Class actions

  • March 11, 2013

    by E. Sebastian Arduengo

    The Financial Industry Regulatory Authority or FINRA recently found that Charles Schwab, violated FINRA consumer protection rules by including provisions in customer agreements where customers waived their right to assert claims through the class action mechanism. The punishment for trying to structure a customer agreement that effectively allows Schwab to cheat their customers without fear of repercussion? A slap on the wrist.

    FINRA's weak action was a result of the U.S. Supreme Court's opinion in AT&T v. Concepcion. The Court held that arbitration agreements that waived a party’s ability to bring a class action must be enforced, even if they were in “take it or leave it” contracts of adhesion, where the consumer had no choice but to agree if they wanted cell phone service. At the time, The New York Times noted “the decision … appeared to provide businesses with a way to avoid class-action lawsuits in court. All they need do … is use standard-form contracts that require two things: that disputes be raised only through the informal mechanism of arbitration and that claims be brought one by one.”  

    This brings us back to the FINRA decision, which is a perfect application of the litigation strategy outlined by The Times, and shows why Concepcion was such a terrific decision for corporate America (not so much for the rest of us). In direct response to the Supreme Court’s ruling in Concepcion , Schwab put new waiver provisions in their 2011 customer agreements, which covered close to seven million customers. The waivers that they put into the 2011 customer agreements were worded such that any customer claim against Schwab had to be arbitrated “solely on an individual, case-by-case basis.”

  • March 1, 2013
    Guest Post

    by, Rochelle Bobroff, Director of the Access to Courts Program, Constitutional Accountability Center. This analysis is cross-posted at CAC’s Text & History Blog.

    While both big businesses and small investors exhorted the Court to resolve the dispute in Amgen v. Connecticut Retirement Plans and Trust Funds based on policy preferences, the Court hewed instead to text and history in its 6-3 ruling on February 27, allowing the securities fraud case to proceed as a class action. The Court’s opinion, written by Justice Ginsburg (and joined by Chief Justice Roberts and Justices Breyer, Alito, Sotomayor and Kagan), remained true to the text of the Federal Rules of Civil Procedure governing class certification and left policy decisions to Congress, citing relevant legislative history.

    The plaintiff-investors in Amgen claimed that misleading statements by the defendant pharmaceutical company regarding the safety and efficacy of its flagship drugs led to an inflated price for the company’s stock. When the truth came to light, they alleged, the price of the stock plummeted, causing financial harm to investors who had purchased the stock at the inflated price. The company countered that its alleged misrepresentations were immaterial. The Court took up the question of whether the district court should have required the investors to prove the materiality of the alleged false statements prior to certifying a class action.

  • October 19, 2012

    by Jeremy Leaming

    Too many progressives have faltered in highlighting the impact nine justices on the nation’s highest court can have on the lives of millions of Americans. The Constitutional Accountability Center’s Simon Lazarus lays the case out over at CAC’s Text and History Blog, noting that during the second presidential debate an opportunity was missed to show how the conservative justices of the Roberts Court increasingly advance corporate interests, while making life tougher on individuals.

    As Lazarus notes, a question from the town hall audience prompted the candidates try and address the ongoing lack of pay equity – women still earn significantly less than their male counterparts. President Obama responded by highlighting his signing of the Lilly Ledbetter Fair Pay Act. The law was named after the Alabama women who struggled to hold Goodyear Tire & Rubber Company accountable for paying her far less than men at the company doing the same work. After Ledbetter (pictured) sued the company, a jury found in her favor and awarded her hundreds of thousands of dollars in back pay. But the company appealed and the case eventually reached the high court in 2007. The rightwing bloc of the Supreme Court in Ledbetter v. Goodyear Tire reversed course and found that Ledbetter could not move forward with her lawsuit under Title VII of the Civil Rights Act of 1964 seeking equal pay for equal work. The rightwing justices essentially said that Ledbetter had waited too long to bring the action, even though she did not discover the discrimination until her retirement from the Goodyear Tire plant.

    During this year’s ACS National Convention, Justice Ruth Bader Ginsburg, who lodged a dissent in Ledbetter, said the decision was “entirely out of touch with the real world of work.”

