Tagged: Appeal

Supreme Court Rejects Class Action Plaintiffs’ Attempts to Circumvent Rule 23(f)

As previously discussed on this blog, the Supreme Court granted certiorari to address the question of whether federal courts of appeals have jurisdiction to review an order denying class certification after the named Plaintiffs voluntarily dismissed their claims with prejudice. In the June 12, 2017 decision in Microsoft Corp. v. Baker, the high court answered this question with a very resounding “no.” In Baker, a putative class of owners of Microsoft Corporation’s Xbox 360® video game console filed suit, alleging that the console suffered from a design defect that gouged game discs. Microsoft opposed Plaintiffs’ motion to certify the class. The District Court denied certification, citing comity considerations and relying on the class certification denial in a similar case. The Ninth Circuit denied the Plaintiffs’ 23(f) petition for interlocutory appeal. Plaintiffs then voluntarily dismissed the case with prejudice for the express purpose of obtaining immediate Ninth Circuit review of the District Court’s denial of class certification. Plaintiffs filed an appeal from the final judgment, challenging the denial of class certification, but not the order dismissing the case with prejudice. The Ninth Circuit held that it had jurisdiction under 28 U.S.C. § 1291 because the stipulated dismissal did not involve a settlement, and thus was a sufficiently adverse and appealable, final decision. The Supreme Court disagreed....

California Supreme Court’s McGill Decision Creates Confusion Over the Enforceability of Arbitration Clauses That Limit Public Injunctive Relief

In McGill v. Citibank, N.A., the California Supreme Court unanimously held that arbitration clauses that waive the right to seek public injunctive relief in any forum are contrary to public policy and therefore unenforceable under California law. The decision is significant, as it potentially limits the type of the relief that is subject to arbitration. It also raises questions regarding the Federal Arbitration Act’s (“FAA”) preemption of California’s so-called Broughton-Cruz rule, which holds that agreements to arbitrate claims for public injunctive relief under the California’s Consumers Legal Remedies Act (“CLRA”), unfair competition law (“UCL”), or the false advertising law are unenforceable in California. Overall, however, the case raises more questions regarding the enforceability of arbitration clauses than it resolves. Plaintiff Sharon McGill (“McGill”) opened a credit card account with Citibank, N.A. (“Citibank”) and purchased a “credit protector” plan (“Plan”) for a monthly premium, which deferred certain credit balances when a qualifying event, such as unemployment, occurred. Although McGill’s original credit card agreement did not contain an arbitration provision, Citibank sent McGill notices in 2001 and 2005 which stated that all claims were subject to arbitration, regardless of the remedy sought, and waived the cardholder’s right to bring any claims on a representative or class-action basis. McGill filed a class action alleging violations of CLRA, UCL,...

Supreme Court to Decide Whether Class Action Plaintiffs Can Ring Their Own “Death Knell” Bell

The United States Supreme Court heard oral argument last month on the issue of whether a federal court of appeals has jurisdiction to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice. The case comes to the Supreme Court from the Ninth Circuit’s decision in Baker v. Microsoft Corp. In Baker, a putative class of owners of Microsoft Corporation’s (Microsoft) Xbox 360® video game console filed suit, alleging that the console suffered from a design defect that gouged game discs. Microsoft opposed Plaintiffs’ motion to certify the class. The District Court denied certification, citing comity considerations and relying on the class certification denial in a similar case. Thereafter, Plaintiffs filed a 23(f) petition for interlocutory appeal with the Ninth Circuit, which was denied. The Plaintiffs then voluntarily dismissed the case with prejudice, with the express purpose of obtaining immediate Ninth Circuit review of the District Court’s denial of class certification. Plaintiffs filed an appeal from the final judgment, challenging the denial of class certification. On appeal, Microsoft argued that the Ninth Circuit lacked jurisdiction because a voluntary dismissal with prejudice does not sufficiently affect the merits of the substantive claims to constitute an appealable final judgment. However, the Ninth Circuit had previously rejected a similar argument in...

11th Circuit’s Stay Suggests that the FTC’s Final Order Against LabMD May Itself be “Unfair” and “Unreasonable”

As reported on this blog on September 27, 2016, the FTC issued a Final Order holding that LabMD’s data security practices were “unreasonable” and constituted an “unfair” business practice in violation of Section 5 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §45(a) and (n). The findings were a clear signal of the FTC’s expanding efforts to regulate data security and to incentivize companies handling sensitive data to implement and maintain strong data security practices. On Thursday, November 10, 2016, the 11th Circuit stayed enforcement of the FTC’s Final Order pending a full hearing and final decision on LabMD’s appeal, and called into question the validity of the FTC’s conclusions as to what may constitute an actionable “privacy harm” following a data security breach.

