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'No-Injury' Consumer Class Actions: A Growing Practice By Plaintiffs and a Potential Response By Defendants
Class actions are expensive to defend and uncertain in result. They create a risky situation for defendants and one in which even blameless companies are tempted to pay out large settlements not because liability exists, but simply to avoid the unknown risks involved in a jury trial once a class is certified. Fortunately for defendants, courts are increasingly unwilling to certify classes in product liability actions because of inherent problems in establishing the commonality and typicality needed to consider the plaintiffs' claims as a class.
In an effort to avoid these difficulties and increase the chance of obtaining class certification, plaintiffs' counsel recently have been changing their tactics in product liability class action litigation. In place of filing traditional injury class actions, they instead have been filing more and more economic 'no-injury' class actions, in which the proposed class members seek to recover not for personal injury, but for their alleged economic losses in purchasing a product that is worth 'less' than they paid for it because of some alleged defect.
These types of class actions present new risks and dangers to corporate defendants. Savvy defense counsel should attempt to extricate their clients from such matters as early in the litigation as possible. One potential method for an 'early exit' from such litigation arises from a recent Supreme Court antitrust decision, Bell Atlantic v. Twombly, 127 S.Ct. 1955 (2007). Twombly established a higher pleading standard for plaintiffs and requires plaintiffs who make generic allegations to provide more factual support in their pleadings in order to survive dismissal. The principles set forth in Twombly may prove beneficial for those defendants seeking dismissal from product liability 'no injury' class actions, at least for those defendants with counsel who move quickly after the litigation is filed.
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