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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D.C. Circuit vacates FCC’s definition of ATDS but upholds consent-revocation rule in ACA International v. Federal Communications Commission

In 2015, the FCC issued an order that addressed certain aspects of the Telephone Consumer Protection Act. Congress enacted the TCPA in 1991 to address perceived abuses of telephone equipment that allowed entities to autodial consumers’ phones.

Three of the issues addressed in ACA will affect all entities that call consumers. Specifically, the FCC’s 2015 order held that a device meets the statutory definition of “automatic telephone dialing system,” generally known as an ATDS, if it could be configured to autodial. The order also addressed two consent issues, holding that callers were permitted only one “safe harbor” call when a consumer had consented to be autodialed on his or her cellphone but the cellphone number had since been reassigned to a different consumer, and that consumers who consent to be autodialed may later revoke that consent by any reasonable means.

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Supremes Hold SLUSA Is Clear – 33 Act Class Claims Stay in State Court

Yesterday, the United States Supreme Court, in a unanimous decision, handed class action plaintiffs a victory by holding that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) allows them to pursue alleged violations of the Securities Act of 1933 (the 33 Act) in state court. Securing plaintiffs’ ability to pursue these claims in state court, the Supreme Court also held that defendants are barred from removing the claims to federal court.

As background, the 33 Act applies only to securities offerings and requires offerors to make full and fair disclosures related to such offerings. The 33 Act may be enforced through private suits and is often enforced through class actions, primarily through Section 11, which applies to registration statements. Initially, Congress authorized both state and federal courts to exercise jurisdiction over lawsuits alleging violations of the 33 Act. See § 22(a), 48 Stat. 86. Strangely, however, Congress barred the removal of such suits from state to federal court. Id. at 87.

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Ninth Circuit Vacates Final Approval of National Settlement Class Action Certification

Last month, the Ninth Circuit vacated the certification of a nationwide class for settlement in the In re Hyundai & Kia Fuel Economy Litigation, No. 15-56014, 881 F.3d 679 (9th Cir. Jan. 23, 2018). The Ninth Circuit concluded that the district court abused its discretion because it failed to “conduct a rigorous analysis to determine whether the party seeking certification has met the prerequisites of Rule 23,” specifically, whether variations in state law undermined the predominance requirement. Id. at 690. Parties involved in class actions, whether on a contested or a settlement basis, should carefully scrutinize Hyundai & Kia Fuel.

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The Fourth Circuit Refuses to Enforce Arbitration Clause and Class Action Waiver in Employment Contracts

As we have previously written, several Supreme Court decisions have upheld, in various contexts, arbitration agreements that waive the right to assert claims on a class basis. See, e.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011); American Express Corp. v. Italian Colors Restaurant, 570 U.S. 333 (2013); DIRECTV, Inc. v. Imburgia, 577 U.S. __, 136 S.Ct. 463 (2015). But the Fourth Circuit recently showed this trend does not mean an arbitration agreement will serve as a blanket protection against class claims. Degidio v. Crazy Horse Saloon and Restaurant, Inc., No. 17-1145, 2018 U.S. LEXIS App 1178 (4th Cir. Jan. 18, 2018).

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The Top 10 Class-Action-Related Developments of 2017

2017 was a relatively quiet year for major class action news, especially in the Supreme Court, which addressed only a handful of cases that might have an impact on class actions and reached decisions only in a couple of those cases. However, there were at least enough noteworthy developments to put together a top 10 list. Here are my top 10 class-action-related developments of 2017:

1. Supreme Court Holds Class Certification Denials Not Immediately Appealable Following Voluntary Dismissal

In Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017), the Court held that a plaintiff’s act of voluntarily dismissing individual claims following a denial of class certification did not entitle the plaintiff to immediately appeal the class certification ruling. The Court’s decision closed a loophole that some circuits had recognized to allow plaintiffs to seek immediate mandatory appeal of an adverse class certification decision, even though defendants are entitled only to discretionary review of an order granting class certification. The Court’s decision means that discretionary review under Rule 23(f), Federal Rules of Civil Procedure, is the only vehicle for appealing a federal district court’s class certification order, regardless of whether the appellant is a plaintiff or a defendant.

For an excellent summary of the Baker decision, see this Aug. 9, 2017, write-up by Andrew Serrao. Continue Reading