Private Enforcement of Legal Rights

On this page: Legal Rights

Background

Legal rights, once enacted, must be enforced, usually by a lawsuit filed either by a public agency or a private party. The effectiveness of legal protections is increasingly threatened by the imposition of restrictions on the ability of people to access the courts to assert legal rights or seek remedies.

Industry and corporate interests seeking to avoid being held responsible for violations of the law, personal injury, malpractice, defective products, and other injuries have launched media campaigns under the general rubric of “tort reform.” Other attempts to restrict the enforcement of laws or access to legal remedies include restrictions on technical filing requirements such as standing, jurisdiction, preemption of state laws, pleading requirements, and more. The imposition of contract terms including mandatory binding and class action bans is making it difficult or impossible to challenge a multitude of illegal and deceptive practices on either a class action or individual basis.

Tort reform—torts are noncriminal claims (such as for medical malpractice and deceptive sales practices) that do not involve contracts and for which relief (usually monetary damages) can be awarded. Tort law permits individuals to sue for damages if they have been hurt as a result of the negligence or intentional conduct of another person or a corporation. Proposed or enacted changes in common-law principles that reduce tort litigation are referred to as tort reform. Recent tort reform legislation attempts to restrict people’s ability to file lawsuits.

Tort reform proposals include:

  • forcing claimants to resolve claims outside the court system, such as in mandatory binding arbitration (see this chapter’s section on pre-dispute mandatory binding arbitration);
  • limits on attorneys’ fees;
  • limits on punitive damages;
  • limits on awards for pain and suffering (the most common and often the most important form of compensation in most civil suits, other than lost wages, in employment suits);
  • changes in legal doctrine governing such civil wrongs as personal injury (both in tort and product liability law), including replacing “joint and several liability” (under which each and every defendant is liable for all damages a plaintiff suffers) with liability that is “several” only; and
  • limitations on class action lawsuits.

Reform proponents argue that courts and legislatures have greatly broadened the circumstances under which potential defendants can be found liable, and that when they have to defend lawsuits—which they claim are frivolous—it increases their costs of doing business.

Opponents of tort reform contend that some proposals jeopardize the rights of people injured by harmful and illegal practices to seek redress. For example, restrictions on joint and several liability could leave injured parties without effective remedies. Moreover, they say, penalties already exist for people who bring frivolous lawsuits, and this issue is best left for judges and juries to determine.

Tort reform opponents also argue that holding defendants responsible for violating the law, including by requiring them to pay compensatory and punitive damages, is important because it deters future bad acts. Defendants know they will be forced to pay for their violations of the law, giving them a critical economic incentive to comply with the law and avoid causing harm. For example, manufacturers have an incentive to produce safe products in order to avoid injuring people and to improve products if defects are discovered, in order to avoid the prospect of paying punitive damages. Liability for violating the law ensures that businesses are not competitively or economically disadvantaged for actually complying with the law.

Tort liability provides an important deterrent to harmful practices that injure older people, such as neglect or inadequate care. Tort reform efforts, including caps on damages, are harmful to older people because they limit the deterrent effect that tort liability provides. Already, older people raising tort claims may receive low or reduced compensatory damage awards due to a number of factors. Compensatory damages are based on the value of the loss and include such factors as loss of companionship and support, loss of society (for instance, what a grandchild might have learned from a grandparent), and loss of future enjoyment of vocational activities. Older litigants may receive low or reduced awards due to a number of factors, including prejudicial assumptions about the value of their life and the court’s or jury’s failure to substitute a relevant factor for one that no longer pertains to an older person, such as lost earning capacity in the case of a retiree.

Private rights of action—the mechanism that allows private parties to enforce a law is called a private right of action. If a law does not provide a private right of action, only federal or state officials or regulatory bodies may enforce it. While important, enforcement efforts by public entities may depend on the political climate, strained budgets, and competing priorities. In such cases, private litigation may be the primary means of enforcement of important legal rights. US Supreme Court decisions have significantly narrowed private enforcement of many federal laws that people with disabilities, the aged, and other people depend on for protection. Federal and state legislatures must ensure that legislation intended to protect individuals explicitly provides a private right of action, to ensure it can be enforced.

