Two Cheers for Judicial Actions in Facebook, eBay Class Action Settlements

ebay_thumbfacebookCross-posted at WLF’s contributor site

Class action lawyers had a bit of a rough week in the U.S. District Court for the Northern District of California, a jurisdiction that has seen more than its fair share of class action lawsuits lately.

Fraley v. Facebook. We last discussed the fate of a class action lawsuit against Facebook and its “Sponsored Stories” program almost exactly a year ago. At that time, Judge Richard Seeborg had called into question some aspects of the proposed settlement, including the lawyers’ fee request and the proposed cy pres award.

The settlement has now been finalized. In his August 26 order, Judge Seeborg approved a $20 million settlement fund, from which class members can each claim $15.

Fraley’s lawyers sought fees amounting to 37.5% of the settlement (which equaled $950/hour for lead counsel and $350/hour for second-year associates). Facebook, to its credit, opposed the fee request.

The plaintiffs’ lawyers argued that Judge Seeborg’s ordered injunctive relief (increased transparency for the Sponsored Stories program) had a monetary value to the class members sufficient to justify a fee 12.5% higher than the “common” fee of 25%.  Judge Seeborg responded that “there is nothing to suggest, however, that any class member will see a single dollar more in his or her pocket as a result of any of the injunctive provisions.”  Continue reading “Two Cheers for Judicial Actions in Facebook, eBay Class Action Settlements”

The Federal Circuit Should Rehear Novo Nordisk v. Caraco Ruling En Banc

federal circuitCross-posted at WLF’s contributor page

Last week, pharmaceutical products and services company Novo Nordisk petitioned the U.S. Court of Appeals for the Federal Circuit to rehear en banc a June 18 Federal Circuit panel ruling that invalidated a Novo patent (Novo Nordisk A/S v. Caraco Pharm. Labs; 2-1 with Judge Newman in dissent). Because the panel misapplied Patent Act § 103‘s standards for obviousness to Novo’s “combination drug,” the Federal Circuit should agree to rehear the case en banc and reverse the three-judge panel.

Background. In 1994, a Novo scientist conceived of an unorthodox way to improve a drug-based therapy for Type II diabetes. The scientist combined metformin, a compound that targets the liver’s sensitivity to insulin, with an insulin stimulator compound called repaglinide. The goal was to extend the amount of time that metformin worked in a patient’s body. The use of repaglinide was controversial for two reasons: 1) combinations of metformin and other insulin stimulators from a “genus” different from that of repaglinide (such as sulfonylurea) offered mixed results; and 2) research showed that repaglinide was eliminated from the body within one hour of use.

Hence, the synergy of the 1994 metformin-repaglinide combination was astonishing. The combination was eight times more effective than administering metformin alone. In other words, it led to an 800% increase in reducing diabetes patients’ fasting plasma glucose (FPG) over an eight-hour period. To this day, there is no scientific explanation for this synergistic effect. Continue reading “The Federal Circuit Should Rehear Novo Nordisk v. Caraco Ruling En Banc”

Update: Second Circuit Upholds Injunction & the Rule of Law in Argentine Debt Case

ArgentinaLast week we informed you about a commentary that Washington Legal Foundation’s Rich Samp had done for National Review Online’s Bench Memos. The commentary focused on a federal District Court opinion involving a foreign debt dispute between Grenada and a Chinese entity. Rich referenced NML Capital Ltd. v. Argentina and noted that a decision from the U.S. Court of Appeals for the Second Circuit was expected any day. WLF had filed an amicus brief in the case supporting the appellants.

That court ruled on Friday, August 23. The decision affirmed a federal District Court’s injunction against Argentina. The injunction dictated that whenever Argentina made payments on bonds or other financial obligations issued in 2005 and 2010, it had to make a “ratable payment” to the plaintiffs in NML Capital Ltd. The Second Circuit also stayed the injunction’s entrance until the U.S. Supreme Court acts on a petition for certiorari Argentina filed on June 24.

