It is unlikely any nominee will be as favorable to business as Justice Scalia was. That appears to be the consensus, at least. Dow Chemical agreed to pay $835 million to side-step a SCOTUS sans Scalia, causing many big company, class-action defendants to take notice. Many now predict Scalia’s passing will force them to re-assess their risks and re-think their appellate strategy.
In his nearly thirty years on the bench, Scalia built a rather staunch reputation as a hard-core conservative when it comes to class actions. He was an avid defender of arbitration provisions which often put the kibosh on class certification. In his AT&T v. Concepcion 2011 majority ruling and his American Express v. Italian Colors 2013 majority opinion, Scalia backed enforcement of the arbitration agreements at issue which thwarted class treatment of the claims. He also built a platform for tighter certification requirements with his 2011 Wal-Mart Stores v. Dukes and 2013 Comcast Corp. v. Behrend opinions which required class-action plaintiffs to show, at the certification stage, that damages can be measured on a class-wide basis - a pretty tall order. Class action defendants were grateful and many political commentators believed the result would be a 5-4 majority ruling in favor of the defendant in the recent Tyson Foods, Inc. v. Bouaphakeo et al. matter which was argued before the Supreme Court last November.
Dow was waiting in the wings. After suffering a pretty hearty blow in 2013 when the jury awarded a $1.06 billion dollar award against it as a result of an alleged price-fixing scandal involving urethanes, Dow had fought the appellate route for years to bring its case to SCOTUS’s door. Dow was accused of conspiring with four other chemical makers to fix the price of chemicals used to make foam upholstery for furniture and plastic walls in refrigerators. After the Tenth Circuit upheld the $1B award, Dow urged the Supreme Court to hear its case, insisting that the Tenth Circuit’s finding conflicted with Scalia’s conservative Dukes and Comcast standards for class certification. With Scalia leading the charge on the bench, things were looking favorable. All of that changed, however, with Scalia’s recent passing. Rather than chance its billion-dollar judgment with a 4-4 court that─if deadlocked─would result in affirmation of the Tenth Circuit’s unfavorable ruling, Dow decided to settle - to the tune of $835 million.
“Growing political uncertainties due to recent events within the Supreme Court and increased likelihood for unfavorable outcomes for business involved in class action suits have changed Dow’s risk assessment of the situation,” Dow said in a recent public statement. I’ll say. While $835 million is no small amount, it beats a billion-dollar judgment that has been growing with post-judgment interest since 2013. It will be interesting to see if other big company class-action defendants follow the trend and reverse their Supreme Court strategy. A high court without Scalia is undeniably less predictable and less conservative. It is unlikely many companies will settle quite as quickly as Dow but Scalia’s passing has definitely had an impact. We predict it will evolve into a ripple effect that influences many class-action defendants’ strategies at the outset of litigation.
This may also have an impact on the judicial side. Without Scalia on the bench to give the kind of bulldog review of appealed opinions of the lower courts, judges that were inclined to give a little stretch to Scalia’s Dukes and Comcast opinions, but did not in fear of a Scalia backlash, may now find the bravado to rule a little differently. It will be interesting to see the trickle-down effects of the loss of one voice on the high court.
Do you suspect an upcoming pattern of retreat for class-action defendants that previously had their sights set on a favorable Scalia-influenced high court review? More importantly, do you believe you will initiate a change in your own litigation and appellate strategies in light of a SCOTUS sans Scalia?