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Tuesday, February 07, 2012

Things are Different in California

Imagine that you are in the market for a car. You head to the car dealership and conscious of gas prices (especially in California) you pay particular attention to the advertised miles per gallon. You look across the showroom and there you see it--a car that advertises 50 MPG. You buy it and drive away a very happy consumer....until you discover that you are only getting 30 MPG. Thankfully, class action lawyers are looking out for you. They file a class action and settlement ensues. You will receive a couple hundred dollars in rebates and coupons. They will receive roughly $8.5 million. The American class action system at work.

In California, however, some folks do things differently. One such person is Heather Peters (a former lawyer) who decided to opt out of the settlement, create a website encouraging others to opt out, and filed a case against the automaker in California small claims court. The maximum amount she can receive in small claims court is $10,000. And, here's the plus: the automaker can't be represented by a lawyer before the small claims court under California law.

As reported late last week in the LA Times, Heather Peters was awarded $9,867,19. In other words, she defied conventional wisdom by opting out of a class and won. She is now encouraging others to do the same.

When I teach class actions as part of first year civil procedure, it is easy to point to the benefits of class treatment (efficiency/fairness/incentivizing some types of cases) as well as its disadvantages (massive attorneys fees that are passed back to the consumer). Is there any reason to believe that folks like Ms. Peters will change class action litigation in the future? Or, do we just do things differently in California?

Posted by Trey Childress on February 7, 2012 at 03:59 PM | Permalink

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Comments

Thanks for the kind words. As a native Californian, it's nice to hear that things remain different out there.

Posted by: Adam Zimmerman | Feb 10, 2012 4:14:35 PM

Thanks, Adam, for the helpful link to your excellent post. I think you make some fabulous points about why this case is different, and also how it might relates to other trends and backlashes to aggregate litigation. Thanks!

Posted by: Trey Childress | Feb 9, 2012 11:40:46 AM

Trey,

In case you're interested, I blogged about this issue (and case) a few weeks back here at Prawfs. (http://prawfsblawg.blogs.com/prawfsblawg/2012/01/class-actions-v-flash-mob-litigation.html). The final decision came down just after I finished my stint here, and I'm glad to see you keeping the issue alive. My answer to your question in that post -- will Peters' usual combination small claims court and social media change or substitute for class action litigation -- was (and remains) a qualified "yes" and "no." This strategy cannot substitute for the overarching deterrence effect class actions may achieve, as some media outlets at the time suggested. But, if not abused, such "flash mob litigation" techniques may provide an interesting signal to reviewing courts about the fairness and adequacy of a class action settlement.

Best.

Adam

Posted by: Adam Zimmerman | Feb 8, 2012 5:29:26 AM

If a corporation can't be represented by a lawyer in small claims court, who appears? The CEO? What if they happen to be a lawyer?

Posted by: Andrew MacKie-Mason | Feb 7, 2012 4:49:57 PM

Honda has stated that it will appeal the small claims court's award. Ms. Peters' influence on other potential class litigants, both present and future, hinges on the outcome of that appeal.

http://www.latimes.com/business/money/la-fi-mo-honda-lawsuit-20120202,0,580678.story

Posted by: Captain Clerk | Feb 7, 2012 4:44:48 PM

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