Posts tagged as:

Eighth Circuit

The Class Action Fairness Act of 2005 aims to steer all but relatively small nationwide class actions into federal court, in part because lawmakers wanted to prevent plaintiff’s lawyers from exploiting the system by forum-shopping cases into state courts that might be biased or ill-equipped to prevent abuse. It therefore allows defendants to remove cases to federal court where the aggregate claim exceeds $5 million. To evade that limit, plaintiff’s lawyers have been proffering stipulations that disclaim (at least temporarily) any intent to ask for more than that sum, even when plausible theories of the case would suggest a larger potential recovery. If the ploy works, they get to stay in the favored state court, and in later stages of litigation they sometimes succeed in using various further tactics to shuffle off the supposed limit and ask for more than $5 million after all.

Aside from the end run it does around the intent of the statute, this practice raises serious ethical issues arising from the lawyers’ duty toward clients, including absent class members who may not even be aware of the suit, let alone in a position to second-guess tactical choices. Disclaiming damages above $5 million, in particular, may be helpful to the lawyer (by obtaining less stringent oversight of the manner in which the suit is prosecuted) yet harm some clients’ interest in obtaining the best recovery.

The U.S. Supreme Court will take up this issue in the spring, and the Cato Institute has filed an amicus brief (PDF) urging the Court to recognize the ethical problem and direct lower federal courts to grant removal where appropriate. Ilya Shapiro has more. Ted Frank at the Center for Class Action Fairness also filed amicus briefs on behalf of certiorari and on the merits; related.

{ 30 comments }

May 7 roundup

by Walter Olson on May 7, 2012

  • NY lawyer sanctioned $10K for behavior at deposition [Debra Cassens Weiss, ABA Journal]
  • Obvious dangers and the W.V. frat-house rear-launched bottle rocket case [Popehat, earlier here, here]
  • Review of Liberty’s Refuge, new book on freedom of assembly by Washington U. lawprof John Inazu [Anthony Deardurff, Liberty Law]
  • If forfeiture and asset freeze can be deployed in a copyright enforcement case, where will they strike next? [Timothy Lee, Cato]
  • Hard-hitting Kim Strassel column on Al “Crucify Them” Armendariz [WSJ, earlier] Exxon CEO Rex Tillerson: “If you want to live by the precautionary principle, then crawl up in a ball and live in a cave.” [Coyote] Washington Post on the case for the Keystone pipeline [Adler]
  • Losing two looks like carelessness: second Durham County D.A. removed from office for misconduct [Volokh, KC Johnson]
  • Why won’t the Eighth Circuit recognize fraudulent misjoinder? [Beck]

{ 2 comments }