JOYCE: A class-action blow to U.S. manufacturing
The U.S. Supreme Court has until Friday to determine whether it will hear an appeal involving a class-action lawsuit against Whirlpool, the nation’s largest washing machine manufacturer. Until then, the future of all manufacturing in the United States hangs in the balance.
The case is one of dozens that class-action attorneys have brought against every major maker of washing machines sold in the United States. If the high court ultimately lets stand the legal theories of liability these attorneys are advancing, the resulting flood of litigation will not be contained in the laundry room. Virtually every U.S. producer of durable goods, for which August orders alarmingly plummeted 13 percent, will be subjected to the constant threat of crippling litigation and the erosion of global competitiveness that goes with it.
The contingency-fee lawyers suing Whirlpool claim that all modern water- and- energy-efficient, fabric-friendly, front-loading washing machines aren’t good enough. Why? If not properly maintained, these washers can develop a moldy, musty odor. The lawyers acknowledge this is true of older washers, too, but they say modern washers smell more often. Estimates of potential jury awards against the industry overall range into billions of dollars.
Like many class actions ginned up by plaintiffs’ lawyers, this case does not lack for gall in its intent to inflate the class size and thus the enormity of a damages award. For example, it demands payments to the overwhelming majority of class members who have never experienced a moldy odor in their washers, including people who have happily owned their machines for 10 years or more.
Meanwhile, Consumers Union reliability surveys indicate that less than 1 percent of owners of modern washing machines report a smell four years after purchase. Data from Sears, one of the nation’s largest sellers and servicers of washing machines, similarly show only 2 to 3 percent of consumers reporting such problems. Such paltry complaint numbers, without a class action’s multiplier effect, could never deliver the mega-jackpot that big-time plaintiffs’ attorneys now often seek.
So the question before the Supreme Court, should it choose to hear the defendant’s appeal, is one of class certification. That decision will go a long way in determining the final outcome of the suit. Certification of a huge class all but guarantees a settlement favorable to the plaintiffs’ lawyers because few companies, regardless of how strong their case may be, will risk a jury verdict that could cost them billions.
Last year, the high court recognized this problem and tightened the standards for certifying a class in a landmark employment case. The justices ruled that individuals comprising a class must share “common questions of law or fact” determined after “rigorous analysis” of the “merits of the underlying claim.”
The Whirlpool lawsuit includes 21 distinct machine models. The two named plaintiffs did not maintain their machines as specified and continued using them even after the suit was initiated. Most of the purported class never smelled mold. How could a federal district court in Ohio and the 6th U.S. Circuit Court of Appeals grant and then uphold class certification in light of these facts?
If certain lower courts are allowed to ignore a major Supreme Court precedent, others may come to see the high court’s limited capacity to hear fresh appeals of presumably settled law as an advantage in an ideological war of attrition. As it has in recent years with antitrust and securities law, the high court can nip in the bud such thinking on class-certification standards with the Whirlpool case.
Beyond the urgent question of class certification, the 6th Circuit’s opinion being appealed also establishes a radical new theory of product liability. In essence, it says that even if just one buyer of a manufactured product might one day become dissatisfied with the product, even if proper product maintenance would have prevented that dissatisfaction, and even if the product is otherwise widely and enthusiastically embraced in the marketplace, everyone who ever bought the product has, by definition, been overcharged and can be joined in a class action against the manufacturer.
Such a wild expansion of product liability law in the class-action context could make trial lawyers rich beyond their wildest dreams while bankrupting countless manufacturers and dooming those manufacturers’ employees to the nightmare of joblessness.
Oddly enough, this Ohio-based case comes as Whirlpool is bringing its overseas washing machine assembly back to the United States, adding thousands of jobs at its factory in the Buckeye State. Thus, the importance of the Supreme Court’s decision on whether to hear class-certification arguments in Whirlpool v. Glazer cannot be overstated. The future of manufacturing in America depends on it.
Tiger Joyce is president of the American Tort Reform Association.