Tuesday, December 16, 2014

Rosenberg & Spier on Class Actions

Now available on the Journal of Legal Analysis website is David Rosenberg and Kathryn Spier’s article, Incentives to Invest in Litigation and the Superiority of the Class Action. Here’s the abstract:

We formally demonstrate the general case for class action in a rent-seeking contest model, explaining why separate action adjudication is biased in the defendant’s favor and collective adjudication is bias free. Separate action bias arises from the defendant’s investment advantage in capitalizing on centralized control over the aggregate (classwide) stake in the common question defense, while the plaintiff, with only an individual recovery at stake, spends much less. Class action eliminates bias by enabling both parties to make their best case through centralized optimal classwide investments. Our social benefit–cost analysis shows that class action surpasses alternative methods for achieving bias-free adjudication.

And here’s a link to the PDF file.

H/T: Larry Solum (who justifiably says to download it while it’s hot).

 

 

December 16, 2014 in Class Actions, Recent Scholarship | Permalink | Comments (0)

Monday, December 8, 2014

Supreme Court Denies Cert in BP Oil Spill Settlement

As reported by SCOTUSBlog and The National Law Journal, the Supreme Court denied BP's cert petition that sought to reopen the Deepwater Horizon settlement.

Although I have only a passing familiarity with the incredibly convoluted BP litigation, I predicted this summer (but not publicly), when BP filed its petition, that the Court would deny cert.  BP repeatedly attempted to undo a settlement agreement that it negotiated for a year and strongly advocated to be approved at the time, and the procedural posture of its cert petition was murky.

Based on a quick reading of the cert petition, it seemed to me that BP mischaracterized both the settlement agreement and the lower courts' orders so it could manufacture a claimed "circuit split."   BP characterized the class as including people who suffered no damage traceable to Deepwater Horizon, but that didn't seem accurate to me.  I think that under the settlement agreement (which is 1,000 pages long and I admittedly have not read it), the claimants have to file a form that certifies that they did suffer such damage.  BP, which agreed to that in the settlement, later changed its mind and said that wasn't good enough proof.

In 2012 the Court also denied cert in the DB Investments (a/k/a De Beers Diamonds) antitrust class action, which was cited in BP's cert petition.  Objectors to the De Beers settlement agreement urged a similar argument that some class members had no cognizable claim.

 

December 8, 2014 in Class Actions, Mass Torts, Supreme Court Cases | Permalink | Comments (0)

Tuesday, October 14, 2014

The Advisory Committee's Gargantuan New Agenda

Far from resting on its laurels after pushing through the latest round of defense-oriented amendments to the FRCP, the Advisory Committee on Civil Rules continues its assault.  This time, among many other things, it's tackling class actions – as if the Supreme Court wasn't already doing a pretty good job of eviscerating class actions by itself.

The 588-page agenda book for the Committee's meeting in Washington, D.C. on October 30-31, 2014 is on the U.S. Courts website here.

October 14, 2014 in Class Actions, Federal Courts, Federal Rules of Civil Procedure | Permalink | Comments (0)

Monday, September 29, 2014

Supreme Court Dismisses IndyMac Case on Statute of Limitations in Class Actions

SCOTUSblog reports that the Court dismissed the writ of certiorari in Public Employees' Retirement System v. IndyMac MBS, Inc. as improvidently granted.   The issue in the case was whether the filing of a putative class action serves, under American Pipe & Construction Co. v. Utah, to satisfy the three year time limitation in § 13 of the Securities Act with respect to the claims of putative class members.

The Court was set to hear argument in the case on Monday, but became aware of a pending settlement proposal.

