Public Views on Class Actions, Companies and the Courts

Transcription

1 Public Views on Class Actions, Companies and the Courts The DRI 3rd Annual Poll on the Civil Justice System produced by Langer Research Associates, New York October, 2014 ENGAGE CONNECT GROW LEARN The DRI Community

2 Table of Contents Overview...3 Class Actions: Outcomes...4 Class Actions: Membership and Attorney Compensation...5 Mandatory Arbitration...7 Trust in Corporate Sectors...8 Motivators of Trust...9 Court Funding and Services...11 Conclusions...13 Appendix A: Topline Results Appendix B: Methodology Public Views on Class Actions, Companies and the Courts

3 Overview Americans hold more negative than positive views of class-action lawsuits across four key measures and most favor new laws to limit who can join such suits and on how the lawyers who file them are paid, according to a national survey for DRI The Voice of the Defense Bar. Although many Americans see pros and cons in class-action suits, 70 percent think such lawsuits often produce unjustifiably high fees for plaintiffs lawyers and 62 percent say they often force companies that have done nothing wrong to pay damages simply because it is cheaper to settle than to take a case to trial. Fewer Americans see frequent positive outcomes. Fifty-four percent think class actions often enable people to hold companies responsible for their actions, and 45 percent say these suits often appropriately compensate people who ve been harmed by a company s actions. Just 20 and 14 percent think either of these occurs very often. These results are from DRI s third annual survey of Americans attitudes toward the U.S. civil justice system, the only annual public opinion survey of its kind. The study is based on national, randomsample telephone interviews of 1,006 adults produced for DRI by the independent survey research firm Langer Research Associates. DRI The Voice of the Defense Bar, founded in 1960, is the nation s leading association of civil defense lawyers and corporate in-house counsel. Beyond views on the outcomes of class-action suits, the survey finds very high levels of support for two basic changes in the ways such lawsuits are conducted. In one, 78 percent say they d favor a law requiring people to show actual harm from a company s actions not just the potential for harm in order to join a class action. Under current law, people can join class actions without showing that they have suffered actual harm. An even larger number 84 percent say fees paid to lawyers who file class actions should have to be agreed to by their clients. Such fees now generally are set in negotiations between the plaintiff s lawyers and the company they sued, with a judge s approval. The poll also finds pushback against efforts by some firms to impose mandatory arbitration, in which customers, as a condition of buying a product or service, are required to agree to arbitration in case of a dispute. This would mean that such companies cannot be sued by purchasers of their goods or services. Seventy-four percent of Americans see that as unacceptable. The DRI survey also focuses on the level of public trust toward certain types of companies, finding that only minorities of Americans express trust in the seven industry sectors tested ranging from a high of 42 percent for automobile manufacturers to a low of 21 percent for oil and gas companies. Majorities instead say they have just some trust, or none at all, in each sector. As detailed in the full report that follows, the survey looks at corporate characteristics and activities that Americans say are important to their level of trust in a company. Quality of goods, customer service and treatment of employees top the list, followed distantly by recommendations from others, and charitable giving or other community involvement. Last on the list among those characteristics tested is a firm s longevity. Public Views on Class Actions, Companies and the Courts 3

4 Finally, the survey looks at attitudes on court funding. It finds relatively little public awareness of what many courts have portrayed as a crisis in their funding levels, or of cutbacks in services that courts provide. Majorities, however, say such cutbacks are, or would be, a serious problem, indicating a potential constituency for increased court funding, particularly if the case is made persuasively that, without it, cuts in services or delays in cases would occur. Class Actions: Outcomes Previous DRI surveys have explored views on class-action lawsuits. A 2013 study found that just half of Americans see most class action suits as justified; 38 percent said they re unjustified, with the rest unsure. DRI s 2012 survey, for its part, found that 65 percent think such suits make corporations more accountable, but also that 59 percent think class actions unfairly enrich plaintiffs lawyers. This year s survey extends this research by measuring the perceived frequency of possible outcomes of class-action lawsuits whether they re seen as occurring very often, somewhat often, occasionally or rarely. The negative outcomes tested are seen as occurring more frequently; the positive ones, less so. Class Action Lawsuits Occurs very often or somewhat often Occurs occasionally or rarely Looking at those who say these outcomes occur very often underscores the difference. The 70 percent who feel that class actions produce unjustifiably high fees for plaintiff lawyers includes 42 percent who feel that occurs very often. Similarly, the 62 percent who feel that class actions force companies to pay damages when they ve done nothing wrong includes 35 percent who feel that 4 Public Views on Class Actions, Companies and the Courts

