Still pretty much the Litigation Lobby’s number one target, and still worth defending with appropriate vigor. [Andrew Pincus, American Lawyer]
The New York Times, which can scarcely mention firearms policy without invoking the Gun Lobby, runs a big feature endorsing the claims of arbitration opponents that is curiously evasive about the role of the Litigation Lobby. Daniel Fisher, Forbes:
The writers who penned today’s New York Times Page One expose of arbitration clauses say they examined thousands of court documents and interviewed hundreds of lawyers, yet they fell for a rookie mistake: They confused class-action plaintiffs for the real thing….
The “article splayed across four pages of the Sunday Times” profiles the owner of the Italian Colors restaurant, the named plaintiff in a class action against American Express that went to the Supreme Court, as if he were typical of “plaintiffs [who] sprang up spontaneously and went out and hired lawyers to vindicate their rights?
Who were his lawyers? The Times doesn’t think you need to know. But here’s the main one: Gary B. Friedman, an attorney who specializes in suing credit-card companies. He recently suffered a bit of bad press when a federal judge in New York threw out a proposed settlement of another class action against Amex because Friedman had displayed “improper and disappointing conduct” by communicating sensitive information to a lawyer for the other side. The judge criticized Friedman for “blatant collusion” by negotiating a settlement with the defense that was “contrary to the wishes of the putative class.”
Now why couldn’t the enterprising Times reporters find room in such a large story for a mention of Friedman? Perhaps because he represents the real face of consumer class actions. These aren’t lawsuits by little guys like Carson trying to vindicate their rights against big corporations. Most are lawsuits by wealthy attorneys trying to get wealthier, by using the mechanism of the class action — originally developed to allow courts to declare classes of plaintiffs in civil-rights cases — to present companies with an offer they can’t refuse: Settle and pay us a rich fee, or risk a devastating loss in court.
Fisher summarizes: the Times “reports without skepticism the plaintiff-lawyer version of the story.” That’s a shame on a topic where even such a liberal figure as California Gov. Jerry Brown, who recently vetoed an anti-arbitration bill, acknowledges there are genuine concerns on both sides.
Our coverage of contractually agreed pre-dispute arbitration — including both the practical and the freedom-of-contract arguments for it — goes back to the early days of this site, including Coyote (“Here is how you should think about this proposed law: Attorneys are the taxi cartels, and arbitration is Uber. And the incumbents want their competitor banned.”), James Taranto on the Times as “two papers in one,” Andrew Pincus on arbitration as still pretty much the Litigation Lobby’s number one target. Much coverage also at Point of Law, including Ted Frank on a familiar-sounding law firm’s use of pre-dispute arbitration clauses.
P.S. I’ll bet he has: “Having worked extensively with Silver-Greenberg on this series over the past several months…” [Deepak Gupta, Public Citizen]
And: more thoughts at Cato at Liberty, including links to Cato work and discussion of why consumers so seldom switch from one provider to another in search of more favorable fine print on class action availability.
Left-leaning lawprofs like Erwin Chemerinsky and Arthur Miller regularly flog the idea that decisions they disagree with — such as Twombly and Iqbal on pleading, AT&T v. Concepcion and AmEx v. Italian Colors on arbitration, and Vance v. Ball State and Ledbetter v. Goodyear Tire on workplace liability — show the Supreme Court to be biased in favor of business defendants. Richard Epstein rebuts.
Much commentary regards last week’s decision on American Express v. Italian Colors Restaurant (see earlier) as a virtual sentence of doom for class actions, which will henceforth be barred by contract in favor of individualized arbitration. From the plaintiff’s side, Paul Bland of Trial Lawyers for Public Justice calls the decision “catastrophic for the antitrust laws… an unmitigated disaster” while from the defense side, Michael Fox expects employers to use the ruling to turn back one of the current litigation trends most menacing to them, class actions over wage-hour infractions under the Fair Labor Standards Act (FLSA) (“a large number of employers who have not implemented arbitration plans will be re-thinking the decision”). Others expect a backlash against the decision; for example, the new Consumer Financial Protection Bureau may ban or greatly restrict arbitration waivers in consumer contexts (cf. Daniel Fisher‘s report) or Congress might legislate with the same intent, presumably after future Democratic Party gains in the House. More: Fed Soc Blog.
There are, however, also reasons to doubt that the decision spells utter rout for the class action bar. To begin with, these lawyers have proven resourceful in finding ways around earlier restrictions, as in the case of securities litigation reform and the Class Action Fairness Act. At Class Action Blawg, Paul Karlsgodt comments: “Concepcion hasn’t [ended class actions], so I doubt Amex III will either.”
