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I’ll be presenting at a Webcast on trends in social media and the law next Friday, June 6, along with Michele L. Gibbons of Jones Day.  See below for a program summary.  You can register by clicking this link:

Social Media Crash and Burn:
Cleaning up the Mess and Rebuilding
LIVE Webcast

In today’s digital age, corporations spend more on online advertising than in print to the tune of billions. However, as the corporate world utilizes social media, they should also be ready and responsive when the inevitable crash and burn occurs. Poorly executed social media campaigns have cost companies and individuals, big time.

Getting ahead of the game is always a good technique to help mitigate the risk and minimize the damages. Once a campaign is out in the wild, there’s no stopping it. You need to think ahead. Join this LIVE Webcast as some of the industry’s great minds share their opinions on best practices for using social media effectively and safely. They will also provide an in-depth look at its features and practical uses. The discussion will also include the following:

Thursday, June 6, 2013
12:00 pm – 2:00 pm (ET)

Credit Info:
Course Level: Intermediate
Prerequisite: None
Method of Presentation:
Group-Based-Internet
Recommended CLE/CPE Hours:
1.75 – 2.0
Advance Preparation:
Print and review course materials
Course Code: 134422 

• Advantages and Disadvantages of Social Media as a Marketing Tool
• Things to Consider in Generating and Implementing Social Media Policies
• Securing Data: Understanding CDA’s Safe Harbor and Privacy law
• Effective Ways of Mitigating and Managing Risks That May Exist
• Significant Legal Issues Related to Social Media Usage
• Damage Control
• Up-to-the minute Regulatory Updates
Social Media Crash and Burn: Cleaning up the Mess and Rebuilding — LIVE Webcast is a must-attend event for In-House Counsel, Risk Officers and Administrators, Data Security Professionals and other related professionals.

Speakers:
Paul G. Karlsgodt, Partner, BakerHostetler
Michele L. Gibbons, Of Counsel, Jones Day
(Note: if CLE or CPE is needed, a minimal/partial processing fee is $49 for the registrant. Otherwise, it’s 100 percent free to participate in the webcast.)
Register for this event
Email: info@knowledgecongress.org with any questions.
(Please note, complimentary passes are available for the first 30 registrants. Once all of the passes are used, attendees can register for the deeply discounted rate of $25 each, courtesy of BakerHostetler.)

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Yesterday, the ALPS 411 Blog published my guest post titled I got this email about a class action.  What should I do?  Among other things, the post addresses how one goes about deciding whether an emailed class action notice is real or spam (or worse). 

For readers not familiar with the company, ALPS is an attorney liability insurer and financial services provider headquartered in my home state of Montana.  Be sure to check out the ALPS 411 Blog for excellent content relating to a host of topics of interest to attorneys, including ethics, malpractice, risk management, and general practice tips.

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Strafford Publications is sponsoring a webinar on class action settlement objectors next Thursday, January 10, 2013 at 1:00 EST. This is a reprise of a webinar that I did with New Jersey Appellate Law blogger Bruce Greenberg a year or so ago.  Due to a scheduling conflict, I won’t be able to participate this time, but my partner Casie Collignon will share her valuable insights instead.  For more information and to register, click the title of the program below:

Class Action Settlement Objectors

Minimizing and Defending Against Challenges by Professional Objectors, Government Officials and Public Interest Groups

A live 90-minute CLE webinar/teleconference with interactive Q&A


Thursday, January 10, 2013 (5 days) 1:00pm-2:30pm EST, 10:00am-11:30am PST

Description

Objections by outside attorneys, government officials and public interest groups can jeopardize or delay class action settlements. Both sides can face problematic objections from “professional objectors” who may appear to be motivated solely to extract part of the fee or take over as class counsel.

Government official objections are usually aimed at coupon settlements and settlement release language intended to bind state officials. Public interest groups that file objections have varied purposes and political agendas. Coupon settlements and cy pres provisions are natural targets.

Both plaintiff and defense counsel may take advantage of several key preventative measures and tactics to ward off and protect proposed settlements from non-class counsel objectors as well as government and public interest objections.

Listen as our panel of experienced class action attorneys provides a review of trends and case law developments in settlement objections from non-class attorney objectors and government or private interest objectors. The panel will discuss best practices for plaintiff and defense counsel to minimize and overcome challenges from objectors.

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Those of you who enjoyed the recent CAB summary of the presentation on privacy class actions at the ABA’s 16th Annual Class Actions Institute will be interested to know that the re-submitted settlement agreement in Fraley v. Facebook, No. No. C 11-1726 RS (N.D. Cal) was preliminarily approved Monday by Judge Richard Seeborg.  Here is a link to a Reuters article by Jessica Dye summarizing the settlement and the court’s decision.

