Class Action Lawsuit Defense

Class Action Lawsuit Defense

Class Action Defense News, Developments and Commentary

Banks Win Class Certification in Target Data Breach Case

Posted in Class Certification, Data Breach

A federal court recently granted class certification to a group of financial institutions (the “Banks”) in the data breach case against Target Corporation (“Target”) arising from the December 2013 hacking of its computer system, which exposed the financial information of millions of customers. In re: Target Corp. Customer Data Security Breach Litigation, MDL Case No. 14-2522, 2015 U.S. Dist. LEXIS 123779 (D.Minn. Sept. 15, 2015). Specifically, the district court in Minnesota certified a Rule 23(b)(3) class defined as “all entities in the United States and its Territories that issued payment cards compromised in the payment card data breach that was publically disclosed by Target on December 19, 2013.” Id. at *4. The Banks alleged three claims against Target: (1) negligence in failing to provide sufficient security to prevent the hackers from accessing customer data; (2) violation of the Minnesota Plastic Security Card Act (“PSCA”); and (3) violation of the PSCA as a per se violation.

In an attempt to defeat certification, Target argued that the Banks’ injuries were only the “risk of future harm” and not cognizable or susceptible to class-wide proof. Id. at *10. The court rejected this argument, holding that “this is not a case in which [the Banks have] yet to suffer harm.” Id. at *11. Citing a survey from the American Bankers’ Association, the court found that the Banks had to reissue “nearly every card” that was subject to an alert after the Target breach. This cost was borne by the Banks at the time of the breach and as a result of the breach. Id. at *11. Continue Reading

Plaintiffs Fold on Their Full Tilt Poker Actions Following Court’s Rejection of Class Certification and Proposed Settlement

Posted in Class Certification, RICO

Poker Chips B&WWeeks after having their motion for class certification denied and a proposed global settlement rejected, the plaintiffs in three actions against entities and individuals involved in the Full Tilt Poker Internet gambling operation have dismissed their claims without prejudice. This case illustrates the importance of due process considerations in representative actions.

Full Tilt, PokerStars, and Absolute Poker/Ultimate Bet (collectively, the “Poker Companies”) were the largest online gambling sites operating in the United States following Congress’s enactment of the Unlawful Internet Gambling Enforcement Act of 2006, which made it a crime for gambling businesses to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.” 31 U.S.C. § 5363. On April 15, 2011, the U.S. Attorney’s Office for the Southern District of New York shut down the Poker Companies’ websites, seized their assets, and issued arrest warrants for their founders. The DOJ brought civil and criminal actions against the Poker Companies and others involved in the operation, which were settled in July 2012. Continue Reading

Judge Easterbrook Holds Unaccepted Offer of Judgment Does Not Moot an Individual TCPA Claim

Posted in Class Certification, TCPA

Chairs_99804207As we covered here, the U.S. Supreme Court accepted certiorari in Campbell-Eward Co. v. Gomez, 768 F.3d 871 (9th Cir. 2014), to decide the question of whether a full-relief offer of judgment under Federal Rule of Civil Procedure 68, made prior to the plaintiff’s moving for class certification, would moot a TCPA class action. The Seventh Circuit earlier this month, however, answered a slightly different question in Chapman v. First Index, Inc., Case Nos. 14-2773 & 14-2775 – namely, can a full-relief offer of judgment moot an individual’s TCPA claim if it is made after class certification is denied? Continue Reading

District Court Follows Supreme Court’s Lead in Halliburton, Allows Class Action to Proceed with Narrowed Factual Scope

Posted in Class Certification, Securities

Chairs_99804207Applying the Supreme Court’s landmark decision in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014) (“Halliburton II”), which allowed companies facing securities fraud class actions to defeat certification by presenting evidence that their alleged false statements did not impact the company’s stock price, the district court on remand held that Halliburton defeated class certification as to all but one of its alleged misstatements. The district court considered expert testimony from both parties before determining that only one of the statements at issue ultimately impacted the price of Halliburton’s stock.

The July 25, 2015 decision by Judge Barbara M. G. Lynn for the Northern District of Texas is the latest chapter in a “long and winding” case that has visited the Supreme Court twice. The Erica P. John Fund, Inc. v. Halliburton Co., No. 2:02-CV-1152-M (N.D. Tex. July 25, 2015). The Erica P. John Fund, Inc. (the “Fund”), is the lead plaintiff in a putative class action against Halliburton alleging violations of the federal securities laws— specifically, that Halliburton made various representations as to the company’s financial status that later turned out to be false, precipitating a massive stock drop.

In 2008, the district court denied class certification after finding that, per binding Fifth Circuit precedent, the plaintiff had not proven that Halliburton’s alleged misstatements had caused the plaintiff’s loss. The Supreme Court later reversed and remanded, holding that so-called loss causation need not be proven at the class certification stage, but rather should be dealt with on the merits. Erica P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179, 2185-86 (2011) (“Halliburton I”). Read more >>

The Sixth Circuit Expands American Pipe Tolling

Posted in Rule 23(b)(2) Class Actions

Chairs_99804207On July 7, the Sixth Circuit decided Phipps v. Wal-Mart Stores, Inc., No. 13-6194, 2015 WL 4079441 (6th Cir. July 7, 2015), an interlocutory appeal in one of the regional progeny of the U.S. Supreme Court’s famous decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Dukes and Phipps both involved allegations of “gender discrimination in pay and promotions,” though the Phipps plaintiffs allege that the discrimination stems from “regional Wal-Mart management policies and decisions” rather than national policies. See Phipps, 2015 WL 4079441, at *1 (emphasis added). That distinction proved critical for the thousands of women who did not pursue individual claims following the Dukes decision, which reversed an order certifying a nationwide class of female employees.

Phipps examined the scope of the American Pipe tolling doctrine. The basic rule of American Pipe is that the statutes of limitations for absent class members’ individual claims are tolled while the putative class action makes its way to a Rule 23 determination. See American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974); Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 346-47 (1983). Phipps examined the extent to which American Pipe also tolled otherwise time-barred class claims. At base, Phipps appears to permit follow-on or “stacked” class actions when the new class is, in effect, a sub-class of the prior class—even when the Supreme Court has famously decertified the prior class for want of Rule 23(a) commonality. Continue Reading

A Year Later: The Impact of Halliburton II Is Still Developing

Posted in Class Certification, Securities

Happy Group of Professionals - iStock_000013960457MediumIn June 2014, the Supreme Court issued its decision in Halliburton Co. v. Erica P. John Fund Inc. (“Halliburton II”), a putative class action in which Halliburton investors alleged that the company made misrepresentations designed to inflate its stock price, in violation of section 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. 134 S. Ct. 2398 (2014). Of particular importance were two major holdings. First, the Court extended its holding in Basic Inc. v. Levinson, 485 U.S. 224 (1988) to allow putative securities fraud class members to prove the causation/reliance element of a securities fraud claim at the class certification stage “by invoking a presumption that the price of stock traded in an efficient market reflects all public, material information—including material misrepresentations.” Id. at 2414. Second, the Court held that securities class action defendants must be given the opportunity to rebut this presumption of reliance at the class certification stage by showing that their alleged misstatements didn’t actually impact the price of their stock. Id.

A year later, the ramifications of the Halliburton II decision are still developing. To date, no class action defendant in any published decision has successfully defeated class certification by rebutting the presumption of reliance under the Halliburton II framework. In fact, the cases that have interpreted Halliburton II over the past year have largely confirmed Justice Thomas’ comment in the Halliburton II dissent that “in practice, the so-called ‘rebuttable presumption’ is largely irrebuttable.” Id. at 2424. Continue Reading

Class Certification of California Price Advertisement Case Gives Cause for Concern

Posted in Class Certification

people dollarsSpann v. JCPenney and People of California v.

By Rodger L. EckelberryRand L. McClellan, and Jacqueline K. Matthews June 30, 2015

A recent class certification decision in California involving challenges to a retailer’s price comparison advertisements should prompt retailers to carefully evaluate their sale advertising practices. Whether comparing to “regular” or previous prices, or to the sale prices of competitors, comparison price advertising is increasingly being challenged in court.