Moreover, earlier Supreme Court decisions generally make clear that the arbitration option cannot displace substantive legal entitlements. Many, even most relevant federal statutory causes of action are barbed with incentive provisions intended to ease the assertion of meritorious claims, including attorneys’-fee entitlements, treble damages and statutory damages. The particular situation in Italian Colors, in which unrecoverable expert witness costs were expected to exceed even treble damages for the claimant, is not really typical. Our colleagues at Point of Law, especially Ted Frank, have been active in pointing out some of these considerations. [Manhattan Institute paper, plus reaction from Carter Wood and more from Michael Greve; discussion between Ted and Cardozo lawprof Myriam Gilles; more blog posts here and here]
In particular, even if the Rule 23 class action device is not available as such, it is likely that plaintiffs will have considerable scope for cost-sharing and collaboration, as described in more detail by Gregory Cook in the Michigan Journal of Law Reform. This came up in the AmEx case itself, as Jim Copland notes:
In footnote 4, the majority credits AmEx’s concession that “other forms of cost sharing . . . could provide effective vindication.” As Professor [Myriam] Gilles noted, AmEx expressly conceded this point in footnote 8 of its reply brief on the merits. In essence, Justice Kagan’s dissent refuses to credit AmEx’s concession — thus disagreeing with the majority about the facts of this specific case.
As Cook points out, pattern and coordinated litigation filed on behalf of numerous small claimants against financial institutions, but not using the class action device, has been quite successful in fields ranging from the Fair Debt Collection Practices Act to FACTA to the ATM notice cases. Indeed, defendants will sometimes regret the lack of a class action mechanism since it may be more difficult to obtain closure and settlement of a body of liability without it.
Commentators have counted out the class action bar before now. It’s always been a mistake.
Today’s Supreme Court decision in American Express Co. v. Italian Colors Restaurant is a victory for freedom of contract, a boost for arbitration as an alternative to litigation, and a step forward in the Court’s ongoing recognition that the class action is just one legal vehicle among many, not some priority express train to be favored over other traffic. The restaurant had agreed with American Express to settle disputes by way of arbitration, and to waive any rights to have future disputes handled through class actions. When a potential antitrust claim arose, it nonetheless sought to slip out of its contractual agreement and invalidate the waiver. Split along familiar ideological lines with Justice Sotomayor not participating, the court ruled 5-3 that the Second Circuit erred in striking down the waiver as inconsistent with the Federal Arbitration Act. While the Court has previously held that arbitration agreements must be construed to provide “effective vindication” of statutory claims, the class action format — which did not even exist for these purposes until decades after the Sherman Act’s passage — was not so crucial to the restaurant’s legal rights as to be unwaivable.
A dissent by Justice Kagan — both longer and more spirited than Justice Scalia’s majority opinion — seeks to extend the Court’s earlier rulings that arbitration clauses cannot thwart “effective vindication” of statutory rights by such devices as requiring overly high fees for entry into arbitration. Interestingly, the dissent outdoes the majority in claiming to favor the true spirit of arbitration as an alternative to litigation; in that respect, at least, it departs from the tone of much commentary from the Legal Left which treats arbitration as an evil corporate plot to deprive the world of the benefits of zealous litigation. It also proposes two paths of argument that the majority declines to pursue: 1) that skepticism toward contractual waivers might be especially appropriate in antitrust contexts because the alleged monopolist under scrutiny may use its putative market power to put across unfair contract terms; 2) that confidentiality clauses in Amex’s contract (not addressed by the majority) might fail the “effective vindication” test by preventing Amex customers from joining forces to collaborate on expert reports to use on their behalf in individualized assertion of their disputes.
For years, organized trial lawyers have been publicly campaigning against arbitration — which keeps money out of their pockets by diverting disputes from knock-down litigation — claiming that it is unfair and one-sided. But many studies support the view that disputants’ overall satisfaction in arbitration compares very favorably to that in litigation, in part because it is a speedier and less acrimonious process. And consumers and small businesses by millions sign away their class action rights not because they are all hoodwinked or coerced, but because at some level they have rational grounds to recognize that those class-action rights are very unlikely to pay off for them in durable future benefits (as opposed to benefits for participants in the litigation industry). Congress will be asked to overturn Supreme Court decisions like Amex v. Italian Colors and the earlier, related AT&T Mobility v. Concepcion. It should resist. (expanded from an earlier post at Cato at Liberty; and welcome SCOTUSblog readers.)
