Sunday, February 07, 2016

236.2 - Good News: SCOTUS rejects corporate attempt to short-circuit class action suits

Good News: SCOTUS rejects corporate attempt to short-circuit class action suits

Consumers got a bit of Good News from an unexpected place: the US Supreme Court.

A company named Campbell-Ewald had been sending out unwanted text messages to cell phone users. Spamming your cell phone is illegal under federal law and someone who receives such a message may recover $500 for each violation.

A man named Jose Gomez was one such person and he sued. What's important is that he declared an intention to make this a class action. After all, just consider the cost and effort involved in suing a corporation against a possible return of $500. There is no way you can come out ahead. That's why class action suits, in which a large number of people, each of who had suffered a relatively small loss, band together in a single suit is usually the only way such violations can effectively be punished.

The thing is, whether or not a case is certified as a class action is determined later in the process, which means the defendant - Campbell-Ewald in this case - knows that is a possibility at the same time that only the original plaintiff or few plaintiffs - just Gomez in this case - are actually involved.

So Campbell-Ewald offered Gomez $1500 for each unwanted text message and then declared to the court that whether or not he accepted, his suit had to be dismissed because by offering Gomez as much as he could hope to get through his suit, the company had removed any dispute between the parties.

If that logic was accepted by the courts, it would enable corporations to short-circuit any potential class action by in effect buying off the original plaintiffs.

Happily, in a 6-3 decision, SCOTUS saw through that facile argument, noting that
[a]s every first-year law student learns, the recipient's rejection of an offer "leaves the matter as if no offer had ever been made."
Especially coming from a court that has been overtly hostile to class action suits -  it was in fact an earlier decision allowing corporations to impose bans on class action on those they dealt with that lead to the explosion in forced arbitration provisions that I talked about last time - so especially coming from a court that has been overtly hostile to class action suits, this was surprising good news.

Unfortunately, it's also tempered good news. First because despite what "every first-year law student learns," three of these supposedly great legal minds (and I expect you can guess which ones*) were prepared to side with the corporation, so hostile are they to consumer rights. And second because in its majority opinion the court also and I think rather bizarrely suggested a way corporations could try to get around the decision. Even so, at this point we have to take whatever we can get.

*Roberts, Scalia, and Alito, in case you couldn't.

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