A consumer class-action lawsuit about allegedly defective washing machines is proceeding in favor of the company, a result being called a “vindication of consumer class actions,” even though The Wall Street Journal held up the lawsuit as an example of why class actions are inherently unfair to corporations accused of wrongdoing.
The washing machines, manufactured by Whirlpool and Kenmore and sold by Sears and other retail stores, had a defect that caused the washers to accumulate mold and emit a bad smell. Despite over a million complaints, Whirlpool continued making the washers, and Sears continued to sell them. A group of consumers ultimately filed a class-action lawsuit after Whirlpool's design changes and special cleaning solution failed to fix the problem.
The “moldy washer” case has been working its way through the court system for the last several years, and right-wing media have repeatedly called on the Supreme Court to take the case as an opportunity to “rein in” class action lawsuits by changing the rules to disallow this type of collective legal action. The Wall Street Journal was particularly riled up over the case, claiming that these suits should not be certified in the first place because "[e]very trial lawyer in America knows that certifying a class nearly always compels a company to settle rather than to face the barrage of bad PR and litigation costs." The Journal also accused 7th U.S. Circuit Court of Appeals Judge Richard Posner of “clearly disregard[ing]” the Supreme Court's previous rulings because he allowed the moldy washer plaintiffs to certify as a class and proceed to trial and rejected the judge's idea that “class actions are the most efficient way to handle the mold complaints.” The Supreme Court ultimately declined to disturb Posner's judgment.
In October, the plaintiffs finally got their day in court -- and lost. As Reuters legal analyst Alison Frankel noted, the outcome was “a vindication of consumer class actions”:
Whirlpool doesn't think so. You wouldn't expect it to, considering that no company in recent memory has worked more assiduously to attack class actions involving supposedly uninjured plaintiffs. Earlier this year, you probably recall, business-friendly groups rallied around Whirlpool and Sears (in related moldy washer cases) when they asked the U.S. Supreme Court to review decisions by the 6th and 7th U.S. Circuit Courts of Appeal that permitted washing machine buyers to proceed as a class, even though most consumers' machines never developed a moldy smell. Whirlpool and Sears, both represented by Mayer Brown, told the Supreme Court that their cases presented the perfect opportunity for the justices to rein in abusive class actions in which plaintiffs' lawyers force defendants to settle solely to avoid the risk of crippling classwide liability.
If the Supreme Court had taken the cases, consumer class action litigation might have been imperiled. But Whirlpool and Sears ended up failing to persuade the justices to take their cases, just as they had previously failed to convince the 6th and 7th Circuits -- twice each -- to decertify consumer classes to test their liability for the design of the washing machines.
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Sure, Whirlpool would rather not have had to defend its products, but that's the consequence of an adversarial legal system and federal rules that permit plaintiffs to band together as a class to pursue their claims.
My argument is that class litigation gives companies like Whirlpool a giant reward if they're willing to take the risk of a classwide liability trial -- which is exactly what the 6th and 7th Circuits said when they refused to decertify moldy washer classes last year. Judge Richard Posner, who wrote the 7th Circuit's opinion, even said that defendants should welcome class action liability trials if they're so convinced of the quality of their products. Class actions, according to both appeals courts, are the fairest and most efficient way to determine whether a product is defective -- for defendants and class members alike. The Whirlpool verdict shows that the 6th and 7th Circuits were right.
The Journal might disagree with Frankel's assessment, but it is apparently true that dealing with all of these legal challenges at once was the most efficient way for Whirlpool and the other defendants to deal with the moldy washer claims. As Posner pointed out in his original opinion, “it was more efficient for the principal issue -- common to all class members -- to be resolved in a single proceeding than for it to be litigated separately in hundreds of different trials.”
Maybe the Journal can now stop trying to fight class actions before they have their day in court. As the editorial board that was so reluctant to have the facts heard admitted days after the company won, “companies with a strong case can come out better even on huge class actions when they decide to fight rather than settle.”
That's what advocates of access to justice have been saying all along -- if the facts are on the company's side, then short-circuiting class actions before they start makes no sense.