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Class Action Nation: The Lawsuit is the Last Remaining Public Square · The Overlap

0:00
Pittsburgh, California, 2001.
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Betty Dukes is a Walmart greeter.
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She's worked there for years.
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She has watched men with less experience, lower performance ratings, get promoted over her repeatedly.
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She files a complaint internally, nothing happens.
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She finds a lawyer.
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And what starts as one woman in one store in one town eventually becomes the largest employment discrimination class action in American history.
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1.5 million women, every region, statistical evidence showing women paid less, promoted less, evaluated better, and rewarded worse, systemically, nationally, at scale.
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And then 10 years later, 2011, the Supreme Court kills it, 5 to 4.
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Scalia writes the majority, of course.
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The reason is essentially Walmart had an official policy against discrimination and local managers just happened to exercise their discretion in ways that disadvantage women
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everywhere, all the time, in every store.
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That's not a common question of fact.
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That's just coincidence.
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Imagine if you could resolve any legal dispute that way by saying, no, we have a policy.
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We can't discriminate a true because we have a policy that says we don't.
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But 1.5 million women, their case is just gone.
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Not because the evidence wasn't there, because the mechanism for holding them together got pulled out from under them.
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And Betty Dukes, who started this, who put her name on a decade-long federal case against the largest employer on Earth, she died in 2017.
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The case never recovered.
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Individual suits were theoretically still possible against Walmart alone.
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Good luck.
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And that's where we're starting today.
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Hey everybody, welcome to The Overlap.
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I'm Joshua.
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I'm William.
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Here's what today is actually about.
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And I wanna be precise because the topic gets flattened into lawyers are greedy.
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And that framing is doing a lot of work for people who benefit from you believing that.
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A lot of work.
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May 10th, 2026, a press release drops.
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Bronstein, Gerwitz and Grossman, investor rights firm, announces a class action against Cody Incorporated, the cosmetics company, if you're not familiar, shareholders who bought
2:37
between December 20th, or sorry, November 2025 and February 2026, allegedly got a steady diet of glowing growth projections while the company's consumer beauty segment was quietly
2:49
underperforming.
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Margins were getting squeezed.
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and the prestige fragrance business was decelerating.
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The stock drops, the people holding it lose money like we talked about in our last episode, and the only mechanism available to them, the only one is this, a class action
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lawsuit filed by a law firm working on contingency only, meaning they only get paid if they win.
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And I want our listeners to reflect on this for a second.
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Not the Cody case specifically, but what it represents.
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There's no federal agency swooping in to help these people.
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There's no regulator who caught this in real time.
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There's a press release and a deadline of May 22nd to join the suit.
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And that's the system.
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That's the whole system.
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And what we're doing today is tracing how we got here.
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From 1966 when Rule 23 was amended to create the modern class action through the tobacco settlements, through Betty Dukes, through the opioid litigation that forced Purdue
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Pharma's internal emails into public daylight to right now in 2026, where the Supreme Court has spent 15 years systematically handing corporations the tools to wrote around
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the courthouse entirely.
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The picket line is gone, the regulator is defanged, and the class action is for better or worse, the last place where ordinary people can make a corporation answer a question in
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public.
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Today we're gonna show you exactly how that happened, who made it happen, and what it costs when even that last door starts closing.
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Let's go.
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February 1994, Albuquerque, New Mexico.
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A 79 year old woman named Stella Lyebeck is sitting in the passenger seat of her grandson's Ford Probe in a McDonald's drive-through.
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She puts the coffee cup between her knees to add cream and sugar.
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The lid comes off 190 degree coffee.
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Not hot coffee, not really hot coffee, but coffee held at a temperature McDonald's internal quality guidelines mandated.
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Soaks through her sweatpants, stays against her skin.
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She suffers third degree, that's full tissue burns, across 16 % of her body, thighs, groin, butt.
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She spent eight days in the hospital.
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She had skin grafts.
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She was partially disabled for two years.
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and she asked for $20,000.
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$20,000 in 1994 to cover her medical bills.
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McDonald's offered her $800.
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$800.
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And here's the document that changes everything about how you understand that number.
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McDonald's had received over 700 prior complaints about burns from their coffee.
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700 people had already told them.
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Their own internal QA manager testified.
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that 180 to 190 degrees was the mandated serving temperature of their coffee.
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Their own witnesses said they had no intentions of changing it.
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So they knew.
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That's not negligence anymore, that's recklessness.
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That's a spreadsheet someone looked at and decided was an acceptable risk.
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The jury awarded her $2.7 million in punitive damages.
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You know, they got that number two days of McDonald's coffee revenue in 1994.
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This was before the McCafe thing, but that's it.
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That's the math.
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The judge reduced it to $480,000.
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It settled confidentially on appeal for an amount that nobody's allowed to know.
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And for the next 30 years, it became the punchline, the symbol of lawsuit abuse.
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The reason we needed tort reform.
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A woman who spilled coffee on herself and hit the jackpot.
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The Chamber of Commerce spent millions making sure that's the story people remembered.
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They did.
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And here's what that framing basically accomplished.
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It trained an entire generation of Americans to see the plaintiff as the villain, to see the lawsuit as greed, to look at Stella Liebeck and laugh instead of looking at the 700
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complaints McDonald's buried and asking what kind of system lets a corporation do that math and just keep doing it.
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And she was trying to pay her medical bills.
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I that's the whole story.
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That's it.
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That's what she asked for.
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She asked for 20K, that's it.
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That case is in 1994, right?
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So go back 30 years earlier, 1966, a committee of federal judges and lawyers, the Advisory Committee on Civil Rules, amends Rule 23 of the Federal Rules of Civil Procedure.
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It's not a law, it's just a procedural rule.
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Nobody writes a headline, but what it does is this.
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It creates a mechanism where thousands or sometimes millions of people with the same injury, the same defendant,
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The same wrong done to them, people who could never afford to sue individually can aggregate their claims into a single action.
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One lawsuit, one discovery process, one set of documents forced into daylight.
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And that's really the design and I'm sure we'll talk about this some more.
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But the whole point is that in a class action, all of the plaintiffs are similarly situated.
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There are enough of them to make it worthwhile.
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And when you put that group together, it just simplifies everything for everybody.
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It makes it more efficient.
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There's one lawsuit, like you said, one discovery process.
