Posts Tagged ‘sotomayor’

The Wal-Mart v. Dukes argument was held as scheduled today.  Here is a Wal-Mart v. Dukes Oral Argument Transcript.  Some initial observations:

  • The beginning of the defendant’s argument was focused on the proper standard for reviewing whether the plaintiff had sufficiently common evidence of a uniform policy.
  • It was not until later in the defendant’s argument that the questioning turned to the question certified for review: whether a Rule 23(b)(2) class action should be certified in a class action seeking monetary relief in the form of back pay.  Questioning on this issue continued into the plaintiff’s argument, but then returned to questions of what standard should apply more generally in certifying an employment discrimination class action.
  • On balance, the tougher questioning of the defendant’s attorney was from the more liberal faction of the court, and the tougher question of the plaintiff’s attorney was from the more conservative faction of the court. 
  • However, to the extent the questions can be a sign of a potential split in the Court (always a dangerous assumption), it is interesting that Justice Ginsburg seemed particularly troubled by the plaintiff’s position on the applicability of Rule 23(b)(2) to the back pay claims.
  • Overall, the sentiment seemed to be against allowing Rule 23(b)(2) to be used as a vehicle to resolve individual back pay claims (again, recognizing that the nature and tone of oral argument questions is not a very reliable way to predict outcomes).  However, there seemed to be some support among several Justices for the possibility that a case could be certified under Rule 23(b)(2) for injunctive relief only, on the ground that hiring policies are discriminatory because they are excessively subjective.

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Class arbitration waivers are contract provisions that require disputes be submitted to arbitration but also expressly preclude the arbitration from being conducted on a representative or class basis.  Class arbitration waivers have been a hot topic in class action litigation over the past few years, as some courts have found that in certain contexts that the are unenforceable in violation of public policy.

Yesterday, the Second Circuit Court of Appeals issued its decision on remand from the U.S. Supreme Court in In re American Express Merchants’ Litigation, No. 06-1871-cv.  This is the second decision by the Second Circuit in the case finding that the class arbitration waiver provision at issue was unenforceable.  The first decision, In re American Express Merchants’ Litigation, 554 F.3d 300 (2009), was issued by a panel that included future Supreme Court Justice Sonia Sotomayor.  (See this February 2009 CAB entry discussing the decision).  Last May, the Supreme Court granted certiorari, vacated the decision, and remanded for reconsideration in light of its recent decision in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010).

A 2-judge panel, sans now-Justice Sotomayor, issued the decision on reconsideration yesterday.  The court found that Stolt-Nielsen did not change its conclusion.  The rationale is best summarized in the following excerpt:

Stolt-Nielsen states that parties cannot be forced to engage in a class arbitration absent a contractual agreement to do so. It does not follow, as Amex urges, that a contractual clause barring class arbitration is per se enforceable. Indeed, our prior holding focused not on whether the plaintiffs’ contract provides for class arbitration, but on whether the class action waiver is enforceable when it would effectively strip plaintiffs of their ability to prosecute alleged antitrust violations.

Slip op. at 11.

The Court went on to hold that the arbitration provision at issue was not enforceable because, it found, the facts in the record established that having to pursue the antitrust claims at issue in the case would be prohibitively expensive without using the class action device.  Therefore, the court reasoned, the contract provision was void for public policy reasons, as a matter of law.  In rejecting the argument that Stolt-Nielsen prohibits the invalidation of arbitration provisions for public policy reasons, the court stated:

While Stolt-Nielsen plainly rejects using public policy as a means for divining the parties’ intent, nothing in Stolt-Nielsen bars a court from using public policy to find contractual language void. We agree with plaintiffs that “[t]o infer from Stolt-Nielsen’s narrow ruling on contractual construction that the Supreme Court meant to imply that an arbitration is valid and enforceable where, as a demonstrated factual matter, it prevents the effective vindication of federal rights would be to presume that the Stolt-Nielsen court meant to overrule or drastically limit its prior precedent.” (Plaintiffs’ Supp. Brief, p. 7) Following the Stolt-Nielsen decision, our court reached a similar conclusion in considering a different iteration of the issue: whether class action waivers are unconscionable as a matter of state law.

Id. at 21.

