Archive for the ‘Class Action’ Category
Friday, March 3rd, 2017
Julia Roberts has delivered a lot of great lines. One of my favorites is from Erin Brockovich
: “By the way, we had that water brought in specially for you folks. Came from a well in Hinkley,” she tells the alarmed corporate lawyer about to take a sip.In the movie, Roberts’ character meets with moms, dads, and children who’ve become sick after the local utility let poisons leak into their small town’s drinking water. “You want their diseases?” she asks after rattling off a list of people affected by the spill.
Roberts’ character helps the people of the town band together to sue the company. This type of lawsuit—called a class action—has been used by Americans of all stripes for the past 50 years to fight back when an unethical business or unjust government policy is making them sick, cheating them of their money, or otherwise screwing them over.
But now, because of corporate special interests and their influence over some members of Congress, class actions are in grave danger of becoming a thing of the past.
Late in the evening on Feb. 17, when the rest of us were distracted by Trump’s latest tweet, a bill got served up in Congress that would sound the death knell for class actions. Through a long list of new rules (that sound almost innocent to the non-lawyer, but are anything but), the bill would make it so class actions essentially become extinct. The House is set to vote on this bill (H.R. 985, the misnamed “Fairness in Class Actions” bill) next week, probably on Wednesday, March 8.
I work at a small nonprofit that supports David v. Goliath type cases like the one in Erin Brockovich. Some of the cases are famous—think the 21st century equivalent of Brown v. Board of Education or the multi-state case against Big Tobacco. Others you’ll probably never hear about, but they fight against injustice (and win!) for groups who too often have no power: foster kids, immigrants, Native Americans, the sick, and seniors.
Without this essential check in place, our delicately balanced system would tip over and land with a heavy thud onto the side of corporate special interests. Sure, the vast majority of businesses are ethical and most government policies are fair—but what about when they aren’t? What about when the poisons in the groundwater give us cancer, or when our employer refuses to promote women because they have this annoying habit of getting pregnant, or when our bank creates a bunch of fake accounts or cooks the books or destroys our retirement in some other new way they’ve dreamt up? What would we do then, if class actions were impossible?
We could still sue individually, but that assumes anyone could afford to foot the legal bill. Do you know how much it costs to hire your own lawyer for a lawsuit like this? $10,000? That barely gets you started. $100,000? Maybe. But if your case stretches on for a decade, as some cases do, try over $1,000,000—what with depositions and electronic discovery to conduct, motions to dismiss to fight off, and appeals on top of appeals on top of appeals.
I don’t know about you, but I don’t have a million dollars (or even one-tenth that) to devote to suing anybody. Right now there is no line item in my family’s budget for “lawsuits.” So basically, in a no-class-action future scenario, if I get screwed over by a company or the government, there will be absolutely nothing I can do about it. This would be a huge win for anyone itching to start their own Ponzi scheme, but a terrifying disaster for the rest of us.
Listen, I understand. There are a lot of crazy things going on right now, and we’ve all got a lot to worry about. But this is important. We all need to stop reading this article and immediately call/email/fax our Congressional representatives and tell them to vote NO on H.R. 985.
Otherwise, when the excrement hits the air conditioning (thanks to Kurt Vonnegut for that delicate phrasing), we regular Americans will have no power to fight back. And call me cynical, but there sure does seem to be a lot of excrement flying around these days. This is no time to allow our elected officials to take away one of our most significant tools of self-protection.
I hope I never have to band together with thousands of my fellow Americans to sue a corporate giant or branch of government, but I most definitely want to retain the right to do so.
Click here to find out more about H.R. 985 and what you can do to stop it.
This blog originally appeared on impactfund.org on March 2, 2017. Reprinted with permission.
Amy Daniewicz is the Grant Program Administrator at the Impact Fund. Prior to working at the Impact Fund, Amy worked in a similar capacity for the Michael & Susan Dell Foundation, where she managed grants supporting children in the Austin community. Prior to that, Amy worked as a non-profit communications director, an entrepreneur, and a blogger. Amy holds a master’s degree in social work from the University of Texas at Austin and a bachelor’s degree in English from Trinity University. Amy’s favorite joys in life are spending time with her husband and three children, making and eating good food with friends and family, and enjoying the beauty of nature.
Thursday, March 2nd, 2017
There was a lot of national attention when Bernie Madoff’s Ponzi scheme collapsed and it became clear that he had stolen hundreds of millions of dollars from investors around the country. Many thousands of stories were written about how he went to prison, the SEC investigated both the scheme and how the scheme had been able to go on so long, and a number of private lawsuits tried to recover money for investors from various people who enabled his scheme.