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Everything, every motion has to be handled one time rather than 30 times or 50 times or a hundred times or 700 times.
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But that's the explicit intent.
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It's all about an individual claim that's too small to litigate on its own.
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Somebody's really hurt here, but the economics don't work to have one big lawsuit for that one person.
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The class action makes it work by making it efficient for everybody.
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Yes, exactly.
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So think about what that means from a systems perspective, right?
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You've got a corporation that has done something harmful to a million people in a way that costs each of them $40.
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Okay.
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No individual sues over $40.
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No attorney will take a case on contingency for $40.
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The corporation has basically found a theft that's structurally immune to accountability.
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Rule 23 breaks that immunity.
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It says,
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aggregate the harm, aggregate the standing, and make the economics work.
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And for about 25 years it did work.
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Imperfectly, expensively, slowly, but it worked.
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and then we hit the 90s.
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And so I wanna spend time here because this is the moment where the class action stops being a procedural mechanism and becomes something else entirely.
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It becomes the only functioning accountability system that we have left.
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And that's all tied to the tobacco litigation.
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Right.
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In Mississippi in 1994, Attorney General Mike Moore is sitting across from a private attorney named Ron Motley, and they have a theory.
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The tobacco companies have internal research, research they funded, research their own scientists produced, showing that nicotine is addictive and their products cause cancer.
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They suppressed it.
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They lied to Congress.
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They lied in advertising.
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Nine out of 10 doctors agreed.
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and the states have been paying Medicaid costs for decades to treat the people dying from diseases the companies knew their products caused.
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Right, that's the part that everybody that votes for supposed quote unquote tort reform, that's what they need to know.
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You're actually already paying for all of the harm that these corporations have done by paying for the Medicaid costs for people who need it.
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Exactly.
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And they did, right?
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And other states joined.
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Private class action attorneys joined.
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Dick Scruggs, who was Trent Lott's brother-in-law, had already made a fortune on the asbestos litigation, which brought organizational muscle.
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They knew how to do this.
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They knew how to pull it off.
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And what the litigation forced before a single dollar had been paid in that litigation was discovery.
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Those internal documents, the Brown and Williamson documents, the
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Liggett documents, memos showing executives discussing nicotine manipulation, research showing they'd known about cancer links since the 50s.
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So 40 years of purposeful, deliberate concealment dragged into courtrooms and onto front pages of newspapers.
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And keep in mind, you couldn't regulate your way to those documents.
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No agency had subpoena power broad enough or political will strong enough to get there.
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And the FDA had tried, right?
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The FTC had tried.
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Congress had held hearings where tobacco executives stood in a row and under oath said that they did not believe nicotine was addictive and nothing happened.
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The regulatory system was captured, had been captured for decades.
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The litigation wasn't some sort of substitute for a regulation.
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It was the proof that regulation had failed entirely.
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to the tune of about $206 billion.
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There it is.
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That's what the master settlement agreement required the companies to pay the states over 25 years.
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And again, this is reimbursing the states for the money that they laid out to pay for all their citizens who were addicted to these little cancer sticks.
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ah But that's the pace.
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pays them for, they pay the states over 25 years and then they are restricted in their marketing, right?
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No more Joe Camel, no more billboards near schools to get their next generation addicted.
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Yeah, and then 1998, right?
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The largest civil litigation settlement in American history extracted not by federal agency, but by state attorneys general and plaintiffs lawyers working on contingency.
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So think about that for a minute.
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my former boss.
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If you're listening to this right now and you've ever heard someone say class action lawyers are ambulance chasers, think about what the alternative to Ron Motley and Dick
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Scruggs was.
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The alternative was nothing.
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The alternative was the tobacco companies keeping those documents sealed forever.
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And then 2011 arrives and the Supreme Court starts doing something very specific and very deliberate.
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Two decisions, same year, same justice, riding the majority in both.
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First, Walmart versus Dukes, Betty Dukes, we talked about earlier, was a Walmart greeter in Pittsburgh, California, not Pennsylvania.
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And she had performance reviews showing she's good at her job.
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She'd been passed over for promotion after promotion.
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She started asking around and discovered a pattern.
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Women across the company are paid less than men in comparable roles, promoted at lower rates, and the mechanism is the same everywhere.
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Local managers have discretion and let discretion run in only one direction.
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She files a class action.
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It gets certified to represent 1.5 million women, the largest employment discrimination class action in history.
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Again, this is 1.5 million women who all have the same evidence.
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Statistical analyses showing the pattern holds in every region, every division of Walmart, women with higher performance ratings than the men who got promoted over them.
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And Antonin Scalia writes the majority, five to four.
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There's a lot of things that are being brought into light even today with such a slim margin.
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But he says, Walmart's official policy is against discrimination.
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The fact that local managers exercise their discretion in a discriminatory way doesn't create a common question of law or fact across the class.
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The company's policy of allowing discretion is not itself a discriminatory policy.
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I'll sit with that logic for a second.
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Walmart's official policy says don't discriminate.
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One and a half million women across every region of the country experience discrimination.
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And the court says no common question because each of the managers in each of those situations exercised his or her, and let's face it, it's just in discrimination every
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time, right?
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So individuals could discriminate, but as long as there wasn't a company policy, there's no class.
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Right.
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No common question.
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And I say this with complete sincerity, one of the most elegant pieces of legal architecture for protecting corporate wrongdoing ever constructed.
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Because what it means in practice, if your discrimination is decentralized enough, if you hand the prejudice down to individual managers, instead of writing it into a policy
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manual, you are structurally immune to class treatment.
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You can discriminate at industrial scale and no class can ever form around.
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I mean, every case has to be brought individually against each specific act of discrimination.
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So Betty Dukes dies in 2017.
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The case never goes back to trial as a class.
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Individual plaintiffs could technically still sue, like I said, individually against the world's largest employer with an army of lawyers.
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No class resources, no shared discovery, no pooled evidence.
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That same year, AT &T Mobility versus Conception, Vincent and Liza Concepcion brought a phone plan that advertised free phones, but AT &T charged them $30.22 in sales tax on the
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free phone.
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They tried to join a class action.
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AT &T pointed to the arbitration clause buried in their service contract, a clause that included a waiver of the right to
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participate in any class action.
