March 31, 2011

Illinois Supreme Court agrees with PLF—limits class action lawsuit abuse

By Illinois Supreme Court agrees with PLF—limits class action lawsuit abuse

Author: Timothy Sandefur

The Supreme Court of Illinois issued a decision a few days ago in Barber v. American Airlines, agreeing with PLF’s friend of the court brief and overruling an old precedent that allowed lawsuits to go forward even if the defendant admitted he was wrong and paid the plaintiff everything she wanted.

In that case, the plaintiff was a woman who complained that American Airlines wrongly charged her $40 for checking her bag even though her flight was cancelled. She filed a lawsuit—but not just on her behalf; she said in her complaint that she wanted to bring the case as a class action case, which might hit American Airlines with millions of dollars in damages.

But Ms. Barber never actually got the case certified a class action. Instead, before she could do that, American Airlines refunded her the $40. Normally, that would end the case—it would be deemed “moot” and the court would throw it out. But some old legal precedents had created a rule called the “pick off exception,” which said that a defendant can’t escape a class action lawsuit by paying off the lead plaintiff’s demands. Of course, in Barber, the case wasn’t yet a class action—but some of the older precedents, particularly a case called Gelb, said that even before a case becomes a class action, a defendant can’t admit it was wrong and pay what the plaintiff demanded. That case said that even after a defendant waves the white flag, a court should keep the case alive to allow the plaintiff “a reasonable opportunity to file a motion for certification”—that is, to make the case into a class action lawsuit anyway, even though there’s no longer any actual dispute.

PLF argued that this idea was unjustified and dangerous—it would allow plaintiffs who have no actual lawsuit anymore to keep a case alive for the sole purpose of abusing the class action system and getting huge damages awards. We argued that “where all plaintiffs are made whole before judicial resolution, and there is no reason to believe the defendant will go back to injuring the plaintiff, the court has no further interest in the case and must dismiss it, regardless of the ‘diligence’ with which the plaintiff has acted in preparing to move for class certification.” And we urged the Court to overrule the Gelb case.

In its decision, the Illinois Supreme Court agreed:

where the tender is made before the filing of a motion for class certification…the interests of the other class members are not before the court and the case may properly be dismissed…. Gelb…is the only Illinois appellate decision we are aware of, other than the decision below, which specifically holds that a plaintiff’s claim is not moot when a tender is made before the filing of a motion for class certification…. Gelb is hereby overruled.

This is good news for businesses, which suffer from widespread class action abuse in this country—and particularly in Illinois. Our Free Enterprise Project has been involved in many cases urging courts to apply the rules of class action lawsuits more diligently. Most recently, we filed a brief in Dukes v. Wal-Mart, the gargantuan class action lawsuit that was argued before the U.S. Supreme Court only a few days ago.

By the way, if you’re interested in learning more about the abuse of class action lawsuits, check out the Center for Class Action Fairness, run by our friend Ted Frank.

And thanks particularly to Melanie Triebel and Rebecca Reeves of the Evan Law Group for being our local counsel in the Barber case.

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