Debt buyers beware: SCOTUS will decide if the FDCPA applies to you

On Friday, January 13, 2017, the U.S. Supreme Court granted certiorari in Henson v. Santander Consumer USA, Inc. This case raises the question whether a debt buyer is a “creditor” or a “debt collector” under the Fair Debt Collection Practices Act (FDCPA). The answer to this question, it turns out, is far from clear since debt buyers fit plausibly into either category. Read more >>

Banking Industry, Fair Debt Collection Practices Act, Federal Class Action Law

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

Sixth Circuit clarifies CAFA removal rules in favor of defendants

On April 7, the United States Court of Appeals for the Sixth Circuit issued a decision clarifying the rules governing the timing of removal of cases to federal court under the Class Action Fairness Act (CAFA). In Graiser v. Visionworks of America, Inc., the plaintiff sued Visionworks in Ohio state court and sought to represent a consumer class, alleging that Visionworks’ “Buy One, Get One Free” promotional advertisement was misleading and in violation of Ohio’s Consumer Sales Practices Act.

Visionworks removed the case to the United States District Court for the Northern District of Ohio pursuant to CAFA, after applying the plaintiff’s “proposed damage formula” to Visionworks’ own sales data for the relevant time period, concluding that the matter in controversy exceeded $5 million. The district court remanded the case back to state court after the plaintiff argued that Visionworks was tardy in removing the case for two reasons: (1) the amended complaint had been removable (but was not timely removed by Visionworks) on diversity jurisdiction grounds, thereby precluding subsequent CAFA removal; and (2) Visionworks was in possession of its own sales data and could have ascertained CAFA removability months earlier in any event.

The appeals court rejected both bases for the remand and reversed the district court’s decision. First, the Sixth Circuit held that:

[I]n CAFA cases, the thirty-day clocks of § 1446(b) begin to run only when the defendant receives a document from the plaintiff from which the defendant can unambiguously ascertain CAFA jurisdiction. Under this bright-line rule, a defendant is not required to search its own business records or "perform an independent investigation into a plaintiff's indeterminate allegations to determine removability.

Second, the Sixth Circuit held that:

[O]nce a defendant ascertains that a case is removable under CAFA, a defendant may remove the case — within the time constraints of § 1446(b)(1) and (b)(3) discussed above — even if the case was originally removable under a different theory of federal  jurisdiction.

The holdings, on all respects favorable to class action defendants, are consistent with the decisions of other United States Courts of Appeals that have addressed the questions presented to the Sixth Circuit in the Graiser case.

Class Action Fairness Act, Federal Class Action Law, Sixth Circuit Class Action Law

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.

Federal Class Action Law, Other Jurisdictions , Settlements