The federal courts overseeing this dispute have taken extraordinary care given the impact their decisions will have on the sovereign nation. Argentina, however, has not shown reciprocal respect for the authority of the U.S. courts. In its Friday opinion, the court noted “we invited Argentina to propose to the appellees an alternative payment formula and schedule for the outstanding bonds to which it was prepared to commit.” Argentina’s proposal ignored the outstanding bonds and instead offered to issue new bonds. The nation’s leaders have also repeatedly stated that Argentina will not abide by any U.S. court decision requiring it to pay the plaintiffs:

  • “Argentina will pay on the Exchange Bonds but not one dollar to the ‘vulture funds’” – President Cristina Fernández de Kirchner
  • “Argentina isn’t going to change its position of not paying vulture funds . . . . We will continue to follow that policy despite any ruling that could come out of any jurisdiction, in this case New York.” – Economy Minister Hernan Lorenzino

The parties will now have to wait until the U.S. Supreme Court acts on Argentina’s petition, which may not be until late September or early October.

In Circuit Courts, SCOTUS’s Comcast Ruling Doesn’t Make it Through the Rinse Cycle

spin cycleCross-posted at WLF’s contributor site

Last year in Butler v. Sears, Roebuck & Co., the U.S. Court of Appeals for the Seventh Circuit overturned a district court’s denial of certification for a class of plaintiffs who alleged injury resulting from a mold-causing defect in Whirlpool-manufactured washing machines.  On appeal, Sears argued that plaintiffs failed to satisfy the requirement of predominance in class action litigation, but to no avail.  Announcing that “Predominance is a question of efficiency,” Judge Richard Posner (writing for the court) concluded that the class should be certified for the sake of efficiency—even though not every plaintiff actually encountered the alleged mold problem, and even though the suit implicated some twenty-seven different washer models.  Sears went on to petition the Supreme Court for certiorari.

Earlier this year, the Supreme Court decided Comcast Corp. v. Behrend, in which it held a class fails to meet the predominance standard under 23(b)(3) if the offered evidence does not show that damages are capable of measurement on a class-wide basis.  On the same day it decided Comcast, the Supreme Court granted review and vacated the panel opinion in Butler, remanding the case for reconsideration in light of Comcast.

But Judge Posner is evidently sticking to his guns. Concluding that the Supreme Court’s decision in Comcast did not “cut the ground out from under [the court’s earlier] decision,” Judge Posner this week authored a new opinion that, on the merits, is substantially indistinguishable from the first one. Continue reading “In Circuit Courts, SCOTUS’s Comcast Ruling Doesn’t Make it Through the Rinse Cycle”

CPSC’s Attack on Corporate CEO More Dangerous Than Rare Earth Magnets?

Buckyballs creations; photo:
Buckyballs creations; photo:

Cross-posted at WLF’s contributor page

The U.S. Consumer Product Safety Commission (CPSC) opened a mammoth-sized can of worms when it decided to go after former Maxfield and Oberton Holdings CEO Craig Zucker in his personal capacity earlier this year.  His transgression?  Refusing CPSC’s request to voluntarily and permanently remove his company’s entire Buckyballs® product line of powerful rare earth magnets from the marketplace.  Attorneys Sheila Millar and Kathryn Biszko of Keller and Heckman shred the rationale for the agency’s misguided decision—and question the Administrative Law Judge’s (ALJ) actions to date—in a new WLF Legal Backgrounder.

The authors primarily take issue with suing Zucker personally.  “Individuals,” they point out, “do not check their free speech rights at the door when they disagree with agency actions and exercise their rights to object.”  One hopes the agency’s decision to pursue Zucker was not motivated to any extent by Zucker’s rejecting the voluntary recall and/or his “Save Our Balls” P.R. campaign which was deeply critical of CPSC’s strong-arm tactics that bankrupted his company.  However, the more one reads about this case, the harder it becomes to escape the conclusion that CPSC has not taken kindly to Zucker’s demand that the agency merely meet its statutory obligation to prove a “substantial product hazard” before ordering a mandatory recall.

