Dear Joe:

So much for Gun Week’s status as the pro-gun paper of record. In your haste to fulminate on the alleged lies of the Violence Policy Center, you got your facts plain wrong. The VPC’s open letter to gun owners cited in the March 10th “Hindsight” was clearly regarding the so-called “Class Action Fairness Act” (S.5), not the “Protection of Lawful Commerce in Arms Act” (S.397). For future reference, those little numbers next to the bill names actually mean something. As far as S.5, by forcing most class action lawsuits into federal court, the new law will leave gun consumers victimized by defective firearms out in the cold because federal courts routinely refuse to certify consumer class actions. See for example Spence v. Glock, Inc., 227 F. 3d 308 (5th Cir. 2000), where tens of thousands of owners of defective Glock pistols were left without a remedy because the federal appeals court refused to certify the class. The outcome in that case will now be the norm whereas under the old rules gun owners could proceed in state courts.

Your readers have lost their right to hold negligent manufacturers accountable in class actions—but you did get to call us names. We’ll leave it to your readers to decide which action more effectively furthers the “pro-gun” cause.

Sincerely,
Kristen Rand

Needless to say I have long since responded to Rand’s message which I received on Mar. 9, promising to correct the record for our readers as well as mentioning S-5 in some detail. What I didn’t mention was that I was pleased to see that the VPC and their anti-gun fellows read Gun Week so attentively.

S-5 Background
Now to the Class Action Fairness Act of 2005—S-5—which had passed both houses of Congress and been signed by President Bush on Feb. 18 before I even wrote the column in question. It was priority legislation for the White House and the Republican Party, and Bush mentioned class action lawsuit reform frequently during the 2004 presidential campaign.

As defined in S-5, “class action” means any civil action filed in a district court of the United States under rule 23 of the Federal Rules of Civil Procedure or any civil action that is removed to a district court of the United States that was originally filed under a state statute or rule of judicial procedure authorizing an action to be brought by one or more representatives as a class action.

The “class” in class action means all of the entities who have sought redress in the combined lawsuit.

As I read the new act, I do not believe that it mandates that all class action lawsuits be tried in federal courts, as some have suggested. The act spells out when an action goes before a federal court and when it does not.

S-5 does a lot more than direct where a class action lawsuit may be filed and where it may be tried. It deals with coupon settlements, which is often the way that a large class of plaintiffs are compensated in a settlement or court ruling.

Bear in mind that trial attorneys in class actions are usually compensated for their services by a percentage of the settlement and that’s one of the subjects dealt with in S-5.

Let’s say you read of a class action lawsuit in which a settlement of $100 million has been reached. The class in that particular suit may include 100,000 individuals who brought the suit.

Since the attorneys might be entitled to as much as $50 million in the agreed settlement, that leaves the other $50 million to be divided under various formulas with the entire class. If it’s all in cash, each member of the class should be entitled to $500, which to some might appear a small share of a $100 million settlement.

Now before I get letters about the preceding hypothetical settlement, let me give you a real example from my own experience.

Many years ago my wife and I bought insurance policies from a company whose agent assured us that the policy would pay its own premiums in full in “about” 10 years, so that if we paid for the first 10 years, the policy would be in force until we died or cashed it in. We were not the only ones to be taken in by this pitch nor was the company we bought from the only firm that used it.

At some point, a group of policyholders filed a class action suit against the insurance companies, claiming that the policies were fraudulently sold in this way. The total number of policy holders was legion—not 10s of thousands but millions. To assist the attorneys who handled the suit, and there were a lot of law firms involved, we and other members of the class filled out various documents and did what the attorneys asked.

By and by a settlement was reached that total hundreds of millions of dollars (I no longer remember the amount). The lawyers who handled the suit were handsomely compensated. We and the other members of the class received notice of the settlement along with coupons for our share of the settlement. The coupons were not redeemable for cash; they were for a minor discount on any future insurance policy we purchased from the same company.

Perhaps it is because of settlements in our insurance case, or other reasons, but among the provisions of S-5 is the requirement that lawyers can only received cash compensation for coupons actually redeemed by class members.

To me, that is sensible reform. And I think about it every time I see a TV commercial or magazine ad run by a law firm that wants to file a class action lawsuit of any kind. I assume that the larger the class in any such suit, the larger the lawyers share of the settlement, and the smaller the amount the individual class member receives. Needless to say, the trial lawyers association generally opposed S-5. I was for it. And, by the way, my wife and I are still paying the premiums on those insurance policies.