The Cost of Suing Business
32 Pages Posted: 4 Apr 2015 Last revised: 11 Sep 2016
Date Written: August 17, 2016
To listen to the Chamber of Commerce, one would think that class actions are the most significant scourge on business ever conjured up by man. In brief after brief to the Supreme Court, the Chamber of Commerce and other business amici tell the same story: Meritless class actions, filed by rapacious plaintiffs’ attorneys for the ostensible benefit of consumers, employees, and shareholders, are so devastatingly expensive to defend against, and threaten such financial ruin if plaintiffs prevail, that corporate defendants cannot help but accept “blackmail settlements” that harm both businesses’ bottom lines and society at large. In this Essay for the 2015 Clifford Symposium, I examine the empirical support for these claims about the deleterious effects of class actions.
Although there is very little reliable empirical information about any aspect of modern civil litigation, at least some available information challenges business amici's assertions about the costs and burdens of class action suits. Class actions, as a whole, appear no more coercive to defendants than any other kind of litigation. Businesses appear to spend even more money suing each other than they do defending against class actions. There is no reason to believe that class actions are more often frivolous than other types of cases, or that plaintiffs’ attorneys who bring class actions are any more unscrupulous than the other members of their profession. And claims about the costs and burdens of class action litigation underestimate the costs of restricting plaintiffs’ access to the courts. For these reasons and others, prevailing depictions of the costs and burdens of class actions appear to be both unfounded and incomplete.
Keywords: class action, litigation, procedure, Chamber of Commerce, pleading, arbitration
JEL Classification: K13, K22, K32, K41
Suggested Citation: Suggested Citation