Newsfeeds and Notice – How Social Networks Might Affect Class Action Litigation

The resources from which people obtain, and choose to obtain, information have changed dramatically. A recent and highly publicized discussion of how information is exchanged might be the so-called filter bubble that many social media users experience. This bubble has reportedly caused “autonomous decision-making,” which hypothesizes that people pay attention to only those sources of information with which they agree and that reinforce their beliefs. These theories are seemingly supported by data regarding how U.S. adults utilize services like Facebook, Twitter, Snapchat and Reddit, and how these and other social media sites are now among the primary sources of news and other information for U.S. adults.

The way people receive and believe information matters in the class action context. Judges are instructed that notices must effectively reach and come to the attention of the class – that is, command the attention of the intended recipients. The ways in which notice may be given are codified in Federal Rule of Civil Procedure 23(c)(2)(B), which provides that “[f]or any class certified under Rule 23(b)(3), the court must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.” Continue Reading

“Yes, I Agree”: With a Click, Uber Drivers Can Waive Right To Bring Class Action Suits

Recently, in a major win for employers and companies that transact business on the internet, the Ninth Circuit upheld the use of arbitration class-action waivers in so-called clickwrap agreements. These types of agreements are commonplace—consumers installing software or signing up for a service are presented with a company’s terms and conditions on their screen, and are required to click “I agree” to proceed.

Like many other modern agreements, clickwrap agreements often include arbitration clauses, including arbitration clauses containing class-action waivers. Such is the case with certain contracts used by Uber Technologies, Inc. (“Uber”), a popular car service that connects customers with drivers through a cell phone application. Recently, former Uber drivers brought suit against Uber concerning the termination of their employment, and the validity of their agreements with Uber was questioned. In Mohamed v. Uber Technologies, Inc., — F.3d —-, Nos. 15-16178, 15-16181, 15-16250, 2016 WL 4651409 (9th Cir. Sept. 7, 2016), the Ninth Circuit held that the drivers’ contracts with Uber were valid, and that the parties were required to resolve their disputes in arbitration. Continue Reading

Yaakov v. FCC – Will TCPA Opt-Out Requirements Be Stricken for Permissive Faxes?

Fax machineBy its express terms, the Telephone Consumer Protection Act (TCPA) applies only to unsolicited faxes. 47 U.S.C. § 227(b)(1)(C) & (a)(5). However, in May 2006, the FCC promulgated new rules concerning fax advertisement transmissions that stated that “[a] facsimile advertisement . . . sent to a recipient that has provided prior express invitation or permission to the sender must include an opt-out notice.” In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991 Junk Fax Prevention Act of 2005, 21 F.C.C. Rcd. 3787, 3820–21 (2006). Confusingly, the 2006 FCC rule change also included a footnote stating that “the opt-out notice requirement only applie[d] to communications [constituting] unsolicited advertisements.” Id. at 3818 n.154.

In October 2014, the FCC issued an order (2014 FCC Order) recognizing ensuing confusion and ambiguity caused by the 2006 FCC rule change. In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 29 F.C.C. Rcd. 13998, 13998 (2014). The 2014 FCC Order stated that “some parties who have sent fax ads with the recipient’s prior express permission may have reasonably been uncertain about whether [the] requirement for opt-out notices applied to them.” Id. Due to this reasonable uncertainty, the 2014 FCC Order provided for the issuance of retroactive waivers of compliance with the opt-out requirement when the sender had express prior permission to send a fax advertisement. Id. The waivers were provided retroactively to those who failed to comply with these requirements up to six months prior to Oct. 30, 2014. Id. at 14012. Applications for waivers were accepted until April 2015. Id. Continue Reading

District Court Adopts “Weak” Test of Ascertainability, Certifies Class of Corn Producers in Suit Against Syngenta over Commercialization of Genetically Modified Corn Seed Products

corn fieldA District Court in Kansas added to an increasing debate in the federal courts over class ascertainability when it certified a class of 440,000 U.S. corn producers in a suit against Swiss global agribusiness Syngenta AG (Syngenta) over the company’s commercialization of genetically modified corn seed products. In re: Syngenta Ag Mir 162 Corn Litig., No. 14-MD-2591-JWL, 2016 WL 5371856 (D. Kan. Sept. 26, 2016).

