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Tuesday, January 03, 2012

Flash Mob Litigation

According to conventional wisdom, the core policy behind class actions is to overcome the fact that small recoveries all by themselves "do not provide the incentive for any individual to bring a solo action."  Amchem Prods, Inc. v. Windsor, 521 U.S. 591, 616 (1997).  However, a report by the Associated Press today suggests another way to motivate consumers to reap the benefits of collective action: go viral.  Rather than accept her $200 payout from a class action settlement for her poorly performing Honda Civic hybrid, Heather Peters filed her own lawsuit for $7,500 in small claims court.  She then created a website, Twitter account and YouTube video to spark a "small claims flash mob," encouraging other Honda consumers to do the same.  According to the AP, "if successful, it could lead to a flood of similar lawsuits."   One news story dubs the strategy "Small Claims 2.0."

A number of commentators have pointed to the increased reliance on networks and social norms to replicate or improve accountability, access and information in complex litigation.  See, e.g., Elizabeth C. Burch, Litigating Together: Social, Moral and Legal Obligations, 91 Boston U. L. Rev. 87 (2011); Byron G. Stier, Resolving the Class Action Crisis: Mass Tort Litigation as Network, 2005 Utah L. Rev. 863 (2005); Howard Erichson, Informal Aggregation: Procedural and Ethical Implications of Coordination Among Counsel in Related Lawsuits, 50 Duke L.J. 381 (2000).  These arguments may have even more force in light of the Supreme Court's decisions in AT&T Mobility v. Concepcion and Walmart v. Dukes, which both sharply limited the use of the class action to resolve broad and diffuse wrongdoing by a single defendant.  Even early structural reform litigation, like that in Brown v. Board of Education, famously relied on networks of attorneys, public interest organizations and experts to coordinate litigation strategy and share information.  However, I do not know of other attempts to spur "flash mob aggregation" without lawyers, in small claims court, arbitration or other trial-like settings.  I'd be curious to hear if any of you have heard of similar efforts.

As I explain after the jump, I doubt that social media can really make up for the decline of the modern class action or other forms of legal aggregation.  However, such efforts, if carefully controlled, may complement efforts to achieve more access and equity in complex settlements.

Social Media as Collective Litigation?  The story's claim that an individual success in small claims court "could lead to a flood of similar lawsuits" in small claims court is highly unlikely.  Nor could a win, or even a string of wins, represent a new or effective substitute to class action litigation.  The Supreme Court's instruction in Amchem about "solo action[s]" represents a basic truth about small claim class action litigation. There are many impediments for individuals who choose to litigate by themselves. Individuals must develop their own evidence, retain witnesses, expend time, and support their claim for damages with a well-grounded legal theory.  Most studies of small claiming patterns suggest that these problems, combined with apathy, inertia and cognitive bias, will persist.   

Class actions thus level the playing field with defendants who, for strategic reasons, are willing to invest substantial resources in individual cases.  Facing two hundred independently prosecuted claims for $100 each, a defendant might invest up to $20,000, in developing crucial expert evidence on a pivotal common question of liability, whereas each of the plaintiffs might invest up to only $100.  Unlike individual plaintiffs, defendants have every reason to take into account the big picture; they don’t litigate cases one at a time.   See, e.g., Sergio J. Campos, Mass Torts and Due Process, _ Vand. L. Rev. _ (forthcoming 2011); David Rosenberg, Mass Tort Class Actions: What Defendants Have and Plaintiffs Don’t, 37 Harv. J. Legis. 393 (2000). Accordingly, class actions allow plaintiffs to litigate with the same broad view.  This is one reason why recent Supreme Court decisions forcing consumers out of class actions, and into individual arbitration (which look a lot like small claims court), are seen as victories for defendants.

Social Media as a Compliment to Aggregate Litigation.  On the other hand, social media could make class actions work more effectively.  An effectively coordinated effort to opt for small claims litigation, over a class action settlement, could at least provide a modest signal to a court that the class action settlement insufficiently compensates class members.  See, e.g., John Bronsteen & Owen Fiss, The Class Action Rule, 78 Notre Dame L. Rev. 1419, 1441 (2003) (arguing that individuals who opt out are signaling dissatisfaction with the suit and are protecting their own interests); Christopher R. Leslie, The Significance of Silence: Collective Action Problems and Class Action Settlements, 59 Fla. L. Rev. 71, 80 (2007) (critiquing the approach of courts that rely on opt-outs as a signal).  And that may be the case in the Honda class action settlement. 

Social media could also combat the phenomenon of “under-claiming” in large settlements – where parties neglect to opt out of a settlement, but never claim an award. See Deborah Hensler, Class Action Dilemmas: Pursuing Public Goals for Private Gain 82, 458-60 (2000) (surveying class action settlement funds and finding the fraction of funds actually disbursed was “modest to negligible” in so-called “claims-made” settlements, where class members are asked to come forward and claim compensation).  An online campaign to collect on the Apple iPod Battery settlement is one such success.  I describe some similar ways to combat opt-out problems and underclaiming using cognitive psychology in Adam S. Zimmerman, Funding Irrationality, 59 Duke L.J. 1105 (2010). 

But even these approaches should be adopted with caution.  Social media could be manipulated by rival attorneys, or defendants, to undermine notice.  Judges generally have to ensure that claimants are not swayed by entrepreneurial lawyers that seek to sabotage the settlement and may police what can be said to potential claimants to ensure that they make unbiased decisions.    See, e.g., In re Visa Check/Mastercard Antitrust Litigation, No. CV-96-5238, 2006 WL 1025588 at *4 (E.D.N.Y. Mar. 31, 2006) (observing that “this is not a run-of-the-mill business environment, subject solely to market forces and the principles of contract and tort law that control behavior in that environment. The fact that the merchant class is huge does not alter the nature of the Court's relationship with its members … I have an affirmative obligation to protect those interests.”); Georgine v. Amchem Products, Inc., 160 F.R.D. 478, 498 (E.D.Pa.1995) ( “[a] remedy is appropriate if the communications at issue create a ‘likelihood’ of abuse, confusion, or an adverse effect on the administration of justice.”).  The benefits of any attempt to use "flash mob" techniques in a class action – preventing avoidable harm to claimants – must outweigh the potential costs, including the value of client autonomy, the chance of error, and the burden on the courts and public administrators.

Posted by Adam Zimmerman on January 3, 2012 at 09:33 PM in Civil Procedure, Torts | Permalink

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