Class action lawsuits—a class action combines the claims of all the people injured by a particular illegal policy or practice into one lawsuit. They are often referred to as “private attorney general” actions because private individuals bring a lawsuit that will benefit all similarly situated people. It ensures that companies do not benefit from a violation of the law simply because most people will not know about or file litigation to enforce their legal rights. Class actions are a crucial tool to address legal violations where the cost to pursue a claim outweighs any possible remedy, or to change policies or practices that negatively impact a large number of people.

Unless individuals are able to join together in a class action, a company that violates a law and causes a small amount of harm to many people will likely escape liability and continue harming people with its unlawful practices. Class action suits in state and federal courts have successfully challenged and provided significant relief for a broad range of claims, such as those based on age discrimination in employment, sweepstakes and telemarketing fraud, unfair lending practices, access to affordable medication, and denials of contractually guaranteed pension benefits.

Critics of class actions argue that plaintiffs’ attorneys benefit more than class members, and that certain state courts are magnets for class actions because they indiscriminately allow frivolous lawsuits to proceed and they award excessive damages to class members. Such anecdotal recounting of a small number of unrepresentative “horror stories” involving state courts’ mishandling of nationwide class actions prompted Congress to enact the Class Action Fairness Act (CAFA) in 2005. CAFA greatly expanded federal jurisdiction over class actions. The act requires that many cases raising only state law claims must now be filed in federal court. It also permits defendants to remove class action suits filed in state court to federal court.

As a result of CAFA, class actions are being filed in or removed to federal court more often. Thus, case resolution in federal court may be delayed because there are many more state judges than federal judges. Moreover, federal judges are now responsible for interpreting and applying state law, instead of state court judges, who are more familiar with state law.

The Supreme Court has also limited the availability and effectiveness of class actions by making it more difficult to obtain class certification. For example, in Wal-Mart Stores, Inc. v. Dukes (2011), the Court decertified a nationwide class of employees alleging sex discrimination based on a nationwide company policy. Dukes makes it harder to show that class members have common claims that can be adjudicated through a class action, and it impedes the recovery of back-pay damages on a class-wide basis in a Title VII class action. Other Supreme Court decisions also restrict class action claims by imposing more stringent pleading requirements, requiring greater scrutiny of claims earlier in the litigation, and restricting the methods by which plaintiffs can prove their claims or the measure of damages.

Many legal rights will never be vindicated without class actions. For instance, the legal theory that provides relief for “pattern or practice” cases requires that it apply to more than one person. Legal fees to prove and recover a single consumer overcharge or protect an individual from discrimination could run into the hundreds of thousands, if not millions, of dollars, far exceeding the remedies provided by statute or the economic means of an individual.

Class action bans—contractual bans on pursuing claims in a class action often accompany mandatory binding arbitration clauses. Some contracts simply ban class actions, even if they do not force a person to submit to arbitration. Class action bans, like mandatory binding arbitration clauses, make it too expensive for individuals to file lawsuits to seek a legal remedy. State laws designed to protect consumers from class action bans embedded in arbitration clauses are preempted by the FAA, as a result of the Concepcioncase, discussed above.

In 2016, the Consumer Financial Protection Bureau (CFPB) issued proposed rules that would prohibit bans on class action suits in consumer financial products. Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Congress required the CFPB to study the use of mandatory binding arbitration clauses in the consumer financial markets. It also gave the CFPB the power to issue regulations that are in the public interest, for the protection of consumers, and consistent with the study. CFPB’s study found that class actions provide a more effective means than individual suits or arbitration for consumers to challenge problematic corporate practices and have provided at least 160 million class members with settlements totaling $2.7 billion in cash, in-kind relief, and attorney fees and expenses over the five-year period studied. Furthermore, the study showed that class actions push companies to alter anti-consumer behavior. Under the proposed rule, arbitration clauses would have to say explicitly that they cannot be used to stop consumers from being a part of a class action in court. The rule would also require companies using arbitration clauses to submit data to the CFPB on arbitration claims, awards, and certain related materials to enable the CFPB and the general public to monitor consumer finance arbitrations to ensure that the process is fair for consumers (see chapter 11, Financial Services and Consumer Products—Federal and State Roles in Consumer Protection Regulation, for more information on the CFPB).

