Class Action Jurisdiction Act

Class Action Jurisdiction Act

In 1970, the Democratic-controlled Congress proposed, but failed to pass, legislation that would have broadened the ability of consumers to form a recognized legal class and launch class-action law suits in Federal courts against fraudulent or deceptive acts by manufacturers or merchants. Democratic legislators sponsored a broad class action bill, and the Nixon administration countered with more rigid restrictions. Although the Democrats accepted some of those restrictions, the bill nonetheless failed to progress in the Senate and a similar bill died in committee in the House. Over the next several years, Congress expanded consumers’ access to legal standing. Throughout, business interests opposed the expansion of class-action lawsuits, which were frequently targeted at corporations that ran afoul of consumer protection laws, securities laws, antitrust laws, or fair employment laws. The business argument is that class actions are unfair and undemocratic, that they benefit some (implicitly lawyers and wealthy consumers) and provide false comfort or even harm to others (implicitly racial minorities).

Cry Wolf Quotes

The truly attractive targets would be the overwhelming majority of businesses which are honest, ethical, and legitimate—large companies because of their assets and small merchants because of their vulnerabilities.

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William B. Norris, Chamber of Commerce, Testimony, Consumer Subcommittee of the Senate Commerce Committee,” Chamber of Commerce Public Presentations.

[L]egal costs alone of defending against class actions will impact disproportionately on small enterprises which rarely have the resources to employ the staff counsel uniformly found among larger companies.

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William B. Norris, Chamber of Commerce, Testimony, Consumer Subcommittee of the Senate Commerce Committee,” Chamber of Commerce Public Presentations.

[The legislation to permit consumer class actions] “is only nominally an act ‘to extend protection against fraudulent or deceptive practices.’ It is more accurately an act to line the pockets of ingenious attorneys. If this bill passes, the lawyers will be in high cotton; their client consumers will be still hoeing the short row.

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James Kilpatrick, Chamber of Commerce Newsletter. August, 1970.

The class action concept is misdirected and does not meet the overriding need of establishing a workable method to prevent frauds and deceptions. At best, class actions are only remedial to the consumer. At worst, they are a deceptive promise of prevention which the consumer is unlikely to see fulfilled. This is especially true of the low-income consumer who is the typical prey of unscrupulous operators, particularly in inner-city areas.

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William B. Norris, Chamber of Commerce, Testimony, Consumer Subcommittee of the Senate Commerce Committee,” Chamber of Commerce Public Presentations.