When most people think consumer fraud protection they imagine government agents going out into the field to inspect businesses, write tickets, and shut down bad-actors. As reports from the state Attorney General’s office can attest, these things do happen, but they are just one part of the state’s enforcement mechanism. A wide variety of regulations are also enforced via lawsuits brought by private attorneys effectively deputized as government enforcement agents.
Since the 1960s, the state has allowed attorneys to bring regulatory enforcement lawsuits. These suits, known as “private attorney general actions” theoretically encourage compliance while appearing to save the state money by lowering the number of people employed in the Attorney General’s office, but their true effectiveness and actual cost is unknown.
Our uncertainty about the value of private enforcement actions stems from the form they take. The nature of litigation makes it difficult to track, particularly when you consider private settlements, unlike their government counterparts, are generally not publicly reported.
Professor Joanna Shepherd’s white paper on New Jersey’s Consumer Fraud Act is the closest thing we have to a case study on private attorney enforcement. Shepherd explains how legislative policy choices and permissive judicial interpretations expanded the Act to the point where lawsuits are filed even in cases where no “fraud” has occurred.
When fraud-free suits (those based only on a statutory violation where no plaintiff can show actual harm) are filed as class actions, lawsuits that used to be a wake-up call for an offending businesses turns into their death knell.
The mystery surrounding private attorney general suits despite their prevalence and significance is one of the reasons we have chosen to focus in on this issue at our September 18 conference. Some of the questions our panelists, which include Senator Peter Barnes (D-Middlesex), Assemblyman Michael Patrick Carroll (R-Morris), the Acting Director of the New Jersey Attorney General’s Division of Consumer Affairs, and practicing attorneys will address include:
- Why is litigation so frequently the enforcement mechanism chosen by the legislature when it comes to business regulation, and what other options are available?
- Does the private enforcement model target the most egregious cases? Is it consistent with the legislative or administrative regulatory regime? Or do private litigation remedies and class aggregation of statutory penalties actually distort the underlying regime?
- How is state-enforcement defined and prioritized, and how do resource constraints shape the enforcement effort?
- Should parties who allege no injury apart from being exposed to a bare statutory violation even have standing to bring a claim?
- Is the scale of statutory damages multiplied thousands or millions of times over proportionate to the underlying alleged violation?
Outsourcing Enforcement: The Debate Over Privatizing the Role of Public Enforcement
When: September 18, 2015 from 8AM-1:30PM
Where: Hotel Woodbridge at Metropark
Who Should Addend: Business leaders, lawyers, and lawmakers concerned about excessive litigation.
Cost: $60 for NJCJI members & government employees, and $125 for non-members
Click here to register now. Or can call our office at 609-392-6557 and register by phone.
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