On Monday, the U.S. Supreme Court declined to grant review to two small Nebraska banks facing class action allegations that they failed to post stickers on ATM machines to alert users about add-on fees. That might not seem like a surprise, except that the certiorari petition by the banks’ counsel at Mayer Brown raised a question that the Supreme Court has previously struggled with: whether class action plaintiffs asserting federal laws that provide statutory damages have constitutional standing to sue even if they haven’t suffered any actual injury. The justices heard a different case posing the exact same question in 2011 in First American Financial v. Edwards, but didn’t resolve the issue because they dismissed the appeal on the last day of the term in June 2012. Class action opponents like the U.S. Chamber of Commerce, the Washington Legal Foundation and the Association of Credit and Collection Professionals were hoping that the Nebraska banks’ case was a new chance to end litigation by uninjured plaintiffs whose small, individual statutory damages claims turn into a big nuisance when they’re accumulated in class actions.
Monday’s cert denial is the second time in two weeks that the justices have decided to sidestep thorny consumer class action issues. On Feb. 24, as you probably know, the court refused to grant certiorari to Sears and Whirlpool, which had argued that the 6th and 7th Circuit Courts of Appeal erroneously certified classes of washing machine owners whose appliances have an alleged tendency to develop a moldy smell. The moldy washer cert petitions were the subject of a vigorous public relations campaign by business groups that contended the vast classes, consisting mostly of owners whose machines never developed a moldy smell, perfectly exemplified the perniciousness of class actions. The justices were clearly interested in the cases, since they discussed the Sears and Whirlpool appeals at least three conferences. But even though the 6th and 7th Circuit certifications came on remand from the Supreme Court, the justices ultimately decided not to accept the invitation from Sears, Whirlpool and their influential amici to remake the rules of consumer class actions.
So: two big opportunities to curb classwide consumer cases and two big punts by a Supreme Court that has in recent years shown no hesitation to limit the litigation rights of ordinary people. (A few prime examples from a long list: American Express v. Italian Colors, AT&T Mobility v. Concepcion, Wal-Mart v. Dukes.) Are we witnessing the dawn of a new era at the Supreme Court?
I posed that question to Deepak Gupta of Gupta Beck, who wrote the brief in opposition to the Nebraska banks’ cert petition, in the case the justices declined to review on Monday. “Not so fast,” Gupta told me. “I’d say to class action lawyers, ‘Don’t think you’re out of the woods yet.’”
Last term, Gupta said, the court granted cert in some class action cases that turned out to be awkward vehicles for the issues it wanted to consider. According to Gupta, Genesis Healthcare v. Symczyk, which presented the question of whether defendants can moot class actions by settling with name plaintiffs, and Comcast v. Behrend, which asked whether class action plaintiffs must present a classwide theory of damages to win certification, were factually messy cases that prompted angry dissents about the court’s departures from its own procedures. The recent cert denials, Gupta said, may indicate that the justices have resolved to pick their battles more carefully.