- Supreme Court remands Frank v. Gaos to lower court on standing issue, thus sidestepping cy pres question; dissenting from per curiam ruling, Justice Clarence Thomas writes that cy pres payments are “not a form of relief to the absent class members and should not be treated as such (including when calculating attorney’s fees)” [opinion; Ronald Mann, SCOTUSBlog]
- New Manhattan Institute report details problems with cy pres, including its use to support ideologically fraught groups and those advancing plaintiffs’-side interests [James Copland, Trial Lawyers Inc. Update 2019: Cy Pres]
- “Apricot scrub” product was marketed as an exfoliant, court recognizes, and abrasive properties of crushed walnut shells as ingredient are feature not bug [Eric Alexander, Drug and Device Law]
- Cough drop action could provide soothing relief for counsel’s bank account [David Andreatta, Rochester Democrat and Chronicle]
- “Don’t import US-style class action abuses – think-tank” [Law Society Gazette, Ireland]
- As part of its newly active stance on class action oversight, U.S. Department of Justice intervenes in cookie labeling settlement [Amanda Bronstad, Law.com; U.S. Statement of Interest in Cowen v. Lenny and Larry’s]
- “For instance, linalool, which is cited as a cockroach insecticide by the law firm, is found in plants like mints and scented herbs. While it’s also used in insecticides, it’s not poisonous for humans…” [Aimee Picchi, CBS News on suit claiming that LaCroix flavored water wrongly claims “all natural” status]
- “Appeals Court Strikes $8.7M in Legal Fees Based on Coupons in Class Action Settlement” [Ted Frank objection in ProFlowers and RedEnvelope class action; Amanda Bronstad, The Recorder] “Judge: Lawyers must justify fee requests for investor suits withdrawn vs Akorn over proxy disclosures” [Ted Frank objection in investor class action against Akorn Inc.; Jonathan Bilyk, Cook County Record]
- Study: class action lawsuits hit innovative companies the hardest [Alex Verkhivker, Chicago Booth on study by Elisabeth Kempf of Chicago Booth and Oliver Spalt of Tilburg University]
- “It’s Possible Woman Suing Over Sugar In ONE Protein Bars Never Actually Ate One” [Mary Ann Magnell, Legal NewsLine] And it is surprising how many reports continue to indulge the notion that typical consumer class actions spring from consumer grievance as opposed to lawyers’ entrepreneurial spotting of chances [ABA Journal on slack-fill suits]
- “DOJ Tells Court: Class Lawyers Already Got $60M in Fees. Now They Want More? [Marcia Coyle, National Law Journal on Native American farmer case] “noting that it was difficult for him to believe the few boilerplate documents entered into the record took hundreds of hours to create. ” [D.M. Herra, Cook County Record; Western Union text messages]
- “State Street settlement fiasco has Arkansas lawmakers questioning state’s role in class actions” [John O’Brien, Legal NewsLine, earlier here, etc.]
- Court will hear case of mariner charged with Sarbanes-Oxley records-destruction violation for discarding undersized fish [Jonathan Adler, Eugene Volokh, Daniel Fisher]
- SCOTUS goes 9-0 for wider patent fee shifting in Octane Fitness v. ICON and Highmark v. Allcare Health Management System Inc. [Ars Technica, ABA Journal, earlier]
- Constitutional principle that Washington must not give some states preference over others could face test in New Jersey NCAA/gambling case [Ilya Shapiro, Cato]
- Supreme Court grants certiorari in Dart Cherokee Basin Operating Co. v. Owens, a class action procedure case on CAFA removal [Donald Falk, Mayer Brown Class Defense Blog]
- “Supreme Court’s Daimler decision makes it a good year for general jurisdiction clarity” [Mark Moller, WLF, earlier] Decision calls into question “the jurisdictional basis for this country’s litigation hellholes” [Beck]
- How liberals learned to love restrictive standing doctrine [Eugene Kontorovich, more]
- “California Shouldn’t Be Able to Impose Regulations on Businesses Outside of California” [Ilya Shapiro on cert petition in Rocky Mountain Farmers Union v. Corey (fuel standards)]
One (Hood v. AU Optronics) went for plaintiffs, the other (Daimler AG v. Bauman) for defendants, but both were unanimous, in another indication that the work of the Justices rises well above the silly caricature offered by critics like Sen. Elizabeth Warren (“wholly owned subsidiary of Big Business,” etc.) I explain at Cato at Liberty. While Justice Sotomayor in a separate concurrence took a different approach to the problems of general jurisdiction, it arrived at the same place with respect to the unreasonableness of suing Daimler in California over faraway conduct.
