I recently had the privilege of serving as vice chair for this year’s Defense Research Institute (DRI) Class Action Seminar. As I’ve done in years past, here are some highlights from the first day’s programming:
Forecast for Class Actions Under a Trump Administration (Alison Frankel of Thomson Reuters)
Alison Frankel predicted that it is doubtful that the Fairness in Class Action Litigation Act (see my March 28 blog post) will get through the Senate, at least in its current form. She noted that there is little basis to predict Justice Gorsuch’s views on class actions (I agree, see my February 2 blog post). She noted that Gorsuch represented the Chamber of Commerce in amicus briefs as a practicing lawyer, and that on his first day on the Supreme Court bench, in the CALPERS v. ANZ Securities case involving whether the filing of a class action tolled a statute of repose, Justice Gorsuch was aggressively focusing on the plain language of the statute. She noted that Gorsuch’s negative view of Chevron deference to administrative agencies may come into play in the upcoming cases involving whether employers can require employees to arbitrate disputes and waive their right to a class proceeding. And it will be interesting to see if the Court grants certiorari in Briseno v. ConAgra Foods, Inc. (see my January 6 blog post), a case in which the Ninth Circuit rejected an ascertainability requirement. I asked Ms. Frankel about how she thinks corporate defendants should handle media inquiries relating to class actions. I think her answer to that was sufficiently important to warrant a separate blog post. Stay tuned for that one.
Microsoft v. Baker (Stephen Rummage of Davis Wright Tremaine)
In this case, the Supreme Court held that plaintiffs could not appeal a decision striking class allegations by stipulating to a voluntarily dismissal of the case in a stipulation that purported to reserve their right to appeal, with the defendant disputing that there was any such right (see my June 13 blog post for a summary of this decision). Rummage, who worked on this case, noted that this decision will make it more difficult for both sides to obtain review of a class certification ruling in circumstances where they both want review – the only options will be a Rule 23(f) petition (in the discretion of the court of appeals) or certification under 28 U.S.C. 1292(b) (in the discretion of the district court and then in the discretion of the court of appeals). Rummage also noted that Baker may have an impact on the line of cases addressing whether the plaintiff has standing to sue where a defendant tenders the amount sought into court after a denial of class certification (Roper, Genesis Healthcare and Campbell-Ewald). He also noted that Baker is likely to have an impact beyond class actions, in individual cases where an interlocutory decision is crippling to the merits of a claim and the plaintiff wants to take an appeal without going through a pointless trial.
Insights from the Supreme Court of Canada (Justice Suzanne Coté)
We were honored to have Justice Coté speak to us. She has extensive class action experience, having participated in the largest class action trial in Canada, involving the tobacco industry, before taking the bench. She highlighted some key differences and similarities between Canadian and U.S. law on class actions. In Canada, class actions began more recently, in 1977 in Quebec, in 1993 in Ontario, and then other provinces after that. Class action law is based on provincial legislation in each province, not on federal law, except for cases against the Crown or a province. Factors that Canadian courts consider in deciding whether to authorize (similar to certify) a class action include judicial economy, avoiding duplication of factfinding and legal analysis, access to justice, forcing corporations to change behavior, and whether the plaintiff has an arguable case (this seemed to me similar to our Rule 12(b)(6) standard).
Future of Privacy Class Actions (Stewart Baker of Steptoe & Johnson, Kurt Beyerchen, Jr. of Hyundai Motor America, Craig Halseth of Ford Motor Co., Christiana Lin of comScore, Inc., and Yael Weinman of Verizon)
New automotive technologies, Internet of Things devices, and new state legislation present an ever-changing landscape for privacy class actions. Vehicle hacking cases to date have presented issues about a lack of harm or injury. Cases involving companies keeping data too long (longer than what is in the terms and conditions) have not been successful due to lack or injury or harm. In some cases, focusing on substantive state law arguments may be preferable to making Article III standing arguments if there will be standing for the same case in state court. Important issues in these cases may be presented involving the obtaining and tracking of consent and the use of the product by persons who are not the original purchaser.