But in all of the coverage of Madoff’s Ponzi scheme, I never saw a single story that said “this is actually good for the free market; what we really need is for Congress to try to block lawsuits that would let investors recover their money from the crooks and discourage these schemes.”
A couple of years later, enter Congressman Bob Goodlatte (R-Corporate Lobbyist Heaven), with his ironically titled “Fairness in Class Action Litigation Act,” which passed through the House Judiciary Committee two weeks ago. Its passage was a remarkable feat of avoiding public notice or debate, with Goodlatte ramming through the legislation in the middle of the night, voting down all amendments along party lines, and refusing to even hold a hearing on the bill, which had at least ten new provisions never included in the previous version passed by the Committee.
Now, the bill is expected to be voted on by the full House next Tuesday.
Goodlatte’s bill was drafted by corporate lobbyists to eliminate the vast majority of class action lawsuits. It would roll back protections for defrauded investors, cheated consumers, people whose privacy has been violated, small businesses harmed by price fixing, workers cheated by wage theft, and pretty much anyone harmed in any way by corporations that break the law.
The legislation has been opposed by nearly every major civil rights organization in America (including Public Justice, the public interest law firm which I head), nearly every major consumer advocate in the nation, the Committee on Rules of Practice & Procedure of the Judicial Conference of the United States (America’s federal judges see the abuse of separation of powers of this ham handed meddling in the ways courts operate), the normally very business-oriented American Bar Association (business lawyers have joined with lawyers for individuals in seeing the mischief here; after all, many small businesses will be harmed by this bill), and numerous academics (their letter are available here, here and here).
Among other things, the lawsuits it would wipe away include cases against Ponzi schemes. While Madoff may have been the biggest corporate criminal in that field, a number of other crooks have cheated American investors in Ponzi schemes, and class action lawsuits have repeatedly successfully recovered investors’ money.
In McGrew v. Harris Bank, for example, a case pursued in Washington State, a successful class action recovered more than $14 million for investors cheated in a Ponzi scheme. Similarly, in Getty v. Philip Steven Harmon, lawyers for investors identified a key person responsible for this scheme who was affiliated with SunAmerican Securities, Inc. – which knew or should have known that securities laws were being violated. The suit recovered more than $5 million for cheated investors. Under Rep. Goodlatte’s bill, these investors almost certainly would have been out of luck. (The legal explanation is set out in painful detail in the letters attached above in this piece.)
Corporate lobbyists might say this pair of successful class actions taking on Ponzi schemes are anecdotes. For people who like data, though, the Consumer Financial Protection Bureau did a careful study of 400 class actions against banks and payday lenders. In those cases, the CFPB found that more than 13 million customers received more than $2.7 billion in recoveries. One of the many lies that Congressman Goodlatte likes to say about class actions is that they don’t actually help cheated consumers, and instead just enrich the lawyers. But the CFPB study of the actual results in these class actions against lenders found that the total attorneys fees in the cases amounted to 16% of the gross relief received by the consumers.
It’s hard to tell right now whether this bill has any serious chance of becoming law. A much milder, more competently drafted version of the Bill was opposed by 17 House Republicans in the last Congress, and never moved in the Senate. Presumably every, or nearly every, Senate Democrat and some moderate Republicans will vote against a bill that would (among other things) make it impossible to bring most lawsuits that offer relief when corporations pay female employees less than male ones, or protect the public from defective products. But the emboldened corporate lobbyist class has spent a lot more money to try to move the bill in this Congress.
The best way to ensure this terrible bill gets blocked is if a large number of Americans contact their legislators and urge them to vote to defeat it.
This time around, we can’t count on President Obama’s veto pen. President Trump has not said anything about the bill one way or the other. We can only hope he might feel constrained by his often-repeated promises not to side with corporate lobbyists against regular Americans, and decide not to sign this monstrosity if it does make it to his desk. But we can’t rely on that scenario, either, and need to stop this bill before it makes its way to the White House.
Rep. Goodlatte’s timing is less than ideal, too. He’s trying to eliminate class actions just a couple of months after the revelations that Wells Fargo had cheated two million of its customers by creating false and unauthorized credit card and checking accounts in their names. That news came not long after Volkswagen was caught rigging its pollution control devices not to work (after prominently advertising to consumers how environmentally friendly its cars were), and a short time after hundreds of thousands of American consumers got refunds or had their homes repaired as a result of class actions, following the discovery that defective Chinese dry wall was damaging their homes. It’s an odd time for the House Republican leadership to decide that Americans should not be able to pursue their rights against corporations that break basic consumer protection, employment and securities laws.
