Aggregated Statutory Class Action Suits

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Many consumer protection laws include the recovery of a specified amount of damages (often measured in the hundreds or thousands of dollars), rather than requiring plaintiffs to prove actual damages. When combined with the procedural device of the class action, however, aggregated statutory damages claims can result in liability exposure in the hundreds of millions—or even billions—of dollars on behalf of a class whose actual damages are often nonexistent. Statutory damages and the class action mechanism serve very similar purposes. Statutory damages set a fixed dollar amount for recovery that a plaintiff can recover, providing a solution to the problem of actual damages being small or difficult to quantify. Making a company or individual liable for a specific amount of statutory damages for each violation creates a financial deterrent to behavior that a legislature wants to curtail and an a means to provide those harmed by such behavior to obtain relief. Similarly, class actions typically allow large numbers of individuals harmed in the same way to recover where nominal damages would make bringing individual lawsuits untenable. When combined, however, statutory damages can be aggregated along a large number of consumers, leading to potential damages awards that bear no relation to the harm or damage that consumer protection laws seek to address. Additionally, the ability to aggregate statutory damages through the class action mechanism is highly susceptible to abuse. Statutory damages class actions often threaten companies and individuals with annihilating civil exposure for technical violations of laws that do not create any appreciable injuries to consumers, or that are far in excess of any actual injury. The enormous ex... ... middle of paper ... ...to be applied according to their literal terms when doing so achieves a result manifestly not intended by the legislature.” Similarly, in Murray v. GMAC Mortg. Corp., a case brought under the Fair Credit Reporting Act (“FCRA”), Judge Easterbrook of the Seventh Circuit ruled that although there were serious due process concerns with a lawsuit that sought billions of dollars in aggregated statutory penalties for “technical” violations of the FCRA, the due process concerns should not impact whether or not to certify a class. He wrote that “[w]hile a statute remains on the book . . . it must be enforced rather than subverted. An award that would be unconstitutionally excessive may be reduced, but constitutional limits are best applied after a class has been certified. . .. Reducing recoveries by forcing everyone to litigate independently—so that constitutional bounds

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