Class Action Lawsuit Defense

Class Action Lawsuit Defense

Class Action Defense News, Developments and Commentary

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.

CFPB Announces Proposed Ban to Mandatory Class Action Waivers in Arbitration Agreements

Posted in Uncategorized

Our Financial Services Blog recently posted about the Consumer Financial Protection Bureau’s (CFPB) Notice of Proposed Rulemaking on a proposed rule to prohibit covered institutions from including, in most core consumer contracts, “pre-dispute arbitration agreements” that contain class waivers.

Read the article.

Paul Karlsgodt to Chair ABA Western Regional CLE Program on Class Actions and Mass Torts

Posted in Events

On May 27, Partner Paul Karlsgodt, leader of BakerHostetler’s Class Action Defense team, will chair the third annual ABA Western Regional CLE Program on Class Actions and Mass Torts in San Francisco. The program will explore topics such as the latest trends and creative approaches to class action settlements, forum non conveniens and related issues in multi-district litigation after Air France 447, insurance issues, and how small firms are managing some of the largest class action matters.

Visit ABA’s website for more program details.

Eighth Circuit Becomes First Appellate Court to Apply Halliburton II Price Impact Analysis

Posted in Class Certification

The Eighth Circuit has become the first federal circuit court to apply the Supreme Court’s Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014) (Halliburton II) decision. Relying on Halliburton II, the Eighth Circuit reversed the district court’s certification of a class of Best Buy shareholders in a Rule 10b-5 case. In a 2-1 opinion, the court held that the defendants had rebutted the fraud-on-the-market presumption of reliance and, as a result, class certification was improper under Civil Rule 23(b)(3) because individual questions of reliance predominated over common questions of law and fact. The case is IBEW Local 98 Pension Fund v. Best Buy Co., No. 14-3178, 2016 WL 1425807 (8th Cir. Apr. 12, 2016).

Like many Rule 10b-5 cases, Best Buy involved statements reflecting earnings per share (EPS) guidance that later proved to be too optimistic. The plaintiffs alleged the company and its executives made two sets of misleading statements regarding EPS on the same day, the first in a press release issued before the stock market opened and the second in a conference call with analysts after the market opened. Notably, the district court found that the earlier statements in the press release were nonactionable forward-looking statements, but the later statements in the conference call were potentially actionable. On appeal, the Eighth Circuit did not review the district court’s ruling on whether each set of statements was actionable. Continue Reading

When a Published Data Breach is a Covered Data Breach

Posted in Data Breach, TCPA

Can an inadvertent Internet posting of a patient’s medical information trigger insurance coverage for liability stemming from a data-breach class action? The Fourth Circuit held last week that it can, and it added to the growing body of case law construing what “publication” means in the context of whether class liability is covered by commercial insurance policies.

We’ve written before about two of the hot corners of the class action arena, data breaches and Telephone Consumer Protection Act claims, in which much of the recent litigation has turned on the extent to which a plaintiff can establish or has established standing. But recent cases, including last week’s Fourth Circuit opinion in Travelers Indem. Co. of America v. Portal Healthcare Solutions, L.L.C., —Fed. Appx.—, 2016 WL 1399517 (4th Cir. 2016), reflect the burgeoning importance of the subsidiary insurance coverage issue. Continue Reading

Sixth Circuit Decision Clarifies Timing of Removal Under the Class Action Fairness Act

Posted in Class Action Fairness Act

Partner Greg Mersol of BakerHostetler’s Employment Class Action Blog published a blog post regarding a recent Sixth Circuit decision that clarified the timing of removal under the Class Action Fairness Act.  As stated in the post, the bottom line is that the “time for CAFA removal runs from when the plaintiffs provide the defendant with allegations or evidence meeting the amount in controversy, not when the defendant might compute damages from its own records.”  Read the full blog post >>