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U.S. Supreme Court Limited Authority to Remove Class Actions to Original Defendants, Third-Party Counterclaim Defendants May Not Remove Even Under CAFA

A defendant by any other name does not smell as sweet when it comes to removing class actions from state court to federal court, even under the Class Action Fairness Act of 2005 (“CAFA”). Congress passed CAFA to address perceived abuses in class action litigation and to provide an avenue for defendants to remove class actions filed in state courts to the more neutral ground of the federal court system. But, who can avail themselves of the removal authority provided by CAFA? The U.S. Supreme Court recently held in Home Depot U.S.A. , Inc. v. Jackson, 587 U. S. ____ (2019) that only the ...

No Standing to Sue, No Class Action Settlement - U.S. Supreme Court Remands Cy Pres Settlement Case Without Reaching the Merits

We have been following the Frank v. Gaos, 586 U. S. __ (2019) class action case, which presented an opportunity for the U.S. Supreme Court to determine the limits on the use of the cy pres doctrine in the context of class action settlements to distribute damages paid by a defendant company to entities other than the plaintiff class. On March 20, 2019, the U.S. Supreme Court halted Gaos in its tracks, vacating the Ninth Circuit’s decision approving the contested cy pres settlement and remanding the case for further proceedings to determine whether any named plaintiffs had ...

Standing in the Way of a Supreme Court Decision on Cy Pres-Only Class Action Settlements

What is the value of the class action mechanism if no redress is provided to plaintiffs at all? Is the class action about providing a remedy to plaintiffs, is it just about getting the defendant company to pay something to someone…or has it evolved simply into a mechanism for plaintiffs’ attorneys to collect fees? These are several of the questions raised by Frank v. Gaos, (No. 17-961), which presents the U.S. Supreme Court with an extreme case of the use of the cy pres doctrine in the context of class action cases. The High Court is faced with a cy pres-only settlement in which the ...

What About the Merits – What, If Anything, Will the Supreme Court Do With Cy Pres-Only Class Action Settlements?

We have been talking about Frank v. Gaos, (No. 17-961), since the U.S. Supreme Court decided to tackle the extreme case of the use of the cy pres doctrine in the context of class action cases. The settlement is a cy pres-only agreement which called for distribution of all funds paid by the defendant directly to charitable organizations and plaintiffs’ attorneys (in the form of attorneys’ fees) and there was no attempt at all to distribute any funds to the plaintiff class. The Supreme Court oral argument was held in Gaos on October 31st and the Justices probed several aspects of the heart ...

How Much is that Disclosure Worth? NC Business Court Curbs Attorney Fee Award in Shareholder Disclosure-Only Class Action

Class actions challenging corporate merger transactions often result in settlement agreements in which the only remedy obtained by the plaintiff class is the company defendants’ additional disclosure of information related to the merger. These “disclosure-only” settlements have proliferated in recent years, drawing criticism, in part, due to questions regarding the materiality of any additional disclosures that are obtained and the broad release of claims that the corporate defendants typically receive in exchange for the disclosures. The Delaware Chancery Court ...

Has Cy Pres Gone Too Far: U.S. Supreme Court to Consider When Class Action Plaintiffs Get Nothing, but Their Lawyers and Charities Cash-In Via Plaintiffs’ Settlement

There has been a lot of discussion surrounding class action litigation over the course of the last several years. The U.S. Supreme Court has tackled a variety of issues ranging from the use of class action waivers in arbitration agreements to whether class action plaintiffs can base claims solely on statutory damages when they have suffered no concrete injury themselves. The use of class waivers in arbitration agreements, in particular, has been front and center with the Consumer Financial Protection Bureau’s (CFPB) arbitration study declaring that class waivers were ...

U.S. Supreme Court Says “No” to Plaintiff Attempts to File Repetitive Class Actions After Statute of Limitations Has Run Out

It is easy to overgeneralize the outcome of a legal dispute as pro-plaintiff or pro-defendant to paint a picture of which way a court is leaning and who is finding favor. This week, the U.S. Supreme Court issued its second class action decision in as many months that is favorable for defendant companies. No doubt this will stir grumblings about pro-business interests being elevated above the individual. But, at its heart, the Supreme Court’s decision in China Agritech, Inc. v. Resh, 584 U.S. ___ (2018) simply holds class actions plaintiffs to the bounds of the law as proscribed in the ...

A Split U.S. Supreme Court Upholds Class Waivers in Individual Employment Agreements, Highlighting the Role of Congress in the Class Waiver Fight

The viability of class waivers in employment agreements has been a closely watched battle in the courts since the National Labor Relations Board (NLRB) ruled in D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764, 357 NLRB No. 184 (2012) that class waivers in individual employment agreements violate the National Labor Relations Act (NLRA) by preventing employees from engaging in concerted action related to their employment. Faced with an Executive Branch that was “speaki[ng] from both sides of its mouth” on this issue and a Congress that recently overturned another ...

The Doors of State Courthouses Remain Open to Class Action Plaintiffs with Federal Securities Act of 1933 Claims Related to Offerings of Securities

In 2017, federal securities class actions were filed at a rapid clip, averaging more than one per day - a level not seen in nearly 20 years according to survey data. It was the third year of growth and a 44% increase over 2016. Only a small subset (25 or 5.7%) of the record-setting 432 federal securities class actions filed last year were claims filed under Section 11 of the federal Securities Act of 1933 (1933 Act), which is at the heart of the U.S. Supreme Court’s decision in Cyan Inc. v. Beaver County Employees Retirement Fund. The 1933 Act requires companies offering securities to the ...

This year important questions regarding the viability of class action waivers in arbitration agreements have moved close to resolution. In July, the Consumer Financial Protection Bureau (CFPB) issued a long-awaited final rule that prohibited class waivers in arbitration agreements related to a broad range of financial products. And employees and the National Labor Relations Board (NLRB) have continued to push against the enforceability of class waivers in the context of individual employment agreements, driving the issue to the U.S. Supreme Court for review. On November 1 ...

U.S. businesses have the good fortune to be on the receiving end of a favorable U.S. Senate vote nullifying the hotly-contested Consumer Financial Protection Bureau (CFPB) rule banning class action waivers in certain consumer finance arbitration agreements. The rule, issued by the agency in July 2017, took several years to finalize and was criticized for being based on a flawed data, the result of the agency overreaching, and more beneficial to class action plaintiffs’ attorneys than the consumers it was supposed to protect. Our previous posts discuss in detail ...

The Consumer Financial Protection Bureau (CFPB) recently announced the release of its final rule prohibiting the use of class action waivers in certain consumer finance arbitration agreements. The rule has been several years in the making, and has been widely followed and hotly contested. The final rule was announced on July 10, 2017 and published in the Federal Register on July 19, 2017. Accordingly, it is set to take effect on September 18, 2017 (60 days following publication) and to apply to contracts entered into on or after March 19, 2018 (180 days after the effective date ...

The Consumer Financial Protection Bureau (CFPB) recently announced the release of its final rule that prohibits the use of class action waivers in certain consumer finance arbitration agreements. This rule banning class waivers has been several years in the making, and has been widely followed and hotly contested. The CFPB reports that it received more than 110,000 comments on its proposed rule during the comment period, which raised concerns regarding “whether the effects of arbitration agreements are salient to consumers, whether arbitration has proved to be a fair and ...

The reality of class action litigation is that what is supposed to be the court’s preliminary decision of whether to certify a case as a class action is often the end of the litigation. In many cases, plaintiffs will not proceed if the court denies class certification for reasons including that their individual claims are not large enough to justify the costs. And defendant companies often will settle a case once a class is certified, even if the claims are meritless, because the risk and costs of litigation are too high. Therefore, the opportunity to appeal a class certification ...

Companies Defending Class Actions in NC Have New Right to Appeal Class Certification

COMPANIES DEFENDING CLASS ACTIONS IN NC HAVE NEW RIGHT TO APPEAL CLASS CERTIFICATION (June 4, 2017): The North Carolina legislature recently passed H.B. 239, over Gubernatorial veto, which gives company defendants the right to appeal trial court decisions allowing class certification directly to the North Carolina Supreme Court, securing a guaranteed avenue for early review of class action cases that was not available to companies in the North Carolina courts before and minimizing delays and costs associated with the two-step appellate process. Read more.

Defendant Companies Now Have the Right to Appeal North Carolina Class Certification Decisions Directly to NC Supreme Court

The North Carolina legislature recently passed H.B. 239, over Gubernatorial veto, which gives company defendants the right to appeal trial court decisions allowing class certification directly to the North Carolina Supreme Court. This law parts from North Carolina case law precedent and eliminates the need for the NC Supreme Court to invoke its supervisory authority to review a grant of class certification prior to resolution of a trial, as the court recently did in Fisher v. Flue-Cured Tobacco Coop. Stabilization Corp., 794 S.E.2d 699, 2016 N.C. LEXIS 1120, (NC Dec. 21, 2016 ...

As class action litigation has continued to proliferate, we have seen efforts to rein in the perceived abuses of the system on multiple fronts. Over a decade ago, Congress passed the Class Action Fairness Act of 2005 (CAFA) to provide an avenue for defendants to remove class actions filed in state courts to the more neutral ground of the federal court system. In the last several years, the courts have been called on repeatedly to define the contours of CAFA and the Judicial Conference Advisory Committee on Civil Rules (Advisory Committee) initiated proposed amendments to Federal Rule of ...

Rolling into the new year, North Carolina attorneys are on notice that the ability to gain approval of class action settlements and related attorneys’ fees may become more difficult in some cases. In recent years, we have seen more class actions challenging corporate merger transactions and settlements in which the only remedy obtained by the plaintiff class was the company defendants’ additional disclosure of information related to the transaction. In exchange for the additional disclosures, the corporate defendants typically would receive a broad-based release of ...

NC DISCLOSURE-ONLY CLASS ACTION SETTLEMENTS & ATTORNEYS' FEES MAY FACE INCREASED SCRUTINY (Feb. 2, 2017): Rolling into the new year, North Carolina attorneys are on notice that the ability to gain approval of class action settlements and related attorneys’ fees may become more difficult in some cases. Read More

In the years following the U.S. Supreme Court’s AT&T Mobility v. Concepcion decision, more and more courts enforced class waivers in arbitration agreements based on the commands of the Federal Arbitration Act (FAA). The National Labor Relations Board (NLRB) parted with the post-Concepcion trend to enforce class waivers in D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764, 357 NLRB No. 184 (Jan. 3, 2012), however, and held that such waivers in individual employment agreements violate the National Labor Relations Act (NLRA) by prohibiting employees from acting in ...

Federal class action jurisprudence has been evolving rapidly over the course of the last 5-6 years, with several major U.S. Supreme Court decisions defining and redefining many aspects of class litigation. With the first round of proposed amendments in over a decade, the civil rule governing federal class litigation is set to follow suit. On August 12, 2016, the Judicial Conference Advisory Committee on Civil Rules (Advisory Committee) published proposed amendments to Federal Rule of Civil Procedure 23, which have been in the works since the 2011 formation of the Rule 23 ...

DEFEATED NC CLASS ACTION ULTIMATELY RESULTS IN VICTORY IN MAP ACT FIGHT AGAINST NCDOT (June 16, 2016): What began several years ago as a defeated attempt at a class action against the North Carolina Department of Transportation (NCDOT) ultimately resulted in a win plaintiff landowners in Kirby v. NCDOT (No. 56PA14-2). On June 10, 2016, the North Carolina Supreme Court held that the State’s restrictions placed on property owners under the Roadway Corridor Official Map Act (Map Act) constitute a taking of their property, requiring the state to compensate the landowners ...

What began several years ago as a defeated attempt at a class action against the North Carolina Department of Transportation (NCDOT) ultimately resulted in a win this month for plaintiff landowners in Kirby v. NCDOT (No. 56PA14-2). On June 10, 2016, the North Carolina Supreme Court held that the State's restrictions placed on property owners under the Roadway Corridor Official Map Act (Map Act) constitute a taking of their property, requiring the state to compensate the landowners appropriately. The case was brought originally as a putative class action on behalf of nearly 800 ...

On May 24, 2016, the Consumer Financial Protection Bureau’s (CFPB) long-anticipated Proposed Rule prohibiting the use of class action waivers in consumer finance arbitration agreements was published in the Federal Register and opened for public comment. The Proposed Rule has been expected following the CFPB’s previous study and statements regarding the impact that arbitration agreement class action waivers have on consumers. The CFPB took 370+ pages to explain and justify its proposal, which boils down to consumers of financial products do not typically pursue redress ...

Plaintiffs can count the first class action decision to be issued by the U.S. Supreme Court since the death of Justice Scalia as a win; although, they did not receive broad authorization to proceed carte blanche, as some had hoped. On March 22, 2016, a 6-2 split Court issued its opinion in the Tyson Foods, Inc. v. Bouaphakeo et al Fair Labor Standards Act (FLSA) class action which called into question the extent to which statistical averaging may be used to establish liability on a classwide basis and whether a class may be certified if it contains uninjured class members. The Court issued a ...

MLB Litigation Brief: Class Action Questions Open After Scalia’s Death, Arbitration Fees and American Rule & More


Our goal is to serve as a cutting-edge resource for companies operating in an increasingly globalized and regulated business environment. Moore & Van Allen’s MLB Litigation Brief is a complement to our Litigation Blog’s in-depth individual treatment of critical issues emerging in federal, North Carolina state, and international litigation, as well as in arbitration, regulatory enforcement, and related business practices. MLB Litigation Brief hits the highlights of recent developments, streamlining access to critical information for our readers. Subscribe to the MVA ...

Class actions consume considerable company resources and can pose significant risk of exposure in the $ millions or $ billions. Therefore, it is critical for companies to prepare themselves – to know the trends in class action litigation and the tools available to minimize their exposure to class action liability. Over the last several weeks, the Supreme Court has heard arguments in three cases that have potential to further define the landscape of class action litigation: Campbell-Ewald Co. v. Gomez (No. 14-857), Spokeo, Inc. v. Robins (No. 13-1339), and Tyson Foods, Inc. v ...

Class actions consume considerable company resources and can pose significant risk of exposure in the $ millions or $ billions. Therefore, it is critical for companies to prepare themselves – to know the trends in class action litigation and the tools available to minimize their exposure to class action liability. Over the last several weeks, the Supreme Court has heard arguments in three cases that have potential to further define the landscape of class action litigation: Campbell-Ewald Co. v. Gomez (No. 14-857), Spokeo, Inc. v. Robins (No. 13-1339), and Tyson Foods, Inc. v ...

Class actions consume considerable company resources and can pose significant risk of exposure in the $ millions or $ billions. Therefore, it is critical for companies to prepare themselves – to know the trends in class action litigation and the tools available to minimize their exposure to class action liability. Over the last several weeks, the Supreme Court has heard arguments in three cases that have potential to further define the landscape of class action litigation: Campbell-Ewald Co. v. Gomez (No. 14-857), Spokeo, Inc. v. Robins (No. 13-1339), and Tyson Foods, Inc. v ...

The North Carolina Court of Appeals considered for the first time whether it is legal in a class action settlement agreement for one party to agree to pay the other’s attorneys' fees and expenses. The court concluded that it is legal, subject to appropriate judicial review. But, the court’s ruling leaves local North Carolina counsel shut out of the roughly $1 million attorneys’ fee award granted to New York lead counsel. The appellate court’s opinion in Ehrenhaus v. Baker, Nos. 14-1201, 14-1083 (N.C. Ct. App. Sept. 15, 2015)(“Ehrenhaus II”) reads much like a primer on ...

CFPB Singles Out Class Action Waivers for Elimination from Consumer Financial Arbitration Agreements

The Consumer Financial Protection Bureau (“CFPB”) made clear this week that, in its view, class action waivers should be on the chopping block in the agency’s upcoming rulemaking aimed at regulating the use of arbitration clauses in consumer financial agreements.  In an October 7, 2015 release, CFPB Director Cordray expressed the agency’s critical stance on companies’ use of arbitration agreements that prohibit consumers from participating in class actions, calling such clauses a “free pass to sidestep the courts and avoid accountability for wrongdoing,” while ...

As it stands, the National Labor Relations Board (“NLRB”) has taken the position that class action waivers in individual employee/employer arbitration agreements are illegal and the agency continues to invalidate these agreements even though the Fifth Circuit Court of Appeals has held that they are enforceable.  In D.R. Horton (2012), the NLRB invalidated class action waivers in individual employment agreements on the grounds that such waivers interfere with an employee’s rights to collective action provided by the National Labor Relations Act (“NLRA”).  The Fifth ...

Circumscribing an individual’s power to subject companies to class and collective actions has been on the forefront of corporate litigation for several years, particularly in light of the growing trend of class action filings.  An increasingly common scenario facing corporate defendants is the “no-injury class” in which many members of a certified class actually sustained no injury or damages, resulting in a much larger class to which damages might be awarded.  This issue has arisen in a variety of contexts, including product liability class actions like the Whirlpool moldy ...

Supreme Court to Decide if Class Action Machine Grinds to a Halt After Offer of Complete Relief to Named Plaintiff

A recent global survey of corporate counsel revealed that the increasing number of class actions filed is considered to be the most important litigation trend currently facing companies.  Over the last several years, companies and plaintiffs alike have been urging the U.S. Supreme Court to clarify the boundaries of class action litigation.  The High Court recently agreed to tackle an issue presented by Campbell-Ewald Co. v. Gomez (No. 14-857), which has the potential to arm companies with a method for shutting putative class actions down early.  The reality facing corporations is ...

