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Posts Tagged ‘parens patriae’

In keeping with the time-honored tradition of end-of-the-year top 10 lists, I’ve assembled my annual list of the top 10 most significant class action developments below.  Whether these are actually the top 10 most significant decisions over the past year may be subject to reasonable debate, so please feel free to add your own favorites in the comments section.

1. Certiorari denied in “moldy washer” cases – In my view, the single biggest development impacting class action practice over the past year was the Court’s decision not to take on the question of “issue certification” presented in the Sears and Whirlpool “moldy washer” cases.  This non-decision opens the door for significant litigation over whether isolated issues should be certified for class treatment even where significant individual litigation would be necessary following resolution of the class wide issues.

2. Judge Posner’s class action settlement decisions – Judge Posner wins the award for the jurist having the single biggest impact on class action practice in 2014.  In addition to the Supreme Court declining to take on review of his decision in one of the “moldy washer” cases, Butler v. Sears, Roebuck & Co., Judge Posner authored two significant (and harshly worded) decisions discussing the standards for evaluating the fairness of class action settlements, including Eubank v. Pella Corp., Nos. 13-2091, -2133, 2136, -2162, 2202 (7th Cir., June 2, 2014), and Redman v. RadioShack Corp., case number 14‐1470, 14‐1471 and 14‐1658 (7th Cir., Sept. 19, 2014).  These decisions are emblematic of a more general trend in the courts of subjecting class action settlements, especially coupon settlements, to ever-greater scrutiny.

3. Basic framework remains largely unchanged after Halliburton II – One of only three Supreme Court decisions of significance on class action issues this past year, the Court largely maintained the status quo in declining to overrule the framework for evaluating “fraud on the market” theory of reliance in securities class actions.

4. Whirlpool trial ends with victory for the defendant – Not long after the Supreme Court declined review, the first of the “issue” class cases went to trial against Whirlpool.  The trial ended in a defense verdict, although as I wrote in October, I’m not sure that’s necessarily a good thing for defendants in the long-term.

5. Court clarifies removal pleading standards in Dart Cherokee Basin Operating Co. v. Owens – In one of the Roberts Court’s most helpful class-action-related decisions, at least from a practical standpoint, the majority removed barriers to corporate defendants’ ability to remove cases under the Class Action Fairness Act (CAFA), clarifying that jurisdictional facts need only be pled, not supported by evidence, in the notice of removal.

6. California Supreme Court issues significant decision on the use of statistical evidence to support class certification – An individual state court decision has to be pretty significant to make my annual top 10 list, but I think Duran v. U.S. Bank National Association fits the bill.  The decision is one of the most comprehensive to date in addressing the potential pitfalls of reliance on statistics as a proxy for common, class wide proof.

7. Supreme Court holds in AU Optronics that consumer actions brought by state attorneys general are not “mass actions” subject to the Class Action Fairness Act – It’s probably a misnomer to call AU Optronics a “class action” case, since the issue presented was whether actions brought by state AGs on behalf of consumers were “mass actions.”  But because the case involved interpretation of CAFA, it makes this year’s list.

8. International class and collective action litigation continues to expand – Class, collective, and multi-party actions continue to expand outside of the United States and Canada.  Examples included France joining the list of Civil Law jurisdictions in Europe to enact a “class action” law, and a group action in Austria, joined by more than 25,000 litigants, challenging Facebook privacy policies.

9. Data breach class actions proliferate – High profile data breaches and hacking incidents made news, and resulted in class actions, in 2014.  From a rash of payment card breaches impacting customers of large retailers like Target and Home Depot to the more recent Sony hacking incident, data breach class action litigation shows no signs of slowing down any time soon.

10. Supreme Court grants, then dismisses, certiorari in Public Employees’ Retirement System of Mississippi, v. IndyMac MBS, avoiding a high court ruling on the question of whether statute of repose can be tolled for absent class members under the American Pipe tolling doctrine.  In what has become a trend of the past year, this is yet another missed opportunity for the Supreme Court to address a class action issues of significance.

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Earlier today, the Supreme Court granted cert in Dart Cherokee Basin Operating Company, LLC v. Owens, No. 13-719, in which it will take up the contours of the standard for providing factual support in a notice of removal under the Class Action Fairness Act of 2005 (CAFA).  Specifically, the issue presented is as follows:

Whether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required “short and plain statement of the grounds for removal” enough?

This is the third CAFA removal case that the Court has accepted in as many years.  During the October 2012 term, the Court decided Standard Fire Ins. Co. v Knowles, 133 S. Ct. 1345 (2013), in which it held that a class representative may not avoid CAFA jurisdiction by stipulating to a recovery of damages of less than $5,000,000 on behalf of members of the proposed class.  Earlier in the current term, the Court decided Mississippi ex rel. Jim Hood v. AU Optronics Corp., Case No. 12-1036 (U.S. Jan. 14, 2014), holding that a parens patriae action brought by a state attorney general on behalf of Mississippi residents was not a “mass action” subject to CAFA.

