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Opinion
Noah Feldman

Class Action Case Could Bend the Law

Class actions are big business. When the U.S. Supreme Court takes up an important question of how these lawsuits will proceed, it's worth taking notice of what the court is doing -- and why.
If only the spreadsheet the court wanted was here.
If only the spreadsheet the court wanted was here.

Class action lawsuits are big business. The U.S. Chamber of Commerce -- admittedly, not the most objective source -- estimates that securities class actions alone cost shareholders $39 billion a year. When you add in all other class actions -- for accidents, accounting errors, you name it -- you can understand why potential corporate defendants as well as plaintiffs' lawyers fight tooth and nail over every inch of the legal terrain. When the U.S. Supreme Court takes up an important question of how these class actions will proceed, as it is doing in the case of Dart Cherokee Basin Operating Company LLC v. Owens, it's worth taking notice of what the court is doing -- and why.

The case arose in a fairly typical way. The original plaintiff, Brandon Owens, sued several oil well concerns in Kansas state court alleging underpayment of royalties to a class of people that included him as well as the similarly situated royalty holders. Like most defendants, the oil companies sought to take the case out of state court, thought to be advantageous to plaintiffs, and into federal court, where the rules and practices tend to be more favorable to defendants. The oil companies relied on the Class Action Fairness Act of 2005, which says that a defendant can force the case into federal court if the plaintiff and defendant come from different states, the class has more than 100 members -- and the amount in controversy exceeds $5 million.