Litigation

  • November 14, 2017

Consumer Financial Services Arbitration: Another Perspective

Arbitration, Class Arbitration, Consumer Class Actions, Legislation
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Much has been said and written about Congress’ rejection of the CFPB proposal to ban class action waivers in arbitration agreements between consumers and financial services companies. One of the most frequent statements I have heard from some politicians in the media is that Congress has voted to ban class actions against banks. As is true with many political statements from both sides of the aisle, this one is only partially true. Here are a few additional (but not alternative) facts to place Congress’ action in context.

  • The CFPB rule, and not Congress’ rejection of it, would have represented a change in the law. Since the Supreme Court’s 2011 decision in AT&T Mobility v. Concepcion, class action waivers have generally been enforceable in contracts for consumer financial services. The CFPB proposed rule was based on the agency’s authority granted under the Dodd-Frank Act. However, Congress and the President had the final say regarding whether the rule would take effect, and
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  • July 18, 2017

Romulus v. CVS Pharmacy, Inc.: Meal Periods, Ascertainability, and the Importance of Removal.

Class Certifications, Employment Class Actions, US District Court - Mass
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In Romulus v. CVS Pharmacy, Inc., five former Shift Supervisors brought a putative class action against CVS under the Massachusetts Wage Act, contending they were required to work through their unpaid breaks.  Specifically, the plaintiffs alleged that they were required to remain in the store during their breaks when they were the only managerial employees on duty, were interrupted to handle transactions when necessary, and were nonetheless not paid for their time.  In a 12-page opinion issued last week, United States District Judge Rya Zobel denied the plaintiffs’ request for class certification, finding they failed to satisfy the requirements of commonality and predominance under Rule 23.

Although CVS policy required a member of management to be present in the store at all times during operating hours, the policy also provided employees with one unpaid 30-minute meal break for each six or eight-hour shift, and instructed employees that, in the event their meal period was interrupted, they should notify their manager to

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  • July 03, 2017

Justice Thomas’ Concurring Opinion in Microsoft Corp. v. Baker: A Useful Reminder

Appeals, Jurisdiction, Supreme Court
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On June 12th, the Supreme Court issued its unsurprising decision in Microsoft Corp. v. Baker, addressing a relatively recent twist concerning the appealability of orders denying class certification.  The case resulted in unanimous agreement among the eight Justices who participated in it (Justice Gorsuch did not participate), but a five-three split among them as to whether the case should be decided on statutory grounds (supported by the majority) or constitutional grounds (supported by the minority).  In the course of the debate over the decision’s rationale, Justice Thomas penned a paragraph that serves as a useful reminder concerning the nature of putative class litigation.

Of all the Court’s class certification cases, this must have been one of the easiest to decide.  Put simply, the district court struck plaintiffs’ class allegations from the complaint, based on a class certification denial in an earlier case raising the same claims.  After plaintiffs unsuccessfully petitioned the Ninth Circuit for interlocutory review under Rule 23(f), they were left with

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  • April 19, 2017

A New Justice: Any Change For Class Actions?

Current Affairs, Supreme Court
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This week, Justice Gorsuch donned his black robes and began hearing arguments alongside his new colleagues on the Supreme Court.  With his elevation to the high court, Justice Gorsuch assumes many new responsibilities.  Some, of the lighter kind, include opening the door during conferences with his colleagues and assuming oversight of the Court’s cafeteria menu.  More serious responsibilities will include weighing in on important class action cases that will undoubtedly be heard by the Court in the future.

Despite his lengthy judicial record from having served a decade on the Tenth Circuit, there are relatively few clues regarding Justice Gorsuch’s approach to class actions.  While on the court of appeals, he participated in only a few class action cases, which is not surprising given that the Tenth Circuit has not been a hotbed of class actions.  His handful of class action opinions, however, evidences not only his gift with the pen but also a restrained, textual approach to Rule 23.  These characteristics are

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  • April 05, 2017

Proposed Changes to Rule 23: Electronic Notice and Efforts to Curb Abuses in Settlement Objection Process

Class Action Settlements, Class Notice
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On this blog, we previously wrote about the Fairness in Class Action Litigation Act of 2017, and identified its potential to bring significant changes to class action practice. That Act was passed by the House on March 9, 2017, based on a 220-201 vote, split almost entirely along party lines, and has now advanced to the Senate for additional consideration.  Whether the Act will become law remains uncertain, and we will continue to monitor future developments. In the meantime, however, it is worthwhile to take note of the proposed changes to Rule 23 itself which are also currently under consideration.

In August 2016, the U.S. Judicial Conference’s Committee on Rules of Practice and Procedure published its proposed amendments to Rule 23. The amendments include a variety of changes concerning class settlement and notice.  This post will focus on two specific areas covered by the amendments: electronic notice to class members, and class settlement objectors. The proposals, if approved, could become effective

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  • March 15, 2017

CAFA, PART II?

