The final quarter of 2018 witnessed a number of new twists on old theories in class actions involving auto and homeowners claims and coverages, as well as further activity in some long-running class actions. Read BakerHostetler’s Q4 2018 Insurance Class Action Update, written by partner Mark Johnson, here.
In this era where there appears to be a new data security incident announced each month, there is surprisingly little class certification jurisprudence for data security class actions. Indeed, to date we know of only four decisions that have addressed class certification of data privacy actions, excluding settlement certification: Dolmage v. Combined Ins. Co. of Am., No. 14 C 3809, 2017 WL 1754772, at *7 (N.D. Ill., May 3, 2017); In re Target Corp. Customer Data Sec. Breach Litig., 309 F.R.D. 482, 484 (D. Minn., 2015); In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 293 F.R.D. 21, 33 (D. Me., 2013); and In re TJX Companies Retail Sec. Breach Litig., 246 F.R.D. 389, 397-98 (D. Mass., 2007). With only one exception (Target), courts have refused to certify contested data privacy classes.
The past quarter has seen several new types of class actions against insurers and new twists on the well-worn theory of total loss claims, as well as some new life breathed into long-running labor depreciation class actions.
Partner Rand McClellan recently posted an article to BakerHostetler’s Financial Services Blog on the Ninth Circuit’s recent ruling on what constitutes an “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act and the current uncertainty about the definition of an ATDS.
By: Robert J. Tucker and Katherine R. Johnston*
Judge Kavanaugh has had very few occasions to address the procedural mechanism of Rule 23. This is not surprising given that few class-action cases end up in the D.C. Circuit. But where he has, Judge Kavanaugh’s commentary suggests that he may be mindful of the realities and difficulties class-action defendants face.
Some insight into Judge Kavanaugh’s views on class actions can be inferred from his dissenting opinion in Cohen v. United States, 650 F.3d 717 (D.C. Cir. 2011). In Cohen, the IRS had illegally collected an excise tax on long-distance phone calls. To remedy the problem, the IRS set up a “simple” refund procedure for taxpayers that would allow them to check a box on their tax returns for a standard refund amount. Id. at 719. Taxpayers who were unhappy with their refund amount under the refund rules could file a tax refund suit. Judge Kavanaugh noted that about 90 million Americans took advantage of the refund program.
Last month, the Sixth Circuit in Macy et al v. GC Services Ltd Partnership unanimously upheld certification of a class under the Fair Debt Collection Practices Act (FDCPA), despite arguments that the named plaintiffs failed to establish Article III standing. The court held the plaintiffs established a concrete injury in fact, without alleging any additional harm beyond a procedural violation of the FDCPA, because they demonstrated that the allegedly incomplete disclosures in debt collection letters sent by GC posed a sufficient “risk of real harm” to the interests protected by the statute – namely, being misled by debt collectors about their rights under the FDCPA.
Plaintiffs Wilbur Macy and Pamela J. Stowe both received a letter from a debt collector that their credit card accounts had been referred to the debt collector for collection. Macy et al v. GC Services Ltd Partnership, No. 17-5593, 2018 WL 3614580, at *1 (6th Cir. Jul. 30, 2018). The plaintiffs alleged the letters violated the FDCPA because they did not inform the plaintiffs that the defendant debt collector was required to provide certain debt and creditor information, and to stop collection activities, only if the plaintiffs disputed their debts in writing. Id.
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.
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.