5 occurs very often. On the other hand, only 20 percent of Americans feel that class action lawsuits very often enable people to hold companies responsible for their actions, and just 14 percent think class actions very often appropriately compensate people who ve been harmed. There are some differences in these attitudes among demographic groups. Young adults are distinctly less likely than their elders to say class actions very or somewhat often produce too-high fees for plaintiffs lawyers. While 56 percent of those age 18 to 29 hold this view, that jumps to 73 percent of those age 30 and over. The belief that such fees often are unjustified is 11 points more prevalent among Republicans, compared with Democrats; 10 points more common among political moderates and conservatives, compared with liberals; and 9 points more common among whites than nonwhites. Strong conservatives, meanwhile, are particularly likely to think class actions force blameless companies to pay damages (72 percent say so, vs. 61 percent of moderates, liberals and somewhat conservatives). And the view that class actions often enable people to hold companies accountable is higher, again, among those over 30, as well as among conservatives, whites, and middle- to higherincome adults, compared with their counterparts. At the same time, there s general agreement on the frequency with which class actions appropriately compensate people who ve been harmed by a company s actions. Fewer than half, almost across the board, say this happens very or somewhat often. (The exception is strong conservatives, at 51 percent). Class Actions: Membership and Attorney Compensation It s unlikely that most Americans have given deep thought to civil jurisprudence issues; rather, as with views across a range of social policies, their attitudes mark both general perceptions and underlying predispositions. Those appear to weigh heavily against current legal practices on two specific issues: who can join class-action lawsuits and how compensation is handled for plaintiffs attorneys in such cases. On the former, 78 percent say they d support a law saying that in order to join a class-action lawsuit a person has to show that he or she has been actually harmed by a company s products, services or policies, rather than just showing the potential for harm. Just 19 percent say they d oppose such a law. Self-identified Republicans and conservatives are more apt to support a law requiring actual harm than other Americans. Eighty-six percent of Republicans and 85 percent of conservatives back such a law, compared with 75 percent of Democrats and independents and 74 percent of liberals and moderates. The public s view on compensation for attorneys is even more lopsided, with 84 percent in support of a law saying that the fees paid to the lawyers who filed a class-action lawsuit have to be agreed to by their clients. Only 12 percent are opposed. Public Views on Class Actions, Companies and the Courts 5

6 Notably, opinions on the compensation question are only slightly affected by views that class-action plaintiffs lawyers often receive unjustifiably high fees. Among those who see frequent overpayment, 88 percent say clients should have a say on such fees. But even among those who say unjustified DRI-The Voice of the Defense Bar 2014 National Survey fees are paid less frequently, 77 percent also say clients should have the right to approve of fees. Class Action Reforms Show actual harm, not just potential for harm, to join? Lawyers fees approved by class-action clients? Strong conservatives are most apt to support a law requiring fees to be agreed upon by clients, with 91 percent backing such a measure, but support is high across the board. More than eight in 10 liberals (81 percent) and moderates (83 percent) feel the same, and there are virtually no differences in support by partisanship (87 percent of Republicans support this law, but so do 84 percent of Democrats and independents). There are some differences in support for both of these laws among other demographic groups. However, in no case does anywhere near a majority oppose a law saying that a person needs to show actual harm to join a lawsuit, or one that gives class-action clients say over legal fees. For example, whites are more apt than nonwhites to both support a law restricting class action membership to those who have been harmed (81 percent vs. 73 percent) and to believe plaintiffs should have to approve their lawyers fees (89 percent vs. 73 percent). Support for a law giving clients the right to approve legal fees also is higher among better-off Americans (91 percent of those with $50,000-plus incomes, vs. 81 percent of those less well off). Most striking, though, aren t the differences, but the broad majorities in agreement across groups. 6 Public Views on Class Actions, Companies and the Courts

