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Posts Tagged ‘TCPA’

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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One of the hottest substantive areas in consumer class actions these days is litigation under the Telephone Consumer Protection Act (TCPA), 47 U.S .C. § 227, sometimes called the “fax blast” statute, which prohibits unsolicited faxes and automated calls for the purpose of commercial solicitation.  The TCPA has a statutory penalty provision that allows consumers to recover $500 for each violation.  The ability to collect far more in statutory penalties than the actual damages caused by a given violation makes TCPA violations an appealing target for enterprising plaintiffs’ class action lawyers.  The aggregation of thousands of claims together can create huge monetary exposure for defendants and the potential for easy settlements and the large contingent fees that comes with it.  In this way, the TCPA is similar to other laws with statutory penalties, such as the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which provides for statutory penalties against a company that produces credit card receipts with too much information on them.

Although it is a federal statute, the TCPA does not provide for federal court jurisdiction in private actions to enforce it.  TCPA class actions may only be filed in or removed to the federal courts if there is diversity jurisdiction under CAFA

This has naturally given rise to the question of whether state laws limiting class actions, such as § 901(b) of New York’s Civil Practice Law and Rules, which prohibits class actions for claims seeking statutory penalties, are applicable in federal court exercising diversity jurisdiction over TCPA claims.   Before the Supreme Court’s decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., the Second Circuit Court of Appeals said yes.  After the Supreme Court remanded for reconsideration in light of Shady Grove, the Second Circuit said yes again, reasoning that the TCPA’s language allowing private enforcement “if otherwise permitted by the laws or rules of court of a State” gave the states broad power to determine how TCPA actions may be prosecuted within their borders.  The Third Circuit has disagreed with this conclusion, holding that State limitations on class actions do not apply in TCPA class actions filed in the federal courts.  Given the Third Circuit’s view, defendants in at least some jurisdictions may have a strong incentive to oppose federal jurisdiction in TCPA cases.

Another question that arises from the peculiar federalist nature of the TCPA is whether a state or federal statute of limitations applies.  Earlier this week, in Giovanniello v. ALM Media LLC, the Second Circuit answered this question and held that a shorter state law limitations period applied rather than the 4-year federal catchall provision. 

Several recent decisions have highlighted a split among both the state and federal the courts about whether TCPA claims should be permitted to be brought as class actions at all.  Of particular note is the recent decision of the New Jersey Superior Court, Appellate Division in Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., which provides an excellent survey of the various state and federal court decisions on both sides of the issue.  The court in Local Baking Products ultimately decided that class certification of TCPA claims was not appropriate. It reasoned that class actions are not a superior procedure for enforcing the TCPA because Congress had made statutory penalties available so that individuals would be incentivized to pursue vindication of their rights in individual actions in small claims or other state courts.  In addition to lack of superiority, a common reason offered by other courts for rejecting class certification is that the question of whether faxes or calls were authorized is too individualized for common questions to predominate.

Earlier this month, however, the Supreme Court of Kansas upheld a lower court’s decision granting class certification in a TCPA case.  In Critchfield Physical Therapy v. The Taranto Group, Inc., the court rejected both the argument that individual actions in small claims court would be superior to a class action and the argument that the question of consent was too individualized.  In addition, the court rejected the argument that class actions would not be superior in light of the threat that aggregating thousands of individual statutory penalties together could create an “annihilating” judgment against the defendant that would be disproportionate to any harm to the class.  A similar argument had been successful in a FACTA case in California federal court, but later reversed by the Ninth Circuit in Bateman v. American Multi Cinema, Inc.

Meanwhile, while a bill has been introduced in the U.S. house to “modernize” the TCPA by permitting certain informational robo-calls to be made to mobile phones, among other things, the bill would not modify the private enforcement provisions of the statute.

One quandary facing courts and counsel in TCPA class actions is how to give notice to consumers if a class is certified.  Last month, a Madison County, Illinois judge ordered that notice of a class action for unsolicited faxes under the TCPA should be disseminated by. . . 

. . . you guessed it . . .  

fax.

