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Posts Tagged ‘arbitration’

I attended the National Institute on Class Actions in Las Vegas last week, and it was probably the best one yet, considering the powerhouse lineup of speakers and excellent topics.  This year’s event also marked the 20th anniversary of the Institute, and the 50th anniversary of the introduction of the modern class action rule in 1966.  I’ve tried to include a short summary of some of the highlights of each of the presentations below.  For more on what you missed, click here for the full program brochure.

Class Actions 101, 201, and 301

As has become a tradition in recent years, the conference kicked off with Yoga, along with a series of class action training sessions for attorneys and judges new to the practice area.  As in past years, the training portion of the program was led by class action expert Drew McGuinness and Program Chair Dan Karon, with help this year from Lauren Guth Barnes and E. Colin Thompson.  In addition to the basic Class Actions 101 course and the advanced Class Actions 201 course, new this year was Class Actions 301, taught by Karon, which covered legal writing tips for class action lawyers.

“Viva Review!” The Past Year in Class-Action Action.

Instructors: Professor John C. Coffee, Jr., Professor Alexandra D. Lahav

The main program kicked off with what has become an annual tradition at the Institute.  Class action scholars John Coffee and Alexandra Lahav gave their annual rundown on the key developments in the courts on class action issues over the past year and their predictions for where class actions are headed in the coming year.  One highlight for me was Lahav’s summary of divergent rulings on the question of ascertainability, which continues to be an area of uncertainty and controversy in the lower courts.

“From Mirage to Immense.” The Genesis, Creation, and Evolution of Rule 23.

Host: Daniel R. Karon

Guest: Professor Arthur R. Miller

What better way to celebrate the 50th anniversary of the modern formulation of Rule 23 than to hear the story of the 1966 amendment by someone who actually helped draft it.  Titan of American civil procedure, Professor Arthur Miller, gave a colorful history of the development of Rule 23, including entertaining stories about how a small group of now-well-known attorneys and academics, including Miller, Ben Kaplan, Archibald Cox, and Charles Alan Wright, came together in the mid-1960s to develop the innovations that gave us the class action rule we know today.  A highlight was the story of how Miller used a manual typewriter to memorialize what ultimately became 23(b)(3) while in the back seat of Kaplan’s car on a ferry ride to the Kaplans’ summer home in Martha’s Vineyard.  A neighboring car mistook the sound of the typewriter as a sign that the boat was sinking.

“Winning Big or Crapping Out.” Class-Action Ethics from a Real-Life Perspective.

Host: Melissa H. Maxman

Guests: Honorable Gene E.K. Pratter, Professor Joshua P. Davis, Thomas G. Wilkinson, Jr.

This panel examined a series of hypotheticals raising ethics issues, specifically how the courts sometimes treat ethics issues differently when they arise in the class action context.  Among the colorful examples was the situation in which a plaintiffs’ class action attorney has a consensual sexual relationship with a woman who he later discovers is an absent class member.

“A Winning Hand or a Flop?” After 50 Years, Are Class Actions Still Legit?

Host:  E. Michelle Drake

Guests:  Michelle K. Fischer, Professor Richard D. Freer, Patrick J. Ivie, Jocelyn Larkin

In this presentation, a diverse group of plaintiffs’ and defense attorneys, a public interest attorney, settlement administrator, and an academic discussed common criticisms of modern class actions and insights into future trends. I was particularly interested to hear the panelists views on the viability of claims-made settlements and the benefits and criticisms of using electronic and other non-traditional notice in settlement adminstration.

“Behind the Curtain.” Examining Class Actions from the In-House Perspective.

Host: Sabrina H. Strong

Guests: Jennifer Bechet, Karin F.R. Moore, Ken K. Patel, Robert E. Bailey

This presentation offered insights from a panel of in-house attorneys whose companies face class action lawsuits. I thought one of the key points, reinforced in different ways by several panelists and consistent with my own experience, is that the threat of class actions doesn’t ordinarily have a deterrent effect on corporate business practices because most companies aren’t looking to intentionally harm their customers.

“Pit Boss Powwow.” Exactly What Is the MDL Judge College and How Does It Work?

Host: Vincent J. Esades

Guests: Honorable Barbara J. Rothstein, Honorable Jack Zouhary, Honorable J. Frederick Motz Sure

A behind-the-scenes treat, this panel of federal judges offered insights into how judges are selected and trained to preside over multi-district litigation proceedings. I thought it was notable that in recent years, practitioners have been brought in to speak at the annual training program to offer a practitioner’s perspective about what works and what doesn’t in complex MDL proceedings.

“Hitting the Jackpot!” A One-on-One Class-Action Conversation with Judge Richard Posner.

