By Ashley Snell, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.
After finding some success in its concussion-related class actions against professional and amateur football associations, noted plaintiffs’ firm Hagens Berman has taken aim at the world’s most popular sport—soccer. The firm has sued a number of soccer organizations, including the much-maligned Federation Internationale de Football Association (FIFA), for failing to provide proper concussion management for players. The Zurich, Switzerland-based federation, obviously averse to playing defense on (or rather, in) the plaintiffs’ home court (U.S. District Court for the Northern District of California), moved to dismiss. The result in Mehr v. Federation Internationale de Football Association exhibits the far-reaching impact of the U.S. Supreme Court’s game-changing general-jurisdiction decisions.
In its 2014 Daimler AG v. Bauman decision, the Court offered defendants highly specific guidance on defeating general jurisdiction. Several past WLF Legal Pulse commentaries have addressed Bauman (here and here). In a nutshell, Argentinian plaintiffs sued a German company, over events that took place in Argentina, in a California federal court. The Court’s opinion limited general jurisdiction over corporations to its principal place of business, its state of incorporation, and “an exceptional case” that renders the defendant at home in that state. Continue reading
Whether a class of plaintiffs must be “ascertainable”—i.e. capable of being feasibly identified through an objective process—continues to be one of the most contested legal issues in class-action litigation. We’ve written about ascertainability mostly in the context of food labeling lawsuits (our collection is here) but it has arisen in claims involving other consumer products. The U.S. Court of Appeals for the Eleventh Circuit is the latest jurisdiction to weigh in on the issue with a decision that directly addresses one of the common objections to ascertainability—that it dooms small-dollar class-action suits.
The plaintiff in Karhu v. Vital Pharmaceuticals accused the defendant of falsely advertising its dietary supplement, “Meltdown Fat Incinerator,” because it did not in fact incinerate his fat. The federal district court dismissed Karhu’s claims because he failed to demonstrate the class members were ascertainable. The Eleventh Circuit affirmed the district court. Judge Richard Goldberg of the U.S. Court of International Trade, sitting by designation, authored the majority opinion and Judge Beverly Martin wrote a cautionary concurrence. Continue reading
by Spencer Salmon, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.
Some years ago, when data breaches first became a problem for the business community, plaintiffs’ lawyers thought class actions on behalf of consumers whose information had been stolen would be the next big moneymaker. To their disappointment, a majority of federal courts across the United States has ruled in favor of data breaches’ most direct and obvious victim—hacked businesses—because plaintiffs have failed to establish standing to sue. In order to establish constitutional standing, plaintiffs must show that the alleged injury is concrete, particularized, actual or imminent, fairly traceable to the action challenged, and redressable. Absent standing, courts lack subject matter jurisdiction over the suit under Federal Rule of Civil Procedure Rule 12(b)(1).
Recently, federal district courts from Nevada (In re Zappos.com, Inc., Customer Data Security Breach Litigation) and Minnesota (Carlsen v. Gamestop, Inc.) joined most federal courts in dismissing data-breach class-action lawsuits for lack of standing. Continue reading
by Tara Parker, a 2015 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.
In recent decisions from opposite sides of the nation—Florida and California—two federal district judges issued contradictory decisions on the same question—whether a liquor manufacturer’s use of “handmade” on its product label is false or misleading to the average consumer. Defendants in mislabeling cases rarely claim total victory at the preliminary level because courts tend to defer the question of whether a label is false or misleading to a later stage in the litigation. The Florida judge’s willingness to dismiss a “handmade” claim shows that courts can beat this trend. If, on the other hand, judges follow the path of least resistance, as seen in the California case, mislabeling claims of questionable merit will continue to proliferate, undermining predictability in the law and raising prices for consumer product purchasers. Continue reading
The California Supreme Court earlier this month issued an opinion that subjects litigants who settle their patent disputes to scrutiny under state antitrust law. The court reasoned that such settlements may create unreasonable restraints on trade. While the decision in In re Cipro Cases I & II to reinstate antitrust claims was not overly surprising—after all, the U.S. Supreme Court had previously held in FTC v. Actavis, Inc. that some patent litigation settlements might violate federal antitrust law—the breadth of the California Supreme Court’s decision could have a particularly negative impact on the free-enterprise system. Indeed, the decision suggests that parties to a patent litigation settlement will have great difficulty ever avoiding California antitrust liability if the settlement entails transferring anything of value from the patent holder to the alleged infringer. Because Cipro’s new state-law antitrust standard is so much more exacting than the standard announced by the U.S. Supreme Court in Actavis, federal antitrust law may well trump California’s standard. Indeed, were Cipro to reach the U.S. Supreme Court, the Court likely would reverse on federal preemption grounds.
