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Catalina Yachts v. Pierce1/14/2005
ns Systems Long Distance, Inc., where we described the consequences of holding absent plaintiffs in small consumer class actions responsible for the defendants' prevailing-party fees, emphasizing the very real risk of deterring legitimate claims:
A rule that permits the imposition of attorney's fees on absent class members who stand to gain such small monetary compensation will encourage opt-outs and have a chilling effect on this important use of the class action device. As a result, some class members with legitimate claims will be left without a remedy.
I find it hard to square our recent sighting of this danger in Turner with the court's perception that its ruling in the present case will cause no damage to the incentives offered by Magnuson-Moss. The court tries to distance today's opinion from Turner by observing that the fee exemption in Turner only extended to absent class members and did not eliminate fee liability for named parties. But this observation misses the point of our ruling in Turner and misperceives its relevance here.
As the court itself recognizes in today's opinion, Turner stands for the proposition that fee-shifting poses a significant risk of discouraging potential claimants with meritorious small claims and should thus be avoided when it would undercut a policy or law that is "meant to encourage plaintiffs to bring meritorious claims." In
Turner, we found a strong public policy encouraging broad participation in class actions; to avoid hampering this policy by frightening potential class members out of pending class actions, we exempted passive class members from potential Rule 82 fees. But this policy of encouraging broad class participation only applies to class actions actually filed; it does not more broadly strive to encourage the filing of new class-action claims. And its limited goal of broadening participation in existing class actions would hardly be served by a fee exemption covering plaintiffs who are already actively participating in the action. Considering the specific policy at issue in Turner, then, refusing to exempt named class representatives from the requirements of Rule 82 made perfect sense.
But here, in contrast to Turner, the policy at issue does actively seek to encourage new claims: specifically, the Magnuson-Moss Act is designed to encourage the filing of small consumer warranty actions, and it strives to attain this goal by creating a one-sided fee-shifting provision that favors the claimant. In this setting, then, the proposition we recognized in Turner - that fee-shifting must be avoided when it undercuts a provision meant to encourage new claims - yields the opposite result: applying Rule 68 in cases like this will directly erode Magnuson-Moss's goal of encouraging otherwise reluctant consumers to bring meritorious warranty claims. Indeed, the chilling effect we sought to avoid in the class-action setting of Turner can only increase in the setting of individual consumer claims, where the added risk of new liability for opposing-party fees cannot be spread to other class members.
As other courts have recognized, studies suggest that individuals who have small claims are unusually vulnerable to this kind of chilling effect, particularly when litigation costs might exceed the size of their claims. This point is particularly important in light of the Magnuson-Moss Act's central purpose: to promote new claims by eliminating the effects of high litigation costs on litigants whose "individual claims are too insignificant to command representation by counsel or to warrant all the other expenses of invoking the judicial process."
Today's opinion threatens to defeat this purpose co
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