By David E. Sellinger and Aaron Van Nostrand, Greenberg Traurig LLP
In a closely watched appeal, the US Court of Appeals for the Ninth Circuit has squarely weighed in on the “ascertainability” of class members in a class-action lawsuit. The three-judge panel further widened a rift among federal courts of appeal on the issue, holding that plaintiffs need not demonstrate an administratively feasible way to identify class members at the class-certification stage.
In an August, 2016 WLF Legal Backgrounder, we predicted that a trio of class actions then-pending in the Ninth Circuit could prompt the US Supreme Court to resolve the circuit split on the ascertainability issue. Although that issue was briefed in all three cases, it was not decided in Brazil v. Dole Packaged Foods, LLC (No. 14-17480), and a hold placed on Jones v. ConAgra Foods, Inc. (No. 14-16327) pending a Supreme Court decision in Microsoft v. Baker is still in effect. The Ninth Circuit did address ascertainability in the third case discussed in that Legal Backgrounder—Briseno v. ConAgra Foods, Inc. The January 3 decision presents a view sharply in contrast with that of certain other circuits, most notably the Third Circuit. Continue reading
In a year-end assessment of the Consumer Financial Protection Bureau (CFPB), attorneys from the law firm K&L Gates LLP evaluated the potential impact of Gordon v. CFPB, a constitutional challenge in which Washington Legal Foundation has filed a certiorari petition with the US Supreme Court on behalf of its client, Chance Gordon.
In the Legal Insight, “Down But Not Out: The CFPB’s Future May Be Uncertain, But Industry Participants Must Remain Vigilant,” the authors discuss judicial challenges facing the Bureau in 2017, including Gordon and PHH Corp. v. CFPB. In PHH Corp., the US Court of Appeals for the DC Circuit ruled that CFPB’s leadership structure runs afoul of the Constitution’s separation of powers. WLF’s petition in Gordon calls into question the subsequent, retroactive ratification of CFPB’s enforcement action against Mr. Gordon, as well as 15 other actions, that were taken during a time when Bureau Director Richard Cordray had not been lawfully appointed.
The K&L Gates Legal Insight notes:
With PHH concluding (for now) that the CFPB’s directorship structure is unconstitutional and Gordon questioning the validity of certain CFPB actions on other constitutionality grounds, a trend may be developing toward judicial challenges to the validity of the CFPB as an agency and the propriety of its enforcement activities.”
A WLF Legal Pulse post discussing Gordon and the three amicus briefs filed in support of WLF’s cert petition can be found here.
On November 17, 2016, Washington Legal Foundation petitioned the US Supreme Court to review a US Court of Appeals for the Ninth Circuit decision, Gordon v. Consumer Financial Protection Bureau. CFPB had pursued a substantial fine against WLF’s client, Chance Gordon, in June 2013, a time during which the Bureau lacked a properly appointed Director. Mr. Gordon’s petition argues that the attempted corrective action Richard Cordray took once he lawfully became CFPB Director—a blanket, retroactive ratification of all actions taken during his unconstitutional recess appointment—runs afoul of the US Constitution’s Appointments Clause (contained in Article II). Mr. Gordon also argues that because Mr. Cordray had not been properly appointed, CFPB lacked standing to pursue a claim against him in federal court.
This week, three organizations filed amicus curiae briefs with the Supreme Court in support of Mr. Gordon’s writ of certiorari. The briefs positively reinforce WLF’s two major justifications for the Court’s review of Gordon v. CFPB. The petition first argues that the Ninth Circuit’s acceptance of Director Cordray’s blanket ratification severely undermines a fundamental check on Executive power: the requirement that Congress must first approve presidential nominees before they can be lawfully appointed. The Gordon decision is also contrary to Supreme Court precedent and furthers a split in the circuit courts over when ratification of ultra vires administrative action is permissible. Continue reading
Featured Expert Contributor — Corporate Governance/Securities Law
Stephen M. Bainbridge, William D. Warren Distinguished Professor of Law, UCLA School of Law
In Salman v. United States, the US Supreme Court returned to the problem of insider trading for the first time in almost two decades. The Court reaffirmed a rule from prior insider-trade caselaw that a gift of information between friends and family constitutes the requisite benefit. Justice Alito’s very brief opinion for a unanimous Court, however, left a number of more difficult questions unresolved.
Bassam Salman was convicted of insider trading for using information he had received from a friend and relative by marriage named Michael Kara who, in turn, had received the information his brother Maher Kara, who was a Citigroup investment banker. Salman argued that liability in such cases should arise only when “there is proof of a meaningfully close personal relationship that generates an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature,” citing the Second Circuit’s decision in United States v. Newman. Continue reading
By Eric D. Miller, Partner, Perkins Coie LLP*
A pending petition for a writ of certiorari presents the United States Supreme Court with an opportunity to clarify whether a state may exercise personal jurisdiction over a nonresident defendant based solely on the defendant’s sale of components to third parties who incorporate those parts into finished products that are then sold in the forum State.
That question has divided the lower courts since Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987). In that case, Asahi, a Japanese manufacturer, had delivered tire-valve assemblies to a Taiwanese tire manufacturer that sold tires throughout the world, including in California. After a California resident was injured in an accident caused by a defective valve, he sued Asahi in California state court. The Supreme Court held that Asahi was not subject to personal jurisdiction in California, but no rationale commanded a majority of the Court. Justice O’Connor, writing for four justices, concluded that the connection between the defendant and the forum state necessary to establish specific personal jurisdiction “must come about by an action of the defendant purposefully directed toward the forum state.” In her view, placing a product “into the stream of commerce, without more,” is not such an act. Justice Brennan, on the other hand, wrote for four justices who believed that placement of goods into the stream of commerce, with the knowledge that they will ultimately be sold in a state, can be sufficient for jurisdiction in that state. Continue reading
Prior to the US Supreme Court’s 2014 decision in Daimler AG v. Bauman, general jurisdiction existed over a business defendant in any state where it was incorporated, had its principal place of business, or its contacts were so “continuous and systematic” as to render them essentially at home in the forum state. Under this expansive interpretation, corporations could be subject to lawsuits in unpredictable and often remote jurisdictions.
Daimler significantly narrowed the reach of general jurisdiction by holding that because Daimler and MBUSA were neither incorporated nor had their principal place of business in California, Daimler’s contacts with California were not enough to render it at home in the state. Continue reading