Eighth Circuit Relies on Spokeo to Hold That Retention of Personal Information, Without More, Does Not Satisfy Article III’s Injury-in-Fact Requirement

The United States Supreme Court decision in Spokeo v. Robins, in which the Court considered whether a claim of statutory damages was sufficient to confer Article III standing, left much to be desired in terms of guidance for lower courts and litigants. Nonetheless, the Eighth Circuit’s recent refusal to revive a putative class action over Charter Communications Inc.’s allegedly indefinite retention of consumer data illuminated a way for defendants to trim claims of bare statutory violations, while clarifying how Spokeo should be applied.

In Suit Alleging Misleading Employment Rates, Third Circuit Rejects Class Certification Premised Upon Invalid Damages Theory

The Third Circuit recently affirmed a decision from the District Court of New Jersey denying class certification in an action alleging that Widener University School of Law defrauded its students by publishing and marketing misleading statistics about graduates’ employment rates. In its precedential opinion adjudicating plaintiffs’ interlocutory appeal pursuant to Fed. R. Civ. P. 23(f), the Third Circuit concluded that although the District Court misconstrued plaintiffs’ damages theory, the error was harmless because the Court would have nonetheless concluded that plaintiffs failed to satisfy the predominance requirement. This opinion, authored by Circuit Judge Chagares, is an example of defendants defeating class certification when plaintiffs cannot proffer a valid method of proving class-wide damages, as required by the U.S. Supreme Court in Comcast v. Behrend several years ago.

Wrap Up of United States Supreme Court’s 2015-2016 Term

With the close of the United States Supreme Court’s 2015-16 term, we offer this wrap up of the Court’s term, focusing on decisions of special interest from the business and commercial perspective (excluding patent cases): Upon being granted a discharge from a Bankruptcy Court, a bankrupt’s debts are discharged unless a particular debt falls within one of the Bankruptcy Code’s statutory exclusions. One of those exclusions is for debts arising from “false pretenses, a false representation, or actual fraud.” Husky Int’l Elecs., Inc. v. Ritz asked whether a debt arising from a fraudulent transfer made for the purpose of frustrating a creditor, but accomplished without making a false representation, is subject to this exclusion.

Supreme Court in Spokeo Holds Plaintiffs Must Allege More Than a Bare Procedural Violation to Stand Up for Their Rights

After much anticipation, the United States Supreme Court issued its decision in Spokeo v. Robins, a case that many believed would finally establish a definitive ruling as to whether a federal statute which awards statutory damages to those impacted is sufficient to confer Article III standing. The question is particularly relevant in the class action context where class members could be awarded statutory damages in the absence of any actual damages. Unfortunately, although the Court considered the scope of the injury-in-fact requirement, the 6-2 decision still leaves the standing question open to interpretation by courts and by both plaintiffs and defendants.

“Bound by the Terms of His Bargain”: Third Circuit Underscores the Difficulty of Vacating Arbitration Awards

In a recent precedential decision, Whitehead v. The Pullman Grp., LLC, the Third Circuit reminded litigants that it’s as tough as ever to vacate an arbitration award – and cast further doubt on the viability of the “manifest disregard of the law” standard here. Appellant Pullman entered into a contract with two singer-songwriters in May 2002, which gave him the exclusive option to purchase their song catalog following a 180-day due diligence period.

Super Bowl Tickets Not the Ticket to Federal Class Action, as Third Circuit Finds No Standing for Uninjured Plaintiffs

“[T]he disappointment of wanting to attend a concert or athletic event only to discover that the event has sold out,” does not confer constitutional standing. That was the take away from the Third Circuit Court of Appeals recent precedential decision, Finkelman v. Nat’l Football League. Addressing the always-thorny contours of constitutional standing to bring a federal lawsuit, the Court held, in the face of high Super Bowl ticket prices, that neither non-purchasers of tickets nor purchasers of “scalped” tickets at elevated prices, had standing to sue under Article III. This opinion sets up yet another obvious roadblock in the path of plaintiffs looking to bring claims—whether or not as class actions—when their perceived injuries are either non-existent or so tenuous as to make “difficulties in alleging an injury-in-fact . . . insurmountable.”