A “web of concealment and highly questionable ethical practices by experienced attorneys who should have known better”: a court has unsealed a scathing report on the conduct in the State Street case of a leading class action firm, Labaton Sucharow, and Garrett Bradley of the Thornton Law Firm in Boston. The court took particular notice of Labaton’s connections through a Houston middleman (to whom it had agreed to pay an undisclosed $4.1 million fee) to the Arkansas Teacher Retirement System, which served as institutional plaintiff [Daniel Fisher/Forbes, Amanda Bronstad/NLJ] Earlier here and here.
Class action tolling means suspending time limits on future lawsuits while a class action suit is pending. This is distinct from class action trolling which is when the Ninth Circuit adopts a deliriously liberal rule and dares the Supreme Court to reverse it.
Both phenomena were involved in today’s unanimous Supreme Court opinion in China Agritech v. Resh. In the 1974 case of American Pipe & Construction v. Utah the Court had adopted a rule permitting individual claimants to file otherwise-tardy actions after a court had declined to certify a class action. The American Pipe rule is itself decidedly indulgent toward the class action device, but it took the Ninth Circuit to take a crucial extra step off the Santa Monica pier by holding that the late-arriving claimants should themselves be able to ask for certification as a class action. After all, the first try at certification might have been based on a flawed legal strategy or incomplete factual record. Why not give our friends in the bar a second bite?
Or a third bite, or an nth: in fact the case that reached the high court was the third class action in a row attempted on the same underlying facts, a securities dispute. To almost everyone but the Ninth Circuit, the resulting danger was clear enough: without any real need to accept “no” for an answer, class action lawyers could just come back again and again with new tame plaintiffs until they find a judge willing to grant certification, the step that tends to guarantee a payday in the class action business.
Today’s unanimity is significant. On procedural and jurisdictional issues, at least, today’s liberal wing on the Court has sometimes been willing to unite with the Rehnquist-Scalia-Roberts wing to recognize and rein in the dangers of lawyer-driven overlitigation, the tactical use of lawsuits as a weapon, and so forth. Justice Ruth Bader Ginsburg, who wrote today’s opinion, has more than once joined and sometimes led such coalitions. By contrast, Justice Sonia Sotomayor has often been found alone and out on a limb in favor of a more litigation-friendly position, which happened again today: she joined in a concurrence agreeing that the Ninth Circuit had gone too far but seeking to limit the Court’s holding to securities suits governed by the Private Securities Litigation Reform Act of 1995 (PSLRA).
The Senate might want to quiz future liberal nominees – yes, there will be such – on whether they more favor the Ginsburg or the Sotomayor approach to these issues.
[cross-posted from Cato at Liberty]
- Due diligence? Prosecutors say $32 million staged slip-fall ring drew on services of litigation finance firm [Matthew Goldstein and Jessica Silver-Greenberg, New York Times]
- Federalist Society podcast previews Frank v. Gaos, Ted Frank’s case on cy pres in a Google settlement;
- Will public get to look at details of $75 million class action fee that has been subject to criticism? [John O’Brien, Legal NewsLine and Max Brantley, Arkansas Times on State Street Bank and Trust settlement] Update: special master said to find attorney misconduct and recommend substantial fee refund [Chris Villani, Law360 (sub)]
- “Recent developments have let the air out of slack-fill lawsuits” [Meghana Shah, Brittany Cambre and Amber Unwala, New York Law Journal, earlier on slack fill] Theater-box candy suit: “Don’t squash our Junior Mints” [Chicago Tribune editorial]
- Tales of the Food Court: California class-action climate encourages flimsy claims against beer and bean purveyors [Greg Herbers, WLF]
- Supreme Court of Canada: commercial garage not liable for injury suffered by teen while stealing car from lot [Rankin (Rankin’s Garage & Sales) v. J.J.]
Some McDonald’s stores used to charge separate prices for Quarter Pounders depending on whether they did or did not include cheese, but then moved to a policy of charging the same price either way. Lawyers have now filed an intended class action claiming that two South Florida clients “have suffered injury” because under the new pricing scheme they “were required to pay for cheese… that they did not want and did not receive.”” [Howard Cohen, Miami Herald]
Yesterday’s 5-4 Supreme Court decision upholding agreements to individually arbitrate wage-and-hour claims was neither surprising nor novel as a legal matter. Nor – notwithstanding the variously breathless, furious, and apocalyptic reactions it has drawn from stage Left – is it objectionable as a matter of policy, or “anti-worker.” It is pro-liberty, pro-contract, and pro-respect for private ordering….
NPR, which really should know better, misreported on Twitter that “The Supreme Court in a 5-4 vote has delivered a major blow to workers, ruling for the first time that workers may not band together to challenge violations of federal labor laws,” of which the first eight words count as accurate reporting, the next half-dozen as erroneous opinion, and the remainder as merely false in fact….
