Monday, April 22, 2019
Maureen Carroll has published Class Actions, Indivisibility, and Rule 23(b)(2), 99 B.U. L. Rev. 59 (2019). Here’s the abstract:
The federal class-action rule contains a provision, Rule 23(b)(2), that authorizes class-wide injunctive or declaratory relief for class-wide wrongs. The procedural needs of civil rights litigation motivated the adoption of the provision in 1966, and in the intervening years, it has played an important role in managing efforts to bring about systemic change. At the same time, courts have sometimes struggled to articulate what plaintiffs must show in order to invoke Rule 23(b)(2). A few years ago, the Supreme Court weighed in, stating that the key to this type of class action is the “indivisible” nature of the remedy the plaintiffs seek.
Some defendants have encouraged federal courts to adopt an extremely restrictive version of indivisibility, which I term “endpoint indivisibility,” as a standard for applying Rule 23(b)(2). This Article argues that an endpoint indivisibility requirement would be fundamentally inconsistent with the historical models for Rule 23(b)(2). Moreover, such a requirement would have devastating effects on civil rights litigation. An alternative standard, which I term “root-cause indivisibility,” offers a better logical and historical fit.
Tuesday, March 26, 2019
Now on the Courts Law section of JOTWELL is my essay, When American Pipe Met Erie. I review a recent article by Steve Burbank and Tobias Wolff, Class Actions, Statutes of Limitations and Repose, and Federal Common Law, 167 U. Pa. L. Rev. 1 (2018).
Wednesday, March 20, 2019
Today the Supreme Court issued its decision in Frank v. Gaos (covered earlier here). The Court had initially granted certiorari to decide “[w]hether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and comports with the requirement that a settlement binding class members must be ‘fair, reasonable, and adequate.’” Following oral argument, however, the Court ordered supplemental briefing on whether any plaintiff had Article III standing under the Supreme Court’s 2016 decision in Spokeo v. Robins.
Today’s per curiam opinion remands the case for the lower courts to consider the standing question:
After reviewing the supplemental briefs, we conclude that the case should be remanded for the courts below to address the plaintiffs’ standing in light of Spokeo. The supplemental briefs filed in response to our order raise a wide variety of legal and factual issues not addressed in the merits briefing before us or at oral argument. We “are a court of review, not of first view.” Cutter v. Wilkinson, 544 U. S. 709, 718, n. 7 (2005). Resolution of the standing question should take place in the District Court or the Ninth Circuit in the first instance. We therefore vacate and remand for further proceedings. Nothing in our opinion should be interpreted as expressing a view on any particular resolution of the standing question.
Justice Thomas dissented. He would have found that the plaintiffs’ allegations were sufficient to establish standing but that “the class action should not have been certified, and the settlement should not have been approved.”
Monday, March 11, 2019
Simona Grossi and Allan Ides have posted on SSRN a draft of their article, The Modern Law of Class Actions and Due Process. Here’s the abstract:
Our goal in writing this article was to offer helpful insight for a reformed interpretation and application of Rule 23 that would make the Rule serve its intended democratic function. The idea of due process is a promise of the rule of law tempered by reasonableness, fairness, and efficiency. It embraces both the value of individual autonomy and the collective interests of the community. The idea of class actions, premised on due process, is to provide a pragmatic method of dispute resolution that is fair to the individual and responsive to the needs of the community and the challenges generated by widely spread and shared harms. In this respect, class actions operate as a tool of democracy. Rule 23 should be interpreted from this hopeful and effective perspective, one that balances individual autonomy against the legitimate needs of the community. But the Rule is not accomplishing its mission. As we show in the article, it appears to be infused with its framers’ self-doubts, and the Supreme Court treats it as an unwelcome guest in the home of traditional litigation forms—see, for example, our discussions of Ortiz v. Fibreboard Corporation (1999); Wal-Mart Stores, Inc. v. Dukes (2011); Jennings v. Rodriguez (2018); Nutraceuticals Corp. v. Lambert (2019).
Thursday, February 28, 2019
Today on the Courts Law section of JOTWELL is Jasminka Kalajdzic’s essay, In Praise of Non-Partisan Law Reform of Class Actions. Jasminka reviews Howard Erichson’s recent article, Civil Litigation Reform in the Trump Era: Threats and Opportunities Searching for Salvageable Ideas in FICALA, 87 Fordham L. Rev. 19 (2018).