MLB Litigation Brief: 4th Circuit Hostile Work Enviro, Class Action Trends Cause Concern, Low-Wage Non-Competes & More


Our goal is to serve as a cutting-edge resource for companies operating in an increasingly globalized and regulated business environment. Moore & Van Allen’s MLB Litigation Brief is a complement to our Litigation Blog’s in-depth individual treatment of critical issues emerging in federal, North Carolina state, and international litigation, as well as in arbitration, regulatory enforcement, and related business practices. MLB Litigation Brief hits the highlights of recent developments, streamlining access to critical information for our readers. Subscribe to the ...

NLRB Judge Finds Employment Contract’s Arbitration Clause Invalid Although No Explicit “Waiver” of Class Actions

Last week, a National Labor Relations Board (“NLRB”) Administrative Law Judge reiterated the agency’s position that employers who require the arbitration of grievances by employees on an individual basis violate the National Labor Relations Act (“NLRA”) by precluding protected concerted activity of the class and collective action mechanisms.  We have seen the NLRB strike down explicit class action waivers in employment contracts in its decisions since D.R. Horton (2012) and Murphy Oil (2014), contrary to the U.S. Supreme Court’s Concepcion line of cases that ...

Class action lawsuits have become a commonplace fixture in the American judicial landscape and carry the force to extract billions of dollars from defendants, many of whom settle once a class is certified due to the costs and risks of litigation, regardless of the merits of the plaintiff’s case.  Ten years ago, Congress tackled several perceived abuses of the class action mechanism by passing the Class Action Fairness Act of 2005 (“CAFA”), which allows defendants to remove certain class actions filed in state court to the more neutral ground of the federal system.  In February ...

Consumer Financial Protection Bureau’s Dodd-Frank Study Scrutinizes Arbitration Agreements & Class Action Waivers

On Tuesday, the Consumer Financial Protection Bureau ("CFPB") released its long-awaited "Arbitration Study: Report to Congress, pursuant to Dodd–Frank Wall Street Reform and Consumer Protection Act § 1028(a)", which presents the results of the agency’s study of the use of arbitration agreements in the context of consumer finance agreements for credit cards, checking accounts, payday and other small dollar loans, general purpose reloadable prepaid cards, private student loans, auto purchase loans, and mobile wireless agreements.  The 728-page study is extensive, to ...

Rare Defendant Class Certified in Federal North Carolina Ponzi Scheme Class Action

Most of the cases that come to mind when you think “class action” consist of a large group of plaintiffs (hundreds or multiple thousands) seeking authorization to proceed as a class in one lawsuit against one or a handful of defendants. It is the rare case in which a large group of defendants are certified as a class in order to facilitate resolution of one plaintiffs’ claims against them. Rare though it may be, Federal Rule of Civil Procedure 23(a) does explicitly allow for the certification of defendant classes if the prerequisites for class certification (numerosity ...

Supreme Court: Companies Fighting State Class Actions Can Remove to Federal Court Without Evidence of Damages

The Class Action Fairness Act of 2005 (“CAFA”) has found its way to the steps of the U.S. Supreme Court several times in the last two years, as plaintiffs and defendants seek to define the parameters of the federal law enacted, in part, to rectify state and local court abuses of the class action process and demonstrated biases against out-of-state defendants.  CAFA provides that a defendant may remove a state class action to federal court if the matter in controversy exceeds $5,000,000, exclusive of interest and costs, and certain other criteria are met.  On December 15, the U.S ...

Unanimous U.S. Supreme Court Gives FLSA Class Action Win to Employers Screening for Theft

Employers continue to face an increasing number of lawsuits (including class and collective actions) claiming they violated the federal Fair Labor Standards Act (“FLSA”) based on a wide variety of policies and conduct.  Recent federal statistics for the 12-month period ending March 31, 2014 show 8,126 FLSA cases had been filed by employees in 2014, up nearly 5% from the cases filed in 2013 and more than double the cases filed ten years prior.  Against this backdrop of unyielding employee litigation, Tuesday’s pro-employer decision issued by a unanimous U.S. Supreme Court in ...

The Bittersweet in Whirlpool’s Moldy Washing Machine Class Action Victory: The War Wages On as We Still Question Whether the Class Should Have Been Certified At All

After many years of battle, Whirlpool Corporation finds itself celebrating a favorable jury verdict in a class action lawsuit. A few weeks ago, a jury had the rare occasion to find for Whirlpool in Glazer v. Whirlpool Corp. (In re Whirlpool Corp. Front-Loading Washer Prods. Liability Litg.), No. 08-65000 (N.D. Ohio), one of several cases in which the company faces product liability allegations associated with mold growth in front-loading washing machines. The harsh reality for corporate defendants is that once a class is certified, the majority of cases settle because the ...

Amendments to Federal Class Action Rules May be on the Horizon: Settlement, Issues Classes, and Notice Requirements on the Front Burner

Class action settlements, certification of issues classes, and class notice requirements are among the topics that may be the subject of upcoming proposed amendments to Federal Rule of Civil Procedure 23. On the agenda for the October 30-31, 2014 Advisory Committee on Civil Rules meeting is a report from the Rule 23 Subcommittee, which was formed in 2011 to consider modifying the rule governing class actions for the first time since the 2001-2003 cycle of amendments. Since its formation, the Subcommittee has identified several issues that may necessitate changes to Rule 23 and is now ...

Your Collective Action Waiver May Not Survive in a Vacuum: 6th Circuit Says Arbitration Was Key to Enforcing Waiver of FLSA Claims

The Sixth Circuit Court of Appeals recently noted in Killion et al. v. KeHE Distrib., LLC, Nos. 13-3357/4340 (6th Cir. Jul. 30, 2014) that it was the first appellate court to tackle head on the question of whether a collective action waiver in the context of Fair Labor Standards Act (“FLSA”) claims can survive in the absence of an agreement requiring individual arbitration.  The collective action waiver before the Sixth Circuit was included in a severance agreement signed by several of the defendant’s employees upon termination, and required that they not consent to be part ...

