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Posts Tagged ‘concepcion’

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. SutterOxford 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 themConcepcion hasn’t, so I doubt Amex III will either.

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In what would have been bigger class action news yesterday had the Supreme Court not issued its decision in Amgen, the Court also heard oral argument in class arbitration case, American Express Co. v. Italian Colors Restaurant, No. 12-133 (click case title for a link to the transcript).  The primary issue presented is whether the “federal substantive law of arbitrability” may be invoked to invalidate an arbitration agreement in a case involving federal law claims.  The case will test the limits of the Supreme Court’s holding in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) (holding that the Federal Arbitration Act preempts state laws prohibiting class arbitration waivers). 

It is clear from the questions posed by the Justices that there are certain members of the Court (namely Justice Scalia, author of Concepcion) who remain steadfast in their belief that arbitration agreements that prohibit class claims are enforceable, period, and that there is another faction of the court that has serious doubts about the use of an arbitration agreement to effectively foreclose a litigant from obtaining any meaningful procedure for vindicating his or her rights.  Whether this case follows Concepcion in solidifying the enforceability of class arbitration waivers or carves out an exception will likely depend on a few swing votes in the middle.

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My partner, Casie Collignon, recently attended CLE International’s conference Class Actions: Plaintiff and Defense Perspectives in Chicago earlier this month, and she graciously agreed to share a summary of her notes.  Here they are for anyone who was unable to attend.  I’ll be attending the ABA’s 16th National Institute on Class Actions next week, so stay tuned for my notes from that conference as well.

On October 4th and 5th, esteemed panels of class action plaintiff and defense lawyers, along with multiple reputable class action administrators, gathered for panel discussions involving class action trends across the country from all perspectives. Below are just a few of the highlights from the conference:

  • Class Actions are not dead after DukesDukes may not have had the one-sided effect that everyone anticipated. Program Co-Director Francis Citera of Greenberg Traurig noted that class certification decisions after Dukes have been, despite popular opinion, very balanced.  In the federal courts since Dukes, there have been 32 cases certified, 33 denials of class certification, and 15 cases where certification was denied in part and granted in part.
  • Manageability remains key to certification – Even though the Dukes, Concepcion, and Comcast trends are on the tips of all class action practitioners’ tongues, manageability is still a top concern from all perspectives.  The Honorable William J.  Bauer of the Seventh Circuit opined about the importance of being able to be able to show the Court what a class action trial will actually look like.  This sentiment was echoed by plaintiff’s class action lawyer Kenneth Wexler of Wexler Wallace, who suggested that all plaintiffs’ class certification motions should be accompanied by an actual trial plan.  Defense attorney Sascha Henry of Sheppard Mullin Richter & Hampton opined  that the defense practitioner can take advantage of both the existence of a plaintiff’s trial plan or the lack of a trial plan in the manageability context.  For example, if there is no trial plan at all, the defendant can argue that the plaintiffs   have not alleged a practical way to manage the case and therefore have not met their burden of proving the manageability requirement.  Alternatively, if a plan is submitted, then the defendant has a precise manageability roadmap to attack. 
  • New settlement notice program trends – While traditional mailers and post card notices still reign supreme for claim rates, Patrick Izie of Class Action Services discussed some new media trends in class action settlements.  He opined that new media, such as QR codes, mobile device notifications, and coupon websites can have a dramatic impact on your claims rates without increased costs. And, even though the parties may not have intended their class settlements to appear on websites such as duckydeals.com, once these types of sites start listing your class action settlements, you can expect claims rates to spike.
  • Class Certification may never truly be over –   Attorney for the plaintiff in McReynolds v. Merrill Lynch, Linda Friedman of Stowell & Friedman, and class action defense lawyer Andrew Trask of McGuireWoods, both agreed that an important lesson to be learned from both the Merrill Lynch case and the recent denial of the motion to dismiss in the smaller Walmart case which is back pending in the Northern District of California, is that no ruling in the class certification context is ever truly permanent. Thus, the class action community should be on the lookout for second and even third bites at the apple with smaller proposed classes and arguments for issue class certification.

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I’m a few weeks behind in reporting this, but I still thought it was worth noting that the Florida Supreme Court held oral argument last month in a case that could test the the reach of the U.S. Supreme Court’s 2011 decision on class arbitration waivers in AT&T Mobility v. Concepcion.  In McKenzie Check Advance of Florida LLC v. Wendy Betts, SC11-514, the plaintiff relied on factual evidence in an attempt to prove that the lack of a class action device has made it impossible for her to obtain legal representation to pursue her claims in arbitration.  The case thus potentially raises the question of whether a case-specific finding of unconscionablility, as opposed to a statewide policy invalidating class arbitration waivers more generally, is permissible despite the Court’s holding in Concepcion (I say potentially because it appears that there are factual questions about whether the evidence really supports the proposition that there would be no lawyer willing to take the plaintiff’s case in an individual arbitration).  Recall that the arbitration provision at issue in Concepcion contained several consumer-friendly features, which could have supported the conclusion that it did not actually deprive a consumer of any opportunity to vindicate his or her rights, although Justice Scalia’s majority opinion did not turn on the existence of these features.