Wednesday, February 27, 2019
SCOTUS: Rule 23(f)’s 14-day deadline for class-certification appeals is not subject to equitable tolling
Yesterday the Supreme Court issued a unanimous decision in Nutraceutical Corp. v. Lambert, which involves Rule 23(f)’s 14-day deadline for seeking permission to appeal a district court’s class-certification ruling.
In Justice Sotomayor’s opinion, the Court makes clear that the 14-day deadline is not jurisdictional, which means that it “can be waived or forfeited.” [Slip op. at 3-4] Nonetheless, the Court found that it is not subject to equitable tolling:
“Whether a rule precludes equitable tolling turns not on its jurisdictional character but rather on whether the text of the rule leaves room for such flexibility. Here, the governing rules speak directly to the issue of Rule 23(f)’s flexibility and make clear that its deadline is not subject to equitable tolling.” [Slip op. at 4]
Howard Wasserman has a more detailed recap at SCOTUSblog.
Wednesday, February 13, 2019
Today on the Courts Law section of JOTWELL is Jay Tidmarsh’s essay Building a Better Mousetrap. Jay reviews a recent book by Christopher Hodges & Stefaan Voet, Delivering Collective Redress: New Technologies (2018).
Thursday, January 31, 2019
Rhonda Wasserman has posted on SSRN her article, Ascertainability: Prose, Policy, and Process, 50 Conn. L. Rev. 695 (2018). Here’s the abstract:
One of the most hotly contested issues in class action practice today is ascertainability – when and how the identities of individual class members must be ascertained. The courts of appeals are split on the issue, with courts in different circuits imposing dramatically different burdens on putative class representatives. Courts adopting a strict approach require the class representative to prove that there is an administratively feasible means of determining whether class members are part of the class. This burden may be insurmountable in consumer class actions because people tend not to save receipts for purchases of low-cost consumer goods, like soft drinks and snacks and have no other objective proof of their membership in the class. Thus, in circuits adopting the strict approach, class certification may be denied, whereas in other circuits, the same class may be certified. Notwithstanding the circuit split on this critical issue, the Supreme Court has denied several petitions for writs of certiorari raising the issue; the Senate has failed to act on a bill passed by the House to address it; and the Advisory Committee has placed the issue on hold. Given the current state of disuniformity and the resultant inequitable administration of the laws, the time is ripe to address the issue.
Ascertainability is not only of great practical importance, but it is interesting on three different levels. First, there is a question of prose – whether the text of the Rule supports the implication of the strict ascertainability requirement. Second, there is a question of policy – whether concern for the class action defendant, the absent class members, or the trial court overseeing the action justifies imposition of the strict requirement, notwithstanding its harsh impact on consumer class actions. Third, there is a process question: which governmental actor – the lower courts, the Supreme Court, the Advisory Committee on Civil Rules, or Congress – has the greatest institutional competency to resolve the policy issue and establish a uniform approach to ascertainability. This Article addresses each of these questions in turn.
Thursday, January 17, 2019
Steve Burbank and Tobias Wolff have published Class Actions, Statutes of Limitations and Repose, and Federal Common Law, 167 U. Pa. L. Rev. 1 (2018). Here’s the abstract:
After more than three decades during which it gave the issue scant attention, the Supreme Court has again made the American Pipe doctrine an active part of its docket. American Pipe addresses the tolling of statutes of limitations in federal class action litigation. When plaintiffs file a putative class action in federal court and class certification is denied, absent members of the putative class may wish to pursue their claims in some kind of further proceeding. If the statute of limitations would otherwise have expired while the class certification issue was being resolved, these claimants may need the benefit of a tolling rule. The same need can arise for those who wish to opt out of a certified class action. American Pipe and its progeny provide such a tolling rule in some circumstances, but many unanswered questions remain about when the doctrine is available.