Last week, the U.S. Supreme Court denied Family Dollar Stores, Inc.’s petition for writ of certiorari seeking review of the Fourth Circuit’s decision in Scott, et. al. v. Family Dollar Stores, Inc., No. 12-1610 (4th Cir. Oct., 16, 2013).  The Fourth Circuit had overturned the District Court’s decision to deny plaintiff’s motion to amend its employment discrimination-based class action complaint on the grounds that “as a matter of law plaintiffs cannot satisfy the Rule 23(a) commonality requirement because the alleged gender discrimination was a result of 'subjective ...

The highly anticipated U.S. Supreme Court ruling in Halliburton Co. v. Erica P. John Fund, Inc., 573 U. S. ____ (2014) (June 23, 2014) left intact the fraud-on-the-market theory established by the Supreme Court in Basic Inc. v. Levinson, 485 U. S. 224 (1988), which is the bedrock upon which securities class actions have rested for nearly thirty years. However, the Halliburton decision provided defendant companies with an avenue for early escape from the impending pressures to settle meritless class litigation by securing their right to rebut the Basic presumption of classwide ...

Securities Class Actions at the Supreme Court: Halliburton and the Fraud-on-the-Market Theory

Over the last few years, securities class actions have given rise to several critical questions ripe for U.S. Supreme Court review, including whether the foundation of the fraud-on-the-market theory established more than twenty-five years ago remains viable. The Supreme Court’s February 2013 decision in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184 (2013) set the stage for one of the most interesting securities cases currently pending before the Court: Halliburton Co., et al. v. Erica P. John Fund S. Ct. No. 13-317. Amgen raised the issue of whether ...

Class Arbitration Waivers Validated by the Eleventh Circuit in FLSA Actions

The Eleventh Circuit in Walthour v. Chipio Windshield Repair, LLC, No. 13-11309 (11th Cir. March 21, 2014) recently joined the Second, Fourth, Fifth, and Eighth Circuits in upholding class arbitration waivers in a Fair Labor Standards Act (“FLSA”) action.  Plaintiffs in Walthour argued that the statutory right to file a collective action under the FLSA cannot be waived, as it is a substantive right.  Plaintiffs pointed to the statute’s text, legislative history and purposes to support their position that the FLSA’s right to collective action trumps the Federal ...

On February 24, 2014, the U.S. Supreme Court denied certiorari in three “moldy” washing machine class actions, which presented questions regarding Fed. R. Civ. P. 23’s commonality and predominance requirements as clarified by Wal-­Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). In a previous post, we discussed in detail the Sixth Circuit’s rationale for upholding the trial court’s certification of a liability class in  Whirlpool Corp. v. Glazer, et al (No. 13-431), despite the fact that there were four different ...

The North Carolina Court of Appeals recently declared the enforceability of class arbitration waivers despite the North Carolina Supreme Court’s previous decision in Tillman v. Commercial Credit Loans, Inc., 362 N.C. 93, 655 S.E.2d 362 (2008), which invalidated an arbitration agreement based, in part, on a class arbitration waiver.  In companion cases, Torrence v. Nationwide Budget Finance, et. al., No. 05- CVS 447 (N.C. Ct. App. Feb. 4, 2014) and Knox v. First Southern Cash Advance, et.al., No. 05-CVS-445 (N.C. Ct. App. Feb. 4, 2014)**, plaintiffs had secured class ...

D.R. Horton Still Alive: NLRB Judge Says Employer’s Intent to Compel Employees to Waive Class Claims Renders Arbitration Clause Unenforceable Even When there is No Explicit Waiver

Although the Circuit Courts of Appeals that have addressed the issue currently stand united in the view that class arbitration waivers in individual employment contracts do not violate the National Labor Relations Act (“NLRA”), the National Labor Relations Board (“NLRB”) ruling to the contrary in D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764, 357 NLRB No. 184 (Jan. 3, 2012) continues to drive the invalidation of arbitration agreements in employment agreements.  On January 17, 2014, an NLRB Administrative Law Judge relied on the NLRB’s decision in D.R ...

Unanimous U.S. Supreme Court Ruled State Parens Patriae Action is Not Removable Under CAFA

In a unanimous decision, the Supreme Court ruled on Jan. 14, 2014 that the state parens patriae action in Mississippi ex rel. Hood v. Au Optronics Corp. was not removable under the Class Action Fairness Act of 2005 as a “mass action,” because the state is the only named plaintiff:  571 U. S. ___ (2014).  You can read our previous posts on AU Optronics here and here.  Posted by Tony Lathrop, January 17, 2014.

“Loath to create a circuit split,” the Fifth Circuit Overturns NLRB’s D.R. Horton Ruling that Class Arbitration Waivers in Individual Employment Contracts Violate the NLRA

            The Fifth Circuit Court of Appeals recently rendered its long-awaited decision in D.R. Horton, Inc. v. NLRB, No. 12-60031 (5th Cir.  Dec. 3, 2013), revised December 4, 2013, which reversed the National Labor Relations Board (“NLRB”) ruling that held a class arbitration waiver contained in an arbitration provisions of individual employment contracts violated the rights of employees under the National Labor Relations Act (“NLRA”) to engage in concerted activities.  The NLRB issued its decision in D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764, 357 NLRB No. 184 ...

Two Principles “Readily Derived” from Wal-Mart v. Dukes that Drive Class Certification in Employment Discrimination Actions: The Fourth Circuit View in Scott v. Family Dollar

            The Fourth Circuit Court of Appeals identified two principles driving the potential certification of a class in employment discrimination cases in Scott, et. al. v. Family Dollar Stores, Inc., No. 12-1610 (4th Cir. Oct., 16, 2013) that it believes are “readily derived” from Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), but were misunderstood by the District Court when it denied plaintiffs an opportunity to amend their complaint to provide additional detail regarding allegations that Family Dollar exercised “centralized control of compensation for store managers at ...

