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Class Action Countermeasures Discussions of the Strategic Considerations Involved In Class Action Defense

Outrage and the Class Action

Posted in Strategy

 It’s no secret that plaintiffs often choose cases, not so much because of the merits of the rulings, but because of the outrage they can generate. (Indeed, some plaintiffs’ counsel openly discuss how they picture either how a particular cross-examination or closing argument will sound.)

As it turns out, a nine-year old lecture by Cass Sunstein sheds some light on ways in which defendants may be able to minimize the effects of outrage in class actions filed against them. (Full disclosure: Professor Sunstein taught several of my classes in law school.)

Sunstein’s lecture discusses the ways in which outrage affects legal rulings. He focuses primarily on how juries decide punitive damages. And his conclusion explains much about how why defendants gets nervous about class-action verdicts:

The simplest lessons are that punitive awards are rooted in outrage; that levels of outrage command a degree of agreement among diverse Americans, at least in some domains; but that people have a great deal of difficulty in "mapping" their outrage onto a bounded scale. Among other things, we find that the process of group discussion dramatically changes individual views by making people move toward higher dollar awards. In other words, groups often go to extremes. The point has large implications for the role of outrage in deliberation and the effect of deliberation in altering outrage. We also find that people’s judgments about cases, viewed one at a time, are very different from their judgments about cases seen together.

(Emphasis added.)  Professor Sunstein was focusing primarily on punitive damage awards. Nonetheless, his analysis has several implications for those defending class actions (which often rely on the same arguments as punitive damages):

Deterrence arguments are likely to be bunk. Plaintiffs’ lawyers (and the academics who advocate greater class-action use) tend to stress the deterrent effect that class actions have on corporate defendants. But Professor Sunstein and his colleagues found that juries tend not to consider deterrence when awarding damages.

The first experiment found that varying the probability of detection had no effect on punitive awards. Even when people’s attention was explicitly directed to the probability of detection, people were indifferent to it. People’s decisions about appropriate punishment were unaffected by seeing a high or low probability of detection. Outrage is what matters, not the probability of detection. The second experiment found that strong majorities of respondents rejected judicial decisions to reduce penalties because of high probability of detection – and also rejected executive decisions to increase penalties because of low probability of detection. In other words, people did not approve of an approach to punishment that would make the level of punishment vary with the probability of detection. What apparently concerned them was the extent of the wrongdoing, and the right degree of moral outrage – not optimal deterrence.

(Emphasis added.)  In other words, while lawyers and scholars rely on deterrence as a justification for "punishing" corporate wrongdoing, no one’s told the actual juries about this. (Nor are they likely to; punishment, through either punitive damages or class action verdicts, results in very large contingency fees.) To the extent that plaintiffs’ counsel rely on deterrence-related arguments in justifying a class certification or summary-judgment ruling, defendants may be able to point to this research to steer the judge back to the merits of the arguments.

Defendants are likely to be better off with bench trials. I’ve written about this before. To the extent that juries tend to amplify–as opposed to dampening–the outrage of the most offended members, a defendant in a class action may be better off trying any eventual case in front of a judge instead. This option won‘t always be available to the defendant. But when it is, a defendant should think very hard about taking it.

Rhetorical advantage. Finally, in a comparatively minor part of his discussion, Professor Sunstein throws out the idea of "rhetorical advantage," a great concept that explains much about how plaintiffs’ lawyers select cases.

What produces a rhetorical advantage? The simplest answer points to existing social norms, which of course vary across time and place. Among most Americans, existing norms make it easier to argue, other things equal, for higher penalties against corporations for egregious misconduct; but it is possible to imagine subcommunities (corporate headquarters?) in which the rhetorical advantage runs the other way. In extreme cases, those with a rhetorical advantage are on the correct side of a social taboo, whether mild or strong. In any case it is easy to imagine many other contexts in which one or another side has an automatic rhetorical advantage.

For all of the law review articles with "rhetoric " in the title, precious few actually develop this idea. (Somewhere along the line, legal academics decided that "rhetoric" was a theoretical tool to be used for critique, as opposed to an intensely practical discipline focusing on persuasion.) But it makes sense that plaintiffs’ counsel would look for cases that can employ, not just the David versus Goliath trope, but other rhetorical advantages as well. To the extent defendants can focus on these areas, they can find their own means of combatting these advantages.

  • http://www.litigationandtrial.com Max Kennerly

    Outrage isn’t entirely cynical on the part of plaintiffs’ lawyers. Some situations genuinely outrage trial lawyers, and some are so compelling that trial lawyers take them regardless of the profit/loss potential.

    Using outrage can be effective at trial, but it’s also playing with fire. Unwarranted outrage can backfire for plaintiffs; similarly, discounting genuine injuries or obvious fault can backfire on defendants, too.

    It reminds me of the Buell-Wilson v. Ford case, in which Ford’s lawyer astonishingly asked the husband of the paralyzed plaintiff if “The silver lining, to the extent that there could be one, it has brought you and [Mrs. Wilson] and the family closer together?”

    The jury awarded just shy of a half-billion dollars in damages.