Allstate Fails to Moot TCPA Class Action

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In an important decision, the Ninth Circuit has rejected defendant Allstate’s attempt to moot a putative class action under the Telephone Consumer Protection Act, by depositing, in an escrow account, sufficient funds to satisfy the named plaintiff’s individual monetary and injunctive relief claims.

The Ninth Circuit’s ruling in Chen v. Allstate Insurance Co. follows closely on the heels of the Supreme Court’s decision in Campbell-Ewald Co. v. Gomez,  136 S. Ct. 663 (2016), which reserved for another day the question whether a defendant could render a case moot if it “deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.” Id. at 672. About a week after the Supreme Court issued its decision in Campbell-Ewald, Allstate sought to “pick off” the named plaintiff in the Chen case. It deposited $20,000 into an escrow account pending entry of a final order by the district court ordering the escrow agent to pay the money to the plaintiff. The issuance of this order, as well as entry of judgment for the plaintiff, Allstate maintained, would require dismissal of the putative class claims as moot.… Read more

Third Circuit Becomes First Circuit Court to Analyze Campbell-Ewald

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The Third Circuit’s analysis is brief, but may shed light on whether the post-Cambell-Ewald tactic of “furnishing” full relief – rather than merely offering it – is a distinction with a difference.

The Supreme Court held in Campbell-Ewald that an an unaccepted settlement offer, made to a putative class representative, “has no force” and therefore does not moot the class action.  Since then, at least one court has distinguished Campbell-Ewald on the ground that when a settlement payment is furnished, rather than merely offered, the case may be mooted.  Leyse v. Lifetime Entertainment Servs., No. 13-cv-5794 (S.D.N.Y. Mar. 17, 2016).

The Third Circuit’s ruling Monday in Weitzner v. Sanofi Pasteur, does not directly address the issue, but its language can be read to suggest that the relevant question is not whether a settlement has been furnished, but whether the furnished payment has been accepted:

These holdings [in Campbell-Ewald] resolve the question presented to us on interlocutory review. Because an unaccepted settlement offer “has no force,” it moots neither Plaintiffs’ individual claims nor the case as a whole.

(emphasis added); see also Jacobson v. Credit Control Servs., Inc., 2016 WL 929427, at *1 (10th Cir.… Read more

Seventh Circuit Declines to Enforce Arbitration Provision

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In Sgouros v. TransUnion Corp., the Seventh Circuit recently declined to compel arbitration because the defendant’s website failed to clearly inform users that they were agreeing to arbitrate their claims.  Judge Wood, writing for the majority and interpreting Illinois contract law, framed the analysis:

we might ask whether the web pages presented to the consumer adequately communicate all the terms and conditions of the agreement, and whether the circumstances support the assumption that the purchaser receives reasonable notice of those terms.  This is a fact-intensive inquiry: we cannot presume that a person who clicks on a box that appears on a computer screen has notice of all contents not only of that page but of other content that requires further action (scrolling, following a link, etc.) Indeed, a person using the Internet may not realize that she is agreeing to a contract at all, whereas a reasonable person signing a physical contract will rarely be unaware of that fact. We need, therefore, to look more closely at both the law and the facts to see if a reasonable person … would have realized that he was assenting to the [agreement]….”

Ultimately, the court held that TransUnion had failed to ensure consumers “would see the critical language before signifying [their] agreement.”  The court noted in particular that while a block of bold text told users that clicking on the box constituted their authorization, it said nothing about contractual terms.  … Read more

Does Tyson Foods Case Redefine Predominance?

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According to Justice Thomas, who (along with Justice Alito) dissented in Tyson Foods v. Bouaphakeo, 555 U.S. ___ (2016), the answer is ‘yes’:

The majority begins by redefining the predominance standard. According to the majority, if some “‘central issues’” present common questions, “ ‘the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.’ ” Ante, at 9 (quoting, 7AA C. Wright, A. Miller, & M. Kane, Federal Practice & Procedure §1778, pp. 123–124 (3d ed. 2005; footnotes omitted)). We recently—and correctly—held the opposite. In Comcast, we deemed the lack of a common methodology for proving damages fatal to predominance because “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.” 569 U. S., at ___ (slip op., at 7).

