TOUGH CLASS

Times are tough for class actions.  In the span of a couple of weeks in April, three decisions came down from the Federal and Florida Supreme Courts that made pursuing a class action that much more difficult.

The Florida Supreme Court added its weight to a slightly older U.S. Supreme Court decision.  It confirmed that arbitration agreements consumers enter into when they sign up for a new phone or credit card (for example), and which contain a waiver of any right to bring a class action, are valid.  They must go at it individually.  The Florida Supremes were invited to make an exception that had not been considered at the federal level for cases when consumers would certainly be unable to vindicate their right without a class action.  It declined to do so.

Back in Washington, the U.S. Supremes considered what happened if the individual plaintiffs seeking to represent a class settle before there is a class approved (or in law term, “certified”) by the court.  A new and popular way for defendants to ward off a class action is to quickly try to settle with those individuals.   The Court ruled that if the named plaintiffs fully settle before a class is certified by the trial court, there can be no class action.  Indeed, the controversy that brought the matter to the court in the first place no longer exists, since the named plaintiffs are no longer harmed, and there was no class in existence yet as a matter of law.

The third case gets a little technical.  Suffice to say, a requirement to bring most class action is that the questions of law that need resolving be common to the whole class.  The U.S. Supreme Court recently interpreted that to mean answers common to the class must also exist.  This will require the trial judges to inquire (at least to a degree) into the merits of the claims before trial, indeed before they can certify that a class exists.  A common question may be whether a false written statement caused damages.  A common answer requires determining how readers acted when they read it, a much more in-depth analysis.

Then again, class certification is sometimes more important than trial.  The stakes become enormous the moment a class exists, and class defendants often feel forced into a settlement by a certification decision.