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Sunday, January 26, 2020

Legal reform group: Allowing class actions in Mississippi a 'solution in search of a problem'

By John Breslin | Nov 7, 2017

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JACKSON, Miss. (Legal Newsline) – As the Mississippi Supreme Court decides whether to allow class action lawsuits in state courts, a legal reform group has filed its opposition. 

Attorney Richard Phillips in April asked the Mississippi Supreme Court to change the rules of procedure - Rule 23 - to allow these actions to be filed.

Class actions are barred in state courts under a decades-old law. It is the only state in the nation that does not allow such actions to be filed at state level.

The U.S. Chamber of Commerce Institute for Legal Reform argued there is no need for the change as any class actions can easily be handled by federal courts, as most are across the country. The ILR owns Legal Newsline.

Harold Kim, executive vice president with the ILR penned the response to an initial motion by Batesville-based attorney Phillips. 

In his comments to the state Supreme Court on Oct. 2, Kim wrote the 2005 enactment of the federal Class Action Fairness Act (CAFA) means the motion is "simply a solution in search of a problem."

Kim noted that CAFA eliminated the "complete diversity requirement," which requires all parties of one side of a suit be from a different state than those on the other.

Class actions are heard in federal court under CAFA if at least one class member is "diverse" from the defendant, there are at least 100 class members and the amount at issue is more than $5 million.

"In CAFA's wake, the need for state court class action rules is greatly diminished since federal (not state) courts now handle most such cases," Kim wrote.

He added that most class action cases in the country are filed in federal court, though he added that when they are not, the defendant usually applies to remove the case from state jurisdiction.

The federal court is an "adequate class action forum in the federal system that does not impose needless burdens on the Mississippi judiciary or taxpayers."

"For that reason, Mississippi's adoption of class action rules would serve no purpose," wrote Kim. He added that class actions in federal courts are "subject to serious abuse" that reward plaintiff lawyers with millions of dollars while offering nothing of "meaningful value to consumers."

"Importing the class device into the Mississippi court system would simply provide another avenue for harming the state's consumer, business, and the economy as a whole," Kim argued.

Phillips wrote in his motion filed earlier this year that without a state court class action procedure, Mississippi "citizens and businesses are often left with no economically viable way to adjudicate contractual disputes in the Mississippi state court system."

He added that when the class action bar was enacted in 1980, it was an entirely different legal eco-system dominate by "one-on-one transactions." Social and "epic" technological changes since that time means the landscape is peppered with "computerized, standardized, data-generated and metrics-driven practices and procedures," he wrote.

In light of these changes, Mississippi "citizens and businesses and the Mississippi court system need Rule 23 class action procedures in the state court system today," he wrote.

"The absence of state court Rule 23 class actions results in an abdication of the power of the Mississippi Supreme Court to interpret, and control the application of, Mississippi law in post-industrial age transactions," Phillips argued.

Philip Thomas, a Jackson-based attorney who has followed the dispute, said he does not think that, if successful, it will make much difference to the number of class actions filed in the state.

"It is not really that hotly talked about because class action litigation is pretty much dead in Mississippi," Thomas told Legal Newsline. "Lawyers are traveling out of the state."

He added, "I do not think it is going to have a huge impact because attorneys are not really looking to file in Mississippi, where it is hard to win."

But Thomas does believe most in the legal community believe the Rule 23 procedure should be allowed, though, he added, it is hard to gauge true feelings.

Historically, Thomas said Mississippi did not really need Rule 23, but that changed dramatically in 2004 when the Mississippi Supreme Court essentially ruled against the use of mass "joinder" actions. The federal CAFA was passed the following year. Now, Rule 23 might fill a cap if federal jurisdiction is denied, Thomas said.

Thomas said it is not common for a single lawyer to file a motion to change a rule of procedure. It is normally initiated by the judiciary itself or the rules committee of the Mississippi Bar.

But, the attorney added, Phillips is a "distinguished and respected" practitioner.

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Organizations in this Story

U.S. Chamber Institute for Legal Reform (ILR)U.S. Chamber of CommerceMississippi Supreme Court