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Apr 03, 2015

Data Breach Round Up

Here’s the latest data breach news from the past few days:

Posted by S. Courter Shimeall in  Data Privacy and Cyber Security  Ohio Class Action Law  Other Jurisdictions    |   Permalink


Mar 13, 2015

Another Circuit Addresses the Pick-Off Play

As we’ve recently discussed, one of the more interesting developments in class action law as of late is the use of the pick-off play, which occurs when a potential class action defendant settles the case with a named plaintiff, potentially mooting the rest of the class action from going forward. And, as we’ve explained in the past, different circuits have come down on different sides on the issue as to whether a Rule 68 offer (an offer to the named plaintiff to fully settle that plaintiff’s damages) indeed moots the rest of the suit. As this story explains, the Eleventh Circuit recently joined the debate and held that it does not:

On December 2, 2014, the United States Court of Appeals for the Eleventh Circuit reversed a district court order dismissing a putative class action as moot, holding that: (1) an unaccepted Rule 68 offer of judgment does not moot a plaintiff’s individual claims; and (2) even if a Rule 68 offer were to moot individual claims, the putative class action would remain justiciable, irrespective of whether a motion to certify the class had been filed at the time of the offer. See Stein v. Buccaneers Ltd. P’ship, No. 13-15417, -- F.3d --, 2014 WL 6734819 (11th Cir. 2014); see also Keim v. ADF Midatlantic, LLC, No. 13-13619 (11th Cir. Dec. 2, 2014) (unpublished) (reversing dismissal of class action based on decision in Stein).

While Stein provides some much-needed clarity regarding the effect of Rule 68 offers on putative class actions in the Eleventh Circuit and aligns the Circuit with most others that have considered the issue, the court’s decision eliminates a strategic option class-action defendants have used to obtain early dismissals, and it may have the unintended consequence of rendering early resolutions of class actions less likely.

In the opinion, the court addresses whether the timing of the Rule 68 offer makes a difference on the issue of mootness. According to the court, a live controversy could still exist after a Rule 68 offer, regardless of whether the remaining plaintiffs have moved to certify the class:

On the issue of the mootness of the class claims, Zeidman [ed note: a Fifth Circuit case from 1998] is different from our case in only one significant respect: in Zeidman, the plaintiffs moved to certify a class before the individual claims became moot, while here, the plaintiffs moved to certify the class only after BLP served its Rule 68 offers. BLP says this changes the result.

We disagree.

First, it is plain that this case still presents a live controversy. The plaintiffs say BLP violated the Telephone Consumer Protection Act and that all class members are entitled to money damages; BLP denies it. In indistinguishable circumstances, Zeidman held the dispute was still live and said: "The case before us, therefore, rests not on whether there exists a live controversy, but on whether the district court has before it some plaintiff with a personal stake in that controversy." Id. at 1042. The same is true here.

Posted by S. Courter Shimeall in  Federal Class Action Law  Other Jurisdictions   Settlements   |   Permalink


Mar 05, 2015

Illinois Attorney General Proposes Changes to “Beef Up” Data Breach Law

As reported by NBC Chicago, Illinois Attorney General Lisa Madigan is pushing a new bill in response to a record 67 million personal records that were breached last year in the state. Here are a few highlights from the piece about the proposal:

Madigan’s bill, which is sponsored by Senator Daniel Biss and Representative Ann Williams, will expand the type of information that requires a company to notify consumers of a breach, including medical information outside of federal privacy laws, biometric data, geolocation information, sensitive consumer marketing data, contact information when combined with identifying information, and login credentials for online accounts.

The bill also requires entities holding sensitive information to take “reasonable” steps to protect the information and requires entities to notify the Attorney General’s office when breaches occur. Madigan said her office would create a website that lists every data breach that affects Illinois to increase awareness among residents.

Posted by S. Courter Shimeall in  Data Privacy and Cyber Security  Other Jurisdictions    |   Permalink


Mar 03, 2015

Michigan District Court Weighs In on Rule 68 Offers

We’ve previously discussed Rule 68 offers — also called a “pick-off play” — in the context of class action proceedings. The essence of a Rule 68 offer is this: a prospective class action defendant settles the case with a named plaintiff, potentially mooting the rest of the class action from going forward.

A recent federal district court decision out of Michigan weighed in on the issue. In Compressor Engineering Corp. v. Charles J. Thomas, Jr., the plaintiffs brought suit under the Telephone Consumer Protection Act (TCPA) for alleged unsolicited advertisements sent via fax machine. The defendant offered the named plaintiff a judgment pursuant to Federal Rule of Civil Procedure 68. When the plaintiff didn’t respond within 14 days, the defendant moved to dismiss the case for lack of subject matter jurisdiction. As the defendant saw it, the claims were moot given the unaccepted offer of judgment.

The district court disagreed. First, it distinguished its case from Genesis Healthcare Corp. v. Symczyk, a Supreme Court decision that, according to the district court, “assumed without deciding that a named plaintiff’s individual claims in a collective action pursuant to the Fair Labor Standards Act (‘FLSA’) were mooted by an unaccepted offer of judgment pursuant to Rule 68.” In the district court’s view, the “Supreme Court limited its holding in Genesis Healthcare to collective actions pursuant to the FLSA and explained that Rule 23 class actions were ‘fundamentally different from collective actions under the FLSA . . .’.”

Next, the court addressed Sixth Circuit precedent on the effect of Rule 68 offers in the Rule 23 context: “when ‘the named plaintiff’s claim becomes moot before certification, dismissal of the action is required.’” The court went on to note that Sixth Circuit precedent requires this result only when the “unaccepted offer of judgment” under Rule 68 “satisfies a plaintiff’s entire demand.” Here, it did not. While the unaccepted monetary offer took care of the plaintiffs’ financial demands, it did not address the plaintiffs’ additional request for injunctive relief namely injunctive relief against “further violations” of the TCPA.

Here’s the full opinion from Judge Paul Borman.

Posted by S. Courter Shimeall in  Other Jurisdictions   Sixth Circuit Class Action Law  Telephone Consumer Protection Act   |   Permalink


Dec 31, 2014

The Good Faith Defense in a TCPA Lawsuit

Many businesses know that calling the wrong party could mean trouble according to the Telephone Consumer Protection Act (TCPA). In broad terms, the law forbids cell phone calls without the consent of the called party. This recent blog post sets up a potentially frightening scenario for businesses — an accidental call:

It is possible that a business may contact a changed or recycled phone number. According to the Wall Street Journal, as many as 37 million phone numbers are recycled each year by telephone companies. It is equally likely that a customer could accidentally input an incorrected single digit when providing his contact information. If that incorrectly inputted cellular telephone number turns out to be an actual phone number assigned to someone else, should that lead to expensive class action litigation for a business that otherwise has all the mechanisms in place to comply with the Telephone Consumer Protection Act (TCPA)? Common sense says no.

The post includes case details that explain the good faith defense in a TCPA lawsuit, which generally defines the belief that a business was contacting the party it intended to contact, not someone with the intended party’s old or recycled cell phone number. As the post explains, the defense is not bulletproof but still presents a strong argument for dismissal of a TCPA suit and, at a minimum, an argument against class certification.

Posted by S. Courter Shimeall in  Federal Class Action Law  Legislation Affecting Class Litigation  Other Jurisdictions    |   Permalink


Nov 03, 2014

Class Actions on the Energy Front

We recently wrote about the Dart Cherokee case — particularly about the pleading standard when it comes to the amount in controversy for the sake of removing a case to federal court. As evidenced by this Forbes editorial, legal commentators have also started taking note of the case. In the editorial, author Rich Samp argues that the U.S. Supreme Court should indeed get to the merits and, in doing so, should reverse the district court’s very narrow construction of the amount in controversy requirement under the Class Action Fairness Act.

In other energy-related class action news, law watchers should be very interested in this lawsuit out of Illinois. The Land of Lincoln has evidently adopted a difficult permitting process before drilling can begin. Some landowners have taken umbrage and responded with a very creative argument: the state’s refusal to grant drilling permits — which, the argument goes, has deprived the landowners of royalty payments — is unconstitutional under the Fifth Amendment. It will be interesting to see what the state court facing this argument makes of it.

Posted by S. Courter Shimeall in  Class Action Fairness Act  Other Jurisdictions   U.S. Supreme Court   |   Permalink


Oct 27, 2014

Is the Aggregation of Job References Mass Credit Reporting?

Plaintiffs recently filed a putative class action suit against the networking site LinkedIn in California federal court. The claim, brought under the Fair Credit Reporting Act, raises questions as to whether the law should apply more broadly than just to the reporting of consumer credit. This Recorder story details the plaintiffs’ theory of the case:

According to the suit, LinkedIn can mine the information provided by users of its professional networking website to find potential references for job applicants without the applicants' knowledge. Searches yield a list of the names and current job titles for potential references, along with the common employer they share with the applicant and time worked together.