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CABWR is finally back after a three week holiday hiatus!  Here are some blog posts from the week that was that might be of interest to class action practitioners:

Class Action Decisions

CAFA Law Blog discusses a Fifth Circuit Court of Appeals decision addressing jurisdiction under the Class Action Fairness Act (CAFA) before reversing class certification in a case alleging violations of the federal Telephone Consumer Protection Act (TCPA):

Class Action Defense Blog summarizes a California appellate court decision reversing a trial court’s decision to deny certification after concluding that it would be necessary to make a determination on the merits to ascertain class members and evaluate numerosity:

http://classactiondefense.jmbm.com/2009/01/class_action_defense_cases_gha.html

Classified comments on a Florida decision upholding a class certification order where the lack of a hearing transcript left the appellate court with no way to analyze the evidence considered by the trial court in reaching its decision:

http://www.carltonfields.com/classactionblog/blog.aspx?entry=246

Folo comments on an opinion by Seventh Circuit Court of Appeals Judge Richard Posner, who has some harsh words for attorneys for objectors to a class action settlement who sought an attorney fee award for what the Judge did not consider a significant contribution to the outcome of the case:

http://www.folo.us/2008/12/30/this-case-is-finito/

The UCL Practitioner summarizes a Seventh Circuit Court of Appeals decision discussing the removability under CAFA of securities class actions filed under section 22(a) of the Securities Act of 1933:

http://www.uclpractitioner.com/2009/01/7th-circuit-makes-it-harder-for-plaintiffs-to-keep-securities-class-actions-in-state-court.html

Class Action Trends

Drug and Device Law Blog discusses the phenomena of “global coordinating counsel” and its rise from marketing ploy to reality as class action and related procedures become more developed around the world:

http://druganddevicelaw.blogspot.com/2009/01/new-meaning-of-global-coordinating.html

Mass Tort Litigation Blog discusses the “multi-faceted” nature of mass tort litigation in an article that includes a discussion of federal judge Jack Weinstein treating MDL litigation and settlement of pharmaceutical products liability claims as a “quasi-class action”:

http://lawprofessors.typepad.com/mass_tort_litigation/2009/01/todays-14-billi.html

Securities Docket summarizes a Manhattan Institute report on a trend in Louisiana public pension funds serving as lead plaintiffs in securities class actions:

http://www.securitiesdocket.com/2008/12/28/manhattan-institute-finds-la-pension-funds-most-active-lead-plaintiffs-in-securities-cases/

The D&O Diary summarizes the year in securities litigation from 2008…

http://www.dandodiary.com/2009/01/articles/securities-litigation/a-closer-look-at-the-2008-securities-lawsuits/

… and The Race to the Bottom offers observations about the modest nature of the increase in securities class actions in light of the financial crisis:

http://www.theracetothebottom.org/home/the-trend-in-securities-class-action-lawsuits.html

The Daily Insurer discusses a recent report by Seyfert Shaw LLP summarizing trends in employment class action litigation:

http://dailyinsurer.blogspot.com/2009/01/class-action-litigation-analyzed-in-new.html

Class Action Commentary

Point of Law provides an abstract of a student note by James McDonald in Duke Law Journal entitled “Milberg’s Monopoly: Restoring Honesty and Competition to the Plaintiffs’ Bar”:

http://www.pointoflaw.com/archives/2009/01/milbergs-monopo.php

Wage Law discusses claims-made settlements and reversions in wage and hour class actions and whether unclaimed funds escheat to the state:

http://www.californiawagelaw.com/wage_law/2009/01/more-on-reversions-and-claims-made-settlements.html

Pro Football Talk comments on the facts of a class action filed on behalf of retired players against the NFL Players’ Association for for breach of fiduciary duty, which was recently tried to a jury verdict in the retirees’ favor:

http://www.profootballtalk.com/2009/01/13/ruling-in-nflpa-class-action-sheds-light-on-what-the-union-did-allegedly-to-retired-players/

Class Action News

The Complex Litigator reports on the California Supreme Court’s decision to grant review in the wage and hour class action Brinkley v. Public Storage, Inc., Sup. Ct. Case No. S168806:

http://www.thecomplexlitigator.com/2009/01/breaking-news-review-granted-in-brinkley-v-public-storage-inc.html

Class Action Previews. Predictions, and Hopes for 2009

North Carolina Business Litigation Report previews the year ahead for the North Carolina Business Court, including a discussion of class actions:

http://www.ncbusinesslitigationreport.com/2009/01/articles/watching-the-court/the-year-ahead-in-the-north-carolina-business-court/

New look Overlawyered has a post proposing a good idea for a consumer class action that it’s author predicts will be filed by some plaintiffs’ firm in 2009:

http://overlawyered.com/2008/12/a-prediction-for-2009/

Law and More has hopes for “juicy corporate class action litigation” in 2009:

http://lawandmore.typepad.com/law_and_more/2009/01/needed-juicy-corporate-classaction-litigation.html

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