Slip op. at 8-9 (Thomas, J., dissenting). To drive this point home, Justice Thomas observes in a footnote that “[t]he majority relies on the same treatise citations that the Comcast dissent invoked to argue that individualized damages calculations should never defeat predominance. 569 U. S., at ___–___ (slip op., at 3–4) (opinion of Breyer, J.).” Id.… Read more

Judgment Entered: Distinguishing Campbell-Ewald

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The Supreme Court ruled in Campbell-Ewald v. Gomez earlier this year that a defendant may not “pick off” the class representative by offering full individual relief under Rule 68. The holding was believed by many to be the end of the pick off defense.  Maybe not.

In Leyse v. Lifetime Entertainment Servs., No. 13-cv-5794 (S.D.N.Y. Mar. 17, 2016), a court yesterday entered judgment as a result of a defendant’s offer of full judgment.  From the opinion:

Only Leyse’s individual claim remains, for which he can recover $500 in statutory damages, or a maximum award of $1500 if the violation was willful or knowing. … Defendant Lifetime has offered to pay the plaintiff $1,503 .00 plus costs, and moved for entry of judgment in favor of plaintiff and to dismiss the complaint. Leyse has not accepted this offer. … Defendant’s motion to enter judgment on behalf of plaintiff Leyse will be granted upon payment to the Clerk of Court for credit to plaintiff, of the full offered amount and an additional amount of $400 to cover the costs estimated by the Clerk.

(citations omitted.)

How did the district court distinguish Campbell-Ewald?

I do not read Campbell-Ewald to disrupt the Second Circuit’s precedent allowing for the entry of judgment for the plaintiff over plaintiffs objections.

… Read more

Ninth Circuit: Plaintiffs’ UCL Claim Neither Time-Barred Nor Preempted

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We thought we’d flag two aspects of yesterday’s Ninth Circuit ruling in Beaver v. Tarsadia Hotels. We will refrain from providing any commentary on this case because GLG is one of the firms representing plaintiffs, but here are the basics.

The case concerns a suit by purchasers of non-residential condo units in the Hard Rock Hotel & Condo Project in San Diego. The plaintiffs claimed the developers failed to make certain disclosures in the course of sale transactions, as required by the Interstate Land Sales Full Disclosure Act (ILSA), 15 U.S.C. § 1701 et seq. The district court awarded partial summary judgment on the portion of plaintiffs’ California Unfair Competition Law claim premised on a violation of ILSA, and the Ninth Circuit affirmed.

In a unanimous decision written by Judge Milan Smith and joined by Judge Paul Watford and Judge Michelle Friedland, the Ninth Circuit held that the UCL’s four-year statute of limitations (and its accrual rule) applied, even though the UCL claim was premised on a violation of ILSA, which has a three-year statute of limitations and a different accrual rule. The court explained, “as a general matter, the UCL statute of limitations will apply to a UCL claim, even when that claim is based on an underlying law with its own separate statute of limitations.” Slip op.… Read more

More Comcast Confusion

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Yesterday, we wrote about the ruling in Moore v. Ulta Salon, Cosmetics & Fragrance, in which Central District of California Judge Fernando M. Olguin  concluded (correctly) that “the [Comcast] Court did not hold that damages must be shown through classwide evidence for common liability issues to predominate.”  (emphasis added). Judge Olguin’s conclusion jives with several post-Comcast rulings by the Ninth Circuit.

Today, we note that another court in the same district reached the opposite conclusion, stating that “to certify a class under Federal Rule of Civil Procedure 23(b)(3)” plaintiffs must show that “damages are capable of measurement on a classwide basis.” In re NJOY, Inc. Consumer Class Action Litig., 2016 WL 787415 (C.D. Cal. Feb. 2, 2016). The continuing divergent results on this issue will likely require the Ninth Circuit to take up the issue yet again.

