Justice

Justice Ginsburg Hands Surprise Victory To Consumers Over Big Business

CREDIT: AP Photo/Jacquelyn Martin

An effort to gut one of the most important mechanisms the law uses to deter businesses against widespread violations of the law failed on Wednesday, when the Supreme Court handed down its 6-3 decision in Campbell-Ewald v. Gomez. Had the defendants, who were backed by powerful business interest groups such as the U.S. Chamber of Commerce and the Business Roundtable, prevailed in this lawsuit, it would have significantly altered the balance of power between large corporations and their customers and workers.

Campbell-Ewald involved a company that allegedly sent many unsolicited text messages to various cell phone users. Under federal law, someone who receives such a message may recover $500 for each violation of the law. The named plaintiff in this case, Jose Gomez, is a man who received one of the unwanted messages.

This tiny case about an annoying message took on far greater importance, however, because Gomez also sought to bring a class action on behalf of others who also received the unsolicited messages. As ThinkProgress previously explained, class actions are often the only mechanism available against defendants who commit small-scale violations of the law against many different individuals:

Suppose that a company cheats you out of a few hundred dollars. While you’ll probably be angry and may make some irate phone calls to the company’s customer service line, chances are you’re not going to sue if the company refuses to back down. The cost of bringing a lawsuit will greatly exceed any amount you are likely to recover from the company, and you are unlikely to find a lawyer willing to take such a small-dollar case unless you agree to pay that lawyer expensive hourly fees.

Class action lawsuits are often the solution to this problem. If the company cheats you and you alone out of a few hundred dollars, you’re probably out of luck. But if the same company illegally cheats thousands of people out of a few hundred dollars as part of the same scheme, class actions allow those thousands of people to join together in one grand lawsuit. Because their combined suit is now worth a lot of money, they are suddenly likely to be able to recruit excellent legal counsel to represent the class.

Campbell-Ewald, however, sought to allow class action defendants to sabotage these lawsuits. Typically, such lawsuits begin when a single plaintiff or small group of plaintiffs file a complaint laying out their allegations. Though Gomez’s complaint indicated his intention to bring this case as a class action, the question of whether the case can proceed as class litigation is not decided until later in the proceedings. That created an interim period when the defendants knew that a class action was coming, but the only plaintiff properly before the court was Gomez.

During that interim period, the defendant company offered Gomez $1,500 per unwanted text message that he received — an offer that would effectively buy off Gomez but leave the other class members with nothing. They then claimed that, even if Gomez did not agree to this offer, the lawsuit had to cease. Under Article III of the Constitution, the company argued, a lawsuit must not proceed unless there is an active “case” or “controversy” between two parties. So when the defendant company offered to give Gomez everything he personally could expect to collect under the law, that offer allegedly rendered the case moot because there was no longer a real dispute between the two sides.

Prior to today, there was good reason to believe that this defendant would prevail — and class action defendants would win the right to shut down class actions by buying off named plaintiffs. The Roberts Court has historically shown considerable hostility towards class actions. And a majority of the Court appeared skeptical of Gomez’s arguments when the case was argued. Mr. Gomez, who didn’t exactly experience a crippling injury, also isn’t the most sympathetic plaintiff — although a loss by Gomez could have had sweeping consequences for all other class action plaintiffs.

Nevertheless, Justice Ruth Bader Ginsburg’s opinion for the Court rejected this attempt to limit the class action. Quoting from a previous dissenting opinion by Justice Elena Kagan, Ginsburg explained that “an unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect. As every first-year law student learns, the recipient’s rejection of an offer ‘leaves the matter as if no offer had ever been made.’” Thus, when Gomez decided not to be bought off by the defendant, the case had to proceed as if the defendant’s offer never happened.

Justices Anthony Kennedy, Stephen Breyer, Sonia Sotomayor and Kagan joined Ginsburg’s opinion, while Justice Clarence Thomas agreed with the result of Ginsburg’s analysis but not her reasoning. Chief Justice John Roberts and Justices Antonin Scalia and Samuel Alito dissented.

Wednesday’s opinion is not a total victory for class action plaintiffs. Ginsburg caveats her reasoning by noting that “we need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff ’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.” So it is now all but inevitable that a class action defendant will attempt this gambit in an effort to avoid having to defend against a class suit. It remains to be seen whether Ginsburg will keep her majority when that case makes its way to the justices.

In the mean time, however, the class action is saved from a legal attack that could have rendered it a near-nullity.