State Can't Ban Class Actions, 11th Rules in Rotting Wood Case
Alabama can't ban consumer protection class actions, the Eleventh Circuit ruled yesterday. The state's consumer protection law prohibits deceptive practices, but doesn't allow wronged consumers to bring class actions. That put it in conflict with the Federal Rules of Civil Procedure which, at least in federal court, allow class action suits.
Applying highly fractured Supreme Court precedent, the Eleventh Ruled that the federal rules trump the state law. The ruling allows plaintiffs to continue to pursue their class action, in federal court, against wood manufacturers who allegedly failed to properly treat their wood.
Good Fences Make Good Neighbors, Bad Fences Just Rot
When Robert Lisk bought wood for his fence, he expected it to last. It didn't. Within a few years, the fence posts had rotted through. (Frankly, given how much of Alabama is swampland, we're surprised any wood can withstand the climate.)
Lisk filed a law class action in federal court, alleging that Lumber One, the wood manufacturer, had violated state consumer protection laws. According to Lisk, Lumber One defectively manufactured its wood and misrepresented it in advertising and warranties. Under state law, however, only allows the state Attorney General or district attorney to bring a consumer protection class action.
A Shady Grove for Your Rotten Wood
Thus, the Eleventh was faced with a conflict of federal procedural rules and substantive state law. The Supreme Court decided a similar case in 2010 -- sort of. In Shady Grove Orthopedic Associates v. Allstate Insurance, the High Court looked at a New York statute which allowed prohibited class actions for claims seeking statutory penalties. Should Rule 23, establishing class action procedures in federal courts, reign supreme or does federalism require the courts to respect the entire state law they are enforcing?
It's hard to say. The decision in Shady Grove was split 4-1-4 with no single rationale getting the support of a majority of the Court. Scalia authored a four Justice plurality, Stevens concurred separately, Ginsburg and the rest dissented. Scalia found that Rule 23 allowed class actions unambiguously, "by any plaintiff, in any federal proceeding." Ginsburg took up the mantle of the Erie doctrine, contending that federalism requires the courts to respect state regulatory policies. Stevens, out on his own, would allow the state rule to win when it is part of a substantive right or remedy, rather than a procedural rule.
In common practice, Stevens' concurrence would control, despite having no other support -- probably. In fact, there's little clear guidance from the Supreme Court. Under Marks, the holding in a case without a clear majority must be that "taken by those members who concurred in the judgment on the narrowest grounds." But, as lower courts have found, those grounds can be hard to determine.
But not here, the Eleventh ruled. Stevens "parted company" with Scalia only on "the proper approach for deciding" when a federal rule trumps a state law, not whether a federal rule does counteract a state prohibition. That holding, that Rule 23 beats the state law, binds this decision, the Eleventh said, reviving the class action.
- 11th Circuit Restores Class Suit Over Rotting Wood (Reuters)
- Even Mock-Wood Laminate Floor is Entiled to Copyright Protection (FindLaw's U.S. Eleventh Circuit Blog)
- First Circuit Goes Back to Erie Doctrine in NH Shooting Case (FindLaw's U.S. First Circuit Blog)
- Lumber Liquidators Gets Criminal Charges: Formaldehyde (FindLaw's Common Law)