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Supreme Court has given firms a stronger hand

This year, it gave firms a stronger shield against class actions. But it also ruled for several individuals suing employers and made it easier for car crash victims to sue automakers.

June 25, 2011|By David G. Savage, Los Angeles Times

Reporting from Washington — The Supreme Court, which winds up its term Monday, has once again shown itself to be highly skeptical of large lawsuits against big business, regardless of whether the suits are intended to protect workers, consumers or the environment.

This year, a 5-4 conservative majority gave companies a stronger shield against class-action claims from consumers who said they were cheated and from employees who said they were victims of discrimination.

The same five justices also blocked lawsuits against the makers of generic drugs for failing to warn patients of new dangers. And in a unanimous decision, the high court killed a broad lawsuit that sought to force the major power producers to limit the carbon pollution linked to global warming.

"They're very suspicious of lawyer-driven lawsuits," said Roy T. Englert Jr., a Washington attorney who defends businesses before the high court. "Some of these cases don't look as though they are about injured parties, but instead, they look like the lawyers are driving the bus."

He cited the late-April ruling in the case of AT&T Mobility vs. Concepcion, which consumer advocates said dealt a "crushing blow" to ordinary people who are cheated of small amounts.

The case began when a San Diego-area couple were charged $30.22 in sales tax for what was advertised as a free cellphone. The couple could have gone before an arbitrator and won as much as $7,500 in compensation, according to their cellphone contract.

Instead, they became lead plaintiffs in a class-action suit against the phone company.

"There was no reason for Mr. and Mrs. Concepcion to care about the class action, but the lawyers sure cared," Englert said.

The Concepcions lost when Justice Antonin Scalia wrote a broad opinion holding that individual arbitrations — not class-action lawsuits — are the way to resolve such claims.

The same theme was at work in a sex discrimination case against retail giant Wal-Mart Stores Inc. Scalia and his colleagues were aghast at the notion of a single lawsuit that would speak for 1.5 million women.

Two lawyers from Berkeley had spent 10 years building the class-action claim against the Arkansas retail giant, but the court's conservative majority said this week that the case should never have been allowed to go forward.

Scalia called the class claim "trial by formula," adding, "We disapprove that novel project."

But earlier in the year, the court, including Scalia, ruled for several individual workers who sued their employers for discrimination. The justices also made it easier for victims in car crashes to sue automakers over safety defects.

But those individual defeats for businesses are not likely to prove costly to corporations, at least in comparison with the class actions.

Robin Conrad, counsel for the U.S. Chamber of Commerce, said that this year has been a "mixed bag overall" but that the rulings limiting class actions were "huge wins for business."

The American Assn. of Justice, which represents the nation's trial lawyers, saw no mixed picture. By knocking out large lawsuits, the court is "granting immunity to corporate wrongdoers who cheat customers or abuse employees," the group said.

Gibson Vance, the group's president, said ordinary employees and consumers will have no legal remedy if they cannot band together in a class-action claim.

"The Supreme Court has sent a loud and clear message to the American people: 'You're out of luck and on your own,'" he said.

If there was a sleeper win for business, it may have come in Thursday's decision striking down a Vermont law protecting the privacy of drug prescription records. Data and information are an increasingly valuable commodity, and it is unclear how much the government can regulate or protect such data.

The court's opinion seems to say the private marketplace will decide.

"The creation and dissemination of information are speech within the meaning of the 1st Amendment," said Justice Anthony M. Kennedy, so the government cannot regulate the message.

Vermont's lawmakers thought they were protecting a patient's private prescriptions from being turned into a marketing tool for drug companies. But the justices, in a 6-3 decision, ruled the law unconstitutional and said these prescription records may be bought and sold in the marketplace.

Three liberal justices, in dissent, said the freedom of speech protected by the 1st Amendment was not intended to give companies a right to private data so that they could "create better sales messages."

david.savage@latimes.com

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