Thursday, May 24, 2007

Raising the class-action bar

Here's a link to the Register's editorial on the Supreme Court's decision Monday in an antitrust class-action lawsuit against the phone companies for conspiring not to compete after the bogus deregulation of 1996. In a 7-2 decisions written by Justice Souter, the court said that for such a lawsuit to go forward (it was brought by private attorneys rather than the government), there had to be some plausibility to allegations of conspiracy to constrain trade, not just a possibility.

The decision is likely to have impact beyond antitrust, making it more difficult to bring a range of lawsuits that require companies to open their books so opposing attorneys can do discovery and try to find something actionable. I think that's healthy, since many of those lawsuits are frivolous, or designed to be settled even though they have little merit, because defending them is more expensive than settling.

Attorneys can be heroes, but when they bring this kind of lawsuit they are not.

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