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So you're stuck suing individually for your $30, which nobody sues for $30 by themselves.
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Right, Scalia again.
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The Federal Arbitration Act preempts state laws that would void class action waivers in arbitration agreements, which means if a company puts an arbitration clause in a consumer
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contract, terms of service, credit card agreement, cell phone plan, employment offer, they can require you to arbitrate it individually and waive your right to a class.
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And you agree to it.
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It's in the fine print you didn't read because nobody reads
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It's designed not to be read.
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Right.
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And again, keep in mind, this is not leaving the decision to the states.
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This is saying the states cannot write laws that contradict the federal arbitration act.
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So your state can't even help you in this situation.
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And the crazy thing is it helps the bigger companies even more, right?
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Because the more you're widespread, the more you're across state borders, you're a federal issue.
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It's a federal issue, not a state issue.
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So the 1966 amendment to rule 23 was written to solve exactly that problem.
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You got a small individual harm, no viable individual lawsuit, and so you aggregate it into a class, and Concepcion lets the corporations dissolve that aggregation before any
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dispute ever arises.
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By contract, before you're even injured, before you know there's anything to sue about, you've already signed away the entire mechanism to sue.
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And the crazy part is that 60 million American workers are now covered by mandatory arbitration clauses with class waivers.
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60 million people who, their employer does to them what Walmart did to Betty Dukes, have no class action available.
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They have a private arbitrator paid in part by the company and the company's a repeat player, right?
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They're going to keep hiring these arbitrators if they give them favorable decisions.
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And those decisions are confidential, create no precedent in law, and are nearly impossible to appeal.
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room didn't replace the picket line because litigation is somehow better.
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It replaced it because everything else was methodically dismantled.
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And then they started working on the courtroom.
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So after 60 million workers, let's talk about what happens when the arbitration wall holds and the class action is the only door left open.
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Because it still opens sometimes.
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And when it does, you see exactly what it's protecting.
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like in the opioid litigation.
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Exactly.
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MDL 2804, Northern District of Ohio.
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Thousands of local governments, hospitals, Native American tribes, individual plaintiffs, all consolidated into one of the largest multi-district litigations in American history
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against Purdue Pharma, Johnson & Johnson, McKesson, Cardinal Health, Amerisource Bergen.
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The allegation?
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They flooded communities with prescription opioids while lying about addiction risk, not negligently, but deliberately.
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And what the litigation produced before even a single trial verdict was the documents, internal documents that showed the strategy the company was pursuing.
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If you've not seen this movie about the Sacklers, you should check it out.
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I forget the title of it.
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see.
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Purdue Pharma movie.
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I think it was, was it Steve Carell?
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Painkiller.
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I'm thinking Aaron Eckhart maybe or painkiller that sounds right.
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think it's on Netflix, Matt Broderick.
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That's who it was.
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Matthew Broderick.
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was the, he was in, in that movie there.
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So, uh, check out painkiller on Netflix if you haven't already, if you need to borrow your mom's password or something to watch Netflix, give it a shot.
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But Richard Sackler, who was the former chairman of Purdue Pharma in 2001, after the news story ran about Oxycontin addiction, he sent an email.
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His proposed solution was to, and I quote, hammer on the abusers in every way possible.
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Now that email exists because of litigation, not because of a regulator, not because Congress, because the attorneys of those plaintiffs spent years in discovery, forcing
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document production that the FDA could not compel by law.
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Right, and there's a philosophical point buried in that which I think people miss, which is that the courthouse at its best has a subpoena power, right?
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It has discovery.
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It can reach into a corporation's internal communications in a way that a press release or a shareholder call cannot.
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The adversarial process for all its many dysfunctions has teeth that journalism and regulation have largely lost.
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when the regulation even exists.
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When the regulator isn't captured, when the agency has funding, the tobacco litigation in the 90s worked the same way.
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30 years of FDA and FTC regulatory failure, and it was state attorneys general and contingency fee plaintiffs lawyers who finally got those documents out.
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The $206 billion master settlement agreement, not a regulator, but a lawsuit.
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And then the Supreme Court spent the next two decades making the next version of that harder.
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Right.
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So we've talked before about the Walmart v.
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Dukes in 2011.
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um Betty Dukes being the greeter from Pittsburgh, California, mentioning her again.
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But that five to four settlement, the class action cannot proceed because Walmart's official policy was against discrimination.
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The local managers had the discretion, yada, yada, yada.
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Scalia's reading is a common question.
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The fact that managers used that discretion in a consistently discriminatory pattern across every region of the country was not the question that he was asking.
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So stop and think about what that standard does.
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If a company has a written anti-discrimination policy and then systematically discriminates anyway, the written policy becomes the shield.
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The more sophisticated the paper trail of compliance, the harder it is to certify a class.
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which every corporate HR department learned immediately from that moment forward.
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Document the policy, delegate the discretion, distribute the liability until it's too diffuse to aggregate.
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Again, not an accident.
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That's a lesson that got taught in 2011 and has been applied in every employment discrimination case since.
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Yeah, the chamber of commerce suit uh that was filed previously that Will was talking about, they filed an amicus brief in that Duke's case and they file in virtually every
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major class action case before the Supreme Court.
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Their Institute for Legal Reform spent $29 million on lobbying in a single recent year.
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They publish an annual list of quote, judicial hellholes.
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jurisdictions they consider to be plaintiff friendly, to pressure state legislatures into restricting access to courts.
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They have won roughly 70 % of Supreme Court cases in which they've filed those amicus briefs in recent uh terms.
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The 70 % success rate, those companies are getting what they paid for with their Chamber of Commerce.
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Exactly, 70%.
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That's not a coincidence, right?
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That's an institution that has spent decades and hundreds of millions of dollars shaping the composition of federal courts and the legal arguments that appear in front of them.
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The $1.5 billion in total lobbying between 1998 and 2022, that's across all issues.
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But the judicial reform project is its own sustained campaign.
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Here's what I the listener to actually sit with.
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Again, you're not in that room.
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You're not in the amicus brief.
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You have no institutional presence before the Supreme Court.
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What you have is one rule, a procedural rule, rule 23, which is consistently being narrowed, carved out, know, arbitration clauses, which are being expanded, and an agency
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system that the court is actively dismantling.
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Loper-Brite in 2024.
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Roberts writes the majority here, which overturns the Chevron deference.
