Majority Rule: Standing Continues to be Plaintiffs’ Achilles Heel in Data-Breach Class Actions

securityGuest Commentary

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

Ninth Circuit Limits CAFA’s “Single Local Event” Exception and Broadens Removal of Mass Actions

Cruz-Alvarez_FFeatured Expert Contributor – Civil Justice/Class Actions

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. (co-authored with Rachel A. Canfield, an associate with the firm)

On April 27, 2015, the U.S. Court of Appeals for the Ninth Circuit issued a 2-1 decision in Allen v. Boeing, reaffirming the court’s prior interpretation of the Class Action Fairness Act of 2005’s (CAFA’s) “single local event” exception, which it previously reviewed in Nevada v. Bank of America Corp.

CAFA expands federal jurisdiction over certain mass actions that fall within its purview. CAFA defines such actions as any civil action in which “monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiff’s claims involve common questions of law or fact.”1

CAFA, however, enumerates a number of exceptions which exclude an action from enjoying CAFA mass action jurisdiction and require remand to state court. Pursuant to the single local event exception, civil actions in which “all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly result in injuries in that State or States contiguous to that State” are excluded from CAFA’s mass action jurisdiction.2 In Allen, the Ninth Circuit was called upon to interpret the breadth of this exception. Continue reading

Supreme Court Agrees to Review Uninjured Plaintiffs’ Lawsuit

supreme courtThe U.S. Supreme Court this morning granted certiorari in Spokeo, Inc. v. Robbins, a case from the U.S. Court of Appeals for the Ninth Circuit involving an issue that the Court declined to address twice in the past several years: whether Congress can grant citizens the ability to file lawsuits in situations where those plaintiffs could not otherwise satisfy the “case or controversy” requirement of Article III of the U.S. Constitution.

On April 15, a WLF Legal Pulse commentary by WLF Chief Counsel Rich Samp, Supreme Court Has Opportunity to Halt Lawsuits by Uninjured Plaintiffs, explained why the Court should decline the recommendation of the Solicitor General of the U.S., which, at the Court’s invitation, had filed an amicus brief urging the justices to deny review.

Also, soon after the Court sought the views of the Solicitor General, WLF hosted a Web Seminar program on Spokeo and the issue of statutorily-created injury that featured Spokeo‘s Counsel of Record, Andrew Pincus of Mayer Brown LLP, and Meir Feder of Jones Day.

Supreme Court Has Opportunity to Halt Lawsuits by Uninjured Plaintiffs

supreme courtFederal 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

Supreme Court’s “Omnicare” Decision Follows Middle Path Advocated by Lane Powell and WLF

greeneddavisjGuest Commentary

By Douglas W. Greene and Claire Loebs Davis, Shareholders with Lane Powell PC in Seattle, Washington. They co-authored WLF’s amicus brief pro bono in Omnicare.

In the opinion issued on March 24 in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund (“Omnicare”), the Supreme Court rejected the two extremes advocated by the parties regarding how the truth or falsity of statements of opinion should be considered under the securities laws. Instead, it adopted the middle path advocated in the amicus brief filed by Lane Powell on behalf of Washington Legal Foundation (“WLF”).

In doing so, the Court also laid out a blueprint for examining claims of falsity under the securities laws, which we believe will do for falsity analysis what Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007), did for scienter analysis. Hence, Omnicare will help defense counsel defeat claims that opinions were false or misleading in § 11 cases, as well as in cases brought under § 10(b) of the Securities Exchange Act. Continue reading

Update: Illinois Supreme Court Rejects Plaintiffs’ Lawyer’s Request to Remove Justice from $11 Billion Case

Ill. S CtOn March 4 in “By Treating Recusal Motions as a Game, Lawyers are Eroding Public Confidence in our Courts,” Washington Legal Foundation’s Chief Counsel Rich Samp wrote about the corrosive effect of plaintiffs’ lawyers’ demands that unfriendly judges be recused from hearing their cases. Much of the commentary centered around the multiple motions plaintiffs’ lawyers in a case called Price v. Philip Morris filed to recuse Illinois Supreme Court Justice Lloyd A. Karmeier from participating in the lawyers’ request to re-open that court’s 2005 decision.

As reported yesterday in Legal Newsline, the state high court denied the most recent request to disqualify Justice Karmeier from the Price case on March 11. The Court has yet to rule on the request to re-open the case.

WLF Web Seminar Explores New General Personal Jurisdiction Arguments under SCOTUS’s “Bauman” Ruling

Litigating away from “Home”: General Personal Jurisdiction One Year after the Supreme Court’s Daimler AG v. Bauman Decision

Mr. Beck utilized a PowerPoint slide presentation. The archive of the program, which includes a viewable version of the slides, is available at WLF’s website here.  If you would prefer to watch the video above, a PDF of the slides are available here.

Related materials on Daimler AG v. Bauman and its application in civil litigation: