FTC, Georgetown Journal of Legal Ethics to Host Workshop on Class Action Lawsuits

The Federal Trade Commission and the Georgetown Journal of Legal Ethics will co-host a workshop, “Protecting Consumer Interests in Class Actions,” September 13 and 14 in Washington, DC. The workshop will bring together judges, academics, class action practitioners, in-house corporate and government attorneys, economists, advocacy groups, and claims facilitators to explore whether certain aspects of the class action mechanism – including settlement notices, non-pecuniary remedies, and attorney fee awards – can be revised, reformed, enhanced, or improved to protect the interests of consumer class members.

“When disputes involve small losses to consumers, private lawsuits are not a realistic option,” said Todd J. Zywicki, Director of the FTC’s Office of Policy Planning. “Class actions, however, can raise structural problems that increase the risk of outcomes that fail to protect consumer class members adequately. The FTC’s Class Action Workshop is intended to explore those problems in detail, as well as what the FTC, and others, can do to address them.”

For a complete workshop agenda, as well as information on attending the workshop – which is free and open to the public – see www.ftc.gov/bcp/workshops/classaction/index.htm.

Protecting Consumer Interests in Class Actions

The FTC’s interest in class actions derives from the agency’s core mission of protecting consumers from deceptive practices that cause injury. Although class actions can serve as an effective means to remedy consumer injury where the financial harm to each class member is too small to justify the filing of individual lawsuits, they also can raise thorny conflict-of-interest issues and become vehicles for abuse.

The topics to be addressed at the Workshop include the following:

• The Use of Coupon Compensation and other Non-Pecuniary Redress;
• Tools for Ensuring that Settlements Are “Fair, Reasonable and Adequate;”
• Clear Notices, Claims Administration and Market Makers;
• Class Action Attorney Fees: Compensating Lawyers while Protecting Consumers;
• Empirical Analysis of Class Action Trends: Current Knowledge and Future Research Agendas; and
• Class Actions as an Alternative to Regulation: The Unique Challenges Presented by Multiple Enforcers and Follow-On Lawsuits.

Recent FTC Activities in the Class Action Area

Since January 2002, the FTC has served as the voice of consumers by intervening or appearing as amicus curiae in six separate cases in which the agency concluded that the proposed class action settlement was flawed – for example, when consumers would receive relief of little or no value or when class counsel would receive an unreasonably large fee in light of the result obtained. Those cases include:

• In re First Databank (www.ftc.gov/opa/2002/01/fyi0202.htm)
• Erickson v. Ameritech (www.ftc.gov/opa/2002/06/fyi0236.htm)
• Carter v. ICR Services (www.ftc.gov/opa/2002/08/fyi0244.htm)
• Haese v. H&R Block (www.ftc.gov/opa/2003/06/fyi0336.htm)
• Schneider v. Citicorp. Mortgage (www.ftc.gov/opa/2004/03/fyi0419.htm)
• Cass v. AmeriDebt (www.ftc.gov/os/2004/04/040412motion4stay.pdf)

In addition to these filings, the Commission has urged the Judicial Conference to adopt pro-consumer amendments to the Federal Rule governing class actions, including mandatory notice of related government actions and tougher judicial scrutiny of “coupon” settlements (www.ftc.gov/opa/2002/02/rule23.htm). The Commission has published a pamphlet – Need a Lawyer? Judge for Yourself – which advises consumers to bargain over legal fees to avoid excessive contingency fee arrangements (www.ftc.gov/bcp/edu/pubs/consumer/products/pro14.shtm).