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40 years of doctrine that said federal agencies get deference in interpreting ambiguous statutes within their expertise.
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Gone.
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Which means the EPA's interpretation of what counts as a regulated pollutant is challengeable.
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The CFPB's interpretation of what constitutes an unfair lending practice, challengeable.
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OSHA's workplace safety standards, challengeable.
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Every binding industry regulation now becomes a litigation target.
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and the courts get to define their way into the facts that they want.
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And so the predicted consequence is exactly what you'd expect.
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And legal scholars started writing it before the ink was even dry.
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When agencies lose authority to set binding standards, the disputes don't disappear.
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They just migrate.
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They move into class action courts.
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Injured parties who used to have this regulatory enforcement option now only can litigate, right?
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That's the only option they have in a litigation system that's been systematically narrowed for over 30 years.
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Right, so the accountability doesn't go away, it basically gets privatized.
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Which means it goes to whoever can afford the contingency fee lawyer, or whose case is big enough to be worth taking, whose harm is documentable enough to survive a motion to
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dismiss.
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Right.
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And what does that sound like?
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What political party do you hear that consistently talks about privatizing everything?
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Alright, small government.
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Exactly.
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And everyone else gets nothing.
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Nothing.
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The CFBP tried, right?
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In 2017, they finalized a rule banning mandatory arbitration clauses with class waivers in financial products.
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Rohit Chopra, later CFPB director, has been pushing this for a number of years, but the rule survived the rulemaking process.
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It was a direct legislative response to the Concepcion case.
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If the court won't protect the right to aggregate, then the CFPB will.
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Right, so Congressional Review Act, months later.
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Congress repealed it, 51 to 50.
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Vice President Pence at the time was the tie breaking vote.
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The rule that would have restored class action rights to millions of consumers of financial products, credit cards, bank accounts, payday loans, gone before a single case
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was filed underneath it.
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And I want to be precise about the structural impact of that.
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The court said arbitration clauses are enforceable.
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The agency said we'll regulate that away.
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Congress said no, you won't.
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Three branches, one outcome.
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Which brings us to 2026.
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And here is where it gets specific in a way that I want you to notice.
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I'm talking about the Cody case again,
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Yes.
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So May 10th, 2026, Bronstein, Gerwitz and Grossman files a securities class actions against Cody Inc.
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which on the New York Stock Exchange is COTY, the cosmetics company.
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The allegation is pretty straightforward securities fraud.
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During a class period from November 5th, 2025 through February 4th, 2026, Cody executives made quote, overwhelmingly positive statements.
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about growth and profitability for the year 2026.
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Meanwhile, their consumer beauty segment was underperforming.
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Their prestige fragrance growth was decelerating.
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Their margins were being squeezed by marketing costs.
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And they didn't actually disclose any of this until they were required to.
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which is after investors bought in on the positive statements, the stock moved, and then the reality sets in.
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And now a class action exists, not because a regulator caught it.
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The SEC has been hollowed out progressively for years, and it's continuing to be hollowed out during this administration.
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Not because Cody's board decided that they had to act, but because a plaintiff's firm decided the case was worth taking on contingency, meaning they only get paid if they
28:23
recover something and filed that lawsuit.
28:26
There's something kind of clarifying about a case like this.
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It's not opioids.
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It's not environmental catastrophe.
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It's a cosmetic company allegedly lying to investors about fragrance sales.
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And the mechanism is identical.
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The class period, the lead plaintiff appointment, the contingency fee structure.
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It's rule 23 doing exactly what it was designed to do way back in 1966.
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For investors who can get themselves appointed lead plaintiff by May 22nd, 2026, that's the deadline.
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The machine has a deadline.
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If you miss it, you're in the class, but you're not driving it.
28:59
which is also worth explaining a little bit.
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So if you own Cody stock during that window and lost money, you're potentially a class member, whether you joined actively or not.
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The lead plaintiff shapes the litigation, but everyone else rides along.
29:11
So you share in any recovery proportionally.
29:13
You don't have to do anything except exist.
29:15
And that structure is both genius and kind of the problem at the same time.
29:21
It makes litigation viable for people with small individual losses.
29:27
Nobody's hiring a lawyer over a few hundred dollars in stock losses, right?
29:30
But it also means the people that were harmed the most often have the least control over how the case is actually proceeding.
29:39
The attorney is the real party in interest often.
29:41
The contingency fee is the engine driving the litigation, which is not a criticism because without that engine, that engine, the case doesn't exist.
29:48
But it's worth being clear-eyed about what you're actually inside when you're inside a class action.
29:53
What you're inside is the last functioning public mechanism for corporate accountability that hasn't been fully captured yet.
30:00
That's not a celebration, it's a description of kind of what's left.
30:05
and it's under attack.
30:06
But the tobacco lawyers got $206 billion for the states and they got a percentage of that.
30:11
The opioid lawyers got a percentage of the $15 billion in settlements.
30:15
uh Peretz-Bronstein at Bronstein, Gerwitz and Grossman will get a percentage of whatever Cody pays.
30:22
The system runs on that incentive.
30:23
But if you remove it, you don't get noble public interest litigation, you get nothing.
30:28
The Sackler family extracted 10 to $11 billion from Purdue Pharma before the bankruptcy.
30:36
They tried to use the bankruptcy reorganization to buy immunity from every civil lawsuit, every individual plaintiff, every government, everyone with a single settlement payment.
30:48
The Supreme Court did block it in 2024 in the Harrington versus Purdue Pharma, five to four, so barely.
30:57
Which means four justices would have let them buy their way out of civil accountability entirely using the bankruptcy proceedings set forth by the federal government.
31:07
Four sitting justices of the Supreme Court looked at a family that had extracted $11 billion while communities drowned in opioid deaths and said, eh the math works.
31:17
They learned everything.
31:18
They kept doing it anyway.
31:20
The documents show that.
31:22
The emails show that.
31:23
The lobbying disclosures show that.
31:26
The amicus briefs show that.
31:29
And a cosmetics company in May of 2026 is allegedly telling investors its fragrance business is fine when it isn't.
31:36
Same mechanism, smaller stakes, same bet that nobody will be able to aggregate a response.
31:41
Somebody did file, deadlines of 22nd.
31:45
Next we have Stella Lyebeck at 79 years old.
31:49
She was sitting in the passenger seat of her grandson's car at a McDonald's in Albuquerque.
31:54
She had a coffee cup between her knees.
31:55
She added cream and sugar.
31:57
That cup tipped over.
31:59
The coffee served between 180 and 190, soaked through her sweatpants and held against her skin.
32:06
That's 180 degrees, right?
32:08
Minimum on the conservator side, maybe up to 190.
32:11
Water boils at 212.
32:14
So she was holding something that was a few degrees below boiling between her thighs.
32:18
And of course she suffered third degree, that's full surface burns over 16 % of her body, third degree.
32:25
That means the burn went through the full thickness of her entire skin.
32:29
She was hospitalized for eight days.
32:32
She had skin grafts.
32:33
She lost nearly 20 pounds during recovery and she was partially disabled for two years.
32:40
And again, this woman was 79 years old.
32:43
All she asked McDonald's for when it was all said and done was $20,000, just enough to cover her medical bills and the wages her daughter lost while taking care of her.
32:51
And McDonald's offered her $800.
32:53
Well, I'm sure you remember this.
32:55
I remember this.
32:56
Like this was like the joke.
32:58
This was like the, the, the big lie that we've all been fed in the millennial generation of why we are just a litigious society.
33:06
And the only thing we ever do is Sue.
33:08
And that's why everything is so expensive for all of us.
33:10
And this was sold to us.
33:13
And I remember, I could remember defending this like idea being like, you knew the coffee was hot.
33:19
You bought the coffee because it was hot.
33:22
And then you complain that it was hot.
33:24
And the reality is starkly different when you actually look at the case and the harm.
33:31
she just, she was like, look, I just want $20,000 to pay for the medical bills.
33:36
She's not trying to like, you know, suck all this money out of McDonald's.
33:40
And I mean, you could see it as a, you know, that was a franchisee and you're trying to get it from a person with a family and yada, yada, yada.
33:47
But ultimately.
33:48
This was a McDonald's policy.
33:51
Right.
33:51
Storewide.
33:52
Countrywide.
33:53
And here's what the company knew when they made this $800 little paltry offer.
33:59
They knew they had received 700 prior complaints about burn injuries from their coffee.
34:04
Like 700 times.
34:05
Now I get it.
34:06
It's a national organization.
34:07
It's a national company, you know, whatever.
34:10
700 is probably not, you know, the grandest number in this grand scheme of things when you have billions of hamburgers sold on your sign.
34:18
And their own QA manager
34:20
testified that the company had no intention of changing its coffee temperature because the executives believed the customers wanted the coffee hot for the commute.
34:30
The internal calculation was that the number of burns was just acceptable.
34:35
Like that's an acceptable cost.
34:37
That's, you know, what do they call it in war?
34:40
like accessible casualties.
34:42
Yeah.
34:42
So it's like, well, we know that 700 people are going to be burned.
34:47
And that's just how it is.
34:48
Right.
34:49
700 out of how many millions?
34:52
So yeah, mean, but these 700 had actually written in.
34:54
So these are not just the people that got burned.
34:56
These are the people who bothered to write in.
34:57
I assuming they were going to get nothing or hear nothing from McDonald's anyway, they just, notified them, hey, your coffee's too hot.
35:04
Those, those complaints are in a file somewhere and all they got in return was an offer of $800 for this woman's two years of suffering.
35:11
Yeah, and the jury, look, the jury awarded her $200,000 in compensatory damages, which was later reduced to $160,000 because they actually did find through this process that she did
35:25
bear some of the actual fault.
35:28
They awarded $2.7 million in punitive damages, which was at the time about two days of McDonald's coffee sales revenue.
35:38
Then the judge decides to reduce that even further down to $480,000.
35:42
The case was settled on appeal for a confidential amount.
35:47
And that's the part you never heard, right?
35:49
Because the story gets rewritten by the marketing engine that is the chambers of commerce and McDonald's and all the other big corporations.
35:55
mean the lobbying organization that is the Chamber of Commerce.
35:57
Exactly.
35:58
And that's what I can't get past because the case became a punchline, right?
36:02
Tortor reform lobbyists spent years making Stella Lieback the symbol of frivolous litigation.
36:07
A woman who spilled her own coffee and got rich.
36:10
That was the version that survived in the popular memory.
36:12
And that's what we all believe.
36:14
Like I can remember, I can remember this like specifically, um, the U S chamber of commerce and the Institute for legal reform spent across all tort reform efforts, hundreds
36:25
of millions of dollars over the following decades, making that version of the story, the one that people actually believed and it worked at least on me, the, McDonald's coffee
36:35
case, the woman who sued over hot coffee, it became the shorthand for everything wrong with American litigation.
36:42
And she had third degree burns.
36:43
She asked, Hey, can you handle my medical bills?
36:46
And they offered her 800 bucks.
36:48
story was weaponized, right?
36:50
I mean, that's what happened.
36:52
The documented facts of the case, they were readily available.
36:56
They just weren't what got repeated at the dinner table, right?
36:58
Instead of hearing about the real facts of the case that she had her verdict reduced down to a modest amount, instead they're just talking about the millions of dollars that were
37:06
awarded by the jury.
37:08
Right.
37:08
Betty Dukes, Walmart greeter from Pittsburgh, California, started at Walmart in 1994, making $5 an hour.
37:17
She was a good employee.
37:18
Her performance reviews actually said so.
37:21
She just wanted to move up, maybe cashier, maybe greeting manager.
37:25
She noticed that the men around her had lowered performance ratings.
37:30
They were being promoted.
37:32
She raised it internally.
37:33
She said she was retaliated against for raising it.
37:36
In 2001, she became the lead plaintiff in what would become the largest employment discrimination class action in American history.
37:43
Duke v Walmart Stores incorporated, North Dakota, California, 2004.
37:50
in ND, I don't think it's North Dakota.
37:53
Northern District of California.
37:55
Sorry.
37:55
how the federal courts are broken down in the states.
37:57
So yeah, we're talking about 1.5 million women in this class.
38:02
1.5 million, that's working for one company.
38:04
Think about that for a second.
38:06
Yeah.
38:06
I mean, they are, they are the largest employer for a reason.
38:10
Current and former Walmart employees to be fair, but the statistical evidence was overwhelming.