…an oft-heard argument is that a contract presented as a take-it-or-leave-it matter, as is typical of employer handbook policies, credit card terms and the like, doesn’t count as a “real” contract and is entitled to no respect as a matter or law or, presumably, from libertarians. … Properly evaluating that claim is a task for another occasion, but my colleague Andrew Grossman is surely right when he points out that every hour of the day workers choose to accept overall employment packages including some terms they welcome (health insurance coverage, paid vacations) along with others they may not (some weekend hours required, don’t take staplers home) and that the lack of dickering over individual terms does not mean that they are not voluntary or have somehow been imposed by force.
Whole thing here. As I wrote after Italian Colors, millions of people “sign away their class action rights not because they are all hoodwinked or coerced, but because at some level they have rational grounds to recognize that” those rights are mostly of value to the class action industry.
Speaking of Italian Colors, the outcome in Epic Systems would surely have been no different had Scalia lived, since he led the way on the Court toward respecting contractual arbitration clauses and upholding the broad scope of the Federal Arbitration Act. More from Archis Parasharami and Dan Jones at SCOTUSBlog: “The best available empirical evidence shows that employees who arbitrate their claims are more likely to prevail than those who go to court, and to obtain awards that are the same as or larger than court awards in a shorter amount of time.” More: James Copland.
- New suits claim lack of web accessibility features in online employment applications violates California’s ADA equivalent law [Kristina M. Launey & Myra Villamor, Seyfarth Shaw]
- Sugar in candy? Who knew? [John O’Brien and John Breslin, Legal Newsline/Forbes] Slack-fill lawsuits reveal nonfunctional void within class-action industry [Baylen Linnekin]
- Musical instruments in court: the stories behind six famous gear disputes [Jay Laughton, Reverb last year]
- “Secret of David Copperfield’s signature trick revealed in slip-and-fall suit by audience volunteer” [ABA Journal]
- Given Congressional presence in area, California not entitled to use foie gras regulation to impose its views of duck and goose husbandry on producers outside state [Ilya Shapiro and Reilly Stephens on Cato cert amicus in Association des Eleveurs de Canards et d’Oies du Quebec v. Becerra]
- “The earliest versions of the “People’s Court” TV show used law professors as the judges. They were picked because they were articulate and looked like judges but weren’t state bar members; for bar members, being on the show was seen as unlawful advertising.” [@OrinKerr linking Roger M. Grace, Metropolitan News-Enterprise in 2003]
- In “race to the courthouse,” lawyers urge Texas counties to sue over opioids [Marissa Evans, Texas Tribune] “Leading Pain Doctors Face Scores of Opioid Lawsuits” [Roger Parloff, who edits newly launched nonprofit site Opioid Watch] “Opioid Settlement Talks Hit Headwinds” [Sara Randazzo, WSJ] A professor (and friend) recently treated for cancer doesn’t care for the “just throttle the supply of prescription opioids” answer [Steven Horwitz, USA Today]
- Asbestos bankruptcy trusts are poorly defended against fraudulent claims. What happens if they run out of money? [U.S. Chamber Institute for Legal Reform study and release] Three senators introduce bill aimed at providing oversight of the bankruptcy trusts [Sen. Chuck Grassley] Have asbestos filings finally peaked? [Amanda Bronstad, National Law Journal] “Cleaning Up The Asbestos Litigation Mess: A Role For The Department Of Justice?” [Glenn Lammi, WLF/Forbes]
- Trial lawyers yearn to knock down validity of contractually agreed arbitration so that every dispute can go to litigation. Is this their year? [L.M. Sixel, Houston Chronicle]
- Judge turns back class action against Home Depot over size of 4x4s, other lumber [Scott Holland, Cook County Record; Jonathan Stempel, Reuters (can be refiled), earlier here and here]
- “The Impact of Lawsuit Abuse on American Small Businesses and Job Creators,” November testimony by John Beisner before Senate Judiciary Committee;
- “Civil Justice Update – Wisconsin Governor Walker Signs Into Law New Reforms” [Andrew C. Cook, Federalist Society] More on disclosure of litigation finance arrangements [Kevin LaCroix]
- Poster case for cy pres abuse: Cato files amicus brief in Google referral header privacy class action settlement [Ilya Shapiro, earlier]
- “California Court Decision Offers Hope for Procedural Brake on Lawyer-Driven Class Actions” [Glenn Lammi, WLF on Noel v. Thrifty Payless]
- New book details Tampa attorney Brian Donovan’s frustrations with multi-district litigation (MDL) in Transocean spill case [Amanda Robert, Legal NewsLine]
- West Virginia: “House moves to limit Attorney General’s use of settlement funds” [Brad McElhinny, WV Metro News]
- “2017 Civil Justice Update” [Mark Behrens and Sarah Goggans, Federalist Society white paper]
- “Here’s why you’ll be paying more for car insurance if you live in Baton Rouge, New Orleans” [Dan Fagan, The Advocate]