District of New Jersey Further Defines the Evolving Boundaries of Injury-in-Fact After Spokeo

On June 6, 2017, in Kamal v. J. Crew Grp, Inc., No. CV 2:15-0190, 2017 WL 2443062 (D.N.J. June 6, 2017), the United States District Court for the District of New Jersey dismissed a plaintiff’s second attempt to assert a claim for violations of the Fair and Accurate Credit Transactions Act (FACTA) for lack of standing in a decision that highlights the evolving boundaries of injury-in-fact in the wake of Spokeo.

The plaintiff alleged that three different J. Crew stores provided him with purchase receipts that violated the FACTA amendment to the Fair Credit Reporting Act (FCRA). Specifically, he alleged that the receipts included the first six and last four digits of his credit card number—more than “the last five digits” of his card number authorized to be printed under FACTA. Plaintiff’s first amended complaint (FAC) initially survived a Fed. R. Civ. P. 12(b)(6) challenge; however, the court subsequently stayed the case pending the outcome of Spokeo, Inc. v. Robins.

On May 16, 2016, the Supreme Court decided Spokeo, holding that, under Article III, an injury-in-fact must be “concrete and particularized” as well as “actual or imminent, not conjectural or hypothetical.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). The Court further observed that a “violation of a procedural right granted by statute can [alone] be sufficient in some circumstances to constitute injury in fact.” Id. at 1549. Continue Reading

DC Circuit Denies Intervenors’ Petition for Rehearing En Banc After Striking Down FCC Regulations Requiring Opt-out Notifications on Solicited Fax Advertisements

On March 31, 2017, the D.C. Circuit struck down FCC regulations requiring that solicited fax advertisements include opt-out notifications, holding that the TCPA did not grant the FCC the authority to impose such a requirement when, by its express terms, the TCPA applies only to unsolicited fax advertisements. Order, Yaakov v. Federal Communications Commission, No. 14-1234, at 4 (D.C. Cir. Mar. 31, 2017) [hereinafter Yaakov Opinion]; see also 47 U.S.C. § 227(b)(1)(C) & (a)(5); 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).

While the Yaakov decision was a big win for several petitioner businesses that took part in the suit, impacted parties have continued to watch the case closely to see whether the FCC will petition for certiorari. Such action seems unlikely, given a statement issued by the chairman of the FCC, Ajit Pai, on the same day as the Yaakov Opinion: Continue Reading

Fifth Circuit Questions the Use of Claim-splitting Tactic by Plaintiff; Orders District Court to Consider Whether Plaintiff’s Proposal Destroys Adequacy

On May 9, the Fifth Circuit Court of Appeals issued a decision in Slade v. Progressive Sec. Ins. Co, Case No. 15-300010, 2017 WL 1843737 (5th Cir. May 9, 2017), in which the court discussed how the practice of claim splitting can create an adequacy bar to class certification.

The appeal was taken from a putative class action filed in the United States District Court for the Western District of Louisiana against Progressive Security Insurance Company (Progressive).

The lawsuit asserts claims for breach of contract, Louisiana state law claims and fraud brought by policyholders who allege they were underpaid on their total-loss automobile insurance claims. For total-loss claims, Progressive calculates the value of a vehicle by assigning a vehicle a base value and then adjusting for the condition of the vehicle. The plaintiff alleges that Progressive improperly used valuation software (WorkCenter Total Loss) – rather than the National Automobile Dealers Association Guidebook or the Kelly Blue Book – to calculate the base value of total-loss vehicles and that the software assigned vehicles a lower base value, which ultimately lowered the payments on the insurance claims. Continue Reading

Sixth Circuit Adds to Circuit Split About the Enforceability of Class and Collective Action Waivers in Employment Arbitration Agreements

The Sixth Circuit just became the third federal court of appeals to hold that an arbitration provision requiring employees covered by the National Labor Relations Act (NLRA) to arbitrate individually all employment-related claims is not enforceable. Nat’l Labor Relations Bd. v. Alternative Entm’t, Inc., No. 16-1385, 2017 WL 2297620, at *9 (6th Cir. May 26, 2017). The court’s decision sides with the Seventh and Ninth Circuits, which have reached similar holdings, to create a slight majority in the circuit split on the enforceability of such provisions. See Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), cert. granted (U.S. Jan. 13, 2017); Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016), cert. granted (U.S. Jan. 13, 2017). The Fifth and Eighth Circuits have reached the opposite conclusion, holding that class and collective action waivers are indeed enforceable. See NLRB v. Murphy Oil USA, Inc., 808 F.3d 1013 (5th Cir. 2015) (upholding its earlier holding in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013)), cert. granted (U.S. Jan. 13, 2017); Cellular Sales of Mo., LLC v. NLRB, 824 F.3d 772, 776 (8th Cir. 2016) (upholding its earlier holding in Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013)). Continue Reading

‘Excessive’ Shipping Fees May Be Next Target of Consumer Class Actions

Packages delivery, packaging service and parcels transportation system conceptRetailers offering online, telephone or catalog purchases may want to review the shipping fees charged to their customers in the wake of several class actions recently filed in California. Multiple retailers have been hit with consumer class actions challenging their shipping fees as exceeding the actual shipping costs incurred by retailers in fulfilling customer orders.

