BakerHostetler released its 2023 Q1 Insurance Class Action Quarterly Report, which summarizes a variety of insurance class action themes. Total loss class actions kept going around the country, and labor depreciation class actions experienced ups and downs, depending on one’s viewpoint. New class actions involving sales tax depreciation, appraisal and privacy claims for data shared with vendors made an entrance, as did additional Washington health care reimbursement rate class actions. And we saw appellate action in some previously reported class actions alleging claims based on uninsured/underinsured motorist coverage, COVID-19 premium rebates and how property space for coverage limits is calculated. Read the report.
On March 28, 2023, the Advisory Committee on Civil Rules (Committee) convened in West Palm Beach, Florida, to discuss a variety of proposed amendments to the Federal Rules of Civil Procedure, including a new rule that would provide guidance about initial case management procedures in multidistrict litigation (MDL).
Appointed by the chief justice of the United States, the Committee’s membership includes federal and state judges, law professors, and practitioners from the plaintiff and defense bar as well as the federal government. The Committee is tasked with studying the federal rules and evaluating proposed changes to those rules. The Committee proposes amendments and rules changes for the Standing Committee on Rules of Practice and Procedure, which in turn makes recommendations to the United States Supreme Court. The Supreme Court has ultimate authority to promulgate rules amendments pursuant to the Rules Enabling Act.
Last week, the U.S. Court of Appeals for the Second Circuit issued a decision that highlights a growing disagreement among federal appellate courts as to whether class action settlements may include a cash incentive award to named plaintiffs for serving as class representatives. This deepening debate creates uncertainty as to whether incentive awards will continue to be available in many parts of the country and increases the likelihood that the Supreme Court will accept one of two pending petitions asking the Court for a ruling on this issue.
The drama leading up to last week’s decision did not begin in the Second Circuit. Instead, the Eleventh Circuit was the first to interrupt a long period during which incentive awards were a standard and accepted part of a class action settlement. In 2020, a three-judge panel of the Eleventh Circuit decided Johnson v. NPAS Sols., LLC (Johnson), holding that incentive awards are impermissible under two rather old Supreme Court precedents that prohibited representative plaintiffs from receiving payment for personal services and private expenses, Internal Imp. Fund Trustees v. Greenough, 105 U.S. 527 (1881) (Greenough), and Cent. R.R. & Banking Co. v. Pettus, 113 U.S. 116 (1885) (Pettus). In Johnson, the Eleventh Circuitheld that it must apply these cases to reverse a $6,000 award to the named plaintiff in a class action settlement. Last August, the Eleventh Circuit denied a petition to reconsider that decision.
BakerHostetler released its Insurance Class Action Quarterly Report for 2022 Quarter 4, devolving trends in the insurance class action space from the past quarter. We witnessed further development of total loss, uninsured/underinsured motorist and COVID-19 premium rebate class actions, along with movement in new(er) property and casualty class actions involving discrimination in claims adjusting and allegations of software errors that overestimated the size of insured spaces, leading to higher premiums. Also, class actions are appearing against insurers for violation of anti-wiretap statutes based on tracking consumers’ movements within websites.
As predicted back in March 2022, class litigation related to per- and polyfluoroalkyl substances (PFAS) has accelerated over the past year. PFAS are a group of man-made chemicals that have been widely used in various industrial and consumer products. Companies that have manufactured, used or disposed of PFAS are facing an increasingly volatile legal landscape given the prevalence of PFAS in the environment and the growing challenges to their safety.
In Kevin D. Hardwick v. 3M Company et al, for example, the plaintiff seeks to compel 10 defendant companies to fund a court-supervised “science panel” to study the effects of PFAS on health and potentially to fund “medical monitoring” for himself and substantially the entire population of the United States. The United States District Court for the Southern District of Ohio certified a Rule 23(b)(2) class of Ohio residents and other individuals “subject to” Ohio law, and estimated to include approximately 8 million people. The court also indicated in its certification order that it intends to expand the class to include residents of other states that would recognize a legal injury under the facts alleged in the case. The Sixth Circuit granted interlocutory review of the certification order.
In their petition for leave and initial appeal brief, the defendants-appellants challenge the district court’s rulings on numerous grounds. Among their principal arguments are that the named plaintiff lacks Article III standing because he is suing to fund scientific research that may shed light on whether he has suffered any injury as a result of PFAS exposure, that the district court erred in failing to apply a rigorous cohesiveness requirement under Rule 23(b)(2), and that the plaintiff failed to provide any specifics of the proposed injunction.
