In first of three big class action cases at SCOTUS, worrisome hints for plaintiffs

October 16, 2015

(Reuters) – If you were looking for policy pronouncements from the U.S. Supreme Court about the proper use of the class action device, you were probably disappointed Wednesday after oral arguments in Campbell-Ewald v. Gomez, the first of the three big class action cases the justices will hear this term. In fact, when Gregory Garre of Latham & Watkins – who represents a marketing company that tried to end a Telephone Consumer Protection Act class action by offering the named plaintiff all of the statutory damages he was entitled to – broached a broad attack on class actions for benefiting only plaintiffs’ lawyers, Justice Elena Kagan shut him down.

“Mr. Garre, both sides have these class action policy arguments,” she said, “but it’s important not to let those drive this pretty technical mootness question. So if we could just take the class action arguments out of it.”

For the most part, as Justice Kagan’s comment suggested, arguments in Campbell-Ewald did indeed focus on the technical mootness question. Campbell-Ewald contended it had offered the TCPA lead plaintiff, Jose Gomez, everything he could have obtained from his suit in damages and injunctive relief, depriving Gomez of constitutional standing and mooting his case. Gomez’s counsel, Stanford law professor Jonathan Mitchell, insisted that an offer of full judgment does not deprive the federal court of jurisdiction. At most, he said, Campbell-Ewald’s rejected offer might have justified a forced entry of judgment in his favor, but not a dismissal on jurisdictional grounds. Anthony Yang of the U.S. solicitor general’s office, backing Gomez, also emphasized the difference between a forced judgment and a jurisdictional dismissal.

That’s not exactly a sexy controversy, even for class action geeks. The Campbell-Ewald case has important, real-world consequences, since defendants in class actions involving relatively small-dollar claims often try to pick off named plaintiffs with settlement offers. That’s why this case – along with the term’s other class action cases, Spokeo v. Robins and Tyson Foods v. Bouaphakeo – attracted so much amicus briefing from class action plaintiffs and defendants.

Only rarely did the justices tip their policy views on class actions during Campbell-Ewald arguments – but when they did, they raised points that should worry the class action bar. Chief Justice John Roberts, for example, pounced when Gomez counsel Miller said that Campbell-Ewald’s settlement offer wasn’t all Gomez could have obtained because Gomez’s complaint demanded class certification, not just damages and an injunction for the lead plaintiff.

“Well, that’s the whole thing, right?” Chief Justice Roberts said. “This is all about class certification.” Roberts was essentially saying what class action opponents have been arguing in amicus briefs for years: Class actions aren’t about vindicating individual rights or even obtaining a promise of good behavior from defendants, they are about leveraging the size of the class.

Justice Samuel Alito asked Mitchell a question that might have come straight from a Chamber of Commerce brief: “(If) the class were certified and you get a judgment, this is a case where the class action attorneys are going to get a lot and the members of the class are going to get virtually nothing?”

Mitchell said it was not, that class members were entitled to between $500 and $1,500 for TCPA violations and class membership could be established by going through caller lists and eliminating people who agreed to receive unsolicited calls and texts. Alito’s followup questions about ascertaining class membership foreshadow issues that will likely arise again in the Tyson case.

Chief Justice Roberts also mused about whether a plaintiff who had already obtained full damages met the criteria for a class representative under the federal rules. He put that question to both Mitchell, who said the plaintiff retained a financial stake in the class action because of the prospect of an incentive award if the case settled, and to the Justice Department’s Yang. Yang said perhaps not, but that the plaintiff’s adequacy as a class representative didn’t affect constitutional standing to maintain the class action.

Like I said, these are just hints, not policy proclamations. But what we heard from Roberts and Alito, at least, was doubt about the class action industry. In a term that could reshape that industry, doubts from the justices are a bad omen.

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