Class actions

  • November 18, 2015
    Guest Post

    by Doron M. Kalir, Clinical Professor of Law, Cleveland-Marshall College of Law

    The fact that the Roberts Court is business-friendly is, by now, well documented. It is also no secret that the Court is generally hostile to the once-venerable institution of class actions. And most recently, as The New York Times ably demonstrated, the Court has moved to elevate arbitration as the preferred mode of dispute resolution. The accumulated effect of these three trends has been devastating: Millions of Americans – customers, employees, patients, and investors, among others – are routinely denied their fundamental right to have a day in court. Some call that the privatization of the justice system.

    DIRECTV, Inc. v. Imburgia, a case emerging out of an intermediate state court in California, is another case reflecting these trends. At first sight, it may not seem a likely candidate to become one of the Term’s blockbusters. Allegedly a typical state contract-interpretation case, it looks benign, almost boring to read. Yet it is anything but. It represents nothing short of a last-ditch effort by state courts to shield consumers from these emerging trends. Will it be successful or – as some predict – destined to fail? Only days will tell.

    The facts of the case are somewhat complicated. In 2007, Amy Imburgia contracted with DIRECTV to receive programming services. Predictably, her Customer Agreement contained an arbitration-only, no-class action clause. Unpredictably, it also contained language abolishing that clause should “the law of your state . . . find this agreement to dispense with class action procedures unenforceable.” And that is precisely what happened – the California Supreme Court held such provisions to be “unconscionable” and therefore unenforceable.

    Four years later, in AT&T Mobility v. Concepcion, the U.S. Supreme Court reversed the California rule. Class-action waivers in arbitration agreements, the 5-to-4 decision held, are enforceable, reasoning that the Federal Arbitration Act (FAA) preempts state law. Despite Concepcion, however, the California Court of Appeals ruled in this matter that the individual-only arbitration clause is still unenforceable. Why? The court reasoned that the term “the law of your state,” as included in this particular consumer contract, should not be interpreted to include federal interpretation of that law (the “Supremacy Clause” version), but rather only state law as interpreted by state courts.

  • November 2, 2015
    Guest Post

    by Ross Eisenbrey, Vice President, Economic Policy Institute

    *This piece originally appeared on EPI’s “Working Economics Blog.”

    The New York Times has published two parts of a three-part series about the epidemic of arbitration clauses that have cropped up in millions of transactions between corporations and their customers and employees. The clauses are routinely included in employment contracts, cell-phone contracts, consumer product purchase agreements, cable subscriptions, rental agreements, and a multitude of financial transactions, as a way to prevent injured parties from having their day in court. Giving up the constitutionally protected right to sue in state or federal court is a big deal and is often the result of ignorance and deceit: millions of people have no idea the clauses are there in the fine print of contract provisions written in legalese that few individuals ever read or comprehend. They don’t find out they’ve lost their rights until they need them.

    Individuals give up not just their right to go to court but all protections regarding the venue of any hearing their claim will receive (for example, the agreement might require arbitration in a city a thousand miles away). They might give up certain remedies and the right to appeal even if the arbitrator gets the law completely wrong, and give up the essential right to join with other victims to file a class action, especially important when each claim is small and no single individual could rationally pay to hire a lawyer and bring a lawsuit for such a small sum.

    The myth is that arbitration is preferable because it allows individuals to resolve their grievances easily, quickly, and cheaply. In fact, arbitration can be more expensive for a plaintiff than a civil suit because instead of a small filing fee in court, the plaintiff will have to pay half of the arbitrator’s fee, or sometimes all of it if the arbitration clause includes a “loser pays” provision. Legal fees can be ruinous, and the Times story relates the case of a woman who owes $200,000 in attorney fees after losing a case in which her former employer allegedly destroyed evidence.

    Perhaps the worst aspect of the forced arbitration epidemic is the loss of a neutral trier of fact. Unlike judges who have lifetime appointments to the bench and are protected from financial pressure, arbitrators rely on the companies to use them again and again, creating a financial pressure to please the corporation that will have many arbitration cases in the future rather than the individual plaintiff, who will probably never use an arbitrator again.

  • September 3, 2015
    Guest Post

    by Leslie Brueckner, Senior Attorney, Public Justice

    *This piece first appeared at Public Justice Blog

    The U.S. Supreme Court is poised to decide an issue of huge importance to everyone who cares about access to justice. The question, in Campbell-Ewald v. Gomez, is whether corporate defendants in class actions are entitled to bribe class representatives to abandon the rest of the potential class members. 