38:16
Women were paid less than men in every single region of the country.
38:22
Women were promoted at lower rates despite receiving higher average performance ratings.
38:27
And the plaintiff's expert analyzed 1.5 million employment records and the pattern held up everywhere.
38:35
And again, what marches the fence here, and it cannot be stated too often, is we don't have a policy of discrimination.
38:41
Local managers have discretion.
38:43
Which is exactly what the Supreme Court grabbed onto in 2011.
38:47
Scalia wrote the majority opinion and the argument was that because Walmart's official policy was against discrimination, because local managers had individual discretion, there
38:56
was no common question of law or fact binding the class together.
39:02
The discrimination, if it existed, was happening locally, therefore no class action.
39:07
Right.
39:08
So think about the logic of that for a moment.
39:10
The very mechanism that allowed the discrimination to function was giving managers the discretion locally became the reason that women couldn't sue together.
39:20
I think about that.
39:20
The description was too consistent to be a policy and too widespread to be individual.
39:24
So it was nothing.
39:25
Five to four, Betty Dukes could still sue individually any of the 1.5 million women could against the largest employer in the world on their own without their shared evidence pool,
39:38
without the shared expert, without the economics.
39:41
They essentially forced 1.5 million women to try each of this individually with a new discovery in every case against a company that could just.
39:53
indefinitely keep it from ever really being tried or even going to court.
39:58
Right.
39:58
mean, they've got lawyers on salary.
40:01
Like their lawyers are not paid by the hour or they're not on contingency fee.
40:05
They're paid salaries.
40:07
And so they can keep fighting this all day long.
40:09
And again, keep in mind who pays the burden of these.
40:11
Some of the costs will be borne by the company, but a lot of those costs will fall to the taxpayers for the courts.
40:17
And the courts will be clogged with these million cases as opposed to one large case.
40:21
They're clogged with a million small cases if they weren't willing to sue.
40:25
And so everybody's blocked from justice.
40:27
That's not what we call access to the courts.
40:29
That's the technicality of access to the courts.
40:32
Yeah, technically the door is open.
40:33
Technically you can file, but realistically nobody's going to.
40:37
And that with that the case was over.
40:39
Betty Dukes died in 2017.
40:40
The class was never actually reconstituted and 1.5 million women never got their day in court.
40:48
So let's talk in some detail about the opioid case.
40:52
What's the background situation on that?
40:54
The situation was like this.
40:55
Purdue Pharma began aggressively marketing OxyContin in 1996.
41:01
Internal documents, documents that only became public because of the litigation, showed the company knew about the addiction risk and deliberately obscured it.
41:10
They trained the sales representatives, know, and we heard, it's funny to kind of experience this, because we all have experienced it in one way or another.
41:19
uh
41:20
We at that point in time, if you went to a doctor, there were these fun pens and fun, you know, plushies and toys and frisbees and all kinds of marketing material.
41:30
Yes.
41:30
Swag, um, that your doctor would give away, including samples, right?
41:34
Like, uh, and so all of these have been changed now, um, because of, of really what Purdue chose to do, but, um, they basically, they train the sales representatives to tell doctors
41:47
that Oxycontin was actually less addictive.
41:49
than other opioids.
41:51
And they targeted high prescribing doctors, which created these pain management clinics that you see now.
41:56
uh Some of my family members, I won't say who, were seeing a doctor like this in Lafayette growing up and prescribed that exact same sort of a thing.
42:08
They used the patient advocacy infrastructure to help fund, to push back against the addiction concerns that people were rightfully bringing up.
42:19
And Richard Sackler, who was the chairman uh and president of the company, wrote that email, that the solution was to hammer on abusers in every way possible.
42:29
Right.
42:29
And keep in mind what he's calling abusers are the actual victims of this company that was perpetrating a fraud on them about the addictive nature of uh opioids.
42:38
Exactly.
42:39
And then the lawsuits came, right?
42:41
Thousands of them, local governments, Native American tribes, hospitals, individuals.
42:45
They consolidated in the Northern District of Ohio into one of the largest multi-district litigations in American history.
42:54
This was in uh regards to the National Prescription Opiate Litigation, MDL number 2804.
43:02
Johnson & Johnson settled for $5 billion.
43:05
And the three major distributors, which were McKesson, Cardinal Health, and Amerisource Bergen, settled for $21 billion.
43:12
Purdue, we know now, went into bankruptcy, but really just transferred to the Sackler family.
43:19
Alright, and the Sacklers tried to use the bankruptcy to buy their way out of every remaining lawsuit.
43:24
Every individual plaintiff, every government agency, single payment, civil immunity for the entire family.
43:30
They wanted to get it all done with one stroke of the pen.
43:34
People who had never filed for bankruptcy, people who still had 10 to 11 billion dollars that they pulled out of the company before it collapsed.
43:41
And the Supreme Court actually blocked it in 2024, Harrington versus Purdue Pharma, five to four, which is just a, it's a sad common recurrence.
43:52
I really wish that the things that actually ever made it to the Supreme Court were, were much more weighted into the pro or against kind of, and it just feels like there's so many
44:03
things that are happening now in the Supreme Court that are these narrow, narrow margins.
44:09
Right.
44:10
And in this case, we had four sitting justices who looked at the structure of this deal, which basically bails this whole family out of any responsibility for what they had done.
44:20
And those four justices found it legally acceptable.
44:23
The family extracts $11 billion, community is lost, and we're talking about hundreds of thousands of deaths over the arc of the opioid crisis.
44:31
And four justices of the US Supreme Court sit there and say, yeah, this bankruptcy math works for me.
44:37
The documents proved what the Sacklers knew and when they knew it.
44:41
Those documents exist because of this lawsuit.
44:44
Not because of a regulatory investigation, not because of congressional hearing that went somewhere, because plaintiffs' attorneys working on contingency had the financial
44:53
incentive to dig and the legal tools to compel the Purdue Pharma to disclose these documents.
45:01
And that only happens if you have the procedural mechanism of a class action.
45:05
The engine driving this is the contingency fee.
45:09
So they file the, for instance, the Cody case we've been talking about, there's a percentage on the other side if they win.
45:14
So they're rolling the dice that this is going to, you they can prove that these people were harmed by this company.
45:19
um But without these cases existing, you know, none of this gets exposed in the first place.