On Dec. 21, 2022, a team of BakerHostetler attorneys including Brian Troyer, Kyle Cutts, Bethany Lukitsch, Matthew Thurlow, Kamy Ahmadian and Lindsey Simmons filed an amicus brief on behalf of the Ohio Chamber of Commerce and in support of the defendants-appellants. In the brief, the BakerHostetler team argues that the certification order violates principles of separation of powers and federalism; offers additional perspectives on the issues of standing under Ohio law, cohesiveness and commonality; and outlines for the Sixth Circuit how the district court’s expansive certification order would harm Ohio’s business environment and economy.
We will continue to monitor this case as well as other PFAS-related cases as they continue to unfold and work their way through the state and federal court systems in 2023.
Nearly two years after it issued its initial decision in Johnson v. NPAS Sols., LLC, in which it held incentive awards for class representatives to be per se unlawful, the United States Court of Appeals for the Eleventh Circuit denied a petition for rehearing en banc, on Aug. 3, 2022. In choosing not to revisit its decision, the court confirmed that class representative incentive awards are prohibited as a matter of law within its jurisdiction – federal district courts in Alabama, Georgia and Florida.
On July 13, 2022, the Florida District Court of Appeal for the Fourth District affirmed an order dismissing a putative class action filed under the federal Fair and Accurate Credit Transactions Act (FACTA) for lack of standing. Southam v. Red Wing Shoe Company, Inc., No. 4D21-3338 (July 13, 2022). FACTA provides, in part, that “except as otherwise provided in this subsection, no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c. FACTA further provides that “any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of … any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000 ….” 15 U.S.C. § 1681n.
A recent opinion from a California federal court, Mier v. CVS Pharmacy, Inc. et al., No. 8:20-cv-01979-DOC-ADS, slip op. (C.D. Cal. May 9, 2022), touches on an aspect of econometric modeling that class action defense counsel should understand, particularly in consumer fraud cases under California’s Unfair Competition Law (UCL) and similar laws with restitution as a remedy. This key principle is that consumer value is subjective and individual, as represented by the downward slope of a demand curve. That shape poses what normally should be an insurmountable problem for UCL class actions. It represents the range of values consumers place on a product. As price rises, quantity falls, because each incrementally higher price exceeds the willingness to pay of one or more additional consumers. Courts are just beginning to recognize this, although savvy defense counsel have understood and advocated it for a long time.
The Class Action Defense team released its Insurance Quarterly Report covering the fourth quarter of 2021 and the first quarter of 2022. Included in the report are updates and analyses about property and casualty class action lawsuits, which are keeping courts and lawyers very busy, class action certification decisions in total loss valuation cases, and various types of class actions regarding personal injury protection, storage fees and medical billing, among other things.
The U.S. Supreme Court has agreed to consider whether the Due Process Clause of the Fourteenth Amendment prohibits a state from requiring a corporation to consent to personal jurisdiction as a condition to doing business in the state. Mallory v. Norfolk S. Ry. Co., U.S. Supreme Court, No. 21-1168, granted.
The plaintiff is a Virginia resident who sued the railroad, a Virginia company, in Pennsylvania state court for harm he allegedly suffered due to exposure to carcinogens while working in Ohio and Virginia. Pennsylvania has a statutory scheme, “consent-by-registration,” that requires foreign corporations to register to do business in the state, which also operates as consent to general personal jurisdiction. The plaintiff argued that Pennsylvania courts had general personal jurisdiction over the foreign corporation because it had registered to do business in the state.
The Pennsylvania Supreme Court disagreed, unanimously affirming the trial court’s holding and finding Pennsylvania’s statutory scheme unconstitutional to the extent it imposed jurisdiction on foreign corporations solely because they had registered to do business in Pennsylvania. The Court held that a foreign corporation’s compliance with Pennsylvania’s mandatory registration statute did not operate as voluntary consent to Pennsylvania courts’ exercise of general personal jurisdiction.
In rendering its decision, the Pennsylvania Supreme Court considered the U.S. Supreme Court’s “recent directives,” including the High Court’s decisions in Daimler AG v. Bauman, 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011).
The plaintiff petitioned the U.S. Supreme Court for review, arguing that a split existed amongst several state high courts regarding whether statutory schemes like Pennsylvania’s were constitutional.
The U.S. Supreme Court’s decision in Mallory could have a significant impact on where corporate defendants can be sued and forced to defend significant cases, including putative class actions. The case is scheduled for argument during the Court’s October 2022-2023 term.
