Class Actions Work

When it makes financial sense for big corporations and insurance companies to make a buck by shortchanging their customers, you can’t be surprised when some unscrupulous companies do just that. Some companies can cheat a lot of people out of a little bit of money and turn a handsome profit. Who will notice small, bogus charges? And better yet, who will do anything about it? This is especially true when the bogus charge is small and it will cost more money to litigate the case than any individual potential recovery is worth. The companies figure that the consumer will just have to eat it. And the corporation will pocket the money.

Those small claims (ones that cost more to litigate than the bogus charges are worth) are known as “negative value” claims. Class actions are often the only way that consumers cheated by insurance companies and other big corporations can be compensated for being cheated out of small amounts or “negative value claims.”

Class actions guard against such dishonesty. A recent example is a case from Missouri. Some insurance policyholders complained that American Family Mutual Insurance Company used inferior, non-original equipment to repair their damaged vehicles in violation of their policy with the company. A jury agreed and awarded over 17 million dollars in damages. Contrary to most arguments that defendants make about a “runaway jury,” an appellate court agreed with the findings of the jury. That court stated that the plaintiffs “presented sufficient evidence for a reasonable juror to conclude that aftermarket parts are not of like kind and quality to OEM (original equipment manufacturer) parts and that American Family breached its contracts with its policyholders when it paid to return the damaged vehicle to pre-loss condition based on the nature and cost of aftermarket parts.”

The lawyer for the consumers, Michael Waldeck, said the appeals court’s decision “recognizes the importance of giving relief to class members whose claims are otherwise too small to pursue.” Exactly.
At Neblett, Beard and Arsenault, we applaud the courage of the Missouri Court of Appeals, Western District, and attorneys Like Mr. Waldeck who stand up for consumers who have been shorted by their insurance companies.