The End of Class Actions? U.S. Supreme Court Considers Important Case

November 06, 2015

In 1966, the U.S. Supreme Court revised Rule 23 of the Federal Rules of Civil Procedure and gave birth to the modern “opt-out” class action – the legal vehicle that allows one representative to bring suit on behalf of an entire group, seeking redress from a common defendant (or defendants) for damages suffered by each member.  Consumer advocates champion the class action because it helps to level the playing field between average Americans and corporations with superior commercial savvy and vast financial resources to spend on litigation. If consumers were forced to individually litigate every claim where it was alleged that a corporation had wrongfully taken dozens or even hundreds of dollars, those consumers would find it either impractical or impossible to find competent legal counsel to assist them in pursuing justice.  Conversely, corporations would no longer have the substantial deterrent of the class action keeping them honest – the financial benefit of engaging in deceptive or unfair (but lucrative) business practices would likely far outweigh any cost of individually litigating a few cases.  So it’s a good thing we have class actions to help safeguard the interests of the little guy, right?

Not so fast.  The U.S. Supreme Court led by Chief Justice John Roberts, having already done much damage to consumers with its past corporate-friendly arbitration rulings, is now considering a case that has the potential to eviscerate class action practice as we know it and undermine consumer advocates’ ability to effectively wield class actions as weapons against unfair and deceptive business practices.

Campbell-Ewald Co. v. Gomez addresses a common defense tactic known as “picking off” the class representative in a class action, through which a defendant could render the class representative’s claims moot by offering complete individual relief to that person but providing nothing for the class, regardless of whether the class representative actually accepted the offer.  Of course, the practical effect of ruling that a class representative’s class claims can be mooted solely by an individual offer of relief would be a death to the class action as a whole, as a defendant could simply “pick off” any would-be class representatives and avoid paying a dime to all those other unlucky souls who might have otherwise had a valid class claim.

Oral argument of the case has been completed and the Court has taken the matter under consideration; a decision is likely to come down in early 2016.


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