Class Action Lawsuit Defense

Class Action Lawsuit Defense

Class Action Defense News, Developments and Commentary

Sanctions Imposed on Five Attorneys for Class Settlement Forum Shopping

Posted in Injunctions

Five Arkansas attorneys have been formally reprimanded by a federal judge in the Western District of Arkansas after stipulating to dismissal “for the purposes of seeking a more favorable forum and avoiding an adverse decision” in connection with the approval of a class settlement. The court had initially considered harsher injunctive sanctions, including requiring the attorneys to provide notice to any federal Arkansas court in which they submitted a class settlement for approval that they “had previously been sanctioned for improper conduct in connection with a class action settlement agreement.” The court’s decision serves as a warning to class action attorneys as they engage in settlement discussions.

In Adams et al. v. United Services Automobile Ass’n et al., W.D. Ark. No. 2:14-cv-02013, the plaintiffs originally filed their putative class action in Polk County, Arkansas. The case was removed to the Western District of Arkansas and assigned to Chief District Judge P.K. Holmes III. After lengthy settlement negotiations, the parties stipulated to voluntary dismissal of the case in federal court. The next day, the plaintiffs refiled the action in Polk County, along with a motion for class certification and for approval of the class settlement.

The settlement, which resulted in a 4 percent claims rate against an estimated settlement value of $3.5 million, included a quick-pay provision allowing class counsel to collect fees of $1.85 million without having to first address objectors or wait for class members to obtain relief. The settlement was approved by the state court, which, according to Judge Holmes, was unsurprising because “Arkansas courts have a lenient approach to class certification and require no heightened attention when a class is certified for settlement purposes.” Continue Reading

Signed, sealed, delivered, but not dismissed: the Sixth Circuit takes on Campbell-Ewald’s offered vs. delivered distinction

Posted in Class Action Trends

Following the Supreme Court’s January decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) that a defendant cannot moot a plaintiff’s individual claim by simply offering to satisfy the plaintiff’s demand before a motion for class certification is filed, but must instead deliver that relief, the lower courts have struggled to identify when relief has been delivered versus merely “offered.” We previously covered the Ninth Circuit’s decision in Chen v. Allstate Insurance Co., 819 F.3d 1136 (9th Cir. 2016). Last month, the Sixth Circuit weighed in with its decision in Mey v. North American Bancard, LLC, –Fed.App.–, 2016 WL 3613395 (6th Cir. July 6, 2016), where the court acknowledged the possibility that a plaintiff’s individual claim can be mooted if a defendant physically delivers the plaintiff’s full demand.

The underlying dispute in Mey involved the Telephone Consumer Protection Act of 1991 (TCPA), which in certain instances prohibits unsolicited telephone calls made through automatic telephone dialing systems to cell phones. 47 U.S.C. § 227(b)(1)(A)(iii). Under the TCPA, individuals have a right to sue corporations that violate this law for damages of up to $1,500 per violation and injunctive relief. Id. § 227(b)(3)(B)-(C).

The defendant in Mey, North American Bancard (Bancard), allegedly used an automated system to make thousands of calls, including a Jan. 21, 2014, call to Diana Mey. Mey sued Bancard, asserting an individual claim and class claims on behalf of a proposed nationwide class of individuals who received such calls. Mey sought statutory damages and injunctive relief. Although Mey filed a motion for class certification with her complaint, the district court determined that the motion was premature because Bancard had not been served and the scheduling order had not been issued. Continue Reading

Second Circuit Confirms Ability of Defendants to Challenge and Defeat Class Certification Even After Loss in Jury Trial

Posted in Rule 23 Requirements

The Second Circuit’s recent post-trial decertification of the class in Mazzei v. The Money Store, et al. has garnered attention about decertification as a defense strategy. The decision confirms that plaintiffs’ burden to prove compliance with Rule 23 requirements does not end when a district court certifies a class, but in fact continues all the way through trial. Mazzei’s affirmation of the district court’s power to decertify a class even after a jury verdict on the merits serves as a useful reminder of this potentially beneficial option for defendants facing an adverse verdict.

In Mazzei, the plaintiff filed a putative class action for breach of contract, alleging the defendants charged post-acceleration late fees not permitted by mortgage agreements. The district court certified a class of borrowers who signed mortgage agreements that were owned or serviced by the defendants. A jury eventually returned a verdict against the defendants and awarded damages of $133 to the plaintiff and $32 million to the class. After the verdict, defendant The Money Store moved to decertify the class, arguing that the plaintiff failed to prove contractual privity on a class-wide basis between The Money Store and borrowers whose loans it only serviced. The district court agreed and decertified the class on grounds of typicality and predominance, and did so despite the fact that the jury had found that such privity existed.