 

 

September 29, 2014 in Class Actions, Supreme Court Cases | Permalink | Comments (0)

Sunday, August 17, 2014

Wasserman on Mass Torts, Future Claimants & Global Peace

Rhonda Wasserman (Pittsburgh) has posted on SSRN a draft of her article, Future Claimants and the Quest for Global Peace, which will appear in the Emory Law Journal. Here’s the abstract: 

In the mass tort context, the defendant typically seeks to resolve all of the claims against it in one fell swoop.  But the defendant’s interest in global peace is often unattainable in cases involving future claimants – those individuals who have already been exposed to a toxic material or defective product, but whose injuries have not yet manifested sufficiently to support a claim or motivate them to pursue it.  The class action vehicle cannot be used because it is impossible to provide reasonable notice and adequate representation to future claimants.  Likewise, non-class aggregate settlements cannot be deployed because future claimants will not have contacted attorneys whose participation is critical to those alternative methods of dispute resolution. 

In lieu of class actions and non-class aggregate settlements, this Article proposes a hybrid public-private claims resolution process designed to provide many of the benefits of global peace, while preserving the constitutional rights of future claimants and ensuring them fair compensation as their injuries manifest.  Under this proposal, defendants would secure judicial approval of a fair and reasonable class action settlement of the current claims and then, through an extra-judicial process, make fair offers on comparable terms to future claimants as their claims mature, adjusted to take into account the time value of money and intervening changes in legal doctrine and medical advances.  Since the class action settlement would not purport to bind the future claimants, their constitutional rights would be protected.  And even though the future claimants would not be bound by the class action judgment nor obligated to accept the fair offers on comparable terms, they would have an incentive to accept them, rather than sue in tort, because they would be assured fair compensation without incurring the costs of litigation.

 

 

August 17, 2014 in Class Actions, Mass Torts, Recent Scholarship | Permalink | Comments (0)

Saturday, August 2, 2014

No Federal Jurisdiction Over Deceptive Marketing Claims Against Credit Card Companies

From the summary prepared by court staff of the Ninth Circuit:

Reversing the district court’s denial of a motion for a remand to state court, the panel held that neither the federal question statute nor the Class Action Fairness Act provided the district court with subject matter jurisdiction over the Hawaii Attorney General’s complaints against six credit card providers, alleging that each violated state law by deceptively marketing and improperly enrolling cardholders in add-on credit card products.

Joining the Fifth Circuit, the panel held that the Attorney General’s claims were not preempted by National Bank Act provisions completely preempting state law claims challenging interest rates charged by national banks. . . . [T]he complaints’ state law claims were not preempted because they did not challenge the “rate of interest” that the card providers charged. Instead, . . . the complaints’ unfair and deceptive practice claims targeted alleged marketing misrepresentations, and their unjust enrichment claims arose from the purported failure to obtain consent before enrolling consumers in debt protection products.

Agreeing with the Second, Third, and Fourth Circuits, the panel held that CAFA did not provide an alternate basis for jurisdiction because the Attorney General brought civil enforcement actions or common law parens patriae suits, rather than class actions, and the complaints specifically disclaimed class status.

State of Hawaii ex rel. Louie v. HSBC Bank Nevada, N.A., No. 1:12-cv-00266-LEKKSC (Aug. 1, 2014).

August 2, 2014 in Class Actions, Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (0)

Saturday, July 26, 2014

Wiessner on Mass Claims in the Context of Argentina's Debt Defaults

My colleague Siegfried Wiessner, Professor of Law and the Director of St. Thomas' Graduate Program in Intercultural Human Rights, has posted on SSRN his article Democratizing International Arbitration? Mass Claims Proceedings in Abaclat v. Argentina.  This is a fascinating account of the decision of the International Center for the Settlement of Investment Disputes to allow some 60,000 individual Italian bondholders to proceed against Argentina for its default on those bonds – the first mass claim presented before an ICSID tribunal.  In support of the ICSID's decision, Professor Wiessner surveys US class action practice, the European Union's collective redress mechanisms (including representative collective actions, group actions, and test cases), and International Mass Claims Commissions.

