THE “SUPREMES” UNITE AGAINST OVERZEALOUS GREENS AND THE TRIAL BAR
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It’s been a good week at the Supreme Court for law and the economy. On Tuesday, the Justices unanimously knocked back trial-lawyer forum shopping, and a day later they voted 7-1 to reverse a Ninth Circuit Court of Appeals ruling that the Clean Water Act should include federal government regulation of water runoff on forest roads, a position that contradicted 35 years of environmental law.
In Decker v. Northwest Environmental Defense Center, the issue concerned whether forest roads often used by loggers should be covered by rules that govern much larger industrial sites. That was the goal of environmentalists who hoped they could hobble the logging industry by reclassifying rural storm water runoff under the Clean Water Act’s “point source” standards, which require costly federal permits.
The Environmental Protection Agency has always expressly exempted forest roads from federal permitting, recognizing that more effective regulation could be done by states and state foresters. In his majority opinion, Justice Anthony Kennedy wrote that the EPA’s consistent position on storm water runoff has been coupled with effective state regulations and expertise.
Meanwhile, in Standard Fire v. Knowles, every Justice united against the trial bar’s latest scheme to evade Congress’s boundaries for class-action lawsuits. In the 2005 Class Action Fairness Act, Congress required that interstate class actions over $5 million be handled by federal courts. The law was an effort to minimize forum shopping in state courts friendly to plaintiffs.
In 2011 Arkansas resident Greg Knowles sued the Standard Fire Insurance company over contractor fees he said were covered by his insurance policy when a hailstorm damaged his house. To keep the case in the plaintiff haven of Miller County, Arkansas, Mr. Knowles said he would limit any potential recovery for the class he would represent below the $5 million threshold.
Nine Justices ruled that Mr. Knowles had no right to bind other potential class members to that $5 million recovery limit before the class was even certified. And while a plaintiff like Mr. Knowles might stipulate that the damages wouldn’t exceed $5 million, the number might later be modified by the state court to exceed Congress’s limit. While the nine Justices frequently divide on business issues, the tort bar’s manipulations are so brazen that they unite right and left.
A version of this article appeared March 21, 2013, on page A14 in the U.S. edition of The Wall Street Journal, with the headline: Supreme Liberal Washout.
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