From today’s Slate Magazine:
On Tuesday, the Supreme Court issued a surprising 5–4 decision in Home Depot v. Jacksonthat progressive advocates view as a win for consumers and class actions. The lineup in Home Depot was unusual: Justice Clarence Thomas wrote the majority opinion, joined only by the liberals; the other conservatives dissented. Home Depot marked the second time this term that Public Justice, a public interest advocacy firm, has triumphed at SCOTUS. Earlier this year, the firm won a unanimous victory in New Prime v. Oliveira, an important labor rights case. How did it nab Thomas’ vote this time around?
The story of Home Depot is a tale of greed, grift, and civil procedure. It centers on a scheme that involved three companies: Home Depot, Citibank, and Carolina Water Systems Inc. Here’s how it allegedly worked. Representatives from Home Depot or CWS called homeowners and claimed that “contaminants” were found in nearby tap water. They urged homeowners to let them perform a test for “contaminants,” which was really just a test for water hardness; almost all tap water tested positive, even if it was perfectly safe. But CWS told homeowners the positive result proved their water was unsafe and required a $9,000 water purification system that other companies sell for $1,400. The company then told homeowners they had been approved for a Home Depot–branded Citibank credit card, which they could use to pay for the system with deferred interest.
George Jackson got suckered into this alleged scam and, like many others, couldn’t afford to pay off the charges he put on the credit card to pay for the overpriced water purification system. A company representative allegedly told Jackson the Citibank card had zero interest for two years—but in fact, the interest rate jumped to 25.99 percent after one year. Jackson couldn’t afford to pay, so Citibank sued him in state court to collect the debt. Eventually, he secured the representation of consumer protection lawyers who filed a counterclaim against Citibank, as well as class-action claims against Home Depot and CWS on behalf of about 290 other homeowners targeted by the alleged scam. He claimed that the companies, working together, had violated North Carolina laws prohibiting unfair and deceptive trade practices.
Home Depot promptly tried to move the case from North Carolina court to federal court—a typical corporate tactic, since federal courts are widely considered to be more business-friendly than state courts. F. Paul Bland, the executive director of Public Justice who argued Home Depot at the Supreme Court, told me that there’s a strong perception among most corporations that “federal courts are more hostile to consumer class action.” Federal judges “are overwhelmingly former prosecutors, corporate lawyers, and law professors,” and “very few ever represented a consumer or worker against a corporation.” By comparison, “about 40 percent of state court judges were plaintiffs’ lawyers.” State courts, as a result, are considered much friendlier to consumer class actions, hence Home Depot’s desire to get the case before a federal judge instead.
Republican lawmakers also think state courts are too favorable toward class actions, which is why the GOP-controlled Congress passed the Class Action Fairness Act in 2005. CAFA was designed to expand the kinds of class actions that corporations could move from state to federal court. It has, Bland said, “been a great boon to corporate America.” And predictably, in response to Jackson’s claims, Home Depot argued that CAFA allowed it to move the entire case out of North Carolina court and get it before a federal judge.
But Home Depot had a problem. Under a long line of cases going back to the 1940s, only a defendant can move a case from state to federal court. And a defendant is defined as the party sued by the original plaintiff. Here, Jackson is the defendant; remember, Citibank sued him to collect the debt he owed—that’s how the whole case started. Under the usual rules, then, Home Depot can’t escape North Carolina court.
Read the complete article here.