Page 4 - Commercial Litigation

S4 | MONDAY, AUGUST 8, 2016 | Commercial Litigation
| NYLJ.COM

After Scalia,

Court Shows Diminished

Class Action
Appetite for

Appeals

M
/ AL
CHI
INS
ADZ
M. R
GO
DIE

commonality analysis] is not the raising of surement on a classwide basis.9 The Com- arbitrations are enforceable even where the
common questions [by the class] . but, cast plaintiffs had advanced four theories cost of individually arbitrating federal statu-
BY LAWRENCE T. GRESSER,
PATRICK M. CONNORTON rather the capacity of a classwide proceeding of damages, only one of which the district tory claims exceeds the potential recovery.
AND NICOLE PASCHAL
to generate common answers apt to drive court accepted. Because plaintiffs’ expert Justice Scalia reasoned that the FAA requires
Dthe resolution of the litigation.”6 By focusing report did not isolate the damages resulting rigorous enforcement of arbitration agree-
uring his nearly 30 years on the U.S. on common answers rather than common from the accepted theory, the court found ments absent a “contrary congressional
Supreme Court, Justice Antonin Sca- questions, Justice Scalia turned what was that plaintiffs failed to proffer a methodol- command.”13 Because the antitrust statutes
lia shaped the court’s jurisprudence in previously a low bar for class plaintiffs into ogy capable of establishing damages on a plaintiffs sued under in Italian Colors evinced
nearly every area of the law, but perhaps no a serious hurdle. And it was one that the classwide basis. In other words, plaintiffs no such congressional command, the court
area more dramatically than class actions. In class in Wal-Mart, which comprised 1.5 mil- were required to establish that questions enforced the parties’ waiver of class arbi-

the past ive years, Justice Scalia authored lion current and former Wal-Mart employees of individual damage calculations do not trations, effectively ending plaintiffs’ case.
opinions that strengthened the commonality who alleged gender discrimination, could predominate, and could not postpone this Justice Scalia’s Italian Colors opinion may
requirement of Rule 23(a), the predominance not clear. The court found plaintiffs did inquiry to the merits stage. While some have been his gravest blow to class action
requirement of Rule 23(b)(3), and the enforce- not carry their burden of establishing that commentators questioned whether Com- plaintiffs. Notably, the Consumer Financial
ability of class action waivers in arbitration their common question—why was I dis- cast doomed all class actions requiring Protection Bureau responded to Italian Col-
agreements. Since Justice Scalia’s passing on favored?—was susceptible to a common individual damages calculations, lower ors by proposing a rule (still under review)
Feb. 13, 2016, the court has shown a dimin- answer.
courts have responded by bifurcating liabil- that would prohibit banks and financial
ished appetite for class action appeals and Wal-Mart was also signiicant due to Jus- ity and damages in many instances, trying service companies from employing such
has arguably retreated from some of his tice Scalia’s rejection of plaintiffs’ attempt to liability on a classwide basis and damages waivers.

positions. Here, we examine Justice Scalia’s prosecute a “Trial by Formula.”7 In certifying individually.10
These four opinions irmly established
class action legacy, consider recent develop- plaintiffs’ claims for back pay, the Ninth Cir- Justice Scalia also took on class actions Justice Scalia as the court’s class action
ments following his death, and assess what cuit had suggested that statistical sampling through the vehicle of the Federal Arbitra- tamer, and it looked as though there was
the future holds for class action litigation at could replace individualized determinations tion Act (FAA). In Concepcion,11 the court more to come this Supreme Court term.
the Supreme Court.
of each employee’s eligibility for back pay. found that the FAA preempts state rules that Then, on Feb. 13, 2016, Justice Scalia sud-
The Circuit Court envisioned that a special condition the enforceability of arbitration denly and unexpectedly passed away in his
master would determine Wal-Mart’s liability agreements on the availability of class arbi- sleep on a hunting trip in Texas.
Scalia’s Class Action Jurisprudence
as to a sample set of class members and then tration procedures. Justice Scalia reasoned
Justice Scalia’s most consequential class extrapolate the special master’s indings to that such rules are inconsistent with the FAA
Developments Since Scalia’s Passing
action opinions are Wal-Mart Stores v. Dukes,1 the remaining class members. Justice Scalia because class arbitrations (1) eliminate the
Comcast v. Behrend,2 AT&T Mobility v. Concep- rejected this “novel project” on the ground beneits of arbitration, namely, informality, Since then, we have seen several develop-
cion,3 and American Express v. Italian Colors.4 that it would abridge Wal-Mart’s right to liti- speed, and cost-effectiveness; (2) require ments in the world of class action litigation.
In each, Justice Scalia wrote the majority gate statutory defenses to individual claims.8 procedural formality to protect/bind absent First, class action defendants have become
opinion for a 5-4 court.
Because many purported class actions relied class members; and (3) increase risks to more reluctant to leave their fate to the
In Wal-Mart, Justice Scalia reframed the on statistical sampling, some commenta- defendants through high-stakes, complex Supreme Court. The most striking example
commonality requirement of Federal Rule tors believed that the Supreme Court’s rul- class arbitrations while denying defendants of this trend was Dow Chemical’s decision to
of Civil Procedure 23(a).5 According to Jus- ing would dramatically curtail future class the right to appeal. Justice Scalia’s Concep- settle an antitrust class action pending before

tice Scalia’s opinion, “What matters [in the
actions.
cion opinion essentially prevents states from the Supreme Court for $835 million. In a public
In Comcast, Justice Scalia gave Rule 23(b)(3)’s devising rules that ensure the availability of statement explaining its decision, Dow alluded
predominance requirement new teeth: Class class actions where plaintiffs contract that to Justice Scalia’s death: “Growing political
LAWRENCE T. GRESSER is the managing partner plaintiffs seeking classwide damages would remedy away.
uncertainties due to recent events with the
of Cohen & Gresser. PATRICK M. CONNORTON and now have to establish at the certiication In Italian Colors,12 the court held that, pur- Supreme Court and increased likelihood for
NICOLE PASCHAL are associates with the firm.
stage that damages were capable of mea-
suant to the FAA, contractual waivers of class
unfavorable outcomes for business involved