Class action cases are under the scrutiny of the top court in the country.
The U.S. Supreme Court is making insurance news with its most recent agreement to take new class action lawsuit constraints into consideration, after having accepted the appeal from an Arkansas Travelers Cos. unit dispute regarding homeowners policy claims.
The focus is on a plaintiff attorney tactic that the U.S. Chamber of Commerce is calling abusive.
The court is taking a closer look at the technique often used by the lawyers of the plaintiffs in class action suits in order to help to direct the cases toward friendly state courts. In this approach, which is currently being examined in this latest insurance news, the attorney agrees not to pursue an amount larger than $5 million, which is the limit that would direct the class action lawsuit into the federal court – as opposed to the state court – where insurers frequently see better outcomes.
The Chamber of Commerce states that this insurance news often leads to unfair compensation.
They have stated that by making this type of insurance news through the state court tactics that avoid the federal courts, the attorneys are managing to use class action lawsuits in order to claim virtually any award, provided that it is not beyond the $5 million limit. The Chamber states that defendants cannot maintain their procedural protections that would be better available to them within a federal court. It also claims that individuals who could be included within the suit are denied the opportunity to seek a greater award if that would have rightly been their due.
This approach commonly makes insurance news, however, the Chamber of Commerce stated within its court papers that the tactic “allows putative class representatives to circumvent congressionally imposed protections simply by betraying the class they purport to represent.”
This is not the first time that the Supreme Court has made insurance news by taking on the opportunity to look into litigation system abuse. Last year, it rejected an attempt to create a class action lawsuit on behalf of what could have been one million female workers, against Wal-Mart Stores Inc.