CPSC is trying to warp well-established legal doctrine in its pursuit of Mr. Zucker.  In order to hold him personally liable, CPSC would have the court *both* ignore the corporate form for unprecedented reasons *and* trample the traditional understanding of the responsible corporate officer (RCO) doctrine.  Millar and Biszko note that the former move “rais[es] questions about whether other individuals involved in product safety decisions—especially those who disagree publicly with initial Commission decisions—could face exposure to personal liability if they resist a voluntary recall request.” Continue reading “CPSC’s Attack on Corporate CEO More Dangerous Than Rare Earth Magnets?”

WLF Attorney’s Commentary on Foreign Debt Court Battle Published at NRO’s Bench Memos

ArgentinaFor the past several years, Washington Legal Foundation has participated as an amicus in high-profile litigation where U.S.-based bondholders are fighting to enforce contracts with Argentina. That nation defaulted on its commercial debt and, the plaintiffs and WLF have argued, has unlawfully chosen to make interest payments to some bondholders while ignoring the legitimate claims of others. Most recently, WLF filed a brief in the U.S. Court of Appeals for the Second Circuit, and a decision from that court is imminent.

Today, WLF’s Litigation Division Chief Counsel Richard Samp authored a commentary for National Review Online’s Bench Memos which discusses an August 20 decision by a federal district court involving a dispute between Grenada and the Export-Import Bank of China. Rich outlines the clear differences between the factual situation in the Grenada dispute and the litigation involving Argentina, and argues that the Grenada case should not reinforce the fears of some on Wall Street that the Argentina litigation would initiate a wave of litigation over foreign debt.

The Many Faces of the FTC on Display in Commissioners Review of Administrative Case

MurinoFeatured Expert Column

Andrea Agathoklis Murino, Wilson Sonsini Goodrich & Rosati

[Editor’s Note: Today, Washington Legal Foundation is releasing a Legal Backgrounder in which former Federal Trade Commission (FTC) Policy Director David Balto critiques the Commission’s administrative litigation process, which features the five Commissioners in the role of both prosecutors and appellate judges. We asked our featured expert FTC blogger, also an FTC alumna, her views on the issue. While WLF respects her thoughts on FTC’s administrative litigation process, we respectfully disagree.]


As an alumna of the FTC, I know first-hand the many roles played by those working inside the agency:  they are investigators, prosecutors, judges, and policy-makers.   On the vast majority of days, those roles mesh seamlessly and without controversy.  But on occasion, as is happening today, there is a clash of roles.  The Commissioners is sitting as an appellate body…charged with reviewing the decision of an FTC Administrative Law Judge (ALJ) that held against the FTC complaint counsel…in a matter that some of the very same Commissioners voted to put into litigation in the first case.

During the hearing, Chairwoman Ramirez and Commissioners Brill, Ohlhausen, and Wright will examine an FTC ALJ decision In the Matter of McWane, Inc..  The case originated in January of 2012 when the Commission, including a then-Commissioner Ramirez and Commissioner Brill, found reason to believe that the defendant, McWane, Inc., a manufacturer of iron waterworks and other plumbing products, had engaged in price-fixing and unlawful information exchange with two competitors, as well as certain exclusionary conduct, and authorized staff to file a Complaint in the FTC’s administrative court.  Following a trial, the ALJ held against the FTC on the first two – and candidly, more serious counts – but found that there was evidence McWane engaged in certain exclusionary conduct and instituted an remedial order on that basis.  Both sides are appealing the portions of the decision held not in their favor.  As they listen, the Commissioners will use the de novo standard of review– which functionally means they can review all of the evidence as they see fit – and therefore ignore the findings of the ALJ.  Continue reading “The Many Faces of the FTC on Display in Commissioners Review of Administrative Case”