Earlier today, the Supreme Court denied certiorari in two highly anticipated appeals of decisions by the Sixth and Seventh Circuit Courts of Appeals to grant class certification over breach of warranty claims involving allegedly defective washing machines. The denial of cert in Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030 (7th Cir., Aug. 22, 2013) (Posner, J.) and In re Front‐Loading Washer Products Liability Litigation, No. 10-4188 (6th Cir. July 18, 2013) was a surprise to many commentators who had seen the moldy washer cases as providing the perfect opportunity for the Court to continue its trend clarifying the boundaries of class certification in cases like Wal-Mart Stores, Inc. v. Dukes, Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, and Comcast Corp. v. Behrend. The denial of cert means that the Court will not be addressing the question of whether it is appropriate for a federal court to order class certification of discrete, common issues in a case without analyzing whether those issues predominate more generally over the individualized questions, like injury or damages. That question will be left to the lower courts for the time being.
Posts Tagged ‘class action’
Posted in Class Action Decisions, Class Action News, class action reform, Class Action Trends, Supreme Court Decisions, tagged amgen, class action, class certification, comcast, commonality, dukes, issue certificeation, moldy, moldy washer, moldy washing machine, posner, predominance, sears, whirlpool on February 24, 2014 | Leave a Comment »
Posted in Class Action Decisions, Class Action Trends, tagged 2013 class action, amex III, behrend, CAFA, class action, class action settlement, class certification, comcast, cy pres, daubert, genesis healthcare, italian colors, kiobel, oxford health plans, raskas, standard fire, year in review, year-end review on February 17, 2014 | Leave a Comment »
In case you missed it, the BakerHostetler class action defense team published its second annual Year-End Review of Class Actions last month. The 2013 issue was expertly edited by Dustin Dow of our Cleveland office, and features contributions from other members of the firm’s class action defense team across the country. The 54-page report has a thorough recap of the key class action developments in the U.S. Supreme Court as well as other federal and state courts, summaries of key developments in various substantive areas of law in which class actions are prominent, and a preview of what to look for in 2014. Click the link above to download a copy.
Posted in Articles, International Class Action Law, tagged brasil, brazil, class action, class action law, class action theory, collective action, fraud on the market, haliburton, herzliyah, israel, klement, latin america, pochmann, procaccia, radzyner, securities fraud, standing on January 27, 2014 | Leave a Comment »
In recent years, academics outside of the United States have made some of the most valuable contributions to the development of legal theory of class actions and other collective litigation. Here are two examples of recent works by thought leaders in this area:
INDIVIDUAL STANDING IN CLASS ACTIONS (A LEGITIMIDADE DO INDIVÍDUO NAS AÇÕES COLETIVAS)
Author: Larissa Clare Pochmann da Silva (Master in Law in UNESA, Doctorate in Law student at UNESA and Professor of Complex Litigation and Civil Procedure at UCAM – Rio de Janeiro, Brazil)
Abstract (translated from Portuguese):
Individual Standing in Class Actions offers an important and interesting approach to the question of standing, one of the most important themes relating to the development of Brazilian class actions.
The first part the book summarizes research on foreign law, inquiring into the state of the art of collective protection throughout Latin America (Brazil, Argentina, Chile and Mexico), in the United States and Canada, in the European Union (Germany, France, England and Italy) and in Australia. Part two offers a comparative analysis of these jurisdictions’ various approaches to standing.
Part three organizes the main objections to representational standing and argues for laws recognizing the standing of individuals to sue in a representative capacity, demonstrating the reasons for its relevance, and the important role to be played by lawyers in class actions.
Finally, the book addresses the question of the participation of the individual from various perspectives, seeking to offer a systematic framework for the standing discussion and proposals for the improvement of collective protection in Brazil.
The result is a work that contributes to the development and strengthening of collective action law in Brazilian and brings a new perspective of modernization and improvement of tools for access to justice and the effectiveness of the process.
Pochmann da Silva’s book is available at http://www.editoragz.com.br/produto.asp?prodId=199.
AN ECONOMIC ANALYSIS OF RELIANCE IN MARKET FRAUD AND NEGLIGENT MISREPRESENTATION
Authors: Alon Klement and Yuval Procaccia (Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law, Israel)
A deeply entrenched principle in the law of fraud and negligent misrepresentation provides that damages can be recovered only upon a showing of reliance. To prevail, plaintiffs must not only establish the mere falsity of a statement, but also show that they had acted upon the statement and sustained injury as a consequence.
Despite the intuitive appeal of this principle, this paper argues that the reliance requirement ought to be abandoned. Harm can be caused by a misrepresentation without reliance, and recovery for such loss should not be barred. When a firm misrepresents an attribute of a product, its price in equilibrium typically rises. The inflated price is an injury caused to all consumers, relying and non-relying alike. A rule restricting recovery to only relying consumers results in inadequate deterrence of the firm, which in turn spurs a host of inefficient effects: it may distort allocative efficiency; encourage investments by firms in the production of fraud; induce investments by consumers in self-protection efforts and in detrimental reliance investments; and prompt competing firms to invest excessively in signaling. Furthermore, it undermines deterrence by erecting a substantial barrier to private enforcement through class actions.
While the discussion focuses on consumer markets, it applies more broadly to other markets and other market structures. We explicitly discuss its extension to security markets, in which the requirement has been famously revoked. While the analysis supports existing policy in the domain of primary security markets, it does not do so in the context of secondary markets.
Klement and Procaccia’s article is available for download at SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2372922
Posted in Class Action Decisions, Supreme Court Decisions, tagged 2013, 6th circuit, 7th circuit, alien tort, amex III, amgen, behrend, CAFA, clapper, class action, comcast, daubert, diversity, erica p. john fund, extraterritorial, genesis healthcare, halliburton, italian colors, kiobel, moldy, oxford health, posner, royal dutch shell, scotus, sears, standard fire, Supreme Court, symczyk, top ten, whirlpool on January 7, 2014 | Leave a Comment »
2013 was a memorable year for class actions. I’ve assembled my top 10 most significant developments below. There were almost enough U.S. Supreme Court decisions to fill up the entire list, but my number 1 development was still a pair of lower court decisions that may also become the story of the year in 2014.
10. Kiobel v. Royal Dutch Petroleum Co., 133 S.Ct. 1659 (2013) – Not a class action decision per se, but likely to have significant repercussions on the development of international class action law. Extraterritorial effect of the Alien Tort Statute is significantly limited.
9. Clapper v. Amnesty Intern. USA, 133 S. Ct. 1138 (2013) - Another non-class action decision already having a significant impact on the question of standing in data privacy class actions.
8. Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013) - Class Arbitration is not completely dead, but there’s a blueprint for how to kill it.
7. American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013)- Arbitration continues to reign supreme, even under the “federal law of arbitrability”
6. Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) – Can class actions be defeated simply by picking off the representatives one at a time? That’s for the circuits to decide.
5. Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S.Ct. 1184 (2013) – Supreme Court holds that materiality is a common question and that proof of materiality is not a prerequisite to class certification, but raises questions about the continued viability of the Basic fraud on the market presumption in securities cases.
4. Certiorari granted in Halliburton v. Erica P. John Fund, No 13-317 - That didn’t take long. On the heels of , Supreme Court agrees to revisit the Basic fraud on the market presumption.
3. Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013) – Limited holding = damages theory has to match theory of liability. Expansive holding = no class certification unless the question of damages is susceptible to common, classwide proof. Which holding will be embraced by the lower courts?
2. Standard Fire Ins. Co. v Knowles, 133 S. Ct. 1345 (2013) – First ever CAFA decision limits representative plaintiffs’ ability to bind class prior to class certification. Can’t avoid federal jurisdiction by stipulating to no more than $4,999,999.99 in damages on behalf of a putative class.
1. Moldy Washing Machine Decisions – Limited Comcast holding prevails so far. Two lower courts reaffirm class certification orders after remand in light of Comcast. Issue certification is alive and well, for the moment, but stay tuned to see if the Court takes up these cases in 2014.
Posted in Articles, International Class Action Law, tagged 1782, cdr, class action, commercial dispute resolution, extraterritorial, federal, international class action, jurisdiction, kiobel, morrison, zeballos on December 9, 2013 | Leave a Comment »
Gonzalo Zeballos and I recently authored an article for Commercial Dispute Resolution Magazine’s “Expert Views” series entitled America’s Closing Doors. The article examines recent U.S. Supreme Court decisions on extraterritorial jurisdiction of the federal courts, and the potential future role of the U.S. courts in international class action litigation. Click the title above for a link to the article, and be sure to check out the other insightful expert views on international litigation issues that CDR has to offer, including several on developments in international class action law.
Posted in Class Action Decisions, Securities Class Actions, Supreme Court Decisions, tagged amgen, basic, class action, class certification, common proof, efficient market, erica p. john, fraud on the market, halliburton, levinson, presumption, reliance on November 20, 2013 | 1 Comment »
The Supreme Court granted certiorari earlier this week in Halliburton Co. v. Erica P. John Fund, 13-317, a second trip to the high Court for the same case. At issue is whether the Court should overrule holding of Basic Inc. v. Levinson, which recognized the “fraud-on-the-market” theory of class wide reliance in securities fraud cases. The Court foreshadowed its willingness to consider this issue last term when it decided Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 132 S. Ct. 2742 (2012). Both Amgen and the Court’s earlier decision in Erica P. John Fund v. Halliburton Co., 131 S. Ct. 2179 (2011) were victories for plaintiffs, with the Court holding in both cases that plaintiffs were not required to prove questions on the merits as a prerequisite to class certification. However, in Amgen, Justice Alito’s concurrence as well as dissenting opinions by Justices Scalia and Thomas (joined by Justice Kennedy) all raised questions about the continued viability of the Basic decision.
At the risk of oversimplification, the “fraud-on-the market” theory is that a material misrepresentation made in connection with the sale of a publicly traded security can have an effect on the entire market, so that investors may be harmed (or benefitted) by the misrepresentation even if they did not directly rely on it, because enough investors in the market did rely on it to the point where the price was affected. A decision by the Court that this presumption is no longer viable could seriously limit or eliminate securities fraud class actions, because without the “fraud-on-the-market” presumption, a required element of a securities fraud claim, reliance, becomes an individualized question of fact. As a result, Halliburton becomes the first case on the Court’s 2013-14 docket that has a potential for a truly significant impact on class actions.
Posted in CAFA Requirements, Class Action News, Lawyers' Resources, tagged class action, ABA, CAFA, class action settlement, Class Action Fairness Act, federal court, 1332, settlement, diversity, cads, guide, practitioner, resource, appeal, cafa appeal, cafa exception, congress, minimal diversity on October 30, 2013 | Leave a Comment »
If you’re prosecuting or defending a class action or are interested in class action developments (and I’m not sure why on Earth you would be reading this otherwise) you’ll want to know about a great new ABA publication on the Class Action Fairness Act of 2005 (CAFA). The Class Action Fairness Act, Law and Strategy, is a book of collected works written by experts on both sides of the bar and deftly edited by former ABA CADS Committee Chair Gregory C. Cook. Those familiar with CADS (the Class Actions and Derivative Suits Committee of the ABA Section of Litigation) will recognize the names of many of the knowledgeable contributors.
The book covers nearly every CAFA-related topic conceivable, from the history of CAFA to the provisions expanding federal diversity jurisdiction in class actions and the provisions regulating federal class action settlements. It can be used as a reference guide for the basic requirements of CAFA, but it also provides practical strategy tips for both plaintiffs and defendants in dealing with common and not-so-common CAFA issues. Here is a summary of the Table of Contents:
- Chapter 1 - Introduction and Overview
- Chapter 2 – CAFA in Congress: The Eight-Year Struggle
- Chapter 3 – Hey CAFA, Is that a Class Action?
- Chapter 4 – The Amount in Controversy under CAFA: Have You Got What It Takes for Federal Court?
- Chapter 5 – CAFA’s Numerosity Requirement, or How to Count from 1 to 100
- Chapter 6 – Basics of MInimal Diversity in CAFA
- Chapter 7 – Welcome to the Jungle: CAFA Exceptions
- Chapter 8 – How CAFA Expands Federal Jurisdiction to Include Certain Mass Actions
- Chapter 9 – Advanced Procedural and Strategic Considerations on Removal under CAFA
- Chapter 10 – CAFA-Related Appeals
- Chapter 11 – CAFA Settlement Provisions
Be sure to click the link on the title of the book, above, for information about how to get your copy. If you don’t have it, chances are that your opponent will!
Posted in Class Action News, Supreme Court Decisions, tagged class action, class certification, front-loading, mold, moldy, posner, sears, seventh circuit, sixth circuit, washing machine, whirlpool on October 7, 2013 | Leave a Comment »
Today, Whirlpool and Sears filed petitions for a writ of certiorari with the U.S. Supreme Court asking seeking review of decisions by the Sixth and Seventh Circuits upholding certification orders in class actions alleging that design defects create a tendency for mold to develop in front-loading washing machines manufactured by the defendants. The two lower court decisions, which were discussed in this August 23, 2013 CAB Post, are Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030 (7th Cir., Aug. 22, 2013) (Posner, J.) and In re Whirlpool Corp. Front‐Loading Washer Products Liability Litigation, No. 10-4188 (6th Cir. July 18, 2013). Earlier decisions in both cases had previously been vacated and remanded for reconsideration in light of the Court’s decision in Comcast Corp. v. Behrend, and both the Sixth and Seventh Circuits reached the same conclusion on remand: that class certification was proper even though most potential class members were not actually affected by mold in their washing machines.
The issues presented for review in Sears, Roebuck & Co. v. Butler are as follows:
1. Whether the predominance requirement of Rule 23(b)(3) is satisfied by the purported “efficiency” of a class trial on one abstract issue, without considering the host of individual issues that would need to be tried to resolve liability and damages and without determining whether the aggregate of common issues predominates over the aggregate of individual issues.