In June 2017, the Court decided CalPERS v. ANZ Securities, holding that American Pipe tolling was foreclosed to a class member who opted out of a certified class in an action brought to enforce a federal statute (the Securities Act of 1933) that contained what the Court labeled a “statute of repose.” In June 2018, the Court decided Resh v. China Agritech, which held that American Pipe tolling is not available when absent members of a putative class file another class action following the denial of certification in the first action rather than pursuing their claims individually in subsequent proceedings.
In this Article we develop a comprehensive theoretical and doctrinal framework for the American Pipe doctrine. Building on earlier work, we demonstrate that American Pipe tolling is a federal common-law rule that aims to carry into effect the provisions and policies of Federal Rule of Civil Procedure 23, the federal class action device. Contrary to the Court’s assertion in CalPERS, American Pipe is not an “equitable tolling doctrine.” Neither is it the product of a direct mandate in Rule 23, which is the source of authority, not the source of the rule. Having clarified the status of American Pipe tolling as federal common law, we explain the basis on which the doctrine operates across jurisdictions, binding subsequent actions in both federal and state court. We argue that the doctrine applies whether the initial action in federal court was based on a federal or state cause of action—a question that has produced disagreement among the lower federal courts. And we situate American Pipe within the framework of the Court’s Erie jurisprudence, explaining how the doctrine should operate when the putative class action was in federal court based on diversity jurisdiction and the courts of the state in which it was filed would apply a different rule. Finally, we discuss how CalPERS should have been decided if the Court had recognized the true nature of the American Pipe rule and if it had engaged the legislative history of the Securities Act rather than relying on labels.
Friday, December 21, 2018
Alex Parkinson has published Behavioral Class Action Law, 65 UCLA L. Rev. 1090 (2018). Here’s the abstract:
Behavioral law and economics has been deployed to analyze nearly every field of law. Class action practice and procedure is a notable exception. This Article is the first to supplement stagnating class action debates and the traditional law and economics account of class action law with behavioral psychology. It draws on a litany of behavioral tendencies, biases, and pathologies— ranging from prospect theory, loss aversion, anchoring, and the status quo bias to the availability heuristic, group-attribution error, reactive devaluation, and the endowment effect—and considers their application to class action practice generally and Rule 23 in particular. In addition to this descriptive survey, this Article makes three contributions to class action scholarship. First, it applies behavioral psychology to an unresolved puzzle: how to explain opt-out rights. Traditional law and economics cannot explain why Rule 23 permits absent class members to opt-out of certain class actions, which appears inefficient and dependent on irrational behavior, or why this opt-out right is exercised according to predictably irrational patterns. However, behavioral law and economics fills these analytical gaps. Second, this Article demonstrates the prescriptive power of behavioral law and economics by illustrating how absent class members can be nudged toward class settlement by self-interested choice architects. Finally, this Article crystallizes the judicial role in light of the potency of behavioral psychology, choice architecture, and nudging in class settlement notices.
Thursday, December 20, 2018
Campos on the Bolch Judicial Institute’s Guidelines and Best Practices for Implementing the 2018 Amendments to FRCP 23
Today on the Courts Law section of JOTWELL is Sergio Campos’s essay, Practice Makes Perfect. Sergio reviews Guidelines and Best Practices Implementing 2018 Amendments to Rule 23 Class Action Settlement Provisions, which was published in 2018 by the Bolch Judicial Institute at Duke Law School.
Friday, September 28, 2018
This action was commenced when Citibank, N.A. filed a routine state-court collection action against respondent George W. Jackson. Petitioner Home Depot U. S. A., Inc. was not a party to that action and never became a party to that collection dispute. Jackson then filed a counterclaim against Citibank asserting class-action consumer-protection claims. In addition to naming Citibank, Jackson named Home Depot and another company as original defendant to that counterclaim class action. The Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4, permits "any defendant in a state-court class action to remove the action to federal court if it satisfies certain jurisdictional requirements. Petitioner Home Depot is an original defendant in the class action at issue here and was never a plaintiff in any claim associated with this case.
The question presented is: Whether an original defendant to a class-action claim can remove the class action if it otherwise satisfies the jurisdictional requirements of the Class Action Fairness Act when the class action was originally asserted as a counterclaim against a co-defendant.
The Court also directed the parties to address the following question:
Should this court’s holding in Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941)—that an original plaintiff may not remove a counterclaim against it—extend to third-party counterclaim defendants?
