Throughout the u. S. And the world with interactive maps. Watch ondemand anytime unfiltered at cspan. Org coronavirus. I am very delighted to welcome you to our event today. Its on a conservative case for class actions, a book written by professor fitzpatrick that galvanized this debate. We have three outstanding speakers, panelists i should say. Our first is the head of the class action practice here it gets indented coach rivera key has litigated in the fitted doubtless class actions including over 20 dismissals of class action cases. So you may have a sense of where his position is on that. He is a graduate of georgetown, undergraduate and the university of Virginia Law School where he was the long review and hes also the author of a chapter in the popular better guide series on 1702 and claims, so please welcome christopher. [applause] our next panelist is professed himself 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 for being the top student to graduate in his class. He is [inaudible] a lot easier, a lot easier. And he has been a lawyer and a professor including backup for wild turkeys come vanderbilt panties off with this book, mexican poling case compelling case to class action mechanism. And are moderated today is judge on the ninth circuit. He is a graduate, a korean immigrant i should start with and came to this country and graduated from i believe cornell and it also Harvard Law School. You guys classmates . Classmate. Magna cum laude and worked at other Large Schools and was an associate counsel to Judiciary Committee of the city and recently appointed to the ninth circuit. So round of applause for judge kenneth lee. [applause] michael, thank you for the introduction. I think will have 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, 50 minutes to make his case. Ten or 15 minutes to rebut and after that will open the floor for questions here. As michael mentioned, ryan and i were classmates in law school. We live in the same dorm floor and i can tell you that back in the day at harvard if you were an rockefeller republican you are treated as if you were to the right of attila the hun. Brian was to the right of a till of the hun. [laughing] i say that in just. Brian more libertarian but he has their easterling conservative credentials. He clerked for judge of skala, for Justice Scalia, worked 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 middle of the vast rightwing conspiracy write a book in support of class actions and plaintiffs lawyers . Well, thank you for the kind introduction, judge lee. [laughing] the reason that a think conservatives should support class actions 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 really is what inspired me to write the book that you have in front of you today. The case before the Supreme Court was called at t versus conceptual. I suspect many of you know about this case. The question was, a class action waivers that are embedded in arbitration agreements enforceable . And 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 an arbitration clause, any state lost 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 had been injured small amounts by corporations, small frauds, small breach of contract, small pricefixing injuries, people with small harms would have a very hard time Holding Companies accountable for those harms. Because if you have to go it on your own, not many people are going to do it. Everyone knew this in 2010 and the chamber of commerce filed an amicus brief to calm everybody down. 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 ive been a member of the vast right wing conspiracy for very long time. I 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 and 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 has a wonderful passage that a court in the book where he says listen, big businesses often wax poetic about the Free Enterprise system and theyre all on the 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 do, for our economy and for our country but they are not the best place to find what the conservative principle suggests we should do to police the marketplace. When is the best place to find what conservative principle say . My book is built upon people like Milton Friedman, like friedrich hayek, like gary becker, like george stigler, like frank 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 that doe policing of our marketplace. Not even friedrich hayek, the Austrian School of economics believed in complete laissezfaire markets. At the very least even the libertarians say we need three rules in our markets. No fraud, no breach of contract, and no pricefixing. We cannot have vibrant markets if companies can breach of 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 we going to enforced and implement those rules . What i argue in the book is the conservative way to do it is to the private enforcement of the law and they go back to the literature on privatization that was very popular during Ronald Reagan and margaret thatchers times. In this literature base of process will want to privatize everything. And, therefore, why should we want to privatize enforcement of the law as well . I identify six reasons why this literature advocates privatizing, private solutions over government solutions. All six of these reasons apply to private enforcement of the law. Number one, we like smaller government. Everything else being equal we want a smaller government. It means lower taxes, fewer government bureaucrats looked around for things to do. This is consistent with private enforcement of the law. If we didnt have class action lawyers Holding Companies accountable for misdeeds, we would have to hire thousands of more government lawyers to pick up the slack. Thats more taxes are more people looking for things to do. We like selfhelp. Thats reason number two. We like to build selfreliance among our citizenry, people rely on themselves and their neighbors and things go wrong, not waiting around for the government to save them and bail them out. This again is consistent with private enforcement of the law. Reason number three, better in sensitive would like because private sector participants are motivated by profit and we think that colonizes them to do a better job than government bureaucrats who get paid the same matter what they do. This is consistent with private enforcement. Class action lawyers earn contingency fees. These are a terrific motivator, and so we would expect and ill explain in a moment there is data to confirm this. We would expect class action lawyers to do a better job of enforcing the then government lawyers do. Number four, better resources. The private sector has better resources than the government does. A government is always strapped for cash, like its always been. Enforcement budget are the least sexy thing in the budget. Its the first thing to go. The private sector can 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 then 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 your bets by having decentralized solutions to problems. Thats