Rule 26 Proportionality and Class Counsel’s Communications With Class Members

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A number of courts have grappled with whether a defendant may discover the identities of the absent class members with whom class counsel have communicated, as well as whether counsel may be compelled to produce the underlying communications.

Typically, the analysis has turned on privilege and privacy concerns.  See, e.g., Barton v. U.S. Dist. Court for Cent. Dist. of Cal., 410 F.3d 1104, 1111 (9th Cir. 2005); Tien v. Superior Court, 139 Cal. App. 4th 528, 540 (2006).  A recent opinion adds Rule 26 proportionality concerns as yet another basis for deeming such requests objectionable.

In O’Connor v. Uber Technologies, No. 13-cv-03826, 2016 WL 107461 (N.D. Cal. Jan. 11, 2016), Magistrate Judge Donna M. Ryu acknowledged that the requests “raise the questions of attorney client privilege and work product,” Id. at *4 n.4,  but opted to deny Uber’s motion to compel on other grounds.  The court held Uber failed to show that the utility or significance of the information justified the concomitant burdens:

In light of the foregoing, Uber’s wildly overbroad discovery requests fail Rule 26(b)’s proportionality requirements, given the lack of importance of the discovery to the resolution of the issues in the case, as well as the enormous burden such discovery would place on the attorney-client relationship between class members and class counsel.

… Read more

In re: Rust-Oleum (N.D. Ill.)

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Judge Amy St. Eve’s recent motion to dismiss ruling in the In re Rust-Oleum Restore Marketing, Sales Practices and Products Liability Litigation, 2016 WL 74671 (N.D. Ill. Jan. 7, 2016), is worthy of review — it covers a range of warranty and consumer protection issues.

The opinion is noted without further analysis since my colleagues and I contributed to the pleadings.… Read more

N.D. Cal. Certification of UCC Warranty Claim Against Hewlett-Packard

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On December 18, 2015, Judge Phyllis Hamilton of the Northern District of California issued a ruling certifying a California-only class in a case brought by HP customers who alleged their computers were not equipped with the promised wireless cards. See generally Karim v. Hewlett-Packard Co., No. 12-CV-5240, 2015 WL 9258100 (N.D. Cal. Dec. 18, 2015).

The ruling, along with Judge Hamilton’s previous certification-related opinion in the same case, provide useful guidance on the question of what the of exposure class members need to show in connection for an affirmation that is alleged to form part of the basis of the bargain for an express warranty.

HP had cited a number of cases for the proposition that plaintiff would not be able to show through common proof that the challenged statement formed a basis for each class member’s bargain.  HP had previously cast a similar argument on reliance grounds, but Judge Hamilton ruled that a long line of cases requiring reliance (based on Williams v. Beechnut Nutrition, 185 Cal.App.3d 135 (1986)), had been abrogated by the enactment of section 2313.  This time, HP recast its argument as one of “exposure.”

Judge Hamilton, relying on the analysis in Weinstat v. Dentsply Int’l, Inc., 180 Cal.App.4th 1213 (2010), held that while exposure is relevant, it does not require that the buyers must prove that they actually read the statement; instead … “it is sufficient for plaintiff to show that the statement was made available to them.”  Because the plaintiff had limited the class to those who purchased computers (i) while the relevant language was on the website, (ii) using a customization feature available on the website, plaintiff “met its burden” of limiting the class to “purchasers to whom the representation was made available.”… Read more

Plaintiff’s Law Firm Asks U.S. Supreme Court To Review Order Requiring Contribution to MDL Common Benefit Fund

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The Girardi Keese Law Firm has asked the U.S. Supreme Court to decide “whether a federal court has subject-matter jurisdiction to force state court plaintiffs who have never appeared in federal court to surrender proceeds from their state court settlements to compensate counsel in federal court litigation.” Girardi Keese Law Firm v. Plaintiff Advisory Committee, No. 15-704.
 
