Defending Class Actions in 2016

I thought readers might find helpful some broader observations on strategies for defending class actions in 2016:

  • Dig in Deep Early: Some defense counsel are accustomed to the practice of filing a motion to dismiss in virtually every putative class action. Some in-house counsel, eager to save costs, have pushed defense firms to agree to prepare these motions for reduced flat fees, in the hopes of ending the case early and at a reduced cost. But if you lose that initial motion, which may not be researched as thoroughly because of a reduced flat fee, while you may still have plenty of additional arguments to make on class certification and on the merits, the plaintiffs will have more momentum and the judge may view the case as potentially more meritorious. I think the better approach is to spend the time and money digging deep into the legal issues to try to predict more accurately how the issues presented by a motion to dismiss ultimately might come out at the appellate level, and doing sufficient internal homework with the business units involved to evaluate the strengths and weaknesses on class certification. That comes at a greater cost than a “knee jerk” motion to dismiss, but it is money well spent because it puts everyone in a better position to make a more informed decision about whether a motion to dismiss or some other strategy (such as a motion to strike class allegations, or taking early depositions of named plaintiffs, or waiting to defend against class certification) is the better way to go.
  • Focus Intently on Each of the Elements of the Causes of Action and the Defenses: Federal district courts are increasingly taking a claim-by-claim, element-by-element approach to evaluating class certification. You will be well-served by having a memo written early in the case laying out each element of each claim and defense, what has to be proven, and assessing whether the evidence is likely to be common to the class or individualized. On the defense side there often are some elements of some claims that you may have to concede are likely to be the subject of common evidence. You need to identify early where to focus your efforts in discovery and briefing. This should not be an afterthought, after discovery has been taken and you are preparing your opposition to certification.
  • Think Deeply About How the Named Plaintiffs’ and Putative Class Members’ Cases Would Be Tried: When it comes time for the court to decide whether to certify a class, one of the best ways to defeat class certification is by demonstrating specifically what evidence you would want to put on if the named plaintiffs’ cases were tried that would be unique to those plaintiffs and could affect the outcome. Put yourself in the shoes of preparing to try one of those small individual cases and think hard about how you would do it. You can then build that up by making a similar showing with respect to putative class members, and where possible demonstrate that a substantial percentage of putative class members’ claims likely will require this type of individualized evidence that the defendant has a right to put on. One of the most significant nuggets of guidance we’ve received from the Supreme Court recently is that under the Rules Enabling Act, a court must not “giv[e] plaintiffs and defendants different rights in a class proceeding than they could have asserted in an individual action.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1048 (2016). If you have the right to put on individualized evidence in trying the named plaintiffs’ individual cases, you must have the same right if the case were tried as a class action. Demonstrating how you would try the named plaintiffs’ (and/or putative class members’) individual cases can be powerful in defending against class certification.


Labor Depreciation Class Action Update: Decisions on Class Certification

I have had a busy summer and am overdue in updating readers on recent decisions in class actions against insurers involving the “labor depreciation” issue. The issue involves whether, when insurers estimate the “actual cash value” of damage to real property under a property insurance policy, depreciation is properly applied to the full estimated replacement cost (as insurers have done for decades) or must only be applied to the materials component of the replacement cost and not the labor component (as plaintiffs’ lawyers have argued). For more background on this issue, see my February 10, 2016 blog post and January 18, 2016 blog post. This is currently the hottest issue in class actions against property/casualty insurers. It likely will get even hotter after these recent decisions.

There have been three recent federal district court decisions granting class certification in these cases. The first one was Labrier v. State Farm Fire & Cas. Co., 2016 U.S. Dist. LEXIS 96476 (W.D. Mo. July 25, 2016). The court found that the commonality requirement was satisfied because of “the overarching, undisputed, and common fact of State Farm’s practice of withholding payment from all its insureds for the depreciated labor component of mixed items of loss,” and because of the central legal issue, which had been decided (see my January 18, 2016 blog post for discussion of that decision). The court also found that the requirement that common issues of law or fact predominate was satisfied because “[t]he record shows that State Farm used the same method for calculating the ACV payment for each member of the class regardless of the type of casualty suffered or any other factor.” Id. at *16, 30.  The court also relied upon the testimony of a State Farm adjuster, who testified that State Farm used the Xactimate software to prepare estimates, and he “could not recall ever adjusting a claim without an Xactimate estimate, or any instance in which Xactimate was inaccurate.” Id. at *33. The court ultimately found that “[t]he putative class members’ damages are data driven and can be mechanically calculated.” Id. at *47. State Farm has filed a petition for permission to appeal this decision in the Eighth Circuit.