7 Mandatory Arbitration On a related front, some recent news coverage has focused on efforts by companies to apply mandatory or forced arbitration to the purchase of consumer products, e.g., by posting notification of this requirement on their websites or at store locations. The effect of this would be to preclude lawsuits by customers with a grievance. Observers have predicted litigation on whether such rules pass legal muster. The DRI survey finds the public lopsidedly resistant to the approach. Just 25 percent say they d find it acceptable DRI-The Voice for of a company the Defense to Bar require 2014 them National to agree Survey in advance to arbitration before purchasing its products. Three times as many, 74 percent, call it unacceptable. Forced Arbitration There s no group in which a majority supports the idea of mandatory arbitration. That said, there are some differences among demographic groups. Eighty percent of Democrats say this approach is unacceptable, vs. 70 percent of Republicans and independents alike. So do 78 percent of adults age 40 and older, vs. 68 percent of those younger than 40. Opposition to mandatory arbitration also is somewhat lower among Hispanics and those living in the West, compared with their counterparts. But, again, the broad agreement among groups on this issue is more striking than the relatively narrow differences that exist. Public Views on Class Actions, Companies and the Courts 7

8 Trust in Corporate Sectors The 2012 and 2013 DRI surveys found substantial risk of juror bias against corporations in civil litigation. Last year, 54 percent of Americans said they d favor an individual plaintiff over a corporation if they were a juror in a civil case. Fifty-eight percent said they d favor an individual plaintiff over an insurance company, and 56 percent said they d favor an individual over a bank. The 2012 study, however, found no such lopsided bias against a small business in your community, indicating that the root of the issue is a lack of trust in large institutions. Results this year lend support to that conclusion, finding low levels of trust across a range of corporate sectors. Forty-two percent say they have a great deal or good amount of trust in automobile manufacturers, for instance, while 57 percent report little or no trust in this industry. And that s the best-rated of six sectors tested. Trust drops to 34 percent for major banks and financial institutions and 32 percent for prescription drug manufacturers. DRI-The Voice of the Defense Bar 2014 National Survey Trust Ratings Trust in insurance companies is similarly low. Just 36 and 35 percent of Americans express at least a good amount of trust in automobile and life insurance companies, respectively. Even fewer, 29 percent, trust health insurance companies. 8 Public Views on Class Actions, Companies and the Courts

9 Of the sectors tested, public trust is lowest in oil and gas companies, with just 21 percent expressing at least a good amount of trust. That leaves often-large majorities expressing little or no trust in these industry sectors, peaking at 78 percent for oil and gas companies and 70 percent for health insurers, with the rest in the 61 to 67 percent negative range (other than car makers, as noted above). Indeed, barely one in 10, or fewer, expresses a great deal of trust in any of these sectors, while four in 10 say they have no trust at all in oil and gas companies. About a quarter say the same of prescription drug firms, major banks and financial institutions and health insurers. It s notable that health insurers are rated lower on trust than either life insurance or automobile DRI-The Voice of the Defense Bar 2014 National Survey insurance companies, by 6 and 7 points, respectively. One reason is that Republicans are more trusting of six of the seven sectors with health insurers the sole exception. Among other groups, young adults, age 18 to 29, also stand out. They express greater trust than do their elders in four of the sectors auto makers, banks, prescription drug producers and health insurers. Great Deal/Good Amount of Trust vs. Just Some/No Trust Car Insurers Drug Finan. Oil/gas Manuf. Health Life Auto Manuf. Insts. Cos Dems Reps Inds Motivators of Trust Lawyers engaged in business-related litigation may benefit from understanding the motivators of consumer trust. For example, 89 percent of Americans say the quality of a company s products and services is highly important in their trust assessment. Similarly, customer service was cited as extremely or very important by 87 percent and 83 percent say how well it treats its employees is highly important in how much they trust a company. Three other potential motivators of trust are far less broadly cited. Fifty-six percent say recommendations from other people are extremely or very important in how much they trust a company. Charitable giving or community support is viewed as important by 50 percent and how long a company has been in business was endorsed by the fewest at 41 percent. There are demographic group differences in motivators of trust. Whites are more apt than nonwhites to say they rely on customer service, while nonwhites give a higher priority to recommendations, Public Views on Class Actions, Companies and the Courts 9