Abstract:     

Mass claims have been accepted, in principle, in the landmark 2011 ICSID Decision on Jurisdiction and Admissibility of Abaclat v. Argentina. Welcoming this development as providing novel access for the common man and woman to international investment arbitration, the author explores related streamlined procedures in domestic and international law -- such as class actions and international mass claims commissions as well as vanguard use of technology and statistical methods -- that allow the processing of a high number of claims arising from common factual and/or legal issues with a view toward elaborating rules and mechanisms tailor-made for the context of international arbitration.

July 26, 2014 in Class Actions, International Courts, International/Comparative Law | Permalink | Comments (0)

Tuesday, June 24, 2014

SCOTUS Upholds Basic v. Levinson, But Gives Halliburton A Partial Victory

In the latest Supreme Court round of Halliburton Co. v. Erica P. John Fund, Inc., the Court declined Halliburton's invitation to overrule Basic v. Levinson,  but remanded to allow Halliburton, at the class certification stage, to attempt to rebut the presumption that the alleged misrepresentations actually affected the price of the stock.  The Court's final two paragraphs:

More than 25 years ago [in Basic], we held that plaintiffs could satisfy the reliance element of the Rule 10b–5 cause of action by invoking a presumption that a public, material misrepresentation will distort the price of stock traded in an efficient market, and that anyone who purchases the stock at the market price may be considered to have done so in reliance on the misrepresentation. We adhere to that decision and decline to modify the prerequisites for invoking the presumption of reliance. But to maintain the consistency of the presumption with the class certificationrequirements of Federal Rule of Civil Procedure 23, defendants must be afforded an opportunity before class certification to defeat the presumption through evidencethat an alleged misrepresentation did not actually affect the market price of the stock.


Because the courts below denied Halliburton that opportunity, we vacate the judgment of the Court of Appeals for the Fifth Circuit and remand the case for further proceedings consistent with this opinion.

Some coverage of the case:

New York Times

Wall Street Journal

June 24, 2014 in Class Actions, Recent Decisions, Supreme Court Cases | Permalink | Comments (0)

Thursday, April 17, 2014

Call for Papers: Akron L. Rev. Symposium Issue on Class Actions

SYMPOSIUM ISSUE

UNIVERSITY OF AKRON LAW REVIEW

 

The Class Action After A Decade of Roberts Court Decisions 

The Akron Law Review invites academic papers on the reasoning, dimensions, and possible impacts of one or more of the class action or other multi-party action cases decided by the “Roberts Court” (2005-present) We welcome papers of any length and request submission before September 14, 2014. Publication will occur in spring of 2015. 

As the Supreme Court of the United States recognized:

The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.

Amchem Products, Inc. v. Windsor, 117 S.Ct. 2231, 2246 (1997) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)). Earlier in 2014, the Court refused to intervene in a class action brought by consumers in “the case of the moldy washing machines” against three large corporations. Sears, Roebuck & Co. v. Butler, 13-430, Whirlpool v. Glazer, 13-431, and BSM Home Appliances v. Cobb, 13-138. Although a victory for consumers, the decision is arguably an anomaly amidst recent pro-business cases restricting plaintiffs’ class certification. See e.g., Comcast v. Berend, 133 S. Ct. 1426 (2013); AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011); Wal-Mart v. Dukes, 131 S. Ct. 2541 (2011). Multi-party litigation may well be changing, and the Akron Law Review seeks your contribution to the conversation.

Your contribution to this conversation will be both timely and visible. The Washington and Lee Law Review Rankings ranked the Akron Law Review as a top 55 general, student-edited journal (in combined score based on impact factor and citation). Additionally, Ohio Supreme Court Justices cited the Akron Law Review more times in the past decade than any other journal. See Jared Klaus, Law Reviews: An Undervalued Resource, 26 Ohio Lawyer, May/June 2012, at 28.

 You may submit manuscripts by email or regular mail. To submit by email, please forward a copy of your article in Word format to lawreview@uakron.edu. You may submit a hardcopy to: Justin M. Burns, Editor-in-Chief, Akron Law Review, The University of Akron School of Law, 150 University Avenue, Akron, Ohio 44325. If you have any questions, please feel free to contact Justin Burns at jmb349@zips.uakron.edu.