Following the decision in Labrier, two decisions granting class certification were issued by Judge Susan O. Hickey of the Western District of Arkansas, in Dennington v. State Farm Fire & Cas. Co., Case No. 4:14-cv-04001 (W.D. Ark. Aug. 24, 2016) and Green v. American Modern Home Ins. Co., Case No. 4:14-cv-04074 (W.D. Ark. Aug. 24, 2016). In Arkansas, the state supreme court had previously ruled that depreciation of labor costs was improper, as explained in my January 18, 2016 blog post. In Dennington and Green, the court found commonality satisfied based on the common legal issue of whether it is proper to apply depreciation to the entire estimated replacement cost value (including both the labor and materials components thereof). The court also found that the predominance requirement was satisfied because, although individual file reviews would be required, the court did not believe that “mini-trials” would be necessary on individual claims. The court noted that, to the extent that the estimates on some claims may have been overly generous and thus no additional amount would be owed under the Arkansas Supreme Court’s decision, or the class members were otherwise fully compensated by what was paid, the evidence did not establish that this would apply to a “significant portion” of the putative class claims. The court also concluded that identifying class members who were paid full replacement cost could be determined by common proof (although the court did not explain how this could be done). In Green, the court found that the amount of labor depreciation could be determined from a search of the insurer’s data on approximately 65% of the claims, and that the need for a file-by-file review on the remainder was not a sufficient basis to deny certification. The insurers likely will petition the Eighth Circuit for permission to appeal.

Assuming the Eighth Circuit decides to review some or all of these class certification decisions — and I expect it will, given that there are many labor depreciation class actions pending in that circuit (including ones I am involved in defending) – the Eighth Circuit will be faced with deciding issues of substantial importance to the insurance industry. If review is granted, the case potentially could have broad implications for insurance class action litigation, at least in that circuit. The key focus is likely to be on commonality and predominance. On commonality, other circuits have ruled that a legal issue that has already been decided (such as the “labor depreciation” issue here) cannot be a proper common issue. See Pipefitters Local 636 Ins. Fund v. Blue Cross Blue Shield, 654 F.3d 618, 630 (6th Cir. 2011). On predominance, as the Supreme Court recently explained, it would violate the Rules Enabling Act to “giv[e] plaintiffs and defendants different rights in a class proceeding than they could have asserted in an individual action.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1048 (2016). If one of these “labor depreciation” cases were tried individually, it seems likely that the insurer would be allowed to put on evidence that nothing more is owed on the claim. This would go to liability, not necessarily or exclusively an affirmative defense. Assuming that the right to put on this type of evidence cannot be taken away from the insurer simply because the proceeding is a class action (as Tyson Foods and other cases explain), then a key question should become how many individual trials will be needed and whether the district court could feasibly conduct them. If it would be hundreds or thousands of individual trials, a class proceeding would seem to be unworkable.

Visa/Mastercard Class Action Settlement Struck Down Due To Intraclass Conflict

Yesterday the Second Circuit reversed the approval of what was reportedly the largest antitrust class action settlement in history, valued at $7.25 billion. In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 2016 U.S. App. LEXIS 12047 (2d Cir. June 30, 2016). The case was brought by merchants who challenged the fees and rules that Visa and Mastercard imposed. I’ll spare you all of the details on that. The key problem the court found with the settlement was that two different parts of the class would get very different relief. Those merchants that accepted Visa and/or Mastercard up to November 28, 2012 would get monetary payments, while those merchants that accepted the cards after that date would get injunctive relief. Both groups were represented by the same plaintiffs’ lawyers. The second group got a very bad deal, according to the Second Circuit, and should have had separate counsel in the negotiations. The court wrote that “[u]nitary representation of separate classes that claim distinct, competing, and conflicting relief create unacceptable incentives for counsel to trade benefits to one class for benefits to the other in order somehow to reach a settlement.” Id. at *24.