 

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The U.S. Supreme Court issued its first class-action-related decision of the 2013-14 term today, or more precisely, its first non-mass-action-related decision of the term.  In Mississippi ex rel. Jim Hood v. AU Optronics Corp., Case No. 12-1036 (U.S. Jan. 14, 2014), the Court held that a parens patriae action brought by the Mississippi attorney general on behalf of Missouri citizens was not a “mass action” subject to the Class Action Fairness Act of 2005.  My partner Casie Collignon has a more detailed write-up on the decision at the BakerHostetler blog Class Action Lawsuit Defense.

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My sincere apologies to the loyal ClassActionBlawg reader for the scarcity of new content lately. I’m on the road this week, but thought I should at least drop a note about two interesting class-action-related developments in the U.S. Supreme Court over the past week:

1) the Court granted cert in  State of Mississippi v. AU Optronics Corp., to address the issue whether parens patriae actions filed by state attorneys general seeking restitution on behalf of state citizens are “mass” actions, permitting removal under the Class Action Fairness Act (CAFA).  For more on the case, see Deborah Renner’s post on the BakerHostetler Class Action Lawsuit Defense Blog.  If it were up to me, I’d go further and say that parens patriae cases are actually “class” actions under CAFA, but apparently the Court has its own idea about the scope of the issue.

2) The Court vacated Judge Richard Posner’s decision in Butler v. Sears Roebuck & Co. and remanded for reconsideration in light of its recent decision in Comcast Corp. v. Behrend.  This follows the Court’s earlier decision to vacate the Sixth Circuit’s decision in In re Whirlpool Corp. Front-Loading Washer Products Liability Litigation for the same reason.  Given the many questions left unanswered by the Comcast decision, it will be interesting to see what the Sixth and Seventh Circuits do with the moldy washer cases on remand.

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From time to time we will troll the class action blogosphere for news and information about our favorite class action topics.  Here are just a few of the recent headlines from around the web.

Complex litigation as a commodity investment? 

Hedge funds have traditionally been willing to explore new territory in the non-traditional investment sphere.  At least some appear to be finding potentially attractive opportunities in so-called Litigation Funding Companies.  LFC’s are often run by former lawyers–some with an investment or hedge fund background.  They identify potentially profitable lawsuits and agree to fund the litigation (to a point) in exchange for a percentage of the settlement.  Three Geeks and a Law Blog has an interesting multi-part series on this new trend.  Read it here.

http://www.geeklawblog.com/2012/03/rise-of-third-party-litigation-funding.html

10 ways to defend class actions using Walmart v. Dukes

Andrew Trask, class action attorney at McGuire Woods and co-author of the Class Action Playbook recently put together a list of takeaways explaining how class action defense attorneys can use Wal-mart v. Dukes.  His post links to a power point presentation he recently gave at DePaul University.  It’s a quick read and worth checking out.

http://www.classactioncountermeasures.com/uploads/file/DePaul%20-%20Defense.pdf

BP Settlement

The BP litigation in the Deepwater Horizon Oil Spill off the Gulf Coast has settled for all claimants except the federal government.  The Mass Tort Litigation Blog has been providing regular updates including this post discussing what’s known about the settlement.  It appears the settlement will consist of two separate agreements. One will resolve economic claims while the other will resolve medical claims.  The Blog cites news reports explaining that “either the settlement will be paid by the $20 billion fund BP created to compensate victims or the fund will close and be replaced by a court overseen claims facility.”

http://lawprofessors.typepad.com/mass_tort_litigation/

Irregular transaction was not enough to show a Bank had actual knowledge of an alleged Ponzi scheme.

Race to the Bottom contributor Susan Beblavi unpacks the Eleventh Circuit’s semi-recent opinion in Lawrence v. Bank of America, D.C. Docket No. 8:09-cv-02162-VMC-TGW, 2012 LEXIS 777 (11th Cir. Jan. 11, 2012).  In that case, putative class action plaintiffs alleged the Bank of America substantially assisted in a Ponzi scheme operated by one of its account holders.  The Eleventh Circuit upheld the District court’s dismissal of the case reasoning that even though BOA authorized numerous large transactions by the account holder, the bank wasn’t required to investigate them under Florida law.  Moreover, the court found the purported red flags were too weak to infer that it was plausible that the bank had actual knowledge of the alleged scheme.  Read more at the link below.

http://www.theracetothebottom.org/home/2012/3/8/lawrence-v-bank-of-america-allegations-of-actual-knowledge-o.html

Parens Patriae actions, class actions?