Host: Daniel R. Karon

Guest: Honorable Richard A. Posner

In one of the highlights of the Institute this year (along with Professor Miller’s presentation), Judge Richard Posner sat down via teleconference for an interview with Dan Karon.  Judge Posner’s remarks were filled with unique insights and a few zingers including his comment that class action settlements are “an invitation to shenanigans” where, in his view, the class is at the mercy of the plaintiffs’ attorneys, and the Defendants interested in getting off as lightly as they can, so the judiciary has an important role in scrutinizing the terms.  He also talked about his process for reaching a decision in a case.  He considers the case as a problem to be solved in general terms, comes up with a practical solution to that problem that makes sense, and then evaluates whether there is anything in the law that “blocks” that solution.  At one point he quipped, “I don’t get a lot out of Rule 23,” preferring instead to consider the Rules of Civil Procedure in general terms and reaching a holistic judgment.

“Small Wagers, Big Results.” How the Supreme Court’s Tyson Foods Decision Could Affect Your Practice.

Host: Andrew J. McGuinness

Guests: Honorable Terrence G. Berg, Eric Grannon, James Langenfeld, Ph.D., Paul Novak, Joseph M. Sellers

This panel presentation on expert witnesses and statistical sampling was highlighted by a mock oral argument of a class certification proceeding in which the plaintiff sought to introduce statistical sampling evidence in an antitrust case.  The argument offered a practical way of evaluating how issues presented by the Supreme Court’s decision in Tyson Foods might play out in a context other than wage and hour employment litigation.

“Into the Stratosphere or Simply a Circus Circus?” After Fifty Years, What’s Class Actions’ Future?

Host: Fred B. Burnside

Guests: Professor Brian T. Fitzpatrick, Professor Robert H. Klonoff, Arthur H. Bryant, William Donovan, Jr.

A fitting end to an outstanding program, this panel of top class action scholars and practitioners offered insights into the current state of class actions and what might be in store in the near future.  Here are some highlights on the predictions offered by the panelists: 1) class actions are not going away; 2) the continued growth of mass commerce will continue to spawn class action litigation; 3) Justice Scalia’s death will have a significant impact on class action jurisprudence going forward and the judiciary is likely to get less friendly to defendants in the short-term; 4) technology will make a big difference for the better in managing class action litigation; 5) defendants will continue to come up with creative, far-reaching ways of limiting class actions; 6) plaintiffs’ attorneys will continue to bring class actions when a) they think they can make money and/or b) they think they will advance the public good; 7) there will be some good class actions and some horrible ones; 8) look out for states to pass new consumer protection laws similar to the New Jersey New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA); 9) the TCPA and all-natural litigation booms will continue in the near future; 10) The CFPB will broadly define consumer finance services; 11) more class actions will go to trial; 12) what happens with the enforceability of arbitration clauses will have a big impact on the viability of many categories of class actions in the future; 13) look for more class actions in the federal courts in New York state.

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Editor’s Note: One of my colleagues, bankruptcy attorney Lars Fuller, sent me the following note this afternoon about a recent Tenth Circuit decision Howard v. Ferrellgas Partners LP discussing class arbitration waivers, which he thought would be of interest to readers of this blog.  Here are the insights that Lars had to offer about the decision (click the link on the case name above for a copy of the opinion):

Attached is an opinion written by 10th Circuit Judge Neil Gorsuch (easily the most entertaining writer on the 10th Circuit), and addresses an issue you likely encounter, i.e., mandatory arbitration arising out of an attempted class action. The 10th Circuit reverses the U.S. District Court (Kansas) after the district court summarily denied arbitration following over a year of discovery on the issue of whether mandatory arbitration applied pursuant to the terms of the governing contract. Judge Gorsuch is refreshingly frank in his critique of the U.S. District: “The [FAA] calls for a summary trial–not death by discovery.” He also summarizes the dispute as being plagued by “venue miseries.”

The contract analysis is very interesting, with potentially an oral contract, subsequently modified in writing, or not. Judging from the Tenth Circuit analysis, the facts would constitute a very challenging law school or bar exam question. Here’s the crux:

[C]ritical questions of fact still remain on the threshold question whether they agreed to arbitrate. We know Mr. Howard called Ferrellgas to order propane to heat his home. We know Ferrellgas agreed to sell him some. But much more than that remains unclear even now. Did the parties form a final and complete oral contract in that initial phone call governing all their propane dealings over the next few years? Or did their agreement cover only Mr. Howard’s propane tank rental and its initial fill, in this way perhaps leaving room for Ferrellgas’s later-delivered, arbitration-clause-containing form contract to govern the parties’ subsequent dealings, including the later propane purchases at issue in this case? Whether this case belongs in arbitration or litigation hinges on the answers to factual questions like these.

The subsequent analysis expands on the challenges these facts present to contract analysis. The opinion also addresses the apparently controversial “rolling theory of contract formation” (apparently “about as controversial an idea as exists today in the staid world of contract law”), along with the Byzantine choice of law arena.

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The Supreme Court issued its decision today in the first of two arbitration-related class action cases on the 2012-13 docket.  Today’s decision bucks what had been a trend in the Court’s decisions in recent years strongly favoring individual arbitration and limiting the situations in which class arbitration (private arbitration in which the plaintiffs proceed in a representative capacity on behalf of a class) can occur.