This case and others like it demonstrate how challenging it can be for defendants and their counsel to negotiate a class action settlement. In the course of very difficult and lengthy negotiations, the defense team may need to try to put on three different hats. The first hat is the more customary one of trying to get the very best deal they can for the defendants. The second hat is to try to pretend they are plaintiffs’ lawyers and identify concerns that may require separate representation of different parts of the class (although if you think separate representation might be necessary, it won’t be easy to convince plaintiffs’ lawyers to get separate lawyers for different subclasses). The third hat is to try to play the role of the judge (and appellate judges) that may review the settlement and try to assess whether the best deal you can get is not so good for the defendants that it will not ultimately be approved.

DRI Class Action Seminar 2016

The Defense Research Institute (DRI) will be hosting its annual class action seminar in Washington, D.C. on July 21-22, 2016. If you haven’t been, this is the year to go. If you’ve been before, you won’t want to miss this year’s seminar.

The presenters will include Ken Feinberg on mass dispute resolution, Andrew Pincus, who argued Spokeo v. Robins (the Supreme Court’s recent decision on named plaintiff standing in class actions), former Solicitor General Gregory Garre, who argued Campbell-Ewald Co. v. Gomez (the Supreme Court’s recent decision on offers of judgment or settlement offers to named plaintiffs), Kathleen Mueller, who briefed Tyson Foods, Inc. v. Bouaphakeo (the Supreme Court’s recent decision on the use of statistical evidence in class actions), a program on cross-border class actions, and much more. You’ll also get to hear a bit from me about class actions facing the insurance industry.

Discounted registration ends June 21, and if you are in-house counsel, you may qualify for free registration. I hope to see you there.

Spokeo v. Robins Supreme Court Opinion: What Is Concrete Harm?

Today the Supreme Court issued its long-awaited decision in Spokeo, Inc. v. Robins, addressing whether the plaintiff had standing to sue in a putative class action brought under the Fair Credit Reporting Act (“FCRA”). Like some other opinions we have seen from the eight-member Court following Justice Scalia’s death, this decision is relatively narrow in scope. The Court held that the requirements of standing apply to statutory violations, and sent the case back to the Ninth Circuit to reconsider whether the plaintiff adequately alleged a “concrete harm.” Plaintiffs and defendants will continue to debate in individual cases whether the alleged harm was sufficiently concrete or particularized, with limited guidance from the Court. The requirement of a “personal and individual” injury that the Court reiterated may be useful in defending against motions for class certification in some cases.

As brief background, Spokeo operates an Internet-based “people search engine” that can be used to search for information about a particular person. Robins alleged that Spokeo violated the FCRA by providing incorrect information about his age, marital / family status, education, employment status, etc., which could have impacted his general prospects in finding a job. The district court dismissed the case for lack of standing, but the Ninth Circuit reversed.

The Court issued a 6-2 decision authored by Justice Alito. The Court explained that the requirement that an injury is “concrete and particularized” involves two separate requirements. “For an injury to be ‘particularized,’ it ‘must affect the plaintiff in a personal and individual way,” whereas “[a] ‘concrete’ injury must be ‘de facto’; that is, it must actually exist” – it must be “’real,’ and not ‘abstract.’” (Slip op. at 7-8.) It seems to me that when an injury affects someone in a “personal and individual way” it is usually “real,” but I suppose some people might be personally impacted by the abstract (academics perhaps more than others).