The 9th Circuit holds that parens patriae actions under Nevada law are not class actions removable to federal court under CAFA, adding to a circuit split on the issue.  For a succinct explanation, see Katherine Heckert’s post at the Carlton Fields Class Action Blog:

http://www.carltonfields.com/classactionblog/blog.aspx?entry=521

Walmart v. Dukes reasoning reverses class certification again

Skaddon’s Russell Jackson posts that the Louisiana Supreme Court has again reversed class certification due to problems of commonality and causation.  Previously, the Louisiana high court adopted the U.S. Supreme Court’s common question analysis in Walmart v. Dukes to reverse class certification in Price v. Martin.  In a recent per curiam opinion in Alexander v. Norfolk So. Corp., No. 11-C-2793, Slip op. (La. Mar. 9, 2012), the Louisiana Supreme Court cited Price for the proposition that class certification requires a rigorous analysis and significant proof of a common question. The case involved a chemical spill involving train cars. Hundreds complained of a bad smell and irritation to their eyes, throat and nose.  This led to a class action that was certified by the trial court and affirmed by an appellate court.  It turned out, each putative class member would need individual toxicology testing to determine whether they are among the minority of people who are susceptible to very low levels of the released chemical.  The Louisiana Supreme Court ultimately reversed class certification based on the lack of predominance of common issues, and the need for individualized trials.  Read more here.

http://www.consumerclassactionsmasstorts.com/2012/03/articles/predominance-1/once-again-the-louisiana-supremes-reverse-class-certification-citing-causation-as-a-problem/

The Perils of Electronically Stored Information

Todd Dawson’s post on Baker Hostetler’s Employment Class Action Blog illustrates just how badly things can go when a key “smoking Howitzer” document slips through defense counsel’s ESI review and ends up in the plaintiffs’ hands.  In an FLSA Collective Action, the employer produced two million documents. Prior to the production, the employer’s attorneys used various search terms to identify privileged documents.  Inevitably, one got through – a bad one. Even worse, the court concluded that the employer had waived privilege.  Thus, not only did the plaintiffs’ counsel get to see the document, they got to use it as well.  To see how this disaster could have been avoided, read more here.

http://www.employmentclassactionreport.com/flsa/inadvertent-esi-disclosure-of-attorney-client-communication-waives-privilege-in-flsa-collective-acti/

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Having been focused on several other speaking and writing projects recently (in addition to my day job), it’s taken longer than I had hoped to comment on several recent class-action-related decisions by the federal circuit courts of appeals.  Here’s a brief summary of three recent decisions of note:

Washington State v. Chimei Innolux Corp., No. 11-16862 (9th Cir. Oct. 3, 2011) – joining the Fourth Circuit in holding that a parens patriae action brought by state attorneys general or other state officials for the benefit of the state’s citizens is not a “class action” for the purposes of removal under the Class Action Fairness Act (CAFA).

Klier v. Elf Atochem N. Am., Inc., No. 10-20305 (5th Cir., Sept 27, 2011) – holding in the absence of an express provision in the settlement agreement to the contrary that unclaimed funds should be distributed pro rata to class members who participated in the settlement as opposed to being given to charity as a cy pres distribution.  Take note of the concurrence by Judge Edith H. Jones, which makes a strong argument that in the absence of any agreement to the contrary or express waiver of the right to recover unclaimed funds, the equities favor returning those funds to the defendant rather than paying them to the class or distributing them to charity.

Esurance Ins. Co. v. Keeling, No. 11-8018 (7th Cir., Sept. 26, 2011) – holding that when punitive damages are at issue, the correct standard is whether it would be “legally impossible” for the plaintiff to recover an amount of punitive damages that, when combined with the amount of compensatory damages sought, would exceed the $5 million amount in controversy threshold under CAFA, but concluding that it was not legally impossible under Illinois law, even though it was unlikely, that $4.4 million in punitive damages could be awarded in a case where the compensatory damages were slightly more than $600,000.

A great resource for more timely commentary and analysis on recent class action decision in the federal courts of appeals is Alison Frankel’s blog On the Case.

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One of the more significant issues relating to the Class Action Fairness Act of 2005 (CAFA) that has percolating through the federal courts over the past few years is whether parens patriae actions brought by state attorneys’ general seeking to recover damages for their citizens are “class actions” that can be removed to federal court.  On Friday, a panel of the Fourth Circuit Court of Appeals issued a 2-1 decision holding that parens patriae actions are not class actions subject to removal under CAFA.  West Virginia v. CVS Pharmacy, Inc., No. 11-1251 (4th Cir. May 20, 2011) (to be published).

CAFA Law Blog has been covering this issue extensively in recent months, and I expect they will have an entertaining post about the case in the coming days.  For CAFA Law Blog posts on the topic, see this link.

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