The complaint claims that these reference lists amount to a consumer report under the Fair Credit Reporting Act, and that LinkedIn fails to abide by safeguards required under the law.

"In essence, LinkedIn has created a marketplace in consumer employment information, where it sells employment information, that may or may not be accurate, and that it has obtained in part from unwitting members, and without complying with the FCRA," write the plaintiffs lawyers at Greenwald Davidson in Boca Raton, Fla., and the Law Offices Todd Friedman in Beverly Hills. Plaintiffs are asking for statutory damages for willful violation of the FCRA, which run from $100 to $1,000 per violation.

More details on this case are available here and here.

Posted by S. Courter Shimeall in  Consumer Credit Industry  Federal Class Action Law  Other Jurisdictions    |   Permalink


Mar 23, 2014

California district judge denies plaintiff's motion for class certification against Google for failing to meet the predominance requirement of Rule 23(b)(3)

On March 18, 2014, Judge Lucy Koh of the United States District Court for the Northern District of California denied the plaintiff’s motion for class certification with respect to claims against Google, Inc. premised on its operation of Gmail and its Google Apps services. The plaintiffs in the multi-district litigation, In re: Google, Inc. Gmail Litigation, 5:13-md-02430-LHK (N.D. Cal. 2014), alleged that Google had engaged in unlawful interceptions of the content of their email communications through the use of various processing devices for the purpose of gathering data about users. Judge Koh, in rejecting the plaintiff’s request to certify four different classes, with three subclasses of Google Apps and Gmail users, found that no class could meet the predominance requirement of Rule 23(b)(3).

Noting that the predominance inquiry requires a court to wade into the merits in order to predict to some degree what issues will control the outcome of the case, Judge Koh observed that “the question of whether Class members have consented to the alleged interceptions has been central to this case since its inception.” The so-called “consent exception” in each of the various wiretap statutes at issue made it lawful to intercept communications when a party (or all parties) consented, and consent could have been express, or implied from the circumstances.  Judge Koh held that, because Google argued that each of the users had consented to the interception of their communications either expressly or impliedly (in light of user disclosures, news articles about interceptions, and other sources of notice about the practice), no class-wide adjudication was possible.

The Court found that, particularly with respect to the fact-intensive determinations about implied consent, “individual issues regarding consent are likely to overwhelmingly predominate over common issues,” because “there is a panoply of sources from which email users could have learned of Google’s interceptions….” As a result, certification was denied as to all classes, because “a fact-finder would have to determine to what disclosures each Class member was exposed and whether such disclosures were sufficient to conclude, under the Wiretap Act, that Class members consented to the alleged Google interceptions of email.” In concluding, Judge Koh closed the door on any re-filing of a certification motion by denying the plaintiffs’ motion with prejudice, noting that they had already had three chances to succeed.

Posted by Daniel Gibson in  Civil Rule 23 Requirements  Other Jurisdictions    |   Permalink


Jul 12, 2013

Second Circuit rules that equitable tolling principles do not apply to the statute of repose under the Securities Act

Last week, the Second Circuit Court of Appeals affirmed a district court's decision, holding that the American Pipe tolling doctrine does not apply to the three-year statute of repose under the Securities Act of 1933.

In re IndyMac Mortgage-Backed Securities Litigation, the Second Circuit found that the U.S. Supreme Court's ruling in American Pipe & Construction Co. v. Utah that held that "the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action" does not apply to statutes of repose. These statutes, in general, have an "absolute" three-year limitation that is stricter than the statute of limitations, which can be subject to tolling.

The Second Circuit’s decision resolved a split of authority within the Second Circuit, but other U.S. Courts of Appeals, including the Federal, Fourth and Tenth Circuits, remain split.  For more, read the full decision.

Posted by Ali Haque in  Civil Rule 23 Requirements  Federal Class Action Law  Other Jurisdictions    |   Permalink


Jul 08, 2013

Ninth Circuit Court expands period in which defendants can remove a case to federal court

Recently, the Ninth Circuit Court of Appeals reversed a district court's remand to state court under the Class Action Fairness Act (CAFA) of a wage-and-hour class action when it rejected an interpretation of 28 U.S.C. § 1446(b)(1) and (b)(3) that says defendants can remove a case to federal court "only during the two thirty-day periods specified in those subsections," which are "thirty days after a complaint has been filed or within that same time frame after plaintiffs provide defendants with a document with facts supporting the removal of the case."