In the multi-district litigation, producers and nonproducers of corn in the U.S. brought claims against Syngenta and its affiliates under the Federal Lanham Act and various state laws in connection with Syngenta’s commercialization of certain corn seed products. The products in question contained a genetic trait known as MIR 162 and were allegedly commingled throughout the U.S. corn supply. A major export market for corn is China, but Syngenta never obtained China’s approval for MIR 162. China subsequently rejected MIR 162 corn for import, which caused a market oversupply that led to a dramatic drop in corn prices, thus allegedly causing significant losses to the plaintiffs’ businesses.

Plaintiffs moved to certify a nationwide class and eight state law classes, comprising nearly half a million corn producers in the U.S. (for the nationwide class) or in a particular state (for the statewide classes) who “priced their corn for sale after November 18, 2013,” excluding certain categories of producers such as those who purchased the seed product in question and those who had filed individual claims in state court.

Court holds that “ascertainability” does not require administrative feasibility

In its opinion, the court first took up the issue whether plaintiffs’ proposed class definitions were properly “ascertainable.” Noting the “critical importance” of a carefully crafted class definition, the court explained that the definition must be “precise, objective, and presently ascertainable.” The Tenth Circuit, however, has not adopted a specific test for ascertainability and so the District Court sought guidance from other Circuits, which are split. Continue Reading

Third Circuit Sets Framework for Numerosity Requirement

Yesterday, in In re Modafinil Antitrust Litig., 3d Cir. No. 15-3475 the Third Circuit provided a framework for analyzing the oft-overlooked numerosity requirement of Rule 23(a)(1)..  The court’s decision both clarified and seemingly bolstered the numerosity threshold.

The district court had certified a class of 22 direct purchasers of the drug Provigil that alleged a global conspiracy between the brand manufacturer and four generic manufacturers.  The crux of the alleged scheme was an agreement to delay the entry of a generic form of the drug into the market in violation of antitrust laws, which caused the class members to suffer injury.  The Third Circuit, however, reversed and remanded the class certification order, stating as follows: Continue Reading

Sixth Circuit Vacates Class Settlement, Finding that Sealed Documents Prevented Objectors from Assessing Settlement’s Fairness

This summer, the Sixth Circuit rejected class action litigants’ filing of the bulk of their class settlement documents under seal. Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299 (6th Cir. 2016). The Sixth Circuit’s decision here is another indication of the increasing scrutiny that federal courts are taking with respect to class action settlements.

Controlling 60 percent of the commercial health insurance market in Michigan, Blue Cross obtained most-favored-nation agreements with more than 40 hospitals in the state. Under these agreements, Blue Cross promised to increase its own reimbursement rates for hospital services in return for each hospital’s agreement to charge other commercial health insurers at least the same reimbursement rate as Blue Cross. Additionally, Blue Cross secured most-favored-nation-plus agreements with 22 other Michigan hospitals, ensuring that those hospitals charged other commercial insurers a higher reimbursement rate than Blue Cross.

The Department of Justice filed a price-fixing claim against Blue Cross, and plaintiffs filed this piggyback class action, seeking $13.7 billion plus treble damages. After Michigan outlawed most-favored-nation clauses, the DOJ dismissed its complaint. The class action, however, proceeded. Plaintiffs moved for and defendants opposed class certification, filing each and every exhibit under seal. After the plaintiffs’ expert submitted his report, estimating class-wide damages at just $118 million, Blue Cross moved to exclude the report. Once again, the parties filed each and every document under seal. Continue Reading

Sanctions Imposed on Five Attorneys for Class Settlement Forum Shopping

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

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

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

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

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