The U.S. Supreme Court has again pulled the reins back against runaway trial lawyers who have been using "inventive" -- that is, bogus -- class-action claims to sue U.S. manufacturers.
Scotusblog summarizes, "The Court vacated and remanded the lower court’s decision in Sears, Roebuck & Co. v. Butler, a class action case involving environmentally friendly front-loading washing machines." The lower court in this case is the U.S. Court of Appeals for the 7th Circuit.
Ted Frank, who writes at PointofLaw.com and Forbes.com, previewed the case in practical terms. From " The Supreme Court Must Stop The Trial Lawyers' War On Innovation":
Front-loading machines use less water and energy than traditional top-loaders. But because the rubber door gasket is on the side of the machine instead of the top, water can collect around it; if a user does not wipe the door clean between uses, or does not use bleach in his most recent washes, mold can develop and give off what Consumer Reports has called a "musty" smell. The problem affects less than three percent of washers. Even with this possible side effect, Consumer Reports has rated this class of machines "best all around," and notes that users can prevent any mold problems with simple precautionary cleaning.
Nevertheless, Whirlpool has been targeted in an unfairly expansive group of class action lawsuits. The plaintiffs allege that the very fact that any mold reveals itself at all demonstrates the product is defective and that every washing-machine owner is entitled to damages, whether or not they've encountered mold. The claim that Whirlpool has done something wrong becomes substantially less sympathetic when one realizes that every major washing-machine manufacturer is facing a similar class action. Trial lawyers are seeking to profit off of manufacturers' efforts to produce environmentally-friendly machines.
Government-mandated environmentally friendly machines, Cato's Walter Olson reminds us.
Business Roundtable had joined the U.S. Chamber of Commerce, the Retail Litigation Center and the National Association of Manufacturers in a filing a friend of the court brief asking for certiorari in Sears v. Butler, challenging the Seventh Circuit's ruling that certified a multi-state, breach-of-warranty class action in which the only commonality among class members was their purchase of different models of the same brand of washing machine.
As our brief argued:
Amici are deeply concerned that, in this case, the Seventh Circuit departed from this Court’s controlling precedents and significantly relaxed the standards for class certification. In particular, the Seventh Circuit certified a massive breach-of warranty class spanning six states over a period of multiple years, notwithstanding the absence of any common questions that predominate over individual ones, and even though many putative class members have not suffered any injury. Instead, the court of appeals created a new test for class certification, holding that a class should be certified whenever the class action device is an “efficient” procedure for resolving allegations that a product is defective because at some point in the future it might fail to perform as expected under its warranty. Because many of amici’s members sell products in interstate commerce or manufacture products that are sold in interstate commerce, amici are concerned that the Seventh Circuit’s decision will dramatically increase their members’ exposure to expansive class-action liability, including in cases where there is no proof that any meaningful number of putative class members have suffered harm from any particular product.
In April, the court reversed and remanded a similar case, Whirlpool v. Glazer, following its key decision in Comcast v. Behrend. As Bloomberg explains in background for today's decision:
In the Comcast case decided in March, the Philadelphia-based cable provider was accused of monopolizing its hometown market. The customers who sued said Comcast swapped territories and subscribers with competitors to ensure that it could control the market and charge higher prices. Comcast, the largest U.S. cable company, has denied the allegations.
The high court, ruling 5-4, said the customers didn’t meet requirements for outlining a common method that could be used to set financial damages for each of the thousands of individual parties to the lawsui.
Makes sense to us: A class-action lawsuit should actually involve a class.
Earlier BRT Blog post.