January 23, 2012

Supreme Court passes up case on class action abuse and punitive damages

By Joshua P. Thompson Senior Attorney

The Supreme Court denied certiorari this morning in Farmers Insurance v. Strawn (Supreme Ct. docket no. 11-445).  PLF filed amicus briefs in both the Oregon Supreme Court and supporting the certiorari petition in this case.

The Oregon Supreme Court decision, which now stands, upheld a trial court decision allowing plaintiffs in a class action lawsuit to presume reliance, an essential element of their fraud claim.  PLF argued that the Due Process Clause prohibited a state court from relieving class members of the burden of proving every element of their claim, because such a presumption deprives the defendant of its right to assert individualized defenses.

The Oregon court’s decision was particularly objectionable, however, because it employed a trick common to that court — it created a post hoc procedural rule then concluded that, because the defendant (Farmers) failed to follow that rule, it had waived its constitutional challege to the punitive damages award.  The Oregon Supreme Court pulled the same maneuver in the Philip Morris v. Williams case a few years ago.  The purpose of this is to prevent the defendant from asserting a federal question in a cert. petition.  As a practical matter, it seems to be working.

What to read next