Advice for Companies Litigating Questionable Class Action Suits

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By Mark Wilson, Esq. on December 08, 2014 2:45 PM

Many class action lawsuits revolve around legitimate concerns, like "Gee, my car's ignition switch stopped working in the middle of a freeway" or "Wow, this medication poisoned me." A small number of class action suits, however, really are much ado about nothing. Think Apple "antennagate." Or the recent hand-wringing over state bar exam software.

One law firm is going on the offensive by going on the defensive, refusing to settle silly claims, says Forbes. What could your company learn from this strategy?

Chemicals! It's Got Chemicals!

Pirate's Booty is a brand of cheese-flavored popcorn-and-rice snack. Six lawsuits, however, claimed that, contrary to its advertising, Pirate's Booty was not "all natural" because some of the ingredients are made with genetically modified ingredients and are "heavily processed." (One suit claims that merely cooking the rice and corn creates a "potentially carcinogenic chemical." That's true -- but cooking any starch, even in your own home, and even if you grew that food out of the ground yourself, creates that potential. It's a chemical reaction that happens.)

The trend in class action litigation has been to settle, but settling only feeds the beast. BraunHagey, the firm defending Pirate's Booty, decided to see this case through -- even looking for sanctions, which they won in one case for discovery abuse.

Noah Hagey, one of the firm's partners, told Forbes that "virtually all the so-called clients in these cases were solicited by the lawyers, and often have close personal or family relationships and are recycled clients from case to case." This is a real phenomenon that takes credibility away from actual class action litigation that attempts to address harms other than dubious claims about nutrition.

The More You Know

So what can GCs learn from Hagey?

  • Investigate the firms. BraunHagey found it suspicious that multiple lawsuits filed around the country were all nearly exact copies of each other, "a scheme to drive up defense costs by filing copycat suits around the country," said Forbes.
  • Investigate the clients. In many cases, clients were family members of the lawyers. In others, clients were actively solicited by the law firms. In other words, the implication is that firms tried to manufacture a problem in order to drum up business, then looked for plaintiffs "harmed" by the problem. In one case, a plaintiff claiming he was harmed by a mislabeled product admitted that he hadn't even made a decision to purchase a product based on the label.
  • See the case through. Firms that generate business by creating class action problems really just want a settlement because it's cheaper than going to trial or summary judgment, where they'll probably lose. You can disincentivize this strategy by making them actually litigate the case.

Not all class actions are so meritless, of course, but if you come up against a dubious claim, calling the plaintiffs' bluff might be the best thing you can do.

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