The issue arises in multi-district litigation against GlaxoSmithKline LLC concerning its diabetes drug Avandia. According to the petition, which was filed by Paul Clement of Bancroft PLLC, Girardi Keese litigated thousands of suits in California state court, 25 of which were removed to federal court and subsequently consolidated pursuant to 28 U.S.C. § 1407. After years of litigation, the firm negotiated a global settlement for about 4,000 state court and 25 federal court clients. The steering committee in the coordinated actions in federal court then asked the district court to order GlaxoSmithKline “to deposit 7% of the settlement proceeds for each of petitioner’s state court clients into a fund designed to benefit the federal court steering committee.” The district court issued the order, and the Third Circuit Court of Appeals affirmed.
 
The Third Circuit found that Girardi Keese had signed an attorney participation agreement, which obligated it to pay 7% of any recovery into the common benefit fund in exchange for access to work product developed by the steering committee.… Read more

U.S. Supreme Court Asked to Decide Whether Plaintiffs May Appeal an Order Denying Class Certification After Voluntarily Dismissing Their Claims With Prejudice

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Say a federal district court strikes a plaintiffs’ class allegations, because it finds that individual issue predominate and a class cannot be certified. And say the court of appeals declines to review the district court’s order denying class certification under Federal Rule of Civil Procedure 23(f), despite plaintiffs’ insistence that the denial of class certification effectively ends their case, because it would be economically irrational to proceed to final judgment on an individualized basis. Can plaintiffs then voluntarily dismiss their individual claims with prejudice and appeal that judgment pursuant to 28 U.S.C. § 1291, in order to obtain appellate review of the district court’s order denying class certification?

In Baker v. Microsoft Corp., 797 F.3d 607 (9th Cir. 2015), the court, relying on prior circuit precedent, reaffirmed that a voluntary dismissal with prejudice “sufficiently affect[s] the merits of the substantive claims to constitute an appealable final judgment” under § 1291. See id. at 612 (footnote omitted); Berger v. Home Depot USA, 741 F.3d 1061, 1065 (9th Cir. 2014). The court “distinguished a stipulated dismissal without a settlement,” which “retains sufficient adversity to sustain an appeal” under § 1291, from “a stipulated dismissal with a settlement,” which does not.… Read more

Seventh Circuit Follows Several Consumer-Related Precedents to Reverse Cert Denial in an FDCPA Case

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The Seventh Circuit’s recent analysis in a fair debt collection opinion draws heavily from recent opinions in the consumer context and will likely have implications in future consumer cases too. See generally McMahon v. LVNV Funding LLC,– F.3d –, 2015 WL 8119786 (Dec. 8, 2015).

The case arises from allegations that defendants violated the FDCPA by sending out letters that sought to collect on debts for which the statute of limitations had already run. Plaintiff’s suit sought, among other relief, actual damages for those class members “who paid a part of the debt after receiving a … letter.” Id. at *2. The district court denied cert based on a finding that a number of individualized causation and damages issues would be presented: “even if ‘the amount of damages due each class member is “capable of ministerial determination,” causation, i.e., determining whether class members paid the debt because of the letter, out of moral compulsion, or for some other reason, is not.'” Id.

The Seventh Circuit disagreed. Following several of its recent consumer decisions, the court held that the certification denial was an abuse of discretion. The court noted that “[i]t is well established that, if a case requires determinations of individual issues of causation and damages, a court may ‘bifurcate the case into a liability phase and a damages phase.'” Id.… Read more

Rule 23 Subcommittee Drops or Postpones Several Proposed Amendments to Rule 23

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Following its September 11, 2015 mini-conference in Dallas, the Rule 23 Subcommittee has decided to abandon or postpone consideration of several proposals to amend Rule 23. According to the subcommittee, these proposals no longer warrant immediate attention. Here are the proposals which have been put off.

The subcommittee had been considering whether to amend the class action rules to make clear that an “issue class” may be certified under Rule 23(c)(4) even when Rule 23(b)(3)’s predominance requirement is not satisfied for the claim as a whole. It had also been considering amending Rule 23(f) to authorize discretionary immediate appellate review of any issue class certification. The subcommittee has now concluded that “there is no significant need for such a rule amendment[]” because the “various circuits seem to be in accord about the propriety of such treatment ‘[w]hen appropriate,’ as Rule 23(c)(4) now says.”