April 17, 2014 in Class Actions, Conferences/Symposia | Permalink | Comments (0)

Tuesday, April 15, 2014

Wasserman on Cy Pres Distributions of Class Action Settlements

Rhonda Wasserman (Pittsburgh) has posted on SSRN a draft of her article, Cy Pres in Class Action Settlements, which will be published in the Southern California Law Review. Here’s the abstract: 

Monies reserved to settle class action lawsuits often go unclaimed because absent class members cannot be identified or notified or because the paperwork required is too onerous. Rather than allow the unclaimed funds to revert to the defendant or escheat to the state, courts are experimenting with cy pres distributions – they award the funds to charities whose work ostensibly serves the interests of the class “as nearly as possible.”

Although laudable in theory, cy pres distributions raise a host of problems in practice. They often stray far from the “next best use,” sometimes benefitting the defendant more than the class. Class counsel often lacks a personal financial interest in maximizing direct payments to class members because its fee is just as large if the money is paid cy pres to charity. And if the judge has discretion to select the charitable recipient of the unclaimed funds, she may select her alma mater or another favored charity, thereby creating an appearance of impropriety.

To minimize over-reliance on cy pres distributions and to tailor them to serve the best interests of the class, the Article makes four pragmatic recommendations. First, to align the interests of class counsel and the class, courts should presumptively reduce attorneys’ fees in cases in which cy pres distributions are made. Second, to ensure that class members and courts have the information they need to assess the fairness of a settlement that contemplates a cy pres distribution, class counsel should be required to make a series of disclosures when it presents the settlement for judicial approval. Third, to inject an element of adversarial conflict into the fairness hearing and to ensure that the court receives the information needed to scrutinize the proposed cy pres distribution, the court should appoint a devil’s advocate to oppose it. Finally, the court should be required to make written findings in connection with its review of any class action settlement that contemplates a cy pres distribution.

 

 

April 15, 2014 in Class Actions, Recent Scholarship | Permalink | Comments (0)

Tuesday, April 8, 2014

Seiner on Issue Class Certification

Joe Seiner (South Carolina) has posted on SSRN a draft of his article The Issue Class, which will be published in the Boston College Law Review. Here’s the abstract:

In Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), the Supreme Court refused to certify a proposed class of one and a half million female workers who had alleged that the nation’s largest private employer had discriminated against them on the basis of their sex. The academic response to the case has been highly critical of the Court’s decision. This paper does not weigh in on the debate of whether the Court missed the mark. Instead, this Article addresses a more fundamental question that has gone completely unexplored. Given that Wal-Mart is detrimental to plaintiffs, what is the best tool currently available for workers to pursue systemic employment discrimination claims?

Surveying the case law and federal rules, this paper identifies one little used procedural tool that offers substantial potential to workplace plaintiffs seeking to pursue systemic claims — issue class certification. Rule 23(c)(4)(A) of the Federal Rules of Civil Procedure permits the issue class, allowing common issues in a class case to be certified while the remaining issues are litigated separately. The issue class is typically used where a case has a common set of facts but the plaintiffs have suffered varying degrees of harm. This is precisely the situation presented by many workplace class action claims.

This paper explains how the issue class is particularly useful for systemic discrimination claims. The paper further examines why traditional class treatment often fails in workplace cases, and addresses how the plaintiffs in Wal-Mart could have benefited from issue class certification. Finally, this Article discusses some of the implications of using the issue class in employment cases, and situates the paper in the context of the broader academic scholarship. This paper seeks to fill the current void in the academic scholarship by identifying one overlooked way for plaintiffs to navigate around the Supreme Court’s decision.

