In a speech to the Class Action Litigation Summit in Washington, DC, today, FTC Commissioner Thomas B. Leary pledged that the Federal Trade Commission would continue to keep a watchful eye on class-action settlements, to ensure that the interests of consumers are adequately represented. Leary argued that the interests of class action attorneys are not always aligned with those of their clients. Today’s FTC Press Release summarized Leary’s address and you can find the full text here.
Com’r Leary’s main points were:
- “We depend on private litigation to supplement our [FTC] efforts, and, therefore, we have a direct interest in the way that class actions are administered.”
- One unintended consequence of 1966 changes in federal procedure rules that authorized “opt out” classes [in which all injured consumers, except those that affirmatively “opt out,” become members of the class] was to make class action lawyers themselves, rather than their nominal clients, the real parties in interest. This potential conflict-of-interest, which is more or less pronounced in different cases, can compromise the class action mechanism’s ability to achieve its two main goals of compensating consumers and deterring similar conduct in the future.
- Some courts are granting certification with increasing ease, leading to dramatic consequences in today’s massive, multi-state class actions — because certification of a class almost always puts a case on a settlement track, regardless of the merits of the underlying claims. In too many cases, the resulting bargain represents the interests of the settling defendants and the class action lawyers rather than the interests of the class members, he said.
Com’r Leary concluded his remarks by describing the FTC’s recent efforts to combat these problems in the class action area.