In a unanimous ruling, the Court in Oxford Health Plans LLC v. Sutter upheld an arbitrator’s decision to interpret an arbitration agreement as allowing for class arbitration, despite express reference to class arbitration in the parties’ written agreement.  Writing for the Court, Justice Kagan reasoned that applicable standard of review prevents the courts from second-guessing whether the arbitrator’s interpretation of the party’s contract was the correct one and only permits review of whether the decision was based on an interpretation of the parties’ agreement.  Because the arbitrator’s decision was clearly based on an analysis of contractual intent, the arbitrator’s decision could not be overturned.  The fact that the arbitrator had interpreted the parties’ agreement as providing for class arbitration and the deferential standard applicable to the arbitrator’s decision distinguished Oxford Health Plans from Stolt-Nielsen S.A. v. AnimalFeeds International Corp., in which the Court had held that class arbitration cannot be compelled absent express agreement by the parties.

Important to the Court’s decision was the fact that the defendant had conceded that the arbitrator should decide the question of whether the parties had agreed to class arbitration.  It was this concession that let Justice Alito to agree with the Court’s decision.  However, in a concurring opinion joined by Justice Thomas, Justice Alito expressed doubt that any ruling in the class arbitration proceeding would have any preclusive effect as to absent class members, an observation that raises a serious question about whether the Oxford Health decision will be of any practical impact in other cases.  He noted:

Class arbitrations that are vulnerable to collateral attack allow absent class members to unfairly claim the “benefit from a favorable judgment without subjecting themselves to the binding effect of an unfavorable one,” American Pipe & Constr. Co. v. Utah, 414 U. S. 538, 546– 547 (1974).  In the absence of concessions like Oxford’s, this possibility should give courts pause before concluding that the availability of class arbitration is a question the arbitrator should decide.

Defendants will likely see the concurrence as a roadmap for asking the question to be addressed by a court in the first instance, as opposed to simply conceding that the arbitrator should decide the issue whether class arbitration is allowed. 

There are two clear takeaways from the Oxford Health decision: 1) in drafting an arbitration provision, make sure to address the issue of whether arbitration on a class-wide basis will be allowed.  Under Stolt-Nielsen, agreements that bar class arbitration will be enforced; 2) think carefully before conceding that an arbitrator, rather than a court, should make decisions about how an arbitration agreement should be interpreted.

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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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I’m pleased to announce that the BakerHostetler Class Action Defense Team has just released its 2012 Year-end Review of Class Actions, a joint project with the firm’s Employment Class Actions, Antitrust, and Data Privacy practice teams.  See below for a synopsis of the project.  Click the link above to access a copy of the report itself:

We are pleased to share with you the BakerHostetler 2012 Year-end Review of Class Actions, which offers a summary of some of the key developments in class action litigation during the past year. Class action litigation continues to persist in all areas of civil litigation despite the Supreme Court’s 2011 decisions in AT&T Mobility v. Concepcion and in Wal-Mart Stores, Inc. v. Dukes, which were seen by many commentators as marking the beginning of the end of class actions as we know them. But while the Supreme Court’s 2011 decisions have had a significant impact on class action litigation, they have not brought about its demise and are not likely to do so anytime soon. In the last two years, we’ve seen landmark decisions and the addition of important judicial gloss to those decisions. 2013 will be no different as the Supreme Court is set to weigh in on a series of key cases this spring.

We hope you find this Review a useful tool as you move forward into the new year. This comprehensive analysis of last year’s developments in class action procedure and jurisdiction, as well as developments by subject matter will hopefully provide context and insight as you look ahead to 2013’s expected trends in class action law, including the proliferation of privacy class action litigation and class action litigation relating to the LIBOR rate-fixing scandal.

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My colleagues at BakerHostetler have put together some great content on several class action-related topics recently that readers should find interesting.

First, the Baker Hostetler Class Action Defense Team issued an executive alert today discussing the Supreme Court’s decision to grant certiorari in another case involving class arbitration waivers.  The alert, titled U.S. Supreme Court Considers Arbitration Clauses and Class Actions Next Year, summarizes the issues to be addressed in Oxford Health Plans LLC v. Sutter.  The alert was authored by newly elected Cleveland Partner Ruth E. Hartman and Class Action Defense Team Leader Ernie Vargo.

Another executive alert, titled Recent Trends in Class Actions for Telephone and Fax Solicitation and Advertising, was issued last week by the Privacy and Data Protection and Class Action Defense Teams.   The alert, authored by my colleague in Denver, Justin Winquist, summarizes the latest trends in class action litigation under the Telephone Consumer Protection Act (TCPA).

Finally, my partner Casie Collignon authored a blog post yesterday with an update on the latest in the ongoing saga of Dukes v. Wal-Mart on remand following the U.S. Supreme Court’s decision.  The post is entitled, California District Court Awaits Class Certification Motion in Wal-Mart.

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Work commitments have prevented me from commenting in detail on some key developments in class actions over the past week or so, but please be sure to check out my Twitter feed for some links.  The key developments include: 1) the Supreme Court granting certiorari in Amex III to decide whether federal law can apply to hold a class arbitration waiver unconscionable; and 2) Judge Posner’s decision favorable to class certification of warranty claims in case involving allegedly moldy washing machines.

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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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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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