> The exorbitant legal fees are ultimately reflected in prices.
Prices are set by supply and demand. If companies had the market power to raise prices to pass on the costs of defending class action lawsuits, they would do so with or without the lawsuit.
Class action lawsuits don't usually uniformly increase costs to all suppliers--some companies get sued less than others and have an incentive to keep it that way. The exception is industry-wide actions like tobacco.
The fundamental problem is that it's really easy to get away with cheating people out of nickles here and there so long as you limit your scale enough to not attract the government's attention, and such activity is pervasive. The European approach has been strict consumer regulations and government enforcement, but compliance also has a cost, one that does fall uniformly on the industry as opposed to just on bad actors. The alternative to all that is to let things slide, but that's not wholly satisfactory either.
I guess I don't see a problem with a tri-furcated system: 1) substantial damages per individual -- opt-in tort system, 2) diffuse damages that collectively add up to substantial wrongdoing -- government fines, 3) diffuse damages that don't collectively add up substantially enough to attract government attention -- reputational damage.
Mid-career federal government lawyers in an expensive city make $130k a year. Class action attorneys generally get a significant fraction of the value of the settlement. And the value of the settlement is calculated in kind of a crazy way particularly when it comes to injunctive relief.
In the google buzz case, which resulted in no monetary relief to the class in general (representative plaintiffs were given a small award, the rest was cy pres) class plaintiffs were awarded over $2.1M plus expenses for 2550 billable hours* over the course of a calendar year.
*That's a little understated because the filing that number came from was near the end of the litigation, but not at the very end.
If there's wrongdoing with extremely diffuse consequences, that's what the government with its GS scale attorneys are for.
Lawsuits, like email marketing, should be opt-in not opt-out.