why we 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 private solutions are more independent than government solutions. In the academy we often teach about something called agency capture, conservatives have a word for it, 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. This makes our Government Agencies less independent and more biased. The private sector doesnt have that problem. The private sector is focus on profits, focused on contingency fees here in my view that is more pure than to 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 in securities fraud, class action lawyers in antitrust, you find the class action lawyers are recovering more money than the government lawyers are recovering. In securities fraud it can do want any given your securities fraud lawyers recover ten times as much as the sec does. A lot of that is because security front lawyers filed more cases the defendant if you look at the exact same cases with a glut to the exact same people for misconduct, a private bar still collects four times as much as the sec does. The theory supports private enforcement and the data suggest private enforcers are doing a better job. Of course it is true that the private sector can go too far. The profit motives can go too far. And 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 the system and pursuit of profit. We dont say therefore lets have the government do everything instead of corporations. No. We say were 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 class action lawyers by regulating those contingency fees that they earn in the cases. Every one of those awards must be approved by a federal judge, and we can direct class action 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 in his recent to turn things to the governor. Its reason to put rules in place to make sure the profit motive is pointed in the right direction. What i argued book is i think we largely already have rules in place. We can always improve the system and i have a few reforms that advocate and book, but for the most part i think our system is working. I consider a few of the main arguments agenda makes against class actions and they bring data to bear on the arguments and i conclude the chamber is basing its advocacy against class actions more on myths and realities. Let me give you a few examples. Number one, the chamber says we have so many meritless class action case of all the time. I like to point to this subway footlong case. Some of the subway footlong were only 11 inches, and some class action lawyer sued alleging Consumer Fraud. This was a frivolous lawsuit, but is this subway footlong of representative class action or is it an outlier . In one chapter of book 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 is never been easier in the history of america to dismiss a list case in court. After the United StatesSupreme Court decided twombly, this is the 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 owned the lists of the ten worst class the ten worst cases filed every year and america. They have a ten most frivolous cases lists they put out every year. I looked at five years of the list. There were ten class action cases come subway footlong, a couple of cases against starbucks because there was too much ice in ice coffee or too much phone and a latte. There three frivolous cases on the chambers list. The other seven class actions were not even frivolous. There was a case against mastercard because they ran a promotion that said if the user mastercard we are going to donate a percentage of your purchases to charity. They didnt tell people the amount of money they would give to charity was capped at a certain level and they hit that point at month three and here. There were nine vermont the running a promotion. This is a least a debatable case, misleading consumers. Most of the cases on the chambers a list fall into that category were at least debatable. What i say in the book is best. 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 make the chamber halfway into one of the things i propose in the is we content down even further on meritless cases. If enough happy with twombly are other things we can do that would put an automatic stay of discovery in place when a motion to dismiss is pending. Most judges do this now but some dont. We can make it automatic. Im willing to give defendants and interlocutors appeal in a ia class action case when the motion to dismiss is denied just to make extra sure that the case is not meritless. So im willing to tweak the system a bit but i dont think we have meritless cases a probl. 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. Listen, you can find one or two or three cases again were class members get nothing and the voters get everything. These cases exist but i but i t to you these are outliers, extreme outliers. In my empirical work as a professor i had added up every single dollar the defendants pay out in class actions, and i compared it to every single dollar judges award lawyers in fees. And you know what . The percentage of what defendants pay out his award in fees . 15 , 15 . Is what the lawyers are getting. This is not everything. This is far from everything. Its far but even a normal individual case contingency fee. We dont have a problem with lawyers making too much. I argued book if you want to be good law and economic conservatives we are probably paying class actually saluted with all kinds of ways to captain santas in ways in the market know quite what their lawyers intend this to be capped. We dont have a problem with these. 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 showed the medium claims rate in the consumer class action is 9 . That means 91 of consumers are not getting any compensation in class actions. That doesnt mean the money is all going to the lawyers. We split the money of the month and 9 the file claims or give some leftover money to charity. It is true in a lot of cases the class action is not very good at compensation, i admit that the two things about that. Number one, remember the alternative here, folks, 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 the government goes after wrongdoers that are prohibited by law from distributing the money to the victims. It has to go into the u. S. Treasury. On the occasions where the law permits the government to distribute money to victims, what do you think the government does . They hired the same people the class action lawyers hired to distribute their settlements. The governments claim rate is 9 , too. So the government 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 that 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, you are less likely to do bad things to begin with. This is a conservative law and economics degree. We have been teaching it for 50 years, and its another reason why the class action is valuable and there are some very good empirical studies that show in class action threat goes up, corporate misconduct goes down. So im willing to rest the case on deterrence alone but in a l