Tuesday, July 31, 2018
Suzette Malveaux has published The Modern Class Action Rule: Its Civil Rights Roots and Relevance Today, 66 U. Kan. L. Rev. 325 (2017). Here’s the abstract:
The modern class action rule recently turned fifty years old — a golden anniversary. However, this milestone is marred by an increase in hate crimes, violence and discrimination. Ironically, the rule is marking its anniversary within a similarly tumultuous environment as its birth — the civil rights movement of the 1960’s. This irony calls into question whether this critical aggregation device is functioning as the drafters intended. This article makes three contributions.
First, the article unearths the rule’s rich history, revealing how the rule was designed in 1966 to enable structural reform and broad injunctive relief in civil rights cases. The article tells the story of how the drafters were united in creating a rule that would enable litigants to respond effectively to the fierce resistance to desegregation following the seminal Brown v. Board of Education decision. They deliberately crafted a rule to address desegregation obstructionism.
Second, the article examines the seminal role the modern class action rule has played in the private enforcement of statutory and Constitutional civil rights. The article analyzes Supreme Court jurisprudence interpreting Rule 23(b)(2) over the course of the last fifty years, identifying three primary periods in which the pendulum has swung: from a heyday of liberal class certification for broad injunctive relief for newly created rights; to a heightened critique and retraction of class certification; to a complex gauntlet of contemporary barriers.
Finally, the article critiques modern class action jurisprudence and concludes that it fails to sufficiently fulfill the drafters’ intent of creating an efficient and just procedural mechanism for challenging systemic inequality. The article urges a contemporary judicial interpretation that honors Rule 23(b)(2)’s strong civil rights mission.
Friday, July 27, 2018
Earlier this year the Ninth Circuit issued a 2-1 decision in In re Hyundai and Kia Fuel Economy Litigation. The panel reversed the district court’s certification of a settlement class involving claims against Hyundai and Kia over their vehicles’ fuel efficiency. The decision was particularly controversial because of the majority’s choice-of-law analysis and its potential impact on certifying nationwide classes.
Today the full Ninth Circuit granted en banc rehearing.
Oral argument is scheduled for the week of September 24, 2018.
Monday, July 23, 2018
Rye Murphy has published Competing Ideologies at the Formation of the Federal Class Action Rule: Legal Process Versus Legal Liberalism, 10 Drexel L. Rev. 389 (2018). Here’s the abstract:
In 1966, the Supreme Court promulgated a new procedural rule for class actions in federal court. Amended Rule 23 was a considerably different mechanism than its predecessor. It was more inviting of class action litigation but also incorporated new mechanisms for protecting class members. This was not an unreasonable trade-off, and one can imagine a group of rule-makers—elite academics, federal judges, prestigious attorneys—peaceably striving to write a rule that could balance individual class members’ interests with the interests of the class as a whole. But this is not what happened. The Rule 23 of today is an accord between two rival sects of mid-century legal thinking. The Legal Process tradition considered federal courts one of many institutions in society for mediating conflict, though the one uniquely capable of employing neutral reasoning to do so. Harvard Law School professors Benjamin Kaplan and Albert Sacks argued that a flexible, robust class action rule was needed to solve the complex, large-scale problems American society was increasingly facing. Attorney John P. Frank, a litigator and civil libertarian, fought vigorously against anything but the narrowest rule. Legal liberalism, Frank’s camp, tended to view federal courts in their capacity to enforce substantive principles, and Frank argued that the Constitution and American legal tradition forbade a rule that might deprive an individual of the opportunity to litigate her own interests. It was a duty of the rule-maker, for Frank, not to enact a rule that would violate what he identified as a principle of individualized adjudication. The balance the current rule strikes, including the opt-out mechanism, is a product of their compromise.
Wednesday, July 18, 2018
This week the Sixth Circuit decided Martin v. Behr Dayton Thermal Products, affirming the district court’s decision to certify various issues for class treatment under Rule 23(c)(4). The court sided with what it called “the broad view” of the relationship between Rule 23(b)(3)’s requirements and issue class actions under Rule 23(c)(4). From Judge Stranch’s opinion:
Under what is known as the broad view, courts apply the Rule 23(b)(3) predominance and superiority prongs after common issues have been identified for class treatment under Rule 23(c)(4). The broad view permits utilizing Rule 23(c)(4) even where predominance has not been satisfied for the cause of action as a whole.
