Photo Credit: Ethic Soup

In my article Chinese Toxic Toys we noted that four years ago Mattel recalled more than 20 million toys which contained excessive levels of toxins. What we did not discuss were the subsequent legal repercussions.

A few years after the recall, Mattel settled a class-action lawsuit (1) that mainly benefited the lawyers, as in 99.9% of all class-action lawsuits. Millions of consumers got a few dollars and a few lawyers got millions of dollars.

Some may argue that the suit also allowed class members to recover all out-of-pocket expenses incurred for lead testing. However the operative phrase here is "out-of-pocket expenses;" in most cases only families who had insurance that would cover the testing were likely to get their children tested, those who could not afford it did not.

Tort reform is needed here to limit what lawyers can receive for a minimal amount of work. In this particular case, lawyers spent a few hours filing papers and received millions of dollars for the effort. The rest of the so-called injured parties received ten bucks or more in vouchers.

Since I buy a lot of stuff, I have been an unwilling recipient of a number of checks from class-action settlements most in the amounts of 10 or 20 cents (yes, that's right), or coupons good for discounts on future purchases from the defendant companies.

The whole thing is a scam. What good is a settlement of 12 million dollars when there are millions of members of the class? If lawyers were limited to a few hundred dollars per hour for the actual work done, there would be no class action suits where the actual injury to each of the affected plaintiffs is negligible.

I do not appreciate getting a check for 7 cents (as I once received in settlement for some CDs). It costs me more than that to deposit a check in my bank account. Class action lawsuits should only proceed if individual members of the class can actually end up with more money than the attorneys.

Figure it out. If a toy costs $20 and the toy store gave you a voucher for that amount as a replacement, how does getting $10 after a lawsuit help you any? Obviously it helped the lawyers get millions, but in the end, the toy maker has to make up the money it wasted in the lawsuit somehow and that somehow means you will pay more for toys the next time. The lawyers won and you lost.

But how to punish the company for willful violation of laws meant to protect the consumer?

The problem here is that as long as the public is gulled into thinking that class-action lawsuits actually accomplish anything (Mattel still makes toxic toys in China), no one will look for the real solution.

One possible solution is to fine (at 90% of their salary) the CEO's of companies that violate the Federal Lead Paint Ban. Unless someone takes responsibility for these things, the consumer will continue to suffer.