 

 

April 8, 2014 in Class Actions, Recent Scholarship | Permalink | Comments (0)

Thursday, March 20, 2014

TRO Entered Against Mt. Gox in Class Action

I have admittedly fallen down on my self-appointed job of reporting on bitcoin litigation.  Somewhat belatedly, I provide an update on some of the litigation surrounding the collapse of Mt. Gox, one of the earliest, largest, and best-known bitcoin exchanges. 

On Feb. 27, 2014, a putative class action, Greene v. Mt. Gox Inc., Mt. Gox KK, Tibanne KK, and Mark Karpeles, No. 1:14-cv-1437, was filed in the Northern District of Illinois.  Subject matter jurisdiction was premised on the Class Action Fairness Act.  The complaint alleged counts for consumer fraud, common law fraud, negligence, and conversion, among other causes of action.

Two classes are proposed:

(1) Payment Class: All persons in the United States who paid a fee to Mt. Gox to buy, sell, or otherwise trade bitcoins.

(2) Frozen Currency Class: All persons in the United States who had bitcoins or Fiat Currency stored with Mt. Gox on Feb. 7, 2014.

On March 9, 2014, Mt. Gox Co., Ltd., which apparently is also known as Mt. Gox KK, filed a bankruptcy petition under Chapter 15 (foreign proceeding) in the Northern District of Texas, No. 3:14-bk-31229.  Under the automatic stay, the Greene proceeding was stayed against defendant Mt. Gox KK.

However, as against the remaining defendants, Judge Feinerman in the Greene case entered a temporary restraining order on March 11, 2014.  The court ruled that plaintiff had demonstrated a likelihood of success on the merits with respect to claims under the Illinois Consumer Fraud Act, common law fraud, negligence, conversion, and for an accounting, and restrained the defendants from selling, transferring, disposing of, or concealing any of their assets or records, including preservation of their web site. 

March 20, 2014 in Class Actions, In the News | Permalink | Comments (0)

Monday, March 10, 2014

New Cert Grant on Statute of Limitations in Class Action

The Supreme Court has granted certiorari in Public Employees' Retirement System of Mississippi v. IndyMac MDS, Inc.

Question presented:

Issue: Whether the filing of a putative class action serves, under American Pipe & Construction Co. v. Utah, to satisfy the three year time limitation in § 13 of the Securities Act with respect to the claims of putative class members.

SCOTUSblog has a post on the case.

March 10, 2014 in Class Actions, Supreme Court Cases | Permalink | Comments (0)

Saturday, March 1, 2014

SCOTUS Holds SLUSA Does Not Preclude State-Law Class Action

The Supreme Court, in Chadbourne & Parke LLC v. Troice, in an opinion by Justice Breyer, held that the Securities Litigation Uniform Standards Act of 1998 did not forbid "a class action in which the plaintiffs allege (1) that they 'purchase[d]' uncovered securities (certificates of deposit that are not traded on any national exchange), but (2) that the defendants falsely told the victims that the uncovered securities were backed by covered securities."

An analysis of the opinion is on SCOTUSblog here.

March 1, 2014 in Class Actions, Recent Decisions, Supreme Court Cases | Permalink | Comments (0)

Tuesday, February 25, 2014

Class Actions and Mandatory Arbitration: GVR on CarMax Cert Petition

Plaintiffs filed class complaints against CarMax, alleging wage and hour violations.  The trial court granted CarMax's motion to compel arbitration, and the California Court of Appeals reversed. 

SCOTUS granted CarMax's petition for certiorari, vacated the judgment, and remanded the case for further consideration in light of American Express Co. v. Italian Colors Restaurant, 570 U.S. ___ (2013).

