The plaintiffs' bar cannot enforce the laws: individual reliance issues prevent consumer protection classes in the Eighth Circuit.

AuthorBarnett, Michael B.

    If the plaintiffs' bar were considered an industry, with annual revenue of almost $40 billion, it would be twice the size of Coca-Cola and 50% larger than either Intel or Microsoft. (1) The large revenue has contributed to ever-higher tort litigation costs, especially for corporations. As a whole, costs resulting from tort litigation in the United States exceed $250 billion a year; (2) tort claims against corporations account for $161 billion of those costs. (3) Though many of these cases have merit, many commentators suspect rampant abuse in the system. Specific to consumer fraud claims, Professor Scheuerman has noted that many consumer fraud class actions provide negligible relief to the plaintiff class. (4) For instance, in one case plaintiffs were awarded coupons for free bottled water as a result of a finding that they were deceived in that the water they purchased was not "spring water" as it was advertised. (5) As relief, the plaintiffs received coupons for something they alleged they did not want in the first place. The attorneys, on the other hand, received $1.35 million under the settlement agreement. (6)

    Many scholars have argued more generally that the class-action system in the United States is broken and allows rampant abuse. (7) one of the concerns raised in commentary is the belief that "the class action was never designed to serve as a free-standing legal device for the purpose of 'doing justice,' nor is it a mechanism intended to serve as a roving policeman of corporate misdeeds or as a mechanism by which to redistribute wealth." (8) Essentially, critics argue the class action mechanism often results in "[u]nwarranted [l]itigation" and "[j]udicial [b]lackmail," influences litigation outcomes, and allows plaintiffs' counsel to receive extraordinary benefits while the class members receive little. (9) Victor Schwartz has described the leverage created by class actions as "legal extortion" and "legal shakedowns" because he believes that class action attorneys, by bringing large lawsuits regardless of merit, drive down stock prices and force settlements. (10) Judge Richard Posner also has noted the difficult choice facing a corporate defendant--either risk the company on a single jury trial or settle regardless of any legal liability. (11)

    These commentators believe that the tort system should be striving to make plaintiffs whole after they have suffered a wrong, not serving as a regulator of the public good. Though the commentators' claims are strong, if not extreme, there is no doubt that waste results when major corporations have to spend millions a year to defend massive class actions based on spurious allegations. (12)

    Class actions arising under consumer protection statutes are an area of particular concern. This is due in part to the widespread use of these claims--approximately one-third of class actions against business defendants contain a consumer claim. (13) Many consumer protection statutes also allow for relaxed proof--compared to common law fraud claims--on issues like reliance and intent. Essentially, these statutes often purport to view a violative action or practice as the harm, irrespective of any actual damage to an individual.

    That said, a common thread in the judicial application of consumer protection statutes (commonly referred to as consumer fraud statutes) has been for courts to require a plaintiff to show something more than only the presence of a deceptive or unfair act; some courts have required a level of causation to be established between the complained of practice and an injury. Most statutes, however, do not expressly require that the plaintiff prove any reliance, and the courts generally have not required it. Difficulty arises, though, when a class action is brought under a consumer protection statute by plaintiffs who were allegedly injured by a deceptive practice but who either did not rely on the practice or relied on it in different ways. Since Federal Rule of Civil Procedure 23(b)(3) requires common facts to predominate over individual ones, courts must determine whether the relevant common fact is only that the violative practice caused the damage to class members or that the violative practice caused the damage to class members in the same way.

    In 2008, the United States Court of Appeals for the Eighth Circuit considered this issue in In re St. Jude Medical, Inc., Silzone Heart Valves Product Liability Litigation (In re St. Jude) and found that Minnesota's statute barring deceptive business practices required similar causation among class participants to permit certification. (14) Specifically, the court found that differing degrees or types of reliance among the plaintiffs was fatal to certification because the proof of causation would require examining the differing reliance of the plaintiffs, and thus individual issues would predominate. (15) This requirement of similar reliance came despite significant authority in Minnesota that said no reliance was required for individual plaintiffs. (16) Regardless, the Eighth Circuit determined that the violative practice must cause damage to the class members in the same way for a class action to be appropriate. Going forward, it is more likely that plaintiffs will have to show common causation, including the same or similar reliance, between an alleged unfair business practice and their injury to recover under state consumer fraud statutes in federal court.