After reviewing the circuit split over this question, the opinion concludes:
In sum, Rule 23(c)(4) contemplates using issue certification to retain a case’s class character where common questions predominate within certain issues and where class treatment of those issues is the superior method of resolution. See Nassau, 461 F.3d at 226; Fed. R. Civ. P. 23(c)(4) adv. comm. n. to 1966 amend. A requirement that predominance must first be satisfied for the entire cause of action would undercut the purpose of Rule 23(c)(4) and nullify its intended benefits. The broad approach is the proper reading of Rule 23, in light of the goals of that rule.
Tuesday, June 26, 2018
Yesterday’s Supreme Court order list included grants of certiorari in several cases, including these three:
Sudan v. Harrison presents the question:
Whether the Second Circuit erred by holding — in direct conflict with the D.C., Fifth, and Seventh Circuits and in the face of an amicus brief from the United States — that plaintiffs suing a foreign state under the Foreign Sovereign Immunities Act may serve the foreign state under 28 U.S.C § 1608(a)(3) by mail addressed and dispatched to the head of the foreign state’s ministry of foreign affairs “via” or in “care of” the foreign state’s diplomatic mission in the United States, despite U.S. obligations under the Vienna Convention on Diplomatic Relations to preserve mission inviolability.
Nutraceutical Corp. v. Lambert presents the question:
Federal Rule of Civil Procedure 23(f) establishes a fourteen-day deadline to file a petition for permission to appeal an order granting or denying class-action certification. On numerous occasions, this Court left undecided whether mandatory claim-processing rules, like Rule 23(f), are subject to equitable exceptions, because the issue was not raised below. See, e.g., Hamer v. Neighborhood Hous. Serv. of Chicago, 138 S. Ct. 13, 18 n.3, 22 (2017). That obstacle is not present here. The question presented is: did the Ninth Circuit err by holding that equitable exceptions apply to mandatory claim-processing rules and excusing a party’s failure to timely file a petition for permission to appeal, or a motion for reconsideration, within the Rule 23(f) deadline? As the Ninth Circuit acknowledged below, its decision conflicts with other United States Circuit Courts of Appeals that have considered this issue (the Second, Third, Fourth, Fifth, Seventh, Tenth, and Eleventh Circuits).
The question presented is: did the Ninth Circuit err by holding that equitable exceptions apply to mandatory claim-processing rules and excusing a party’s failure to timely file a petition for permission to appeal, or a motion for reconsideration, within the Rule 23(f) deadline?
And Henry Schein, Inc. v. Archer and White Sales, Inc. presents the question:
Whether the Federal Arbitration Act permits a court to decline to enforce an agreement delegating questions of arbitrability to an arbitrator if the court concludes the claim of arbitrability is “wholly groundless.”
June 26, 2018 in Class Actions, Federal Courts, Federal Rules of Civil Procedure, International/Comparative Law, Recent Decisions, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)
Monday, June 11, 2018
Today the Supreme Court issued its decision in China Agritech, Inc. v. Resh (covered earlier here). Justice Ginsburg authored the Court’s opinion, which was joined by Chief Justice Roberts and Justices Kennedy, Thomas, Breyer, Alito, Kagan and Gorsuch. From the introduction:
This case concerns the tolling rule first stated in American Pipe & Constr. Co. v. Utah, 414 U. S. 538 (1974). The Court held in American Pipe that the timely filing of a class action tolls the applicable statute of limitations for all persons encompassed by the class complaint. Where class-action status has been denied, the Court further ruled, members of the failed class could timely intervene as individual plaintiffs in the still-pending action, shorn of its class character. See id., at 544, 552–553. Later, in Crown, Cork & Seal Co. v. Parker, 462 U. S. 345 (1983), the Court clarified American Pipe’s tolling rule: The rule is not dependent on intervening in or joining an existing suit; it applies as well to putative class members who, after denial of class certification, “prefer to bring an individual suit rather than intervene . . . once the economies of a class action [are] no longer available.” 462 U. S., at 350, 353–354 * * * .