Battling big business can be a herculean task in today’s Congress. Yet it is essential that every American understand the direct, and damaging, impact this particular legislation will have on countless consumers.
This bill isn’t about “fairness.” It’s about giving a gift to corporate lobbyists on Capitol Hill.
This blog originally appeared in Huffington Post on March 2, 2017. Reprinted with permission.
Paul Bland, Jr., Executive Director, has been a senior attorney at Public Justice since 1997. As Executive Director, Paul manages and leads a staff of nearly 30 attorneys and other staff, guiding the organization’s litigation docket and other advocacy. Follow him on Twitter: www.twitter.com/FPBland.
Thursday, May 5th, 2016
Banks and payday lenders have had a good deal going for a while: They could break the law, trick their customers in illegal ways, and not have to face any consumer lawsuits. Armed by some pretty bad 5-4 Supreme Court decisions, they could hide behind Forced Arbitration clauses (fine print contracts that say consumers can’t go to court even when a bank acts illegally), even when it was clear that the arbitration clauses made it impossible for a consumer to protect their rights.
But the free ride is coming to an end. After an extensive study, that proved beyond any doubt how unfair these fine print clauses have been for consumers, the CFPB is taking a strong step to reign in these abusive practices. In a new rule, the CFPB says banks can no longer use forced arbitration clauses to ban consumers from joining together in class action lawsuits. That means banks can no longer just wipe away the most effective means consumers often have for fighting illegal behavior.
This is a common sense rule that will go a long way in combating some of the financial industry’s worst practices.
In recent years, for example, if a bank systematically cheated 10,000 consumers in the same way, the bank could use its arbitration clause to stop those customers from going to court together. Each individual had to figure out the scam, figure out what their rights were and then spend time and money fighting the bank and its expensive lawyers. Everyone was essentially on their own. Under most arbitration clauses, one or two customers (at most) would have the means and ability to fight all the way through the arbitration system to get their money back.
In contrast, a class action could offer all 10,000 people a fair shot at justice.
Exempting the financial industry from the normal legal system has had far-reaching – and terrible – consequences. Predatory lending and dishonest practices have pushed millions of people right into desperation. Far too many Americans have been tricked into taking out loans that were far more expensive than they realized.
But help is finally on the way. The free ride is ending.
When it passed the Dodd-Frank Act, Congress required the CFPB to study the use of forced arbitration clauses and take action if those clauses undermined the public interest. So the CFPB undertook a huge, data driven empirical study, which itreleased in March of 2015. The study found that, when consumers could go to court as part of a class action, they recovered billions of dollars in relief. Banks had to refund over charges, erase illegal or inflated debts, and correct inaccurate credit reports.
When consumers were subject to forced arbitration, though, nearly all of those wins disappeared. Almost no consumers actually fought their way through the complex and biased corporate arbitration system. They just gave up. Predatory lenders generally kept whatever money they’d taken, and could operate in a Wild West manner, unless a government agency intervened on behalf of the helpless consumer.
How did arbitration get to be so unfair? In the past, many state laws were clear that if an arbitration clause that banned class actions would undermine a consumer protection law, then a court should strike it down. But in a pair of 5-4 decisions, Justice Scalia wrote opinions that swept all that law away. As a result, corporations could write fine print contracts that would override actual laws. These decisions – one in 2011 and one in 2013 – were unmitigated disasters for consumers and they transformed the Federal Arbitration Act – in place since 1925 – into a Federal Predatory Lender Immunity Act.
But today, things are changing. The CFPB is living up to its name — the Bureau really is protecting consumers. CFPB Director Rich Cordray is probably the most effective agency head in the federal government. He is not afraid to stand up to huge and politically powerful corporations on behalf of the American people. He’s worked hard to ensure the agency lives up to the vision that Elizabeth Warren had when she was advocating for its creation. It’s no wonder why politicians who get huge campaign contributions from large banks hate the agency so much. Many House Republicans attack the CFPB almost as often as they try to repeal the Affordable Care Act.
Today’s action is probably the biggest step forward for consumers since Dodd-Frank itself. It’s a huge step forward in the fight for common-sense protections. It’s a new rule that says the financial sector doesn’t get to re-write – or break – the rules anymore.
This blog originally appeared in Huffington Post on May 5, 2016. Reprinted with permission.
Paul Bland, Jr., Executive Director, has been a senior attorney at Public Justice since 1997. As Executive Director, Paul manages and leads a staff of nearly 30 attorneys and other staff, guiding the organization’s litigation docket and other advocacy. Follow him on Twitter: www.twitter.com/FPBland.
