Class-Action Chill

For some time Lake Champlain had been filling up with sludge, apparently from an International Paper Co. factory at Ticonderoga, N.Y. Finally, in 1971, H. Keith Zahn went to federal court and sued the New York pulpmaker on behalf of himself and some 200 others who owned Vermont land fronting on the lake. Alleging $40 million in overall damages because of the pollution, Zahn was relying on the newly popular tactic of the class action, which allows a large group with a common complaint to join together in one suit. Last week the Supreme Court dug in its heels and decided 6-3 that Zahn's class-action suit must collapse because some of his neighbors were not eligible plaintiffs.

Severe Blow. When parties from different states are involved and when the sum in dispute exceeds $10,000, a federal court has jurisdiction. And federal class actions have long depended on at least one plaintiffs meeting the $10,000 requirement. But the court has now made clear that every plaintiff must meet that requirement. Thus most of Zahn's coplaintiffs, who had individually suffered less than $10,000 damages, were told that they could "not ride in on another's coattails." That does not necessarily mean Zahn gets nothing; he may still bring a federal suit with whichever of his neighbors also allege $10,000 in damages.

Trouble is, he and others like him, acting on their own, might not be able to afford the expenses involved in proving a complex case. That does "no judicial system credit," said William Brennan for Fellow Dissenters William Douglas and Thurgood Marshall. The three also pointed out that the decision could lead to more individual suits in the state and federal courts where previously one collective proceeding would have covered a specific issue. But the majority apparently believes that tough standards will at least cut the federal work load. Consumer and environmental advocates fear that the new decision is a chill wind for class actions. Said Bill Butler, Washington counsel for the Environmental Defense Fund: "It's a severe blow to the unorganized, ad hoc groups that want action on particular offenses." Certain kinds of class actions, such as those involving antitrust and various kinds of civil rights, are not affected, since they have no $10,000 minimum. But the court has one other pending case on the subject, and the betting is now that when it rules, it will set forth even greater restrictions.

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