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EDITORIAL: Jackpot justice

The Supreme Court gets another chance to crack down

- The Washington Times - Tuesday, May 28, 2013

The final weeks of a Supreme Court's term tend to be the most provocative. Hotly debated issues can take the longest to decide. When the court meets in conference on Thursday, it should exploit another opportunity to crack down on greedy class-action trial lawyers.

In March, the justices decided by a vote of 5 to 4 to restrain the ability of lawyers to sue in the name of a large group of people who may or may not want to participate in a lawsuit. Winning lawyers often pocket millions from their slice of the judgment, and "victims" walk away with a few dollars and a discount coupon.

The court has this second chance to strike a blow against jackpot justice by agreeing to hear Sears v. Butler, the second case of smelly washing machines to make its way to the Supreme Court.

Consumers who can't or won't read the manufacturer's instructions before using Whirlpool washing machines can in rare circumstances detect a moldy odor. Once trial lawyers learned this, they set out to find clients, dreaming of fat settlements. They obtained certification for class action from judges in the 6th and 7th U.S. Circuit Courts of Appeals.

Taking the issue to court often has little to do with resolving an actual problem. The lawyer for Sears, Timothy Bishop, argued that the moldy scent is rare. "There's no class here," says Mr. Bishop. "Fewer than 3 percent of buyers noticed a musty smell in the first five years of machine ownership. But the manufacturer's warranty is explicitly designed to address those cases and any others in which consumer products unexpectedly malfunction."

Judge Richard A. Posner of the 7th Circuit nevertheless ruled that it was more convenient to consider the lawsuits all at once. Only a small number of consumers were actually affected, but everyone within a certain geographic area who owned one of the machines was drawn into the suit, like it or not. In granting class-action certification, Judge Posner ignored the Supreme Court's guidance on class certification, which was handed down in a 2011 sex-discrimination case against Wal-Mart. Justice Antonin Scalia warned in that lawsuit that parties to class actions "must be prepared to prove that there are in fact ... common questions of law or fact."

Judge Posner said it was "a question of efficiency" to certify, with the common issue being whether the machines were defective, leaving the facts of the defect to be determined during the trial.

The Supreme Court should weigh in on this crucial point, the point about leverage. Once a trial lawyer gets class certification, his ability to extract a large settlement increases manyfold. Given the risk of losing such a suit, manufacturers choose to settle and pay huge sums to make the case go away.

The high court should raise the bar for class certification. Otherwise, manufacturers will continue to settle when they shouldn't, the price of appliances will increase, and only greed wins. That's what stinks.

The Washington Times

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