Update on Data Breach and Data Privacy Class Actions Post-Spokeo

In May, the U.S. Supreme Court issued its opinion in Spokeo v. Robins, providing guidance on the “injury-in-fact” aspect of the constitutional standing requirement for putative class action plaintiffs.  136 S. Ct. 1540 (2016), as revised (May 24, 2016).  Spokeo was quickly hailed by both plaintiff- and defense-side lawyers as a major victory, but in truth provided something for everyone.  It requires, for example, that a plaintiff allege “a concrete injury even in the context of a statutory violation . . .” and not merely a “bare procedural violation, divorced from any concrete harm.”  Id. at 1543, 1549.  Further, a “concrete” injury must “actually exist” and be “real, and not abstract.”  Id. at 1548.  On the other hand, a “concrete” injury is not “necessarily synonymous with ‘tangible.’”  Id. at 1549.  Ways to determine whether “intangible” harm qualifies as “concrete” include: (1) evaluating whether the alleged harm “has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit” and (2) looking to the judgment of Congress which “has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.”  Id.

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Ninth Circuit Confirms Brazil v. Dole Decertification Due to Faulty Damages Model

In Brazil v. Dole, No. 14-17480 (9th Cir. Sept. 30, 2016), the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part three different orders issued by the U.S. District Court for the Northern District of California.  In doing so, the Ninth Circuit (1) confirmed that in order to state a false advertising claim under the unlawful prong of California’s Unfair Competition law, a plaintiff must allege that he relied on the purportedly misleading statements, (2) clarified what types of evidence were sufficient to create an issue of material fact sufficient to defeat summary judgment based on the reasonable consumer standard, and (3) confirmed that, in order to certify a damages class under Rule 23(b)(3), a plaintiff must present a damages model that provides a method of calculating damages using proof common to the class.

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California Supreme Court Approves Attorney Fee Awards Calculated Based Upon Percentage of Class Action Common Fund

In Laffitte v. Robert Half International Inc., No. S222996 (Aug. 11, 2016), the California Supreme Court held, in an employment class action lawsuit, that when attorney fees are awarded to class counsel from a common fund, that the award is not per se unreasonable because it is calculated as a percentage of the common fund, as opposed to pursuant to a lodestar calculation.

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U.S. Supreme Court Remands Spokeo; Ninth Circuit Must Consider Whether “Concrete” Injury Occurred

Spokeo, Inc. v. Robins has been closely watched because of its potential implications for class actions alleging mere “technical violations” of consumer protection statutes.  Yesterday, the U.S. Supreme Court issued a 6-2 decision confirming that a plaintiff must have suffered a “concrete” injury to have standing under Article III of the U.S. Constitution.  According to the Court, a plaintiff who suffers the injury defined in a consumer protection statute may or may not have suffered an injury sufficiently “concrete” to have standing.  But because the Ninth Circuit Court of Appeals had failed to address the concreteness of Plaintiff’s injury as a separate issue, the Supreme Court remanded the case.

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Eighth Circuit Reverses District Court for Ignoring Price-Impact Evidence That Rebutted the Fraud-on-the-Market Presumption and Defeated Class Certification

In IBEW Local 98 Pension Fund v. Best Buy Co., Inc., No. 14-3178 (8th Cir. Apr. 12, 2016), the United States Court of Appeals for the Eighth Circuit held, in a Rule 10b-5 securities fraud action, that the district court incorrectly analyzed the price-impact evidence submitted by defendants to rebut the fraud-on-the-market presumption of reliance that plaintiffs had invoked to satisfy Rule 23(b)(3)’s predominance requirement.  Two years ago, the U.S. Supreme Court, in Haliburton Co. v. Erica P. John Fund, Inc., 134 S.Ct. 2398, 2414-16 (2014) (Halliburton II), recognized a defendant’s right to rebut the presumption using price-impact evidence at the class-certification stage.  Based on Haliburton II, the majority panel determined that defendants had submitted “overwhelming” evidence that the alleged misstatement caused no stock price inflation.  The panel rejected plaintiffs’ theory that the misstatement could nevertheless have “maintained” the stock’s already-inflated price at the allegedly inflated level.  The decision importantly limits the fraud-on-the-market presumption to cases in which the alleged misstatement is the independent cause of new or additional stock price inflation. Continue Reading

Reading The Tea Leaves – How Will The U.S. Supreme Court Decide Spokeo?

While the U.S. Supreme Court has issued decisions on two of its major class action cases this term, Campbell-Ewald Co. v. Gomez and Tyson Foods v. Bouaphekeo (see January 20, 2016 blog and May 5, 2016 blog), one other previously argued case remains undecided, Spokeo, Inc. v. Robbins.  What will happen with this case given the recent passing of Justice Scalia?    Continue Reading

Statistical Modeling in Class Actions: The U.S. Supreme Court Weighs in, Kind of

A U.S. Supreme Court decision expected to potentially change (or at least clarify) the rules on the hot-button issue of statistical modeling in class actions ended up turning much more on case law specific to the Fair Labor Standards Act (“FLSA”), and on some litigation strategy decisions made at the trial court level.  The Court’s 7-1 decision in Tyson Foods v. Bouaphakeo, thus became much less of a blockbuster than many had expected.   Continue Reading

Mooting Class Actions by Offer of Judgment – Episode 2: The Ninth Circuit Strikes Back

In Campbell-Ewald v. Gomez, 136 S. Ct. 663 (Jan. 20, 2016), the Supreme Court resolved a split among courts and held that an unaccepted settlement offer of complete individual relief does not moot the plaintiff’s lawsuit.  However, the Court expressly left open the question of “whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and then the court enters judgment for the plaintiff in that amount.”  136 S. Ct. at 672.  Continue Reading

Back at it Again (with the Standing Opinions): Seventh Circuit Reiterates Article III Standing in Data Breach Class Actions

On July 20, 2015, the Seventh Circuit issued its opinion in Remijas v. Neiman Marcus Group, 794 F. 3d 688 (7th Circ. 2015), which immediately became the low-water mark for Article III standing in data breach cases.  In short, Remijas became the first Circuit decision to expressly and expansively recognize that risk of future injury and time and money spent protecting against identity theft as a result of a data breach were sufficient to confer Article III standing.

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Attacking Class Action Allegations On The Pleadings Can Be A Successful Strategy

Not all class action allegations are created equal. Certain types of claims are more likely to be amenable to class treatment – generally those involving uniform policies that result in uniform injuries; other claims seem destined for individualized treatment – generally those involving a variety of unpredictable factors that determine liability as to each putative class member.  And some class claims, due to their very nature, are so individualized that the class allegations should be dismissed on the pleadings.  Indeed, the California court of appeal recently reminded us that some class allegations deserve dismissal on demurrer.  The case is Schermer v. Tatum, D067807 (Cal. App. 4th Dis. Mar. 18, 2016). Continue Reading

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