The long-term impact of the Second Circuit’s decision is unclear, especially since the Supreme Court’s decision in AT&T Mobility v. Concepcion is expected soon.  (See this November 17, 2010 CAB Entry recapping the oral arguments in AT&T Mobility).  However, AT&T Mobility involves issues of federal preemption and the power of the state courts to find class arbitration waivers unenforceable.  Therefore, even a decision favorable to the defendant in AT&T Mobility may not prevent future federal courts from applying the Second Circuit’s reasoning in invalidating class arbitration waivers.

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When the Supreme Court nomination of then-Judge Sonia Sotomayor was announced, I put together this summary of her fairly significant judicial record on class action issues.  Finding any record on class action issues for current nominee Elena Kagan has been more of a challenge, since she has not served as a judge.  However, Solicitor General Kagan does have a background as a Civil Procedure and Constitutional Law professor, and she has written at least one article addressing class actions.  Professor Adam Steinman at the Civil Procedure & Federal Courts Blog has posted an excerpt from that article, Certifying Classes and Subclasses in Title VII Suits, 99 Harv. L. Rev. 619 (1986).  In that excerpt, Kagan appears to argue for a middle ground between what at the time were two competing models for class certification in Title VII employment discrimination cases.  Her scholarship from 25 years ago is hardly a barometer for how she might rule on any issue today, but might it be support for those who argue that she would be a voice of compromise on the Court if confirmed?

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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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To follow up with yesterday’s CAB entry on Supreme Court Nominee Sonia Sotomayor, here are some key quotes from other entries  from around the web discussing her record in class actions and related litigation:

Business Week:  “When it comes to class-action lawsuits and securities-fraud cases, Sotomayor’s record holds as a pragmatist.” 

http://www.businessweek.com/blogs/money_politics/archives/2009/05/sotomayor_on_di.html?chan=top%20news_top%20news%20index%20-%20temp_news%20+%20analysis (via Securities Docket)

Lots, Stocks, and Gavel: “[S]he took an activist position in favor of an interpretation that would have allowed the suit to go forward, in spite of specific language in the law that would have barred it.”


WSJ Law Blog: “There is no reason for the business community to be concerned.”


Reuters: “Experts say it can be difficult to predict how a federal appeals court judge like Sotomayor will rule on business cases as a member of the Supreme Court.”


Statutory Construction Blog: “I . . . found 3 cases where the Court reviewed a decision of Judge Sotomayor that involved statutory construction. They’re real snoozers, and am not sure they tell us much but…”


Wal-Mart Watch: “Most view her record [i]s decidedly moderate, though she has implied in the past that the gender and ethnicity of judges should and does influence their judicial decision-making.”


The Volokh Conspiracy: “[M]any in the business community were hopeful that the President would select someone who would fit into the Roberts’ Court’s overall approach to business cases. That is someone who is not overtly pro-business, but recognizes the importance of narrow rulings that reinforce settled expectations. . . .  Does the Sotomayor nomination conform to the business community’s expectations?  It is not so clear. . . .”


Forbes (by Walter Olsen of Overlawyered and Point of Law): “Issues of business law don’t come across as Sotomayor’s great passion one way or the other, so it’s hard to know what all this portends for the high court’s direction on business issues should she be confirmed.”


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After hearing and reading countless media reports today about how Supreme Court Appointee Sonia Sotomayor’s  judicial record will be scrutinized between now and her confirmation, I got to wondering about her judicial record in class actions.  My research turned up a few key cases on class action issues, which I have summarized below.

In Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25 (2d Cir. 2005), Judge Sotomayor authored an opinion affirming in part and reversing in part the dismissal of a putative securities class action, holding that the Securities Litigation Uniform Standards Act (“SLUSA”) did not preempt certain state law claims alleging damages relating to securities transactions brought by plaintiffs who were not buyers or sellers of the securities.  The portion of the decision that limited the reach of SLUSA preemption was overruled by the United States Supreme Court, in a 8-0 decision authored by Justice Stevens in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71, 126 S. Ct. 1503 (2006).  The case turned primarily on an issue of statutory interpretation, the meaning of the phrase, “in connection with the purchase or sale of a covered security” as used in the portion of the statute that expressly preempts class actions based on state law, with the Supreme Court adopting a broad interpretation of that phrase in contrast to the narrow interpretation given by the Second Circuit.

