Why Attorneys General Should Be Relentless - Even if Somebody Else Already Has Been
It's critical that the state, and not just private law firms, stand up for the rights of consumers.
If you read the newspapers this week, you would have seen an excellent example of this practice. Last week, more than thirty State Attorneys General filed a class action lawsuit against a consortium of technology manufacturers that engaged in an international conspiracy to artificially inflate and control prices in the computer chip industry (NY also filed a separate suit).
This class action lawsuit seeks to recoup the money spent by state entities, as well as by each state's own citizens, on the inflated prices of the computers containing these chips. The case was launched on the heels of the DOJ criminal investigation, prosecution, and subsequent attainment of guilty pleas from several defendants.
Some estimates put the increased costs to consumers as high as hundreds of millions of dollars. You'd be surprised to read that such well-known corporations as Samsung (at least in Attorney General Spitzer's separately filed suit) are there with the rest of the defendants (in the suits of the other states they are excluded pending settlement negotiations). The scope of the conspiracy is international, involving collaboration by almost 70% of the market share, and crosses numerous international boundaries.
This lawsuit is a great example of exactly what our states should be doing. I don't really know a much better use of the portion of our tax dollars earmarked for our Attorney General than filing suits against international conspiracies to increase prices (by the way, what always bothers me is how free market defenders - as these companies likely are - are willing to engage in such anti-competitive and decidedly un-free monopoly behavior - but I digress).
Ironically, some "tort reform" organizations (click here for an overview of the tort reform movement) are attacking state attorneys general for exactly this kind of aggressive pursuit of consumer fairness.
As you may or may not know, the "American Tort Reform Association" is not really about creatively reforming our civil justice system, but is focused on dismantling it.
In its description of "out of control" attorneys general, the website quotes NY State Attorney General Spitzer's support of law enforcement as if it is something to be ashamed of:
"Looking over the legal landscape of the past few years, there has been a tremendous redistribution of legal power away from Washington and back to the states. It seems a logical conclusion that states must take on a larger law enforcement role. Who better than the state attorneys general to step into the void and ensure that the rule of law is enforced?" - Eliot Spitzer, New York Attorney GeneralSorry, but how is this a bad point of view for the Attorney General to have?
On the other hand, the Wall St. Journal's editorial page puts forward a critique of this lawsuit against the technology companies by claiming that private law firms had already launched similar litigation and gotten a class action certified, and so it is a waste of taxpayer dollars.
Indeed, the editorial narrative continues by arguing that Spitzer, and by association all other 34 State Attorneys General, launched the litigation for political ends.
Contrary to the short-sighted arguments advanced on the editorial pages of the Wall Street Journal, there are a couple of reasons why it is still helpful for the state's highest law enforcement official to be involved on an issue, even if private law firms have initiated litigation.
1) There is a symbolic power in the state taking action against egregious misconduct. Moreover, you may have only heard about this conspiracy, and the possibility for victims of it to be directly compensated, after the 34 states filed their suits. Official state action gets broad public attention and publicly shames the source of the misconduct.
2) Private suits may not always include the largest amount of plaintiffs possible. Although it appears that the private class action may also include state entities, this might not always be the case.
3) State Attorneys General may also be more likely to invoke violations of state law, in addition to, federal law claims filed by the private group. From the available documents it appears that the private lawsuit only invokes federal law and omits state law claims. National private class action lawsuits may be less likely to invoke violations of state law claims when the class of plaintiffs is strewn about all fifty states because it may add to the complexity of the case and impair class certification. Case in point, the Attorneys General suits allege violations of each states own anti-trust and consumer laws not present in the pre-existing national lawsuit. Without State Attorneys General, state laws, which may be more stringent than their federal counterparts, may go un-enforced and/or be less likely to be litigated.
But more than all of these points, if these cases are being brought for political reasons, I say - so what? So what if a State Attorney General is especially motivated to sue companies that hurt its state's consumers because they want these people's votes? As long as these cases are not frivolous, we need more state officials to take on the corporations that the state governments so often cater to for campaign funds (see NY Assemblyman Heastie for a prime example). Granted, State Attorneys General also receive funds for campaigning, but when the sources of these funds are not the people doing the misconduct such as corporations, but those who are usually the recipients of this misconduct, I don't see the problem. Given that 4 major companies have already plead guilty, and that another is cooperating with the DOJ, this seems rather un-frivolous - to say the least.
If corporations fund our state legislators, and their campaigns, and they are therefore hesitant to press legislation or reform to rein in unfair business practices, than I am all for my similarly elected State Attorney General picking up the slack.
Indeed, they may do such a good job that I end up voting for them when they come up for re-election - and my voting power is certainly something I can’t use to control private law firms.
I mean, when was the last time somebody offered to sue to protect your rights for free?
If you or your organization is interested in learning more about or working on these types of civil justice issues, please feel free to contact me at firstname.lastname@example.org.
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy