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Well, now we know what Justice Scalia thinks of this stuff

April 28, 2011 6:29 PM

A lot of ink will be spilled discussing Concepcion.  Yesterday's decision may well have killed off, at least for companies that enter into validly-formed contracts with their customers, the kind of "spoils for the lawyers, crumbs for the class" class action that is of recent (<20 years) vintage and really deserves to die.  Indeed, one could almost hear Justice Scalia thinking of Russell's "Tort Twits" as he was writing the majority opinion.

That five Justices don't like consumer class actions very much isn't a surprise.  Just how broadly impactful the Concepcion decision will be, however, remains to be seen.  I, for one, will be mighty interested to watch what the Second Circuit does if it is asked to reconsider its decision from last month in the American Express Merchants' Litigation matter.  In that antitrust case, the Second Circuit refused to compel individual arbitration, as Amex's card acceptance agreement would require, because antitrust litigation is (in the court's view) so expensive to litigate that it would be economically irrational to do so if there can be no pot of class action gold for the lawyers at the end of the rainbow.  Removing the possibility of class certification, the court believed, would frustrate the purpose of the antitrust laws and leave the aggrieved merchants without a remedy.  If the Second Circuit reverses field in light of Concepcion, and sends that case to arbitration despite its misgivings, we will be able to hear the plaintiffs' bar screaming "Katy, bar the door."  If it does not, however, that decision will poke one very big hole in Concepcion that the Supreme Court will be asked to fill (but may not).  There are other potential holes in Concepcion, too, as I have written in an article I hope will be published next week.  More on that later.

(There's also that awfully pregnant footnote 6 in Concepcion, where Justice Scalia invites states to adopt a patchwork of regulations governing adhesive arbitration agreements, subject to what can only be described, with apologies to Justice Scalia, as an "undue burden"-like test to judge whether the state has made it too hard to arbitrate.  But now I'm really digressing from the topic at hand.)

The question on the table is whether Concepcion presages a blowout victory for Wal-Mart in Dukes.  I can't deny that Concepcion moves the needle in that direction.  For some reason, however -- be it actual wisdom or sheer stubbornness -- I still just don't think so.

I do agree with most everything in Russell's last post.  I believe the Court's decision in Dukes will (1) strongly reaffirm the idea of "rigorous scrutiny," (2) stress that district judges must have a clear and workable (i.e., lawful) plan as to how a class case will be tried, and (3) preclude using (b)(2) classes in situations that really must be scrutinized under (b)(3).  But now ask yourself:  Did the oral argument in Dukes suggest that a single Justice disagrees with any of these points?  (The district judge in Dukes had a trial plan, but as even the sympathetic Justices noted, that plan would have unlawfully prevent Wal-Mart from raising defenses it has a legal right to assert.)  Indeed, since the Second Circuit, in In re IPO, repudiated its earlier decision in In re Visa/MasterCard Antitrust Litigation ("we don't have to listen to the defense expert on certification issues if the plaintiff's expert's certification theory isn't facially insane"), has any Court of Appeals -- other than, of course, the Ninth Circuit in Dukes, by a mere one-judge majority -- diverged from these views even a little bit? 

I think, then, that Russell can get everything on his wish list, in language clear enough for every district judge in the country to understand, in an 8-1 or 9-0 opinion.  The question remains, however, whether the five-justice Concepcion majority will want to go further, blocking any kind of certification in Dukes and doing so in terms that blast Rule 23 to smithereens, or whether the Justices will agree unanimously, or close to it, to reverse the back pay certification but leave open the possibility of a narrow class that focuses on whether past discrimination, if proved, should yield a prospective injunction.

Will the five conservative Justices who agreed in Concepcion forego a chance for consensus if it exists?  I can't pretend to have special insight, but I don't think so.  If I'm wrong about this outcome, it's likely to be because I'm overestimating the Concepcion minority's hostility toward what the lower courts did in Dukes.  If Justices Breyer, Ginsberg, Kagan and Sotomayor want to write an opinion that would uphold the lower court's certification order in (or close) to its entirety, the winning five, who clearly disagree, might as well go to town when reversing.  But I just don't see it.     




Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.