January 7, 2013 11:52AM

SCOTUS to Weigh in on Class Action Abuse

I and others have written before on Standard Fire Ins. v. Knowles, the pending Supreme Court case on class action abuse (in which the Cato Institute has filed an amicus brief, courtesy Ilya Shapiro and the firm of Baker Hostetler) and now Roger Parloff has an excellent write‐​up in Fortune. Relevant excerpt:

…behind [Standard Fire’s] technical question lurks a lurid, tragicomic, outlandish back story. That story concerns the goings‐​on inside the circuit court of Miller County, Ark., where a handful of local law firms have made almost $400 million in fees over the past seven years, all from class‐​action settlements that have been procured without a judge’s ever having ruled that these cases are even worthy of class treatment, let alone meritorious.

Precisely how much cash the lawyers’ clients — the class members themselves — have received from the lawyers’ so amply‐​compensated efforts on their behalf is, on the other hand, a mystery to this day. Those numbers are regarded as “confidential” and “proprietary” by the plaintiffs attorneys, and have been found to be “irrelevant” by the Miller County court, which has repeatedly refused to order that information disclosed to defendants who have sought it.…

Belief in the reality and harmfulness of magnet jurisdictions is not viewed by the Supreme Court as a liberal or conservative issue. It’s seen as a matter of whether or not you were born yesterday. None of these justices were born yesterday. That’s why I think the vote in today’s case might be 9–0 for Standard Fire.

Parloff’s article is full of illuminating detail about how, given scope for sufficiently creative forum‐​shopping, a single rural county can wring enormous sums out of defendant businesses nationwide. Read it here.