45:25
So you don't even have the uh incentive for anybody to expose their crimes for lack of.
45:30
or better description.
45:31
uh
45:33
I think that the commonly accepted contingency percentage is something like 33%.
45:38
Right.
45:39
Like it's typically like a third.
45:41
some capital at third, some 40%, but it just kind of depends on the case.
45:46
Yeah.
45:47
It's a lot, but at the same time, you have to consider how much they're spending to get that evidence and how many lawyers are sending to depositions and yeah.
45:55
Yeah.
45:56
it's also basically just a gamble that they'll ever recover any money at all from it.
46:02
You know, they might just be spinning this in vain.
46:04
you can kind of compare it to use the pharmaceutical companies that we're talking about here.
46:09
When they go to make a new drug, like 99 % of their drugs fail in clinical testing, right?
46:14
Before they even get to maybe phase one.
46:16
And that's what they're doing, the same sort of thing.
46:18
But we call that business and that's good for America, it's innovation.
46:21
But when a lawyer does it, it's ambulance chasing and hits it, fraud and abuse and all this sort of stuff.
46:26
Yeah.
46:27
The Sacklers called the addicted people abusers.
46:33
McDonald's called 700 victims acceptable cost.
46:37
Walmart called systemic pay discrimination, local manager discretion.
46:44
Each of those framings was designed to make the harm invisible as a collective phenomenon, to keep it atomized, individual, too small to fight.
46:55
The class section says, no, what happened to you happened to enough other people that we can give it a name and take it to court.
47:02
That's not a celebration of our legal system.
47:04
It's a description of what the legal system became when everything else has been systematically dismantled.
47:11
So Stella Liebeck, Betty Dukes, every county commissioner in Ohio who watched their community drown and eventually found a lawyer willing to file.
47:20
These are the people who ended up inside the last public square.
47:23
So let's sit with what we actually just proved.
47:26
Not argued, proved.
47:28
When regulatory systems are deliberately weakened, and they were deliberately weakened, right?
47:35
Like this is not entropy, this was policy.
47:38
The courthouse becomes the only room left where collective harm gets to have a name.
47:44
And there's a power that comes in naming something that caused harm.
47:49
That's what the tobacco settlement was.
47:51
That's what the opioid MDL was.
47:54
That's what Betty Dukes tried to do before five people decided that Walmart's official anti-discrimination policy was more real than the statistical evidence of what Walmart
48:08
actually did.
48:10
There are lots of different ways to look at this, but the mechanism that makes it all possible, the amendment to the procedural rules is a simple idea that it harms small
48:18
enough to be unlitigable, individually becomes litigable when it happens to enough people.
48:23
So imagine if somebody steals $5 out of your wallet, right?
48:26
Maybe there's not a, maybe you're not going to take them to court over that.
48:30
But if somebody steals $5 out of every wallet in America as a part of a systemic plan, then we have something we can work with, right?
48:37
We have something that's worth taking on.
48:40
and dealing with.
48:41
That's why 1.5 billion dollars.
48:43
Right, exactly.
48:44
so the fact is, mean, the fact that the Chamber of Commerce spent $29 million in a single year to fight these kinds of cases shows that it's not a side project for them.
48:54
This is infrastructure maintenance for them.
48:56
This is how they're going to destroy the last bastion of recourse for the American public.
49:03
Ooh, it's 1.7 trillion.
49:04
That makes it way more litigatable.
49:06
Ligatable?
49:07
Lit-legatable?
49:10
I don't know.
49:13
Okay, so here is where I land.
49:16
ah And here is what I would actually do first if I were someone who just spent an hour absorbing all of this.
49:25
Stop treating arbitration clauses as fine print.
49:29
They're not fine print.
49:30
They are a legal weapon.
49:32
that's preloaded like a bullet into the chamber, into your phone contract and your employment offer and your credit card agreement and they fire this the moment you try to
49:42
hold someone accountable collectively.
49:45
The first concrete thing is to go to public citizen website, citizen.org and read their arbitration resources.
49:53
Public citizen has been litigating and lobbying against forced arbitration longer than most advocacy organizations have even existed.
50:02
They will tell you which bills are live, which senators are on the fence, and what a constituent call actually needs to say to move the needle.
50:11
And I'll add a little bit of texture to that.
50:13
The CFPB, which is the Consumer Financial Protection Bureau, I believe, tried to ban arbitration clauses in financial products in 2017.
50:21
And this gets real when, you're a Wells Fargo customer who had an account open without your permission, you know a little bit about how this works.
50:29
But Congress killed that effort with the Congressional Review Act within just months.
50:34
mean, when's the last time Congress moved on anything in months?
50:37
The same playbook is in motion right now around the 2024 rulemaking attempts.
50:41
If you have a Senator on the Senate banking committees, and you can find out in about 45 seconds at senate.gov slash committees, that is a specific targeted place to put pressure.
50:50
Not a general call, but a specific call about the forced arbitration ban.
50:54
Refer to it by name when you call.
50:56
I want to mention something here.
50:57
You know, the CFPB is essentially run by Russ Vought of the Heritage Foundation and Project 2025 fame right now.
51:05
So if you're, if you're concerned about why all of this is related and how all of this is related to our current administration or currently what's going on in our world, it was
51:15
not an accident that the Heritage Foundation, uh, former director was placed as the director of the Consumer Financial Protection Bureau.
51:25
The person who wants to gut the entire government and have everything be a private subscription service.
51:31
So for people who want to go deeper on the structural picture, on how Loper-Bride and the collapse of the Chevron deference is going to push more more accountability disputes into
51:42
courts that are simultaneously being made harder to access, the Constitutional Accountability Center publishes genuinely readable analysis at the usconstitution.org.
51:57
Report on the chamber's Supreme Court win rate is something that I keep seeing in all of these results.
52:04
70%.
52:05
The chamber filed amicus briefs and won 70 % of the time in recent terms.
52:11
That number should change how you think about every Supreme Court nomination fight you've ever watched.
52:17
And I know watching the Supreme Court shift and change is boring, but it really does matter.
52:25
It's boring until it isn't, right?
52:27
I once you start seeing this stuff come through, you'll realize why they spent all that money pushing these people into the Supreme Court.
52:32
Right.
52:33
Here's a version of the action that I think creates the most durable change over time, and it requires patience, but it does compound.