These cases typically rely on Article 11 of the Data and Marketing Association’s Guidelines for Ethical Business Practice, which provides that “[p]ostage, shipping, or handling charges, if any, should bear a reasonable relationship to actual costs incurred.” Plaintiffs also frequently cite a Federal Trade Commission consent judgment in which an auto dealer consented to stop charging customers “freight” charges in excess of the actual cost to the dealer to transport vehicles to its showroom. In the Matter of Bill Crouch Foreign, Inc. d/b/a Bill Crouch Imports, Inc. (Formerly Mazda of Boulder, Inc.), 96 F.T.C. 111, 1980 WL 339028 (July 31, 1980). These two sources, plaintiffs argue, establish a public policy requiring retailers to charge customers no more in shipping fees than the actual costs incurred in shipping goods to customers. Continue Reading

Will the Supreme Court Address the Growing Uncertainty in Class Certification Injury Standards?

Recent years have seen some upheaval in the lower courts on whether classes may be certified when they include members who lack actual injury. So far, however, the Supreme Court has declined to address this issue, thus increasing uncertainty and risks for litigants.

Class action cases are often brought pursuant to Rule 23(b)(3), which requires that district courts find “questions of law or fact common to class members predominate over any questions affecting only individual members.” This “predominance” inquiry is designed to ensure that class members’ claims are sufficiently similar to justify class treatment. When a proposed class includes persons who have not been injured by the challenged conduct, however, individual issues may preclude establishing that common issues predominate as required by Rule 23(b)(3).  Continue Reading

Substantial Risk of Harm in Data Breach Class Actions Ripe for Supreme Court Review

Early in May, the U.S. Court of Appeals for the Second Circuit in Whalen v. Michaels Stores, Inc., No. 16-260 (L) (2d Cir. May 2, 2017), affirmed the dismissal of a data breach class action brought against Michaels Stores Inc. (Michaels) for failing to sufficiently allege an injury to support standing. This decision is significant because it widens the existing circuit split on what allegations constitute an injury-in-fact, particularly where a plaintiff seeks standing by alleging a substantial risk of harm resulting from a data breach.

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Ninth Circuit Dismisses Consumer Claims Challenging Scientific Substantiation

On April 21, 2017, the Ninth Circuit affirmed the dismissal of two putative class actions against manufacturers of human growth hormone (HGH) supplements. The actions centered on allegations that the defendant falsely advertised the benefits of the supplements. Specifically, the plaintiffs alleged defendants falsely represented that their product, SeroVital, increased HGH levels, was clinically tested, and that ‘peak growth hormone levels’ are associated with various health benefits. Plaintiff also alleged that these claims were not supported by scientific studies, and that the study included on defendant’s website was “riddled with flaws” and “would not be accepted by any credible, peer-reviewed scientific journal.”

The Ninth Circuit agreed with the trial court that the plaintiffs failed to specifically allege facts to support a finding that the defendants advertising claims were actually false. Instead, the Court determined that plaintiffs were alleging defendants’ advertising claims (e.g., “clinically tested”) were unsubstantiated. California law, however, does not provide for a private cause of action to enforce the substantiation requirements of California’s unfair competition and consumer protection laws. Continue Reading

Game On: Supreme Court to Decide Whether Xbox Plaintiffs Can Create Appellate Review

Recently, the United States Supreme Court heard argument in Microsoft Corp. v. Baker,[1] a case that may significantly impact class-action defense and appellate jurisdiction. Plaintiff classes frequently want to immediately appeal orders denying class certification. But because these orders are interlocutory and not “final” under the relevant statute,[2] plaintiff classes cannot appeal until their individual claims are resolved and a final judgment is entered, which could be expensive and time-consuming. Consequently, some plaintiff classes bypass this process by voluntarily dismissing their claims with prejudice after class certification is denied, effectively converting the interlocutory order into a final, appealable order. In Baker, the Supreme Court may decide whether this tactic is permissible.

Prior to 1978, appellate courts would allow plaintiff classes to immediately appeal orders denying class certification if they “end[ed] the lawsuit for all practical purposes.”[3] This practice was known as the “death knell” doctrine. But in 1978, the Supreme Court in Coopers & Lybrand v. Livesay[4] unanimously rejected the death-knell doctrine, and held that an order denying class certification is interlocutory and not appealable as of right.[5] Continue Reading

D.C. Circuit May Have Finally Killed TCPA Class Actions Over Solicited Faxes Without Opt-Out Notices!

On Friday, in a split decision, the United States Court of Appeals for the District of Columbia Circuit entered its long-awaited ruling in Yaakov v. Federal Communications Commission, holding that “the FCC’s 2006 Solicited Fax Rule is [] unlawful to the extent that it requires opt-out notices on solicited faxes.” Order, Yaakov v. Federal Communications Commission, No. 14-1234, at 4 (D.C. Cir. Mar. 31, 2017) [hereinafter Yaakov Opinion].

The court’s decision, if not appealed, will finally resolve the confusion and controversy surrounding an FCC order issued in 2006 (2006 FCC Order) announcing that the Telephone Consumer Protection Act (TCPA) requires opt-out notifications in fax advertisements sent with prior express invitation or permission (“solicited fax advertisements”), notwithstanding the fact that, by its express terms, the TCPA applies only to unsolicited faxes. 47 U.S.C. § 227(b)(1)(C) & (a)(5); 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). Continue Reading

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