Rule 225 offers viable solution to dubious claims

Michael A. Pope and Steven F. Pflaum Jan. 23, 2005, 10:23am

Mike Pope

Monday, Jan. 24 may prove to be a milestone in efforts to restore balance and consistency to the handling of class actions in Illinois.

That’s when the committee that makes recommendations to the Illinois Supreme Court regarding court rules holds a public hearing in Chicago on an important proposed rule regulating class actions. The proposed rule represents a vital means of curbing misuses of class action procedures that are giving our state an unfortunate reputation as a haven for a particularly dubious type of class action—one featuring a claimed class of plaintiffs located across the country, requiring the application of the law of numerous states, and possessing a tenuous connection to the court in which the lawsuit was filed.

Make no mistake about it: our state courts are facing a serious problem—some might say a crisis—with respect to class actions.

Properly regulated, class actions can be an important vehicle for obtaining relief for plaintiffs whose individual claims are too small to be economically litigated separately.

But all too often, class actions are nearly tantamount to legal extortion, where the sheer size of the alleged plaintiff class makes it too risky for defendants to risk going to trial on even flimsy claims. That’s why most class actions settle, but frequently on terms that provide little value to the plaintiff class yet huge attorneys’ fees awards to their lawyers.

The number of class actions filed in Illinois has skyrocketed in recent years. Remarkably, there are no rules of court regulating the conduct of those lawsuits. Instead, class actions are governed by a bare-bones statute that was enacted more than 25 years ago and has never been amended since.

As the number and nature of class actions has changed dramatically over that period of time, our most able and experienced judges have responded by developing procedures that ensure that class actions are handled fairly and efficiently. Unfortunately, the lack of guidance from any court rules has caused other judges to flounder, contributing to the kind of abuses recounted above.

The proposed court rule that is the subject of Monday’s hearing seeks to codify the current best practices for the handling of class actions to ensure that those procedures are employed uniformly and routinely throughout the state.

The heart of the proposed rule would require judges to determine, before permitting a case to proceed as a class action, that a class action is superior to other means of adjudicating the controversy.

This modest, but crucial, requirement is currently employed by federal courts as well as by courts in 38 other states and the District of Columbia. The language of this requirement would be borrowed verbatim from the procedural rule used by federal courts, with an additional clause added to direct Illinois judges to consider, among other things, the extent to which the case involves Illinois law and Illinois parties.

The broad coalition of organizations, businesses, and individuals that proposed the class action rule recognize that doing nothing about the current problems plaguing the administration of class actions in Illinois is not a viable option.

By adopting the proposed rule, our Supreme Court will be exercising needed leadership in bringing stability and rationality to an important area of law and in boosting the reputation of Illinois courts.

Michael A. Pope and Steven F. Pflaum are partners in the international law firm of McDermott Will & Emery LLP. Messrs. Pope and Pflaum represent a diverse group of organizations, businesses, and individuals that submitted the proposed class action rule to the Illinois Supreme Court.

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