This AP article by Bill Kaczor has a good summary of the arguments on both sides and some of the key questions posed during oral argument.  A link to the video feed of the oral argument can be found here (although the server was not responding when I tried to play it).

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In a recent post entitled Concepcion a Year Later, Are Consumer Class Actions Dead Yet?, I invited readers to offer their perspectives on trends in the enforceability of class arbitration waivers now that a year after the Concepcion decision.  In response, Jessie Kokrda Kamens at the Bloomberg BNA Class Action Litigation Report send me a copy of her recent article, Post-Concepcion, Plaintiffs Chalk Up Few Victories, Look to Government for Relief.  Kamens offers the perspectives of several leading class action practitioners on how the law on class arbitration waivers has developed in the lower courts since Concepcion, as well as their predictions on how the law will develop into the future.  Among the observations made in the article:

  • Although class arbitration waivers were upheld in 76 cases, plaintiffs were successful in invalidating arbitration clauses in several key cases, mostly on various federal law grounds.
  • Use of “consumer-friendly” provisions, such as the one at issue in Concepcion that provided for monetary incentives for individuals to pursue arbitration, makes it much more likely that an arbitration clause will be upheld.
  • Observers are eagerly awaiting several federal and state regulatory and legislative developments that may impact the enforceability of class arbitration waivers, including the results of a study being conducted by the federal Bureau of Consumer Financial Protection (CFPB) pursuant to Dodd-Frank about the impact of arbitration clauses on consumer financial products, several bills being considered by Congress, and a bill being considered in the California legislature that would render void contracts that contain class action waivers.

Thanks to Bloomberg BNA (www.bna.com) for granting permission to post a copy of the article on this site.  For those of you who are not subscribers, I highly recommend the Bloomberg BNA Class Action Litigation Report.  It is one of the most comprehensive and reliable sources of class action cases and trends available.

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On May 1, we received the following comment in response to a post from last May entitled Will AT&T v. Concepcion Really Kill the Consumer Class Action?

Melissa 

It has been almost a year. Could someone tell me, in their opinion, what effect Concepcion has had on consumer class actions over the last 11 months?

According to a recent New York Times article by David Segal titled A Rising Tide Against Class Action Suits, the effect has been significant.  The article cites a report from the consummer advocacy group, Public Citizen, which found 76 opinions relying on Concepcion as a reason to prevent class actions from “moving ahead.”

I have no reason to doubt the accuracy of the number of opinions cited in the Public Citizen report, and there is no doubt that Concepcion has had an impact on class action litigation, both in consumer class actions and in other subject matter areas.  However, I would caution that simply looking at the number of class actions that have been unsuccessful due to class arbitration waivers does not tell the whole story.   Here are a few observations to consider in assessing the impact of Concepcion:

  • Concepcion has not been treated by the lower courts as foreclosing all arguments for declaring an arbitration clause invalid.  A case in point is the Second Circuit’s recent decision in In re Amex III., which relied on the federal common law of arbitrability in declaring a class arbitration waiver invalid.
  • Class action litigation has been on the decline in substantive areas that are not impacted by arbitration clauses, such as in securties class actions.
  • There are many areas of consumer class action litigation that remain unaffected by arbitration clauses because they either involve claims where there may be no contractual relationship between the plaintiff and the defendant, including statutory penalty class actions such as TCPA class actions class actions and certain data privacy class actions, or they involve areas of the law where arbitration clauses are prohibited, including many insurance class actions.  A careful review of the data may show that consumer class action litigation has simply shifted to these areas.
  • Recognizing that arbitration clauses do not necessarily provide a magic talisman against class action litigation and that implementing an overly consumer-friendly arbitration clause may actually encourage litigation, not all companies have rushed to adopt arbitration clauses into their consumer contracts.

In summary, I would say that while Concepcion‘s ban on state laws invalidating arbitration clauses has become an important consideration in litigating consumer class actions, it has not brought about their end.

I’d love to hear what readers have to say about their own perspectives on this issue.  Please feel to comment below.

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Robert H. Klonoff, Dean of the Lewis and Clark Law School and author of the quintessential class action compendium, Class Actions and Other Multi-Party Litigation in a Nutshell, has authored an excellent research paper entitled The Decline of Class Actions.  The paper which will be published in Volume 90 of the Washington University Law Review, but a draft is now available for free download at SSRN.  Dean Klonoff asserts that recent trends in class action decisions, which make it more difficult for plaintiffs to obtain class certification, have undermined the “compensation, deterrence, and efficiency” objectives underlying Rule 23.  He urges policymakers, rulemakers, and the courts to take a “more balanced approach to classwide adjudication.”

Whether or not you agree with Dean Klonoff’s criticisms from an academic point of view, the article is a must read for anyone looking for a good synopsis of the key developments in the U.S. class action law over the past several years.  From the Class Action Fairness Act to the Supreme Court’s recent decisions in Dukes and Concepcion to slightly less glamorous topics such as the necessity of a precise class definition, Klonoff’s article is impressive in its comprehensive analysis of relevant recent developments.

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