By Paul Bland An alarming bill from Rep. Robert W. Goodlatte of Virginia is now making its way through Congress, and it is imperative that lawmakers who care about and champion consumers’ rights take quick action to ensure it never becomes law.
The congressman has misleadingly titled his legislation the “Fairness in Class Action Litigation Act.” In fact, it is anything but.
The original draft of Goodlatte’s bill was so over-reaching it would have eliminated virtually any class action lawsuits for any illegal action a corporation might undertake. It would have wiped away all securities fraud lawsuits, cases against price fixing that violate the antitrust laws and even civil rights cases (such as those brought against corporations that pay women less than men for the same work).
Now, he claims his bill would “only” eliminate what he calls “no injury” class actions. This phrase is a brilliant focus group-tested label for cases that involve very real (although difficult to quantify) types of injuries.
First, the bill would eliminate lawsuits involving advertisements that leave out important facts about products. For example, there are several lines of washing machines that are prone to significant mold problems. The problem is common enough that the manufacturers have made a large profit selling special products aimed at killing the mold in these same machines. Several lawsuits are now pending on behalf of consumers, arguing that if the manufacturer had disclosed the significant potential for mold problems, consumers would not have paid as much money for these machines. Goodlatte’s bill would throw out these cases on the grounds that some consumers will not experience mold. He ignores the fact, however, that all consumers are hurt when they overpay because key facts are withheld from them.
Similarly, the bill would make it impossible for consumers to bring class action lawsuits if a food item is falsely labelled as “natural” or “organic” when it is grown with pesticides or has artificial ingredients. Goodlatte’s idea that such cases are “no injury” cases is not only wrong; it would encourage corporations to lie to consumers by convincing them that products have qualities they do not actually have.
The legislation would also eliminate cases based on laws dealing with corporate abuse that hurts people, but is difficult to quantify. In these types of cases, legislatures often create something called “statutory damages.” For example, the Fair Credit Reporting Act regulates corporations that collect information about consumers and then sell that data to businesses. A common use of this service is when a business is trying to figure out whether to lend to someone, or hire them.
A lot of credit reporting agencies, however, do a lousy job at this. In fact, it is very common in America for these agencies to sell false information about a consumer, often because they have poor procedures that lead to numerous mistakes. Under the Fair Credit Reporting Act, any agency that sells false information and has used those lousy procedures will have to pay a “statutory damage” — up to $1,000 — to consumers about whom they made false statements. The consumers don’t have to prove the exact amount of money they lost because of the false information the agency provided about them.
This remedy makes good sense: it’s bad for consumers (and for the credit markets) when the credit reporting agencies make a lot of significant mistakes. If you only allow people to sue when they can quantify what these injuries have cost them, however, there would be few, if any, lawsuits.
Goodlatte’s bill says, in effect, “Since it’s hard to put a dollar figure on privacy injuries, let’s treat corporations who make false statements about hundreds or thousands of consumers as if they caused zero damages, not $1,000.” In Goodlatte’s world, if a corporation injures a consumer in a way that’s hard to quantify, we should let the corporation walk away without having to pay any money to anyone.
For most Americans, having corporations hide information about products prone to defects, deceive people about the important characteristics of products, or reporting false things about consumers are harmful acts. Notwithstanding the House Republicans’ mantra that lawsuits pursuing these problems are “no injury” cases, the country is better off if corporations are discouraged (rather than encouraged) from engaging in these behaviors.
Paul Bland is executive director of Public Justice, an impact litigation group focusing on consumer, worker and civil rights.
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