WASHINGTON, DC.— The Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes imposed significant controls on the certification of class action lawsuits in federal courts. In a brief filed today with the High Court, the Washington Legal Foundation urged the Court to rule that Wal-Mart’s controls on class actions should be applied to state courts as well.
WLF filed its brief in support of petition for review of a decision of the Montana Supreme Court, which certified a massive class action against Allstate Insurance Co. The suit was filed by one individual unhappy with the way his insurance claim was handled, but the court named him as the representative of a class consisting of every Montana resident who settled a claim with Allstate without the assistance of a lawyer, at any time in the past 20 years. Brushing aside Allstate’s insistence that all claims settlements turn on a unique set of facts, the Montana court held that one massive class action trial will be used to determine whether Allstate’s settlement practices violated Montana law. If a jury finds against Allstate, then every class member will be entitled to seek both compensatory and punitive damages.
Wal-Mart held that federal rules governing class actions do not permit federal courts to certify class actions in this manner because the result is to unfairly deprive defendants of the right to raise all available defenses. The Supreme Court held that simply because a jury finds that a defendant treated one plaintiff unfairly is not a reason to prevent the defendant from submitting evidence that it did not treat another plaintiff unfairly. WLF’s brief argued that the Wal-Mart rule is essential to any concept of procedural fairness and thus should be binding on state courts as well—by operation of the 14th Amendment’s Due Process Clause. WLF argued that class certification orders of the sort issued by the Montana Supreme Court are all too common and essentially force defendants to settle even the most frivolous lawsuits. Following the filing, WLF issued the following statement by Chief Counsel Richard Samp:
“Class actions of this sort—in which the claims of each policyholder turn on facts specific to him—are virtually never appropriate because they could never be brought to trial; yet they serve the purposes of the plaintiffs’ bar by imposing tremendous settlement pressure on defendants. The Supreme Court ought to hold state courts to the same standards imposed on federal courts. ”
WLF is a public interest law firm and policy center that regularly litigates in support of tort reform, to ensure that the costs of unwarranted lawsuits do not drive up costs for all consumers.