February 25, 2014 in Class Actions, Recent Decisions | Permalink | Comments (0)

Monday, February 24, 2014

The Washing Machine Trilogy: SCOTUS Denies Cert. in Three Class Actions

Today the Supreme Court denied certiorari in three cases that have come to be known as the “smelly washing machine” class actions. In all three, the lower court certified the class action, and the defendants—invoking Wal-Mart and Comcast—sought certiorari. The cases are:

 

February 24, 2014 in Class Actions, Recent Decisions, Supreme Court Cases | Permalink | Comments (0)

Tuesday, January 14, 2014

Judge Denies Approval of NFL Concussion Class Action

From The Legal Intelligencer:

The federal judge handling the NFL concussion case has denied preliminary approval of the $760 million settlement agreed to by the league and its former players.  Read more . . .

 

January 14, 2014 in Class Actions | Permalink | Comments (0)

Supreme Court Holds Suit by Mississippi not a "Mass Action" Under CAFA

The Supreme Court has issued Mississippi ex rel. Hood v. AU Optronics Corp.

Justice Sotomayor wrote the opinion for a unanimous Court.

From the reporter's syllabus:

Petitioner Mississippi sued respondent liquid crystal display (LCD) manufacturers in state court,alleging violations of state law and seeking, inter alia, restitution for LCD purchases made by itself and its citizens. Respondents sought to remove the case to federal court. The District Court held that the suit qualified as a mass action under §1332(d)(11)(B)(i), but remanded the suit to state court on the ground that it fell within CAFA’s“general public” exception, §1332(d)(11)(B)(ii)(III). The Fifth Circuit reversed, agreeing with the District Court that the suit was a massaction but finding the general public exception inapplicable.
Held: Because Mississippi is the only named plaintiff, this suit does not constitute a mass action under CAFA.

January 14, 2014 in Class Actions, Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (1)

Thursday, January 9, 2014

Tort Reformer Urges Supreme Court to "Rein in" "Activist" Judge Posner

In National Review online, Tiger Joyce, president of the American Tort Reform Association, urges the Supreme Court to grant cert in Sears, Roebuck & Co. v. Butler and a similar case.  Adam Steinman reported on the Butler opinion here.

In Butler, Judge Posner reaffirmed class certification in a case alleging mold growth in washing machines, after the Supreme Court vacated the Seventh Circuit's earlier judgment reported at 702 F.3d 359 (7th Cir.2012) and remanded the case for reconsideration in light of Comcast Corp. v. Behrend. 

Sears petitioned for certiorari.

ATRA president Joyce urges the Supreme Court to grant the petition and "rein[] in crazy class-action lawsuits" and send a message to "activist" and "disrespectful" lower courts.

January 9, 2014 in Class Actions | Permalink | Comments (0)

Monday, November 18, 2013

Another SCOTUS "Statement" on Class Actions (While Denying Cert.)

Earlier this month we covered Chief Justice Roberts’ statement in Marek v. Lane, a case challenging a class action settlement that included cy pres remedies. In his statement, Chief Justice Roberts agreed with the decision to deny certiorari but raised a number of concerns about cy pres remedies, concluding that “[i]n a suitable case, this Court may need to clarify the limits on the use of such remedies.”

Today, Justice Alito issued a similar statement “respecting the denial of the petition for writ of certiorari” in another case involving a class action settlement: Martin v. Blessing (No. 13-169). You can find his six-page statement in today’s order list, beginning on page 13 of the pdf file. It begins:

The petition in this case challenges a highly unusual practice followed by one District Court Judge in assessing the adequacy of counsel in class actions. This judge insists that class counsel “ensure that the lawyers staffed on the case fairly reflect the class composition in terms of relevant race and gender metrics.” App. to Pet. for Cert. 35a. The uniqueness of this practice weighs against review by this Court, but the meaning of the Court’s denial of the petition should not be misunderstood.

The judge is U.S. District Judge Harold Baer of the Southern District of New York, and Justice Alito writes that “[b]ased on the materials now before us, I am hard-pressed to see any ground on which Judge Baer’s practice can be defended.” [p.3]

Continue reading

November 18, 2013 in Class Actions, Federal Courts, Federal Rules of Civil Procedure, Recent Decisions, Standing, Supreme Court Cases | Permalink | Comments (0)