In Moore v. PaineWebber, Inc., 306 F.3d 1247 (2d Cir. 2002), Judge Sotomayor wrote an opinion upholding a denial of class certification in a RICO fraud case after recognizing that common proof of misrepresentations could be made in a form other than a written, standardized sales script, finding that the district court had not abused its discretion in holding that there was no evidence of a centralized scheme in which common misrepresentations were made to all class members.

Martens v. Thomann, 273 F.3d 159 (2d Cir. 2001) may be an example of the type of decision that reflects a trait highlighted by the President’s comments and media reports, a respect for the impact of judicial decisions on lives of real people.  In this case, the court reversed and remanded, primarily on due process and other procedural grounds, the district court’s imposition of sanctions against two class representatives and their individual attorneys who sought to pursue a motion to “enforce” a previously approved settlement in a Title VII employement class action.

From a class action defense perspective, In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124 (2d Cir. 2001) would be the most troubling of Judge Sotomayor’s class action decisions, were it not for her participation on the panel in In re Initial Public Offering Securities Litigation, 471 F.3d 24 (2d Cir. 2006).  The In re Visa Check opinion, issued prior to the 2003 amendments to FRCP 23, suggested a standard that prohibited a district court from weighing any disputed evidence that might overlap with the merits of the plaintiffs’ claim as long as the plaintiff could provide some expert testimony that, if believed, would support the conclusion that one or more issues could be decided on a classwide basis.  However, in In re IPO Securities Litigation, decided post-2003, the court held that a court must weigh conflicting evidence in determining whether each element necessarily for class certification had been certified even though that decision may also overlap with the merits.  In reaching that conclusion, the court stated that:

we . . . disavow the suggestion in Visa Check that an expert’s testimony may establish a component of a Rule 23 requirement simply by being not fatally flawed. A district judge is to assess all of the relevant evidence admitted at the class certification stage and determine whether each Rule 23 requirement has been met, just as the judge would resolve a dispute about any other threshold prerequisite for continuing a lawsuit.

In re IPO Securities Litigation, 471 F.3d at 24. 

Judge Sotomayor has issued published decisions in a few other class action lawsuits during her tenure as a judge on both the appellate and trial court levels.  These decisions appear fairly case-specific and do not reflect a particular judicial philosophy on class action issues. 

  • In re WorldCom, Inc., 546 F.3d 211 (2d Cir. 2008) – Upheld bankruptcy court’s order discharging putative state law class claims that a telecommunications company’s act of sending light pulses through fiber optic cable buried on his property constituted a trespass and supported a claim for unjust enrichment.


  • In re NYSE Specialists Securities Litigation, 503 F.3d 89 (2d Cir. 2007) – Affirmed lower court decision that the New York Stock Exchange was entitled to absolute immunity on certain claims brought on behalf of a would-be class of investors but reversed on grounds that the lead plaintiffs lacked standing to sue the Exchange for federal securities fraud for alleged false statements involving other entities. 


  • Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002) – Upheld the trial court’s decision denying a motion to compel arbitration in a set of consolidated, putative class actions where the arbitration provision was set forth on a web page located below the “download” button allowing users to download free software off the Internet.


  • Cruz v. Coach Stores, Inc., 202 F.3d 560 (2d Cir. 2000) – Affirmed the denial of a motion for class certification in an employment discrimination case after agreeing that the motion was untimely, that the elements of class certification had not been met, and that the district court had not abused its discretion in finding that the plaintiffs’ proferred expert report submitted in support of the motion was inadmissible.


  • Hoffmann v. Sbarro, Inc., 982 F. Supp. 249 (S.D.N.Y. 1997) – Allowed a opt-in class to proceed in a case seeking unpaid employment benefits under the Fair Labor Standards Act (“FLSA”). 


  • Semmler v. Metropolitan Life Ins. Co., 172 F.R.D. 86 (S.D.N.Y. 1997) – Denied class certification in an ERISA case seeking relief for a plan administrator’s decision to deny certain benefits for healthcare services.


  • Nellis v. Shugrue, 165 B.R. 115 (S.D.N.Y. 1994) – Upheld a bankruptcy court had the power to approve a global settlement of debtors’ claims over objections from certain debtors that the settlement should be considered a “class action” settlement.

Overall, her decisions on class action issues do not suggest a pro-plaintiff or pro-defense bias.  Rather, they seem to reflect a willingness to consider each case on its own merits and to either admit when she has made a mistake or at least be guided by changing circumstances rather than any ridged adherence to a predetermined philosophy or idealogy.

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