United States: Top Five Developing Issues In Class Action Litigation

Class action litigation is a rapidly developing area of the law. Here are the top five trends to keep an eye on as we approach the new year:

1. Standing to Pursue Statutory Claims

In June 2016, the U.S. Supreme Court held in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), that "Article III standing requires a concrete injury even in the context of a statutory violation," clarifying that Congress' enactment of a statutory right, by itself, is not necessarily enough to confer standing. Under Spokeo, the allegation of "a bare procedural violation, divorced from any concrete harm" is insufficient to establish standing.

Seizing on the Spokeo decision, defendants—particularly in class actions—have attacked the standing of plaintiffs pursuing claims under federal statutes, such as the Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions Act (FACTA), Telephone Consumer Protection Act (TCPA) and Fair Debt Collection Practices Act (FDCPA). These challenges have resulted in hundreds of judicial decisions by federal courts around the country.

While the decisions have varied widely, some trends have emerged. For example, while a growing majority of courts have found standing in TCPA and FDCPA cases, courts are about evenly split in FCRA cases, and a majority of courts have found no standing in FACTA cases. Many courts have reached opposite conclusions despite being confronted with indistinguishable facts. We expect that it may take years for the law to crystallize on these issues as the judicial decisions work their way up through circuit courts and perhaps back to the Supreme Court.

For additional information on standing to pursue statutory claims, please see:

2. Ascertainability Requirement

For a class to be certified, the class definition must provide objective criteria for determining whether a particular individual is a member of the proposed class. This requirement is referred to as "ascertainability." While Federal Rule of Civil Procedure 23 does not expressly refer to ascertainability, most courts have held that the ascertainability requirement is implicit in Rule 23.

Courts differ, however, as to what a plaintiff must show at the class certification stage to satisfy the ascertainability requirement. The 3rd Circuit and some lower courts have held class action plaintiffs to a "heightened ascertainability" standard by requiring that, in addition to defining the outer boundaries of a class using objective criteria, there must also be an "administratively feasible" method to identify class members. See, e.g., Carrera v. Bayer Corp., 727 F.3d 300, 305-07 (3d Cir. 2013). By contrast, the 2nd, 6th, 7th, 8th and 9th Circuits, and the majority of lower courts have held that there is no "heightened ascertainability" requirement in those jurisdictions. See, e.g., Sandusky Wellness Ctr., LLC, v. Medtox Sci., Inc., 821 F.3d 992, 995-96 (8th Cir. 2016); Rikos v. Procter & Gamble Co., 799 F.3d 497, 525 (6th Cir. 2015); Mullins v. Direct Digital, LLC, 795 F.3d 654, 658 (7th Cir. 2015). The Supreme Court has not addressed this issue, but many court watchers expect that to change in the near future.

For additional information on the ascertainability requirement, please see:

3. Fairness in Class Action Litigation Act of 2017

Currently gaining traction in the Senate is the Fairness in Class Action Litigation Act of 2017, which passed the U.S. House of Representatives on March 9 by a vote of 220-201. The bill would make a number of changes to class action requirements and procedures, many of which would serve to benefit defendants and impose additional requirements and risks for class counsel. For example:

  • The bill would require, for class certification, that each member of the proposed class must have suffered the same "type and scope" of injury (which would effectively eliminate classes containing uninjured members), and would impose an "administrative feasibility" requirement (which, as discussed above, many courts have found is not required for certification under Rule 23).
  • The bill would impose an automatic stay of discovery pending a motion to transfer or motion to strike class allegations, reducing costs and burdens on defendants in the early stages of litigation, and would also create a right to immediately appeal from class certification orders (which currently lies in the discretion of appellate courts and is often denied).
  • On top of these changes, the bill would put additional pressure on plaintiffs' attorneys by requiring that attorney's fees be calculated based on the actual class recovery, requiring class action complaints to disclose any relationships and potential conflicts of interest between proposed class representatives and their class counsel, and creating new disclosure requirements relating to class settlements and third-party funding.

It remains to be seen what will happen to the bill in the Senate. Many commentators believe that changes to the bill are likely.

For more information on the Fairness in Class Action Litigation Act of 2017, please see:

4. CFPB's Prohibition of Consumer Arbitration Agreements

On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) issued a new rule prohibiting banks and credit card companies from including class action waivers in their arbitration agreements with consumers. Without such waivers, consumers are able to consolidate their cases into class actions, provided that they are able to meet other legal requirements for filing class actions.

In addition to prohibiting class action waivers in arbitration agreements, the rule imposes significant reporting requirements on banks and credit card companies that choose to continue using arbitration agreements. Companies are required to provide records to the CFPB regarding their arbitrations, including claims sought, counterclaims raised, other filings and final awards that are issued. The CFPB intends to post these materials (after redacting consumers' personal information) on its website beginning in July 2019.

The new rule has received widespread criticism, with opponents arguing that the rule is anti-consumer and anti-business, and promotes frivolous litigation. Congress can, and likely will, take action to nullify the new rule before it goes into effect next year, which would also prohibit the CFPB from attempting to enact any similar type of rule in the future. Even if Congress does not act, substantial political and legal challenges threaten to undercut the power of the CFPB, and of its Director, Richard Cordray, in particular. Cordray has vigorously defended the rule, since speculation has grown that he plans to run for governor of Ohio in 2018.

For additional information on arbitration agreements in the class action context, please see:

5. Mooting Class Actions Through Unaccepted Offers of Judgment

In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), the Supreme Court held that, prior to certification of a class, an unaccepted offer of judgment in full satisfaction of the named plaintiff's claims does not moot the case. Quoting Justice Kagan's dissenting opinion in an earlier case, the Court reasoned that "[a]n unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity, with no operative effect." However, the Court expressly left open the possibility that the result may be different where a defendant deposits the full amount of the plaintiff's individual claim in an account payable to the plaintiff and the district court then enters judgment for the plaintiff in that amount.

Since the Gomez decision, several defendants have attempted to defeat putative class action cases by following the Supreme Court's suggestion. These efforts have been unsuccessful. In Chen v. Allstate Inc. Co., 819 F. 3d 1136 (9th Cir. 2016), the 9th Circuit held that depositing funds into an escrow account payable to the plaintiff, followed by entry of judgment for the plaintiff, was ineffective to moot the case. The court reasoned that placing the funds in an escrow account is not the same as actual receipt of funds by the plaintiff and that it would be inappropriate to enter judgment before the plaintiff had a fair opportunity to move for class certification. The 7th Circuit reached a similar holding in Fulton Dental, LLC v. Bisco, Inc., 860 F. 3d 541 (7th Cir. 2017).

However, courts have recognized that an unaccepted settlement offer can defeat an individual plaintiff's claims after a motion for class certification has been considered and denied. In Leyse v. Lifetime Entm't Servs., LLC, 679 F. App'x 44 (2d Cir. 2017), the 2nd Circuit held that, while such an offer "does not moot a case—that is, it does not strip the district court of jurisdiction over the case—such an offer, if rejected, may nonetheless permit a court to enter a judgment in the plaintiff's favor." Stay tuned for further developments in this area.

For additional information about attempts to moot class actions by picking off lead plaintiffs, please see:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions