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Archive for December, 2010

As 2010 winds down, it’s time to review the key developments in class action law.  It was an especially busy year for the federal courts, and in particular the U.S. Supreme Court, on issues impacting class action practice.  Here, in chronological order, are 10 key developments from the year that was:

  1. January 5 – In In re Baycol Products Litigation, the Eighth Circuit follows the Seventh Circuit’s lead in upholding the right of a federal court to enjoin a putative statewide class action from proceeding where a federal court had already denied class certification in a case involving substantially similar claims.  (See CAB entries dated January 7 and January 12).
  2. February 23 – In a decision that will impact many class actions removed under the Class Action Fairness Act, the Supreme Court adopts the “nerve center test” as the standard for determining corporate citizenship, in Hertz Corp. v. Friend.  (See CAB entry dated March 2)
  3. March 31 – The Supreme Court holds that states may not regulate the types of claims that may be filed as class actions in the federal courts, in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co.  (See CAB entry dated April 8)
  4. April 7 – In American Honda Motor Co. v. Allen, the Seventh Circuit holds that a trial court must rule on challenges to the admissibility of expert testimony relevant to class certification before deciding whether a class may be certified.  (See CAB entry dated May 4)
  5. April 26 – The Ninth Circuit issues its decision in Dukes v. Wal-mart Stores, Inc., adopting rigorous class certification standards similar to those previously adopted by the Second Circuit in In re IPO Securities Litigation, 471 F.3d 24 (2d Cir. 2006), but nonetheless certifying under FRCP 23(b)(2), what has been called the largest employment discrimination class action in history.
  6. April 27 – The Supreme Court seemingly puts an end, for all practical purposes, to the concept of class arbitration by holding that a defendant could not be compelled to defend an arbitration on a class basis where the arbitration clause did not expressly provide for class arbitration, in Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp.  (See CAB entry dated May 11).
  7. June 24 – In Morrison v. National Australia Bank, the Supreme Court deals a fatal blow to “foreign-cubed” class actions, holding that § 10(b) of the Securities and Exchange Act of 1934 does not allow for fraud claims involving transactions on foreign exchanges that occurred outside the United States. (See case summary at SCOTUS blog).
  8. July 19, October 20 – An Eleventh Circuit panel issues a controversial decision in Cappuccitti v. DirecTV, Inc., severely restricting CAFA removal jurisdiction to cases where the amount in controversy exceeds $75,000 with respect to at least one class member, but later reverses itself in an October 15 opinion.  (See Guest Post from Eric Jon Taylor and Jon Chally at CAFA Law Blog for more on the first decision and this October 20 CAB entry on the second decision).
  9. November 9 – Supreme Court hears oral argument in AT&T Mobility v. Concepcion, in which the Court considers whether the Federal Arbitration Act preempts state law holding a class arbitration waiver unconscionable.  (See CAB fsummary of oral argument dated November 17).
  10. December 6 – Supreme Court grants certiorari in Wal-Mart Stores, Inc. v. Dukes, to decide the issue of whether a claim for monetary relief can be certified under FRCP 23(b)(2).  (See CAB entry dated December 7).

Just considering the cases still awaiting ruling before the Supreme Court, 2011 promises to be another exciting year in the world of class actions.  Happy New Year to all!

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We here at ClassActionBlawg.com would like to wish all of our faithful readers a happy and healthy Holiday Season.  Best wishes to you all for a joyful and prosperous 2011 (except maybe for you plaintiffs’ lawyers… Ok, you too, just not the prosperous part when you’re suing our clients).

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According to this December 9, 2010 Bloomberg article from Adriana Lopez Caraveo and Jens Erik Gould, the Mexican Senate has passed a bill that would introduce a form of class action litigation to Mexico.  According to the article:

The bill, which now moves to the lower house, would allow Mexicans to bring class action suits against companies that provide consumer goods and services, financial services or that cause environmental damage, according to the bill. Mexican law doesn’t currently allow for such lawsuits.