In Spann v. JCPenney, the United States District Court for the Central District of California last month certified a class of JCPenney customers who had purchased items advertised as discounted from JCPenney’s “original” price for the same item. Spann v. JCPenney, No. SA CV 12-0215 FMO, 2015 WL 3478038, at *24 (C.D. Cal. May 18, 2015). The plaintiff alleged that the vast majority of these items were never actually sold at the purported higher, “original” price, and thus the purported “sale” prices were false or misleading. The court in JCPenney noted that the practice of comparing one’s own current price to one’s own previous price, or to the price of a competitor, is a widespread sales tactic that can be effective in inducing customers to make purchases. In fact, JCPenney itself previously touted that it was eliminating price comparisons from its advertising in favor of “square deal” pricing, and saw a precipitous corresponding drop in its sales volume. Less than a year later, it reinstated its comparisons to its own “original” prices. Read more >>

Supreme Court to decide if a TCPA class action can be mooted by a pre-certification offer of judgment

Posted in TCPA

Cell phonesYesterday, the United States Supreme Court accepted certiorari to review the Ninth Circuit’s decision in Campbell-Eward Co. v. Gomez, 768 F.3d 871 (9th Cir. 2014), which involved a TCPA class action brought by the recipient of a text message that a contractor, defendant Campbell-Eward, sent on behalf of the U.S. Navy in May 2006. The text message read:

Destined for something big? Do it in the Navy. Get a career. An education. And a chance to serve a greater cause. For a FREE Navy video call [number]. Continue Reading

Status of Pay-for-Delay Cases Nearly Two Years After Actavis – “It ain’t over ’til it’s over.”

Posted in Antitrust

money ThinkstockPhotos-178441253Nearly two years ago the Supreme Court issued its opinion in FTC v. Actavis, 133 S. Ct. 2223 (2013), holding that a reverse payment made by a brand manufacturer to a generic manufacturer to resolve pending patent litigation could satisfy a violation of the Sherman Antitrust Act. In adopting a “rule of reason” test and rejecting the “scope of the patent” test adopted by several lower courts, the Supreme Court held that “[i]t would be incongruous to determine antitrust liability by measuring the settlement’s anticompetitive effects solely against patent law policy, and not against procompetitive antitrust policies as well.” Id. at 2231. Thus, “the antitrust question should be answered by considering traditional antitrust factors.” Id.

Unfortunately, as Chief Justice Roberts predicted when he wished “good luck to the district courts” in his dissent in Actavis, the Court’s majority opinion left more questions unanswered than answered. The majority declined to provide a structure for the rule-of-reason analysis, leaving it to the lower courts to establish the framework. That uncertainty is now making its way through district and circuit courts.  Continue Reading

Third Circuit Clarifies Standard for Ascertainability

Posted in Class Certification

Laptop Magnifying glassIn a recent ruling vacating denial of class certification, the Third Circuit provided guidance on the scope of the implied “ascertainability” requirement under Rule 23. Byrd v. Aaron’s, Inc., 2015 U.S. App. LEXIS 6190 (3d Cir. April 16, 2015) involved a putative class action against Aaron’s, which leases, among other things, laptop computers to consumers. The plaintiffs alleged that Aaron’s and its affiliates had violated the Electronic Communications Privacy Act (ECPA) by surreptitiously monitoring the activity of the rental laptops’ users via spyware that collected screenshots, keystrokes, and webcam images.

The plaintiffs sought to certify a class of “all persons who leased and/or purchased one or more computers from Aaron’s Inc., and their household members, on whose computers DesignerWare’s Detective Mode was installed and activated without such person’s consent on or after January 1, 2007.” The district court refused to certify because the class was not ascertainable. According to the magistrate judge’s report and recommendation, which was summarily adopted by the district judge, the class was underinclusive, because owners, lessees, and their household members did not encompass all individuals whose information might have been surreptitiously gathered. Moreover, the class was overinclusive because mere installation of the spyware was not sufficient to satisfy the interception requirement of the ECPA. Finally, the magistrate judge took issue with the plaintiffs’ failure to define “household members.” Continue Reading