Even since BlackBerry users lost service for three days in mid-October, many have speculated that Research In Motion will be smacked with a class action suit. Well, two class actions have now been filed but there are good reasons to think RIM’s legal department is not wringing its hands just yet.
The first national class action was filed in Montreal on Tuesday by a Canadian who apparently was not happy with RIM’s decision to make peace with users by offering them free apps. The second suit was reportedly filed a day later in southern California on behalf of all U.S. BlackBerry users, including 2.4 million users in California alone.
Ordinarily, when a major company suffers a well-publicized gaffe and is hit with a class action, it is time to wince and wonder how much it will cost them. In the case of the RIM (NSDQ: RIMM) class actions, however, there are several features of the lawsuits that make them look small-time.
Note first that it took nearly two weeks for lawsuits to be filed over the BlackBerry service debacle. This is an eternity in the world of class action suits. The way the class action business works is that lawyers keep boiler-plate documents and stand-by plaintiffs on hand so that they are ready to file a suit at the drop of a hat. Often, dozens of firms will file similar suits within hours or days of each other and then jostle among themselves about who will get lion’s share of the work (and pay-out).
The fact that two weeks elapsed before a suit was filed likely means one thing: big class action firms looked at the case and didn’t smell money. According to an analysis by Moira Herbst at Reuters (NYSE: TRI), the firms may have been deterred by forced arbitration clauses or by the fact that it may be hard to frame a service outage as consumer fraud or breach of contract.
In the absence of the class action heavy hitters, it appears that two minnows have stepped in to test the waters. It is also no coincidence that this week’s lawsuits were filed in two of North America’s most class action friendly jurisdictions — California and Quebec. The Canadian province is especially attractive because it provides a fund to subsidize class action suits and because it is a civil law jurisdiction where plaintiffs do not have to identify a specific type of legal harm.
As for the California suit, the complaint is not yet online but the lead plaintiff is reportedly a Sprint (NYSE: S) customer who claims he has an “implied contact” with RIM because the company provided him with services.
So far, none of this sounds like fodder for litigation a la Erin Brockovich. Unless any big league class action firms come of the woodwork, RIM appears free for now to focus on its pile of other problems.