Thursday, October 29th, 2015
This week, Sprint agreed to pay nearly $3 million in government fines after being caught by the Federal Trade Commission for cheating and deceiving people with low credit scores. As the FTC’s Bureau of Consumer Protection explained, “Sprint failed to give many consumers required information about why they were placed in a more costly program, and when they did, the notice often came too late for consumers to choose another mobile carrier.…. Companies must follow the law when it comes to the way they use consumer credit reports and scores.”
Yes they must, and it’s wonderful to see the FTC on the job. But when consumers are cheated because of illegal corporate practices, neither government regulators nor law enforcers (like attorneys general) can usually do much to recover compensation for the victims. As we noted pretty recently in a post about the VW emissions scandal, class actions are the only realistic way to do that. But since the Supreme Court let them, corporations have been inserting clauses into contracts that ban class actions and force individuals to resolve disputes in corporate-controlled, secretive arbitration systems. Forced arbitration is bad enough. But without being able to join with others in a class action lawsuit, most claims simply disappear, allowing corporate wrongdoers to completely escape any legal accountability.
The Consumer Financial Protection Bureau has taken the bold step of moving towards a rule to ban such clauses in consumer financial “contracts.” We hope they hurry because the damage caused by these clauses grows every day.
Today, the Center for Justice & Democracy released a new, updated fact sheet listing nearly 50 important cases that were dismissed because of forced arbitration clauses and class-action bans. These tossed cases were brought by customers ripped-off by automobile dealers, banks, credit card companies, phone companies, payday lenders and for-profit colleges (to name a few). They involve employees suffering from discrimination and wage and hour abuse. And we know there are many more cases out there.
Notably, three cases were brought by customers defrauded by Sprint and, like the rest, were thrown out of court, leaving cheated customers with nothing.
This blog originally appeared at ThePopTort.com on October 22, 2015. Reprinted with permission.
Wednesday, October 14th, 2015
The past year was unprecedented in the world of auto safety. The world learned of ignition switches that could fail, causing loss of control and airbag non-deployment; airbags that shoot shrapnel into the occupant compartment when deploying; guardrails that skewer cars rather than cushion their impact; and other appalling defects resulting in one fifth of all cars on the road in America being recalled.
Sadly, there is evidence that manufacturers knew of these deadly defects years before conducting recalls and that court secrecy orders helped them hide these defects and keep dangerous products on the market.
This past year, the world found out what we have known for decades: court secrecy kills. By sealing discovery and court records, including during settlements, courts aid and abet companies in keeping evidence of deadly products from consumers.
For decades, two organizations have led the fight against court secrecy: AIEG and Public Justice. These organizations are joining forces to fight the travesty of court-sanctioned secrecy hiding dangers to the public.
AIEG – standing firm against non-sharing discovery protective orders. For decades, the Attorneys Information Exchange Group (AIEG) has led the charge against protective orders that prohibit plaintiffs’ lawyers from sharing discovery documents with lawyers for other consumers hurt by the same product. AIEG is the leading collaborative organization of lawyers representing victims of unsafe product designs, particularly automotive products. AIEG’s members commit to doing all they can to make the evidence of public dangers that come to light in their lawsuits available to other injured consumers seeking justice. AIEG members have access to the organization’s work product resources for fighting secrecy orders including samples of agreed orders, sample briefing opposing non-sharing provisions in many jurisdictions, and case law in all jurisdictions upholding the principle of discovery sharing among plaintiffs with similar cases. AIEG stands with its members in fighting restrictive protective orders that lock up evidence of public dangers.
Public Justice – Court Secrecy Project fights to keep court records open to the public. For decades, Public Justice has fought for public access to court records about dangerous products – documents used in support of motions, at trial, or issued by judges. A national public interest law firm supported by – and able to call on and work with – over 2,500 of the top plaintiffs’ lawyers in the country, Public Justice often represents public interest groups like the Center for Auto Safety or injury victims to intervene in lawsuits to open up sealed documents and files. For instance:
- Public Justice intervened to unseal the trial transcript and exhibits showing Cooper knew of defects in its tires, working closely with AIEG members. Toe v. Cooper Tire and Rubber Co.
- Public Justice successfully brought to light long-sealed court records about a defective Remington rifle that fires when no one pulls the trigger. Aleksich v. Remington Arms Co.
- Public Justice helped unseal records showing a leading pharmaceutical company ghost-wrote medical journal articles to promote its hormone replacement drug. In re Prempro Products Liability Litig.
- Public Justice intervened on behalf of the Center for Auto Safety, and persuaded the court to unseal its decision sanctioning Honda for its expert witness’s tampering with critical evidence. Davis v. City of Auburn.
