Carter v. The Dial Corporation: The First Circuit Washes Its Hands of Clarifying Ascertainability in Class Actions

We previously wrote about the split among the circuit courts of appeal over the ascertainability requirement for class certification and whether self-identifying consumer affidavits—e.g., an affidavit in which a consumer attests that he or she is a class member and suffered injury—can satisfy that requirement.

Recently, the First Circuit denied, over a strong dissent, a Rule 23(f) petition to appeal a district court’s order certifying a class on the grounds that the plaintiffs could demonstrate ascertainability through consumer affidavits. Carter v. The Dial Corporation, No. 17-8009, 2017 WL 3225164 (1st Cir. July 31, 2017). In Carter, the district court certified a class of consumers from eight states who purchased antibacterial soap from 2001 to the present. The defendants lacked any records to identify class members, and class members were unlikely to possess records demonstrating that they purchased the product. Nevertheless, the district court, relying on the First Circuit’s recent decision In re Nexium Antitrust Litig., 777 F.3d 9 (1st Cir. 2015), held that the plaintiffs satisfied ascertainability because class members could submit affidavits or declarations to establish that they purchased the product during the 16-year class period.

Judge Kayatta, who also dissented in Nexium, dissented from the denial of the Rule 23(f) petition. Kayatta stated that the Nexium majority held that plaintiffs could establish classwide injury through affidavits from each class member stating that he or she was not a brand loyalist, i.e., would not have purchased a cheaper generic version of the drug if available—an approach suggested by neither party. 2017 WL 3225164 at *1 (citing Nexium, 777 F.3d at 20). Kayatta observed there was no record in either Nexium or Carter to evaluate whether the defendant would have had a meaningful opportunity to refute the proposed affidavits. Kayatta noted that “[s]ooner or later, this court will have to wrestle with the issues raised by the district court’s approach” on a full record and briefing. 2017 WL 3225164, at *1.

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Game Over: Supreme Court Unanimously Rejects Xbox Plaintiffs’ Attempt to Create Appellate Review

In April, we reported on the oral argument in Microsoft Corp. v. Baker, a Supreme Court case addressing whether putative class members may obtain appellate review of orders denying class certification by voluntarily dismissing their individual claims with prejudice. Recently, the Supreme Court gave its unanimous answer: no. See Microsoft Corp. v. Baker, 137 S. Ct. 1702, 1707 (2017). The Court’s ruling ends a long-standing practice that class plaintiffs used as an end run around procedural restraints to create appellate review, and affirms the use of a Federal Rule of Civil Procedure 23 (Rule 23) petition as the sole vehicle to obtain interlocutory review of an order denying (or granting) class certification.

Under a 1978 Supreme Court decision, orders denying class certification are interlocutory and not appealable as of right. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 477 (1978). Twenty years later, Rule 23 was amended with paragraph (f), which gives appellate courts discretion to review, upon petition, orders granting or denying class certification. But if their Rule 23(f) petition is denied, putative class members would sometimes voluntarily dismiss their claims with prejudice to artificially create a final order from which to appeal. This is what happened in Baker.

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Revisiting the Enforceability of Class Action Waivers in Consumer Financial Contracts

The Consumer Financial Protection Bureau (CFPB) has published the final Arbitration Agreements Rule, which impacts the way claims involving consumer financial products and services are handled in the future, including a prohibition against providers of such products and services from relying on a predispute arbitration agreement that includes an arbitration clause barring a consumer from filing or participating in a class action. BakerHostetler’s Financial Services Team just released an Executive Alert and blog post regarding this development.  The blog post can be found here.

2016-17 Securities Class Actions by the Numbers

2016 was an unprecedented year in securities class actions filings.

According to a report published by NERA Economic Consulting, a record 300 securities class action complaints were filed in 2016 in federal courts, a 32 percent increase from 2015. This number represents the highest pace of filings since the 2000 dot-com crash.

