Civil Procedure & Federal Courts Blog

Lammon on Rule 23(f) Class-Certification Appeals

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.

 

Another Circuit Decision on Personal Jurisdiction and Class Actions

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.”

 

 

7th Circuit Decision in Mussat v. IQVIA: Bristol-Myers, Personal Jurisdiction & Class Actions

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.

(emphasis added).

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.”

 

 

D.C. Circuit Panel Decision in Molock v. Whole Foods

Yesterday the D.C. Circuit issued its decision in Molock v. Whole Foods Market Group, Inc. The case raises important questions about personal jurisdiction in the wake of the Supreme Court’s Bristol-Myers decision, particularly whether Bristol-Myers applies to class actions filed in federal court. The panel majority, however, found that it would be premature to address that issue. Judge Tatel’s majority opinion, joined by Judge Garland, begins:

In this not yet certified class action, the defendant moved to dismiss all nonresident putative class members for lack of personal jurisdiction. The district court denied the motion on the merits. We affirm, but on alternative grounds. Absent class certification, putative class members are not parties before a court, rendering the defendant’s motion premature.

Judge Silberman writes a dissenting opinion, which begins:

The majority disposes of this appeal by concluding that Whole Foods’ motion to dismiss was premature, notwithstanding the plaintiffs’ repeated failure to raise the issue to the district court. I would not excuse that forfeiture. * * * Because I would reach the Bristol-Myers question and hold that class claims unrelated to Whole Foods’ contacts with the District of Columbia cannot proceed, I respectfully dissent.

 

 

 

Aggregate Litigation in State Courts: Report from the Pound Civil Justice Institute's Judges Forum

The Pound Civil Justice Institute has published the report of its 2019 Judges Forum, Aggregate Litigation in State Courts: Preserving Vital Mechanisms, which features academic papers by Teddy Rave and Myriam Gilles, plus commentary and discussion by the legal experts and judges who attended.

You can find previous Judges Forum reports here.

 

 

Rose on Class Actions

Amanda Rose has posted drafts of two papers on SSRN. One is Cutting Class Action Agency Costs: Lessons from the Public Company, which is forthcoming in the U.C. Davis Law Review. Here’s the abstract:

The agency relationship between class counsel and class members in Rule 23(b)(3) class actions is similar to that between executives and shareholders in U.S. public companies. This similarity has often been noted in class action literature, but until this Article no attempt has been made to systematically compare the approaches taken in these two settings to reduce agency costs. Class action scholars have downplayed the importance of the public company analogy because public companies are subject to market discipline and class actions are not. But this is precisely why the analogy is useful: because public companies are subject to market discipline, the tools they utilize to reduce agency costs are more likely to be efficient. This Article looks to those tools as inspiration for class action reform, proposing several novel ways to improve current practice.

Another is Classaction.gov. Here’s the abstract:

This Essay proposes the creation of a federally-run class action website and supporting administration (collectively, Classaction.gov) that would both operate a comprehensive research database on class actions and assume many of the notice and claims processing functions performed by class action claims administrators today. Classaction.gov would bring long-demanded transparency to class actions and, through forces of legitimization and coordination, would substantially increase the rate of consumer participation in class action settlements. It also holds the key to mitigating other problems in class action practice, such as the inefficiencies and potential abuses associated with multi-forum litigation, the limited success of CAFA’s notice requirement in spurring effective pubic oversight of class actions, and the potential for abuse inherent in cy pres settlement awards.

 

 

 

Kalajdzic on Fitzpatrick on the Conservative Case for Class Actions

Today on the Courts Law section of JOTWELL is Jasminka Kalajdzic’s essay, A Return to First Principles: Class Actions & Conservatism. Jasminka reviews Brian Fitzpatrick’s recent book, The Conservative Case for Class Actions. 

 

 

 

SDNY Opinion on Payments to Class Action Settlement Objectors under the 2018 Amendment to Rule 23

Last month Judge Lorna Schofield (U.S. District Court for the Southern District of New York) issued an interesting decision that is one of the first to apply the 2018 amendment to Rule 23 regarding objectors to class action settlements. The new language in Rule 23(e)(5)(B) provides:

“Unless approved by the court after a hearing, no payment or other consideration may be provided in connection with: (i) forgoing or withdrawing an objection, or (ii) forgoing, dismissing, or abandoning an appeal from a judgment approving the proposal.”

The recent decision comes in the case of In re Foreign Exchange Benchmark Rates Antitrust Litigation. Two objectors had appealed Judge Schofield’s approval of the class settlement in that case, but the objectors reached an agreement with class counsel to dismiss the appeal in exchange for a $300,000 payment to the objectors’ counsel and a $5,000 incentive award payment to one of the objectors.