- Public Justice joined and just helped win the fight to open up court records in the Trinity guardrails litigation in Texas, in which a jury found the guardrails endanger motorists. Unites States ex rel. Joshua Harman v. Trinity Industries.
- Now, Public Justice is battling for access to reams of sealed and redacted court records about defective power modules in potentially millions of Chrysler, Dodge, and Jeep Vehicles. Velasco v. Chrysler Group, LLC.
Separately, AIEG and Public Justice have done a world of good, keeping evidence of public dangers unsealed. Together, we are redoubling our efforts in light of the widespread, continuing damage done by unjustified court secrecy orders.
We need you in this fight against deadly court secrecy.
We can’t stand idly by while courts participate in endangering the public. We need to be at the forefront of educating judges and lawyers that it is wrong to keep the lid on evidence of public dangers, the law supports discovery sharing – to provide efficient and inexpensive access to evidence for all litigants, and the law requires that the courts and their records be open to the public in all but the most extreme situations.
Doing your part:
- Never agree to a discovery protective order that prevents you from sharing what you find with other plaintiffs. Commit to taking the time to fight restrictive protective orders. Contact AIEG’s Protective Order Committee if you need assistance.
- Never agree to seal evidence of public dangers as a part of case proceedings or settlement. Take steps necessary to make sure public access to the documents are preserved.
- Contact Public Justice if you become aware of dangers to the public sealed in court records – either trial evidence or information filed with the court. Seek Public Justice’s assistance in getting those records unsealed. Public Justice has fought this fight for decades and can help you in many ways – from providing sample briefs and case law to co-counseling with you to intervening on behalf of a public interest group to fight for public access.
Please don’t do nothing. We can’t have more of the same. We can’t have another year like the last one. The revelations of widespread suppression of evidence of public dangers provide an opportunity for us to educate judges and other lawyers about the disastrous effects of secrecy. Let’s not squander this opportunity. Together, we can help the courts turn the corner on this shameful legacy, and return the justice system to its rightful role in illuminating, not hiding, evidence of public dangers.
Thank you for joining us in this fight.
This blog originally appeared on Public Justice on October 13, 2014. Reprinted with permission.
About the Authors: Arthur H. Bryant, Chairman of Public Justice, has won major victories and established new precedents in several areas of the law, including constitutional law, toxic torts, civil rights, consumer protection, and mass torts. The National Law Journal has twice named him one of the 100 Most Influential Attorneys in America.
Lee Brown is the president of AEIG, the Attorneys Exchange Information Group.
Monday, September 21st, 2015
Corporate America has been tireless in trying to sharply limit, or simply eliminate, all class action lawsuits. When corporations break the law by doing things such as not paying workers for time they work, paying women less than men, or by violating privacy rights in willful ways, Corporate America knows that workers and consumers can band together in a class action. If that ability to organize is taken away, however, in a great many cases consumers and workers will not be able to fight illegal conduct at all.On too many occasions, corporations that don’t want to be hemmed in by consumer protection and civil rights laws have found a willing partner in battling those actions among the five conservative members of the U.S. Supreme Court. On several key occasions in recent years, the Court has invented new rules of federal law that have sharply limited when individuals can join together and enforce the law through class actions.
Things could get much worse, though. There are no less than three cases in the Court’s upcoming term that could be disastrous for consumers, workers and small businesses cheated by anti-competitive behavior that violates antitrust and other laws. In each of the three cases, the plaintiffs won in the trial court under laws that have been on the books for years and accepted by nearly all of the lower courts. In each case, Corporate America is asking the Supreme Court to invent a new federal law that would immunize them.
These are the three cases, and questions, the Court will tackle in the coming weeks.
Tyson v. Bouaphaekeo: Should Courts Ignore Statistical Evidence If It Proves a Corporation Broke the Law?
As part of their job, meat processing employees in an Iowa plant had to put on and take off certain protective clothes when they were working in an area using certain knives. Tyson Foods estimated it would take four minutes to do these tasks, and that’s all it paid them for. In fact, it takes a lot longer. That’s why a jury found that Tyson owed workers $5.8 million for underpaying its employees. (This is what we would call “wage theft.”)
One of the pieces of evidence the jury considered was a statistical sample of 744 observations of employees putting on and taking off the protective gear. That data clearly showed that it took far longer than the four minutes Tyson claimed. Tyson now says that using this statistical evidence was illegal, because it was a “trial by formula.” Tyson now says it should be able to have an individual trial for every single employee, and that using a sample of 744 observations is improper.
