Consumer class actions and class actions in general have been under attack by soulless corporations. First, many corporations insert arbitration clauses that prohibit class actions and ironically make it cost prohibitive to arbitrate so people are out of luck and companies are emboldened to rob consumers blind. After all, if a behemoth company with ten million subscribers overcharges its customers a quarter a month, that’s 2.5 million a month for the company which equates to 25 million dollars a year. Yet to the individual consumer the damages of a quarter a month amount to $3 a year, so the cost for invoking an arbitration may be 100 times that and without a class action mechanism it is hard to have a class action law firm or consumer lawyer file an individual claim over $3. The public companies in the end who are beholden to their stockholders and not their customers are incentivized to jam in adhesion arbitration clauses to line their pockets and pull in profits for their shareholders and executives and disincentivized to do the right thing.
Even if they’re called out for their wrongful conduct, they can just cut the individual check for the $3 and they’ve made out like bandits. In cases where there’s no arbitration clause, sometimes an individual files a class action on behalf of all the people who have been wronged by the company and the company attempting to head off the liability early, offers full relief to the lead plaintiff in an effort to stop their from being a class action. This is referred to as a pick-off play, like a baseball runner at first base who leans a little too far being thrown out to end the inning, the defendant is trying to end the lawsuit.
In a Telephone Consumer Protection Act (TCPA) case against Work Out World (WOW), after taking parts of the case all the way to the third circuit and losing, tried the pick-off play by allegedly depositing the full damages into the plaintiff’s account. Judge Sheridan in the Federal District of New Jersey held that the case could proceed anyway. The Judge wrote, ““Here, it is apparent that WOW sought settlement with plaintiff in an attempt to thwart class certification. However, to deny class certification at this point would be to deprive her of a ‘fair opportunity to show that certification is warranted,’” which referenced the United States Supreme Court’s Campbell-Ewald v. Gomez. The 7th Circuit and the 9th Circuit have come to similar conclusions, that essentially the absentee class has a right to have it concerns addressed and with a pick off play, it does not effectively stymie the ability of the court to rule on the issues of class certification.
Corporate unaccountability must be met with assertive litigation to hold it accountable when the company cannot police itself. Similarly, sometimes employees who try to vindicate their Fair Labor Standards Act (FLSA) rights and try to have the Courts or a jury ascertain how much they’re owed, fall prey to a pick off play to try and stop it from blossoming into a collective action or a Rule 23 Class Action for violations of state law such as New York Wage and Hour Laws, or Illinois wage rights. We commend those that champion the cause of holding companies accountable and who soldier on in litigation not just for their own interested but for others that are damaged but don’t have the time or inclination to directly file something like an overtime lawsuit.