Judge Schofield refused to approve the payment, quoting this language from the Advisory Committee Note to the 2018 amendment:

“But some objectors may be seeking only personal gain, and using objections to obtain benefits for themselves rather than assisting in the settlement-review process. At least in some instances, it seems that objectors -- or their counsel -- have sought to obtain consideration for withdrawing their objections or dismissing appeals from judgments approving class settlements. And class counsel sometimes may feel that avoiding the delay produced by an appeal justifies providing payment or other consideration to these objectors. Although the payment may advance class interests in a particular case, allowing payment perpetuates a system that can encourage objections advanced for improper purposes.”

She reasoned: “The Agreement here seems to fit that description; the Agreement does little more than benefit Objector’s counsel and ‘perpetuate[] a system that can encourage objections advanced for improper purposes.’”

Here is the full opinion:

Download SDNY Opinion In re Forex (10-11-2019)

It’s also available on Westlaw at 2019 WL 5256957.

Here’s coverage of Judge Schofield’s decision from Bloomberg’s Perry Cooper.

 

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PS: Because Judge Schofield refused to approve the payment, the Second Circuit appeal went forward. Just a few weeks after oral argument, the Second Circuit issued an opinion affirming Judge Schofield’s approval of the settlement. Here is the Second Circuit’s opinion:

Download 2d Circuit Opinion (18-3673)

The Second Circuit opinion is available on Westlaw at 2019 WL 5681336.

 

Pound Civil Justice Institute/Lewis & Clark Law School Symposium: "Class Actions, Mass Torts, and MDLs: The Next 50 Years"

A couple of weeks ago, the Pound Civil Justice Institute and Lewis & Clark Law School sponsored a symposium entitled “Class Actions, Mass Torts, and MDLs: The Next 50 Years.”

The 11 papers that were presented will be published in the Lewis & Clark Law Review in the coming months. You can find more information about the symposium here, here, and here.

 

 

 

 

 

Tidmarsh on McGovern & Rubenstein on Negotiation Class Actions

Now on the Courts Law section of JOTWELL is Jay Tidmarsh’s essay, The Negotiation Class Action. Jay reviews a recent paper by Francis McGovern & Bill Rubenstein, The Negotiating Class: A Cooperative Approach to Class Actions Involving Large Stakeholders.

 

 

 

Class Certification Order in Pay Discrimination Case Brought by US Women's Soccer Team

Today Judge Klausner of the U.S. District Court for the Central District of California certified both a damages class and an injunctive relief class in Morgan v. United States Soccer Federation. The plaintiffs are members of the U.S. Women’s National Soccer Team, alleging violations of the Equal Pay Act and Title VII based on discrepancies in pay between them and the Men’s National Team.

Here is today’s order:

Download Morgan v US Soccer Federation - Order 2019-11-08

And here is coverage from ESPN: https://www.espn.com/soccer/united-states-usaw/story/3984769/uswnt-wins-ruling-to-pursue-gender-discrimination-suit-as-class-action

 

 

 

Mullenix on Choi, Erickson & Pritchard on Attorneys Fees in Securities Fraud Class Action "Mega-Settlements"

Now on the Courts Law section of JOTWELL is Linda Mullenix’s essay, Is Greed Good? Mega-Fees in Securities Fraud Class Action Mega-Settlements. Linda reviews a recent paper by Stephen Choi, Jessica Erickson, and Adam Pritchard, Working Hard or Making Work? Plaintiffs’ Attorneys Fees in Securities Fraud Class Actions.

 

 

 

Campos on Class Actions

Sergio Campos has published The Uncertain Path of Class Action Law, 40 Cardozo L. Rev. 2223 (2019). Here’s the abstract:

For the past ten terms the Supreme Court has increased its focus on the law of class actions. In doing so, the Court has revised the law to better accord with a view of the class action as an exception to an idealized picture of litigation. This “exceptional” view of the class action has had a profound impact not only on class action law, but on procedural and substantive law in general. However, in the October 2015 term the Court decided three class action cases that support an alternative, “functional” view of the class action, one that does not view the class action as exceptional, but as one of many equally permissible tools to serve the objectives of substantive law. This alternative view has the potential to have a similarly significant impact on the law, but it is not certain whether the Court will further develop this alternative, especially given its most recent class action decisions. This Article discusses the development of the “exceptional” view of the class action, the awakening of a “functional” alternative view, and the uncertain path ahead.

 

 

 

 

2019 ABA National Class Actions Institute (Nashville, October 17-18)

The American Bar Association’s 23rd Annual National Institute on Class Actions is happening in Nashville, Tennessee on October 17-18.

Here is the schedule.

Hope to see folks there!

 

 

 

 

D.C. Circuit Oral Argument in Molock v. Whole Foods: Personal Jurisdiction & Class Actions

Yesterday the U.S. Court of Appeals for the D.C. Circuit heard oral argument in Molock v. Whole Foods Market, Inc., which addresses the extent to which the Supreme Court’s 2017 Bristol-Myers decision on personal jurisdiction applies to class actions.

Here is the oral argument recording.