 

 

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This is the fifth of what will be six posts summarizing my notes of the six presentations at the ABA’s 16th Annual Class Actions Institute held last month in Chicago.  For more on this excellent conference, see my October 31, November 5, November 6, and November 18 CAB posts.

Session 4 was one of the highlights of the conference for me, as it covered a hot area of class action litigation that has recently become a focus of my own practice and likely a focus for many readers of this blog: privacy class actions.  It was titled “My Kind of Case, Pri-va-cy Claims,” The Hottest New Trend in Class-Action Litigation.  Fred Burnside moderated another excellent panel, which consisted of his partner Stephen M. Rummage, who offered a defense view, Jay Edelson, who offered the plaintiff’s view, and the Honorable James F. Holderman, who offered insights from the bench.

Privacy cases can roughly be broken down into two categories: 1) cases involving alleged negligence, such was when consumer data is stolen or compromised through hacking or theft, and 2) intentional breaches of privacy, such as through the sale of private information for marketing purposes.  The panel covered both types of cases.

Data Breach Cases Arising Out of Alleged Negligence

Much of the early jurisprudence in this area has related to the question of whether a breach of privacy without any financial loss is a cognizable injury sufficient to confer standing on a plaintiff.  In general, many of the federal district courts that have dismissed data breach class actions due to a failure to allege or prove injury have done on Article III standing grounds.  However, there are signs that this tide could be turning.  A specific example is the Eleventh Circuit’s decision in Resnick v. AvMed, Inc., No. 11-13694 (11th Cir. Sept. 5, 2012), in which the court overturned the dismissal of a data breach complaint on the grounds that allegations of actual identity theft resulting from information on a stolen computer was sufficient injury to confer standing. 

The Resnick decision also illustrates a developing theory of relief in data breach cases, which is the theory that a failure to protect customer data amounts to unjust enrichment or breach of an implied contract.  One of the theories in Resnick was that a portion of the health insurance premiums that the plaintiff had paid to the defendant was in exchange for the defendant’s promise to safeguard the plaintiff’s private information and that the defendant would be unjustly enriched by being allowed to keep the full value of the premiums due to its alleged failure to protect the data from theft.  The Eleventh Circuit held, without discussion, that these allegations were sufficient to withstand a motion to dismiss a claim for breach of implied contract or unjust enrichment under Florida law, although it upheld the dismissal of claims for negligence per se and for breach of the covenant of good faith and fair dealing.

In contrast to Resnick is a recent federal district court decision dismissing claims arising out of a Sony Gaming Networks breach (link courtesy of Law360).  The case was largely dismissed under FRCP 12(b)(6) due to the plaintiffs’ inability to allege an injury resulting from the breach.  One key difference between the two cases seems to be the inability of the plaintiffs in the Sony case to allege any identity theft resulting from the breach.  The probability of a dismissal for lack of injury or standing in a data breach class action does appear to be higher where there is no evidence of identity theft or other use of any compromised information.  Similarly, allegations of across-the-class-damages, such as those brought under a breach of contract theory, have fared better than allegations of individualized damages, such as identity theft.   

Intentional Privacy Breach and Statutory Damages Cases

An area creating a unique set of problems is privacy class actions seeking statutory damages, such as class actions seeking damages under the Video Protection Privacy Act, or VPPA.  Several high-profile cases have been filed against Netflix, Best Buy, and others under this statute, which provides for $2,500 per violation in statutory damages. 

The problem for all parties in these types of cases is that the statutory damages, when aggregated over hundreds, thousands, or even millions of consumers, can become crippling to the defendant, making a settlement at even close to the maximum aggregate value of the claims a practical impossibility. 

This creates a problem in settlement approval: how is a court supposed to judge what settlement  amount is reasonable in a case where the damages sought would be crippling if the plaintiff were to win at trial?

The case of Murray v. GMAC Mortgage Corporation, 434 F.3d 948 (7th Cir. 2006) provides a good illustration of this dilemma.  The case involved a potentially crushing recovery of statutory damages under the Fair Credit Reporting Act.  The trial court had declined to approve a settlement that would have resulted in a $3,000 award for the named plaintiff, or three times the maximum statutory damages award, and potentially leaving less than $1 for each of the remaining class members, or less than 1% of the minimum statutory award.  The Seventh Circuit reversed the trial court’s decision, but it punted on the question of what would be a reasonable settlement given the “ruinously high” statutory damages at stake in the case.  The Murray case does seem to stand for the proposition that you can’t just pluck a number out of the air in setting a settlement amount.

