Big business, class actions and the Supreme Court: It’s complicated

September 16, 2013

It’s no secret that one of the most active and successful friend-of-the-court participants at the U.S. Supreme Court in recent years has been the U.S. Chamber of Commerce, otherwise known as the lobbying arm of corporate America. Last term, according to the website of the National Chamber Litigation Center (the U.S. Chamber’s legal wing), the group filed amicus briefs addressing the merits of 22 business-related cases before the Supreme Court. The Chamber was in the fray in all of the big cases involving class actions against businesses, including American Express v. Italian Colors, Amgen v. Connecticut Retirement, Comcast v. Behrend and, of course, Standard Fire v. Knowles. In all of those cases, the Chamber advocated positions that would make it tougher for claimants to file and litigate class actions; in three of them – Italian Colors, Comcast and Standard Fire – the Chamber and pro-business interests prevailed.

Given that record, I was surprised to see from the Supreme Court docket that the Chamber is sitting out one of this term’s major business cases, Mississippi v. AU Optronics, which will determine whether actions by state attorneys general to enforce state laws may proceed in state court or can be removed by defendants to federal court as mass actions under the Class Action Fairness Act. As you probably recall, last year the 5th Circuit Court of Appeals broke with the 2nd, 4th, 7th and 9th Circuits and held that the Mississippi AG’s antitrust suit against the LCD maker is a mass action because even though the AG is the only plaintiff, he’s actually seeking money damages on behalf of thousands of Mississippi residents. Mississippi’s AG, Jim Hood, successfully petitioned the Supreme Court to resolve the circuit split. AU Optronics wants to make Hood rue the court’s grant of certiorari. Its merits brief, filed earlier this month, argues that this case is the Supreme Court’s opportunity to unmask state AG parens patriae cases for what they really are: mass actions in all but name.

Last week, many of the usual suspects joined that argument in amicus briefs. The defense lawyers’ association DRI, as well as the American Bankers Association and Big Pharma’s trade group, told the justices that AG parens patriae cases permit those ever-wily plaintiffs lawyers to team up with state officials to evade Congress’s intention of forcing them to litigate contingency-fee class actions in federal court. (Allstate, which was the defendant in the case on which the 5th Circuit premised its AU Optronics holding, made a similar point in its amicus brief.) The Washington Legal Foundation and the National Association of Manufacturers, meanwhile, asserted that under constitutional protections for out-of-state defendants, Mississippi’s case should be litigated in federal court regardless of whether it’s a mass action. AG actions, as I’ve reported, are increasingly likely to be consumers’ only means of holding defendants accountable through litigation. If the Supreme Court decides that these cases must be heard in federal court, that’s a boon for big business.

Or is it? And if the answer were entirely straightforward, why didn’t the Chamber file an amicus brief?

I want to say at the outset that I don’t know for sure why the U.S. Chamber isn’t involved in the Mississippi case. I contacted representatives at the U.S. Chamber and at the National Chamber Litigation Center as well as an NCLC lawyer and didn’t hear back. I asked the Center back in July, when Mississippi filed its merits brief at the Supreme Court, whether the Chamber planned to appear as an amicus and was told (after my story ran) that the group declined to comment. Maybe the NCLC is busy with other cases or feels that the Chamber’s position is adequately represented by the other amici.

I think there’s more to the story, though. Remember, the Chamber took a strong position in the Standard Fire case last term at the Supreme Court, arguing alongside several other pro-business groups that lead plaintiffs in class actions should not be permitted to stipulate upfront to damages in order to keep their cases in state court. The Chamber’s advocacy litigators at the Institute for Legal Reform, moreover, have long crusaded against state AGs hiring private contingency-fee lawyers to prosecute claims on behalf of the state. The intersection of state AGs, contingency-fee lawyers and the Class Action Fairness Act should be of surpassing interest to the Chamber.

But this issue is more complicated than it might seem. For some of the Chamber’s members, state AG actions are an alternative – and perhaps cheaper – route to resolving liability they’d otherwise face in private class actions. In several cases in the last few years, most recently in the e-books litigation, defendants have chosen to settle the lion’s share of the claims against them through AG actions. That phenomenon has sometimes led to tension between AGs and class action lawyers, in contrast to their usual cooperation. And though they’ll never say so, defendants can be the beneficiaries of that competition between AGs and plaintiffs lawyers.

I say this all the time, so forgive the repetition: Businesses don’t like being sued, but once it happens, their goal is usually to end the litigation as cheaply as possible. Sometimes that means fighting to the bitter end to establish a principle or dissuade future claimants. Far, far more often – and especially in class or mass actions – it means trying to get a case tossed early, or, if that fails, settling for as little as they can in order to obtain a release from liability. That reality is why defendants agree to charity-only settlements even in cases in which they contend no one has suffered an injury, and why they usually don’t oppose fee requests by class action lawyers. It’s less expensive to make claims go away by settling than to keep paying defense costs – and sometimes the most efficient means for big businesses to resolve claims is to settle state court parens patriae actions with state AGs.

That said, I bet most members of the U.S. Chamber will be rooting against Mississippi when AU Optronics’ case is argued on Nov. 6.

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