Anyone ever have any dealings with a class action lawsuit? Why don’t we just pass a law allowing lawyers to reach into the bank accounts of any business they want to and take all the money they want? That seems to be the whole purpose of class action lawsuits.
We received notice awhile back that we were eligible plaintiffs in such a lawsuit against Washington Mutual. We could have declined to participate, but all that does is remove our names. It doesn’t do anything to stop the suit itself.
In a class action suit, some bright lawyer or law firm gathers together thousands or millions of people who were allegedly harmed by the actions of some company. Then they sue the company. At best, the company is out several million dollars in legal costs to defend itself. At worst, it may be out tens of millions of dollars in damages on top of the costs of defending itself.
The way most of these suits work out, when the plaintiff class wins, each plaintiff receives a check from the law firm for $1.27, or $15.82 or whatever. Meanwhile, the law firm handling the case pockets millions of dollars. The injured parties—if they were actually injured—normally receive paltry sums that do them little good, while the lawyers make out like kings.
In the case I mentioned above, we purchased about $5,000 worth of stock in Washington Mutual. If you follow stock market news, you may be aware that that was not a real good place to have money invested when the banking industry began having trouble a few years ago. The company went bankrupt, leaving our investment worth zero.
I’m not sure just how this all worked, since the company was liquidated in bankruptcy. I suppose they sued some company that acquired WaMu’s assets. They also sued some brokerage companies and an accounting firm.
I’d like to know why they didn’t sue the federal government over the requirements that made this bank and others lend mortgage money to people who couldn’t qualify for loans. Those regulations—started under Jimmy Carter and expanded by other Democrats—were the primary cause of the whole banking problem, but we don’t ever hold politicians accountable for anything.
Political considerations aside, I’ll get back to the point. This lawsuit ended up costing the defendant companies, none of which were the actual causes of the problem, $208.5 million—that’s $208,500,000. Out of that sum, we received $22.41 to indemnify us for our $5,000 loss. The law firm probably received 30% off the top for its share. That would be over $60 million. Nice fee.
I don’t know whether or not any of the defendant companies were put out of business by this settlement, but I do know that the plaintiffs the lawyers supposedly represented received peanuts. Where is the sense in this.
This is just the most recent example of a class action suit I was pretty much forced into. I’ve also received settlements of a dollar or two because some utility company allegedly charged too much over some period of time in the past. I’ve heard of lawsuits against companies on behalf of their stockholders because the value of the stock wasn’t high enough, but no one has ever explained to me how suing your own company is going to increase its value and therefore the value of your stock.
To me, the whole idea of class action lawsuits is nothing but a naked rip-off for the benefit of lawyers. I can think of no rational justification for this.
What experiences have you had with class action lawsuits? How did you feel about your peanuts compared with the huge treasures the lawyers got?
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You’re right, Sheri. It’ll never change, because the people with the power to change it have too much self-interest in perpetuating it. As Piper Bayard is fond of saying, “The end is near, and we deserve it!”
Don’t get me started – let’s just say that the law isn’t going to change any time soon because our congressional members are largely made up of attorneys. Many presidents are in fact attorneys before they become president and that includes their wives. How did they make all their money we might ask – you don’t have to look far.
Additionally, most of the population base I mentioned above will eventually leave their post and one day return to the practice of law. Why do you suppose they call it ‘practice of law?’