The Fifth Circuit seldom affirms class certification orders. Can it stand class actions?

The court's ruling last week in Reed v. Florida Metro. Univ., No. 11-50509 (5th Cir. May 18, 2012), suggests not. The case dealt with the near-worthless degrees that Everest College sold — awarded — online and from store-front "campuses", where (per Everest's introductory video) aspiring students meet first with a "Director of First Impressions".

Jeffrey H. Reed, a Texan, spent $51,000 for an online bachelor's degree in "paralegal studies" only to find that law schools and the local police deemed the Everest degree no degree. Mr. Reed sued under the Texas Education Code, which sets basic rules for degree-awarding outfits, on behalf of himself and a class of the other Everest victims — graduates — who lived in the Lone Star state.

The district court enforced an arbitration clause in Mr. Reed's Enrollment Agreement with Everest. The court left to the arbitrator whether to handle the arbitration on a class basis.

The arbitrator ruled that, because the arbitration clause gave him the power to award any "remedy", it therefore authorized him to certify an arbitration class. The district court confirmed what Blawgletter will call the certification award, which seems not to have dealt at all with the merits.

The Fifth Circuit reversed. The panel held that the arbitrator "exceeded his powers when he concluded that the parties' agreement permitted class arbitration." Id. at 12. The court leaned mainly on Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (2010), which we thought when it came out meant "that arbitrators will have no choice but to deny almost all class certification requests." Although the panel said "the agreement to submit to class arbitration may be implicit", it added that such an agreement "should not be lightly inferred." Id. at 16 (footnote omitted). It went on to say that the arbitrator inferred way too much from his express power under the parties' contract to award "[a]ny remedy available from a court under the law". "[A] class action cannot properly be considered a 'remedy' under state or federal law", the panel averred. Id. at 21 (emphasis added).

The Second and Third Circuits do not agree with that outcome, as the panel noted. Id. at 22 & n.13 (rejecting Sutter v. Oxford Health Plans LLC, 675 F.3d 215 (3d Cir. 2012) (post here), and Jock v. Sterling Jewelers Inc., 646 F.3d 113 (2d Cir. 2011), cert. denied, 132 S. Ct. 1742 (2012)). The panel pointed to "the Supreme Court's lengthy discussion of the significant disadvantages of class arbitration". Id. at 25 (citing Stolt-Nielsen, 130 S. Ct. at 1776) (emphasis added).

We wish to highlight Judge Dennis's concurring opinion, at least the part where he says "in different kinds of future cases" — ones that involve such small stakes that "bilateral arbitration would . . . offer claimants . . . no practicable or realistic remedy" — "an arbitrator can properly find an implicit agreement to class arbitration procedures". Id. at 33 (citing In re Am. Express Merchants' Litig., 667 F.3d 204, 214) (2d Cir. 2012)).

We wish also to aim a pinky at the panel's spin on the phrase "any remedy available from a court under the law". The court seems to have added "substantive" before "remedy" and "law". But why? The Securities Litigation Uniform Standards Act, for instance, describes "Class action limitations" as "Limitations on remedies". 15 U.S.C. 78bb(f)(1) (emphasis added). And courts often refer to class treatment as a "remedy" instead of merely a "procedure". E.g., Quilloin v. Tenet HealthSystem Philadelphia, Inc., 673 F.3d 221, 233 (3d Cir. 2012) (quoting Thibodeau v. Comcast Corp., 912 A.2d 874, 884 (Pa. Super. 2006)); In re Am. Express Merchants' Litig., 634 F.3d 187, 196 (2d Cir. 2011), on rehearing, 667 F.3d 204 (2d Cir. 2012).

So why didn't the arbitrator have the power to construe "remedy" in the sense of a "procedural remedy"? Don't arbitrators have broad authority? The Second and Third Circuits based their holdings on that precept. Why not the Fifth Circuit?

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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.