10 DRI-The Voice of the Defense Bar 2014 National Survey Basis for Trusting Companies Recommendations from others a firm s charitable giving or community involvement and its longevity as motivators of trust. Democrats are the most apt to rely on all four characteristics. Lower-income adults are more likely to focus on a company s longevity. They also are the least likely to stress product quality and customer service, although these majorities are very large regardless of income. And college graduates are more likely than non-graduates to focus on product quality, and less apt to take charitable activities and longevity into account. Whites Nonwhites Recommendations 54% 63% Longevity 36% 54% Customer service 90% 80% Charity/community involvement 46% 58% Democrats Republicans Independents Recommendations 61% 49% 54% Longevity 46% 32% 43% Customer service 91% 88% 83% Charity/community involvement 54% 43% 50% 10 Public Views on Class Actions, Companies and the Courts 5

11 <$50K $50-100K $100K Product quality 86% 93% 96% Longevity 47% 37% 28% Customer service 84% 88% 94% College Graduate Non-grad Product quality 95% 87% Longevity 32% 46% Charity/community involvement 39% 55% Court Funding and Services A final topic covered by the 2014 DRI survey finds a gap between public perceptions of court funding and the shortfalls cited by many judicial system advocates one in which lack of awareness plays a major role. Americans are split on whether the courts are adequately funded or not, with neither opinion garnering a majority. Forty-six percent think the court system has all the funding it needs to do its job adequately, while 39 percent think the system is underfunded. The balance, 15 percent, have no opinion. DRI-The Voice of the Defense Bar 2014 National Survey State Court Funding Public Views on Class Actions, Companies and the Courts 11

12 One likely reason is that comparatively few see cutbacks as having taken effect. Twenty-nine percent say that the courts in their area have reduced services or delayed cases as a result of budget problems; more, 41 percent, say that as far as they are aware they have not, and, in this case, a particularly large share, 30 percent, have no opinion, likely due to their lack of contact with the court system. Notably, those who say cutbacks or delays have occurred are more apt to recognize funding problems. Just 29 percent in this group say the courts are funded adequately, while 66 percent say the courts are short of needed funding. Among those who haven t seen cutbacks, far more think current funding is adequate 67 percent and just 25 percent think it s insufficient. The 30 percent who don t know about cutbacks split about evenly on the funding question; about a third each say the courts are adequately funded, are underfunded or have no opinion. Those results indicate impact-driven attitudes, in that individuals who see a negative effect of court funding shortfalls are much more apt than others to see the courts as underfunded. Two further results underscore that finding. Among people who see cutbacks in the court system now, 62 percent call it a serious problem, and among those who don t see cutbacks now, 52 percent say they would see it as a serious problem if it occurred. Again this suggests that support for court funding hinges, to a large extent, on views of how well the system is functioning. The chief demographic differences in views on court funding are between men and women and political and ideological groups. Fifty-five percent of men find court funding adequate while 39 percent find it inadequate. Among women, however, just 37 percent find court funding adequate, while more, 45 percent, call it inadequate. Just 24 percent of men think the courts in their area have cut back on services or delayed cases, while 49 percent think not; women, by contrast, divide on the question, percent. And while 49 percent of men think cutbacks either are or would be a serious problem, that rises to 60 percent of women. In partisan terms, views that the courts are not adequately funded peak at 48 percent among Democrats, vs. 31 percent of Republicans and 38 percent of independents. Republicans also are slightly less apt to think their local courts have cut back. Views that such cutbacks are or would be a serious problem are highest among Democrats and liberals, and lowest among independents and moderates. Court Funding Aware of Cutbacks Adequate-Inadequate Yes-No-No Opin. All 46-39% % Men 55-33% % Women 37-45% % Dem 38-48% % Rep 47-31% % Ind 51-38% % Lib 38-50% % Mod 47-40% % Cons 50-34% % 12 Public Views on Class Actions, Companies and the Courts