A more recent example was the proposed settlement in Fraley v. Facebook, No. No. C 11-1726 RS (N.D. Cal).  An initial settlement proposal that provided for a $10 million cy presaward and no cash payments to class members was rejected in August.  See this link to Order Denying Motion for Preliminary Approval courtesy of consumerwatchdog.org.  In that order, Judge Seeborg made the following observation about the quandary presented in the case:

The issue this presents appears to be a novel one: Can a cy pres-only settlement be justified on the basis that the class size is simply too large for direct monetary relief? Or, notwithstanding the strong policy favoring settlements, are some class actions simply too big to settle? 

Under a revised proposed settlement, each claimant would be entitled to receive up to $10, but if the total claims plus the attorneys’ fee award exceeds the entire $20 million amount available under the settlement, the claims will be reduced pro rata.  If there are so many claims that the per claim amount became less than $5, then the Judge will have discretion to decide to award the funds to a charity as a cy pres award.  Another unique facet of the revised settlement is that Facebook is allowed to challenge the attorneys’ fee amount requested by plaintiffs’ counsel.

The panelists discussed Edelson’s struggle in attempting to bring class actions under the California “Shine the Light” law, which requires companies to disclose to whom they are selling customers’ information.  Edelson said he has lost almost all of those cases, but he is hopeful of a turnaround in the appellate courts.  This let to a broader point about the development of privacy class actions.  New theories have traditionally been unsuccessful at the trial court level, but oftentimes patience and perseverance has paid off for the plaintiffs’ bar.

One common type of privacy-related statutory damages class action is class actions under the Telephone Consumer Protection Act (TCPA), which prohibits unsolicited faxes and automated telephone calls.  Edelson noted that cases under the TCPA are settling for between  $150-400 per unsolicited fax/call.  The statutory damages amount is $500 per unsolicited fax or call, and $1,500 for willful violations.  A trend in TCPA cases, especially in the Ninth Circuit, has been TCPA class actions based on unsolicited text messages.

In general, intentional privacy cases tend to be good certification cases, and the real battles tend to be on the merits.  However, even in statutory damages cases, there can still be defenses to class certification.  Ascertainability of the class can often be an issue.  For example, the question of whether a given class member consented to certain types of direct marketing or the release of private information to third parties can often be an individualized question that prevents class certification. 

A common question that arises in statutory damages cases is whether the named plaintiff must prove some sort of injury to herself and/or members of the putative class in order to recover statutory damages.  In some situations, courts have held that no proof of injury is required at all for the recovery of statutory damages.  There are generally two standing questions 1) is there constitutional standing to sue; and 2) is there statutory standing under the statute on which the claims are based.  One justification that plaintiffs offer for why statutory damages would be awarded without proof of injury is that is provides a means of disgorging ill-gotten gains from the defendant.

Parting Thoughts

The panel offered some good advice for practitioners, including the following kernels of wisdom: 1) Understand that privacy cases strike a particular nerve with both consumers and courts; people don’t like the idea that their private information is being used for an improper purpose(this is an area where plaintiffs’ lawyers often don’t have much difficulty convincing plaintiffs to participate in the legal process); 2) Counsel your clients upfront on privacy issues to avoid the situation where a class action becomes an issue.  2) Keep track of what Jay Edelson is doing to make sure you are up on the latest trends. 

In closing, the panel offered thoughts on the problem of statutory damages being aggregated into excessive damages amounts that a defendant is unlikely to pay in settlement and a court is unlikely to ever award.  If nobody thinks that a plaintiff should get $1 billion for a mere technical statutory violation, then why not change the law to reflect what the plaintiff really be able to recover?  One of the problems in this area is that the techology moves much faster than the legislative process.  Congress is always passing legislation to deal with an old problem.

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This is not class action related, but it is blawg related.

I will be participating in a CLE webcast on July 27, 2012, which has the working title Social Media for Lawyers: Do’s, Don’ts, Why Nots, and You Probably Shouldn’ts.  The will be presented by the West LegalEdCenter.  My co-panelists will be Kristine Scott, Corporate Compliance Director – Privacy, for Aon Service Corporation, and fellow class action blogger H. Scott Leviant of The Complex Litigator.  Below is a brief summary of the program.  I’ll post more details as soon as they are available.  We hope you can join us!

In this webcast, our panel will address the common ethical and legal pitfalls associated with the growing use of blogs, Twitter, facebook, LinkedIn, and other social media in law firms and corporate environments.  The three unique perspectives  offered by the panelists on this timely subject will provide useful information for both in-house lawyers and private practitioners in a variety of firm sizes and practice areas. 