The heart of the Court’s opinion was that “Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” (Id. at 9-10.) The Court noted, however, that some harms that are difficult to prove (such as libel and slander per se) are deemed sufficiently concrete by the law, and in some circumstances the violation of a procedural right can be sufficient (such as with voting rights or rights to government information). With respect to the FCRA, however, the Court concluded that “not all inaccuracies cause harm or present material risk of harm.” (Id. at 11.) The Court gave the example of an incorrect zip code as something that likely would not cause concrete harm.  The case was remanded to the Ninth Circuit to address the concrete harm requirement, which the Court found not adequately addressed in the Ninth Circuit’s prior opinion. (The Court could have tackled this issue themselves, it simply involves an analysis of the complaint, but they may have been deadlocked on that point, and therefore reached this outcome.)

Justice Thomas wrote a concurring opinion, in which he proposed to create a distinction between private rights (where, in his view, a mere statutory violation apparently would be sufficient) and public rights (where concrete, individual harm distinct from harm to the general public would be required). He would find the FCRA to largely create public rights, however, except for one provision.

Justice Ginsburg wrote a dissent, joined by Justice Sotomayor. They would have found that Robins’ complaint adequately alleged concrete harm to his employment prospects, and therefore would have affirmed the Ninth Circuit’s decision. It is notable though that only two of the Justices took this view.

I expect this opinion will have limited impact on class action litigation generally. Where the plaintiff’s claims are nebulous, defendants will continue to argue that there is no concrete or particularized injury. Lower courts will have to sort that out without much more guidance from the Supreme Court than they had before this decision.

Where I see this opinion as being potentially more useful to defendants is that where defendants can  argue that the individual circumstances of each putative class member’s claim must be litigated to determine whether there is a “personal and individual” injury, that can, in appropriate cases, be a strong argument against class certification.

Tyson Foods Supreme Court Opinion Addresses Statistical Evidence in Class Actions

Today, the Supreme Court issued its opinion in Tyson Foods v. Bouaphakeo, addressing the use of statistical evidence in class actions. The plaintiffs’ bar will undoubtedly claim the decision as a victory because class certification was upheld. But I don’t think that’s right. The decision (a  6-2 opinion by Justice Kennedy, with Justices Thomas and Alito dissenting) stands for principles that defendants can use to defend many class actions successfully.

The heart of the Court’s decision is that we should think of class actions conceptually as if they were hundreds or thousands (or millions, as the case may be) of separate individual suits. If the statistical evidence being offered could be properly used to prove entitlement to relief in individual cases, then it can all be used in a class action. But if the evidence would not be sufficient in an individual case, then it will not pass muster in a class action either. This is because the procedural device of a class action cannot alter substantive rights, under the Rules Enabling Act.

Tyson Foods involved a claim under the Fair Labor Standards Act. The plaintiffs alleged that Tyson Foods failed to pay for time  spent putting on and taking off (“donning and doffing” in the legal lingo) protective equipment at overtime rates where the employee worked more than 40 hours per week including the “donning and doffing” time. The plaintiffs’ expert watched video recordings of employees taking their equipment on and off, and measured and averaged the times for the different departments. The Court found that this evidence, which had not been challenged by the defendant under Daubert, would be admissible in an individual lawsuit. This was because, in Anderson v. Mt. Clemens Pottery Co., the Court established a burden-shifting framework, under which, if the employer fails to satisfy its statutory duty to keep adequate time records, the employee can establish a prima facie case with evidence sufficient to make a “just and reasonable inference” about the amount of time worked. The burden then shifts to the employer to rebut that inference.

The Court distinguished the “Trial By Formula” method that was rejected in Wal-Mart Stores, Inc. v. Dukes because the putative class members in that sex discrimination case could not have properly used deposition evidence regarding practices of individual store managers in stores they did not work in to prevail in individual suits.

The Court declined to create any broad rule, explaining that “[w]hether a representative sample may be used to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.” (Slip op., at 15.) The Court also declined to decide the second issue in the case – whether uninjured class members could recover from the aggregate jury verdict. The Court found that issue premature, where the district court had not yet allocated the award. Chief Justice Roberts wrote a concurrence (joined by Justice Alito on this point) suggesting that there was no way of knowing how the jury reached its verdict and thus how it could be allocated without providing relief to uninjured plaintiffs. He wrote that “Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not,” and “if there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.” (Slip op. of Roberts, C.J., concurring, at 5-6.)

