Posted Jun 06, 2011 01:00 pm CDT
Tort-reform advocate Ted Frank is so confident that the U.S. Supreme Court will scuttle a huge employee class action against Wal-Mart that he has put his own money on the line.
Writing at PointofLaw.com, Frank says he has invested 10 percent of his net worth in call contracts that bet Wal-Mart stock will bounce when the U.S. Supreme Court issues its decision in Wal-Mart Stores Inc. v. Dukes. Frank founded the Center for Class Action Fairness, a nonprofit organization that represents consumers challenging class action settlements.
Frank says he is persuaded the Supreme Court will reverse class certification for several reasons: the briefs, the oral arguments and the Supreme Court’s language in another case about the need to protect unnamed class members. These developments didn’t lift the price of Wal-Mart stock, however. “This leads me to suspect that the market is undervaluing the probability of reversal, and will be surprised when the Supreme Court does reverse later this month,” he writes.
Frank cautions that he’s not recommending that others follow his lead. He points out that the market may have anticipated the result years ago and accounted for it in stock price, or the market may regard the suit as nothing more than a minor nuisance. Other events, such as a terrorist attack or economic shock, could depress stock prices and make him a loser on the Wal-Mart bet. Or he may be wrong on the upcoming decision.
Writing at his blog Truth on the Market, University of Illinois law professor Larry Ribstein notes Frank’s post. He wonders whether there could be an expanded role for legal information experts who are doing the same kind of analysis about pending court decisions.