- Pursuing well-worn script following exposure of fib-laden memoirs, class action lawyers sue demanding reader refunds for Lance Armstrong autobiography [ABA Journal]
- Adventures of Ted Frank’s CCAF: Easy Saver coupon settlement; Southwest Airlines drink voucher; Asus Computer dongle giveaway. Plus: “Citigroup Plaintiff Lawyers Fire Back At Fee Objectors” [Daniel Fisher, Forbes]
- Wrongful termination complaint contains its share of juicy allegations regarding well-known plaintiff’s firm Hausfeld LLP [Andrew Trask]
- Calif.: “Judges Accuse Class Lawyers of Misconduct” [The Recorder; The Complex Litigator (Clarke v. First Transit, PDF)]
- Aiming to undermine Concepcion ruling, plaintiff lawyers seek to overwhelm system with arbitration demands [Reuters, earlier]
- How to get your class action settlement disapproved by the judge [Andrew Trask]
- “Papa John’s Facing $250 Million Text Message Spam Lawsuit” [PC Mag]
The retention campaign for liberal Florida Supreme Court Justices Fred Lewis, Barbara Pariente, and Peggy Quince is “outspending the opposition 20-to-1,” fueled by large donations from plaintiff’s injury law firms that practice before the court, such as the law firms of Wayne Hogan, Tom Edwards, and Fred Levin, Searcy Denney Scarola Barnhart & Shipley, Grossman Roth, and Pajcic & Pajcic — not to mention defense lawyers. [Orlando Sentinel]
P.S. And from which side do you think the left-leaning Justice at Stake detects a threat to judicial independence? Right. You guessed it. See also ABA Journal [proposals to cut state bar out of judicial nomination process classed among “legislative attacks” on independent judiciary. Meanwhile, no quantity of vitriolic and demagogic attacks on jurists over such decisions as Citizens United or Concepcion ever seem to get classed as menacing judicial independence].
- Dixon v. Ford Motor Company: “The Best Causation Opinion of 2012” [David Oliver] “Any exposure” causation: “Pennsylvania Supreme Court delivers significant asbestos ruling” [Point of Law]
- Maryland high court may consider pro-plaintiff shift from contributory negligence to comparative fault [Sean Wajert]
- In last-minute ploy, Albany lawmakers extend time limits for suing local governments [Torch via PoL, Times-Union]
- Mental diagnoses: what to do when courtroom experts armed with DSM-5 shoot from the hip [Jim Dedman, Abnormal Use]
- California appeals court, legislature decline to go along with trial lawyers’ crusade against Concepcion and class arbitration waivers [WLF, CL&P]
- Critics challenge legality of Louisiana AG’s use of contingency lawyers [Melissa Landry, Hayride]
- To curb client solicitation, NJ mulls withholding crash reports from noninterested parties for 90 days [NJLRA]
- Congress again debates bad idea of race-based government for native Hawaiians [Ramesh Ponnuru, Ilya Shapiro/Cato; earlier here, etc.]
- “I could have been killed for blogging.” [Patterico, Scott Greenfield] Latest blogger “swatting” (bogus police call) hits RedState’s Erick Erickson [same] Incivility is a hazard for bloggers, but fear for families’ physical safety shouldn’t be [Jonathan Adler, Amy Alkon] Dear authorities in Montgomery County, Md. and elsewhere: you should know it’s not every day Radley Balko calls for tougher law enforcement. Earlier here and here.
- More dying from guns than from car crashes? Eugene Volokh skewers some misleading arguments from the Detroit Free Press;
- Mississippi: Judge dismisses Dickie Scruggs’s motion to vacate bribery conviction [AP; Tom Freeland and more]
- Washington Times kindly cites coverage in this space on Maryland “structuring” prosecutions [editorial]. Maryland delayed foreclosures and is now paying the price in slower housing recovery [Hayley Peterson, Examiner]
- Andrew Pincus defends arbitration and SCOTUS decision in Concepcion [NYTimes “DealBook”; NLJ] Effort in Florida to ease use of arbitration in med-mal disputes [Miami Herald]
- Michigan Supreme Court judge Diane Hathaway, elected via 2008’s most unfair attack ad, is now in a spot of ethical bother [Ted Frank]
- Washington Post pundit Dana Milbank’s lament: Obama isn’t doing enough to intimidate opponents [David Boaz, Cato]
- FDA defends itself against rising criticism on drug and device approval [NYT] NYT approaches the issue with a curious slant [Paul Rubin]
- California courts: what makes you think we need to follow SCOTUS on arbitration? [Cal Biz Lit, more, Russell Jackson] Senate anti-arbitration hearing could have used more truth in advertising [PoL]
- Pols want to fast-track favored L.A. stadium against environmental suits under California’s obstructor-friendly CEQA. Hmmm… why not fast-track everyone else too? [Gideon Kanner, Stephen Smith, SCPR, Paul Taylor, Examiner]
- State law forbids use of deadly force in defense of business property: “Burglar’s family awarded $300,000 in wrongful death suit” [Colorado Springs Gazette]
- One reason the Ninth Circuit may go off on more frolics: three-judge, one-clerk bench memos [Kerr]