December 10, 2010
The Coming Revolution in Class Actions
This term the Supreme Court has granted cert in three class action cases and each case has a far reach. Depending on what the court does with these cases, the world of complex litigation could be dramatically changed. These aren't really mass tort cases, but the topic is tangentially related to ours so here goes, gentle readers. If you are not interested in this stuff, surf on.
As we've been discussing on this blog, the Wal-Mart class action presents the court with the opportunity to rethink the requirements of 23(a) (how much do class members have to have in common for a class action to be certified) and 23(b)(2) (can any money damages claims be included?). The Baycol case presents the court with the question of whether certification determinations are preclusive. And the Concepcion case presents the question as to whether arbitration agreements barring class actions cannot be struck down based on state law contract doctrine -- in other words, must they be upheld under the FAA?
If the court follows its current trend of limiting class actions, by June we will be living in a world where the commonality requirement is very strict (class members will have to show that their common questions of law and fact also have common answers), if they fail to certify their class they'll be precluded from trying again, perhaps even if they were not class representatives, and consumers will be almost universally barred from bringing class actions (because what company in its right mind would choose not to have an arbitration provision barring class treatment?).
December 9, 2010
How Do Big Cases Affect Companies?
If you're wondering how will the Dukes class action affect Wal-Mart, if the plaintiffs win their certification motion? The answer from one prominent scholar is, probably not much. I think this is a great time to revisit the very provocative article from Michael Selmi and think about what this tells us about litigation in America today in civil rights but also the tort area.
See Michael Selmi, The Price of Discrimination: The Nature of Class Employment Litigation and its Effects in the Texas Law Review (link to SSRN). Here is the abstract:
This article analyzes the recent wave of large class action employment discrimination suits to determine their effects on the firms that are sued and the members of the plaintiff class. The first part of the paper includes an event study that measures the effect the lawsuits and their settlements have on stock prices of the companies that are sued, and the second part of the paper involves three case studies (Texaco, Home Depot and Denny's) to explore how the lawsuits actually change corporate practices. The study finds that the lawsuits do not generally affect stock prices, and rarely provide meaningful benefits to the plaintiff class. Although the damages obtained in the cases are substantial, they are generally not sufficient to affect large corporations, which also means that the lawsuits are unlikely to provide a sufficient deterrent against discrimination. An important subsidiary finding of the study is that employment discrimination class actions have lost their public nature and have evolved into private tort claim where there is little public oversight. The last part of the article proposes several reform measures, including increasing damages available in employment discrimination suits, and imposing a public monitoring function on the settlement.
December 8, 2010
Justice Ginsburg and the Dukes Class Action
Our own Howard Erichson was cited in a Supreme Court amicus brief for his observation that "Granted,
the Wal-Mart class action isn't a mass tort, but the Ninth Circuit's previous decision that upheld certification of the largest class action to date bears significantly on class action law in general." For this reason, the Court's grant of cert in the case on Monday signals a banner year for class actions in the Supreme Court.
The Court has been hostile to mass tort class actions and among the hostile Justices we should pay special attention to Justice Ginsburg. Justice Ginsberg is a proceduralist (she once taught civil procedure). She has evidenced a desire to read the class action rule narrowly and rigorously, not only in Amchem v. Windsor, but also more recently in Shady Grove v. Allstate, in which she desribed the process by which a number of individual small claims become a class action as a form of "alchemy" and I would say came pretty close to suggesting that class action rule violates the Rules Enabling Act (although she certainly did not go that far).
At the same time, Justice Ginsburg is a well known proponent of women's rights and antidiscrimination law. She was on the front lines of sex discrimination litigation when she was in practice, back in the day.
In the Dukes class action she faces a crash course between two values: her apparent increasingly skeptical view of the class action as an instrument of doing justice and deterring wrongdoing and her committment to gender equality. It will be very interesting to see how she resolves that tension.
[edited to fix link]
December 6, 2010
Supreme Court Grants Cert in Dukes v. Wal-Mart Stores, Inc.
In a long awaited decision to Wal-Mart's petition, the United States Supreme Court granted review in Dukes v. Wal-Mart Stores, Inc. There's already been a good bit of academic commentary on the case. Vanderbilt Law Review En Banc hosted a Roundtable discussion on the case, which is available here. It includes my introduction to the issues in the Dukes case along with Bob Bone's essay, Sorting Through the Certification Muddle; Greg Mitchell's essay, Good Causes and Bad Science; Alexi Lahav's essay, The Curse of Bigness and the Optimal Size of Class Actions; and, of course, the late Richard Nagareda's essay, Common Answers for Class Certification.
Suzette Malveaux, Bob Bone, Melissa Hart, and I will be hosting a "hot topics" panel on the Dukes case at this year's AALS meeting. The panel is currently scheduled for Friday, January 7, 2011, from 8:30-10:15 a.m. at the San Francisco Hilton. We have, however, requested that the location be changed due to the on-going labor disputes, so an update may follow.
Update: Interestingly, the Court granted cert only on Wal-Mart's first question, "Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)--which by its terms is limited to injunctive or corresponding declaratory relief--and, if so, under what circumstances." (Wal-Mart Petition for Cert. at i). The Court also directed the parties to "brief and argue the following question: 'Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).'" For those who are interested, I address the issues underlying this question in pages 93-98 of the Introduction.