If It Walks Like a Class or Mass Action…Is it Removable Under CAFA? (Part 2)

           We continue our exploration of removability under the Class Action Fairness Act of 2005 (“CAFA”) and the threshold question that has driven a split between the Circuit Courts of Appeals described as “intolerable as a matter of federalism,” carrying CAFA back to the steps of the U.S. Supreme Court.  Before determining whether any requirement for removal under CAFA is met, the critical question is: is the case at hand even a class or mass action?  CAFA debuted on the U.S. Supreme Court’s calendar last term with Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 568 US __ (2013), and ...

If It Walks Like a Class or Mass Action…Is It Removable Under CAFA? (Part 1)

            Last term, the U.S. Supreme Court broke ground on interpreting the Class Action Fairness Act of 2005 (“CAFA”) by setting limits on plaintiffs seeking to maneuver around federal jurisdiction.  Having resolved in Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345, 568 US __ (2013) the quandary presented by plaintiffs attempting to stipulate their way around CAFA’s $5 million threshold for class action removal, the Supreme Court and lower courts recently have been faced with a threshold question of a different nature regarding removability under CAFA: is the case at hand even a ...

A Look at Class Certification through the Lens of In re: Whirlpool Corp. Front-Loading Washer Products Liability Litigation: Finding Commonality & Predominance Despite Comcast and Dukes

            Several opinions issued by the U.S. Supreme Court during the past few years have made it more difficult for plaintiffs to obtain class certification.  Despite the hurdles erected by the Supreme Court’s recent opinion in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) which has been seen to raise the bar for establishing the commonality necessary to obtain class certification, and Comcast Corp. v. Behrend, 569 U.S. ___, 133 S. Ct. 1426 (2013) which addressed the class certification predominance requirement, cases like In re: Whirlpool Corp. Front-Loading Washer Products ...

            The viability of class arbitration waivers as a means for companies to limit their exposure to class actions continues to be tested, including in the employment arena.  One of the first cases to probe the enforceability of class arbitration waivers in employment agreements after AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011) was Raniere, et al. v. Citigroup Inc. filed in the Second Circuit.  Raniere, et al. v. Citigroup Inc., 827 F. Supp. 2d 294 (S.D.N.Y. 2011) was decided by the District Court on November 22, 2011 and appealed to the Second Circuit Court of Appeals on December 19 ...

Beyond the Class Arbitration Waiver: The 9th Circuit View of Concepcion as Broadly Outlawing State Discrimination Against Arbitration

            The U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011) has been the cornerstone of recent jurisprudence validating the use of class arbitration waivers in arbitration agreements to insulate companies from exposure to class action litigation.  Concepcion also has served to bolster the overall strength of arbitration agreements and to illuminate the scope of the preemptive power of the Federal Arbitration Act (“FAA”).  The recent decision by the Ninth Circuit Court of Appeals in Mortensen v. Bresnan Comm’n, LLC, No. 11-35823, 2013 U.S. App ...

The U.S. Supreme Court Ended the Term with an Exclamation Mark at the End of Its Statement on Class Actions and Arbitration: The Amex and Oxford Health Decisions

            The Supreme Court’s October 2012 Term could rightly be named “The Year of the Class Action.”  The High Court received many petitions for review and ultimately issued more than five decisions that tackled issues impacting the landscape of class action practice from questions regarding federal jurisdiction under the Class Action Fairness Act of 2005 to class certification requirements in fraud-on-the-market securities class actions.  Two of the Court’s final class action decisions addressed the impact of arbitration agreements on class actions and class arbitration ...

Save the Last Dance for the Public Injunction: The 9th Circuit’s En Banc Decision in Kilgore v. KeyBank Dances Around Whether AT&T Mobility v. Concepcion Reaches Public Injunction Cases

            In our November, 2012 series, “Once Around the Dance Floor With a Public Injunction, the Vindication of State Rights and AT&T Mobility v. Concepcion,we discussed the potential impact of the impending Ninth Circuit Court of Appeals en banc review of Kilgore v. Keybank Nat’l Ass’n, No. 3:08-CV-02958-THE (N.D.Cal.). (See posts here, here, and here). In the initial appellate review of Kilgore, a Ninth Circuit three-judge panel held that California’s Broughton-Cruz rule that prohibits the arbitration of public injunction claims was preempted by the Federal Arbitration ...

The Fourth Circuit’s View on Class Arbitration Waivers and the Vindication of Statutory Rights: Muriithi v. Shuttle Express, Inc.

            The Fourth Circuit Court of Appeals recently issued a decision placing the AT&T Mobility, LLC v. Concepcion, 131 S.Ct. 1740 (2011) stamp of approval on class arbitration waivers in this Circuit.  In Muriithi v. Shuttle Express, Inc., No. 11-1445, 2013 U.S. App. LEXIS 6464 (4th Cir. Apr. 1, 2013), the Fourth Circuit took on several issues surrounding class arbitration waivers that have been the source of disagreement among lower courts since Concepcion.  The Shuttle Express plaintiff was a shuttle driver for defendant Shuttle Express, a company that provides transportation for ...

What Was the Question? The U.S. Supreme Court’s Answer in Comcast v. Behrend Leaves Us Wondering about the Standard for Analyzing Expert Evidence for Class Certification

             The U.S. Supreme Court’s review of Comcast v. Behrend, 655 F.3d 182 (3rd Cir. 2011) showed promise to resolve uncertainties raised by the lower courts regarding the applicability of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993) at the class certification stage and the depth of analysis courts should apply to expert evidence under Federal Rule of Civil Procedure 23’s rigorous analysis.  We first discussed Comcast in August 2012, after the Supreme Court granted certiorari to review the Third Circuit’s decision upholding certification of a ...

