Tag: class-action

The Wal-Mart Suit Matters to Manufacturers, Too

The U.S. Supreme Court hears oral arguments today in Wal-Mart Stores, Inc., v. Betty Dukes, et al., potentially the largest employment discrimination class-action suit in history and a case of great interest to major manufacturers, as well. The Court’s “question presented” provides a concise summary of the issues.

In a sharply divided 6-5 decision that conflicts with many decisions of this Court and other circuits, the en banc Ninth Circuit affirmed the certification of the largest employment class action in history. This nationwide class includes every woman employed for any period of time over the past decade, in any of Wal-Mart’s approximately 3,400 separately managed stores, 41 regions, and 400 districts, and who held positions in any of approximately 53 departments and 170 different job classifications. The millions of class members collectively seek billions of dollars in monetary relief under Title VII of the Civil Rights Act of 1964, claiming that tens of thousands of Wal-Mart managers inflicted monetary injury on each and every individual class member in the same manner by intentionally discriminating against them because of their sex, in violation of the company’s express anti-discrimination policy.

The questions presented are:

I. Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2) – which by its terms is limited to injunctive or corresponding declaratory relief – and, if so, under what circumstances.

II. Whether the certification order conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule of Civil Procedure 23.

Wal-Mart’s attorneys from Gibson Dunn — including Theodore J. Boutrous, Jr., and Ted Olson — state their case strongly in the petitioner’s brief.

The [Ninth Circuit’s] certification order is flatly inconsistent with Rule 23(a)’s prerequisites. The class members— potentially millions of women supervised by tens of thousands of different managers and employed in thousands of different stores throughout the country— assert highly individualized, fact-intensive claims for monetary relief that are subject to individualized statutory defenses. The named plaintiffs’ claims cannot conceivably be typical of the claims of the strangers they seek to represent. These intractable problems are compounded by a virtually boundless class definition that produces an across-the-board class pervaded by conflicts among its members.  This kaleidoscope of claims, defenses, issues, locales, events, and individuals makes it impossible for the named plaintiffs to be adequate representatives of the absent class members. (continue reading…)

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Gov. Schwarzenegger: Legal Reform Helps Create Jobs

California Gov. Arnold Schwarzenegger proposed a “California Jobs Initiative” in his State of the State address last week, a legislative package he described in more detail at an event Monday in Torrance. The site was Ace Clearwater Enterprises, which manufactures complex formed and welded assemblies for the aerospace and power generation industries. (The company president is Kellie Johnson, a member of the NAM’s Executive Committee.)

The Governor’s plan is quite substantive, framed around these goals: To create 100,000 new jobs and train an additional 140,00 Californians; to streamline regulations to get shovels into the ground, extending the home buy tax credit; and to eliminate sales taxes on green-tech manufacturing equipment.

The fifth element — tort reform — is worth of special note given the efforts to block or even reverse legal reform in Congress. The fact sheet for the jobs initiative summarizes the section, “Reforming The Legal Climate For California’s Businesses”:

To foster an atmosphere where businesses can thrive, the Governor will propose a series of changes to regulations governing class action law suits, products liability suits and seek to cap punitive damage awards. Unfair and frivolous suits impact where companies locate or expand. California’s current litigation laws lead to large settlements with little value to consumers but become worth millions to lawyers at the expense of California businesses. Current statutes also impede growth by holding businesspersons liable for defective products – even if the seller had no knowledge or control over the defect – and allowing for punitive damage awards that are wildly unpredictable among similar cases.

The Governor will propose a set of statutory changes that will set forth clear guidelines for class action lawsuits improve California’s litigation climate by allowing defendants to appeal class action certifications and by requiring the plaintiff rather than the defendant to pay for notification to other potential class members. In addition, these reforms will provide for limitations on the scope of damages assessed against business persons for defective products and eliminate unreasonable and excessive noneconomic and punitive damages awards.

For more, see the the California Civil Justice blog, “Gov. Schwarzenegger Urges Legal Reforms to Improve Climate for California Businesses, and Dan Pero at AmericanCourthouse.com, “Schwarzenegger to Fight for Legal Reform.”

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Earlier, Litigation Against Dole was Proved a Fraud

Things were looking up for Dole legally even before a federal judge rejected a Nicaraguan court’s award against the company as coming from a fundamentally unfair legal system. (See earlier post.)

The latest edition of California Lawyer magazine covers the corrupt class-action case against Dole based on invented claims of chemical exposure in Nicaragua banana plantations. The article, “Rotten Bananas,” uses the rulings by Los Angeles County Superior Court Judge Victoria G. Chaney to tell the story. She denounced the lawsuit as “not just a fraud on this court, but …blatant extortion of the defendants.”

A “heinous conspiracy” by plaintiffs attorneys in Nicaragua and the United States had so infected “every aspect” of the cases, she said, that it is “not possible for this court to ensure a fair, untainted trial.” …She dismissed the plaintiffs’ claims with prejudice, “preventing their ability to ever come back, at least in this court, and hopefully in any other court, and raise these claims again.” She added, “I have serious, serious doubts about the bona fides of any plaintiff claiming to have been injured as a result of exposure to DBCP while working on banana plantations. Because of all this, lesser sanctions are wholly inadequate.”

But there’s always law firm willing to role the dice, down the shake. From a news release, announcing a $150 million lawsuit:

Austin, TX (PRWEB) October 19, 2009 — On November 2nd, HendlerLaw and The Lanier Law Firm will ask a Texas Court to certify an international class action against Dole Food Company, Inc., The Dow Chemical Company and others for DBCP related injuries to Banana plantation workers from various countries (cause # 93-c-2290, Texas State Court, Brazoria County).

The Class Action Complaint alleges exposure to DBCP while working on Dole and Chiquita Banana plantations caused sterility, renal damage, cancer and other health problems and contends Dole senior management expressly directed farm managers to disregard safe use guidelines.

With unemployment nearing 10 percent and the economy barely starting to recover, we hope, from the deepest post-WWII recession, we need to remember that suits like this damage business investment and economic growth. It’s a good time to reread the Pacific Research Institute’s “Jackpot Justice: The True Cost of America’s Tort System,” which reports, “[The] economic drag of the American tort system costs billions, lowering the standard of living for ordinary citizens nationwide.”

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Reversing Stoneridge, Stimulus for Class-Action Securities Suits

As noted here and here, Senator Arlen Specter (D-PA) is sponsoring a $1.6 billion tax break for trial lawyers, allowing them early deductions for loans to finance contingency fee lawsuits.

The Senator has now introduced another bill that benefits the litigation industry, in this case, the class-action securities lawyers. (Remember “King of Torts” William Lerach, who went to federal prison for his schemes.) The bill, S. 1551, is called the Liability for Aiding and Abetting Securities Violations Act and is is meant to overturn the U.S. Supreme Court’s 2008 decision in Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc.

The Wall Street Journal’s opinion page today describes what that means. From “The Specter of Unlimited Liability“:

In 2000, Scientific-Atlanta and Motorola agreed to sell cable boxes to Charter Communications, which was creative in booking these deals and had to restate its financial results. Scientific-Atlanta and Motorola had done nothing more than enter into contracts with its customer, Charter, on terms requested by that customer, and had accounted for the deals properly. Nonetheless, the Stoneridge investment firm sued the two suppliers, alleging a “scheme” against Charter investors.

In striking down this suit, the High Court called the case “a private cause of action against the entire marketplace in which the issuing company operates.” It also pointed out that Congress decided not to provide a private cause of action against secondary parties when it passed the Private Securities Litigation Reform Act in 1995 and Sarbanes-Oxley in 2002. The Securities and Exchange Commission already has the authority to punish fraud and distribute fines to victims. Private lawsuits are about trying to use expansive liability claims that distort justice and harm the shareholders of innocent but deep-pocketed companies.

And private lawsuits are what the bill from Senator Specter and Senator Jack Reed (D-RI) would encourage.

The NAM filed an amicus brief in the Stoneridge case. More …

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