March 27, 2013

REVIEW & OUTLOOK                         

Classy Action at the High Court

The Justices tell the trial bar to stop creating phony lawsuit rationales.

The other news at the Supreme Court on Wednesday was another big defeat for the trial bar. The Justices put a stop to the latest attempt to revive huge legal paydays by ruling 5-4 to reaffirm their requirements for certifying a class action.

In Comcast v. Behrend, the Justices ruled that in order for a class of plaintiffs to be certified they must demonstrate adequate commonality of harm. While the plaintiffs claimed the cable company’s monopoly had let it improperly raise prices, the complaints drifted among four disparate theories of liability, with a wide array of potential plaintiffs.

“The permutations involving four theories of liability and 2 million subscribers located in 16 counties are nearly endless,” Justice Antonin Scalia wrote for the majority. “Under the proper standard for evaluating certification, respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis.”

The decision is also a reason for the Justices to agree this Friday to hear another class-action case. In Whirlpool v. Glazer, the Court is being asked to decide whether the washing-machine maker could be liable for huge sums because a small percentage of customers said the machines made their clothes smell moldy. The effect would be a wild expansion of liability in which every person who has ever brought the product could be entitled to compensation even if only a few consumers found fault with their machines.

The Comcast and Whirlpool cases have made it this far because both the Third and Sixth Circuit Courts of Appeal ignored the Supreme Court’s 2011 decision in Wal-Mart v. Dukes that set serious limits on class actions. The current Court has taken much-needed steps to rationalize class certification, and the Justices should make it clear they expect other federal courts to honor the precedents. They should keep taking cases and overturning heedless junior courts until they get the message.

Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved.

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