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The Black-Box Business of Class-Action Suits

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Although the Justice Department has no reliable statistics, court watchers report that the volume of class-action suits filed each year has mushroomed in the last decade. To be sure, the number of lawyers specializing in class-action cases has grown significantly. There were 100 members of the National Association of Consumer Advocates 12 years ago; there are more than 1,000 today.

"I used to be the only one doing class-actions in the Seattle area in the '80s," said Steve Berman, managing partner of Hagens Berman Sobol Shapiro, a firm with headquarters in Seattle that has been involved in several large class-actions against the likes of Microsoft and Boeing. "Now there are at least six firms doing it."

Thousands of class-actions are currently pending in U.S. courts, including suits against Apple, Microsoft, Visa and Mastercard, Enron, MCI Worldcom, Ace Cash Express, eHarmony, Tenet Healthcare, and Martha Stewart Living Omnimedia, not to mention several spinach producers, peanut-butter makers, pet-food manufacturers, toy companies, cigarette makers, and drug companies.

The size of classes and the resulting settlements is growing too. "With better communication and the advent of the internet, the potential magnitude of fraud increases," said Simmons.

That may be bad news for society, but it's good news for administrators.

"They're the black box of class-action litigation," said Perino. "No one really knows what they're doing, but they're making a nice living doing it."


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