Tuesday, August 10, 2021
Adam Zimmerman has posted on SSRN a draft of his article The Class Appeal, which will be published in the University of Chicago Law Review. Here’s the abstract:
For a wide variety of claims against the government, the federal courthouse doors are closed to all but those brought by powerful, organized interests. This is because hundreds of laws—colloquially known as “channeling statutes”—require disaffected groups to contest government bodies directly in appellate courts that hear cases individually. In theory, these laws promise quick, consistent, and authoritative legal decisions in appellate courts. In fact, without class actions, government bodies avoid judicial review by selectively avoiding claims brought by some of the most vulnerable claimants in the administrative state—from veterans and immigrants to coal miners, laborers, and the disabled.
This Article proposes a novel solution: courts of appeals should hear class actions themselves. In so doing, courts high in the judicial hierarchy would continue to authoritatively decide important legal questions involving government institutions, while ensuring groups of similar, unrepresented parties finally get their day in court. While appellate class actions might sound like a strange procedural innovation, appellate courts already have power do this. Relying on the All Writs Act, appellate courts long ago created ad-hoc procedures modeled after class actions to respond to systemic government harm.
This Article is the first to examine nascent experiments with appellate class actions. It shows that, contrary to popular belief, appellate courts can hear class actions and explains why they should do so. In cases challenging systemic abuse, this power has become vital not only to level the playing field between the government and the governed, but to protect courts’ core function in our separation of powers—to hear claims, interpret law, and grant meaningful relief. Without classwide judgments in such cases, courts risk ceding power to the executive branch to decide for itself when judicial decisions limit its own unlawful policies.
Wednesday, August 4, 2021
Yesterday, the full Ninth Circuit voted to vacate the April panel decision in Olean Wholesale Grocery v. Bumble Bee Foods and to hear the case en banc.
One of the important issues in the case is the extent to which a court must assess the standing of potential class members in deciding whether to certify a class action. The majority opinion, authored by Judge Bumatay, had held that “the mere presence of some noninjured class members does not defeat predominance, but we hold that the number of uninjured class members must be de minimis.” Judge Hurwitz dissented from this part of the opinion, arguing instead that “[t]he critical question is not what percentage of class members is injured, but rather whether the district court can economically ‘winnow out’ uninjured plaintiffs to ensure they cannot recover for injuries they did not suffer.”
In June, the Supreme Court flagged this issue (without resolving it) in footnote 4 of Justice Kavanaugh’s majority opinion in TransUnion. “We do not here address the distinct question whether every class member must demonstrate standing before a court certifies a class.”
Tuesday, July 27, 2021
Law & Contemporary Problems Issue in Honor of Francis McGovern: Innovations in Complex Litigation and Settlement
Duke’s Law & Contemporary Problems has published an issue in honor of Francis McGovern, Innovations in Complex Litigation and Settlement. Here are the details and links to the symposium contributions:
Friday, June 25, 2021
Today the Supreme Court issued its decision in TransUnion LLC v. Ramirez (covered earlier here). It’s 5-4, with Justice Kavanaugh writing the majority opinion joined by Chief Justice Roberts and Justices Alito, Gorsuch, and Barrett. Justice Thomas writes one dissent, which is joined by Justices Breyer, Sotomayor, and Kagan. And Justice Kagan writes another dissent, which is joined by Justices Breyer and Sotomayor.
The case is a class action bringing claims under the federal Fair Credit Reporting Act (FCRA), and the key issue in the case is Article III standing. The majority finds that Article III was satisfied for some class members and claims, but was not satisfied for others. From the majority’s introduction:
In this case, a class of 8,185 individuals sued TransUnion, a credit reporting agency, in federal court under the Fair Credit Reporting Act. The plaintiffs claimed that TransUnion failed to use reasonable procedures to ensure the accuracy of their credit files, as maintained internally by TransUnion. For 1,853 of the class members, TransUnion provided misleading credit reports to third-party businesses. We conclude that those 1,853 class members have demonstrated concrete reputational harm and thus have Article III standing to sue on the reasonable-procedures claim. The internal credit files of the other 6,332 class members were not provided to third-party businesses during the relevant time period. We conclude that those 6,332 class members have not demonstrated concrete harm and thus lack Article III standing to sue on the reasonable-procedures claim.
