This quarter has seen a few new types of class actions against insurers as well as aging of some more mature theories wending their way through the courts. BakerHostetler’s Class Action Defense – Insurance team has published a report with more insight.
Click here to read the Insurance Class Action Quarterly Update.
On Monday, the U.S. Supreme Court decided China AgriTech, Inc. v. Resh, No. 17-432, 584 U.S. __ (2018) and held that the American Pipe doctrine, which tolls the statute of limitations to permit members of a putative class to bring individual claims in the event class certification is denied, does not toll the statute of limitation for putative class actions. The case provides greater certainty to class action exposure for companies by preventing plaintiffs from consecutively filing, or “stacking,” class actions in a bid to extend the statute of limitations. Our colleagues Justin T. Winquist and Sammantha Tillotson published a Client Alert with more information.
Posted in Class Certification
In Comcast v. Behrend, 569 U.S. 27 (2013), the United States Supreme Court clarified the requirements for establishing that classwide injury and damages predominate over individual issues for the purposes of FRCP 23(b)(3). In particular, where a party relies on a damages model to establish predominance, the model must be consistent with the theory of liability and “measure those damages attributable to that theory.” Id. at 35. A defendant may challenge the damages model to show that “questions of individual damage calculation will inevitably overwhelm questions common to the class.” Id. at 34. In turn, federal courts should perform a “rigorous analysis” to determine the soundness of the model, even if such inquiry will “overlap with the merits of the plaintiff’s underlying claim.” Id. at 34-35.
In 2016, the Supreme Court issued a landmark decision in Campbell-Ewald Co. v. Gomez, resolving a circuit split on whether an unaccepted offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure could moot a named plaintiff’s individual claim, thus dooming the class claims. The decision – which held that an unaccepted Rule 68 offer cannot moot such claims – left class defendants a glimmer of hope by suggesting the result “might be different” if a defendant pairs his or her offer with an actual tender of payment, such as a certified check or a deposit to the court registry. Since then, class defendants have sought to invoke the “Campbell hypothetical” with increasing frequency, lodging evermore creative arguments in favor of mootness. Lower courts, however, have met these tactics with skepticism and have reached divergent – and sometimes directly contradictory – results.
Posted in Rule 23 Requirements
Proposed amendments to the class action settlement process in Federal Rule of Civil Procedure 23(e) are scheduled to take effect on Dec. 1, 2018. One of the proposed amendments requires that “[t]he parties must provide the court with information sufficient to enable it to determine whether to give notice of the proposal to the class.” Proposed Rule 23(e)(1)(A). Under the new rule, the court must direct notice if the parties show the court that it will likely be able to (1) approve the settlement proposal and (2) certify the class for purposes of judgment on the proposal. At first glance, this appears to be a significant change to Rule 23(e), requiring settling parties to provide significantly more information at the preliminary approval stage than Rule 23 previously required. In practice, however, this is probably just the codification of the status quo for many courts and class counsel.
Posted in Class Action Fairness Act
Officials at the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) continue to scrutinize class settlements to ensure that neither defendants nor class action counsel are improperly benefiting at the expense of class members. As discussed below, at minimum, parties to class actions in federal court can expect federal authorities to increasingly monitor and review class actions and file amicus briefs or statements of interest in appropriate cases.
Posted in TCPA
In 2015, the FCC issued an order that addressed certain aspects of the Telephone Consumer Protection Act. Congress enacted the TCPA in 1991 to address perceived abuses of telephone equipment that allowed entities to autodial consumers’ phones.
Three of the issues addressed in ACA will affect all entities that call consumers. Specifically, the FCC’s 2015 order held that a device meets the statutory definition of “automatic telephone dialing system,” generally known as an ATDS, if it could be configured to autodial. The order also addressed two consent issues, holding that callers were permitted only one “safe harbor” call when a consumer had consented to be autodialed on his or her cellphone but the cellphone number had since been reassigned to a different consumer, and that consumers who consent to be autodialed may later revoke that consent by any reasonable means.
Posted in Securities
Yesterday, the United States Supreme Court, in a unanimous decision, handed class action plaintiffs a victory by holding that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) allows them to pursue alleged violations of the Securities Act of 1933 (the 33 Act) in state court. Securing plaintiffs’ ability to pursue these claims in state court, the Supreme Court also held that defendants are barred from removing the claims to federal court.
As background, the 33 Act applies only to securities offerings and requires offerors to make full and fair disclosures related to such offerings. The 33 Act may be enforced through private suits and is often enforced through class actions, primarily through Section 11, which applies to registration statements. Initially, Congress authorized both state and federal courts to exercise jurisdiction over lawsuits alleging violations of the 33 Act. See § 22(a), 48 Stat. 86. Strangely, however, Congress barred the removal of such suits from state to federal court. Id. at 87.
Posted in Consumer Class Action
Last month, the Ninth Circuit vacated the certification of a nationwide class for settlement in the In re Hyundai & Kia Fuel Economy Litigation, No. 15-56014, 881 F.3d 679 (9th Cir. Jan. 23, 2018). The Ninth Circuit concluded that the district court abused its discretion because it failed to “conduct a rigorous analysis to determine whether the party seeking certification has met the prerequisites of Rule 23,” specifically, whether variations in state law undermined the predominance requirement. Id. at 690. Parties involved in class actions, whether on a contested or a settlement basis, should carefully scrutinize Hyundai & Kia Fuel.
Posted in Arbitration, Employment
As we have previously written, several Supreme Court decisions have upheld, in various contexts, arbitration agreements that waive the right to assert claims on a class basis. See, e.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011); American Express Corp. v. Italian Colors Restaurant, 570 U.S. 333 (2013); DIRECTV, Inc. v. Imburgia, 577 U.S. __, 136 S.Ct. 463 (2015). But the Fourth Circuit recently showed this trend does not mean an arbitration agreement will serve as a blanket protection against class claims. Degidio v. Crazy Horse Saloon and Restaurant, Inc., No. 17-1145, 2018 U.S. LEXIS App 1178 (4th Cir. Jan. 18, 2018).
