February 5, 2004

Studying Lawsuits

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A study done by Theodore Eisenberg, the H. A. Mark Professor of Law, along with New York University Law Professor Geoffrey P. Miller, may rock Congress’ decision to place limits on class-action lawsuits. The study concluded that neither the settling price of class-action suits, nor the average fee awarded by the court to the lawyers who bring them, has increased over the last decade.

Whether or not class action suits are truly driving up the cost of business and, consequently, ought to be suppressed, is currently being debated in the senate, making the study very timely.

“The issue is a fiercely divisive one,” said The New York Times, but “legislation to curb class actions is a priority of President Bush and many Republicans in Congress.” An underlying belief of those who want to change class-action laws is that limiting the return on lawsuits will decrease the desire to file them in the first place.

Therein lies the conflict with Eisenberg and Miller’s study. The current laws are “not resulting in outrageous settlements or payments,” Eisenberg said. Thus, he furthered, “I haven’t seen evidence the system is broken. Senators fighting for the Class Action Fairness Act, an act that would limit the amount paid to both lawyers and the classes they represent, are worried about the system having become corrupt. Sen. John Ensign (R-N.V.) decries that “what [the] system has become is the megabucks [jackpot] for … trial lawyers.” Ensign complains about what the system has “evolved,” into, and how it is “not about the little guys anymore.”

According to Eisenberg and Miller’s study, however, it never was. Of the 370 state and federal court opinions examined, the mean gross recovery was $100 million in inflation-adjusted 2002 dollars, and the median gross recovery was $11.6 million. However, the mean recovery for 2002 was approximately $200 million less than that of 1994’s. The average recoveries for the years in between were all over the chart, but no math indicates a trend of steady increase.

Controversy surrounds the findings. “Both sides [advocates of limiting class-action filings, and opponents of such action] have fastened on to the study as a major piece of evidence,” Eisenberg explained. “Proponents of class-action reform say that it doesn’t prove much; those who [think the current rules work], argue that they’ve seen no evidence to support reform.”

Reformers who maintain that the findings are meaningless point to the data which says that the number of lawsuits filed in federal court has increased over the last five years; it does not matter if the amount of each individual case remains the same as long as the quantity of such cases continues to increase.

According to a report by Stanford Law School in cooperation with Cornerstone Research, there were 31 more class-action lawsuits in 2002 than in 2001. The same statistics also show that the number of these lawsuits has doubled from 108 in 1996 to 225 in 2002.

At the same time, opponents argue that the increase has not been steady, and that at litigation’s heaviest, only three percent of companies have been involved in class-action lawsuits. “The 70-member coalition of consumer, environmental and civil rights organizations opposing the so-called Class Action Fairness Act (S. 1751) … pointed to … [Eisenberg and Miller’s] study,” saying that it “decried the need for legislation altogether,” said PR Newswire.

The question is if restrictions on the amount of money awarded to the plaintiffs and their lawyers are necessary, and if such restrictions will halt the growth in number of cases brought.

In response to such a question, Eisenberg looked to his research and asserted, “if I were a policy maker, I’d wait to see evidence.”

thing we particularly like, apart from being able to serve our customers’ needs, is that this is an entirely local arrangement between two Ithaca-based businesses.”

Instructions for net users will be provided in several ways, both online and on posters in the host stores. More features will be available for a fee to those who sign up for them, and the high-speed connections will give users a full range of convenient Internet options. Homer Smith, owner of Lightlink, said, “We love CTB. A better match could not have been made in heaven.”

Brous emphasized that unlike other public wireless connections in places like airports or Starbucks, the basic service at Ithaca Bakery and Collegetown Bagels stores will be offered at no charge.

Many people already feel that CTB is easier to get to than campus when they need to get out of the house to get some work done, and internet access will make it even more inviting. “I might start doing work there now. It’s a much easier commute than the library,” said Dan Greenwald ’05.

Of course, the connection won’t benefit everyone — namely people without portable computers. “It sounds like a great idea, but I don’t have a laptop,” said Jessica Schiffman grad. This sentiment was echoed by many PC-bound owners, despite the popularity of laptops.

But considering the number of people who already frequent Collegetown haunts with laptops, textbooks and papers, the service will still be put to good use.

“It’s wonderful!” said Chrisi Sarmiento-Gawiak ’04, after finding out about the plans. “I’ll be there every day after school now!”

Many customers at the Collegetown CTB location, however, did not seem to know that it is already hooked up for wireless. There did not seem to be any posters or signs announcing the new service.

Once word gets out, though, CTB will surely be an even hotter spot than it is now. Students often feel that working in a public setting can be less distracting than working at home and sometimes lets them get more done. “I just hope they don’t mind me sitting there with a 45 cent bagel for 4 hours of work!” Greenwald said.

Archived article by Erica Fink