Justice Thomas’ evolving pro-consumer jurisprudence

Conventional wisdom holds that there is now a solid pro-business majority on the U.S. Supreme Court, consisting of Chief Justice John Roberts and Associate Justices Clarence Thomas, Samuel Alito, Neil Gorsuch and Brett Kavanaugh. A 5-4 decision on Tuesday in a civil procedure case, Home Depot U.S.A., Inc. v. Jackson, 2019 DJDAR 4505 (U.S. May 28, 2019), calls this conventional wisdom into question.

Justice Thomas wrote the majority opinion in Home Depot, which examined whether, after a case was initially filed in state court, a third-party defendant on a class action counterclaim could remove the case to federal court pursuant to the Class Action Fairness Act of 2005, as set forth in 28 U.S.C. Section 1453 (CAFA). The original plaintiff in the case, Citibank, filed a collection case in North Carolina state court against a borrower for failure to make payments on a Home Depot-branded credit card. In response, the borrower filed a class action counterclaim against Citibank, identifying Home Depot and another party as third-party counterclaim defendants, claiming that he and other homeowners were induced through false statements to buy water treatment systems at inflated process, and that all of the counterclaim defendants had participated in the alleged scheme.

Rejecting arguments made by Home Depot and by multiple pro-business amici curiae, including the U.S. Chamber of Commerce, the Supreme Court held that removal to federal court is not allowed. Writing for the court, Justice Thomas explained that federal courts are courts of limited jurisdiction, which is carefully circumscribed by Congress. CAFA, therefore, must be construed narrowly, and the statute permits removal only by a "defendant." Pre-CAFA caselaw held that an original plaintiff who is named as a counterclaim defendant may not remove. See Shamrock Oil & Gas Co. v. Sheets, 313 U.S. 100 (1941). The court found no reason to distinguish between counterclaim defendants who were original plaintiffs and those who are newly joined to the litigation when the counterclaim is filed.

In so doing, the Supreme Court left open what dissenting Justice Alito described as a "loophole" that might be readily exploited by enterprising plaintiff-side class action lawyers "to thwart a defendant's attempt to remove a class action to federal court," and thereby keep "extortionate" cases in state court, where "crippling unjust losses" might be imposed on businesses that refuse to settle quickly. According to Justice Alito, Congress' pro-business goals in enacting CAFA should be considered when assessing whether the term "defendants" includes third-party counterclaim defendants, or is limited to parties originally sued as defendants by the original plaintiff. These policy-based arguments carried no weight with Justice Thomas; he concluded his majority opinion with the comment that such a "result is a consequence of the statute Congress wrote. Of course, if Congress shares the dissents approval of certain litigation 'tactics,' it certainly has the authority to amend the statute. But we do not."

For a justice often described as a conservative Republican, this is an unusually pro-consumer outcome. But a review of his other writings suggests an emerging pro-consumer pattern in his jurisprudence. Some hints came in cases under the Federal Arbitration Act (FAA), where he expressed skepticism about the breadth of the court's preemption jurisprudence. For example, Justice Thomas only "reluctantly" joined the majority opinion in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), in which the Supreme Court held that arbitration clauses containing class action waivers are enforceable, even in states with laws declaring such waivers to be unconscionable, because the FAA preempts states' attempts to restrict private agreements to arbitrate. See id. at 1754 (Thomas, J., concurring). In general, Justice Thomas takes a narrow view of preemption, even though corporate defendants often rely on the doctrine when faced with significant claims under state law. See Wyeth v. Levine, 129 S. Ct. 1187, 1207 (2009) (Thomas, J., concurring) ("I have become increasingly reluctant to expand federal statutes beyond their terms through doctrines of implied preemption.") (citation omitted).

Similarly, Justice Thomas wrote separately in Spokeo v. Robins, 136 S. Ct. 1540 (2016), a pro-defense ruling that acknowledged restrictions on class actions, on standing grounds, when the plaintiff failed to plead concrete injury in fact. Even though he joined the court's opinion, Justice Thomas expressed greater willingness than the other justices in the majority to allow cases to proceed, saying that "the concrete-harm requirement does not apply as rigorously when a private plaintiff seeks to vindicate his own private rights" (as opposed to when a plaintiff attempted to "test the abstract legality of government action"). Id. at 1552-53 (Thomas, J., concurring). "[W]here one private party has alleged that another private party violated his private rights, there is generally no danger that the private party's suit is an impermissible attempt to police the activity of the political branches or, more broadly, that the legislative branch has impermissibly delegated law enforcement authority from the executive to a private individual. ... A plaintiff seeking to vindicate a statutorily created private right need not allege actual harm beyond the invasion of that private right." Id. at 1553 (Thomas, J., concurring).

Justice Thomas expanded on these comments in his dissenting opinion last week in Frank v. Gaos, 2019 DJDAR 2243 (Mar. 20, 2019). Certiorari was granted in Frank to assess whether a class action settlement could be approved as fair when virtually all of the settlement consideration constituted a charitable contribution to organizations affiliated with class counsel. The court, however, declined to reach that question, ruling in a per curiam opinion that before the settlement could be evaluated, the lower courts needed to assess whether the plaintiffs proposing the settlement had standing to sue pursuant to Spokeo's injury-in-fact requirement. Justice Thomas, however, disagreed vigorously, finding no question as to whether the plaintiffs satisfied Spokeo. The underlying claim was for alleged violation of a federal statute forbidding an electronic service provider from disclosing the content of communications made by users of the service. Plaintiffs claimed that certain search data Google provided to web advertisers implicated the statute, but there was a serious question as to how the specific disclosure might have harmed anyone in any material way.

To Justice Thomas, however, real-world impact seemed not to matter at all. It appears that his view is that if Congress determined that an interest is important enough to be protected, that is sufficient for standing purposes. Courts, he likely would say, should not be second-guessing congressional judgment as to whether an injury is sufficiently concrete to merit federal litigation. "As I have previously explained, a plaintiff seeking to vindicate a private right need only allege an invasion of that right to establish standing. Here, the plaintiffs alleged violations of the Stored Communications Act, which creates a private right. ... [T]he plaintiffs established standing." Id. (Thomas, J., dissenting) (citing his concurring opinion in Spokeo). From the defense perspective, this is an astonishingly limited reading of Spokeo, with potential implications not simply for standing arguments but also for class action jurisprudence generally.

Regardless of what his views might be on substantive policy, it appears that Justice Thomas' rulings on procedural and jurisdictional matters are steadily moving his developing jurisprudence to the side of the consumer rights bar.