Author Archives: David Stein

About David Stein

David Stein represents plaintiffs in class action litigation against the country’s largest corporations. He has served as court-appointed lead counsel in various consumer protection class action and multi-district proceedings, and his advocacy at both the trial and appellate levels has resulted in product recalls, permanent injunctive relief, and substantial remuneration for class members.

Sixth Circuit Again Rejects Pick-Off Attempt to End Class Action

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In a brief opinion, the Sixth Circuit has again rejected a defendant’s attempt to moot a class action by offering full monetary relief to the named plaintiff.

In Conway v. Portfolio Recovery Associates, the Sixth Circuit was faced with a procedural posture where a defendant in a suit brought under the Fair Debt Collection Practices Act offered the plaintiff judgment in his favor. Although the plaintiff decided against the offer, the district court dismissed the case for lack of subject matter jurisdiction and entered judgment in plaintiff’s favor, over his objections.

The Sixth Circuit reversed, explaining:

Because the intervening Supreme Court decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), squarely resolves the central issue of this appeal, and because we have jurisdiction to say so, the district court’s dismissal and judgment must be set aside.

The Supreme Court has now made clear that an unaccepted offer of settlement or judgment, like the one PRA made to Conway, generally does not moot a case, even if the offer would fully satisfy the plaintiff’s demands for relief. Campbell-Ewald, 136 S. Ct. at 672.

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California’s “Safety Requirement” Takes Another Hit

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Here is a noteworthy excerpt from Judge Whyte’s motion to dismiss and class certification ruling in the pending MDL class action involving Lenovo computers that came pre-installed with adware.  The excerpt below pertains to the California safety requirement in duty to disclose cases – a topic about which we have written several times.  (The excerpt is otherwise offered without commentary since Girard Gibbs LLP is court-appointed class counsel in the litigation.)

Lenovo argues that plaintiffs cannot allege a duty to disclose because a “manufacturer’s duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue.” Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1141 (9th Cir. 2012).
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This court must apply California law. In Wilson, cited by Lenovo, the Ninth Circuit noted that California federal courts have generally interpreted Daugherty, a California Court of Appeal decision, as limiting a manufacturer’s duty to disclose “to its warranty obligations absent either an affirmative misrepresentation or a safety issue.” 668 F.3d at 1141 (citing Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006), as modified (Nov. 8, 2006)). In Norcia, cited by plaintiffs, the district court noted that “the California Court of Appeal itself has very recently clarified that this is a misreading of California law.
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Spokeo: State Legislature Can Confer Standing, Says ED Cal.

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Judge Troy Nunley of the Eastern District of California is the latest to issue an important new opinion analyzing the Supreme Court’s Spokeo decision.   Courts around the country have grappled with Spokeo and whether various statutory violations confer Article III standing.

In Fraser v. Wal-Mart, Judge Nunley considered California’s Song-Beverly Credit Card Act of 1971; Wal-Mart allegedly violated the Act by requesting and recording its customers’ ZIP codes.  Notably, a recent decision from the District of Columbia found plaintiffs in a similar suit lacked standing. See Hancock v. Urban Outfitters, Inc., 2016 WL 3996710 (D.C. Cir. July 26, 2016).

Wal-Mart sought dismissal on a similar basis, arguing that plaintiffs had alleged only “a bare procedural violation” of the Act, which is not enough to constitute standing under Spokeo. Judge Nunley, however, wrote that “The Supreme Court explained that ‘the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact … [and] a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.’”  The court continued: “this Court finds that Plaintiffs adequately allege a procedural violation of Section 1747.08 sufficient to satisfy Article III standing requirements.”

Finally, the court noted that the Spokeo Court had also recognized that the risk of future harm can satisfy the requirement of concreteness for standing purposes.  … Read more

SDNY Rejects Spokeo Challenge, Recognizes Burgeoning Consensus

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In Boelter v. Advance Magazine Publishers Inc., Judge Naomi Reice Buchwald of the Southern District of New York considered Spokeo’s standing analysis in the context of the Michigan Preservation of Personal Privacy Act. The analysis on Spokeo reflects a burgeoning consensus:

 

The PPPA’s requirement that notice be provided to the customer of the ability to “remove his or her name at any time by written notice,” PPPA § 3(d), gives individuals the opportunity to prohibit disclosure of their protected information…. If, as [plaintiff] alleges, Condé Nast failed to give her notice and an opportunity to opt out, then the disclosure of her PRI would have violated the PPPA’s substantive disclosure prohibition.

