When at first you don’t succeed, seek post-verdict decertification: Lessons learned from Mazzei v. The Money Store

What do you do when a court certifies a class over your objection and denies your motion for directed verdict on the critical class certification issue at trial, and a jury awards $32 million ($54 million if you count pre-judgment interest) on an individual claim worth $133.80? This was the situation the defendants faced in Mazzei v. The Money Store. What happened defied all odds. Read more >> 

Banking Industry, Mortgage Lending Industry, Pre-Certification Motions, U.S. Supreme Court

New life for the death knell? SCOTUS accepts Microsoft Corp. v. Baker

On January 15, 2016, the U.S. Supreme Court granted certiorari to review the decision of the Ninth Circuit in Baker v. Microsoft Corporation. The question presented is: “Whether a federal court of appeals has jurisdiction under both Article III and 28 U.S.C. § 1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their claims with prejudice.” Read more >>

Class Definitions, Federal Class Action Law, U.S. Supreme Court

No good deed goes unpunished: Did P.F. Chang’s prompt notice of data breach create standing to sue?

On April 14, the court released its opinion in Lewert v. P.F. Chang’s China Bistro, Inc., holding that class plaintiffs may satisfy Article III standing by alleging both an increased risk of fraudulent charges and identity theft, as well as costs incurred in mitigating a future risk of harm. Although this is the second time the Seventh Circuit has addressed standing in this context, the case expands the court’s already generous standard. It also illustrates the difficult choices faced by companies whose systems are hacked. Read more >>

Class Definitions, Data Privacy and Cyber Security, U.S. Supreme Court

U.S. Supreme Court to decide whether “no-injury” classes have Article III standing

On April 27, 2015, the U.S. Supreme Court accepted jurisdiction over Spokeo, Inc. v. Robins, 742 F.3d 409 (9th Cir. 2014), to answer this question: May Congress confer Article III standing upon a plaintiff who suffers no concrete harm and who could, therefore, not otherwise invoke the jurisdiction of a federal court by authorizing a private right of action based on a bare violation of a federal statute?

Court watchers will recall that two years ago, SCOTUS accepted jurisdiction over the same issue in another case from the Ninth Circuit, First American Corp v. Edwards, 132 S. Ct. 2536 (2012). There, the Court was to determine whether a class action could be maintained for an alleged violation of the Real Estate Settlement Procedures Act (RESPA), despite the fact that none of the class members had suffered any actual injury. The case was of enormous consequence since Congress has passed dozens of statutes that grant private rights of action for their mere violation, whether or not there has been an actual harm of any sort.

But the Edwards case was dismissed before decision, and it left many wondering why. The dismissal also left unanswered whether “no-injury” classes can be maintained consistent with Article III.

Spokeo raises the same issues. The plaintiff brought suit against the people-search website for an alleged violation of the Fair Credit Reporting Act (FCRA). The plaintiff, who was unemployed, claimed that erroneous information posted by Spokeo hurt his employment opportunities. He sued for economic loss and emotional distress. The district court found the plaintiff’s injury to be speculative and dismissed his claims. But the Ninth Circuit reversed, despite Spokeo’s argument that the plaintiff lacked standing since he suffered no specific, concrete injury.

Spokeo, like Edwards, is of enormous practical importance far beyond the world of websites. From banks to credit collection companies to telecom providers, Congress has used the concept of statutory standing — and punitive fines — to empower class action lawyers to bring claims worth billions of dollars against companies on behalf of clients who suffered literally no injury at all.

Yet “[f]rom Article III’s limitation of the judicial power to resolving ‘Cases’ and ‘Controversies,’ and the separation-of-powers principles underlying that limitation,” the Supreme Court has deduced a set of requirements that together make up the irreducible constitutional minimum of standing.” Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1386 (2014) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). “Concrete injury, whether actual or threatened, is that indispensable element of a dispute which serves in part to cast it in a form traditionally capable of judicial resolution.” Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 220-21 (1974).

Can Congress create standing for the mere violation of a statute without any corresponding harm, consistent with the requirement of constitutional standing contained in Article III? Will the Congressional enforcement power be curtailed? Or will the Court rule that a technical violation of a statute is concrete enough to meet the test for standing under Article III?

We will be watching.

Standing, U.S. Supreme Court