A Unanimous U.S. Supreme Court Prevents Class Action Plaintiffs from Sidestepping Federal Jurisdiction under the Class Action Fairness Act

            Class action defendants hit a home run in Standard Fire Insurance Co. v. Knowles, 568 U.S. ___  (Mar. 19, 2013), one of the U.S. Supreme Court’s latest class action decisions and its first decision to address the Class Action Fairness Act of 2005 (“CAFA”).  Knowles questioned the power of class action plaintiffs to legally bind class members prior to class certification and, in particular, whether class action plaintiffs could avoid federal jurisdiction under CAFA by stipulating with the complaint that the class would not seek damages in excess of the $5 million CAFA ...

The Class Arbitration Waiver is Back at the U.S. Supreme Court: Insights from Arguments in the Amex Federal Antitrust Case

            The line-up of class action cases to be reviewed and ruled upon by the U.S. Supreme Court this year is stacked with heavy hitters.  On the same day that the Court issued its opinion in the Amgen securities fraud class action case (covered in last week's post), the Court heard oral arguments in American Express Co., et al. v. Italian Colors Restaurant, et al., (S.Ct. No. 12-133).  Amex is the first Supreme Court class arbitration waiver case that explores the impact of AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011) on federal claims.  The putative class plaintiffs are corporations and a ...

The U.S. Supreme Court Deals a Blow to Corporations Facing Fraud-on-the-Market Securities Class Actions

            While several of the U.S. Supreme Court’s recent decisions have raised the bar for plaintiffs seeking to bring class actions, the divided Court’s February 27th decision in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, 568 U.S. ___ (2013) dealt a blow to corporate defendants in the securities fraud class action arena.  The Court heard arguments in Amgen in November, 2012 on the issue of whether plaintiffs in securities fraud class actions must prove the materiality of the alleged misrepresentation in order to obtain class certification based on the ...

            The U.S. Supreme Court has issued several decisions over the past few years which have reinforced the federal policy favoring arbitration and have prevented class actions from proceeding against corporate defendants.  Among those decisions was Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010), in which the Supreme Court took steps to preclude class arbitrations by prohibiting arbitrators from ordering the class arbitration of federal antitrust claims where (1) the arbitration agreement was silent on the class issue and (2) the parties stipulated that ...

Does the Class Action Fairness Act Bring an End to the World As We Know It?

            Argument in the first U.S. Supreme Court case reviewing the Class Action Fairness Act of 2005 (“CAFA”) was held on January 7th - The Standard Fire Insurance Co. v. Knowles (S.Ct. No. 1450).  We previously discussed the Knowles case in our series on the Supreme Court’s review of CAFA after the Court granted certiorari to review the case straight from the U.S. District Court for the Western District of Arkansas (see part 1, part 2, and part 3).  At the heart of Knowles is a fight against the notion that class action plaintiffs have the power as “masters of the complaint” to manipulate ...

A Year in the Life of Arbitration and Class Action Litigation: An Update on Significant Developments in 2012

This year we have followed significant developments affecting class action litigation and the force of arbitration agreements.  Many of these developments can be traced to the U.S. Supreme Court’s April 2011 decision regarding class arbitration waivers in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), while others stem from broader issues related to requirements for certification of class actions, federal/state law preemption, and the viability of arbitration as an alternative forum for dispute resolution.  We have explored the enforceability of class arbitration ...

Once Around the Dance Floor with a Public Injunction, the Vindication of State Rights, and AT&T Mobility v. Concepcion (Concluded)

           Kilgore v. Keybank Nat'l Ass'n, No. 3:08-CV-02958-THE (N.D.Cal.) probes many questions as we already have discussed in our first and second posts, which you can read here and here.  In concluding our discussion, let us consider whether California’s Broughton-Cruz rule should be treated differently from other rules which categorically prohibit the arbitration of claims because the interests at stake in a case seeking public injunctive relief exceed the private interests of the parties to the arbitration agreement?  The California courts took the position that claims seeking ...

Once Around the Dance Floor with a Public Injunction, the Vindication of State Rights, and AT&T Mobility v. Concepcion (Continued)

            In this post, we will continue our discussion regarding Kilgore v. Keybank Nat'l Ass'n, No. 3:08-CV-02958-THE (N.D.Cal.), which soon will be reheard by the Ninth Circuit Court of Appeals en bancKilgore explores the impact of the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011) on the validity of arbitration agreements in cases seeking public injunctive relief when there is a state rule that prohibits the arbitration of such claims.  You can read the first part of our discussion here.   

            The Kilgore plaintiff argues in many respects that ...

Once Around the Dance Floor with a Public Injunction, the Vindication of State Rights, and AT&T Mobility v. Concepcion

            “[T]he sometimes delicate and precarious dance between state law and federal law” once again will be performed by the Ninth Circuit Court of Appeals in its en banc review of Kilgore v. Keybank Nat'l Ass'n, No. 3:08-CV-02958-THE (N.D.Cal.).  Kilgore presents another opportunity to define the reach and limitations of the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), challenging long-standing state and federal policies regarding arbitration and probing the breadth of the preemptive power inherent in the Federal Arbitration Act ...

If at First You Don’t Succeed: Res Judicata and the Revival of Motions to Enforce Class Arbitration Waivers post-Concepcion

            The U.S. Supreme Court’s April, 2011 decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011) marked a significant change in the class action landscape with its validation of class arbitration waivers pursuant to the Federal Arbitration Act (“FAA”), despite state laws which previously held such waivers unconscionable and unenforceable.  Post-Concepcion, an arbitration clause that requires the arbitration of all disputes between parties and precludes any class or representative actions could potentially safeguard defendants against costly and ...

The Master of His Complaint? U.S. Supreme Court Urged to Prevent State Class Action Plaintiffs’ Attempts to Evade Removal Jurisdiction under the Class Action Fairness Act (Part 3 of 3)

            Can it be that easy?  Can hundreds of plaintiffs avoid removal of their state actions to federal court simply by dividing their identical claims into two or more complaints with fewer than 100 plaintiffs on each complaint?  So far, two federal circuit courts of appeals– the Seventh Circuit and the Ninth Circuit - have answered “yes,” reasoning that this is precisely what the Class Action Fairness Act of 2005 (“CAFA”) permits in the provisions which circumscribe the removal of state mass actions.  Pointing to the Congressional purposes for enacting CAFA, corporate defendants ...