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[W]e also conclude that the asserted harm is sufficiently concrete. In light of the related aims of the two statutes, it is significant that all courts to consider the question, including this one, have concluded—both pre-and post-Spokeo—that consumers alleging that a defendant violated the VPPA by “knowingly disclos[ing] their [personally identifiable information] to a third party without their consent have satisfied the concreteness requirement for Article III standing.” Yershov v. Gannet Satellite Info. Network, Inc., ––– F.Supp.3d ––––, No. 14–13112–FDS, 2016 WL 4607868, at *7 (D.Mass. Sept.

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NY District Court Declines to Enforce AT&T Arbitration Clause

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In a recent opinion, Judge Block of the Eastern District of New York declined to enforce AT&T Mobility, LLC’s arbitration agreement.  The plaintiff had contracted with AT&T Mobility, LLC for wireless services.  The plaintiff then received unwanted phone calls from one of AT&T’s affiliates – AT&T Corp.  Plaintiff filed suit against AT&T Corp. under the TCPA.

AT&T Corp. asked the court to compel the dispute to arbitration based on the broad language in the AT&T Mobility contract.  Among other things, the contract purported to cover not only disputes with AT&T Mobility, but also any disputes with AT&T Mobility’s subsidiaries, affiliates, or any other related entity.

Declining to enforce the arbitration provision, Judge Block reasoned that

the words expressed [in the arbitration clause] must be judged according to “what an objective, reasonable person would have understood them to convey.” Leonard v. Pepsico, Inc., 88 F. Supp. 2d 116, 127 (S.D.N.Y. 1999) (citing Kay-R Elec Corp. v. Stone & Webster Constr. Co., 23 F.3d 55, 57 (2d Cir. 1994)). Notwithstanding the literal meaning of the clause’s language, no reasonable person would think that checking a box accepting the “terms and conditions” necessary to obtain cell phone service would

obligate them to arbitrate literally every possible dispute he or she might have with the service provider, let alone all of the affiliates under AT&T Inc.’s corporate umbrella—including those who provide services unrelated to cell phone coverage.

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9th Cir: Remand (Not Dismissal) Proper If Plaintiff Lacks Standing

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In Polo v. Innoventions International, the Ninth Circuit recently issue an opinion requiring district courts to remand, rather than dismiss, cases where the named plaintiff is deemed to lack standing.

The plaintiff had initiated the suit in California state court and alleged four class claims, including a CLRA claim. After removing the case, the defendant sought to “pick off” the named plaintiff by providing her with a full refund. The district court held that as a result, the plaintiff lacked Article III standing, granted summary judgment in defendant’s favor, and dismissed the case.

The Ninth Circuit did not address whether the district court was correct in holding that the refund deprived plaintiff of standing – though the court did drop a footnote suggesting the holding was “questionable.” (Compare Chen v. Allstate Insurance Co.). However, the Ninth Circuit did hold that “upon determining that it lacked jurisdiction, the district court should have remanded the case to state court pursuant to 28 U.S.C. § 1447(c)” rather than dismissing it. As the court explained:

the district court generally must remand the case to state court, rather than dismiss it. Bruns v. Nat’l Credit Union Admin., 122 F.3d 1251, 1257 (9th Cir.

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SD FL Rejects Dismissal Attempt Under Spokeo

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As we continue to track standing decisions following the Supreme Court’s Spokeo ruling, a new decision from the Southern District of Florida is noteworthy.

In Guarisma v. Microsoft Corporation, the plaintiff brought suit under the Fair and Accurate Credit Transactions Act (FACTA) after a Microsoft store issued him a printed receipt that bore the first six and last four digits of his credit card account number, along with his name.

Microsoft moved to dismiss on standing grounds, arguing the plaintiff did not suffer a concrete injury.  In response, plaintiff argued that Microsoft’s failure to comply with the FACTA constituted a concrete injury in and of itself.

