Class actions face crucible in next Supreme Court term

June 9, 2015

(Reuters) – By this time next year, class action lawyers could be looking back with nostalgia and regret at the good old days when they only had to worry about Wal-Mart v. Dukes and Comcast v. Behrend.

On Monday, the U.S. Supreme Court agreed to hear Tyson Foods v. Bouaphakeo, a case challenging a $5.8 million wage-and-hour judgment against the company in an employment class action by workers at an Iowa meat processing plant. As my Reuters colleague Lawrence Hurley reported yesterday, the Tyson petition for certiorari presents the question of whether the trial judge should have permitted Tyson workers to rely on statistical sampling to establish liability and damages. But Tyson’s counsel of record, Carter Phillips of Sidley Austin, also included a much further-reaching second question in the company’s cert petition: Can a class be certified when it contains some members who have not been injured and have no legal right to damages

That is a very hot issue for business groups such as the U.S. Chamber of Commerce, the National Association of Manufacturers, the Business Roundtable and others that filed amicus briefs urging the Supreme Court to take the Tyson case. And if the court sides with them and Tyson and concludes classes cannot be certified unless every class member can show an actual injury, plaintiffs’ lawyers are going to have a much harder time getting big cases over the certification hurdle.

The Tyson case, in other words, could clarify what the court’s 2013 ruling in Comcast just implied. Class action defendants had hoped Justice Antonin Scalia‘s admonition in Comcast that damages must be measurable across the class would preclude certification of cases involving plaintiffs with different sorts of injuries, and particularly cases in which some plaintiffs may not have been injured at all. The decision, however, has turned out to be much less potent than defendants had hoped. Earlier this year, for instance, the 1st U.S. Circuit Court of Appeals, said Comcast didn’t require decertification of an antitrust class of Nexium purchasers suing AstraZeneca for blocking a generic version of the drug – even though the class contains thousands of members who suffered no harm because they would have bought Nexium even if a cheaper generic had been available.

Tyson’s cert petition argued that the 1st Circuit’s Nexium decision highlights the need for the Supreme Court to address the certification of classes with a mix of injured and uninjured plaintiffs, pointing to a purported split with (among other rulings) the District of Columbia Circuit’s 2013 ruling in In re Rail Freight Fuel Surcharge Antitrust Litigation.

Public Citizen, which represents the Tyson employee class at the Supreme Court, said in its brief opposing cert that there is actually no circuit split over certification of classes with some uninjured members, just some stray dicta on constitutional standing and class membership. Public Citizen reminded the justices that earlier this year they declined to take up a petition by BP, which had raised the same uninjured class member argument as Tyson.

Public Citizen also argued that for procedural reasons, the Tyson case does not properly present the issue of uninjured class members, so perhaps the Supreme Court will end up deciding only the statistical sampling question Tyson posed. But you can bet that a lot of anti-class-action amici are going to push the justices to consider the broader question of whether class counsel can lump together all sorts of plaintiffs, including some with no injuries, to maximize their leverage in settlement talks.

The Tyson case is the second enormously consequential class action case the Supreme Court has already agreed to hear next term. As you know, the justices decided in April to hear Spokeo v. Robins, another case involving class actions and supposedly unharmed plaintiffs. Spokeo presents the question of whether Congress can confer constitutional standing on otherwise uninjured class members by providing a private right to recover statutory damages for violations of consumer laws. On its face, the Spokeo case involves just the Fair Credit Reporting Act, but depending on how the Supreme Court rules, it could end up gutting class actions based on federal laws such as the Telephone Consumers Privacy Act, the Americans with Disabilities Act, the Truth in Lending Act and a half-dozen or so other statutes with private enforcement provisions.

Yet a third class action issue on the Supreme Court’s upcoming docket, Campbell-Ewald v. Gomez, will decide whether defendants can moot class actions by offering name plaintiffs full damages before a class is certified in low-dollar cases.

So think about it: If all goes the way defendants hope, by the end of next term they will have eliminated class actions based on statutory damages in federal consumer laws, fenced liability in cases involving plaintiffs with a mix of injuries and entrenched a tactic for squelching class actions cheaply.

That would all make Wal-Mart v. Dukes seem like a speed bump.

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