That’s a pretty staggering idea. Courts have allowed juries and judges to infer facts from statistical evidence for decades; the idea that no jury could consider statistical evidence without it being a supposedly illegal “trial by formula” is radical. Our military and intelligence services use statistical analyses in their national security strategies, and pharmaceutical and medical companies all rely upon statistical analyses of results and observations in their work, too. They do because it has been shown to be effective. Now, Tyson is arguing that when it comes to proving a corporation violated the law in a class action, courts should pretend that in that one context, statistical analyses of data is banned. This is pretty convenient for corporations engaged in wage theft, but it makes no sense at all as a matter of law.
Spokeo v. Robins: Should the Court Essentially Repeal Hundreds of Statutes that Let People Sue for Set Sums When a Company Breaks the Law?
Spokeo is a company that “scrapes” information from a variety of sources on the internet, and then sells it to people who want to find out about others. In this case, the plaintiff says Spokeo got a lot of facts wrong about him: his age, education, employment and marital status, and a number of other facts. Under the Fair Credit Reporting Act, if an agency that gathers information about people sells false information about someone; and willfully uses lousy procedures that are likely to make substantial mistakes, they have to pay a set amount (up to $1,000) to any consumer about whom they made a false statement. The consumer doesn’t have to prove they lost money or suffered physical injury because of the false statement. Congress just presumed that it would bad for consumers to have corporations lying about them and wanted to discourage corporations from willfully doing so.
This idea of “statutory damages” is a very old one in American law, and is included in literally hundreds of statutes. That’s because, if someone lies about you, how can you put a number on how much it hurt you? So rather than bar victims of this kind of illegal act from receiving anything, legislatures give them a flat dollar figure, as sort of rough justice.
Now, Corporate America is asking the Supreme Court to say that if an individual can’t prove in what it calls a “concrete way” just how much they were harmed because of a lie, that the Constitution says they were not injured at all. In an extremely clever but very ugly feat of focus group politics, corporate advocates call this a “no injury” case, and say that the hundreds of statutes that Congress passed creating statutory damages for hard-to-measure injuries are all unconstitutional.
This would be a sweet deal for corporations that willfully create procedures through which they report false things about consumers, and if Spokeo wins, it will suddenly become much easier for corporations to violate Americans’ privacy. If the Supreme Court does invent this new rule of law, it will essentially strike down hundreds of existing laws (talk about activism!) by doing so.
Campbell-Ewald v. Gomez: Does the Constitution Authorize Corporations to Bribe Named Class Representatives to Sell Out Everybody Else?
The basic idea of a class action is that one or more people are going to come forward on behalf of everyone in a group who’s been treated a certain way. The people who bring the case are called the “named class representatives,” and they have an obligation to protect the interests and stick up for everyone whom they’re representing. The idea is not that someone files a case and says “I’m suing for a group of people who were all cheated the same way, but if you pay me off, I’ll toss them all under the bus and just take some money for myself.”
But in Campbell-Ewald, that is exactly the argument the defendant is making. The corporation wants to pay off the named class representative by offering the exact amount of money he is owed under the law, and then argues that the Constitution magically requires that every other person who has a claim disappear.
First, this argument runs exactly counter to the core idea that the named class representative is supposed to adequately represent everyone else in the class. As a system, we want the people who come forward on behalf of a class to take their obligations to the rest of the class seriously. We want people who know that it’s not all about them, but that it’s about protecting the rights of a group.
Second, the defendant’s repulsive argument here encourages the worst kind of game playing. Are you a corporation who’s been caught red-handed, cheating a crowd of people? Well, under this theory, you can just pay off the people who step forward to bring a case one by one. You’llnever have to pay off anywhere near all of the people you cheated. (If there’s no class action, no one will ever be able to find them all, explain to them what happened, and get them to come forward). So, corporations just have to individually pay off the people who step forward. The laws won’t be enforced, and the corporation will get to keep nearly all the money it took. Is that justice? Maybe it’s considered justice in the board rooms of corporations that break the law and cheat people, but nowhere else.
So What Will Happen?
It’s really hard to know. There is no doubt that the U.S. Supreme Court has five justices who have a very strong deregulatory impulse; they seem to feel that we have way too many laws protecting consumers and workers, and they don’t mind reining them in. On the other hand, even the five pro-corporate justices on this Court sometimes fail to get a full majority to support very radical changes in the law. When the Court was asked to basically eliminate nearly all class actions in cases involving securities fraud a few years ago, that was a bridge too far for the majority. The betting here is that Corporate America has asked for too much in each of these cases: they want rulings that are so radical, so counter to what the law has been for years, that there won’t be five votes to let them get away with such behavior. But if I’m wrong, we’re in fora lot of trouble.
This Blog originally appeared on Public Justice and was reprinted by Daily Kos on September 21, 2015. Reprinted here with permission.