2. Whether a product liability class may be certified where it is undisputed that most members did not experience the alleged defect or harm.
In Whirlpool Corp. v. Glazer the cert petition requests review of the following issues:
1. Whether the Rule 23(b)(3) predominance requirement can be satisfied when the court has not found that the aggregate of common liability issues predominates over the aggregate of individualized issues at trial and when neither injury nor damages can be proven on a classwide basis.
2. Whether a class may be certified when most members have never experienced the alleged defect and both fact of injury and damages would have to be litigated on a member-by-member basis.
Posted in Class Action Decisions, Consumer Class Actions, rule 23, Supreme Court Decisions, tagged butler, causation, class action, class certification, class-wide, classwide, damages, injury, liability, moldy, posner, predominance, rule 23, scalia, sears, washing machine, whirlpool on August 23, 2013 | 2 Comments »
One of the key questions in the aftermath of the Supreme Court’s recent decision in Comcast Corp. v. Behrend is the extent to which damages must be susceptible to classwide calculation in order to justify class certification. In particular, the question is as follows: When the Comcast Court held that class certification was improper because the plaintiff had failed to demonstrate that “damages are capable of measurement on a classwide basis,” did it mean that Rule 23(b)(3) certification is never proper if damages cannot be determined on a classwide basis? If the answer to this question is yes, then consumer class actions are in trouble because it’s a rare case where classwide determination of damages is possible. But if the answer to this question is no, then as the Comcast dissent suggested, “the opinion breaks no new ground on the standard for certifying a class action under Federal Rule of Civil Procedure 23(b)(3).”
Yesterday, in the second of two moldy washing machine class actions that had been vacated and remanded for further consideration in light of Comcast, the Seventh Circuit Court of Appeals joined the Sixth Circuit in answering “no” to this question. In Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030 (7th Cir., Aug. 22, 2013) (Posner, J.), the court reaffirmed its earlier decision that if common issues predominate over individualized issues in resolving the question of liability, then a class can be certified even if the question damages would require individual determinations. As usual, Judge Posner’s decision is colorful and an interesting read, even for those who disagree with the outcome. The Sixth Circuit’s decision, which was issued last month, is In re Whirlpool Corp. Front‐Loading Washer Products Liability Litigation, No. 10-4188 (6th Cir. July 18, 2013).
In evaluating the potential broader impact of the Sixth and Seventh Circuit’s decisions, it is important to maintain a clear distinction between the question of damages and the related questions of injury and causation of damages. Courts have long accepted that individualized damages questions do not prevent class certification, and the moldy washer decisions themselves break little new ground other than to interpret Comcast as not having altered that longstanding principle. However, saying that individualized questions of damages can be left for a later proceeding is very different than saying that there is a good reason to certify a class when the elements necessary to prove liability itself (which typically include both the existence of injury and causation) cannot all be resolved on a classwide basis. Individualized questions of whether a given class member has suffered any compensable injury at all or whether the allegedly wrongful conduct caused any alleged injury should still defeat predominance, and neither Sears nor Whirlpool should be read to suggest differently. In those cases, because the plaintiffs had advanced what these courts concluded was a viable theory of common injury, the only individualized questions related to the amount of, and not the existence of, damages. See In re Whirlpool Corp., slip op. at 22 (“Because all Duet owners were injured at the point of sale upon paying a premium price for the Duets as designed, even those owners who have not experienced a mold problem are properly included within the certified class.)
Posted in Class Action Decisions, Supreme Court Decisions, tagged amex, amex III, arbitration waiver, AT&T Mobility, class action, class arbitration, concepcion, effective vindication, FAA, federal law of arbitrability, italian colors, oxford health, scalia, sutter on June 20, 2013 | Leave a Comment »
Those of us who have been following the Supreme Court’s decisions on class actions and arbitration over the past few years may have been a bit surprised when the Court recently upheld an arbitrator’s decision to compel class arbitration in Oxford Health Plans LLC v. Sutter. Oxford Health bucked a trend of decidedly defendant-friendly decisions on issues relating to the interplay between class actions and arbitration. Today, the Court moved back into more familiar territory in deciding American Express Co. v. Italian Colors Restaurant (“Amex III“).
The holding in Amex III, as summarized in the syllabus, is that “[t]he FAA does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential recovery.” Thus, just is it had held that state law of unconscionability could not be used to invalidate a class arbitration waiver in AT&T Mobility LLC v. Concepcion, the Court’s holding today limits the use of federal law to invalidate arbitration provisions that preclude class actions.
Will Amex III finally be the case to end class actions as we know them? Concepcion hasn’t, so I doubt Amex III will either.