The U.S. Chamber’s Latest Attack on Class Actions

The U.S. Chamber of Commerce really doesn’t like class actions. Neither do the corporations that fund their efforts. Why? Mainly because corporations and their front groups know that class actions give American workers and consumers the power and ability to level the playing field, even when facing the most powerful corporations in the world. In fact, class actions are often the only way that individuals can hold corporations accountable when they are faced with widespread wrongdoing.

The Chamber’s disdain for class actions was on full display at a hearing in the House Judiciary Subcommittee on the Constitution and Civil Justice. Entitled, “The State of Class Action Ten Years After the Enactment of the Class Action Fairness Act,” the hearing set out to set the stage to pass legislation to further limit consumers’ ability to band together in a class action.

This is the latest move in their campaign to chip away at consumers’ access to justice. They have attacked class actions from every conceivable angle – from advocating for amendments to weaken the procedural rule governing class actions, to pushing Congress to enact laws that serve as hurdles to class formation, to burying class action bans in forced arbitration clauses hidden in the fine print.

But at today’s hearing some witnesses actually argued that class actions serve very little public good. However, a new study released today by the American Association for Justice (AAJ) and the National Association of Consumer Advocates (NACA), debunks this notion and highlights ways that class actions benefited consumers in just the year 2009 alone:

  • They empowered consumers. When the price of propane shot up in 2008, consumers filed suit against Ferrellgas for allegedly reducing the amount of propane in its tanks without notifying consumers or changing the labels. Through a class action settlement, consumers recovered up to $25 million for being overcharged. [1]
  • They allowed victims of financial fraud to recover. Through a class action, $219 million was returned to investors whose retirement funds were devastated by Bernie Madoff’s colossal Ponzi scheme. The judge in the case praised the equitable settlement, stating that nearly all class members were made whole. [2]
  • They restored people’s rights. Thousands of disabled residents living in New York City Housing Authority buildings could not go in and out of their housing due to widespread disrepair of elevators. Through a class actions, the residents forced the city to repair the elevators in a timely matter. [3]
  • They restored employees’ retirement funds. Level 3 Communications employees filed suit against employee retirement plan managers for withholding information about company troubles and continuing to invest in the overvalued company stock while employees lost their retirement funds. It took a class action to restore $3.2 million in lost retirement funds. [4]
  • They addressed health and environmental harms. A dike at a coal plant operated by the Tennessee Valley Authority (TVA) burst, sending more than a billion gallons of highly toxic coal ash slurry into waterways and covering nearly 300 acres with sludge. The coal ash at this plant was held in earthen dikes rather than lined landfills. Leaks and seepage plagued the dikes at the TVA coal plant for years. According to an inspection report, the TVA knew about leaks at the facility for more than two decades and opted not to pay for long-term solutions to the problem. A class action was brought on behalf of property owners who suffered damages. The district court found in their favor on their claims of negligence, trespass, and private nuisance. The case then went to mediation to determine appropriate damages, and on August 1, 2014, it was announced that TVA had agreed to pay $27.8 million to settle claims from property owners who suffered damages due to the 2008 spill of coal ash sludge. [5]

You can read the full report here.

Stay tuned for more to come on this issue.

[1] Drucker v. Ferrellgas Partners L.P. et al, No. 2:09-cv-02305 (D. Kan. 2009).

[2] Bd. Of Trustees of Buffalo Laborers Security Fund et al v. J.P. Jeanneret Assocs. Inc. et al, No. 09-cv-08362 (S.D.N.Y. 2009), In re Beacon Assocs. Litig., No. 09-cv-00777 (S.D.N.Y. 2012) and In Re J.P. Jeanneret Assocs., 769 F. Supp. 2d 340 (S.D.N.Y. 2011).

[3] Brito et al v. New York City Housing Authority, et al, 09-cv-01621 (E.D.N.Y.).;

[4] Walter v. Level 3 Communications, Inc., No. 09-cv-00658 (D. Colo. 2009).

[5] Blanchard v. Tennessee Valley Authority, No. 09-cv-00009 (E.D. Tenn. 2009).