So how can defendants use this decision in defending against class certification? Here are a few thoughts:

  • In many cases, the law does not permit any type of burden shifting in individual suits. In addition, in many other cases (such as many insurance and financial services class actions), defendants have detailed records of individual interactions with the putative class members. In these situations, statistical evidence often cannot properly be used to prove an individual case. Tyson Foods supports defendants’ position in these cases.
  • Tyson Foods recognizes that the court cannot “deprive [defendant] of its ability to litigate individual defenses.” (Slip op. at 12.) While it appears that the defense was presented using common evidence in Tyson Foods, the defendant should be entitled to introduce individual evidence to support its defenses to individual putative class members’ claims. In some cases, this may result in decertification of the class if the trial becomes unmanageable due to the defendant’s right to put on its individual defenses. As Tyson Foods further explains, it “violate[s] the Rules Enabling Act [to] giv[e] plaintiffs and defendants different rights in a class proceeding than they could have asserted in an individual action.” (Slip op. at 14.) Where the defendant will use individual evidence to defendant against the named plaintiffs’ claims and/or some class members’ claims, it is entitled under Tyson Foods and Wal-Mart to use that same evidence in defending itself at the trial of a certified class action.
  • The presence of uninjured class members, although still an open question, is an important one. The Chief Justice’s concurrence on this point is likely to carry significant weight in the lower courts. Defendants can continue to press this issue.


Property Insurance Diminution in Value Class Action: Georgia Federal Court Certifies Class

One of the issues I’ve been covering on this blog is a series of putative class actions in Georgia arising out of a Georgia Supreme Court decision in 2012, which held that diminution in value of real property is potentially covered under a property insurance policy (see my summary of the Georgia Supreme Court decision if you’d like more background on this). The Georgia Supreme Court essentially extended its prior ruling in an auto insurance case to the property insurance context, although it is somewhat counterintuitive that real property, after it is repaired, would see a reduction in value (as opposed to an increase in value).

Earlier this week, a Georgia federal court granted class certification, in part, in Thompson v. State Farm Fire & Casualty Company, 2016 U.S. Dist. LEXIS 30308 (M.D. Ga. Mar. 9, 2016). The class was defined as homeowners who, within the six-year period prior to the filing of the lawsuit, made claims arising from water damage to their homes. The class was limited to a claim for breach of contract based on State Farm’s failure to make assessments for potential diminished value. Key points from the ruling included:

  • State Farm apparently took the position that it does not assess or pay for diminished value, and its policy never covers diminished value, notwithstanding the Georgia Supreme Court’s decision. The court found that State Farm Mutual Auto. Ins. Co. v. Mabry (the auto insurance case) required these assessments. Insurers that do not dispute that their policies potentially cover diminished value in Georgia, and that make assessments for diminished value where appropriate, are likely to be in a different position.
  • With respect to the claim for failure to assess for diminished value, the court found that common issues predominated because State Farm did not make any such assessments, and because damages potentially could be based on the cost of the assessment. at *32. The court did not explain how, under the policy, the insured could recover the cost of the assessment. That puzzles me. Mabry involved declaratory and injunctive relief.
  • The court denied the motion for certification with respect to the claim for State Farm’s failure to pay for diminished value. Common issues did not predominate on that claim because “State Farm can avoid liability, not just an award of damages, by showing that an individual property did not suffer diminished value,” and the “necessary determination of whether each class member suffered diminished value renders breach anything but a common question.” at *23-24. Because State Farm would be entitled to make this showing for every class member, common issues did not predominate. Id. at *26-27. This is consistent with other insurance class action decisions.

This decision seems likely to heat up the diminution in value class action litigation in Georgia, although insurers that are handling the issue differently will have different arguments to make in defending against class certification. As I noted in my February 2 post, Liberty Mutual recently obtained dismissal of a declaratory judgment claim in one of these cases.

