Lieff Cabraser: Congressional testimony of Elizabeth Cabraser

TESTIMONY OF ELIZABETH J. CABRASER
given March 5, 1998 before the United States Congress Subcommittee on Courts and Intellectual Property of the House Committee on the Judiciary

"ACCESS, EQUITY AND FINALITY OF ADJUDICATION: THE ROLE OF CLASS ACTIONS IN OUR CIVIL JUSTICE SYSTEM"

by Elizabeth J. Cabraser

SUMMARY OF TESTIMONY

Class actions will continue to play a vital role in protecting investor, consumer, employee, and civil rights in the increasingly complex society of the 21st Century.

The modern class action is a uniquely American contribution to the civil justice system and embodies inherently American ideals of equal access, justice, fair play, efficiency, and economy.

Principles of federalism require deference to the substantive laws of the states, but the courts may apply uniform procedural rules, including class action procedures, to preserve the due process rights of all litigants, to expedite unitary adjudication of common issues, and avoid judicial congestion in the mass tort context.

Class actions have moved to state courts because the federal courts have arguably abdicated their leadership role in class actions and complex litigation management: a role for which the federal courts are ideally suited and to which they should return.

Our citizens require, and deserve, the renewed leadership of the federal courts in the increased use of class actions in consumer litigation, and the judicious application of class action techniques to common issues in mass tort litigation.

Further revisions to Federal Rule 23 are unnecessary. The Supreme Court's Amchem decision provides detailed guidance for the certification and settlement of class actions. The federal courts have the inherent authority and equity jurisdiction to preside over nationwide class actions; should retain the discretion to certify common issues of law and fact for class treatment while reserving other issues (such as specific causation and damages) for individual adjudication; and possess the statutory and procedural tools they require to manage class actions fairly and efficiently.

EXCERPT FROM PREPARED STATEMENT
OF ELIZABETH J. CABRASER

The modern corporate form of business organization has enabled the United States to achieve and maintain supremacy as an economic power, and has provided for its citizens a standard of living never before known. At the same time, a judicial mechanism was needed to address the inevitable tension and potential inequality between corporations, as legal "persons" of vast wealth, perpetual existence, and attendant economic and political power and influence, and human individuals, subject to injury, and consigned to mortality.

Equity, as implemented under the class action rules, has evolved to embody three distinct, and distinctly American principles: (1) efficiency and economy in judicial administration; (2) universal access to civil justice; and (3) empowerment of small claimants to achieve equality between human and corporate persons.

Each of these principles is invoked and reaffirmed in the Supreme Court's recent Amchem decision as the class action's continuing mandate:

the [Federal Rules] Advisory Committee had dominantly in mind vindication of "the rights of groups of people who individually would be without effective strength to bring their opponents into court at all." . . .

* * *

The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor." Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (1997). 117 S. Ct. at 2246.

As the 20th Century has progressed, the advent of mass marketing and mass advertising, and advancements in technology, mechanization, and computerization have eclipsed traditional, local, one-on-one business, commercial and employment relationships.

Most of the time, most of us have benefited from the advances and achievements of business and industry. Its efficiencies and economies of scale have transformed, largely for the better, our lives and work. But these same efficiencies have enabled the perpetration of investment frauds, the marketing of substandard or dangerous products, and resort to overcharging, false advertising and other deceptive business practices on a mass scale never before imaginable.

In a justice system without a class action heritage, such schemes would be unstoppable, because the cost of litigation erects economic barriers to the courts. Our system, wisely, does not subsidize civil litigants. It is, for the most part, a "user pays" system. In the traditional civil case, the merits of a plaintiff's case, and the prospects of substantial compensation if the case is proved, creates the necessary incentives for wronged litigants to invoke the system and maintain order and confidence in our society by redressing private wrongs.

However, when a small wrong is committed that affects many people, none of them may have a sufficient amount at stake to justify individual litigation, and a wrongdoer may profit hugely, and with impunity, by conducting a fraudulent or deceptive scheme comprised of numerous and recurring small transgressions.

While such conduct imposes only a small amount of damage on the individual level, it impacts many people, and is precisely the type of conduct that erodes public trust and confidence in our systems of business, government, and adjudication.

As the California Supreme Court observed a generation ago, in a case that established the rights of consumers in class actions, "if each is left to assert his rights alone, if and when he can, there will at best be a random and fragmentary enforcement, if there is any at all. The end result is not only unfortunate in the particular case, but it will operate seriously to impair the deterrent effect of the sanctions which underline much contemporary law." Vasquez v. Superior Court, 4 Cal.3d 800, 807 (1971).

We are a nation of laws, not of men; and all persons (corporate and human) stand equal before the law. Class actions were thus a self-consciously corrective measure, borrowed from equity and applied to suits at civil law, and employed to counteract the tendency of economic power to confer practical immunity from the rule of law. In modern American society, it was perceived that a civil justice system that did not adjust to correct the prejudicial ramifications of the inequality between company and individual, actively promoted injustice.