Judge Kavanaugh’s Limited Class-Action Jurisprudence Reveals a Healthy Skepticism for Class Actions

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.

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Sixth Circuit Upholds Class Certification of FDCPA Claims Despite Spokeo Challenge

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.

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The US Supreme Court’s Ruling in American Pipe Does Not Extend to Allow Tolling of Statutes of Limitation in Successive Class Actions

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.

 

State Court Adoption of Comcast v. Behrend

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.

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2018 Class Action Landscape

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.

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Proposed Rule 23 Amendment for Class Action Settlement: Sea Change or Codification of the Status Quo?

Proposed amendments to the class action settlement process in Federal Rule of Civil Procedure 23(e) are scheduled to take effect on Dec. 1, 2018. One of the proposed amendments requires that “[t]he parties must provide the court with information sufficient to enable it to determine whether to give notice of the proposal to the class.” Proposed Rule 23(e)(1)(A). Under the new rule, the court must direct notice if the parties show the court that it will likely be able to (1) approve the settlement proposal and (2) certify the class for purposes of judgment on the proposal. At first glance, this appears to be a significant change to Rule 23(e), requiring settling parties to provide significantly more information at the preliminary approval stage than Rule 23 previously required. In practice, however, this is probably just the codification of the status quo for many courts and class counsel.

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Federal Authorities Continue to Monitor Proposed Class Action Settlements

Officials at the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) continue to scrutinize class settlements to ensure that neither defendants nor class action counsel are improperly benefiting at the expense of class members. As discussed below, at minimum, parties to class actions in federal court can expect federal authorities to increasingly monitor and review class actions and file amicus briefs or statements of interest in appropriate cases.

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