Insights From FDCC Program On December 2015 Amendments To Federal Rules of Civil Procedure

Last week, I attended an excellent program of the Federation of Defense and Corporate Counsel regarding how the December 2015 amendments to the Federal Rules of Civil Procedure are impacting the defense of class actions and other complex litigation. (For a summary of the amendments pertinent to class action practice, see my November 20 blog post). Here are my takeaways from the FDCC program:

  • It appears that Defendants are not yet asking for shifting/allocation of costs in discovery because this area of the rule amendments has not yet resulted in court decisions. This is a fertile area for defendants to test the waters, but they should pick the right test cases.
  • With respect to the requirement that discovery be proportional to the needs of the case, recent decisions have demonstrated that defendants need to give courts the tools they need to cut down on “fishing expeditions” by plaintiffs. This often involves filing some type of affidavit with respect to the nature and extent of the burden and perhaps cost imposed by the discovery being sought. Defendants that have been able to demonstrate the burden with greater specificity, where that is possible, have been achieving good results. Some courts have not applied the proportionality requirement where the defendant has failed to file a burden affidavit.
  • Defendants should remind courts that the “reasonably calculated to lead to the discovery of admissible evidence” language that was part of Rule 26 for many years is no longer there. It has been deleted, but some courts are still referencing it, erroneously, in discovery rulings.
  • Defendants’ briefs on discovery issues should emphasize that the proportionality balancing that the new Rule 26 requires is mandatory, not optional.

Compliance With Medicare Secondary Payer Act At Issue In Auto Insurance Case

A recent decision in the District of New Jersey addressed an auto insurer’s obligations to comply with the Medicare Secondary Payer Act. Auto insurers may wish to review their practices and procedures in light of this decision.

In Negron v. Progressive Casualty Insurance Company, 2016 U.S. Dist. LEXIS 24994 (D.N.J. Mar. 1, 2016), the plaintiff brought a qui tam suit under the False Claims Act against Progressive. The allegations focused on an online application, in which policyholders were asked to select either a “health first” policy, under which the policyholder’s health insurance coverage would be the primary medical coverage for injuries arising from an auto accident, or Personal Injury Protection (PIP) primary coverage, under which Progressive would provide the primary coverage. The application noted that the policyholder should select the PIP primary coverage if one or more drivers was insured by Medicare or Medicaid. Id. at *7-8. The plaintiff selected the health first policy, even though she was a Medicare recipient. After she was injured in an auto accident, an adjuster denied her claim because the “health first” policy was a secondary payer. One of her medical bills was conditionally paid by Medicare. Id. at *6-8. The Medicare Secondary Payer Act provides that Medicare is a secondary payer where auto insurance coverage exists. The plaintiff sued, alleging that the insurer caused the submission of a false or fraudulent claim to Medicare, in violation of the Medicare Secondary Payer Act. The United States and New Jersey both declined to intervene, and the plaintiff proceeded with the qui tam suit.

Progressive moved to dismiss the federal and New Jersey False Claims Act claims. The court denied  the motion, finding that the complaint sufficiently alleged both that the defendants caused the submission of a false or fraudulent claim, and that the violation was “knowingly” made. A central part of the opinion focused on what the court concluded that the defendants could have done better:

First, Defendants could have constructed their online application to prevent Medicare and Medicaid enrollees from purchasing health first policies. This could have been accomplished through pop-up warnings, by requiring applicants to disclose the name of their health insurance carrier or provide a certification that they are not Medicare/Medicaid recipients, or by any number of other modifications to the online application process.

Second, it seems reasonable to assume that the online application process resulted in further post-application underwriting review and further communications between the Defendants and purchasers of health first policies such as the issuance of a formal policy and declarations, the issuance of permanent insurance cards, premium notices, and renewal processes. Each of these communications or interactions presented a separate opportunity to ensure that health first policies were not held by Medicare/Medicaid enrollees.

Lastly, both sides describe a claims adjustment process which involved a real human being. Yet, nowhere is it explained why the adjustor did not ask the health providers submitting the claims the simple question of what other insurance Realtor presented to the health care provider when the services were rendered. Further, no reason is given why that same simple question was not asked of Realtor at the beginning of the claims adjustment process. Patients of health care providers are routinely asked for proof of insurance and insurance companies routinely ask insureds to provide information about other available and potentially primary or overlapping coverage. Health care providers rarely miss an opportunity to get paid for their services, and as we have noted, insurance companies rarely miss the opportunity to come in second when it comes time to pay.