“Reverse-Payment” Patent Settlements
When parties to litigation enter into a settlement, one would normally expect that any cash payments would flow from the defendant to the plaintiff. The normal expectations have been reversed in the context of litigation involving prescription-drug patents, however, as a result of financial incentives created by the Hatch-Waxman Act, a federal statute designed to ensure that generic versions of prescription drugs enter the market more quickly. The Act includes a provision that permits generic companies, by declaring to the Food and Drug Administration a belief that the patent held by a brand-name drug company is invalid, to essentially force the patentee to immediately file a patent infringement suit. It also grants huge financial awards to generic companies that successfully challenge drug patents. Continue reading
The WLF Legal Pulse has devoted a lot of digital ink to the issue of whether the members of a class action must be “ascertainable”—that is, capable of being feasibly identified. Opinions on this implicit class action procedural requirement have varied among the federal circuits and even within specific federal district courts. As an organization that generally favors uniformity, WLF was intrigued by reports that those responsible for making and amending the federal rules of civil procedure had ascertainability on their radar screen for class action rule reform.
The October 30-31, 2014 Agenda Book of the Advisory Committee on Civil Rules dumped cold water on the chances for a rule on ascertainability. The committee discussed the split among federal courts and concluded “in light of the likely difficulty of drafting rule provisions on class definition, the question is whether the problems described warrant making the effort.”
We can’t say we’re surprised, then, that the Advisory Committee’s Rule 23 Subcommittee left ascertainability out of its “draft concept amendments” for the class action rules, which can be read in the April 10-11 Agenda Book (starting on page 243). Considering what fellow legal reform enthusiast Andrew Trask of McGuire Woods LLP wrote on his blog about the Subcommittee’s proposals, perhaps we should be relieved ascertainability wasn’t also included. In any event, for the time being, class action defendants will have to continue fighting a court-by-court battle over this implied requirement.
As we’ve discussed previously, the U.S. Court of Appeals for the Ninth Circuit is poised to offer some clarity on ascertainability in Jones v. ConAgra. District courts in the circuit, especially within the Northern District of California (N.D. Cal., a/k/a The Food Court), have expressed divergent views on whether and how plaintiffs must demonstrate ascertainability.
For instance, in the Jones district court opinion, N.D. Cal. Judge Charles Breyer held that the plaintiffs must offer an objective and feasible method of identifying class members, though their failure to do so was not, by itself, fatal to their motion for class certification. Fellow N.D. Cal. Judge Samuel Conti, however, in Sethavanish v. ZonePerfect Nutrition Co., denied plaintiffs’ class certification motion entirely on the ground that they failed to demonstrate ascertainability. Continue reading
Federal courts have been inundated in recent years by suits filed by plaintiffs who have suffered no injury but who allege that a federal statute provides them with “standing” to sue for alleged violations of federal law. Such lawsuits can be extremely lucrative for the plaintiffs’ bar when the statute provides for an award of statutory damages (typically, $100 to $1,000) for each violation; by filing their suits as nationwide class actions, attorneys can often plausibly seek to recover billions of dollars. The Supreme Court may soon make it much more difficult for such suits to survive a motion to dismiss. The Court on Friday will consider whether to grant review in Spokeo v. Robins, a case that squarely addresses whether plaintiffs can assert Article III standing where their only “injury” is the affront to their sensibilities caused by the belief that someone is not complying federal law. The Court has indicated a strong interest in addressing the issue; Spokeo is an appropriate vehicle for doing so and ought to be granted.
The U.S. Solicitor General recently filed a brief recommending that the Court not hear Spokeo. That brief may, ironically, increase the likelihood that the Court will agree to hear the case, because the Solicitor General very pointedly declined to endorse the appeals court’s rationale for concluding that the plaintiff has standing.
Spokeo involves claims filed under the Fair Credit Reporting Act (FCRA), one of dozens of federal statutes that offer a bounty (in the form of statutory damages) to those who demonstrate a violation of a federal statute. Spokeo, Inc. operates a “people search engine”—it aggregates publicly available information from phone books, social networks, and other sources into a database that is searchable via the Internet, and displays the results of searches in an easy-to-read format. It has always emphasized that it does not verify or evaluate any piece of data and does not guarantee the accuracy of information offered. Continue reading