In two other claims, all 8,185 class members complained about formatting defects in certain mailings sent to them by TransUnion. But the class members other than the named plaintiff Sergio Ramirez have not demonstrated that the alleged formatting errors caused them any concrete harm. Therefore, except for Ramirez, the class members do not have standing as to those two claims.
This was not the result that we urged in this legal scholars amicus brief, which was joined by myself, Tommy Bennett, Erwin Chemerinsky, Heather Elliott, Steve Vladeck, and Howard Wasserman. We had argued in favor of Article III standing for the entire class as to all of the claims they proved at trial. One point that we made, however, found some purchase in Justice Thomas’s dissenting opinion—that rejecting Article III standing in federal court would not necessarily stop these same federal claims from being pursued by these same plaintiffs in state court. Here’s footnote 9 from the Thomas dissent:
Today’s decision might actually be a pyrrhic victory for TransUnion. The Court does not prohibit Congress from creating statutory rights for consumers; it simply holds that federal courts lack jurisdiction to hear some of these cases. That combination may leave state courts—which “are not bound by the limitations of a case or controversy or other federal rules of justiciability even when they address issues of federal law,” ASARCO Inc. v. Kadish, 490 U. S. 605, 617 (1989)—as the sole forum for such cases, with defendants unable to seek removal to federal court. See also Bennett, The Paradox of Exclusive State-Court Jurisdiction Over Federal Claims, 105 Minn. L. Rev. 1211 (2021). By declaring that federal courts lack jurisdiction, the Court has thus ensured that state courts will exercise exclusive jurisdiction over these sorts of class actions.
As to Article III standing generally, Justice Thomas’s final paragraph is notable:
Ultimately, the majority seems to pose to the reader a single rhetorical question: Who could possibly think that a person is harmed when he requests and is sent an incomplete credit report, or is sent a suspicious notice informing him that he may be a designated drug trafficker or terrorist, or is not sent anything informing him of how to remove this inaccurate red flag? The answer is, of course, legion: Congress, the President, the jury, the District Court, the Ninth Circuit, and four Members of this Court.
In addition to Article III standing, TransUnion presented a question regarding whether the class action satisfied Rule 23(a)’s typicality requirement. The Court did not address that question, however: “In light of our conclusion about Article III standing, we need not decide whether Ramirez’s claims were typical of the claims of the class under Rule 23. On remand, the Ninth Circuit may consider in the first instance whether class certification is appropriate in light of our conclusion about standing.”
Monday, June 21, 2021
Today the Supreme Court issued its decision in Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System. Justice Barrett writes the opinion, which is unanimous as to some parts and a majority opinion as to the rest. Here’s the full breakdown:
BARRETT, J., delivered the opinion of the Court, in which ROBERTS, C. J., and BREYER, KAGAN, and KAVANAUGH, JJ., joined in full; in which THOMAS, ALITO, and GORSUCH, JJ., joined as to Parts I and II–A; and in which SOTOMAYOR, J., joined as to Parts I, II–A–1, and II–B. SOTOMAYOR, J., filed an opinion concurring in part and dissenting in part. GORSUCH, J., filed an opinion concurring in part and dissenting in part, in which THOMAS and ALITO, JJ., joined.
The case involves a securities-fraud class action against Goldman Sachs. The district court certified the class and the Second Circuit affirmed class certification. Here’s how Justice Barrett summarizes the decision:
In this Court, Goldman argues that the Second Circuit erred twice: first, by holding that the generic nature of its alleged misrepresentations is irrelevant to the price impact inquiry; and second, by assigning Goldman the burden of persuasion to prove a lack of price impact.
On the first question, the parties now agree, as do we, that the generic nature of a misrepresentation often is important evidence of price impact that courts should consider at class certification. Because we conclude that the Second Circuit may not have properly considered the generic nature of Goldman’s alleged misrepresentations, we vacate and remand for the Court of Appeals to reassess the District Court’s price impact determination. On the second question, we agree with the Second Circuit that our precedents require defendants to bear the burden of persuasion to prove a lack of price impact by a preponderance of the evidence. We emphasize, though, that the burden of persuasion should rarely be outcome determinative.
Friday, March 26, 2021
Now on the Courts Law section of JOTWELL is Jasminka Kalajdzic’s essay, AI & the End of Lawyers… Defeating Class Certification. Jasminka reviews Peter Salib’s recent article, Artificially Intelligent Class Actions, Tex. L. Rev. (forthcoming).
Monday, February 8, 2021
Last week the U.S. Court of Appeals for the Eleventh Circuit issued an important decision on class actions, Cherry v. Dometic Corp. Judge William Pryor’s unanimous opinion for the panel rejects the view that “administrative feasibility” is a requirement for class certification under Rule 23.
The court does recognize that administrative feasibility is “relevant” for Rule 23(b)(3) class actions—because of the “manageability criterion of Rule 23(b)(3)(D).” But even so, “the district court must balance its manageability finding against other considerations.” Therefore, “administrative difficulties—whether in class-member identification or otherwise—do not alone doom a motion for certification.”
Wednesday, January 27, 2021
Today on the Courts Law section of JOTWELL is Christine Bartholomew’s essay, The Reality of Class-Action Appeals. Christine reviews Bryan Lammon’s recent article, An Empirical Study of Class-Action Appeals.
Monday, January 11, 2021
Today’s lengthy Supreme Court order list includes a denial of certiorari in IQVIA Inc. v. Mussat. The Seventh Circuit’s decision below (covered earlier here) had concluded that “the principles announced in Bristol-Myers do not apply to the case of a nationwide class action filed in federal court under a federal statute.”
The question presented in the cert petition was “[w]hether a district court with jurisdiction coextensive with a state court in the district can exercise personal jurisdiction over absent class members’ claims as part of a putative class action when the court concededly could not exercise personal jurisdiction over the absent class members’ claims if they had been brought in individual suits.”
Wednesday, December 16, 2020
Today the Supreme Court granted certiorari in TransUnion LLC v. Ramirez, which presents the question: “Whether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered.”
(The cert petition presented a second question relating to punitive damages, but the grant is limited to Question 1.)
Friday, October 9, 2020
Now on the Courts Law section of JOTWELL is Robin Effron’s essay, #Getyour$$now!: A New Plan for Class Action Notice and Administration. Robin reviews Amanda Rose’s article, Classaction.gov, U. Chi. L. Rev. (forthcoming 2020).
Friday, September 25, 2020
Yesterday, the Sixth Circuit issued a 2-1 decision in In re National Prescription Opiate Litigation, a much-anticipated case about the certification of a negotiation class in the Opioid MDL.
The majority reversed the district court’s certification of a negotiation class. Judge Clay’s majority opinion called it a “novel form of class action.” He observes that Rule 23 “does not mention certification for purposes of ‘negotiation’ or anything along those lines” and writes that “a new form of class action, wholly untethered from Rule 23, may not be employed by a court.” He also found that the district court’s certification of the negotiation class had “papered over the predominance inquiry” required by Rule 23(b)(3).
Judge Moore disagrees, with a 40+ page dissent that begins:
The Federal Rules of Civil Procedure were not written and have never been interpreted to manacle district courts that innovate within the Rules’ textual borders. The district court has breathed life into a novel concept—a class certified for negotiation purposes—to aid in its Promethean duty to secure the just, speedy, and inexpensive resolution of this byzantine multidistrict litigation. We should be in the business of encouraging, not exterminating, such resourcefulness. Certifying a negotiation class honors the Rules’ equitable heritage, complements the settlement class’s history, hews to Federal Rule of Civil Procedure 23’s textual requisites, and stirs no constitutional or policy qualms. So, with respect, I dissent.
The entire dissent is worth a read. Before proceeding to analyze whether the district court properly certified the proposed negotiation class, Part I of Judge Moore’s opinion addresses the proper approach to interpreting and applying the Federal Rules of Civil Procedure, and Part II provides an engaging history of Rule 23.
Tuesday, August 4, 2020
Elizabeth Cabraser and I have posted on SSRN our recent article, What Is a Fair Price for Objector Blackmail? Class Actions, Objectors, and the 2018 Amendments to Rule 23, 24 Lewis & Clark L. Rev. 549 (2020). Here’s the abstract:
As part of a symposium addressing what the next 50 years might hold for class actions, mass torts, and MDLs, this Article examines a recent amendment to Rule 23 that offers a new solution to the persistent problem of strategic objections. Most significantly, Rule 23 now requires the district judge to approve any payments made to class members in exchange for withdrawing or forgoing challenges to a class action settlement. Although the new provision is still in its infancy, it has already been deployed to thwart improper objector behavior and to bring for-pay objection practice out of the shadows. The 2018 changes — along with other on-the-ground developments — are important steps toward improving the class action settlement process.
Thursday, July 30, 2020
Bob Klonoff has posted drafts of two articles on SSRN: Class Action Objectors: The Good, the Bad, and the Ugly, which is forthcoming in the Fordham Law Review; and The Judicial Panel on Multidistrict Litigation: The Virtues of Unfettered Discretion, which is forthcoming in the University of Missouri-Kansas City Law Review.
Here are the abstracts:
Tuesday, July 28, 2020
The Sixth Circuit will hear oral argument this morning (9:00 am EDT) in the Opioid MDL (In re: Nat’l Prescription Opiate Litigation, No. 19-4097 & 19-4099).
You can listen live to the audio at this link. Sitting on the panel are Judges Moore, Clay, and McKeague.
Tuesday, July 21, 2020
First Circuit Finds Amazon's Arbitration Provision Unenforceable in Class Action by Last-Mile Drivers
On Friday, the First Circuit issued its decision in Waithaka v. Amazon.com, Inc. Judge Lipez’s decision begins:
This putative class action requires us to decide whether employment contracts of certain delivery workers -- those locally transporting goods on the last legs of interstate journeys -- are covered by the Federal Arbitration Act ("FAA" or the "Act"), given its exemption for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. * * * After close examination of the text and purpose of the statute and the relevant precedent, we now hold that the exemption encompasses the contracts of transportation workers who transport goods or people within the flow of interstate commerce, not simply those who physically cross state lines in the course of their work.
Plaintiff-appellee Bernard Waithaka, a so-called "last mile" delivery driver for [Amazon] falls within this category of transportation workers whose contracts are exempt from the FAA. Hence, we conclude that the FAA does not govern the enforceability of the mandatory arbitration provision of his employment agreement with appellants. Because that provision prohibits proceeding on a class basis, either in the arbitral or judicial forum, we also agree with the district court that the arbitration provision is unenforceable under state law.
Friday, June 5, 2020
Today the Lewis & Clark Law Review posted the symposium issue, featuring contributions by Jennie Anderson; Bob Klonoff; Teddy Rave & Zach Clopton; Dave Marcus; David Noll; Lynn Baker & Steve Herman; Josh Davis & Brian Devine; Alexi Lahav; Elizabeth Cabraser & Adam Steinman; Bob Bone; Gerson Smoger; Judith Resnik, Stephanie Garlock & Annie Wang; Brian Fitzpatrick; and Arthur Miller.
My personal thanks to the Pound Institute, Lewis & Clark, and Bob Klonoff for organizing a wonderful symposium, and to the law review editors for their excellent editorial work. It’s great to see the finished product!
Thursday, May 28, 2020
Bryan Lammon has posted on SSRN a draft of his article, Interlocutory Class-Certification Appeals Under Rule 23(f). Here’s the abstract:
This Article presents my empirical study of petitions to appeal from class-certification decisions under Federal Rule of Civil Procedure 23(f). I created a dataset of Rule 23(f) petitions filed from 2013 through 2017. The data revealed three insights on Rule 23(f) and class actions generally.
First are the basic findings. Litigants filed over 850 petitions to appeal from 2013 through 2017. The courts of appeals granted about 25% of them. And when appellate courts granted permission to appeal, they reversed the district court's class-certification decision about 54% of the time.
Second, I used the data to test two common criticisms of Rule 23(f): (1) that the rule favors defendants, and (2) that the circuits apply the rule inconsistently. I found little empirical support for either of these criticisms. And what little evidence there is comes with some significant caveats.
Finally, the data shed some light on the largely unknown universe of class actions. We have very little hard data on class actions — how many are brought, the types of cases, their success rate, etc. And some question whether the class action is still a viable tool for plaintiffs to obtain relief. My study provides a glimpse into one corner of the class-action universe. And, perhaps surprisingly, it's a corner in which plaintiffs are not always losing: in the Rule 23(f) context, the courts of appeals reached a plaintiff-favorable outcome over 50% of the time.
