ND Cal. Refuses to Decertify Based on Spokeo, Supposed Over-Breadth of Class

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Magistrate Judge Laurel Beeler recently examined the Supreme Court’s Spokeo decision in the context of a claim brought under the Fair Credit Reporting Act.  The decision also provides new clarity on when over-breadth is a deal-breaker for class definitions.  The case is Patel v. Trans Union, LLC, No. 14-CV-00522, 2016 WL 6143191 (N.D. Cal. Oct. 21, 2016).

In Patel, the plaintiff alleges defendants disseminated a consumer-information report that wrongly described him as a terrorist and as having a criminal record. Plaintiff further alleged that when he asked defendants for their file on him, they failed to send him his complete file.

The court had previously certified classes; defendants sought decertification under Spokeo, arguing plaintiff had not suffered “concrete” harm.  Judge Beeler disagreed as to both aspects of the plaintiff’s case.

First, regarding the inaccurate information, the court reasoned:

The court sees little difficulty in concluding that the alleged inaccuracies — being wrongly branded a potential terrorist, or wrongly ascribed a criminal record — are themselves concrete harms. This is fully in line with Spokeo’s express analysis. There, in describing cases in which the violation of a statutory right “can be sufficient…to constitute injury in fact,” the Court analogized to torts for which the law has “long permitted recovery” — picking out, specifically, the torts of “libel” and “slander per se.” Spokeo, 134 S.
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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

DC Circuit: Consumer Financial Protection Bureau “Unconstitutionally Structured”

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In an opinion issued today by the U.S. Court of Appeals for the D.C. Circuit, the court held that the Consumer Financial Protection Bureau is “unconstitutionally structured.” The court found that the “CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director” violates the separation of powers and Article II, which vests in the President “the authority to supervise, direct, and remove at will subordinate officers in the Executive Branch.” The court’s opinion was written by Judge Kavanaugh and joined in full by Senior Judge Randolf, who also issued a separate concurrence. Judge Henderson concurred in part and dissented in part. In total, the panel’s opinions run 110 pages. Bring coffee and an interest in constitutional policy-making.

The practical import of this decision is minor, however, because the remedy ordered for this constitutional flaw does not affect the CFPB’s ongoing operations. “As before, the CFPB will continue to operate and perform its many critical responsibilities, albeit under the ultimate supervision and direction of the President.” So, our current or future President can fire the CFPB’s Director–or not.

This is welcome news. The petitioner had asked the court to “shut down the entire CFPB (if not invalidate the entire Dodd-Frank Act) until Congress, if it chooses, passes new legislation fixing the constitutional flaw.” But the court didn’t bite.… 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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Ninth Circuit: Class Action Waivers in Employment Contracts Violate Federal Law

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In an important ruling, Morris v. Ernst & Young, the U.S. Court of Appeals for the Ninth Circuit held that employment contracts requiring employees to arbitrate suits individually, rather than on a class or collective basis, violate employees’ right to engage in “concerted activity” under the National Labor Relations Act (NLRA). The decision is one of several in the past few months invalidating class action waivers in employment agreements.

Employees of Ernst & Young brought a class action in federal court alleging the accounting firm denied them overtime wages in violation of the Fair Labor Standards Act (FLSA) and California labor laws. In the district court, Ernst & Young successfully moved to compel individual arbitration because the employment contract required employees to arbitrate disputes in “separate proceedings,” and the action was dismissed. The Ninth Circuit, however, reversed.

Writing for himself and Judge Hurwitz, and over the dissent of Judge Ikuta, Chief Judge Thomas concluded that an employer violates § 7 and § 8 of the National Labor Relations Act by requiring employees to sign an agreement precluding them from bringing, in any forum, work-related legal claims together. The court agreed with the National Labor Relations Board that the NLRA establishes a federal right of employees to pursue work-related legal claims together in some forum—arbitration, court, or elsewhere.… Read more

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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For Defense Bar, Class Action and Arbitration Issues Remain Hot Topics for Supreme Court Review

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A recent post by Adam Feldman at Emprical SCOTUS entitled “Cert Filing Leaders” demonstrates that the defense bar’s interest in Supreme Court review of arbitration and class action issues has not abated, despite the passing of Justice Scalia, who often provided a fifth and decisive vote on such issues.

Feldman has reviewed cert petitions pending before the Supreme Court with an eye towards who is filing. He finds that Gibson Dunn, Sidley Austin, WilmerHale, Bancroft PLLC, Jones Day, Kellogg Huber, Latham & Watkins, and Mayer Brown “combine for 46 docket filings so far this year.” More interesting is that “[t]he most petitions from these firms so far this year are in the class action and arbitration areas,” with patent law taking third place.

At least insofar as class actions are concerned, this was a bit surprising. For one, recent efforts to secure a Supreme Court ruling which kills off class actions–think Spokeo, Inc. v. Robins or Campbell-Ewald Co. v. Gomez or Tyson Foods, Inc. v. Bouaphakeo–have largely failed (Robins, Gomez) or backfired (Bouaphakeo). For another, the Supreme Court may remain an 8-member court for a substantial portion of its October 2016 Term. Without a ninth Justice, the Court is unlikey to grant cert in cases which stand a high chance of resulting in a tie vote.… Read more