For more on the bill, see this December 10 article in The News from Víctor Mayén, which characterizes the bill as authorizing collective actions

regarding the consumption of private or public goods and services, environmental services and financial services that harm the consumer, due to monopolistic or other undue practices.

Neither article assesses the odds of the bill’s passage in the lower house, although the unanimous passage in the Senate would appear to suggest that the chances are good.

The legislation follows an amendment to article 17 of the Mexican constitution, passed in June, granting authority to the legislature to pass legislation regulating class or collective actions.  For more on the amendment, see this entry posted in June at the Stanford University global class actions clearinghouse.

Despite a (somewhat) diligent Internet search, I have not been able to locate an English translation of the Bill, so unfortunately I can’t report on any of the details of the legislation.  This August 2008 report from emii.com hinted that the legislation being considered in Mexico at the time was following a more “Latin American” pattern, as distinguished from US-style class action procedure.

If any readers have more information about this bill, we welcome your comments.

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Can plaintiffs seek back-damages using a class action vehicle that’s built for righting wrongs in equity through remedies like injunction?  In the biggest work place class action ever, the United States Supreme Court has granted cert on the question of whether plaintiffs can use the Rule 23(b)(2) injunctive class procedure as a vehicle to seek money damages.  Why does it matter?  Because injunctive classes are much easier to certify than damages classes.  Usually, when plaintiffs seek damages as their primary remedy they pursue class certification through Rule 23(b)(3), the money damages class, which has significantly more burdensome procedural requirements to achieve class certification than its injunctive counterpart.  The high court should have an answer by June of 2011.

For an accessible preview check out Lyle Denniston’s article at Scotus Blog.  Read the 9th Circuit opinion here.  Check out other comments by Supreme Court watchers:  David G. Savage has an article in the L.A. Times; Jess Bravin and Ann Zimmerman have this piece in the Wall Street Journal; Adam Liptak and Steven Greenhouse file this report in the New York Times.

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In a case rife with lessons, a lawyer learned another valuable one today:  If you’re going to dish out the vitriol in your briefing with certain judges, be ready to be put in your place. 

The case of Thorogood v. Sears Roebuck & Co. is already famous for the suggestion made by plaintiffs’ counsel in oral argument that the Seventh Circuit panel’s three male judges poll their wives to see if they agreed whether the possibility that a stainless steel clothes dryer contained non-stainless components made them fearful of rust damage to their laundry.  The panel conducted the poll as suggested and the unanimous “no” result helped to solidify Judge Posner’s conclusion that the proposed fraud claims was not susceptible to common proof.

Today’s decision was an unusually lengthy denial of a rehearing petition, following an appeal of an earlier panel decision holding that the all Writs Act permits a federal district court to enter an injunction against future putative class actions in other courts on the same grounds in which the district court previously denied certification.  Judge Posner, also the author of the three previous decisions in the course of the litigation, explained the lengthy opinion by saying that it might be helpful to readers of the panel’s previous opinions in the case, as well as to the author of the petition for rehearing, “whose accusations are over the top, as we shall now explain, and who may wish to moderate his fury.”

Aside from being an exceedingly entertaining read (for anyone other than the petitioners’ counsel), the opinion is of interest for Judge Posner’s additional discussion of the potential (with an emphasis on the word potential) abuses of class action settlements by both plaintiffs’ attorneys and defendants.

No doubt there will great discussion about this opinion across the web in the coming weeks.

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In October, Colorado attorney and Wash Park Prophet blogger Andrew Oh-Willeke asked whether there were any statistics on class action filing in the state and federal courts in Colorado.  I responded by providing the raw data on class action filings that I could find through the Court News Service (see October 15, 2010, CAB Post entitled Colorado Class Action Filing Trends).  Oh-Willeke has since authored a post in which he has added some insightful observations on the raw data, including an analysis of on the burden, or lack thereof, that class action lawsuits may be placing on court dockets and some more general comments on class action litigation in general.  Check out his follow-up analysis at the following link:

http://washparkprophet.blogspot.com/2010/11/class-action-lawsuit-statistics-for.html

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