Federal preemption of state law—under the US Constitution’s Supremacy Clause, federal law is the supreme law of the land and may preempt conflicting state law. The intent of Congress to preempt state law is determined by looking at the language, structure, and purpose of the federal statute. Some federal statutes contain explicit preemption language. In other cases, it is clear that state law is preempted because a particular regulatory scheme establishes that Congress intended federal law to be the exclusive law applicable to a field of law. Finally, a state law is preempted when it is impossible to comply with both a state and federal law at the same time because they conflict with each other, and when the state law stands in the way of accomplishing the federal government’s purpose.

Historically, by outlawing discriminatory practices allowed in some states, federal preemption helped protect civil rights. More recently, however, federal preemption has had the opposite effect by undermining state efforts to provide greater protection than that provided by federal law.

For example, national banks avoid state usury laws and other protections against excessive fees and interest rates, which are preempted by the National Bank Act. High-cost lenders have also sought to avoid state laws by partnering with national banks. Defendants in product liability cases successfully argue that federal preemption invalidates state laws that establish higher consumer safety standards and provide compensation of victims. Pharmaceutical and medical device manufacturers avoid liability for faulty products or labeling because the Food and Drug Administration’s approval has been found to preempt state regulation. Cigarette and automobile manufacturers, and countless other corporate entities, have escaped strong state laws protecting consumers by asserting federal preemption.

Advocates for increased federal preemption argue that it is too burdensome to comply with 50 different state laws, or complain that they must meet the strictest, and often most expensive, state regulations. They argue that state law should be preempted because it would improve interstate commerce.

Others counter that excessive federal preemption thwarts the traditional role that state governments have in protecting the health, safety, and welfare of state residents. In Cuomo v. Clearing House Association (2009), the Supreme Court upheld a state’s authority to protect its citizens by enforcing valid, non-preempted state laws against national banks. It found the National Bank Act generally preempts “administrative oversight” of national banks but not state “judicial enforcement actions.” In addition, Dodd-Frank limited the authority of federal banking agencies to preempt state law (see Chapter 11, Financial Services and Consumer Products—Federal and State Roles in Consumer Protection Regulation).

Private Enforcement of Legal Rights: Policy

Access to the legal system

In this policy: FederalLocalStateLegal Rightsenforcement of legal rights

The civil justice system should encourage fair and noncoercive settlements, improve access for people with small claims, and, where feasible, streamline the judicial process, making it less costly and more effective for all parties.

The courts, not legislatures, should decide whether lawsuits are frivolous, and should dispose of cases that lack merit before either party incurs significant expense.

States and local governments should make their justice systems more accessible, less expensive, and easier to use for people seeking to enforce their rights.

Damages in civil proceedings

Congress and state legislatures should not limit the amount of punitive damages or joint and several liability, or create unreasonable limits on damage awards for pain and suffering. They should ensure that judicial proceedings are fair, both in the administration of justice and in the calculation of damages in civil proceedings.

Removing age bias from legal decisions

Courts and juries should determine damage awards free from all forms of age bias, including devaluation of the quality of an older person’s life or the value of his or her nonremunerative activities.

Class action lawsuits

Congress and state legislatures should not restrict the rights of similarly situated individuals to bring class (or collective) action suits. Legislation and regulatory action that would limit access to remedies available under various laws or that would postpone resolution of class action suits should not be adopted. Congress should either repeal the Class Action Fairness Act or amend it significantly to restore the rights of individuals to seek full relief in state courts under state laws.

Uniform Marital Property Act

States should adopt legislation, such as the Uniform Marital Property Act, that treats all property (except gifts and inheritance) acquired during marriage as the joint property of both spouses, regardless of who holds title to it.

Federal preemption of state law

Federal laws enacted to protect individual rights should be the floor, not the ceiling, so as not to preempt state laws that provide more protections or remedies.