Here’s coverage from Perry Cooper, Whole Foods Appeals Court Tries to Avoid Jurisdictional Issue (Bloomberg).

And here’s what can happen in the Whole Foods parking lot.

 

 

 

 

Campos on Bartholomew on Electronic Notice in Class Actions

Today on the Courts Law section of JOTWELL is Sergio Campos’s essay, E-Notice and Comment on Due Process. Sergio reviews Christine Bartholomew’s recent article, E-Notice, 68 Duke L.J. 217 (2018).

 

 

Symposium: “Class Actions, Mass Torts, and MDLs: The Next 50 Years” (Lewis & Clark Law School, November 2019)

The Pound Civil Justice Institute and Lewis & Clark Law School are co-sponsoring a symposium entitled Class Actions, Mass Torts, and MDLs: The Next 50 Years.

It will take place at Lewis & Clark Law School in Portland, Oregon on November 1 & 2, 2019.

You can register to attend the symposium here. It’s free for judges, law clerks, academics, law students, and public officials.

 

 

 

 

Burbank & Farhang on the Effects of Judicial Partisanship and Identity on Class Certification Decisions

Steve Burbank & Sean Farhang have posted on SSRN a draft of their article, Politics, Identity, and Class Certification on the U.S. Courts of Appeals. Here’s the abstract:

This article draws on novel data and presents the results of the first empirical analysis of how potentially salient characteristics of Court of Appeals judges influence precedential lawmaking on class certification under Rule 23. We find that the partisan composition of the panel (measured by the party of the appointing president) has a very strong association with certification outcomes, with all-Democratic panels having more than double the certification rate of all-Republican panels in precedential cases. We also find that the presence of one African American on a panel, and the presence of two females (but not one), is associated with pro-certification outcomes. Contrary to conventional wisdom in the scholarship on diversity on the bench, such diversity may be consequential to lawmaking beyond policy areas conventionally thought to be of particular concern to women and racial minorities.

Class action doctrine is a form of trans-substantive procedural law that traverses many policy areas. The effects of gender and racial diversity on the bench, through making more precertification law, radiate widely across the legal landscape, influencing implementation of consumer, securities, labor and employment, antitrust, prisoner’s rights, public benefits, and many other areas of law. The results highlight how the consequences of diversity extend beyond conceptions of “women’s issues” or “minority issues.” The results also suggest the importance of exploring the effects of diversity on trans-substantive procedural law more generally.

Our findings on gender panel effects in particular are novel in the literature on panel effects and the literature on gender and judging. Past work focusing on substantive antidiscrimination law found that one woman can influence the votes of males in the majority (mirroring what we find with respect to African American judges in class certification decisions). These results allowed for optimism that the panel structure — which threatens to dilute the influence of underrepresented groups on the bench because they are infrequently in the panel majority — actually facilitates minority influence, whether through deliberation, cue taking, bargaining, or some other mechanism.

Our gender results are quite different and more normatively troubling. We observe that women have more pro-certification preferences based on outcomes when they are in the majority. However, panels with one female are not more likely to yield pro-certification outcomes. Female majority panels occur at sharply lower rates than women’s percentage of judgeships, and thus certification doctrine underrepresents their preferences relative to their share of judgeships.

Our suggestions regarding mechanisms that may help to explain these results are speculative and tentative. Recent scholarship on the gender gap in political discussions and decision-making illuminates some disquieting possibilities. If the dynamics identified by this research are at play, one possibility is that a female judge in the minority who vigorously advocates for a preferred outcome is less successful because, as a panel minority in a substantive domain that, unlike anti-discrimination law, does not elicit gender-based deference, she is regarded as less authoritative and influential. Another is that the reinforcement of a female majority increases her propensity to advocate preferences that differ systematically from those of her male colleagues in areas without obvious gender salience.

 

 

 

 

 

Interesting Ninth Circuit Decision on Article III Standing and Class Certification

Today the U.S. Court of Appeals for the Ninth Circuit issued a unanimous decision in Patel v. Facebook. The panel opinion by Judge Ikuta begins:

Plaintiffs’ complaint alleges that Facebook subjected them to facial-recognition technology without complying with an Illinois statute intended to safeguard their privacy. Because a violation of the Illinois statute injures an individual’s concrete right to privacy, we reject Facebook’s claim that the plaintiffs have failed to allege a concrete injury-in-fact for purposes of Article III standing. Additionally, we conclude that the district court did not abuse its discretion in certifying the class.

Download Patel v Facebook (9th Cir)

 

En Banc Ninth Circuit Reinstates Hyundai/Kia Settlement

Today the en banc Ninth Circuit issued its decision in In Re Hyundai and Kia Fuel Economy Litigation (covered earlier here). Judge Nguyen authors the majority opinion, and Judge Ikuta authors a dissenting opinion.

Contrary to the earlier panel ruling, the en banc Ninth Circuit affirms the district court with respect to both class certification and approval of the settlement.