Class Action Fairness Act
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In February 2017, Representative Goodlatte introduced the Fairness in Class Action Litigation Act of 2017. The Act, as with its 2015 predecessor, covers a lot of ground. It permits certification of damages classes only where “each proposed class member suffered the same type and scope of injury.” It precludes certain conflicts of interest between class counsel and the named plaintiff. It resolves the Circuit split on ascertainability, adopting the view of the Third and Eleventh Circuits (and perhaps the First Circuit as well, as my colleague Katherine Kayatta recently noted) that the named plaintiff has the burden to show that identifying the class members is administratively feasible. It alters or creates certain procedural and disclosure requirements, such as giving a party an interlocutory appeal as of right of the class certification decision and staying all discovery during the pendency of certain motions. And it clarifies that Rule 23(c)(4) is an administrative tool for making class actions work, not a mechanism to permit evasion of the

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  • January 26, 2017

Ninth Circuit Widens Circuit Split on Ascertainability in Briseno v. ConAgra Foods, Inc.

Class Certifications, Consumer Class Actions
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On this blog, we have previously written about the growing split among the federal circuits concerning courts’ approaches to ascertainability. The Third Circuit, in a string of cases within the last five years, adopted a test requiring that class members must be identifiable without extensive and individualized fact-finding or “mini-trials,” and a plaintiff must present evidentiary support to demonstrate that a model it proposes to satisfy Rule 23’s requirements will be effective.  The Eleventh Circuit in Karhu v. Vital Pharmaceutical, Inc. similarly found that a plaintiff must establish an administratively feasible method by which class members can be identified.

In Mullins v. Direct Digital, LLC, the Seventh Circuit rejected the Third Circuit’s approach, finding that the Third Circuit’s test was a “heightened” requirement above and beyond Rule 23’s requirements.  The Seventh Circuit adopted a more lenient approach and looks only at whether a class can be ascertained by objective criteria, not whether there’s an administratively feasible way to identify

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  • January 17, 2017

Supreme Court Will Hear Class Action Waiver Cases

Class Arbitration, Employment Class Actions, Supreme Court
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Last week, the Supreme Court consolidated and agreed to hear three appeals of Circuit Court decisions concerning whether class action waivers contained in employment arbitration agreements infringe on employees’ rights under Section 7 of the National Labor Relations Act.  According to the schedule currently in place, briefing on these cases will commence in late February 2017.  Unless a ninth Supreme Court justice is appointed, confirmed, and seated before oral argument in this consolidated appeal, the possibility of a 4-4 decision—and resulting preservation of the status quo–looms large. 

 

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  • January 03, 2017

Fifth Circuit Reaffirms Enforceability of Class Action Waivers in Employment Arbitration Agreements, But Their Fate Remains Unclear

Arbitration, Class Arbitration, Employment Class Actions
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Employers commonly use arbitration agreements to minimize the expense and exposure of employment-related claims.   By mandating arbitration of employment disputes, they hope to ensure that these matters are resolved in a cost-effective and confidential manner.  Many arbitration agreements go a step further, requiring employees to pursue their claims individually, and to waive their right to proceed on a class or collective basis.   Unfortunately, the certainty employers have striven to achieve with such agreements has proven elusive in recent years, as the National Labor Relations Board (NLRB) and several courts have found that class action waivers violate employees’ rights.

Although the U.S. Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion upheld the enforceability of class action waivers in the consumer context, in the years since, the NLRB has repeatedly rejected the use of class action waivers in the employment context.  In In re D.R. Horton, the NLRB held that class action waivers inherently infringe on employees’

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  • November 30, 2016

First Circuit Affirms Tough Standard for Alleging Securities Fraud; Revives One Claim Against Local Drug Maker

Current Affairs, First Circuit Decisions, Securities Class Actions
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On November 28, 2016, the First Circuit upheld the dismissal of all but one of the class action securities fraud claims against Cambridge, MA drug company, ARIAD Pharmaceuticals, Inc., reaffirming the exacting pleading standards that enable defendants to put an early end to reflexive stock-drop lawsuits.  In doing so, the First Circuit also adopted strict requirements for asserting claims that defendants misled investors in a common stock offering.

In In re ARIAD Pharmaceuticals, Inc. Securities Litigation, shareholder plaintiffs appealed the District of Massachusetts’ dismissal of the federal securities fraud claims against ARIAD based on optimistic statements the company’s executives made about the prospects of ARIAD’s experimental leukemia drug, ponatinib, which ultimately did not fare so well in FDA trials.  The First Circuit largely affirmed the district court’s dismissal, holding that the complaint failed to raise a compelling inference that the company’s executives acted with scienter—or intent to defraud.  The appellate court did, however, revive a claim related to “one particular alleged

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