WASHINGTON -- The Supreme Court rejected a $1.5 billion
class-action asbestos settlement Wednesday, ruling that the 1993
accord unfairly excluded some potential plaintiffs.
1See the full text of the court's decision in the asbestos
class-action suit.
2See the full text of the court's states-rights decision involving labor
law.
3See the full text of the court's states-rights decision involving
trademark law.
4See the full text of the court's states-rights decision involving
patent law.
The court also delivered three bitterly divided decisions that limit the
ability to sue states. The decisions ended the court's term. The
court begins its 1999-2000 term on the first Monday of October.
In the asbestos lawsuit, the court, by a 7-2 vote, ruled that a federal
judge in Texas wrongly approved the settlement, involving
Fibreboard Corp., of Dallas.
The decision is of great importance to resolving complex
product-liability lawsuits, such as those over breast implants,
cigarettes and other allegedly dangerous products. The new
guidelines may make it more difficult for manufacturers and other
defendants to obtain settlements of such lawsuits.
Writing for the court, Justice David H. Souter said that in
settlements in which a limited amount of money is available, those
seeking the settlement "must show that the fund is limited by more
than the agreement of the parties, and has been allocated to
claimants belonging within the class by a process addressing any
conflicting interests of class members."
"With Fibreboard retaining nearly all its net worth, it hardly appears
that such a regime is the best that can be provided for class
members," Justice Souter added.
Fibreboard, a unit of Owens Corning, Toledo, Ohio, manufactures
vinyl siding and other building materials at 21 plants in the U.S. and
Canada. Its products once contained asbestos, for decades used
extensively in insulation and fireproofing before it was linked to
severe and sometimes deadly respiratory problems.
In 1993 U.S. District Judge Robert Parker in Tyler, Texas, approved
a so-called global settlement of about 186,000 potential future
claims and several related agreements negotiated by Fibreboard, its
insurers and some people with asbestos-related health claims.
Judge Parker has since been elevated to the Fifth U.S. Circuit Court
of Appeals.
The settlement was upheld by the Fifth Circuit, but the Supreme
Court last June told the appeals court to restudy the case in light of
a 1997 ruling in which the justices made it more difficult to find
nationwide solutions in massive product-liability litigation.
That decision said judges lack the authority to allow a class-action
settlement in a lawsuit that, under federal rules of civil procedure,
would be denied class-action status at trial. After restudying the
Fibreboard case, the circuit court again upheld the settlement.
Wednesday, the justices said the appeals court was wrong.
Joining Justice Souter's opinion were Chief Justice William H.
Rehnquist and Justices Sandra Day O'Connor, Antonin Scalia,
Anthony M. Kennedy, Clarence Thomas and Ruth Bader Ginsburg.
Justice Rehnquist wrote a concurring opinion that said the federal
judge made "near-heroic efforts ... to make the best of a bad
situation." But he said the court was restricted by federal civil-trial
rules, adding that the situation "cries out for a legislative solution."
In dissent Justice Stephen G. Breyer said that in complicated
cases such as asbestos claims, "our court should allow a district
court full authority to exercise every bit of discretionary power that
the law provides." He was joined by Justice John Paul Stevens.
(Ortiz vs. Fibreboard)
Court Expands States' Rights
Regarding states' rights, the court ruled that the Constitution's
"structure and history" shields a state not only from being sued in
federal court, but also make a state immune from an individual's
lawsuit in state court seeking to enforce a federal right.
By a 5-4 vote, the justices killed a state court lawsuit by dozens of
state probation officers seeking to enforce a federal labor law and
collect overtime pay from Maine.
The decision leaves Maine's probation officers with a federally
protected right to be paid for overtime work but with no way to
enforce that right aside from trying to get the federal government to
sue the state for them.
The relationship between the federal government and the states,
what constitutional scholars call federalism, is not widely
considered as politically explosive as abortion, religion and other
topics that reach the nation's highest court. But the court's view of
that relationship defines in profound and fundamental ways the ebb
and flow of political power.
In a series of cases decided by 5-4 votes, the justices have shown
increasing sensitivity to how individual states' authority fares when
pitted against the federal government's power.
The conservative coalition of Chief Justice Rehnquist and Justices
O'Connor, Scalia, Kennedy and Thomas again prevailed
Wednesday over more liberal colleagues, Justices Stevens, Souter,
Ginsburg and Breyer.
Writing for the court in the Maine case Wednesday, Justice
Kennedy said Congress lacked the authority, when enacting the
Federal Labor Standards Act of 1938, to waive states' sovereign
immunity from being sued in state courts.
"Congress has vast power but not all power," Justice Kennedy said.
"The powers delegated to Congress under the ... Constitution do not
include the power to subject nonconsenting states to private suits
for damages in state courts."
In an extraordinarily lengthy session, Justice Kennedy read portions
of his 51-page opinion, emphasizing the importance of a nation built
on the idea of two distinct sovereignties -- the federal government
and the individual states. "Congress must accord states the esteem
due to them as joint participants in a federal system," he said.
Justice Souter responded by reading for 14 minutes from his
58-page dissenting opinion in words often dripping with sarcasm. "I
expect the court's late essay into immunity doctrine will prove the
equal of its earlier experiment in laissez-faire, the one being as
unrealistic as the other, as indefensible and probably as fleeting,"
Justice Souter said. (Alden vs. Maine)
Florida Wins Disputes
The same 5-4 majority controlled the court in two other states-rights
cases from Florida. The state had come under attack for its
program to help families save for the cost of the state's public
colleges and universities. College Savings Bank, of Princeton, N.J.,
sued the state twice in 1994 once under federal patent law and
once under federal trademark law, alleging false advertising.
College Savings Bank since 1987 has marketed certificates of
deposit for financing future costs of education.
In one of the cases, Chief Justice Rehnquist wrote the majority
opinion, which barred patent holders from suing states in federal
court over alleged infringements.
Illustrating the bitter divide of the court, Justice Stevens complained
in dissent from the bench of the court's sweeping view of sovereign
immunity. "The doctrine, I fear, is much like a mindless dragon that
indiscriminately chews gaping holes in federal statutes."
"The principle that 'no man is above the law' which applies to the
president of the United States as well as the lowliest public servant
should apply equally to the states," Justice Stevens said.
In an opinion by Justice Scalia the court also held that Congress
lacked the power to pierce states' sovereign immunity by making
them liable for violations of a 1992 federal law, the Trademark
Remedy Clarification Act. In so ruling, the court overturned its own
1964 decision that, along with subsequent rulings, indicated that
states waive their immunity when they enter the marketplace as
participants, not regulators. (Florida Prepaid Postsecondary
Education Expense Board vs. College Savings Bank; College
Savings Bank vs. Florida Prepaid Postsecondary Education
Expense Board)
06/23/00