Madison County was nation's class action capitol; Enactment of CAFA in '05 slowed filings to trickle

By Ann Maher | Feb 26, 2015

Madison County's status as the nation's class action capitol gave rise more than a decade ago as lawyers developed consumer actions out of a wide range of transactions from across the nation.

At the peak in 2003, there were 106 such cases filed in Madison County.

Through the years, cases have run the gamut:

Thomas Maag of the Lakin firm, son of appellate judge Gordon Maag, sued multiple retailers for refusing to make change on gift card purchases. One suit involved a grievance of less than a dollar.

Lakin lawyers sued dozens of mortgage lenders, claiming each one charged a few too many dollars for a fax, a courier, a record search, or some other service.

Lakin lawyers also sued health insurers and claim handlers over adjustments of a few dollars.

Stephen Tillery, who had won a $10 billion class action judgment in Madison County in 2003, sued mutual funds over microscopic variations in timing of transactions.

Lanny Darr sued his auto insurer on behalf of himself, for renting him a low class vehicle while he awaited repair of his high class vehicle.

The lawyers may not have recognized that their claims, which reaped millions in fees for them and very little for plaintiffs, helped turn public opinion against class actions across America.

Ultimately, cries for reform met with a friendly White House and Congress. On Feb. 18, 2005, the Class Action Fairness Act was signed into law by former President George W. Bush.

In effect, the legislation moved high dollar, multi-state grievances from friendly state courts to federal court. CAFA also limited attorney fees and settlements where class member receive little value.

Bush said the bill would “help protect people who are wrongfully harmed while reducing the frivolous lawsuits that clog our courts, hurt the economy, cost jobs and burden American businesses.”

Ed Murnane, past president of the Illinois Civil Justice League, said that passage of CAFA "corrected" the misuse of the class action legal procedure.

"It's obvious that the use of class actions as a legal device was going wild, with an average of 74 per year in Madison County between 2001 and 2005," Murnane said.

CAFA opponent, Sen. Dick Durbin (D-IL), said at the time that the bill wasn't "the Class Action Fairness Act — this is the Class Action Moratorium Act."

“The business community has worked so long and hard” to move the cases out of state courts, Durbin said in 2005. “Businesses know they can win more class-action cases in federal court. That’s what this whole debate is about.”

After CAFA passed Congress Feb. 17, 2005, the president hastened enactment by signing the bill the following day.

Before signing, he referenced the activity at the Madison County Courthouse during the previous week, noting the significant number of class actions that had been filed - 20.

“And we’re only in February,” he said.

The effect of CAFA in Madison County can be seen in terms of numbers of cases filed by year:

2001 - 60
2002 - 76
2003 - 106
2004 - 82
2005 - 46
2006 - 3
2007 - 7
2008 - 7
2009 - 8
2010 - 9
2011 - 11

Last year, there were six class actions filed in Madison County.

On the bully pulpit

President Bush visited Collinsville on Jan. 5, 2005, to urge Congress to pass tort reform, while highlighting what class action"justice" looks like.

During his speech, he referred to a case involving a faulty TV that was settled in Madison County. Class members got $50 rebates for TVs from the same manufacturer and their lawyers got millions.

“Where’s the justice in that?” the president said.

Following is an article written about the faulty TV case by former Record reporter Steve Gonzalez and published on Feb. 14, 2005.

Lawyers wanted more money, class members wanted TV

While class action members were waiting for justice in the form of a properly tuned television set, the lawyers who represented them wanted more than the $2.3 million Madison County Circuit Judge Phillip Kardis allowed.

In the original settlement reached last May, Thomson Consumer Electronics agreed to pay $6.9 million in attorney fees for a case involving allegations of faulty audio in its Proscan TV sets.

Because the judge reduced attorney fees by two-thirds, class counsel, David Nester of Nester & Constance of Belleville and John Carey of Carey & Danis of St. Louis, filed supplemental applications for fees and costs.

Meanwhile, class member Rich Dygert of New Hartford, N.Y., hasn’t received anything from the settlement.

“Every time we turn on the set, within one-to-two minutes, the screen turns to snow,” Dygert recently told the Record. “My cat runs like hell straight to the basement every time this happens, not to mention my wife screaming for a new TV.”

Dygert, who is a mechanical engineer, said the only way to get the picture and sound back to normal on his Proscan TV “is to bang on the top of the set,” he said.

He filled out his claim form and mailed it to TAL Claims Center in Minneapolis, Minn. on Jan. 26, 2004, and still has received nothing–let alone a response.

“The judge has it in his discretion to reduce attorney fees and costs under Illinois class action laws,” John Carey of Carey & Danis said.

Late last month, attorneys for the class withdrew their application for an award of additional attorney fees stating the court refuses to award additional fees to the class.

When Kardis denied the plaintiff’s attorney’s motion for supplemental fees on Aug. 11, 2004, he said, “The court is amazed that plaintiffs’ counsel have chosen to completely ignore previous directives of this court. Not only is the court’s order not discussed, it is not even mentioned. The court will NOT base a contingent attorney’s fee on possible payments, i.e., as much as $27 million.”

Kardis stated that the attorneys were already more than amply awarded at $2.3 million, noting that at $250 per hour for 1,000 hours billed would only amount to $250,000.

The class action case was filed in Madison County on Feb. 15, 2002, by James Stalcup and Mary Gick against RCA, GE, and Proscan television sets which were manufactured by Thomson Consumer Electronics. The complaint alleged that the televisions Thomson manufactured between 1998 and 2000 had a serious defect which caused total audio failure in the television’s circuitry.

The plaintiffs alleged the total audio disruptions cause the television to exhibit characteristics and symptoms so that no matter what remedy is attempted to adjust the sound, nothing cures the problem except unplugging the television.

According to the complaint, the class members have been out a substantial amount of money and all temporary repairs have been unsuccessful with the average cost to replace the defective part in the set is between $100-$200.

On May 24, 2004 Judge Kardis approved the settlement of the claims which provides complete cash refunds for all customers who incurred out-of-pocket expenses for repairs related to audio loss, as well as purchase certificates for other class members who did not have to spend money for repairs.

The class also alleged that Thomson was fully aware of the defect at the time of the manufacture and engaged in conduct to minimize and conceal the defect. They also alleged Thompson’s Customer Service representatives have “feigned ignorance” about the defect and stated there was nothing the company could do.

Damages were sought for fraud, breach of warranty, violations of consumer protection acts of all 50 states and punitive damages from the company for its alleged “outrageous, unconscionable, and indefensible conduct of concealment” of the audio problem.

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