    Yes, you read that right. According to the corporation who was sued, it should be allowed to cancel out a class action against it simply by offering to settle the named plaintiff’s individual claims. Under the defendant’s view of the law, corporations accused of ripping off millions of people could avoid accountability by repeatedly picking off the few named plaintiffs who are willing to step forward. Campbell-Ewald has even gone so far as to argue that class representatives are bound by such offers, accepted or not, even if it effectively denies all other class members the ability to obtain any relief at all.

    The craziest part about the theory they’ve put forth is that it turns the whole notion of adequacy of representation 180 degrees. As we explained in an amici brief we just filed with the Court (along with the AARP), one of the most basic rules of class actions is that class representatives are supposed to represent the others impacted by the wrongdoing. Not only is this required by Rule 23 (the federal class action rule), it’s also required by the U.S. Constitution (due process, anyone?). This means not just that the class representatives are supposed to be competent, they are also supposed to be loyal to the rest of the class members. And that means the class representatives are not supposed to file potential class actions just to make money for themselves, they are supposed to be standing up for everyone in the class. 

  • July 24, 2015
    Video Interview

    by Nanya Springer

    Some talk this week centered on the issue of reforming the U.S. Supreme Court, with one irresponsible proposal gaining moderate attention, but Erwin Chemerinsky has been talking about fixing the Supreme Court for years.  In an interview with ACSblog, Chemerinsky ‒ the Distinguished Professor of Law and Raymond Pryke Professor of First Amendment Law at the University of California, Irvine School of Law ‒ describes the Supreme Court’s greatest failures and proposes responsible solutions.

    Chemerinsky recalls the Lochner Era ‒ a period during which the high court struck down more than 200 laws enacted to protect consumers and employees, using the rationale that such laws interfere with freedom of contract. While the Lochner Era ended nearly a century ago, Chemerinsky explains that today’s Roberts Court “is the most pro-business Supreme Court that we’ve had since the mid-1930s.”

    This claim, as Chemerinsky notes, is backed up by empirical studies. From restricting the availability of class action suits and favoring binding arbitration to weakening the influence of unions, the Roberts Court has consistently sided with corporations over consumers and employees—all while refusing to recognize poverty as a suspect classification and determining that education is not a fundamental right.

    Chemerinsky offers reasonable proposals, such as imposing 18-year nonrenewable term limits, allowing cameras inside the Court and insisting that the justices conform to the same ethical standards, particularly with regard to recusal, as judges on other courts.

    Watch the full interview here or below.

  • June 10, 2015
    Guest Post

    by Arthur BryantChairman of Public Justice

    * This post originally appeared on the blog for Public Justice

    Corporate America and irresponsible government officials consistently trash lawsuits as “frivolous” and trial lawyers as “greedy.” Why? Because lawsuits and trial lawyers hold them accountable when they abuse their power, break the law, and violate people’s rights.

    Want proof? Just look at the five finalists for Public Justice’s 2015 Trial Lawyer of the Year Award. This coveted honor goes annually to the lawyers who won the verdict or settlement that made the biggest contribution to the public interest in the past year.

    David v. Signal International

    In 2005, Signal International, a large contractor in Alabama and Mississippi, was hired to help rebuild the Gulf Coast in the wake of Hurricanes Rita and Katrina. It recruited nearly 500 pipefitters and welders from India with promises of good jobs and permanent U.S. residency. The recruits paid $10,000 to $25,000 just to be considered. But Signal brought them here on guest worker visas, with no possibility of residency; forced them to live in “man camps” on “the reservation,” with up to two dozen workers in a trailer with one bathroom; and deducted $1,050 monthly from their pay to do so. When Signal learned some workers were organizing to take action, they locked those workers in a trailer, terminated the leaders of the organizing movement and attempted to forcibly deport them. One became so distraught he attempted suicide.

    The Southern Poverty Law Center (SPLC) and a team of public interest and private attorneys fought for seven years – and continues to fight – to hold Signal accountable. When the judge would not let the case proceed as a class action, the SPLC recruited an extraordinary group of lawyers to represent hundreds of workers  in a dozen related lawsuits in multiple jurisdictions on a pro bono basis. David v. Signal International was the first to go to trial. Led by Alan Bruce Howard of Crowell & Moring in New York, with other attorneys from that firm, the SPLC, the American Civil Liberties Union, the Asian American Legal Defense and Education Fund, the Louisiana Justice Institute in New Orleans, and Sahn Ward Coschignano & Baker in Uniondale, NY, the lawyers navigated numerous complex challenges, including explaining immigration law to jurors and presenting testimony from workers who did not speak English. They won a unanimous $14 million jury verdict for five workers in a four-week trial. The jury found Signal had engaged in labor trafficking, fraud, racketeering and discrimination. This is the largest labor trafficking litigation in U.S. history. The David verdict is just the beginning. The claims of the other workers have yet to be heard.