Class-action suit out of fashion in today's law cases. Court rulings make lawsuits filed by group less attractive
THE legal vehicle on which the civil rights movement and some other causes rode to victory in past decades has, like some of America's favorite automobiles of the 1950s, '60s, and '70s, been remodeled out of fashion. Utilization of class-action lawsuits, which produced such landmark decisions as the 1954 Supreme Court ruling outlawing school segregation and the high court's 1973 decision legalizing abortion, has dropped sharply in the 1980s.
These suits - brought on behalf of a large number, or ``class,'' of plaintiffs with similar claims - proliferated after the Federal Rules of Civil Procedure were revised in 1966 in a way that made it possible to bring suit on behalf of a large number of individuals on ``common questions of fact and law.''
Civil rights lawyers saw sweeping social change. Many other lawyers saw the opportunity to earn big ``contingency'' fees - that is, fees based on a percentage of dollar awards to plaintiffs.
The result was a lot of litigation.
But a series of Supreme Court rulings has set new terms for class-action suits. The court ruled in 1969 that plaintiffs in federal suits involving state law had to have individual stakes of at least $10,000. And in 1974 the high court ruled - in a case involving alleged price fixing by two New York brokerage houses - that each of the 3 million stockholders, whose claims ranged from $70 to $100, had to be notified of the suit. Individual mailings and the attendant paper work pushed the price of bringing suit to a prohibitively high level.
``Now it is clear that in the federal courts there is an absolute decline in class action in all categories,'' says Stephen C. Yeazell, a Stanford University law professor and author of a book entitled ``From Medieval Group Litigation to Modern Class Action.''
In 1977, 3,584 class-action suits were filed in federal courts. In the year ending June 30, 1987, 610 were filed.
The court's notice requirement gives the individual ``a chance to opt out or show up with his own lawyer,'' says Sherman L. Cohn, a Georgetown University professor of civil procedure. This important legal provision has a double edge. It fosters a big company attitude Professor Cohn characterizes as: ``If you want to do something wrong, you can get away with it better if you hurt lots of people a little bit, because they can't afford to sue.''
Paul Rothstein, another Georgetown law professor, says the current mood is that the courts are ``a rationed resource that can't be open to every claim.'' Class actions can be administrative nightmares, he says, involving collection of thousands of documents for individual claimants, assessing damages, negotiating who's responsible for what aspect of a case with several sets of lawyers, then figuring out an equation for paying them.
Another adverse development for class-action suits, says Professor Yeazell, is that ``now judges are looking more closely at awards, and calibrating on the low side.''
Dean Paul D. Carrington at the Duke University Law School says judges were forced into setting award limits because some lawyers, whom he termed ``bounty hunters,'' brought frivolous suits.
In civil rights cases the losing party pays the attorney fees. Yeazell says that in recent years the courts have set the rate at about $75 an hour and that has ``diminished the attractiveness'' of such class-action suits to lawyers. He also attributes the downturn to cuts by the Reagan administration in the Federal Legal Services Corporation, which brought many class actions. He says all these factors combined have caused the decline.
Dean Carrington says the trend downward is normal, that ``new law generates a wave of litigation, then it trails off.'' He argues that relaxed federal rules sparked cases in the beginning. But the numbers ``fizzled'' as people complied with the law or employed ``evasive action.''
Both Yeazell and Rothstein put forth another reason. They say conservative Reagan judicial appointments and an administration assault on the philosophy of judicial activism are substantial factors in the decrease, particularly in the civil rights area.
According to statistics compiled by the United States Equal Employment Opportunity Commission, class-action suits filed in federal courts fell from 54 percent of the total caseload in 1985 to 35 percent in 1986. Rothstein says, ``The numbers would be a lot higher if not for these inhibitors.''
Figures kept by the federal court system show a more dramatic drop. In 1978 there were 3,045 civil rights class actions; in 1985 the number dropped to 729, and in 1987 to 185. Carrington says it is hard to measure the impact of judicial conservatism. But he says he believes conservative judges are less likely to render judgment for ``the plaintiff in dubious cases.''
Carrington acknowledges that ``Congress under Reagan hasn't created a whole lot of rights legislation.'' But, he says, the class-action suit remains an ``important institutional arrangement.''
Yeazell says that at one time the class action was thought to be a cure-all for every social problem. Now he sees the pendulum coming back closer to the middle. ``It's premature to think of the demise of class action,'' he concludes.