13 Cutbacks In Court Service (Current or Potential) Serious Problem, Not a No Problem Not Serious Problem Opinion All 55% 32% 11% 3% Men 49% 34% 15% 2% Women 60% 30% 7% 3% Dem 65% 25% 8% 2% Rep 58% 31% 10% 1% Ind 48% 37% 12% 3% Lib 65% 25% 8% 2% Mod 49% 41% 9% 1% Cons 54% 31% 12% 3% Conclusions In sum, findings of the 2014 DRI Survey point out directions for those interested in class-action reform and in funding for the court system, as well as provide insight into public trust in corporate sectors overall and among demographic groups. One result may give pause to consumer-product companies considering mandatory arbitration requirements in the sale of their goods or services, a move that may alienate potential customers. On the other hand, concerns about problematic outcomes of class-action suits are widely expressed, with overwhelming public support for changes in the rules on who can join such suits, and how plaintiff s attorneys are compensated. The findings on court funding may cause consternation among those who see serious problems in the level of resources available to the judicial branch of government. Perhaps because most Americans lack regular contact with the court system, most are unaware of cutbacks in court services in their area. Just 39 percent see the system as inadequately funded. Concern likely would rise if cutbacks were more broadly recognized. Finally, the results document the public s relatively low trust in a range of corporate sectors, albeit with differences across businesses and among groups. Combined with previous DRI survey results on potential juror prejudice toward corporate defendants, these findings suggest that defense attorneys may wish to consider not just a company s actions, but its reputation as well. Public Views on Class Actions, Companies and the Courts 13

14 Appendix A: Topline Results *= less than 0.5 percent Judicial Funding 1. As far as you ve either heard or experienced, do you think the courts in your state (have all the funding they need in order to do their job adequately), or do you think the courts (are short of needed funding)? Have Funding They Need Are Short of Needed Funding No Opinion 9/21/ Compare to: As far as you ve either heard or experienced, do you think the civil courts in your state (have all the funding they need in order to do their job adequately), or do you think the civil courts (are short of needed funding)? Have Funding They Need Are Short of Needed Funding No Opinion 10/6/ As far as you re aware, have the courts in your area cut back on their services or delayed cases because of budget problems, or not? Yes No No Opinion 9/21/ a. (IF YES, Q2) Do you see that as a serious problem, a problem but not a serious one, or not a problem? Serious Not Serious Not a Problem No Opinion 9/21/ * 2b. (IF NO OR NO OPINION, Q2) If that happened, would you see it as a serious problem, a problem but not a serious one, or not a problem? Serious Not Serious Not a Problem No Opinion 9/21/ Public Views on Class Actions, Companies and the Courts

15 2a/2b NET: Serious Not Serious Not a Problem No Opinion 9/21/ Class Actions I have some questions on class-action lawsuits, in which a group of people known as plaintiffs sue a company for what they see as a faulty product, bad service or an unfair policy. 3. How much, if at all, do you think class action lawsuits [ITEM]? Do you think this happens very often, somewhat often, occasionally or rarely? Summary table 9/21/14 More Often Less Often Never No NET Very Smwht NET Occas. Rarely (Vol). Opinion a. produce unjustifiably * 5 high fees for plaintiffs lawyers b. enable people to hold * 3 companies responsible for their actions c. force companies to pay damages when they ve done nothing wrong, because it s cheaper to settle than fight in court d. appropriately compensate people who ve been harmed by a company s actions 4. Would you support or oppose a law saying that in order to join a class action lawsuit a person has to show that he or she has been actually harmed by a company s products, services or policies, rather than just showing the potential for harm? Support Oppose No Opinion 9/21/ Public Views on Class Actions, Companies and the Courts 15