Under Spokeo and Eleventh Circuit precedent, the court framed the question as “whether, in enacting the FACTA, Congress created a substantive right for consumers to have their personal credit card information truncated on printed receipts, or merely created a procedural requirement for credit card-using companies to follow.”  The answer:

The Court is persuaded Congress intended to create a substantive right.  Notably, other courts have found the FACTA endows consumers with a legal right to protect their credit identities, both pre- and post-Spokeo.

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The FACTA’s legislative history supports the Court’s finding Congress desired to create a substantive legal right for consumers to utilize in protecting against identity theft.  

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3rd Circuit Continues to Recognize “Pick-Off” Exception to Mootness

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After the Supreme Court’s decision in Campbell-Ewald, courts around the country have been forced to reexamine not only when a plaintiff’s claims can be mooted, but also whether a defendant’s attempt to “pick off” the named plaintiff’s claim can moot the entire proposed class’s claims.

In Richardson v. Bledsoe, the Third Circuit became the most recent circuit court to hold that a defendant cannot moot class claims by picking off the named plaintiff — at least as long as the plaintiff did not unduly delay in bringing his or her motion for class certification:
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While Campbell-Ewald, as mentioned above, does not actually address the picking off exception, we see in it some support for the principles animating the exception in the Court’s discussion of class action standing. Specifically, the Court noted that while a class does not become an independent entity until certification, “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.” This statement seems to suggest a corollary: when a would-be class representative is not given a “fair opportunity” to show that certification is warranted (perhaps because her individual claim became moot before she could reasonably have been expected to file for class certification), she should be permitted to continue seeking class certification for some period of time after her claim has become moot.
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SDNY: Defer Standing Until Class Certification

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Awhile back, we wrote about the practice of named plaintiffs asserting state-law claims arising under the laws of states in which no named plaintiff resides. Our last post looked at a decision out of the Northern District of California.  More recently, a decision from the Southern District of New York has addressed the issue.

In Kaatz v. Hyland’s, 2016 WL 3676697 (S.D.N.Y. July 6, 2016), the court addressed a defense argument that the plaintiffs lacked standing to bring a putative nationwide class action under any state’s laws except their own.  The court disagreed:

Although standing is generally a threshold issue for an Article III court to determine at the outset of the case, the Supreme Court created an exception for courts to address class certification prior to standing when certification issues are logically antecedent to Article III concerns.

There is a growing consensus among district courts that class certification is logically antecedent, where its outcome will affect the Article III standing determination, and the weight of authority holds that in general class certification should come first.  In other words, when class certification is the source of the potential standing problems, class certification should precede the standing inquiry.

(Quotations and citations omitted.)

The court also noted that plaintiffs in a “consumer protection class action may assert claims under laws of states where they do not reside to preserve those claims in anticipation of eventually being joined by class members who do reside in the states for which claims have been asserted.”
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GM Ignition and the “Benefit of the Bargain” Theory

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Last week, Judge Jesse M. Furman issued a 103-page ruling disposing of New GM’s partial motion to dismiss.  At the crux of the opinion were plaintiffs’ two damages theories.

First, as the court put it, plaintiffs “pursue an unprecedented theory of damages, one that turns not on whether the vehicles at issue were sold with known, latent defects … but rather on the alleged reduction in resale value of the vehicles due to damage to New GM’s reputation and brand.”  Not surprisingly, given the court’s tone in characterizing the theory, the court ruled the first theory was “unsound.”

Second, plaintiffs also seek damages based on a much more well-established methodology: the benefit of the bargain theory.  As the court described that theory:

The gravamen of the benefit-of-the-bargain defect theory is that Plaintiffs who purchased defective cars were injured when they purchased for x dollars a New GM car that contained a latent defect; had they known about the defect, they would have paid fewer than x dollars for the car (or not bought the car at all), because a car with a safety defect is worth less than a car without a safety defect.

Although New GM argued that this theory too failed “across the board” and that it “always requires a plaintiff to prove manifestation of the alleged defect,” the court held that while different jurisdictions have reached different conclusions, in many jurisdictions the damages theory is viable:

New GM is wrong in arguing that the benefit-of-the-bargain defect theory must fail because New GM did not warrant that its cars would have a particular resale value in the future.  

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