Class actions

  • March 31, 2017
    Guest Post

    by Dan Karon, Karon LLC

    A German auto manufacturer lies about its cars’ emissions and swindles billions. Too bad. An energy company cooks the books and steals millions of people’s retirement money. So sad. A chemical company dumps toxic waste into a river and kills thousands of children downstream. Pound sand.

    If Congress passes H.R. 985—the Fairness in Class Action Litigation Act—these horrifying scenarios will be just the beginning. The bill reads like a Chamber of Commerce wish list because it is. It will kill all class actions and will sacrifice the valuable, necessary and commendable work that consumer attorneys have performed for decades. It will gut human-rights cases, eviscerate employment-abuse cases and kill defective-drug and products cases. Its carnage is too expansive to list here. The bill will leave nothing but an unpoliced wasteland, where unaccountable corporations will exploit their new world order, knowing that no one can stop them.

    If this all sounds too horrible to be real, I am sorry—it is. Despite all the scares that the class-action bar has agonized through, this congressional blow not only will crush people’s right to justice, but also will decimate plaintiffs’ and defense firms overnight. If you think I am kidding, read the bill.

    How did we get here? Simple. Bad plaintiffs’ lawyers brought too many bad cases. But these sewer lawyers neither resemble nor represent the plaintiffs’ bar—lawyers who risk comfort, safety, and security every day by committing to a contingent-fee model, where the upside of bygone days no longer exists. We do this because it is important, because we care, and because we want to make a difference. These motivations may seem silly or unimaginable to lawyers who have never done this type of work, who have never risked their practice, and who favor getting paid per hour to getting paid perhaps. Plaintiffs’ work is not for everybody.

  • February 19, 2016

    by Nanya Springer

    As part of its Access to Justice series, ACS on Thursday hosted Director of the Consumer Financial Protection Bureau Richard Cordray for a discussion of how forced arbitration and other anti-consumer measures are harming average Americans. Cordray, the agency’s first director, has overseen the birth and growth of the CFPB, which sprung directly from the financial crisis of 2007-2008. During the ensuing years, the cumulative wealth of middle-income Americans fell drastically, and many families saw their net worth cut in half.  The CFPB, he noted, was forged to ensure “consumer financial markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.”

    A burgeoning threat to consumers is mandatory arbitration agreements. Cordray explained that originally, arbitration was used primarily “in commercial disputes between businesses that bargained with each other to create tailored contracts; it was rarely used in disagreements between businesses and consumers.” Over the last two decades, however, “banks started including arbitration clauses in their consumer contracts, requiring any disputes or disagreements to be resolved through private arbitration.” He noted that the attorneys who advised these banks specifically pointed out that arbitration clauses can be used to block class action lawsuits.

    To investigate the impact of increasingly common arbitration clauses, the CFPB undertook the most extensive study of consumer finance arbitration ever conducted, finding that tens of millions of consumers are subject to at least one mandatory arbitration clause—and most don’t even know it. Most importantly, the CFPB found that “arbitration clauses restrict consumers’ relief in disputes with financial service providers because companies are using them to block class proceedings in any forum – whether court or arbitration.”

  • February 19, 2016

    by Nanya Springer 

    In The Huffington Post, ACS President Caroline Fredrickson urges the U.S. Senate to fulfill its constitutional duty and “give fair and prompt consideration” to any Supreme Court nominee.

    ACS Director of Strategic Engagement Jill Dash comments to Paul Waldman in The Washington Post about the improbability that a new Supreme Court would immediately overturn high-profile decisions. “The four more liberal justices currently on the Court take precedent and stare decisis seriously,” adds ACS Issue Brief author Samuel Bagenstos.

    Perry Cooper at Bloomberg BNA says class actions may see a Renaissance in the near future and notes ACS Board member Erwin Chemerinsky’s prediction that Spokeo Inc. v. Robins will result in a 4-4 split decision.

    In the Emory Corporate Governance and Accountability Review, Caroline Poplin examines the pharmaceutical industry’s misuse of First Amendment doctrine, and ACS Board member Reuben Guttman, with Paul J. Zwier, examines wrongful marketing and pricing practices.

  • December 2, 2015
    Guest Post

    by Jason Steed, Associate at Bell Nunnally and president of the ACS Dallas-Ft. Worth Lawyer Chapter

    Class actions are crucial to protecting the rights and interests of workers and consumers. If an employer underpays a worker a few dollars every paycheck—or a credit card company overcharges a consumer a few pennies per transaction—the total loss to that worker or consumer might be only a few hundred dollars. That might be a lot of money to the individual worker or consumer, but it’s not enough to justify hiring an attorney for a lawsuit. Class actions enable dozens or hundreds or even thousands of individuals to bundle their claims into a single lawsuit so workers and consumers can recover the sums they are owed. And the threat of a class action discourages corporations and other entities from adopting schemes that might nickel-and-dime us to death.

    This is why the Supreme Court’s recent decisions undermining class action litigation are of great concern to those who care about the rights and interests of workers and consumers. In 2011, for example, in a case called Wal-Mart Stores v. Dukes, the Supreme Court made it much harder to certify a nationwide class action for employees seeking to recover lost pay due to sexual discrimination. According to the Court’s majority in Dukes (made up of the five most conservative justices), employees can’t bring a class action for sexual discrimination unless they can show that every worker in the proposed class suffered exactly the same sort of bias and discrimination. Statistical sampling isn’t good enough to support the class action. And without the ability to rely on statistical sampling to show commonality among members of the proposed class, large corporations will now be much less likely to face large class actions based on claims of discrimination.

    This Dukes decision looms in the background as the Court considers another important class action case this term. In Tyson Foods, Inc. v. Bouaphakeo, a group of several thousand employees at Tyson Foods brought a class action claiming Tyson failed to pay them sufficient wages for the time they spent donning (putting on) and doffing (taking off) personal protective gear before and after work. To prove the amount of lost wages, the workers relied on statistical sampling—averaging the times that various employees spent donning and doffing their gear. The district court certified the class, a jury returned a verdict of $5.8 million for the employees, and the Eighth Circuit Court of Appeals affirmed this judgment.

  • 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.