Id. at *18-20.

The court rejected the defendants’ argument that there was no loss to the government because Medicare’s payment was merely conditional, explaining that “[i]f that practice regularly occurred, defendants would essentially be receiving an interest free loan from the government on claims they are obligated to pay and were always obligated to pay.” Id. at *24. The court further found that the plaintiff had sufficiently alleged a knowing violation of the False Claims Act “by alleging that Defendants failed to make reasonable and prudent inquiries to ensure compliance with the [Medicare Secondary Payer] Act.” Id. at *27.

Insurers writing auto policies similar to Progressive’s “health first” policy may want to take note of this decision.

How Will Justice Scalia’s Death Impact Pending Class Action Cases?

As our nation and especially the legal community mourn the death of one of the most charismatic and influential Supreme Court justices in our history, one question that might be asked is how Justice Scalia’s death might impact pending class action cases. There are two pending class action cases of broad significance: Spokeo, Inc. v. Robins, which presents a question involving standing to sue in so-called “no injury” class actions; and Tyson Foods, Inc. v. Bouaphakeo, which involves whether a class can be certified based on a statistical sampling technique, and whether a class can properly be certified where it includes many members who were not injured.

Both cases were argued in November, and thus the Court could be close to finalizing decisions in them, although it may need to revisit that if Justice Scalia’s vote was decisisve. As Tom Goldstein explains at SCOTUSblog, the Court has traditionally not issued opinions based on the vote of a justice who has died or left the Court before the opinion is issued. There are two ways the Court has traditionally handled a justice’s death in the middle of a term, where the justice’s vote was decisive and the remaining members are divided 4-4. The Court could hold the case for reargument after a new justice is confirmed, or issue an order affirming the lower court based on the 4-4 deadlock. If the Senate refuses to confirm a nominee of President Obama, as Senate Republican leadership has suggested they might do, that could mean holding a case for reargument for quite a long time. Even if the next president were to make a nomination shortly after taking office next January 20, it would be at least a few months—towards the end of the next Court Term—before the seat would be filled, leaving the Court with only eight members for more than a year.

In Spokeo, based on my review of the oral argument transcript (see my November 3 blog post), the Court seemed to be largely in agreement that there has to be some concrete harm beyond a mere statutory violation to satisfy Article III standing requirements. There was a lot of disagreement over how to resolve the Spokeo case on its own allegations, however, suggesting that there might have been a 5-4 vote on that prior to Justice Scalia’s death. My guess is that, if Justice Scalia’s vote was decisive, the remaining justices might now find their way to a majority in favor of a narrower decision that corrects what they seemed to pretty much all think was wrong about the Ninth Circuit’s opinion, while resolving this case on narrow grounds, leaving some issues for another day. If that happens, it could be a small victory for class action defendants.

In Tyson Foods, my reading of the oral argument transcript (see my November 11 blog post) suggests that this case might not turn on Justice Scalia’s vote. The media’s interpretation was that Justice Kennedy would side with the plaintiffs, perhaps along with the four liberal justices. My effort to read the tea leaves suggested that Justice Kennedy, if he sided with the plaintiffs, would want to do so quite narrowly. He will still frequently be a lynchpin in the eight-member Court. I also thought that there seemed to be a broader majority in Tyson Foods in favor of a result that might explain how the way this case was presented to the jury was the wrong way to try a class action, and send the case back for a retrial without deciding much more than that. My guess is that we will see a majority opinion in this case, rather than a rehearing or affirmance because of a 4-4 vote. It could be a narrow opinion that provides district courts and class action practitioners some guidance on how a class action should be tried, and does not completely eliminate the possibility of statistical evidence being used, but leaves some of those details unanswered. The issue of many class members lacking injury, however, may be more difficult to resolve, and perhaps the Court might find a way to decide the case without deciding that issue if there were a tie vote on that question.