it is the exact opposite. The way the system used to be, you have to affirmatively opt into the classaction. I cant represent you even if a court says that im similarly situated to you unless you give me your permission. You have these opt ins and that presents challenges and benefits to defendants in the Business Community, you have smaller class actions but then what you have is people going opt in, wait and see how the class goes and it is more difficult. To answer your question i dont think either system is perfect but if i were designing something i would borrow from our friends in the uk they are having a pretty important election today. I would borrow from them and have a system loser pay. What i think that would do, brian has good ideas in his book about how we can implement some of these reforms and i agree with most of the reforms he advocates but there needs to be some skin in the game for the lawyers bringing these cases. I understand the contingency fee is part of that because they are taking a risk, they would only be investing if they were recovery a handsome sum on their investment and i think for example with respect to discovery request, brian talks about this, a plaintiff lawyer cant just ask, bob worn as a trial lawyer and i learned under his wing, these discovery requests, i bring my client by the ankles and shake him until every penny falls out of his pocket. It is a stark image but it is very much what we experienced in civil discovery. If it were a loser pay system or some more robust cost shifting, if i were designing a classaction system i dont know how i would feel about the opt in versus opt out. I see benefits to our system. The ability of our clients to get our feedback that we have to incur to defend against these cases. Another question . I have a question. Your experience, the classaction defense lawyer, what percentage of cases do you believe are frivolous and of those how many of them were dismissed by the courts . I will stipulate has no bearing on your ability as a lawyer. That is an important caveat. I would say 100 meritless. I was a 100 were meritless, but i would say frivolous is a legally charged term that means there is no good favor objective basis for bringing lawsuits and the consumer context i would say at least half of them. Im not saying frivolous in the sense that it has to rise to the level of froot loops or something completely silly, red bull gives you wings, but theres nothing there and there was no good faith basis for bringing it. There was a news report, there was one customer came to them and complained and they launched a classaction. Of those 50 , i have defended many lawsuits, classaction lawsuits, lets say that is 250. Getting it dismissed where the dismissal was upheld is less then a quarter and it is extremely rare to get a case knocked out that early. It is extremely rare that you get the case knocked out that early and it goes up to your court and the Court Affirms it. I am not speaking anything out of turn here it is just most courts especially in this circuit view it as very high bar to get a case dismissed on the pleadings. They want folks to have their day in court in the operating presumption with most judges is if a lawyer puts his or her name on this document, under rule 11 certifies it is brought in good faith, i have no basis before me today to question that and there has been no discovery, to get that into the record, lawyers bring lawsuits in good faith. From that perspective even if it is superficially frivolous the subway sandwiches case, lets take that as an example. Im not saying i wouldnt have moved to dismiss. I probably would have but im sympathetic to the defense lawyer who informed their client they face an uphill battle so youre advertising your sandwiches, youre advertising them as footlong. It says 12 inch sub, every law in this country, every state in this country has a law that prohibits false or deceptive advertising even if it is not i right positive that minimum deceptive. You expect a pictures displaying the subs, they dont show a lump of joe, there is no disclaimer. Im not defending that lawsuit but would we characterize that as i framed it as objectively frivolous, and what is the law or decision subway could cite to the federal judge to say theyve not stated a claim, they cant get to discovery, you must dismiss it. We all listen to this and say it is absurd, Everybody Knows that is what the judge did with the starbucks case. Everyone knows when you buy a latte and when you get it with ice, it is not going to be 20 ounces, involves common sense and i applaud that. It is unfortunate, we need more of that and that would alleviate problems we discussed today. One thing emphasizes the area of agreement, as we have been on his book tour. I am a professor and dont get to practice in courts as often as chris does. Lawyers are not very careful about what they are willing to allege, and i have a friend who is 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 it is almost unanimous the same answer he gives how willing lawyers are to lie and i do think we may have a problem with people not doing any investigation before we file complaints, taking a shot and see what might happen, we probably do need to do something to strengthen rule 11 sanctions and rule 11 procedures so people cant just make up the fact. If youre making a fact it is harder to get those cases dismissed. I know judges hate to order rule 11 sanctions. There have been efforts in the past to change that and they have been unsuccessful. Dont know what you have done to make rule 11 sanctions more of a deterrent to lawyers but i have been persuaded both by things you have said and things i have heard elsewhere on this book tour that we may have to do something with rule 11 as well. One last question. You think the conservative case for pcp a class actions, i would like to hear. Interesting you ask me about that. I explicitly say in the book, advocating reforms, the tcp a should be one of the laws that we do not allow class actions to enforce. The telephone Consumer Protection act, if you get a robo call a rowboat text, 1,500 every time. When you combine those bountys with no relation, with massive over deterrence, the defendant is facing, not making this up, 1 trillion of liability, that is ridiculous and give you efforts if you are the plaintiffs lawyers and bank the company with a robo call case. I say we should not use the classaction device when it will result in overturns, statutory damages cases, punitive damage cases are not appropriate in my view for the classaction device. I will say this, however. When i have gone around other Federalist Society audiences and mentioned the tcp a as one of the things we shouldnt use classaction for as a result on over deterrence, it is not resulting in over deterrence. Im getting robo calls and rowboat texts all the time. We need to double down, triple down, more classactions that is the theory and the reality. Obviously i agree. It shows why those of us who practice confined a lot of areas of agreement. It is hard to quantify you are eating dinner, and the statutory damages and penalties, and amount to encourage to bring these lawsuits or whatever you want to do that. With congressional intent, to layer the classaction procedure over that particular law to i have defended many of those lawsuits and the client often asks, what is my potential exposure here, how many allegedly spam texts they sent. 90 of the time is in response to your request or your opt in and it adds up very very quickly. I want to thank Brian Fitzpatrick and christopher chorba, everyone has learned quite a bit today. Thank you. [applause] that was a lot of fun. [inaudible conversations] you are watching a special edition of books easy airing during the week when members of congress are in their district due to the coronavirus pandemic. Tonight the presidency. First, u. S. News World Reports Kenneth Walsh looks at how different president of handle crisis. Then former second Lady Lynn Cheney and former president ial advisor karl rove reflect on the george w. Bush administration. Letter, jared cohen looks at eight Vice President s it became president due to the death of their predecessors. Enjoy booktv now and over the weekend on cspan2. This weekend on booktv, saturday at 6 00 pm eastern, richard cordray, former rector of the Consumer Financial Protection Bureau. It is about consumers and the problems they face, Consumer Finance and how it has changed and it is about the Consumer Financial Protection Bureau and the work that it engages into protect people across america. Sunday at 12 30 p. M. Eastern hr mcmaster, former Trump Administration National Security adviser. The United States and other free and open societies are doing everything we can to protect ourselves against the efforts of the Chinese Communist party to subvert our freemarket Economic System and our democratic form of government. At 6 20 p. M. Ruth gilmore, either in City University of new york professor on mass incarceration in the us. The fact that most people leave prison to a little bit of analysis to see that we could be closing prisons already in jails already if we just cut by two weeks, three weeks, four weeks, much less years the time people are serving. Reporter watch booktv this weekend on cspan2. Good morning, everyone. I am joanne j. Myers and i would like to thank you all for beginning your morning with us. We are delighted to welcome doctor ali khan and cspan