52:40
State courts still matter enormously in this fight.
52:43
CAFA moved the big federal class actions into federal court, but state attorneys general retained independent authority.
52:49
And in many states, their authority is broader than what the federal agencies currently have, especially post-Loper-Brite.
52:56
The National Association of Attorneys General isn't a household name, but the Mississippi AG was the person who cracked the tobacco case wide open.
53:03
Your state AG's Consumer Protection Division is a real lever.
53:07
Find out who runs it.
53:08
The NAAG.org has the directory of State Attorneys General.
53:12
And if you're someone who lost money in Cody stock between November 2025 and February 2026, we uh mentioned the the Bronstein case.
53:21
The deadline to request lead plaintiff status is May 22nd, uh 2026.
53:25
That's coming up very quickly.
53:27
So that's not an abstraction.
53:29
That is like two weeks from now, give or take 10 days, right?
53:34
B G and G.com B G A N D G.com slash.
53:40
Capital C, capital O, capital T, capital Y.
53:44
I'm not endorsing the law firm, but I'm telling you that the deadline is real and it passes whether or not you act on how much money that you've lost.
53:52
And that case is also a pretty clean illustration of something worth naming directly.
53:56
Securities fraud class actions get criticized as lawyer enrichment vehicles, again, because of that contingency fee percentage.
54:04
Sometimes that criticism is fair.
54:05
I'm not going to say that I don't know the facts of the Cody case well enough to know whether that's what's happening here.
54:10
But the Cody complaint alleges that executives issued overwhelmingly positive statements about growth and profitability while the underlying numbers, which they had access to,
54:18
were deteriorating.
54:21
slowing consumer beauty sales, margin pressure, decelerating prestige, fragrance growth.
54:25
Those are the same mechanics as every corporate fraud case that ever mattered.
54:29
Executives knew, the public didn't, the litigation forces disclosure of what they knew.
54:34
And the contingency fee is not a bug.
54:37
It's the only reason any of this works for people who are not already rich.
54:42
Ron Motley didn't have tobacco money.
54:45
Betty Dukes did not have Walmart money.
54:48
The contingency fee is the structural equalizer that exists inside a system that has been methodically stripped of equalizer.
54:57
So this week, find out if you have a forced arbitration clause in your employment contract.
55:02
Most people don't even know, right?
55:04
They just walk you through those things on your first day orientation.
55:06
They're teaching you where the bathrooms are and how to log into the computer.
55:10
And then they just quickly hand you this document to sign, but read those documents.
55:16
The Economic Policy Institute at epi.org has a worker rights section that explains what you're looking at and what, if anything, you can do about it.
55:25
Some states still have protections.
55:27
Some employers under pressure have removed them.
55:29
This year, pay attention to your state attorney general race, like it's a federal race.
55:34
I'm paying attention to mine here in Oklahoma.
55:36
We have our current AG who's right about 50 % of the time on things that I care about running for, to be governor, uh which means that the AG spot and the AG seat is going to
55:49
be open for us.
55:50
And so I'm, I want you to pay attention like I'm paying attention because
55:55
It's as important in a post-loper bright world as any federal race that's happening for midterms.
56:04
And remember, like this may not seem relevant to you because maybe you don't invest in Cody stock or maybe you don't, you've never had a McDonald's coffee, although that's
56:14
vanishingly unlikely.
56:16
But the reality is the people who end up in this public square, the people that end up being talked about on podcasts like this, didn't choose this.
56:24
Estella Lieback asked for $20,000 for our medical bills.
56:28
The counties in Ohio just wanted to repair their communities after all the people they had lost.
56:32
What they got instead was years of litigation and eventually a settlement that proves what everyone already suspected.
56:37
The isn't whether the courtroom is a good substitute for a functioning democracy.
56:43
It isn't.
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We know that.
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The question is what do do while you're still inside this shitty one that exists?
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So, uh like we've been doing here for the past couple of months, we talk about something that stuck with us through our research phase of this podcast.
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So the thing that's been sitting with me is the McDonald's number.
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Not like the verdict, right?
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The 700.
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McDonald's had received 700 complaints about coffee burns before Stella spilled her cup.
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And 700 people told them this coffee is too hot and it's causing injuries.
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And then the company's counteroffered to a 79 year old woman with third degree burns on 16 % of her body was 800 bucks.
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The class action didn't create the outrage.
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It just made the outrage visible.
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in a language that corporations are required to respond to.
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Yeah, for me this week, it's the Sackler email, right?
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2001, Oxycontin addiction is making the news.
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People are dying.
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And I mean, it's an epidemic, right?
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Across the country.
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And Richard Sackler writes an internal email writing that the solution to this problem is, and I'm quoting, to quote, hammer on the abusers in every way possible.
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That wasn't a slip of the tongue.
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That wasn't a typo.
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That's a documented strategic posture.
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That email exists because litigation forced it into the public record.
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A regulator didn't find it.
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Congress didn't find it.
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Discovery during litigation did.
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The $50 billion in opioid settlements is the headline, but the email is the evidence.
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That's what the courthouse actually produced.
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And as always, you know, you can find us at FOF foundation.
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ah That's where our Casto pod is, but you can subscribe to us on Apple podcasts and Spotify.
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If this episode has made you feel something useful, not comfortable, maybe useful, share it with a person who would rather not think about this.
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Those are actually the most important people that we need to reach out in the world.
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And remember, the courthouse was never supposed to be the last resort.
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It was supposed to be one option within a system of many.
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And it was a procedural mechanism that we're talking about today.
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mean, how, there's anything more boring than a change in procedural rules?
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I don't know what it is.
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Even lawyers' eyes glaze over.
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But that has now become the last, the court of last resort for people who are abused by these massive corporations.
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So the fact that the courthouse is now doing the work of the picket line and the regulatory agency and the congressional hearing all at one time.
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It's not a sign that the system is working, but the people inside it, the Betty Dukes and the Alaskan fishermen and the Ohio counties, they didn't wait for a system, a better
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system to materialize.
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They used the one door they had open to them and that's worth something.
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Maybe it's worth more than we give her credit for.
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Or maybe the building is on fire and the door leads to a slightly less burny room.
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Either way, we'll see you next week.
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That's the overlap.
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Bye.
59:42
Bye.