Another major class action dispute
on Dec 2, 2010 at 5:15 pm
In a new sign that the spreading use of class-action lawsuits is creating major new controversy for the Supreme Court, the nation’s major tobacco companies on Thursday mounted a broad constitutional challenge to use of that device as a way to get around examining the specific claims of individuals who claim injury. The case arrived at the Court even as the Justices were preparing to consider taking on a case on the legality of a huge class-action claim against Wal-Mart Stores, the popular discount retailer.  The new petition in the tobacco case, Philip Morris USA, et al., v. Jackson, et al., has been docketed as 10-735. Its filing follows a favorable temporary ruling for the companies by Justice Antonin Scalia in September.
“This case,” the new petition said, “turns on whether the Due Process Clause permits state courts to impose massive liability in a class action without a truly representative trial of individual claims.” Even the Louisiana courts admitted, the filing said, that they left out the kinds of factual development and legal defenses that would have been indispensable for individual claims, and they did so in order “to make this case ‘work’ as a class action.”
Here is the question the petition presented: “Whether the Due Process Clause prevents state courts from employing the class-action device to eliminate fundamental substantive and procedural protections that would otherwise apply to class members’ individual claims.” At issue is an award that is now estimated at $270 million.
Justice Scalia, in his Sept. 24 order temporary staying the mandated program to encourage smokers to give up the habit, wrote that “the extent to which class treatment may constitutionally reduce the normal requirements of due process is an important question.” Scalia, acting in his role as Circuit Justice, noted the “national concern over abuse of the class-action device.” (A post on this blog discussing Scalia’s order, including a link to the text of that order, is here.)
The class that was cleared for the Louisiana case against the tobacco companies numbers more than 500,000, the petition said. State courts put together the class despite the reality that it involves “disparate, highly individualized tort claims,” targeting actions and statements of different companies at different times over a half-century period, it noted. The multitude of individual claims was treated, the petition said, as if it were a single, unitary claim common to the entire class, it added.
“That unorthodox procedure eliminated individualized elements of liability…and affirmative defenses that unquestionably would have been adjudicated if class members had sued individually. The result was a massive $270 million award for smoking cessation for the ‘class as a whole’ in a case where no one in the class was required to prove the elements of an individual claim,” and the two individuals who are representing the class “had already quit smoking well before the time of trial.”
The petition argued that Supreme Court review is justified “because the decisions below conflict with longstanding methods of adjudicateion and with precedent governing the limited circumstances in which courts can depart from traditional one-on-one adjudiciation.” Moreover, the petition noted, there is an “increasing prevalnce of class actions,” with state courts showing a “growing reliance on novel procedures to facilitate certification of highly individualized claims.”
In the federal courts, issues arising out of class-action lawsuits have often turned on the meaning and scope of federal court rules — particularly Rule 23, which governs class actions in the federal courts. The scope of Rule 23, for example, is at stake in the case of Wal-Mart Stores v. Dukes, et al. (docket 10-277), which the Justices are scheduled to consider at their private Conference tomorrow. But the Wal-Mart petition also seeks to raise constitutional issues about the class in that case, which may number perhaps 1.5 million women who now work or formerly worked for the discount chain.
Since Rule 23 does not apply to state court class-action litigation, the legal issues about those cases that would be within the Supreme Court’s reach are federal constitutional issues. That, of course, is what is at the center of the new tobacco industry appeal.
The class-action representatives’ response to the new petition will be due in 30 days, unless the time for filing it is extended. It is doubtful that the Court could reach the case in time for a decision during the current Term.
The stay issued by Justice Scalia will remain in effect at least until the Court acts on the petition; if the case is granted review, the stay will continue until the final ruling comes down.
