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Posts Tagged ‘preemption’

In an entry entitled Concepcion, Four Long Months Later, I summarized several decisions evaluating class arbitration waiver provisions following the Concepcion decision.  I neglected to include the case of NAACP of Camden County East v. Foulke Management Corp., ___ N.J. Super. ___ (App. Div. 2011), in which a New Jersey state appellate court held an arbitration provision unenforceable under state law on ambiguity grounds.

Bruce D. Greenberg has a synopsis of the decision on his blog, New Jersey Appellate Law, along with a link to the opinion.

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After the all the activity in the Supreme Court during the October 2010 term, why would anyone want to talk about a decision from the October 2009 term?  Isn’t that kind of like showing off your new Blackberry Curve the day after they unveil the iPhone 4?  I prefer to think about it this way–it’s like what they say about the NFL draft.  Sure, it’s fun to read all of Mel Kiper’s draft grades the next day, but you won’t really know how your team did until you have time to see the players perform on the field.

All these obscure metaphors are my way of introducing an upcoming live phone/web seminar in which I’ll be presenting entitled “Filing Class Actions in Federal Court After Shady Grove” scheduled for Thursday, July 14, 1:00pm-2:30pm EDT.  Here’s a synopsis of the program:

The Supreme Court’s Shady Grove ruling held that Rule 23 preempts state laws that otherwise bar statutory claims from being brought as class actions. Many believed an increase in class actions filed in federal court, particularly in the consumer protection and antitrust arenas would result.

One year later, the impact of Shady Grove on federal court filings remains unclear, mostly due to ambiguities in the Court’s decision and the differing plurality and concurring opinions regarding the standard for deciding which state-law restrictions do not apply in federal court actions.

The lower courts’ struggles to apply these different tests have resulted in divergent applications of Shady Grove. Nonetheless, plaintiffs and defendants can glean guidance from these rulings for arguing their positions regarding the applicability of a state-law restriction in federal court.

My fellow panelists and I developed this program to analyze the U.S. Supreme Court’s Shady Grove decision and discuss how lower courts have applied the ruling. We will offer guidance for practitioners to argue their positions on whether particular state-law prohibitions on class action claims should apply in federal diversity cases.

We will offer our perspectives and guidance on these and other critical questions:

  • Has the Shady Grove decision provided plaintiffs with additional opportunities for class action litigation?
  • How have lower courts applied Shady Groves‘ divergent tests for deciding which state laws restrictions will not apply in federal court actions?
  • Have there been any rulings since Shady Grove which dispensed with the state law restriction on class action claims?

After our presentations, we will engage in a live question and answer session with participants — so we can answer your questions about these important issues directly.

I hope you’ll join us.

For more information or to register >

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As 2010 winds down, it’s time to review the key developments in class action law.  It was an especially busy year for the federal courts, and in particular the U.S. Supreme Court, on issues impacting class action practice.  Here, in chronological order, are 10 key developments from the year that was:

  1. January 5 – In In re Baycol Products Litigation, the Eighth Circuit follows the Seventh Circuit’s lead in upholding the right of a federal court to enjoin a putative statewide class action from proceeding where a federal court had already denied class certification in a case involving substantially similar claims.  (See CAB entries dated January 7 and January 12).
  2. February 23 – In a decision that will impact many class actions removed under the Class Action Fairness Act, the Supreme Court adopts the “nerve center test” as the standard for determining corporate citizenship, in Hertz Corp. v. Friend.  (See CAB entry dated March 2)
  3. March 31 – The Supreme Court holds that states may not regulate the types of claims that may be filed as class actions in the federal courts, in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co.  (See CAB entry dated April 8)
  4. April 7 – In American Honda Motor Co. v. Allen, the Seventh Circuit holds that a trial court must rule on challenges to the admissibility of expert testimony relevant to class certification before deciding whether a class may be certified.  (See CAB entry dated May 4)
  5. April 26 – The Ninth Circuit issues its decision in Dukes v. Wal-mart Stores, Inc., adopting rigorous class certification standards similar to those previously adopted by the Second Circuit in In re IPO Securities Litigation, 471 F.3d 24 (2d Cir. 2006), but nonetheless certifying under FRCP 23(b)(2), what has been called the largest employment discrimination class action in history.
  6. April 27 – The Supreme Court seemingly puts an end, for all practical purposes, to the concept of class arbitration by holding that a defendant could not be compelled to defend an arbitration on a class basis where the arbitration clause did not expressly provide for class arbitration, in Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp.  (See CAB entry dated May 11).
  7. June 24 – In Morrison v. National Australia Bank, the Supreme Court deals a fatal blow to “foreign-cubed” class actions, holding that § 10(b) of the Securities and Exchange Act of 1934 does not allow for fraud claims involving transactions on foreign exchanges that occurred outside the United States. (See case summary at SCOTUS blog).
  8. July 19, October 20 – An Eleventh Circuit panel issues a controversial decision in Cappuccitti v. DirecTV, Inc., severely restricting CAFA removal jurisdiction to cases where the amount in controversy exceeds $75,000 with respect to at least one class member, but later reverses itself in an October 15 opinion.  (See Guest Post from Eric Jon Taylor and Jon Chally at CAFA Law Blog for more on the first decision and this October 20 CAB entry on the second decision).
  9. November 9 – Supreme Court hears oral argument in AT&T Mobility v. Concepcion, in which the Court considers whether the Federal Arbitration Act preempts state law holding a class arbitration waiver unconscionable.  (See CAB fsummary of oral argument dated November 17).
  10. December 6 – Supreme Court grants certiorari in Wal-Mart Stores, Inc. v. Dukes, to decide the issue of whether a claim for monetary relief can be certified under FRCP 23(b)(2).  (See CAB entry dated December 7).

Just considering the cases still awaiting ruling before the Supreme Court, 2011 promises to be another exciting year in the world of class actions.  Happy New Year to all!

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The U.S. Supreme Court will hear oral argument next week in a case involving one of the hottest issues in class action law these days, the enforceability of class arbitration waivers.  Class arbitration waivers are contract clauses that require arbitration, combined with an agreement to waive the right to pursue any dispute as a class action. 

AT&T Mobile LLC v. Concepcion, docket no. 09-893, is an appeal of the Ninth Circuit’s opinion in Laster v. AT&T Mobile LLC, No. 08-56394 (9th Cir. Oct. 27, 2009), which held that a class arbitration waiver in a mobile phone terms of service agreement was unconscionable as a matter of California law. 

The Ninth Circuit opinion was in line with a trend among state and federal courts in striking down class arbitration waivers in consumer contracts on unconscionability grounds.  However, the case involved what the Ninth Circuit called a “new wrinkle”.  The clause at issue had provided for a “premium” payment of $7,500 to a consumer who obtained an arbitrator’s award higher than the company’s last settlement offer.  This provision arguably provided the incentive to pursue an individual suit that courts had found to be lacking in previous cases involving class arbitration waivers.  Despite the wrinkle, the court found that the case was not distinguishable from an earlier case in which it had found a class arbitration waiver unconscionable, and it rejected the defendant’s argument that the Federal Arbitration Act preempted the application of state law in determining the enforceability of the waiver.

The supreme Court granted certioriari to consider:

Whether the Federal Arbitration Act preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures-here, class-wide arbitration-when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.

SCOTUS Blog has this preview of the upcoming oral argument.

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I’m embarrassingly late in posting a link to the Supreme Court’s recent decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., No. 08-1008, slip op. (S. Ct., March 31, 2010) in which the Court held that a New York state rule prohibiting class actions to recover statutory penalties did not apply in a case filed in federal court exercising diversity jurisdiction under the Class Action Fairness Act (CAFA). 

Anyone who thinks that class action jurisprudence can be predicted based on perceived political leanings of  the Justices should take a look at the composition of the various factions of the Court that agreed to different parts of the plurality opinion:

SCALIA, J., announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I and II–A, in which ROB-ERTS, C. J., and STEVENS, THOMAS, and SOTOMAYOR, JJ., joined, an opin-ion with respect to Parts II–B and II–D, in which ROBERTS, C. J., and THOMAS, and SOTOMAYOR, JJ., joined, and an opinion with respect to Part II–C, in which ROBERTS, C. J., and, THOMAS, J., joined. STEVENS, J., filed an opinion concurring in part and concurring in the judgment. GINSBURG, J., filed a dissenting opinion, in which KENNEDY, BREYER, and ALITO, JJ., joined.

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