The Supreme Court had already ruled that disproportionate “exactions” levied on property owners in exchange for the right to develop are an unconstitutional taking if they consist of demands for land. Now, in Koontz v. St. John’s River Water Management District, the Court confirms that the rule also applies to exactions of money and effort — in this case, a demand that a landowner develop a government property miles away from his own holdings. It also confirms that the principle applies to denials of permits as well as approvals. [Roger Pilon, Tejinder Singh/SCOTUSBlog, Ilya Somin, Damon Root/Reason] Background: Cato brief and summary, Timothy Sandefur and Ilya Shapiro. More: Richard Epstein, Gideon Kanner, Randal O’Toole, Rick Hills, Ilya Somin.
Posts Tagged ‘Supreme Court’
Court strikes down section 4 of Voting Rights Act
Dylan Matthews at the Washington Post has a relatively calm explainer on yesterday’s Court decision striking down one section of the VRA. While implicitly siding with the liberals, he takes some of the steam out of hyperbolic reactions portraying the latest decision as some horrid onslaught against the VRA, as opposed to an incremental evolution in its application. Other views: Ilya Shapiro, Cato, more, and background here and here; Trevor Burrus; Cato merits brief, PDF. More: Jonathan Adler on the Court’s rationale.
The Court’s latest on affirmative action
My colleagues Roger Pilon and Ilya Shapiro (and more) analyze the Supreme Court’s unexpectedly narrow 7-1 decision in Fisher v. University of Texas, and Stuart Taylor, Jr. and Richard Sander also write about the case for USA Today. More: Ilya Somin.
New Supreme Court decisions: Vance, Nassar, Mutual
I’ve got a new post up at Cato at Liberty on three important decisions for the business community decided today at the Supreme Court, two on employment law and one on pharmaceutical pre-emption: Vance v. Ball State on liability for supervisorial harassment, University of Texas Southwestern v. Nassar on mixed-motive retaliation, and Mutual v. Bartlett (more) on design default preemption for a generic drug. (& welcome Coyote, Point of Law, SCOTUSBlog, Taegan Goddard/WonkWire readers)
AmEx v. Italian Colors: the end of the world?
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.
June 21 roundup
- What could go wrong? “Moving into F.B.I. turf, local police are assembling databases of DNA records” [NYTimes, earlier here, here, and here]
- Toyota pays Orange County D.A. $16M to go away: $4M to locally influential attorney Robinson and friends, $8M to… gang prevention?! [NLJ]
- Mt. Holly: “Supreme Court Takes Up Challenge To Disparate-Impact Discrimination Theory” [housing; Daniel Fisher, Forbes]
- UFCW: legalizing private liquor stores to compete with our guys’ state-run Pennsylvania stores would be just like killing people [Malanga]
- Prattling on about Lochner v. New York decision, Michael Lind appears to lack first clue as to what it actually said [David Bernstein; more on “Where’s your country, bub?” anti-libertarian flap, Max Borders (on E.J. Dionne), Will Wilkinson (“Why does Michael Lind keep asking questions that have obvious answers?”), Marlo Lewis/Open Market.]
- The other day the editorialists of the New York Times sat down and wrote that “there is no persuasive evidence of any significant fraud or abuse” in asbestos claiming. Yes, they actually wrote that. In 2013. Paging Lester Brickman!
- Supreme Court: feds can’t require beneficiaries of overseas grant programs to sign pledge to oppose legalizing prostitution [Ilya Shapiro] “How Calling Sex Work ‘Human Trafficking’ Hurts Women” [Cathy Reisenwitz, Sex and the State, more]
- “The utterly frivolous and offensive complaint against the honorable Judge Edith Jones” [@andrewmgrossman on this Andrew Kloster piece, earlier here and here]
American Express v. Italian Colors: arbitration waiver of class actions
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.)
SCOTUS: trial lawyers can’t scoop up DMV names to solicit cases
Yesterday, in the case of Maracich v. Spears, the Supreme Court ruled that the Driver’s Privacy Protection Act of 1994 (DPPA) prohibits trial lawyers from accessing names and contact information from states’ drivers license databases with the intention of soliciting potential clients for litigation. Under DPPA, the general rule is that states must keep the information in such databases private; there is a “litigation exception” for queries intended to investigate or prepare for legal proceedings, but the Court ruled that soliciting clients was not part of its scope. As I argue in a new post at Cato at Liberty, the dispute brought about a curious reversal in the polarities displayed in the case of Maryland v. King earlier this month: the pro-privacy justices in that case were more likely to be willing to dispense with privacy this time, and vice versa.
