Editors' pick: Originally published May 3, 2016.You may have recently received an email that sounds similar to this one:
Dear Class Member,
You are receiving this email because you are a Class Member in the Schlesinger v. Ticketmaster Class Action Settlement.
The settlement has been fully approved and all appeals have been resolved. To the extent you are eligible to receive them, your Discount, UPS Discount, and Ticket Codes will be placed in your Ticketmaster.com account…
If so, congratulations. Ticketmaster is a wealthy target, and a much maligned company, and you're probably entitled to some winnings.
The bad news is that you will probably never see a dime of that money. Also, you very likely were actually ripped off somewhere along the way, a bunch of lawyers have profited by using your name and you can probably treat that email as just another bit of spam. Welcome to the grotesque free-for-all known as the American class action system
The class action lawsuit at its heart is a solid idea. Originally it was created as a rule of judicial efficiency. If one common act harmed an entire group, there's no need for them to each individually prove the same case. Indeed, doing so risks a confusion of justice if the quirks of one judge and jury lead to awards for some and not others on the same set of facts.
It also allows restitution when harms are too small for individual lawsuits. Without a disincentive, companies would be free to outsource moderate risks onto their customers, taking advantage of them one nickel and dime at a time. Ticketmaster's alleged behavior is a perfect example of this.
The plaintiffs in Schlesinger claim that Ticketmaster has been deceiving customers by charging excessive processing and delivery fees, which were in reality profit centers for the company rather than actual costs. If true, these claims would make for a perfect example of the class system in action. The company would, indeed, have committed fraud and should pay for it, but who's going to sue over a $10 surcharge to see Chumbawumba? (This is a very old lawsuit.)
Instead a plaintiffs' attorney can find just a few representative cases and then sue in the name of everyone that the company allegedly harmed. Whether or not that's a good thing depends almost entirely on which side of the bar you sit on, but when a company has allegedly bilked its customers for vast amounts of money it's important to have some check on
Nothing that Ticketmaster did, or any other defendant in a class action, will ever actually be proven however, because very few of these cases ever go to trial. In fact, virtually none will.
This is where the wheels start to come off the wagon. Schlesinger is in fact a highly representative class action lawsuit, just not in ways that should make any member of the bar proud.
The modern class action lawsuit has come under increasing criticism for serving the interests of plaintiffs lawyers and, to an increasing degree, defendants at the expense of the claimants it purports to serve. The link above references a study conducted by the law firm Mayer Brown, which finds, among other things, that "the vast majority of cases [produce] no benefits to most members of the putative class."
Setting aside securities cases, in which lawsuits are filed on behalf of shareholders who already have a network of oversight designed to represent their interests, in the case of consumer class actions this is generally true.