The question presented in the case now before us: Upon denial of class certification, may a putative class member, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew beyond the time allowed by the applicable statute of limitations? Our answer is no. American Pipe tolls the statute of limitations during the pendency of a putative class action, allowing unnamed class members to join the action individually or file individual claims if the class fails. But American Pipe does not permit the maintenance of a follow-on class action past expiration of the statute of limitations.
The opinion concludes:
The watchwords of American Pipe are efficiency and economy of litigation, a principal purpose of Rule 23 as well. Extending American Pipe tolling to successive class actions does not serve that purpose. The contrary rule, allowing no tolling for out-of-time class actions, will propel putative class representatives to file suit well within the limitation period and seek certification promptly. For all the above-stated reasons, it is the rule we adopt today: Time to file a class action falls outside the bounds of American Pipe.
Justice Sotomayor wrote a concurring opinion, which begins:
I agree with the Court that in cases governed by the Private Securities Litigation Reform Act of 1995 (PSLRA),15 U. S. C. §78u–4, like this one, a plaintiff who seeks to bring a successive class action may not rely on the tolling rule established by American Pipe & Constr. Co. v. Utah, 414 U. S. 538 (1974). I cannot, however, join the majority in going further by holding that the same is true for class actions not subject to the PSLRA.
Friday, June 8, 2018
Dave Marcus has published The History of the Modern Class Action, Part II: Litigation and Legitimacy, 1981-1994, 86 Fordham L. Rev. 1785 (2018). Here’s the abstract:
The first era of the modern class action began in 1966, with revisions to Rule 23 of the Federal Rules of Civil Procedure. It ended in 1980. Significant turmoil roiled these years. Policymakers grappled with the powerful device as advocates argued over its purpose, and judges struggled to create rules for the novel litigation the remade Rule 23 generated.
This Article tells the story of the class action’s second era, which stretched from 1981 to 1994. At first blush, these were quiet years. Doctrine barely changed, and until the early 1990s, policymakers all but ignored the device.
Below this surface tranquility lurked important developments in what the class action, newly embroiled in fundamental debates over litigation and legitimacy, was understood to implicate. Critics castigated the civil rights class action as an emblem of the “imperial judiciary’s” rise and of courts’ inability to separate law from politics. To industries targeted by plaintiffs’ lawyers, the securities fraud class action exemplified the “litigation explosion” and challenged judicial competence to screen for meritorious lawsuits. The emergence of the mass tort class action as an alternative to legislative and administrative processes made a determination of litigation’s legitimate role particularly urgent.
These second-era episodes deepened partisan divides over the class action and prompted new claims about what sort of private litigation could legitimately proceed. The three episodes drew new and influential participants into fights over the class action, and they eventually reengaged policymakers with class action regulation. Such developments made an era of significant reform all but inevitable.
Monday, June 4, 2018
From Alison Frankel, Fitbit lawyers reveal ‘ugly truth’ about arbitration, judge threatens contempt (Reuters):
At a hearing Thursday in San Francisco federal court, a lawyer for the fitness tracking company Fitbit told U.S. District Judge James Donato that no rational customer would arbitrate a $162 claim against the company. The filing fee for a proceeding before the American Arbitration Association, said William Stern of Morrison & Foerster, is $750 - and that’s just to get the case started. It simply doesn’t make sense, Stern said no fewer than six times at Thursday’s hearing, to arbitrate a $162 claim.
* * *
Thursday’s hearing was supposed to be about the opt-outs’ class action, but Judge Donato quickly homed in on the arbitration controversy. He said Fitbit’s handling of the McLellan arbitration “appears to be an absolutely unacceptable level of gamesmanship” and ordered briefing from both sides on whether Fitbit had engaged in “a form of civil contempt.”
The judge said he had sent the case to arbitration because Fitbit said that’s where it belonged. It is “profoundly troubling,” Judge Donato said, that Fitbit unilaterally decided McLellan’s claim could not be arbitrated because, as he described the company’s position, “We think it’s a cheap case, and we offered her plenty money to get rid of it, and she said no, and she’s crazy as a result of that, so our hands are now tied.’”
(H/T: Bob Klonoff)