COMMENTS ON CONSUMER ORGANIZATION FOR CLASS ACTION

l. I am proposing that a new category of organization be chartered to
represent consumer interests. This would be public but non-governmental,
and be roughly analogous to a labor union. However it would not have
exclusive bargaining authority.

I will not attempt a full definition of the qualifications of a CQ.
It would have to have

a) hesubstantial number of members

b) be open to and under the full control of a large consumer member-~
ship

c) qualify as a non-profit educational or research organization --
however it should have a well-defined latitude in pressing for
legislative action in a non~partisan fashion

d) its income and resources must be primarily dedicated to research,
public information, and class action litigation for consumer
interests.

 

It would have the authority to represent consumer classes in such
actions; and furthermore to retain settlements to finance its further
actions on behalf of consumer interests, up to, say $100 per capita,
amounts where the cost of redistribution would be a significant fraction
of the damages.

It would also be legitimized to represent consumer interests in other
areas, like the privilege of access to CATV channels, or in some circumstances
to request “equal time” to respond to misleading advertising.

2. There may well be several competing organizations. Then, of course
there will be problems of allocating settlements among them. (This problem will
trouble any class action procedure). The matter should be left to judicial
discretion, for the time being, though the law might well indicate the
relevance of factors like
a) the research and legal investment made by a given CO in a particular
action, and
b) the number and characteristics of the membership of various CO's as
injured parties.

3. In my original writing, I suggested the authority of the CO to initiate
a class action suit as a compromise between the original Evlkhardt-Tyding
proposals and the Administration bill which required triggering by an FTC
or prosecutory action. The CO approach, i.e., allowing a CO to initiate a
suit without such triggering should answer the argument about nuisance and
strike suits, but as you pointed out, the courts themselves will probably
inhibit these,

I would therefore rescind my emphasis on the CO approach as a compromise,
and indeed there is no reason why individual initiatives for class actions
should be preempted by chartering the CO's. The difference would be that
the CO has a built-in claim to retain and reinvest the class settlement,
2.

which of course the individual plaintiff does not. The CO could still
have some additional privileges, like the tight to proceed where the per
capita injury is less than $10, that might be denied to individual initia-
tors on grounds of de minimus (relief).

May I stress that the real purpose of this proposal is to institution-
alize a new, balancing force in the economy, the now~fragmented consumer
interest. A government bureau cannot do this, even if it is an independent
agency rather than a political arm of the President. (A consumer affairs
representative should be in the White House, as a channel of information
to the Executive.)

Environmental abuses often merge with consumer abuses (though the
first-order interests are sometimes at odds). The identical approach

might well be available for actions in the area of environmental exploi-
tation.