The median time to file – the time between the alleged class period and filing date – remained near record lows at 13 days, up only two days from the 2015 time frame. The median class period length increased from the 10-year low of under a year in 2015 to more than 1.26 years in 2016.  In other words, allegedly wrongful conduct is being challenged quickly and over a longer period. Continue Reading

The D.C. Circuit Denies Motion to Stay Issuance of Mandate in Yaakov v. FCC Opt-Out Notification Case, but Petition for Certiorari Looms

On March 31, 2017, the D.C. Circuit entered its ruling in the closely watched Yaakov v. FCC case, holding that the Federal Communications Commission (FCC) had exceeded the authority given to it by Congress when it promulgated a rule requiring that opt-out notices be included in fax advertisements sent with prior permission of the recipient. See https://www.classactionlawsuitdefense.com/2017/04/03/d-c-circuit-may-have-finally-killed-tcpa-class-actions-over-solicited-faxes-without-opt-out-notices/. Many have speculated that the D.C. Circuit’s ruling will be the final word on this issue, especially given a statement issued by the chairman of the FCC, Ajit Pai, on the same day as the Yaakov opinion, indicating that the decision “highlight[ed] the importance of the FCC adhering to the rule of law” and stating that “[g]oing forward, the Commission will strive to follow the law and exercise on the authority that [it] has been granted . . . by Congress.” However, a handful of intervenors and petitioners have continued to challenge the ruling. Continue Reading

Eighth Circuit Provides Important Guidance in Class Settlement Approvals

The Eight Circuit provided some useful guidance for district courts and practitioners in obtaining and reviewing final approval of class settlements in its July 5, 2017, decision in Keil v. Lopez. In that case, the court affirmed approval of a consumer class action settlement by Blue Buffalo Co. Ltd. involving ingredients of pet food. Here are the four key takeaways from this decision:

  • Explain why the settlement is fair, reasonable and adequate.

The Eight Circuit had adopted a four-part test, in Van Horn v. Trickey, 840 F.2d 604, 607 (1988), to determine whether a settlement is fair, reasonable and adequate. The court of appeals found fault with the district court’s lack of analysis of this test as “conclusions, not reasons.” However, because of the strength of the record, the court found sufficient facts to approve the settlement under the Van Horn test. The court of appeals distinguished review of a class settlement approval from a disputed class certification decision for contested class certification – the latter of which requires a statement of reasons for satisfying Rule 23 to meet the rigorous analysis standard – implying that an inadequate explanation alone may justify remand of a class certification decision. Continue Reading

Ninth Circuit Narrows Already Slim Exception to Rule Barring Post-Removal Amendments to Avoid CAFA Jurisdiction

A plaintiff will rarely be permitted to amend its class action complaint after removal to avoid federal jurisdiction under the Class Action Fairness Act (CAFA). That is the takeaway from the Ninth Circuit Court of Appeals’ decision in Broadway Grill, Inc. v. Visa Inc., 856 F.3d 1274 (9th Cir. 2017), which further narrowed the already slim exception to the general rule that a plaintiff is bound by its pre-removal jurisdictional allegations.

The Broadway Grill court addressed a class action complaint, originally filed in a California state court against credit card companies, that alleged certain charges violated antitrust laws. The proposed class included “all California individuals, businesses and others” that accepted the companies’ credit cards in California; the class definition was interpreted to include both California and non-California citizens. The case was subsequently removed to the District Court for the Northern District of California under CAFA, which provides for federal jurisdiction where a matter in controversy exceeds $5 million, the plaintiffs number more than 100 and “minimal diversity” exists because at least one class member is a citizen of a state different from that of any defendant. “Minimal diversity” existed because the defendant credit card companies were California citizens and the proposed class included non-California citizens. Relying on a “very narrow” exception set forth in Benko v. Quality Loan Serv. Corp., 789 F.3d 1111 (9th Cir. 2015) to the general rule barring post-removal amendments to avoid CAFA jurisdiction, the district court in Broadway Grill permitted the plaintiff to amend the complaint and limit the class to only “California citizens,” thus eliminating minimal diversity under CAFA and requiring remand to state court.    Continue Reading

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

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