Once in a while, I pop off and say something I don't think is provocative -- like I did last week in saying that class actions are procedural tools that cannot deprive the defendant of putting on its defenses against individual class members' claims. And then the firestorm begins. That's a "naive" view, I've been told. "Not very nuanced." Even "unsophisticated."
It also happens to be right. So you can imagine my glee when a loyal reader of this blog shared with me Justice Scalia's recent opinion granting a stay in a tobacco class action, Philip Morris USA Inc. v. Scott, No. 10A273, 561 U.S. ___ (2010). In Scott, the defendant had sued in Louisiana state court on behalf of a statewide class of smokers, claiming that the defendants had defrauded the class by "distorting the entire body of public knowledge" about nicotene and its effects. An intermediate appellate court had granted relief to the class, setting up a quarter-of-a-billion-dollar fund to provide smoking cessation programs to class members for ten years. The Louisiana Supreme Court declined review, so the defendants are seeking review in the US Supreme Court and asked Justice Scalia for a stay of the judgment.
Justice Scalia granted the stay, which is newsworthy itself. But even more important is what he said about consumer fraud class actions and due process in the opinion. Now remember, the criteria for granting a stay requires a Justice to find that it's reasonably probable that certiorari will be granted, that the petitioner will prevail, and that the petitioner will be irreparably harmed. With that framework in mind, get a load of this:
[T]he tort of fraud normally requires proof that the plaintiff detrimentally relied on the defendant's misrepresentations. . . . But the Court of Appeal held that this element need not be proved insofar as the class seeks payment into a fund that will benefit individual plaintiffs . . . Thus, the court eliminated any need for plaintiffs to prove, and denied any opportunity for applicants to contest, that any particular plaintiff who benefits from the judgment (much less all of them) believed applicants' distortions and continued to smoke as a result.
. . . The apparent consequence of the Court of Appeal's holding is that individual plaintiffs who could not recover had they sued separately can recover only because their claims were aggregated with others' through the procedural device of the class action.
The extent to which class treatment may constitutionally reduce the normal requirements of due process is an important question. . . . [T]his suit typifies the sort of major class action that often will not be removable, and in which the constraints of the Due Process Clause will be the only federal protection. . . . This constitutional issue ought not to be permanently beyond our review.
. . . I think it reasonably probable that four Justices will vote to grant certiorari, and significantly possible that the judgment below will be reversed. . . . If expenditures cannot be recouped, the resulting loss may be irreparable. . . . Funds spent to provide anti-smoking counseling and devices will not likely be recoverable.
Id. at 2-4.
Will the Supreme Court hold that a State violates due process by reading the reliance requirement out of consumer fraud class actions, but imposing it in individual cases for the same cause of action? What protections are required by due process to preserve a class defendant's right to challenge the elements of absent class members' individual claims? And what effect, if any, does the fact that this is purportedly "equitable" relief have on the due process analysis?
Holy imponderable questions, blog-man!
Tune in later this term. Same blog time, same blog channel.