About the Author: Paul Bland, Jr., Executive Director, has been a senior attorney at Public Justice since 1997. As Executive Director, Paul manages and leads a staff of nearly 30 attorneys and other staff, guiding the organization’s litigation docket and other advocacy.
Thursday, September 3rd, 2015
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.
But if Campbell-Ewald’s lawyers are to be believed, the basic ethical and constitutional premises of class actions were just flipped. They say that corporate defendants in class actions have the right to bribe class representatives to abandon everyone else. And in their view, even if a class representative wants to do the right thing and reject an individual payday so they can stand for the entire class, Rule 68 strips away that possibility, and the court must dismiss the whole case for lack of subject matter jurisdiction.
If the Supreme Court agrees with Campbell-Ewald, it could spell disaster for the ability of injury victims to obtain any compensation whatsoever via class action suits. Class actions make it economically possible for injured consumers, civil rights plaintiffs, and low-wage workers to pursue claims for relatively small damage amounts for wrongs that would otherwise go unremedied. A Supreme Court ruling that would allow defendants to shut down class actions simply by “picking off” named plaintiffs could wipe countless cases – and countless consumers and others who would benefit from those cases – off the litigation map.
Hopefully, the Court will see this tactic for what it is: a form of bribery that turns the very idea of class representation on its head.
This blog was originally posted on Public Justice on September 02, 2015. Reprinted with permission.
About the Author: The author’s name is Leslie Brueckner. In 2011, Leslie became the director of Public Justice’s new Food Safety & Health Project. In addition to her litigation work, Ms. Brueckner has taught appellate advocacy at American University Law School and Georgetown University School of Law. She is a senior attorney at Public Justice.
Thursday, September 3rd, 2015
A U.S. District Court finalized a $415 million wage settlement for tech workers Wednesday after four-years of litigation.
Nearly 65,000 employees for Adobe, Apple, Google, and Intel filed a class-action antitrust lawsuit in 2011 after the government uncovered emails between Apple co-founder and CEO Steve Jobs, former Google CEO Eric Schmidt, and other executives that showed companies conspired to not poach one another’s employees in an effort to keep salaries low and reduce turnover.
Judge Lucy Koh of the United States District Court, Northern District of California, who signed off on the settlement, tossed out a previous $325 million agreement earlier this year because it was too low. The companies appealed the decision and then submitted a $415 million offer.
The companies will pay out the settlement to 64,466 plaintiffs listing in the suit according to individual worker’s base salaries between 2005 and 2009, the time period covered during the email exchanges.
Koh will lead a final hearing Thursday to close the matter.
This blog was originally posted on Think Progress on September 03, 2015. Reprinted with permission.
About the Author: The author’s name is Lauren C. Williams. Lauren C. Williams is the tech reporter for ThinkProgress with an affinity for consumer privacy, cybersecurity, tech culture and the intersection of civil liberties and tech policy. Before joining the ThinkProgress team, she wrote about health care policy and regulation for B2B publications, and had a brief stint at The Seattle Times. Lauren is a native Washingtonian and holds a master’s in journalism from the University of Maryland and a bachelor’s of science in dietetics from the University of Delaware.
Thursday, December 27th, 2012
In the wake of ATT Mobility v. Concepcion and Stolt-Nielsen v. AnimalFeeds,* many employers have sought to enact new arbitration agreements or to enforce arbitration provisions in older agreements to eliminate their employees’ ability to come together when seeking to vindicate their rights to enforce statutory protections for workers. Employers should be careful what they wish for, in seeking to compel arbitration. They may indeed wind up in arbitration – but unable to strike class allegations, and required to pay the full and exorbitant costs of class-wide arbitration.
In a case on which Bryan Schwartz Law serves as local counsel for Richard J. Burch of Bruckner Burch, in Houston, Texas, the employer is now feeling the danger of a Stolt-Nielsen-based strategy seeking to compel individual arbitration in a putative, wage-hour class action. In the Laughlin v. VMWare case, in which VMWare employees assert they were misclassified as exempt employees and denied overtime and other compensation to which they were entitled, the company moved to compel arbitration based on an agreement which did not specifically provide for class-wide arbitration.
