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Big Things Come in Small Packages: “This is dev­as­tat­ing because it sets up all class-actions to fail”

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COMMENT: “. . .‘This is dev­as­tat­ing because it sets up all class-actions to fail,’ says attor­ney Lori Andrus, who rep­re­sents sev­eral Volk­swa­gen plain­tiffs. . . . . ‘It’s incred­i­bly inap­pro­pri­ate for Con­gress to send the mes­sage that it’s OK to hurt peo­ple by the mil­lions,’ said Volk­swa­gen own­er Rebec­ca Kaplan. ‘The more peo­ple you hurt, the more this law will pro­tect you.’ . . .”

The EPA just filed a law­suit against VW over the diesel emis­sion scan­dal [6]. Wish them luck. Espe­cially if a bill mov­ing its way through Con­gress dubbed the “VW Bailout Bill” becomes law. If it does become law, the EPA just might be the only enti­ty that’s actu­ally able to bring a mean­ing­ful law­suit over the scan­dal. And not just in this case over the VW emis­sions. The “VW Bailout Bill” would effec­tively bailout any enti­ty poten­tially fac­ing a class-action law­suit.

This bill is only 100 words in length!! Big things come in small pack­ages!

“A Bailout for Volk­swa­gen? Con­gress Wants to Do Some­thing Absolute­ly Crazy”  [7]by David Dayen; The Fis­cal Times [7]; 1/4/2016. [7]

When Volk­swa­gen admit­ted to cheat­ing [8] on air pol­lu­tion stan­dards tests in Sep­tem­ber, it opened itself up not only to gov­ern­ment pun­ish­ment, but law­suits from 500,000 U.S. pur­chasers of its “clean” diesel vehi­cles. Volk­swa­gen has yet to fix the vehi­cles to bring them into emis­sions com­pli­ance, and even if it does, that will like­ly cre­ate a low­er-per­for­mance car than con­sumers paid for.

“Through­out these years, Volk­swa­gen has been lying to us,” says Rebec­ca Kaplan, an at-large mem­ber of the Oak­land City Coun­cil, who has been active in reduc­ing car­bon emis­sions in her city. “They’ve been under­min­ing the very things that I have been fight­ing for.” Kaplan, who has stopped dri­ving her non-com­pli­ant VW Golf TDI and reject­ed a low­ball trade-in offer from the deal­er, has joined one of hun­dreds of class-action suits [9] against the automak­er, like­ly to be con­sol­i­dated into a large mul­ti-dis­trict case.

The com­bi­na­tion of reg­u­la­tory over­sight and class-action lit­i­ga­tion can keep com­pa­nies in line. But a bill in Con­gress con­sist­ing of a lit­tle more than 100 words [10] would not only pre­vent Kaplan from seek­ing jus­tice but also crip­ple vir­tu­ally all class-action law­suits against cor­po­ra­tions. It’s known as the “Fair­ness in Class Action Lit­i­ga­tion Act,” but lawyers and advo­cates call it the “VW Bailout Bill.”

The bill, which will get a vote on the House floor [11] in the first week of Jan­u­ary, fol­lows a series of steps by the judi­ciary to block the cour­t­house door on behalf of cor­po­ra­tions. “There’s no ques­tion the Supreme Court has ben mov­ing in that direc­tion to lim­it access to courts,” said Joanne Doroshow, exec­u­tive direc­tor of the Cen­ter for Jus­tice and Democ­racy. “But Con­gress has nev­er done some­thing like this, try­ing to step in and wipe out class-actions.”

The sim­plic­ity of the VW Bailout Bill belies the chaos it would cre­ate. Pro­po­nents like the U.S. Cham­ber of Com­merce, the bill’s lead­ing lob­by­ist [12], say they mere­ly want to get rid of “non-injury” class-action cas­es, based on poten­tial dam­ages from defec­tive con­sumer prod­ucts or cor­po­rate actions that have yet to result in harm. Lawyers for class-action lit­i­gants argue that defec­tive prod­ucts deserve com­pen­sa­tion even if the con­sumer hasn’t yet been injured.

But the bill goes much fur­ther, stat­ing that courts may not cer­tify class-action suits unless the plain­tiff “affir­ma­tively demon­strates that each pro­posed class mem­ber suf­fered the same type and scope of injury as the named class rep­re­sen­ta­tive or rep­re­sen­ta­tives.”

“This is dev­as­tat­ing because it sets up all class-actions to fail,” says attor­ney Lori Andrus, who rep­re­sents sev­eral Volk­swa­gen plain­tiffs. If every class mem­ber must have the same type and scope of injury, it forces exten­sive proofs for class cer­ti­fi­ca­tion — essen­tially a full-blown tri­al up front, where plain­tiffs will have to prove that their injuries match with their fel­low rep­re­sen­ta­tives.

Not only would these tri­als be cost­ly, but they would empow­er cor­po­rate defense lawyers’ schemes to lim­it dam­ages. While cur­rent rules already require class mem­bers to have some lev­el of com­mon­al­ity and typ­i­cal­ity, the words “same type and scope” offer oppor­tu­ni­ties to refine that fur­ther. “It’s not clear what they mean by same injury,” says Andre Mura, anoth­er class-action plaintiff’s attor­ney. The terms are so vague, Mura argued, that they would have to be inter­preted repeat­edly, with unpre­dictable results.

