The Supreme Court this month received the first round of briefing in a case that could cure one of the newest, most significant abuses in our civil justice system: massive class actions that lawyers file on behalf of people who are not injured. In these cases, the class action plaintiffs’ lawyers use novel legal theories and damage models to get their classes certified and then count on companies to settle the claims and pay them attorney fees – sometimes for more than the class members will end up collecting from the settlement.
The whole point of civil litigation is to make people whole for their losses. Any person who is not injured and has no loss to be corrected should have his or her claim dismissed. The person has no substantive legal basis for the claim, and Article III of the U.S. Constitution gives federal courts jurisdiction only over cases where people allege actual injury traceable to the defendant. But, what happens when uninjured people are nonetheless swept into federal class actions?
This is the issue before the Supreme Court in Tyson Foods, Inc. v. Bouaphakeo. The plaintiffs’ counsel used a controversial damages model to turn discrete wage-and-hour claims for some Tyson employees into a much larger class action. They created an “average employee,” claiming that this “average employee” would be due overtime pay if the time taken to put on and take off protective gear was included in the work week. They then sought to have every class member – some 3,300 people – paid the same overtime as the “average employee,” regardless of how much the real employees actually worked, spent putting on and taking off gear, or were paid.
The problem is that hundreds of class members had no injury at all. It was clear under the plaintiffs’ own statistical sampling model that these employees were fully paid, even accounting for the time to put on and take off gear. Yet, the district court certified the case as a class action with these uninjured people. At trial, the jury found that the modeling majorly overstated the damages and about half of the class had no or only a de minimis injury. Yet, the court allowed all class members, including the uninjured, to get the same pro rata share of the award.
This case has huge national implications because class action lawyers have become adept at developing novel theories for filing claims for uninjured individuals. Variants of “no injury claims” have arisen in product liability, data privacy and many other areas of law. In some cases, as in Tyson Foods, class action lawyers try to hide a sizeable number of uninjured claimants among those who may have been injured. Many class actions these days are based nearly entirely on legal fictions created by the class action lawyers.
For example, there is a raft of lawsuits against front-loading washing machine manufacturers alleging that front-loaders are more likely than top-loading washers to develop mold. Rather than sue for only those who have experienced this alleged defect, the class actions seek to represent everyone who owns the machines. The same is true in car cases. Class action lawyers have filed class actions for all owners of a given car model when a manufacturer voluntarily recalls the car. As one lawsuit alleged, the owners paid for a “problem free” car and were injured by buying a car that could have a defect. They say it is irrelevant that most customers never had the defect and those that did could have their cars fixed for free.
The vast majority of people in these cases never claim any award; they were likely satisfied with their purchase or pay. But, their presence distorts the litigation. People with actually injuries get less than what it may take to make them whole. Also, by expanding the overall size of the award, the class action lawyers generate more legal fees. Let us not forget former class action maven Bill Lerach’s comment, “I have the best practice in the world. I have no clients.”
Access to justice is the hallmark of our civil justice system, but justice is not served when people who are not injured get paid as if they were. The answer is simple: require lawyers to define classes that include only injured people. If this is too hard, that is a sign that the claims are not appropriate for class treatment and should be pursued individually. There is no presumption for class actions. It is a legal shortcut only for when individual claims are based on common facts, including common injury. Lawyers should not be able to manipulate class actions to convert deficient claims into viable ones. Short cuts work only when they lead to the same place.
Goldberg is the director of the Progressive Policy Institute’s Civil Justice Center and partner in the Public Policy Group in the Washington, D.C. office of Shook, Hardy & Bacon, LLP. On August 14, 2015 he filed an amicus brief in Tyson Foods, Inc. v. Bouaphakeo on behalf of the National Association of Manufacturers, Alliance of Automobile Manufacturers, Association of Home Appliance Manufacturers, American Tort Reform Association, American Petroleum Institute and Metals Service Center Institute.