16 Compare to: Do you think people should be allowed to join class-action lawsuits as plaintiffs only if they can show that they ve been harmed by a company s products or actions, or is it enough for them to show the potential for harm, regardless of whether they ve actually been harmed? Show Harm Show Potential For Harm No Opinion 10/6/ Would you support or oppose a law saying that the fees paid to the lawyers who filed a classaction lawsuit have to be agreed to by their clients? Support Oppose No Opinion 9/21/ Sector Bias 6. On another subject, overall, how much do you trust [ITEM] a great deal, a good amount, just some or not at all? Summary table 9/21/14 More Trust Less Trust Great Good Just Not No NET Deal Amount NET Some At All Opinion a. automobile manufacturers b. health insurance companies * c. life insurance companies d. automobile insurance companies e. prescription drug manufacturers f. major banks and financial * institutions g. oil and gas companies For each item I name, please tell me how important it is in deciding how much you trust a company. First is [ITEM] is that extremely important, very important somewhat important, not so important or not important at all? Summary table 9/21/14 16 Public Views on Class Actions, Companies and the Courts

17 More Important Less Important Not Not No NET Extrmly Very Smwht NET So At All Opinion a. recommendations * from other people b. the quality of its * products or services c. how long it s been * in business d. how well it treats * its employees e. its customer service * f. its charitable giving * and community involvement Forced Arbitration 8. Some companies say that in order to buy its product, you have to agree in advance that you won t sue the company. Instead any dispute over the product would be settled by a private arbitrator. Is this something you would find acceptable, or not? Acceptable Not Acceptable No Opinion 9/21/ Appendix B: Methodology This survey was produced for DRI The Voice of the Defense Bar by Langer Research Associates of New York, N.Y., an independent, nonpartisan firm that specializes in designing, managing and analyzing probability-based public opinion surveys. Langer Research produces the ongoing ABC News/Washington Post poll for ABC News, the weekly Bloomberg Consumer Comfort Index for Bloomberg LP and individual survey research projects for a range of other clients. The firm is directed by Gary Langer, former director of polling at ABC News, a board member of the nonprofit Roper Center for Public Opinion Research, trustee of the National Council on Public Polls and former president of the New York Chapter of the American Association for Public Opinion Research. Public Views on Class Actions, Companies and the Courts 17

18 Langer Research Associates subscribes to the Code of Professional Ethics and Practices of the American Association for Public Opinion Research and the Principles of Disclosure of the National Council on Public Polls. For details contact Field work and data tabulation services were provided by SSRS/Social Science Research Solutions of Media, Pa., using its national dual-frame telephone omnibus survey. The weekly SSRS Omnibus consists of approximately 1,000 random-sample telephone interviews, half via cell phone and half via landline phone, with a minimum of 35 interviews in Spanish. Calls customarily are made each Wednesday through Sunday to a fully replicated, stratified, single-stage, RDD sample of landline telephone households and randomly generated cell phone numbers designed to represent the adult population of the United States. Phone numbers receive six call attempts over a 10-day period, with a rolling-cross section design that allows sample to remain active for multiple 5-day waves. Within each landline household, interviewers ask to speak with the youngest adult male or female at home; if no person of that gender is at home, interviewers ask to speak with the youngest adult of the other gender. Cell phone interviews are conducted with the adult answering the phone. The data are weighted via a multistage process, first correcting for unequal probabilities of selection depending on the number of adults in the household and the nature of telephone service in use, then applying a post-stratification adjustment to correct for systematic nonresponse using known demographic parameters. The sample undergoes iterative proportional fitting ( raking ) to match the most recent March Supplement of the U.S. Census Bureau s Current Population Survey by age (by gender), education, race/ethnicity, marital status and Census region (by gender). Respondents telephone status (cell-phone only, landline only or mixed user) is included, based on the most recent estimates available from the U.S. Centers for Disease Control s National Health Interview Survey. Full results are based on a total of 1,006 interviews from Sept , 2014, including 504 completed via landline telephone and 502 via cell phone. The results have a margin of sampling error of plus or minus 3.5 percentage points for the full sample, including a design effect of 1.4. All characterizations of differences in results presented in this report have been tested for statistical significance. 18 Public Views on Class Actions, Companies and the Courts