by Brian Wolfman
According to this Associated Press story, in 2012, the Vermont Attorney General sued a company called Vermints under Vermont’s consumer protection law alleging that Vermints had mislabeled its mints “Vermont’s All-Natural Mints” (my emphasis). What was the AG’s beef with the label? According to the suit, the company is Massachusetts-based and the mints were manufactured in Canada, using mostly non-Vermont ingredients. The AP story says Vermints has settled the case by agreeing to remove the offending labels, paying Vermont $30,000, and giving $35,000 to the Vermont Foodbank, the state’s largest anti-hunger organization. A nice result for the AG.
If private lawyers (acting as so-called private attorneys general) had brought the suit on behalf of consumers of Vermints, the same settlement might have raised eyebrows. A class-action critic might have said the case bordered on the frivolous. Who cares about the label on a tin of mints? Well, the Vermont AG cared. In settling the suit he said:
Use of the term “Vermont” has great economic value, and many businesses go to the expense of sourcing their ingredients and processing within the state in order to market their products as Vermont products. We need to maintain a level playing field when it comes to claims of geographic origin, and to ensure that consumers who care about where their food comes from get accurate information in the marketplace.
I doubt many people are worried about the AG demanding $35,000 for the Vermont Foodbank. Just the opposite, I’d think. My guess is that many Vermonters and other observers would be pleased that the AG used the state’s consumer protection law to force a private company to make a charitable donation to an anti-hunger non-profit.
But if the case had been filed by private plaintiffs, objectors might say that a cy pres award to the Foodbank was impermissible because of the lack of nexus between the underlying claim (misleading labeling of candy) and the mission of the cy pres recipient (alleviation of hunger in Vermont). They might even express concern that the plaintiffs themselves got no monetary relief. How can it be right to settle a case, they might say, where the lawyers and a charity, but not the class members, walk away with all the goodies?
That concern makes little sense in many small-claims consumer cases, as the Vermont AG recognized in settling the Vermints case without providing a dime to consumers. It would have been economically irrational to provide money to a class of people who had purchased mislabeled Vermints. Strictly speaking, some consumers may have been injured. But what would individualized relief look like? A buck for each class member who swore under oath on a claim form that she was duped by the faulty label into buying a tin of mints? Some class-action settlements actually seek to provide very small amounts of money to claiming class members. (I was once sent a three-cent class-action settlement check via first-class mail.) But that’s often a waste because most of the money the defendant has agreed to cough up goes for claims processing, check-writing, and postage. Generally, the best type of relief in small-harm cases is aggregated relief: injunctive-like benefits, such as the label change the AG obtained, and lump-sum payments to help offset the costs of litigation and to promote deterrence, such as the payments to the state and to the Vermont Foodbank. See Hughes v. Kore of Indiana Enter., Inc., 731 F.3d 672, 677-78 (7th Cir. 2013).
Class-action opponents might argue that an AG case is legitimate, while a private suit is not, because the AG was elected by the people and is doing the people’s business when suing to enforce consumer protection laws. And if the people don’t like what the AG is doing, they can ditch the AG come election time. On the other hand, the private lawyers, the critics would say, serve their own pocketbooks, not democratic interests. True, private lawyers and their clients are not elected by anyone. And, sure, most lawyers practice law to make a living (which, among other things, motivates them to enforce consumer protection laws).
But if a state’s consumer protection laws authorize members of the public to act as private attorneys general, as most of them do to one degree or another, aren’t private lawyers’ suits, like AG suits, carrying out the legislature’s intent—particularly given that consumer protection laws generally encourage suit by requiring the defendant to pay a successful plaintiff’s attorney’s fees? So, why shouldn’t those suits be viewed as consistent with democratic ideals? After all, if a legislature decides it no longer likes private suits to enforce its consumer protection laws, because it thinks that private lawyers don’t exercise the type of enforcement restraint that the political process imposes on AGs, it can amend those laws to eliminate or narrow private enforcement (as legislatures have done on occasion).
But, generally, the legislatures have kept their private attorney general provisions on the books because they want to rein in unfair and deceptive business practices, and they realize that the AGs do not have the resources (and sometimes the political will) to do the enforcement job on their own.
Seems like an important difference is that the class action attorney is releasing individual class members’ private causes of action at settlement, whereas the state AG suit is likely settling a suit where there is no private right of action at all or in a way that doesn’t release citizens’ individual claims.