In affirming the district court’s decertification order, the Second Circuit first rejected the plaintiff’s argument that the district court lacked authority to decertify a class after a jury verdict. Rule 23(c)(1)(C) authorizes district courts to change their class certification rulings at any time before final judgment – and, of course, the return of a jury verdict is not itself a final judgment. (Slip op. at 9). The court went further, finding that “the district court has the affirmative ‘duty of monitoring its class decisions in light of the evidentiary development of the case.’” (Id. at 10, quoting Richardson v. Byrd, 709 F.2d 1016, 1019 (5th Cir. 1983).) Both the Fourth and Ninth Circuits, for example, have decertified classes after high-profile jury verdicts in favor of plaintiffs. See Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998); Wang v. Chinese Daily News, Inc., 737 F.3d 538 (9th Cir. 2013). Continue Reading

Concrete and Particularized Part III: Initial Circuit Court Reactions to Spokeo

Posted in Consumer Class Action

 

In the two months since the U.S. Supreme Court issued its much-awaited decision in Robins v. Spokeo, 136 S. Ct. 1540 (2016), a handful of federal circuits have applied the decision to pending disputes over Article III standing. Consistent with the scope of the Court’s holding, described in Parts I and II of our coverage of the decision, the circuits have varied in their treatment of Spokeo. This post provides a brief rundown of the decisions thus far, which take three basic forms. Continue Reading

First Circuit Subscribes to a Minority View: Free App Users Allowed to Proceed With Privacy Class Action Under the Video Privacy Protection Act

Posted in Class Actions Privacy

In Yershov v. Gannett Satellite Information Network, Inc., 2016 U.S. App. LEXIS 7791 (1st Cir. Apr. 29, 2016), the First Circuit held that users of free mobile applications, or “apps,” can bring a claim against an online service provider if the provider shares with third-party data analytics companies the users’ personally identifiable information and information about videos the users viewed on the app. The court’s holding departs from the majority of courts that have ruled on this issue and reached the opposite conclusion.

Alexander Yershov, the plaintiff, installed a USA Today mobile app on his Android phone. In a class action complaint, Yershov alleges that every time an app user viewed a video, the defendant, Gannett Satellite Information Network, Inc. (USA Today’s parent), shared with a third-party data analytics company: (1) information about the video the user viewed; (2) the user’s GPS coordinates; and (3) the unique identification number of the user’s smartphone, called an “Android ID.”

The Video Privacy Protection Act (“VPPA”), 18 U.S.C. § 2710, under which Yershov brought his claim, prohibits “video tape service providers” from disclosing “personally identifiable information” (“PII”) concerning a “consumer” to third parties. 18 U.S.C. § 2710(b). Prior district and appellate courts’ decisions on this statute have turned on defining the latter two terms—first, whether the above information that Gannett disclosed constituted “personally identifiable information,” and, second, whether free app users qualify as “consumers.” Continue Reading

Ninth Circuit First to Take Up Offers of Judgment After Campbell-Ewald

Posted in TCPA

supreme court iStock_000005215190_LargeCo-authored by: Erica L. Cook

As we reported earlier this year in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 672 (2016), the Supreme Court held that a putative class action does not become moot when a defendant merely offers a named plaintiff full relief on his or her individual claims under Fed. R. Civ. P. 68. Left unanswered was the question whether the outcome would be different if a defendant deposited “the full amount of the plaintiff’s individual claims into an account payable to the plaintiff, and the court then entered judgment for the plaintiff in that amount.” Id. The Ninth Circuit is the first circuit court to examine the use of Rule 68 to moot a putative class action post-Campbell-Ewald.

In Chen v. Allstate Insurance Co., 819 F.3d 1136 (9th Cir. 2016), two plaintiffs brought a class action complaint against Allstate Insurance Company (Allstate), alleging violations of the Telephone Consumer Protection Act (TCPA). Allstate tendered an offer of judgment of $25,000 plus attorney fees and injunctive relief to the plaintiffs before the plaintiffs moved for class certification. When the plaintiffs did not accept the offer, Allstate moved to dismiss the plaintiffs’ complaints for lack of subject matter jurisdiction, arguing that the claims were rendered moot by the offer. Id. While the motion to dismiss was pending, one of the plaintiffs accepted Allstate’s Rule 68 offer; the other did not. Id. The district court denied Allstate’s motion to dismiss, holding that even if the Rule 68 offer fully satisfied a plaintiff’s individual claims, a plaintiff still had the opportunity to move for class certification when the action as a whole remained a justiciable controversy. Id. The district court relied on the Ninth Circuit’s decision in Pitts v. Terrible Herbst, Inc., 653 F. 3d 1091 (9th Cir. 2011), which held that an unaccepted Rule 68 offer that was made before class certification and fully satisfied a named plaintiff’s individual claims did not moot a class action claim when the defendant used tactics to “pick off” named plaintiffs to avoid a class action. Continue Reading