    The Ledbetter Act trumps the high court’s out-of-touch majority opinion by allowing for a realistic timeframe for workers to bring employment discrimination cases.

    But Lazarus says progressives, including the president, have failed to “take a cue from Senator [Patrick] Leahy, who has held numerous hearings over the past four years to ‘shine a light on how the Supreme Court’s decisions affect Americans’ everyday lives.’”

  • October 3, 2012

    by Jeremy Leaming

    The Roberts Court is a tool of corporate America. At least that’s the gist of a new film from Alliance for Justice, called “Unequal Justice: The Relentless Rise of the 1% Court.”

    This of course is not news to those who pay attention to what the Supreme Court does, nor is it agreed upon. For instance the American Enterprise Institute, the Heritage Foundation, and the Chamber of Commerce likely see the Roberts Court as a protector of American capitalism – the place where almost anyone can lift themselves up by their bootstraps to become superrich.

    “The Roberts Court is basically a pro-business court,” Stanford Law School Professor and ACS Board member Pamela Karlan, says in the AFJ film. “They don’t have a desire to really open the federal courts up to suits by average Americans, either workers or consumers, or people who are injured by various products; it’s a pro-business court.” (Watch the film here or view below.)

    The film reminds us of the Court’s opinions that shut down a class action gender discrimination lawsuit against the retail giant Wal-Mart, overturned a woman’s lower court verdict against a company for years of gender discrimination, and found that corporate America has even more power to spend boatloads of money to sway elections.

    “The Citizens United’s impact has been dramatic,” says former U.S. Senator Russ Feingold and founder of Progressives United. “And since then our system is in the worst free-fall it’s been in since the Gilded Age, probably worse.”

    Even former Sen. John McCain (R-Ariz.), a rightwing policymaker, weighed in on blasting Citizens United as one of the most “misguided, naïve, uniformed, egregious decisions of the United States Supreme Court, I think in the 21st Century.”

    Katrina vanden Heuvel, editor and publisher of The Nation and narrator of the 20-minute film, said individuals have been shut out of the justice system by today’s Supreme Court, which “has decided that when everyday people run up against powerful corporate interests, the big corporations almost always win.”

    Some of the women behind the class action lawsuit against Wal-Mart explain their efforts to advance equality and deal with a stinging defeat.

    “The women of Wal-Mart brought the case to stand up for their right to be treated equally, but they never got that far,” Heuvel said. “The decision turned on whether their claims had enough in common. The conservative majority raised the hurdle for class actions, and made it harder to prove discrimination.”

  • July 12, 2012

    by Jeremy Leaming

    New York City’s leaders, most notably its billionaire mayor, are bent on supporting a stop-and-frisk policy that according to the police department’s own numbers overwhelmingly target minorities.

    Mayor Michael Bloomberg continues to defend the policy, which allows police officers to stop-and-frisk people in the city on suspicion of criminal activity.

    Recently Bloomberg took to a church in Brooklyn to trumpet the policy, saying, “We are not going to going to walk away from a strategy that we know saves lives.” And although he went on to claim city officials would strive to carry out stop-and-frisk “properly,” he has also denigrated Philadelphia’s efforts to reform its frisking policies. “Why would anyone want to trade what we have here for the situation in Philadelphia – more murders, higher crime?” he said in May.

    But numbers regarding stops and frisks show that the policy hardly deters crime, let alone saves lives. According to statistics from the New York Police Department more than 680,000 people were stopped in 2011 and in 88 percent of the stops no arrests were made.

    The numbers do, however, show that racial profiling is taking place. Of the nearly 686,000 people stopped last year 84 percent of them were black or Latino, The Times reports. Pace University law professor Randolph M. McLaughlin told the newspaper, “People are starting to wonder: ‘What’s really going on here? Is this a racial policy?”

    Noting that courts are increasingly assessing stop-and-frisk tactics, McLaughlin added, “And judges read newspapers too.”

    In May, U.S. District Court Judge Shira A. Scheindlin permitted a class-action lawsuit against the New York Police Department’s policy, saying she was seriously concerned about officials’ “troubling apathy towards New Yorkers’ most fundamental constitutional rights.”