The class-action reform bill that Congress passed last year was supposed to take some of the shenanigans out of mass tort litigation. But last week, 34 state Attorneys General showed that where there’s a will, there’s a lawyer.
Those 34 AGs filed civil suits in federal court Friday, seeking to recover damages from seven memory-chip makers from around the world, most of whom have already been through the federal wringer for a price-fixing conspiracy.
Four of the seven companies now being sued have pleaded guilty in the criminal case, while a fifth, Micron Technologies, has secured immunity through a cooperation agreement with the Justice Department. Some $730 million in fines have been levied and executives from a number of companies have been handed prison sentences in the case.
Enter the state AGs, who have now ridden in on their taxpayer-funded horses to shoot the wounded. The 2005 Class Action Fairness Act moved certain kinds of class-action suits to federal court, including those involving indirect damages from antitrust violations. So nearly three dozen state Attorneys General have sued the chip makers for damages in federal court in California.
The suit comes in an election year for both Bill Lockyer, California’s AG who’s running for state Treasurer, and Eliot Spitzer, the New York AG currently running for Governor. The legal theory behind the suits is that customers may have overpaid for computer equipment as a result of the conspiracy, so the AGs are allegedly looking out for the taxpayer in suing on behalf of consumers and state agencies that purchased equipment during the conspiracy.
This comes in spite of the fact that a number of private plaintiffs are already suing for damages or trying to negotiate settlements in the price-fixing case. The addition of a coterie of AGs seems designed to grab some headlines and a share of the glory for our politician-lawyers.
It is hard to know how big this particular pot of gold might be, since the damages are mostly indirect (in the form of higher prices passed on by some computer makers). But antitrust law permits persons harmed by a price-fixing conspiracy to sue for treble damages. And adding consumers to the mix also enlarges the kitty, since the AGs are effectively suing on behalf of everyone in their state who bought a piece of electronics with memory inside between 1998 and 2002.
We’ve often criticized the cozy relationship between the trial bar and the state Attorneys General, but in this case the AGs seem to have cut out the middle man, bringing a massive class-action suit all on their own. For our tax dollars, we’re not sure the 50 states need a trial-lawyer-in-chief.
