Could it possibly be that the land of the 35-hour workweek and permanent employment is more business-friendly than California?
Probably not on the whole, but France’s recent adoption of a class action law that avoids the perverted incentives of the U.S. system could teach us a few lessons on how to protect consumers without killing businesses.
Granted, the adoption of a law permitting class action lawsuits for the first time is not a strong sign of a business-friendly regime. But if you must allow class actions, you can do a lot worse than France has done.
Damages are capped at $2,620. Cases may only be instituted over consumer goods bought under a standard contract. And, perhaps best of all, only certain government-approved consumer watchdog organizations can bring suit.
France has demonstrated that a legal system can allow class actions without the contingent-fee plaintiffs’ lawyer, that “man of the people” who always seems to drive a $100,000 Mercedes.
Combined with the other potent advantage of European legal systems,that the losing plaintiff pays the defendant’s attorneys’ fees,the French system is something our own class action reformers and legislators should consider.
Companies could be held accountable for defective goods, one type of dispute in which there are significant efficiencies in a class action system. Disputes over employment and business practices, however, would be left to the individual plaintiffs who can decide whether to press their own cases rather than letting highly incentivized lawyers they’ve never met decide for them.
The current American system rewards no one so much as the lawyers. Lawyers for both sides can make hundreds of thousands or even millions of dollars in fees, while the absent class members may get a coupon of nominal value that they throw out with the rest of their junk mail.
The cases are run by lawyers for the benefit of the lawyers, because, unlike traditional litigation, there is rarely an actual flesh-and-blood plaintiff around to see that his lawyer is working in the plaintiff’s interest, rather than the lawyer’s own interest. Defendant businesses face not only potential liability, but also staggering attorneys’ fees to prove that they are in the right.
California voters have demonstrated that they understand the dangers of class action abuse and are willing to vote for change. The passage of Proposition 64 in 2004 by an 18-point margin established the minimal requirement that a plaintiff in an unfair competition suit, a prime field for class action abuse, must have suffered an actual loss to be able to bring a lawsuit.
Reform is possible. Californians understand that a healthy business climate, not a wealthy plaintiffs’ bar, is the key to the long-term financial health of the state.
Plaintiffs’ lawyers, however, quickly adapted to Proposition 64 and moved on to wage and hour class actions. This latest class action craze puts the burden on California businesses to prove, among other things, that every employee in the past several years took every required meal and rest break. And if the plaintiffs win even one dollar, the statute allows them to collect their attorneys’ fees from the defendants.
This is a sad story that those who do business in California know all too well. Is it time to move the plant to France? Probably not, but we should learn from their class action system that the problems with our own aren’t inevitable.
Taylor is a class action defense lawyer with Hansen & Taylor LLP in Irvine.