Wednesday, March 25, 2020
Following on the heels of decisions by the D.C. Circuit and the Seventh Circuit earlier this month, the Fifth Circuit issued a decision today that touches on the relationship between personal jurisdiction and class actions in the wake of the Supreme Court’s Bristol-Myers decision. Specifically, the panel decision in Cruson v. Jackson National Life Insurance Co. addresses whether the defendant had waived its argument that the Texas district court lacked personal jurisdiction with respect to the claims of class members outside of Texas.
In the district court, the defendant (Jackson) had filed a Rule 12 pre-answer motion to dismiss for lack of subject-matter jurisdiction and failure to state a claim but did not assert a lack of personal jurisdiction until it served its answer. The district court found this constituted a waiver of the lack-of-personal-jurisdiction defense, but today’s Fifth Circuit decision disagrees. Judge Duncan’s opinion states:
“Jackson’s objection to personal jurisdiction concerned only class members who were non-residents of Texas. Those members, however, were not yet before the court when Jackson filed its Rule 12 motions. What brings putative class members before the court is certification: Certification of a class is the critical act which reifies the unnamed class members and, critically, renders them subject to the court’s power. When Jackson filed its pre-certification Rule 12 motions, however, the only live claims belonged to the named plaintiffs, all Texas residents as to whom Jackson conceded personal jurisdiction. Thus, at that time, a personal jurisdiction objection respecting merely putative class members was not ‘available,’ as Rule 12(g)(2) requires for waiver.” [Slip Op. at 9-10 (citations, internal quotation marks, and footnotes omitted)]
The Fifth Circuit did not, however, address the merits of the defendant’s personal jurisdiction argument. In footnote 7, Judge Duncan states:
“We decline Jackson’s request to address the merits of its personal jurisdiction defense for the first time on appeal. . . . Because we find that Jackson did not waive the defense, and because we vacate the district court’s certification order and remand for further proceedings, Jackson is free to raise the defense again should plaintiffs seek to re-certify a class. We express no opinion on the merits of the personal jurisdiction issue, should it be raised again on remand.”
Thursday, March 12, 2020
Yesterday the Seventh Circuit did what the D.C. Circuit refrained from doing one day earlier—it weighed in on the hotly-contested question of whether the Supreme Court’s Bristol-Myers decision applies to class actions filed in federal court. Judge Wood’s unanimous panel decision in Mussat v. IQVIA, Inc. begins:
Florence Mussat, an Illinois physician doing business through a professional services corporation, received two unsolicited faxes from IQVIA, a Delaware corporation with its headquarters in Pennsylvania. These faxes failed to include the opt-out notice required by federal statute. Mussat’s corporation (to which we refer simply as Mussat) brought a putative class action in the Northern District of Illinois under the Telephone Consumer Protection Act, 47 U.S.C. § 227, on behalf of itself and all persons in the country who had received similar junk faxes from IQVIA in the four previous years. IQVIA moved to strike the class definition, arguing that the district court did not have personal jurisdiction over the non-Illinois members of the proposed nationwide class.
The district court granted the motion to strike, reasoning that under the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), not just the named plaintiff, but also the unnamed members of the class, each had to show minimum contacts between the defendant and the forum state. Because IQVIA is not subject to general jurisdiction in Illinois, the district court turned to specific jurisdiction. Applying those rules, see Walden v. Fiore, 571 U.S. 277, 283–86 (2014), it found that it had no jurisdiction over the claims of parties who, unlike Mussat, were harmed outside of Illinois. We granted Mussat’s petition to appeal from that order under Federal Rule of Civil Procedure 23(f). We now reaffirm the Rule 23(f) order, and we hold that the principles announced in Bristol-Myers do not apply to the case of a nationwide class action filed in federal court under a federal statute. We reverse the order of the district court and remand for further proceedings.
In reaching this conclusion, Judge Wood also clarified that Rule 23(f) permitted an immediate appeal of the district court’s ruling on the motion to strike—even though that ruling did not formally grant or deny class status. She explained that “[t]he district court’s order eliminates all possibility of certifying the nationwide class Mussat sought, and so to that extent it operates as a denial of certification for one proposed class.”