The Master of His Complaint? U.S. Supreme Court Urged to Prevent State Class Action Plaintiffs’ Attempts to Evade Removal Jurisdiction under the Class Action Fairness Act (Part 2 of 3)

            As a defendant in a state class action, you exercise your right under the Class Action Fairness Act of 2005 (“CAFA”) to remove the case to federal court.  You are facing a putative class action with potentially thousands of class members, and your experts have established by a preponderance of the evidence that the aggregate damages of the class is greater than the $5 million threshold for removal under CAFA.  The federal court, however, remands your case to state court because the plaintiff filed a stipulation along with his complaint which states that he will not seek aggregate ...

          Defendants in state class actions will be interested in this three-part blog series in which we will examine two cases involving the Class Action Fairness Act of 2005 (“CAFA”) that are under consideration by the U.S. Supreme Court: Standard Fire Insurance Co. v. Knowles (S.Ct. No. 11-1450) and Bristol-Myers Squibb Co., et al. v. Anglin (S.Ct. No. 12-147).  Congress passed CAFA, in part, to rectify abuses of the class action process by State and local courts, including demonstrated biases against out-of-state defendants.  See 190 P.L. 2, § 2(a)(4), (b).  CAFA provides that a ...

Query: Whether a Class Arbitration Waiver Can Stand in the Face of Federal Claims and Whether the Vindication of Rights Doctrine Applies to State Law Claims?

The critical inquiry into the breadth and depth of the U.S. Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011) continues with two Petitions for Writ of Certiorari recently filed in the high court: Buffington et ux. v. SunTrust Banks Inc., S.Ct. case number 12-146, and American Express Co. et al. v. Italian Colors Restaurant et al., S.Ct. case number 12-133.  The decisions of the Second Circuit in Amex and the Eleventh Circuit in Buffington stand juxtaposed, with the Second Circuit having found a class arbitration waiver unenforceable because it was not ...

The Proper Expert Inquiry at the Class Certification Stage

     What is the proper inquiry into expert evidence proffered by parties at the class certification stage?  Last year, we discussed cases from several U.S. Courts of Appeals which highlighted some of the uncertainties surrounding the applicability of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993) and the depth of analysis courts should apply to expert evidence at the class certification stage.  See my previous blog here.  The Daubert analysis and Rule 23 rigorous analysis often seem to be conflated by parties and lower courts.  And in the midst of the U.S ...

Will the Supreme Court Answer the Call to Revisit the “Class Arbitration Waiver”?

Discussion regarding the impact of the U.S. Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion has included recognition of the likelihood that Concepcion would not serve as a stamp of approval on all class arbitration waivers – under some circumstances Concepcion likely would not preclude class actions or class arbitrations.  Over the last year, we have watched lower courts and regulatory bodies analyze Concepcion and the validity of class arbitration waivers in a variety of contexts:  state claims vs. federal claims, employment claims vs. consumer claims, antitrust ...

Lower Courts Probe the Line Drawn by Concepcion: Class Arbitration Waivers and Vindication of Rights

Hypothetical Question: a contract contains an arbitration clause that requires the arbitration of all disputes and also prohibits the parties from arbitrating any claims as part of a class or representative action.  Is the class/representative arbitration waiver enforceable under AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011)?

We discussed that there is a significant possibility that Concepcion will not preclude all class actions.  See here.  Lower courts, both federal and state, are in the process of testing exactly where the line will be drawn.  Several lower courts have ...

From Class Action Waivers to State Administrative Hearing Waivers: How Far is the Reach of Concepcion?

Most are aware of the noteworthy U.S. Supreme Court decision in AT&T Mobility v. Concepcion, 131 S.Ct. 1740, issued on April 27, 2011.  I addressed the implications of Concepcion in a previous blog. Concepcion has generated a lot of discussion and has been feared by some to be the “death knell” of the consumer class action.  But can the reach of Concepcion actually be much farther?  Will Concepcion be labeled the “death knell” of preliminary state administrative hearings as well?  The U.S. Supreme Court’s recent summary disposition of a Petition for Writ of Certiorari in the ...

The Full vs. Tailored Daubert Review at the Class Certification Stage

Does expert evidence that is offered in support of class certification need to be scientifically reliable in order to be admissible at the class certification stage? While the Circuit Courts are reportedly split on the application of Daubert at the class certification stage, a look behind the terminology used by the courts (full vs. limited or tailored Daubert review) reveals that the courts consistently have required that the admissibility, i.e., the scientific reliability and relevance, of the expert evidence offered in support of class certification be determined at the class ...

The Fourth Circuit Advises Class Action Plaintiffs that Shady Grove Does Not Provide a License to Bypass All State Procedural Rules

   In March, 2010, the U.S. Supreme Court issued an important ruling in Shady Grove Orthopedic Associates v. Allstate Insurance Co., 130 S. Ct. 1431 (2010) that opened the federal courts to plaintiffs as a forum for class actions. However, the Fourth Circuit Court of Appeals recently advised putative class action plaintiffs that the door opened by Shady Grove is not as wide as they may have hoped.

   The Shady Grove plaintiff filed a class action in federal court based on diversity jurisdiction and sought state statutory penalties in spite of a New York state statute that prohibited class ...

The U.S. Supreme Court Upholds Class Arbitration Waivers and Arbitration Agreements

Over the last three years, the Supreme Court has issued a number of opinions that have given strength to arbitration agreements. The Court has reiterated that the Federal Arbitration Act (“FAA”) places arbitration agreements on equal footing with other contracts. As a result, corporations will be better able to use arbitration to safeguard against costly and lengthy individual and class actions. On August 5, 2011, I addressed these developments and their impact on corporate clients in the “Class Action Update” presented at the Network of Trial Law Firms “Litigation ...

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