Litigating Statutory Damage Class Actions After Spokeo (Bryan Merryman of White & Case)
Bryan Merryman presented extensive statistics on post-Spokeo decisions. Relatively few courts have found standing in cases under the Fair and Accurate Credit Transactions Act (FACTA), such as cases involving putting too many credit card digits on receipts. Cases under the Fair Credit Reporting Act (FCRA) are more evenly split. Courts have been more likely to find standing under the Fair Debt Collection Practices Act (FDCPA), under which plaintiffs are more likely to allege monetary damage, and some courts have viewed the disclosure obligations as substantive protections. Courts have also been more likely to find standing in Telephone Consumer Protection Act (TCPA) cases. There is a developing circuit split over whether a mere statutory violation suffices for standing or whether consequential harm is needed. One court in the Northern District of Illinois issued a fine where a defendant removed a case to federal court and then filed a motion to dismiss for lack of standing which, if granted, would result in a remand.
Plumbing the Depths of American Pipe (Mark Perry of Gibson Dunn)
Mark Perry provided a historical perspective on how the old distinction between law and equity was “abolished,” but still retained with respect to certain doctrines such as equitable tolling of statues of limitations and equitable estoppel. In more recent years, the Supreme Court has been gradually eliminating or limiting equitable doctrines and focusing more on Congress’s responsibility for setting, modifying and adjusting timely filing requirements. In Perry’s view, the Court seems to be moving toward a rule that broad categories of cases will not be exempted from timely filing requirements without a case-specific showing of prejudice. This potentially could bring an end to or substantially modify the American Pipe doctrine on class action tolling. The Court’s recent decision in CALPERS v. ANZ Securities concludes that Rule 23 does not require tolling, thereby limiting American Pipe to an equitable tolling rule. There is less concern today about a multiplicity of duplicative filings by individual putative class members than there was in 1974, given the electronic filing systems that are in use today and the possibility of protective notice type filings. This may open the door to the end of American Pipe.
Ascertainability (Angela Spivey of McGuire Woods)
Angela Spivey represents the defendant in Briseno v. ConAgra Foods (see my January 6 blog post), in which the Ninth Circuit concluded that there is no ascertainability requirement (although manageability remains, where applicable). A petition for certiorari is pending in that case, set for the Supreme Court’s September 25, 2017 conference. There is a sharp circuit split on this issue, with some circuits requiring a reliable and administratively feasible way to determine who is in the class without minitrials, while other circuits require only that there be objective criteria for the class definition, not administrative feasibility. In those circuits that have not recognized ascertainability as such, however, the need for minitrials still matters, and the defendant can make largely the same type of argument under Rule 23(b)(3), due process and the Rules Enabling Act.
Insurance Coverage Issues Raised by Class Claims (Courtney Horrigan of Reed Smith and Alexander Potente of Sedgwick)
This presentation highlighted a lengthy list of issues that both policyholders and liability insurers needs to consider with respect to the defense of class actions. Various policies may come into play, including commercial general liability, employment practices liability, directors and officers liability, professional liability, and cyber and data privacy liability. Timely notice is important, and in some jurisdictions insurers will have no obligation to pay fees incurred before the case is tendered to them. Typical issues that arise between policyholders and their insurers include selection of defense counsel, rates, the insurer’s litigation guidelines, staffing, budget, and any sharing of defense and indemnity among multiple insurers (which is another reason why early notice to all insurers can be important). In addition to exclusions that may apply, damages sought in class actions that are likely not covered likely include punitive or multiple damages, penalties, attorneys’ fees taxed as costs, and wages. The presenters also highlighted how insurers need enough information about the case sufficiently in advance of a mediation to make a decision on settlement authority, and how written confidentiality agreements may be needed.