Judge Edward Davila of the Northern District of California struck some of the more offensive provisions of the arbitration agreement under Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, such as a provision which would have required Plaintiff to share the costs of arbitration. However, Judge Davila found these unlawful provisions severable (i.e., refused to kill the whole arbitration agreement). Perhaps most importantly, though, Judge Davila referred to the arbitrator the decision on the Stolt-Nielsen argument – namely, as argued by VMWare, the notion that class-wide arbitration cannot proceed where the parties’ arbitration agreement did not expressly consent to class arbitration. His initial decision from early 2012 is available here:
In arbitration, AAA arbitrator LaMothe then rejected the employer’s Stolt-Nielsen motion to strike class allegations, notwithstanding the fact that the agreement did not expressly give permission to bring class allegations, finding the parties’ agreement intended to encompass all claims by Plaintiff Laughlin, including her class claims. The AAA order is available here:
In the last 18 months, numerous other arbitrators from JAMS, AAA, and other nationwide arbitration services have likewise denied motions to strike class allegations, employing similar reasoning.
On review, Judge Davila confirmed the arbitrator’s partial final clause construction award allowing class allegations to proceed, meaning – in light of all the foregoing – that VMWare will now be forced to arbitrate a putative class action, and will be forced to bear all of the costs of doing so:
Be careful what you wish for, employers. You may find that sometimes, allowing employees their day in court is better than the alternative.
DISCLAIMER: Nothing in this article is intended to form an attorney-client relationship with the reader. You must have a signed representation agreement with the firm to be a client.
*See our numerous prior blog posts relating to the subject of arbitration class waivers in light of Concepcion andStolt-Nielsen, including: http://bryanschwartzlaw.blogspot.com/2012/09/california-supreme-court-grants-review.html;
This post was originally posted on December 26, 2012 on Bryan Schwartz Law. Reprinted with Permission.
About the Author: Bryan Schwartz is an Oakland, CA-based attorney specializing in civil rights and employment law.
Tuesday, June 21st, 2011
The Supreme Court’s landmark decision on Monday in Wal-Mart v. Dukes understandably garnered front-page headlines in the nation’s newspapers. After all, the case was the largest employment discrimination case in history, dwarfing all other competitors by far with its potential to have included more than one-million current and former female Wal-Mart employees.
But in reality, this mammoth pattern and practice class action was decided December 7, 2010. That’s the day the Supreme Court agreed to hear the dispute. The women who brought this 10-year-old case had won every step of the way. In fact, Ninth Circuit Judge Susan Graber said in her 2010 concurrence in one of the plaintiffs’ victories, “There is nothing unique about this case except for its size.”
As it turned out, however, size mattered. There was no direct circuit split on this issue. Indeed, there was no other case that was truly directly on point. So when the Supreme Court decided to wade into the fray, there was no chance it was doing so to pat the West Coast appellate court on the back for a job well done. Instead, the Court was going to place limits on class actions.
Lead plaintiffs’ counsel Brad Seligman fought hard and fought well throughout this ten-year-old litigation. But a case that could have led to billions of dollars in litigation was going to face a difficult hurdle at the nation’s highest court, and it did. The cries that plaintiffs now cannot proceed in employment class actions, however, could be premature.
The Wal-Mart case included hourly greeters, company vice presidents earning six figures, and female employees in all sorts of jobs between those extremes. The claim by the plaintiffs’ attorneys that Wal-Mart provided “unchecked discretion” to its managers was one that swing voter Anthony Kennedy undoubtedly found difficult to square with the allegation that the company had a top-down culture of discrimination emanating from Wal-Mart’s Arkansas headquarters.
In fact, during the oral arguments Justice Kennedy said as much when he wondered aloud what the unlawful policy was. “It seems to me there’s an inconsistency there,” he said. “If it’s standardless and recordless, then why is there commonality?” If there was any doubt as to the outcome, that comment and question put it to rest.
This was less a case of Wal-Mart being “too big to sue” than the majority of the justices wondering how 1.5-million women at 3,400 stores in widely divergent positions could have something in common besides their gender.
The opinion was notably silent, however, about whether or not the retailer had engaged in sex discrimination. And, it leaves open the possibility of smaller groups of employees banding together, ideally from similar job classifications.
Wal-Mart’s attorney Theodore Boutrous said immediately following the decision, “Under [this] ruling, the way we read it, no class can be certified in this case.” But that seems to be more than a bit of hyperbole.
Will it be tougher for plaintiffs to proceed? Unquestionably. And when they do so, the litigation will be much smaller in scope. But the women and those who represent them have vowed to continue fighting Wal-Mart over what they see as unequal treatment. Smaller class actions against other big companies have succeeded before and likely will again. Those cases just need to be more focused than ever on complying with the Supreme Court’s call for commonality among class members.
About the Author: David Weisenfeld served as U.S. Supreme Court correspondent for LAWCAST from 1998 through June 2011. During that time, he covered every employment law case heard by the Court including Wal-Mart v. Dukes, and also wrote and co-anchored the company’s employment law newscasts. In addition, his work has appeared in the American Bar Association’s Supreme Court Preview magazine.