In the Seventh Circuit, on the other hand, there appears to be less uncertainty about interpreting Comcast. Judge Barabara B. Crabb of the Western District of Wisconsin issued a ruling quite similar in tone to Judge Olguin’s.  See Eggen v. Westconsin Credit Union, 2016 WL 797614 (W.D. Wisc. Feb. 26, 2016).  Like Judge Olguin, Judge Crabb was compelled to note that the defendant had ignored circuit court precedent on Comcast, instead arguing that certification was inappropriate due to individualized damages issues.  … Read more

Once Again, Comcast Does Not Require Classwide Proof of Damages

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In previous posts, we’ve noted that some district courts have continued to grapple with Comcast v. Behrend, even though the Ninth Circuit has repeatedly clarified that Rule 23(b)(3) does not require classwide proof of damage.  Given the inconsistent district court holdings, it is not surprising that defendants sometimes avoid mentioning the Ninth Circuit’s holdings.  But in a recent opinion, Judge Fernando M. Olguin dealt with the failure harshly, writing that defense counsel had “misstate[d] the standard set forth in Comcast.” See Moore v. Ulta Salon, Cosmetics & Fragrance, 311 F.R.D. 590 (C.D. Cal. 2015).

In Moore, defendant argued that regardless of whether common questions predominate in the liability context, plaintiff cannot satisfy the predominance requirement unless she also “show[s] that damages can be proven on a class-wide basis.”  Judge Olguin began by noting that the argument hinged on a “failure to address applicable Ninth Circuit precedent.”  Id. at 607.  He continued:

defendant misstates the standard set forth in Comcast. …  The [Comcast] Court did not hold that damages must be shown through classwide evidence for common liability issues to predominate.… Here, if the class prevails on its liability claims … only then will the court determine how many hours of pay each plaintiff is entitled to, how many meal and/or rest breaks each plaintiff was denied, and the resulting penalties that defendant must pay.

… Read more

Court Rules It Has Authority To Decide Whether Class Cert. Is “Logically Antecedent” to Standing Inquiries

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In consumer class actions, it is not uncommon for named plaintiffs to assert state-law claims arising under the laws of states in which no named plaintiff resides. After all, many consumer suits concern products sold nationwide, and there often may be close parity between the laws of states in which named plaintiffs and unnamed plaintiffs reside.

When faced with a class action complaint structured in this way, defendants typically argue, at the pleadings stage, that named plaintiffs lack Article III standing to assert claims based on these other state laws. This is a threshold issue, according to defendants, which must be decided at the outset of the case. Plaintiffs often respond that differences between a named plaintiff’s claims and unnamed class members’ claims should be treated as an issue of adequacy and typicality under Federal Rule of Civil Procedure 23, and should be resolved at the class certification stage.

District courts in the Ninth Circuit have issued conflicting rulings on this question. Some hold that standing analysis must precede class certification, while others hold that class certification may be decided before standing is addressed. Compare Los Gatos Mercantile, 2014 WL 4774611, *4 (adopting the former approach), with Jepson v. Ticor Title Ins.… Read more

C.D. Cal.’s “90-Day Rule” — On Its Way Out?

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Yesterday, in Balser v. Hain Celestial Group, Inc., No. 14-55074, the Ninth Circuit issued a memorandum opinion that may spell the beginning of the end for the Central District of California Local Rule 23-3.  Rule 23-3 states:

Within 90 days after service of a pleading purporting to commence a class action other than an action subject to the Private Securities Litigation Reform Act of 1995, P.L. 104-67, 15 U.S.C. § 77z-1 et seq., the proponent of the class shall file a motion for certification that the action is maintainable as a class action, unless otherwise ordered by the Court.

(emphasis added).  The Local Rule dates back to a time when Fed. R. Civ. P. 23(c)(1)(A) required class certification to be decided “as soon as practicable,” rather than the current “at an early practicable time.”

In the Balser decision, the Ninth Circuit casts serious doubt as to whether the 90-day rule remains viable:

the schedule contemplated by Central District of California Local Rule 23-3, when considered alongside federal rules regarding status conferences and the timing of discovery, is quite unrealistic in light of recent case law regarding the need to establish a sufficient factual record at the class certification stage. See Wal-Mart Stores, Inc.

… Read more