    This Note will specifically consider the implications of In re St. Jude on class certification sought under the Missouri Merchandising Practices Act (MMPA) (17) in federal court. Though Missouri case law does not require reliance to be shown to bring an individual action under the MMPA, (18) federal courts likely would require a showing of causation in which common facts of reliance exist in the class context. This is true, in part, because of the similarities in the Missouri and Minnesota statutes. Further, even though the Supreme Court of Missouri is the final arbiter of Missouri law, the MMPA adopts the Federal Rules of Civil Procedure for class actions. (19) Thus, any interpretation of Rule 23(b)(3)'s requirements should control class certification in Missouri courts as well. At bottom, this will result in more classes being refused certification in federal court under consumer fraud statutes.

    This Note will proceed by looking at the development of consumer protection statutes generally and then examine Missouri's adoption and expansion of the MMPA. (20) Next, it will consider cases from Minnesota, Arkansas, and Missouri in order to establish that the Eighth Circuit has taken a consistent approach in requiring common causation in consumer protection statutes, despite some differences between the underlying state statutes. (21) Finally, the Note will contend that nothing in the MMPA would lead to a different result in Missouri than the Eighth Circuit reached in In re St. Jude. (22)


    1. Expansion and Purpose of Consumer Protection Statutes

      Prompted by the shortfalls of the rule of caveat emptor, early consumer protection statutes centered on accurate determinations of weights and measures. These laws were around as early as the Justinian Code (23) and the Bible. (24) But, until the last 100 years, little change took place in the field. However, in 1906 Upton Sinclair published The Jungle and described the terrible conditions of a sausage factory in Chicago. (25) That book and a federal investigation prompted President Theodore Roosevelt to begin efforts to increase consumer protection in the United States. (26) As a continuation of Roosevelt's efforts, the Federal Trade Commission (FTC) was established in 1914 and given the power to control "unfair methods of competition" that injured other business or competition generally. (27) Then, in 1938, the FTC was given power to "protect consumers from 'unfair and deceptive trade practices.'" (28) But even after the agency had this power, it "did little to stop manufacturer misrepresentations." (29)

      Real consumer protection from deceptive practices did not begin to take hold until the 1960s. (30) In 1962, President John F. Kennedy called upon Congress to provide more protection to consumers. He listed four consumer rights that should be protected: (1) the right to safety, (2) the right to be informed, (3) the right to choose, and (4) the right to be heard. (31) To effectuate these goals, President Kennedy urged Congress to enact the Consumer Protection Act, which would both strengthen existing programs and create new protections for consumers. (32) Despite the eventual enactment of the stronger federal legislation during the 1960s,33 the FTC was described in 1969 as "rudderless; poorly managed and poorly staffed; obsessed with trivia; politicized; all in all, inefficient and incompetent." (34)

      Against this backdrop, many states began to enact consumer protection statutes of their own, and today every state has a statute that prohibits deceptive trade practices. (35) As a whole, the statutes have sought to provide a basis of recovery that does not require the strict showings of common law fraud or misrepresentation--allowing easier recovery for predatory business practices aimed at consumers. (36)

    2. Missouri Merchandising Practices Act

      The original consumer protection statute in Missouri, the Missouri Merchandising Practices Act (MMPA), was enacted in 1967. (37) Though there have been several additions and amendments, most of the original Act remains today. In fact, section 407.020, the operative section that proscribes unlawful business practices, has changed little since the MMPA's original enactment. (38) one of the most significant changes was the addition of a private cause of action as one part of a major expansion of the act in 1973. (39) Prior to that expansion, the only available remedies were injunctions or restitution sought by the attorney general after an...

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