On April 6, 2017, the California Supreme Court struck another blow in its contentious battle with the United States Supreme Court on the enforceability of consumer arbitration clauses subject to the Federal Arbitration Act (FAA). In McGill v. Citibank, N.A., No. S224086, Slip Op. at 1 (Cal. Apr. 6, 2017), the Court held that an arbitration clause in Citibank’s credit card agreement purporting to waive the plaintiff’s right to seek public injunctive relief under the Consumers Legal Remedies Act (CLRA), the Unfair Competition Law (UCL), or the False Advertising Law (FAL) in any forum was unenforceable as against California public policy. The Court further held that, notwithstanding the U.S. Supreme Court’s decisions on the subject, including in AT&T Mobility v. Concepcion, 131 S. Ct. 1740, 1747 (2011), the FAA did not preempt California’s policy. As discussed below, these holdings are troubling and likely inconsistent with federal law. Continue Reading
Plaintiffs across the country have continued to file class actions against companies of all stripe for violation of the Telephone Consumer Protection Act (“TCPA”), often for communications far afield from the classic “telemarketing” calls that the TCPA was meant to prevent. Recently, a spate of class actions have been filed against health care providers and health plans, alleging that routine calls to patients and health plan members constitute “telemarketing” under the TCPA if they mention a product or service, whether that be medications, appointments, or information about health plans.
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.
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.
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.
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.
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
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
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
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