More: While concurring in the result of Daimler v. Bauman, Justice Sotomayor sharply differed on the reasoning, which resulted in some unusually strong language directed at her from Justice Ginsburg writing for the other eight Justices [Blackman] Eugene Volokh considers the foreign-law angle. (& welcome Amy Howe/SCOTUSBlog readers)
From the U.S. Chamber’s Institute for Legal Reform: “Authored by John Beisner of Skadden Arps, this paper introduces for discussion potential class action reforms to build on the highly-successful Class Action Fairness Act of 2005. Among the reforms suggested are measures to address cy pres class action settlements and to preserve the efficiency of federal MDL proceedings. The paper also considers other changes designed to address certain judicial misinterpretations of CAFA’s jurisdictional provisions, and identifies several additional areas of concern that may warrant reform as they develop.” [report; coverage, Washington Examiner, Daniel Fisher, Andrew Trask]
- Judge Alsup “shopping for new plaintiffs lawyers” for class action against Wells Fargo “because he isn’t happy with the team that brought suit”
- “Sixth Circuit Rejects Class Settlement in Pampers Case” [Adler] More: William Peacock, FindLaw (“something stinks”)
- Supreme Court to decide whether quasi-class-actions spearheaded by state attorneys general (“parens patriae”) can dodge CAFA’s mandate of removal to federal court [Deborah Renner, WLF]
- Channeling Google settlement funds to the Google-favored Lawrence Lessig center at Stanford is already a dubious use of cy pres, but thanking the lawyers makes it worse [Ted Frank]
- “Class actions ending in ‘ridiculous results’ continue to plague California, critics say” [Legal NewsLine]
- Big Ninth Circuit win for Ted Frank big win in inkjet coupon class action [Recorder, PoL, more]
- “Sixth Circuit Can’t Take A Hint From SCOTUS, Reinstates Whirlpool Smelly-Washer Case” [Daniel Fisher; earlier on Sears v. Butler, Business Roundtable; PoL, Fisher and our coverage]
The decision in Standard Fire Insurance Co. v. Knowles was 9-0, Justice Breyer writing for the Court, and signals’ Justices’ impatience with lawyerly gamesmanship intended to evade CAFA (the Class Action Fairness Act of 2005). I’ve got a short commentary at Cato, which filed an amicus brief on the side that prevailed [decision in PDF, background at SCOTUSBlog, earlier here etc., my new Cato post; more on stage hooks](& SCOTUSBlog, Ted Frank/PoL (“Miller County [Arkansas] trial lawyers had collected hundreds of millions of dollars of legal fees from forum-shopped class-action settlements; the class members whom they purportedly represented likely didn’t even get 10% as much.”))
More: Andrew Trask (“The Supreme Court is envisioning the class action as a procedural aggregation device, rather than a corporate deterrent or a trust-like entity. This is good news for defendants.”); Alison Frankel, Reuters. And I’m quoted on the case in Alex Daniels’ account in the March 20 Arkansas Democrat-Gazette (sub-only).
- Court hears oral argument in Standard Fire Insurance Co. v. Knowles, the CAFA evasion case [transcript in PDF, Civil Procedure & Federal Courts Blog rounding up links, Federalist Society podcast with Brian Fitzpatrick, earlier here, here]
- Shelby County case invites SCOTUS to revisit Voting Rights Act [Ilya Shapiro, Cato; Eric Posner and Nicholas Stephanopoulos, Slate] But does Jeffrey Toobin understand the VRA? [Derek Muller, Prawfs]
- Speaking of that New Yorker writer, Toobin’s account of the Heller Second Amendment case is definitely not one for the history books [Tim Lynch, Cato]
- On gay marriage cases, jurisdiction/standing issues could leave Court fractured like Turkish taffy [Art Leonard] Best result for gays, argues Jonathan Rauch, might be narrow or mixed decision [TNR] Beyond the Court, idea of local option could offer national GOP a graceful retreat from its current untenable position [Carolyn Lochhead, San Francisco Chronicle quotes me arguing to that effect]
- SCOTUS asked to consider tribalism-trumps-adoption Indian Child Welfare Act of 1978 [NYT]
- Despite amicus urgings from various good guys, Supreme Court declines to review Hettinga, the economic liberty case with the blazing Janice Rogers Brown/David Sentelle concurrence [Ilya Shapiro/Cato, Damon Root, Tim Sandefur/PLF, earlier here and here]
- Is the Sixth Circuit replacing the Ninth as perennial SCOTUS reversee? [Adler]
The Class Action Fairness Act of 2005 aims to steer all but relatively small nationwide class actions into federal court, in part because lawmakers wanted to prevent plaintiff’s lawyers from exploiting the system by forum-shopping cases into state courts that might be biased or ill-equipped to prevent abuse. It therefore allows defendants to remove cases to federal court where the aggregate claim exceeds $5 million. To evade that limit, plaintiff’s lawyers have been proffering stipulations that disclaim (at least temporarily) any intent to ask for more than that sum, even when plausible theories of the case would suggest a larger potential recovery. If the ploy works, they get to stay in the favored state court, and in later stages of litigation they sometimes succeed in using various further tactics to shuffle off the supposed limit and ask for more than $5 million after all.
Aside from the end run it does around the intent of the statute, this practice raises serious ethical issues arising from the lawyers’ duty toward clients, including absent class members who may not even be aware of the suit, let alone in a position to second-guess tactical choices. Disclaiming damages above $5 million, in particular, may be helpful to the lawyer (by obtaining less stringent oversight of the manner in which the suit is prosecuted) yet harm some clients’ interest in obtaining the best recovery.
The U.S. Supreme Court will take up this issue in the spring, and the Cato Institute has filed an amicus brief (PDF) urging the Court to recognize the ethical problem and direct lower federal courts to grant removal where appropriate. Ilya Shapiro has more. Ted Frank at the Center for Class Action Fairness also filed amicus briefs on behalf of certiorari and on the merits; related.
As good an argument for the Class Action Fairness Act as any: Trial lawyers sued Compaq in Texas over an allegedly defective disk controller, though none of the plaintiffs had ever suffered a malfunction or a loss of data, alleging a violation of Texas consumer fraud law on behalf of a nationwide class. No dice: the Texas Supreme Court threw out the case, noting that Texas law did not permit the sort of nationwide class action contemplated by the plaintiffs. End of story? Nope: the same trial lawyers filed the same complaint again, this time in Oklahoma state court, and asked the Oklahoma state court to apply Texas law to a nationwide class. “Sure thing!” the court rubber-stamped–applying an ersatz version of Texas law rejected by Texas courts. The forum-shopping was able to extract $40 million in attorneys’ fees from a questionable coupon settlement, as an Overlawyered post noted August 6. The Summer 2008 issue of State Court Docket Watch includes my essay discussing why this is a constitutionally problematic set of decisions by Oklahoma courts–written before, though published after, the Anthony Caso analysis for WLF.