Also, the subcommittee had been discussing an amendment to Rule 23(e) which would set standards for approval of settlements which include cy pres relief. This proposal generated opposition from the defense bar, which expressed concern that such an amendment would “enshrine” cy pres remedies in Rule 23 itself. Such an amendment would have made it more difficult for the defense bar to mount sweeping attacks on cy pres relief, such as the argument that cy pres awards violate due process.… Read more

Comcast, Restitution, and Trump University

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As California courts continue to grapple with the Supreme Court’s 2013 Comcast v. Behrend decision and appropriate restitution calculations under California’s consumer protection statutes, a recent decision from Judge Gonzalo P. Curiel of the Central District of California provides helpful analysis. Makaeff v. Trump University, LLC, 309 F.R.D. 631 (C.D. Cal. 2015).

The Trump case arose from real estate seminar students’ claims that, in short, they didn’t get what they were promised.  Plaintiffs brought suit under California’s CLRA and UCL, as well as under Florida’ FDUTPA and New York’s General Business Law sec. 349(h).

The primary issue was whether plaintiffs’ proposed classwide restitution and damages model complies with Comcast and applicable state law: Plaintiffs argued that they received no value (or at best de minimis value) in exchange for their money, and argued they were thus entitled to full refunds. Defendants, for their part, argued that state law doesn’t condone a “full refund” theory, and instead requires an amount-paid minus value-received calculation.

The court sided with plaintiffs. First, under California law, plaintiffs were entitled to offer evidence to substantiate their theory that “only a full-refund will return them to the position that they were in before being ensnared by Defendants’ scam.”  Makaeff, 309 F.R.D.… Read more

Certification in Keurig coffee case in the Southern District of Illinois

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Judge Nancy Rosentstengel’s lengthy opinion certifying a class under Rule 23(b)(3) in Suchanek v. Strum Foods, is worth a read in its entirety and is available at 2015 WL 6689359 (S.D. Ill. Nov. 3, 2015), clarified and reconsideration denied at ECF No. 250 (Nov. 19, 2015).

The case is based on allegations that defendants marketed and sold “premium, ground coffee,” which in truth was more than 95% instant coffee. Here are some highlights:

Commonality:
This case had previously been to the 7th Circuit, which concluded that plaintiffs had satisfied commonality. Suchanek v. Sturm Foods, 764 F.3d 750, 756 (7th Cir. 2014). The district court declined to reconsider that conclusion and reaffirmed that the following question was common classwide: whether the coffee’s packaging was likely to mislead a reasonable consumer.

Typicality:
Defendants contested typicality on the grounds that plaintiffs and other class members bought the coffee for different reasons and based on their own beliefs. The court rejected that argument:

What Defendants are essentially saying is that typicality is not satisfied unless the class members all had the same perceptions and knowledge … and the same preferences and reasons for purchasing [the coffee]. This argument goes too far. The standard for typicality does not require the facts underlying every claim to be identical.

… Read more

Further Ninth Circuit Clarification on Comcast and Restitution Under California Law

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Since Comcast v. Behrend, 133 S. Ct. 1426 (2013), was handed down, district courts in the Ninth Circuit have grappled with whether certification under Rule 23(b)(3) requires that damages be susceptible to classwide calculation, with some saying yes and others no. The Ninth Circuit handed down rulings in 2013 and 2014 saying that even post-Comcast it remains permissible under Rule 23(b)(3) for damages calculations to be individualized. See Leyva v. Medline Indus., 716 F.3d 510, 513-14 (9th Cir. 2013); Jimenez v. Allstate Ins., 765 F.3d 1161, 1167 (9th Cir. 2014). Both of these decisions rely on the pre-Comcast Ninth Circuit ruling in in Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087 (9th Cir.2010).

Despite this series of clarifying rulings, courts in the Ninth Circuit have continued to hold that Comcast requires a classwide damages model. E.g., In re ConAgra Foods, Inc., 90 F. Supp. 3d 919, 1021 (C.D. Cal. 2015) (“Rule 23(b)(3) is satisfied only if plaintiffs can show that damages are capable of measurement on a classwide basis.”); McVicar v. Goodman Glob., No. 13-cv-1223, 2015 WL 4945730, at *14 (C.D. Cal. Aug. 20, 2015) (“At the class certification stage, Plaintiffs must present a theory that can measure, on a class-wide basis, damages attributable to Plaintiffs’ theory of liability.”).… Read more