Part I will address the unique ethical issues facing the plaintiffs’-oriented or small firm lawyer.  Issues include the ethics of “friending” judges, how to ethically use social media in advertising, whether to segregate personal and professional social media use, how to provide legal commentary without giving legal advice, selecting social media based on practice type (one size does not fit all), and the circumstances under which it is appropriate to use social media to publicize events in a pending case.

Part II will address ethical and risk management issues facing corporate lawyers and executives.  Topics to be addressed in Part II include best practices in social media policies, the use of social media by employers in vetting potential employees, protection of employee or customer privacy, and how and when it is appropriate for an employer to  monitor employee social media use.

Part III will focus on ethical issues for large firms and lawyers in large firms.  Topics include maintaining a level of appropriate decorum without boring your audience, when and how to talk about clients in social media, the danger of “issues” conflicts and other conflicts of interest, and best practices in law blog comments policies and disclaimers.

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According to Deborah Mao in this article published today on businessweek.com, regulators for the city of Hong Kong has proposed new legislation that would permit representative actions for certain consumer class actions.  The legislation is reportedly a response, at least in part, to concerns about the difficulty of shareholders to seek collective redress for alleged acts of securities fraud, although the new law would not initial apply to securities fraud claims. 

The legislation would likely provide for class actions to be financed through a public legal aid program rather than through contingency fees, as is typically the case in the United States.  The proposal is still in the early stages, and specific legislation remains to be “drafted and introduced,” according to an official quoted in the article.

We’ll keep an eye on future developments relating to the proposed legislation.  Stay tuned…

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I have returned to the world of blogging to find a veritable hurricane of blawg-related activities going on in Denver.  Here are some upcoming events of note:

Guru of social media and the law, Kevin O’Keefe of LexBlog, will be in Denver this weekend.  You can meet him at one of the following events:

  • Beer for Bloggers Event sponsored by the LexBlog and CBA CLE Thursday evening, 5:30-7:30 p.m. at Katie Mullen’s (16th St. Mall at Court Place). 
  • Social media roundables at various locations, including one starting at 10:00 a.m. at Baker Hostetler, 303 E. 17th Ave., Suite 1100, Denver CO 80203 (please email me at pkarlsgodt@bakerlaw.com if you’d like to attend).
  • CLE presentation for the DU Sturm College of Law All Alumni Weekend, 3:30 p.m. DU College of Law, Room 165 (the program is free for DU Law Alumni). 

In addition, on December 9, beginning at 8:30 a.m. I will be one of the speakers in a CBA CLE program entitled Legal and Ethical Implications of Social Media.  My presentation will be entitled “The Ethics of Using Social Media in Law Firm Marketing.”  The other speakers and their topics are:

  • “The Ethical Geek: Ethics Issues for a Digital Practice,” Paul Chan, General Counsel, University of Denver
  • “Electronic Discovery Ethics for Lawyers:  How to Find What You Should and Ignore What You Must,” David K. Isom, Corporate Trial Lawyer and Electronic Discovery Consultant

For more information about this program, please contact Priscila Fulmer pfulmer@cobar.org.

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Venkat Balasubramani over at Spam Notes has been covering developments in an interesting group of class actions against Blockbuster Video and Facebook.  The cases arise out of Facebook’s Beacon feature, which causes news feed stories to be automatically generated about users’ purchases and other actions with online partners like Blockbuster.  the plaintiffs in each of the cases allege violations of various privacy laws arising out of the use of the Beacon program. 

The first of the three actions was filed against Blockbuster in federal court in Texas.  A separate filing against Facebook and various of its online partners, including Blockbuster, followed in federal court in California.  The Texas plaintiffs later filed a similar case against Facebook in Texas.

The parties in the California case recently reached a settlement.  The settlement calls for Facebook to terminate the Beacon program and pay $9.5 million to a fund to be used to establish a “privacy foundation,” along with payment of administrative costs, incentive payments to the named plaintiffs, and attorneys’ fees.  If finally approved, the settlement would include a release of claims by users against both Facebook and its  affiliates, thus ostensibly resolving the claims in both Texas cases even though Facebook is the only named defendant in the California case. 

As Balasubramani reports, the court in the California case has preliminarily approved the settlement and denied attempts by the Texas plaintiffs to intervene.   The cases involve an interesting case study in the struggle between competing plaintiff groups.  The settlement also raises interesting questions about the use of cy pres awards to charity in lieu of direct payments to class members and the preclusive effect of a class settlement as to claims against defendants who do not contribute to the settlement consideration.

Check out Spam Notes for the latest developments as well as links to key filings and settlement documents.

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