The underlying lawsuit (Kevin Russell at SCOTUSBlog and background here, here) also involves a bit of a reversal: class action lawyers are themselves being sued in a class action. The majority opinion by Justice Anthony Kennedy sketches in some of the background:
In the case now before the Court, petitioners are South Carolina residents whose personal information was obtained by respondents from the South Carolina DMV and used without their consent to send solicitation letters asking them to join the lawsuits against the car dealerships. Petitioner Edward Maracich received one of the letters in March 2007. While his personal information had been disclosed to respondents because he was one of many buyers from a particular dealership, Maracich also happened to be the dealership’s director of sales and marketing. Petitioners Martha Weeks and John Tanner received letters from respondents in May 2007. In response to the letter, Tanner called Richard Harpootlian, one of the respondent attorneys listed on the letter. According to Tanner, Harpootlian made an aggressive sales pitch to sign Tanner as a client for the lawsuit without asking about the circumstances of his purchase.
Some of these points may be relevant on remand, because the court will be asked to consider whether the original solicitation letter (marked “SOLICITATION”) had the predominant purpose of investigating the developing lawsuit, or of attracting clients for it. And this leads to the third turnabout. In the second class action, the one over privacy and the lawyers’ use of the DMV database, petitioners are seeking specified statutory damages of $2,500 for each person whose privacy was breached, which could add up to an “astronomical” (as Justice Ginsburg put it in her dissent) sum of hundreds of millions of dollars in all. Indeed, the majority opinion as well as the dissent signaled disquiet at a possible assessment of damages so far out of proportion to any actual harm done — a phenomenon we have seen again and again in statutory class or group damages cases in the past. Some trial lawyers have in the past pooh-poohed, as the griping of sore losers, complaints about mechanical multiplication of statutory damages into huge sums (e.g. FACTA, junk faxes, song piracy, California Labor Code). In this case, such multiplication could pose a threat to the fiscal well-being of some of their own number. (& welcome TortsProf, Legal Ethics Forum, SCOTUSBlog, JOLT Digest (Harvard Journal of Law and Technology) readers)
Why does Obama keep losing in the Supreme Court?
And why are many of the decisions against him unanimous? Ilya Shapiro has some ideas, and an update at Cato. And from Ramesh Ponnuru:
“Obama’s Dangerous Contempt for the Rule of Law.”
SCOTUS: Raisin-confiscation dispute is ripe enough
In its unanimous decision yesterday in Horne v. U.S. Department of Agriculture, the Supreme Court did not reach the merits of whether the Agricultural Marketing Agreement Act of 1937 worked an unconstitutional taking without compensation from the Horne family, who process as well as grow raisins in central California, by compelling them to participate in its scheme. But it did rule that the Ninth Circuit was wrong in disclaiming jurisdiction over the Hornes’ suit on the grounds that they should have paid an enormous fine first and then sued to get it back. In doing so, it rejected the position taken by the Obama administration in favor of that taken by (among others) a Cato Institute amicus brief. (More: Ilya Shapiro, Cato; Ilya Somin; Damon Root, Reason; more background, Lyle Denniston/SCOTUSBlog, Michael Doyle/McClatchy, The Economist, James Bovard, Ilya Shapiro)
After the Ninth Circuit takes a further look, it would surprise no one if the merits of the case wound up back at the Supreme Court. I touched on the merits in this earlier post:
Max Boot, who has written a new book on the history of guerrilla movements, tells how Shamil, firebrand leader of a celebrated 19th-century Muslim insurgency in Chechnya and Dagestan, began to lose the allegiance of “many ordinary villagers who balked at his demands for annual tax payments amounting to 12 percent of their harvest.” Instead, they switched their allegiance to the rival Russian czar, whose demands were more modest.
The USDA’s marketing order committee demanded that the Hornes hand over 47 percent of their raisins without compensation.