Complex Litigation: Negative Value Suits

Abstract

This paper is a commentary and analysis of the so-called “negative value suit” in the class action arena. A negative value lawsuit is so named because the class consists of hundreds or thousands of individual claims, each claim with very small value. The theory is that an individual with such a small claim will be unable to pursue legal relief, because no attorney would be willing to undertake representation where the stakes are so low and the possibility of recovering a reasonable attorney’s fee is equally remote. Thus, the only feasible way for negative value claims to be pursued is through the aggregation of such claims in a class action, where a class attorney is more likely to be willing to undertake representation, and there is a prospect of recovery of a reasonable attorney’s fee from a class-wide judgment or settlement. The archetype of the negative value suit is the minor fee overcharging on a routine bill, such as a telephone invoice or on a credit card statement. The Supreme Court in Amchem v. Windsor acknowledged that the primary purpose of the Rule 23(b)(3) class action was to provide a vehicle for the prosecution of such negative value suits. This article discusses the varied approaches of the lower federal courts to determine whether a proposed litigation presents a negative value litigation that is suitable for certification under Rule 23(b)(3).

Keywords: negative value suits, class actions, small claims consumer class actions, Amchem Prods. v. Windsor, Rule 23(b)(3) small claims suits