In Amy Roth et al. v. CHA Hollywood Medical Center et al., the Ninth Circuit found that these two time periods "operate as limitations on the right to removal rather than as authorizations to remove" and that they "do not otherwise affect the time during which a defendant may remove" under the federal removal statute, 28 U.S.C. § 1441.

The Ninth Circuit concluded that when 28 U.S.C. §§ 1441 and 1446 are read together, a defendant may remove a case outside the two thirty-day periods under 28 U.S.C. § 1446 as long as one of the two thirty-day periods is not triggered.  For more, read the full opinion.

Posted by Ali Haque in  Class Action Fairness Act  Federal Class Action Law  Other Jurisdictions    |   Permalink


Nov 19, 2012

Choice of Law Decision Leads to Dismissal of State False Advertising Claims in Class Action Against General Mills

“Wow, I can help lower my cholesterol 10 percent in one month?” This and other statements on Cheerios boxes led the FDA to issue a warning letter to General Mills. Without commenting on the accuracy of the health claims in the Cheerios marketing, the FDA noted that if the cereal is intended for use in lowering cholesterol, then it’s a drug within the agency’s regulatory supervision. Cheerios boxes were relabeled, but that didn’t stop the class action plaintiffs. Six complaints were filed by plaintiffs in California, New Jersey and New York. Apparently, all were filed in state court seeking state law remedies. The U.S. Judicial Panel on Multidistrict Litigation Committee consolidated the actions into one multidistrict litigation. For more, read the full story

Posted by Gregory Krabacher in  Federal Class Action Law  Other Jurisdictions    |   Permalink


Oct 09, 2012

The End of Incentive Agreements for Plaintiffs?

Recently, the Ninth Circuit Court of Appeals issued a decision that calls to task the unethical behavior of class counsel. As a result, class counsel was denied some of its fees and a serious blow to the legitimacy of incentive agreements was dealt.

In the consolidated case of Rodriguez vs. Disner, case no. 10-55309 (9th Cir.), the court held that due to the inherent conflict of interest created by the incentive agreement in place between the McGuireWoods law firm as class counsel and select class members, it would award neither incentive compensation to the select class members nor incentive fees to McGuireWoods.

The case arose out of an antitrust class action law suit brought by the plaintiffs against West Publishing (owner of BAR/BRI) and Kaplan. The plaintiffs alleged that these two defendants conspired to prevent competition and wrongfully monopolize the full-service bar review course market, all in violation of applicable federal law. Shortly before trial, the allegations were resolved and the case was settled. West Publishing and Kaplan agreed to pay $49 million into a settlement fund, with 25 percent of that amount set aside for attorneys’ fees.

The twist here is that the original class counsel, Van Etten Suzumoto & Becket LLP (which later merged with McGuireWoods LLP), had entered into incentive agreements with five of the plaintiffs. Pursuant to these agreements, the law firm would apply for additional compensation for these plaintiffs, together with the concomitant attorneys’ fees. Per the terms of the agreement, the law firm would seek incentive awards upwards of $75,000 per plaintiff.

For more, read the full article.

Posted by Christopher Ernst in  Other Jurisdictions    |   Permalink


Sep 17, 2012

MERS class action dismissed in New Jersey federal court

The United States District Court for the District of New Jersey has declined a remand request and dismissed a putative class action filed by homeowners against HSBC Mortgage Services Inc. and Mortgage Electronic Registration Systems, Inc. In Napoli v. HSBC Mortgage Servs., Inc., Case No. 12-CV-222 (D. N.J. 2012), the plaintiffs alleged that HSBC and MERS fraudulently overcharged them and similarly situated foreclosed-upon borrowers by overstating the payoff amounts due on their home loans, and asserted claims for breach of contract and violations of the New Jersey Consumer Fraud Act, the Truth-In-Consumer Contract, the Warranty and Notice Act, and the Uniform Commercial Code. The case was originally filed in New Jersey Superior Court and was removed by the defendants pursuant to the Class Action Fairness Act (CAFA). The plaintiffs had been foreclosed upon and were facing the sale of their properties following judgment when they refinanced their properties immediately prior to sale. Plaintiffs alleged in their complaint that the loan payoff amounts that were ultimately refinanced had been overstated by the defendants by more than $6,000. They sought to recover their damages, trebled under the state statutes forming the basis for their claims. For more, read the full story.

Posted by Daniel Gibson in  Banking Industry  Class Action Fairness Act  Other Jurisdictions    |   Permalink


Sep 10, 2012

Court says no way to cy pres: "Gift" stricken from class action settlement

Courts are questioning whether the trust doctrine of cy pres may be used in class action litigation to permit the distribution of unclaimed settlement funds to charities. While proponents argue that cy pres distributions punish corporate wrongdoing, deter future misconduct and deny “windfalls” to settling defendants, there is mounting concern that the process can erode public confidence in the bar and the judiciary. Of equal concern, leading scholars — and courts — believe that the process is simply unconstitutional.

A recent decision from the U.S. District Court in New Mexico is a case in point. In In re Thornburg Mortgage, Inc. Securities Litigation, 2012 U.S. Dist. LEXIS 107934 (July 24, 2012), the court struck a cy pres provision in an agreed class action settlement that would have made a local charity the primary beneficiary of a class settlement, while excluding some class members from participating in the settlement at all.

In re Thornburg Mortgage, Inc. Securities Litigation is the latest in a series of thoughtful cases addressing the flaws with cy pres awards, and striking them on its own motion. Settling defendants should not hesitate to challenge cy pres distributions and insist that residual settlement funds be returned at the close of the claims period. For more, read the full story.

Posted by Drew Campbell in  Cy Pres  Other Jurisdictions    |   Permalink


Dec 01, 2011

Concepcion, collective-arbitration waivers, and the business of insurance: Arkansas Supreme Court says the McCarron-Ferguson Act reverse preempts the FAA

Following the Supreme Court's decision in AT&T Mobility, Inc. v. Concepcion, 113 S. Ct. 1740 (2011), it seemed clear that states possessed little power to limit the enforcement of arbitration provisions and class action waivers in consumer contracts.  "Arbitration is a matter of contract, and the [Federal Arbitration Act ("FAA")] requires courts to honor parties' expectations."  However, the Supreme Court of Arkansas, in its recent decision in Southern Pioneer Life Ins. Co. v. Thomas, 2011 Ark. 490 (Ark., 2011) identified what could be a significant exception to Concepcion: the business of insurance. 

In Southern Pioneer, the Thomas's executed a credit application and a retail installment contract as part of the purchase of a new car.  The credit application contained a provision calling for arbitration of "[a]ny claim or dispute, whether in contract, tort or otherwise…, which arise [sic] out of or relate to this Application, an installment sale contract or lease agreement, or any resulting transaction or relationship…."  The related retail installment contract provided an option for the purchase of credit-life insurance coverage with Southern Pioneer, the entire premium for which was financed with the purchase price of the vehicle and wrapped into the life of the loan.  The Thomas's opted for the insurance, but subsequently paid off the loan six years ahead of the maturity date.  They then filed a putative class action, alleging breach of the insurance contract against Southern Pioneer and seeking the refund of unearned premiums from the date of payoff through the original maturity date.  Southern Pioneer sought to compel arbitration pursuant to the arbitration clause in the credit application.

The trial court denied Southern Pioneer's motion, and the Arkansas Supreme Court affirmed, because the Arkansas Uniform Arbitration Act (the "AUAA") in effect at the time, and which recognized the validity, enforceability and irrevocability of contractual arbitration provisions generally, expressly did not apply to "any insured or beneficiary under any insurance policy…."  Ark. Code. Ann. 16-108-201(b) (Repl. 2006).  While recognizing that the FAA "would ordinarily preempt conflicting state law," the Court held that the McCarran-Ferguson Act (the "MFA"), [15 U.S.C. 1011, et seq.], "operates to bar application of the FAA and leave the regulation of the insurance industry to the states…."  The MFA provides that "[n]o Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance…unless such Act specifically relates to the business of insurance…."  15 U.S.C. 1012(b).

The Arkansas Supreme Court's decision suggests that, while states may be barred by the FAA from either enacting or judicially enforcing laws or doctrines like the Discover Bank rule, as set forth in Concepcion (California's rule classifying most collective-arbitration waivers in consumer contracts as unconscionable, and therefore unenforceable), states are nonetheless free under the McCarron-Ferguson Act to place limitations or outright prohibitions on collective-arbitration waivers or arbitration agreements generally, if the limitation or prohibition is a law enacted by the state for the purpose of regulating the business of insurance.

However, the Ohio Revised Code does not specifically exempt the business of insurance from the enforceability of contractual arbitration provisions like the AUAA did in Southern Pioneer.  As a result, Concepcion, and by extension the FAA, appear likely to continue to govern the enforceability of arbitration agreements and collective-arbitration waiver provisions in Ohio jurisdictions for the foreseeable future, including those found in contracts of insurance.

Posted by Daniel Gibson in  Arbitration  Federal Class Action Law  Insurance Industry  Other Jurisdictions    |   Permalink






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