Saving Class Members from Counsel

The U.S. class action regime is supposed to obtain justice for victims and hold wrongdoers accountable. Instead, the system is filled with pathologies that combine to harm class members and allow defendants to minimize their responsibility. Victims are deprived of their property and due process rights. Adding insult to injury, the modern movement towards cy pres settlements also deprives victims of their free speech rights.

Cy pres was borrowed from the law of trusts, but its use in class actions is unjustified. It is leading to greater corruption and collusion, opening the door to significant rent seeking. Most reform proposals will not help, but two—adopting an opt-in regime and using a corporate form—hold significant promise.