Class Actions and Statutory Damages for Procedural Violations – Navigating Between Stranded Consumers and Corporate Wreckage

By Martin Thelen

ABSTRACT

Class Actions and Statutory Damages both incentivize consumers to sue. When combined and based upon a procedural violation, they pose immense financial threats to defendants. It is the legal system’s role to finely balance the protection of consumers on the one hand while ensuring proportional liability for minor non-compliance on the other hand. With the Standing requirement, the class certification requirements and liability caps, courts can use three different tools to achieve the right balance. This article is the first to address all of them. It shows that, under the Standing doctrine, a Probability-Magnitude Test is the best way to decide upon injuries that have not yet occurred. Moreover, it analyzes recent decisions on the class certification requirements that, so far, have not been covered in the literature. Strong arguments suggest that class certification should be granted when procedural violations are alleged. However, courts should use flexible liability caps to avoid an overburdening liability. Finally, this article shows that many of the discussed concepts can be applied to the public enforcement of statutes as well.