Class Actions Targeted in Federal Supreme Court’s Business Docket
The court returns for its new term on Monday with three major class action cases already scheduled for oral arguments this fall.
In other business cases of interest that will decided before the term ends in June, the nine justices will hear a challenge to government regulation of the electricity markets and decide whether civil racketeering laws can apply to a company’s actions overseas.
The class action cases give the conservative-leaning court another opportunity to cut back on such litigation, as it has done in a series of rulings in recent years. The most significant of those handed victories to Wal Mart Stores Inc and Comcast Corp.
In all three new cases, the U.S. Chamber of Commerce and other business groups have filed court papers backing the businesses sued by workers and consumers.
“This is an area of the court’s docket we have been pushing and trying to encourage the court to push back the worst abuses of the class action tool,” said Kate Comerford Todd, a lawyer with the chamber’s litigation arm.
The business community characterizes class actions as driven largely by specialist plaintiffs’ lawyers, who file claims on behalf of groups of consumers over such issues as defective products and unfair business practices.
If successful, lawyers can make millions of dollars in legal fees. Individual plaintiffs generally recover much less, but supporters of the practice say it can be the only way consumers can pursue grievances against deep-pocketed companies.
Paul Bland, executive director of the consumer advocacy group Public Justice, said all three of the new cases are seeking “fairly dramatic change to the law that will really hammer class actions.”
In one of the cases, the court in November will consider Tyson Foods Inc’s appeal of a $5.8 million judgment against the company over worker pay at an Iowa meat-processing facility. Tyson objects to the use of statistics to determine damages instead of assessing individual damages for each plaintiff. A win for Tyson could have a broad impact on similar disputes.
Another case the court will hear in November involves online people-search service Spokeo Inc. It focuses on whether plaintiffs can sue for a technical violation of federal law even when they cannot show they have been harmed economically.
Business including Facebook Inc and Google Inc joined friend-of-the-court briefs backing Spokeo’s position, saying allowing such lawsuits to go forward encourages abuse of the class action process.
The third case concerns alleged violations of a federal consumer law by advertising agency Campbell-Ewald Co. The court will weigh during Oct. 14 oral arguments whether litigation ends if the named plaintiff is offered the maximum available damages. That means the case would not continue as a class action lawsuit that would potentially benefit multiple plaintiffs.
Consumer advocates say a ruling for the company would allow defendants to nip class action lawsuits in the bud.
Another case that has attracted business interest is the challenge to an Obama administration regulation aimed at encouraging efficiency in the electricity market by having electrical grid operators pay users to reduce consumption at peak times.
The regulation concerns what the Federal Energy Regulatory Commission calls “demand-response,” which is when, in an attempt to manage demand for electricity, regional electrical grid operators agree to pay electricity users to cut consumption at peak times.
The dispute, also to be heard by the justices on Oct. 14, has businesses lined up on both sides, with some trade groups that represent utilities opposed to the regulation and some utilities and companies that benefit from the payments backing the government.
In a case the justices added to their calendar on Thursday, the court will decide whether a lawsuit filed by European Union countries accusing cigarette maker R.J. Reynolds of running a global money-laundering scheme involving narcotics smuggling into Europe can move forward.
The case could affect other cases in which U.S. federal civil racketeering laws have been used to sue over conduct that takes place overseas. R.J. Reynolds is part of Reynolds American Inc.
(Editing by Will Dunham)