In the Volk­swa­gen case, for exam­ple, “it could mean the same mod­el car, the same defeat device, the same emis­sions sys­tem, the same con­sumer harm,” Mura says. “When real­ly Volk­swa­gen engaged in the same course of con­duct on all their vehi­cles.” Defense attor­neys could claim that a class rep­re­sen­ta­tive who released few­er emis­sions because they drove few­er miles than their col­leagues, or drove in harsh­er weath­er, or with low­er tire pres­sure, should be exclud­ed from the case. That could either whit­tle down class­es to lim­it dam­ages or dis­qual­ify them from cer­ti­fi­ca­tion.

And the appli­ca­tions go beyond Volk­swa­gen. “In a mort­gage fraud case, the class might have all been deceived in same way, but the doc­u­ments signed might have been incon­sis­tent,” says Andrus. “Or with for-prof­it schools, they might have paid dif­fer­ent tuition or tak­en dif­fer­ent class­es.” Andrus has bat­tled these tac­tics before, but the con­gres­sional bill would cod­ify them into law. “There’s no ques­tion this was writ­ten by a defense lawyer whose job it is to defend cor­po­ra­tions,” she says.

With­out a class-action option, VW cus­tomers would have lit­tle recourse. “The dam­ages are not enor­mous in the sense that I could hire indi­vid­ual coun­sel,” says George Far­quar, a sci­en­tist and small busi­ness own­er from Liv­er­more, Calif., who is part of a class-action suit against the car­maker. “It’s amaz­ing this leg­is­la­tion is being con­sid­ered.”

A Con­sumer Finan­cial Pro­tec­tion Bureau study [13] found that vic­tims of just finan­cial-relat­ed class-action set­tle­ments received over $2 bil­lion in com­pen­sa­tion between 2008 and 2012, to say noth­ing of the changes in cor­po­rate behav­ior aris­ing from those cas­es. “The alter­na­tive is that those claims dis­ap­pear,” says the Cen­ter for Jus­tice and Democracy’s Doroshow. “You’re talk­ing about pro­vid­ing basic immu­nity (to cor­po­ra­tions).”


Incred­i­bly, the House is pair­ing the VW Bailout Bill with oth­er leg­is­la­tion designed to lim­it cor­po­rate lia­bil­ity. The FACT (Fur­ther­ing Asbestos Claim Trans­parency) Act would force pub­lic report­ing of per­sonal infor­ma­tion of asbestos vic­tims, in an effort to delay and lim­it com­pen­sa­tion for their poi­son­ing.

The Cham­ber of Com­merce also sup­ports the FACT Act [14], claim­ing it would pre­vent dou­ble-dip­ping by mesothe­lioma suf­fer­ers who may have been exposed to mul­ti­ple asbestos-lined prod­ucts. But the clear intent is to both chill vic­tims from com­ing for­ward and delay their com­pen­sa­tion. Because mesothe­lioma suf­fer­ers typ­i­cally only live between four and 18 months after diag­no­sis, this would shift many vic­tim claims to wrong­ful death, which has a low­er pay­out rate. Cor­po­ra­tions like Hon­ey­well [15] have finan­cial rea­son to want vic­tims of their use of harm­ful chem­i­cals to die quick­er, so they can pay their fam­i­lies less.

House pas­sage of the VW Bailout Bill and FACT Act is like­ly, but the Sen­ate could pro­vide a road­block. How­ever, as we saw with the year-end omnibus, ide­o­log­i­cal bills that can’t oth­er­wise pass on their own have a ten­dency to ride along [16] with must-pass leg­is­la­tion and become law.

Cor­po­rate immu­nity has been a major pre­oc­cu­pa­tion [17] of John Roberts’ Supreme Court. Rul­ings like AT&T Mobil­ity v. Con­cep­cion [18] and Amer­i­can Express v. Ital­ian Col­ors [19] allow cor­po­ra­tions to force their cus­tomers into manda­tory arbi­tra­tion, rather than the judi­cial sys­tem, to set­tle dis­putes. And 2011’s Wal­mart v. Dukes [20] tossed out class-action cer­ti­fi­ca­tion in a gen­der dis­crim­i­na­tion case, argu­ing that the retail­er couldn’t pos­si­bly have dis­crim­i­nated against all 1.5 mil­lion of its female employ­ees in the exact same man­ner. Sub­se­quent cir­cuit courts have fol­lowed Supreme Court prece­dent [21] and tight­ened class-action restric­tions.

But while the bar for class-action cer­ti­fi­ca­tion is already set incred­i­bly high, the VW Bailout Bill adds an entire­ly new set of require­ments, cir­cum­vent­ing not only judi­cial prece­dent but also a long­stand­ing fed­eral rule (Rule 23 [22]) that lays out class-action stan­dards. And it would pro­tect cor­po­ra­tions that engi­neer major frauds, where it is dif­fi­cult to bring thou­sands of indi­vid­ual claims.

“It’s incred­i­bly inap­pro­pri­ate for Con­gress to send the mes­sage that it’s OK to hurt peo­ple by the mil­lions,” said Volk­swa­gen own­er Rebec­ca Kaplan. “The more peo­ple you hurt, the more this law will pro­tect you.”

The GOP’s response to VW’s sys­tem­atic scam­ming of US con­sumers is to make it effec­tively impos­si­ble for not just VW’s con­sumers but ALL Amer­i­can con­sumers to wage a class-action law­suit against any cor­po­ra­tion at all.

VW own­ers can take their com­plaints into pri­vate-arbi­tra­tion courts that’s all the rage these days. The own­ers that accept­ed VW’s ‘good will’ $500 cash pay­ments will prob­a­bly aren’t going to have a choice any­way if they decide to sue since an arbi­tra­tion clause was added to the con­tract required to get the mon­ey [23]That should [24] go well [25]