Seventh Circuit Bucks the Trend, Holding That Class and Collective Action Waivers in Employee Arbitration Agreements Violate the NLRA

Posted in Employment

In Lewis v. Epic Systems Corp., No. 15-2997 (7th Cir. May 26, 2016) (slip op.), the Seventh Circuit held that class and collective action waivers in arbitration agreements are not enforceable because they violate the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151 et seq. In so doing, the court created a circuit split on this issue with the Second, Fifth, Eighth and Ninth Circuits, which previously rejected challenges to the enforceability of employment arbitration agreements that were based on the NLRA. Sutherland v. Ernst & Young LLP, 726 F.3d 290, 297 (2d Cir. 2013); D.R. Horton, Inc. v. N.L.R.B., 737 F.3d 344, 362 (5th Cir. 2013); Owen v. Bristol Care, Inc., 702 F.3d 1050, 1055 (8th Cir. 2013); Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1075 (9th Cir. 2014).

The defendant in Lewis required employees to agree to arbitrate all wage and hour claims, and included a class and collective action waiver in its arbitration agreements. Employees did not have an option to opt out of the arbitration agreement, which was made a condition of continued employment. Slip op. at 2. Continue Reading

Post-Tyson Foods, Defendants Should Take the Offensive in Discovery Sampling

Posted in Class Action Trends

Following the Supreme Court’s ruling in Tyson Foods and in light of the greater emphasis on proportionality in the amended Federal Rules of Civil Procedure, defendants can expect to see an increase in the use of sampling in class action discovery as plaintiffs attempt to use statistical evidence to establish both liability and damages. But defendants need not take such discovery lying down. Rather, defendants should consider taking the offensive and using plaintiffs’ own sampling to defeat class allegations.

In a recent post about Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036 (2016), we detailed the Supreme Court’s holding that plaintiffs could rely on statistical evidence to determine class-wide liability. Rejecting calls for a broad rule either prohibiting or allowing representative evidence in class actions, the Court held that the permissibility of representative evidence would “depend on the purpose for which the evidence is being introduced and on the elements of the underlying cause of action” and, therefore, opened the door for plaintiffs’ attempted use of sampling in class action discovery. Continue Reading

Concrete and Particularized Part II: What Spokeo May Mean for Class Actions

Posted in Class Actions Privacy

Supreme Court iStock_000008258486_Large_bwThis blog post is the second in a series of posts that Baker & Hostetler LLP is devoting to the significant decision Robins v. Spokeo, No. 13-1339, 537 U.S. ___ (2016) (Spokeo). Monday’s post focused on Spokeo’s effect on privacy class actions and big data. Today’s post focuses on the decision’s impact on class actions.

On May 16, 2016, the Supreme Court issued its long-awaited decision in Spokeo. In the 6-2 decision, the Supreme Court held that the Ninth Circuit’s Article III standing analysis did not consider both injury-in-fact elements – the Ninth Circuit addressed whether the injury was particularized, but did not analyze whether the injury was “concrete.”

Spokeo concerned allegations that Spokeo, Inc., an operator of a “people search engine,” gathered and disseminated inaccurate information about the plaintiff in violation of the Fair Credit Reporting Act (FCRA). 15 U.S.C. § 1681 et seq. (slip op. at 4-5). Upon learning about the inaccurate information (through means not detailed in the complaint), the plaintiff filed a class-action complaint against Spokeo. But the district court dismissed the complaint, holding that plaintiff did not properly plead an injury-in-fact as required under Article III. (slip op. at syllabus).

On appeal, the Ninth Circuit reversed on grounds that the plaintiff had alleged injury-in-fact due to his allegation that “Spokeo violated his statutory rights” and because Mr. Robins’ “personal interests in the handling of his credit information are individualized.Id.

Continue Reading

Supreme Court Holds That Plaintiffs Must Allege Concrete and Particularized Injury To Have Standing To Assert FCRA Claim

Posted in Class Actions Privacy

Supreme Court iStock_000008258486_Large_bwToday, the U.S. Supreme Court decided Robins v. Spokeo, Inc., which addressed the question of whether a plaintiff has satisfied Article III’s injury-in-fact standing requirement by alleging a statutory violation but no concrete injury. Our sister blog, the Data Privacy Monitor, provides initial coverage here. Stay tuned as we analyze this important ruling which could have broad-ranging implications for class actions arising under statutory causes of action.