The Game Goes On: Sheppard Mullin Obtains Dismissal With Prejudice of Class Action Alleging Social Gaming Micro-transactions Constitute Illegal Gambling

Another lawsuit alleging illegal gambling in a social game has been dismissed.  Over the last year, social gaming mobile applications have come under attack from the Plaintiffs’ bar as gambling in disguise.  Plaintiffs’ attorneys theorize that in-app micro-transactions where consumers pay cash for virtual items (i.e., gold coins or gems) designed to speed up or otherwise enhance gameplay are, in effect, wagers insofar as other in-game materials can subsequently be “won” with those items.  None of the plaintiffs have prevailed in these recent cases. Continue Reading

Tag, You’re It: Biometric Information Privacy Act Class Action Against Shutterfly Moves Past 12(b)(6)

Over the last six months, at least four putative class actions have been filed under the Biometric Information Privacy Act (“BIPA”)—an obscure Illinois statute passed about seven years ago to regulate the collection and use of consumers’ biometric information.  In relevant part, the BIPA requires entities in possession of biometric information (i.e., retina scans, fingerprints, voiceprints, etc.) to retain a specific written policy governing data retention and to collect written consent from consumers before collecting biometric information. Continue Reading

Not Taking “Yes” For An Answer: U.S. Supreme Court Rules That Unaccepted Offer Of Complete Individual Relief Does Not Moot Plaintiff’s Individual Or Class Action Claim

On January 20, 2016, in a highly anticipated decision (see October 27, 2015 blog) that will have implications for class action practice nationwide, the U.S. Supreme Court ruled that an unaccepted offer of judgment sufficient to completely satisfy an individual claim does not moot that claim or any class claim. The Supreme Court’s decision partially resolves a vigorously contested question of constitutional law that has been the subject of great dispute among federal Courts of Appeals for the last decade—whether a Rule 68 offer of judgment for complete relief deprives a court of Article III jurisdiction to hear only a “case or controversy.”  In a 6-3 decision, the Supreme Court held that a live case and controversy still exists when a plaintiff refuses to accept an offer of judgment.  In so holding, however, the Supreme Court suggested that it might reach a different decision if a defendant deposits funds sufficient to satisfy the plaintiff’s individual claims, and then obtains a judgment from the trial court in this amount.         Continue Reading

U.S. Supreme Court Holds California Court of Appeal’s Interpretation of Arbitration Clause Preempted by FAA

In DirecTV v. Imburgia, No. 14-462, 2015 U.S. LEXIS 7999 (December 14, 2015) the United States Supreme Court reversed a California Court of Appeal decision interpreting, and invalidating, an arbitration clause containing a class arbitration waiver, holding that the Court of Appeal’s interpretation was preempted by the Federal Arbitration Act (the “FAA”).  The Court then ordered the Court of Appeal to enforce the arbitration agreement at issue.  The Court’s opinion, which was decided 6-3 with two dissenting opinions, reinforces earlier Supreme Court precedent holding that state courts cannot avoid the preemptive effect of the FAA by applying facially neutral state contract principles in a way that disfavors arbitration.  Continue Reading

Plaintiffs’ Full Refund Theory of Restitution Under California’s Unfair Competition Law Goes Up in Smoke in Latest Tobacco II Opinion

The long saga of In re Tobacco Cases II recently produced yet another appellate opinion addressing California’s Unfair Competition Law (“UCL”), False Advertising Law (“FAL”), and the remedies they provide.  This time, in In re Tobacco Cases II, 240 Cal. App. 4th 779 (Sept. 28, 2015) (“Tobacco II”), the appellate court considered what “restitution” under the UCL actually means, and how to appropriately calculate it.  In doing so, the court provided much needed guidance on these issues and (assuming the decision is affirmed) largely eliminated the “full refund” theory of restitutionary recovery in all but the most extreme UCL and FAL actions. Continue Reading

Supreme Court Takes On Class Actions, Again

Over recent years the United States Supreme Court has waded deep into the waters of class certification, significantly altering the playing field for class action claims.  As the Supreme Court continues its 2015 session, it takes on issues that may continue to alter the landscape, including (i) whether settlement with a class representative can be used to effectively terminate class claims, (ii) whether a class action can proceed even though the plaintiff representative has incurred no concrete, actual damage, and (iii) the validity of statistical modeling to substantiate alleged class-wide damages claims.  Continue Reading

The Ninth Circuit Declares That Individualized Damages Issues Alone Never, Ever Preclude Certification of a Rule 23(b)(3) Class

In Pulaski & Middleman, LLC v. Google, Inc., No. 12-16752, 2015 U.S. App. LEXIS 16723 (9th Cir. Sept. 21, 2015), a Ninth Circuit panel held that individualized damages (or restitution) calculations cannot alone defeat Rule 23(b)(3)’s predominance element. The opinion is significant because the district court below had determined that an exceedingly high degree of individualized proof would be needed to calculate each putative class member’s restitution award and plaintiffs had failed to propose a “workable method” to reduce this complexity. Notably, the panel also defined the measure of restitution in false advertising cases brought under California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) in a manner that plaintiffs will likely argue expands the remedy. Continue Reading

The Pitfalls of Ascertaining Ascertainability: Seventh Circuit Declines to Adopt Heightened Threshold Requirement for Class Actions

Although not explicitly stated in the text of Rule 23, for several decades courts have held that a putative class must be clearly defined and based on objective criteria as prerequisites to class certification.  Courts and commentators alike have referred to this threshold showing as the “ascertainability” requirement without a common understanding of what exactly it means for a class to be ascertainable.  During the past few years, however, certain federal courts throughout the country have begun to adopt a more rigid view of Rule 23’s implicit ascertainability requirement, which has resulted in the short-circuiting of several class actions at the certification stage.  This trend has been most prominent in the Third Circuit, which now requires plaintiffs to prove that there is a “reliable and administratively feasible” way to identify all those who fall within the class definition.  See, e.g., Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013).

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The California Supreme Court Holds Consumer Class Action Waivers In Arbitration Provisions Are Enforceable Under Federal Law

On August 3, 2015, the California Supreme Court issued its long-awaited arbitration decision in Sanchez v. Valencia Holding Co., LLC, No. B228027.  The Court held that the arbitration provision found in a standard form auto finance and sales contract widely used by auto dealerships and lenders throughout California is not unconscionable.  Not surprisingly, the Court acknowledged the recent U.S. Supreme Court authority holding that the Federal Arbitration Act (“FAA”) preempts conflicting state law, and affirmed that California law must now recognize the enforceability of class action waivers contained in arbitration provisions under the FAA.  Nevertheless, arbitration provisions can be rendered unenforceable, depending on a fact intensive analysis of unconscionability.  The Court refused to apply a uniform, bright-line standard.  The ruling is unlikely to stem the tide of litigation over the enforceability of arbitration provisions in high stakes class action litigation.

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Barbarians at the Gate: Seventh Circuit Finds Article III Standing for Data Breach Class Actions

As a result of the Supreme Court’s decision in Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147 (2013), data breach class actions were largely considered dead in the water.  The overwhelming majority of courts, relying heavily on Clapper, dismiss data breach actions for the simple reason that until a consumer suffers actual identity theft, she lacks Article III standing to sue.  In other words, without actual identity theft, the risk of future harm—as well as any money spent attempting to protect against potential identity theft—is purely speculative and does not suffice to constitute a legally cognizable injury. Continue Reading

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