The Eleventh Circuit is poised to reconsider recent standing decisions favorable for defendants seeking to invoke Article III’s standing requirements to defeat class certification.

At issue is the Eleventh Circuit’s July 2022 decision in Drazen v. Pinto, holding that (i) all class members must have Article III standing in order to receive individual damages (whether through a settlement or otherwise), and (ii) the standing determination is decided under Eleventh Circuit law, even where certain class members do not reside within the Eleventh Circuit’s geographic boundaries and may have standing under other circuit precedent.  41 F.4th 1354, 1360–61 (11th Cir. 2022). The dispute in Drazen arose in the context of the Telephone Consumer Protection Act (“TCPA”), and addressed both unwanted phone calls and text messages.  While a settlement in Drazen was pending, the Eleventh Circuit held in Salcedo v. Hanna, 936 F.3d 1162, 1168 (11th Cir. 2019), that, contrary to precedent in other circuits, a single unwanted text message was not sufficient to give rise to Article III standing under the TCPA.  Because the panel was bound by Salcedo, and because the proposed class definition in the Drazen settlement included individuals whose sole harm was an unwanted text message, those individuals did not have standing.  The panel therefore vacated the district court’s approval of the settlement.

Continue Reading Eleventh Circuit to Reconsider Standing Decisions

The Ninth Circuit recently held that a class could be certified with class members who lost less than a penny of interest.  But it also held that where some class members may have lost nothing at all, the district court must take a hard look at whether the predominance requirement has been met. 

Continue Reading Losing Less than a Penny Suffices for Standing for Class Certification, the Ninth Circuit Rules

On February 22, 2023, a federal judge in the Southern District of New York issued a first-of-its-kind order allowing a securities class action lawsuit to proceed against the issuer of non-fungible tokens (“NFTs”) on the grounds that the NFTs are securities for purposes of federal securities laws. Friel v. Dapper Labs, Inc. et. al., Case No. 1:21-cv-05837-VM (S.D.N.Y). NFTs are digital tokens, frequently associated with digital content, for which ownership of the tokens is recorded on a blockchain. The order was issued in the context of a lawsuit against Dapper Labs, the creator and issuer of NBA Top Shot “Moments.” Moments are digital video clips of NBA game highlights and their associated NFTs minted by Dapper Labs. Moments are offered and sold on Dapper Labs’ proprietary digital platform, validated on Dapper Labs’ private blockchain (the “Flow Blockchain”) and trade on a secondary marketplace controlled by Dapper Labs. The lawsuit claims that Moments are securities and Dapper Labs offered and sold those securities in violation of the registration requirements of the federal securities laws. Dapper Labs filed a motion to dismiss the lawsuit, and the court rejected the motion, concluding that Moments are securities.

Continue Reading A Closer Look: Federal Court Concludes that Certain NFTs May Be Securities: Preliminary Determination in Ongoing NBA Top Shot Litigation

In two putative class actions pending in the Eastern District of North Carolina, the Department of Justice has filed statements of interest urging the Court to deny defendants’ motions to compel arbitration of plaintiffs’ claims for violations of the Servicemembers Civil Relief Act.

In Padao v. American Express National Bank, No. 5:22-cv-00145-BO-RN (E.D.N.C.), and Espin v. Citibank, No. 5:22-cv-00383-BO-RN (E.D.N.C.), plaintiffs alleged that defendants American Express and Citibank violated the interest rate cap imposed by the SCRA on certain debts in connection with periods of military service.  Both defendants moved to compel arbitration based on arbitration clauses and waivers of representative proceedings in their credit card agreements.

In statements of interest filed in both cases, the DOJ urged the Court to deny defendants’ motions, contending that Congress amended the SCRA in 2019 to allow servicemembers to enforce their rights under that law on a class or representative basis “in accordance with the Federal Rules of Civil Procedure” and “notwithstanding any previous agreement to the contrary.”  These explicit references to the federal rules and to previous agreements, the DOJ argued, evince Congressional intent to override the Federal Arbitration Act’s mandate to enforce arbitration agreements according to their terms.  Moreover, according to the DOJ, this aspect of the 2019 amendment is not impermissibly retroactive because it introduces only “jurisdictional or procedural changes” and does not affect the parties’ underlying substantive rights.

While Padao and Espin focus on the narrow issue of arbitration agreements involving servicemembers under the SCRA, the DOJ’s filings provide an interesting perspective on arguments that might be made to interpret statutory provisions as conveying a Congressional command contrary to the FAA.

A group of small businesses recently sued Bank of America in the Central District of California, alleging that it misled them about the terms of Paycheck Protection Program (PPP) loans. This marks yet another putative class action accusing lenders of misconduct in connection with the PPP.

Continue Reading Lawsuit Accuses Bank of America of Misleading Companies About PPP Loans

A procedural violation of a state’s privacy statute is not alone enough to establish Article III standing—a plaintiff must suffer a concrete injury, such as an increased risk of identity theft.  The Fourth Circuit’s decision in O’Leary v. TrustedID, Inc., 2023 WL 2125996 (4th Cir. Feb. 21, 2023) confirms this—but also illustrates how Article III standing is a two-edged sword that may allow a plaintiff to defeat a defendant’s attempt to remove a case to federal court. 

The plaintiff in O’Leary filed a class action against TrustedID in South Carolina state court for allegedly violating South Carolina’s Financial Identity Fraud and Identity Theft Protection Act, S.C. Code Ann. § 37-20-180.  The statute prohibits requiring consumers to use six or more digits of their Social Security numbers to access a website without also requiring some other authentication measure.  The plaintiff alleged that TrustedID’s website required him to provide six digits of his Social Security number and did not have any other safety precautions, such as a password requirement.

Continue Reading Fourth Circuit Remands Class Action to State Court After Plaintiff Questions His Own Standing

The Illinois Supreme Court has ruled that separate claims under the state’s Biometric Information Privacy Act (BIPA) accrue “with every scan or transmission” of a person’s biometric information—rejecting the idea that only a single claim accrues at the start of a series of similar scans or disclosures.

The decision, Cothron v. White Castle, substantially increases potential damages exposure for BIPA defendants.  The potential for large monetary awards is likely to spur more BIPA lawsuits in Illinois—and potentially beyond, as several other States have similar privacy laws taking effect in 2023.  At the same time, however, Cothron establishes that trial courts have discretion to determine the appropriate amount of statutory damages (subject to a $5,000-per-violation cap), and suggests that it would be an abuse of discretion for a trial court to permit such a sizeable award that a company’s financial viability would be threatened. 

Continue Reading New BIPA Claims Accrue “With Every Scan or Transmission” of Biometric Information, Says the Illinois Supreme Court  

The Ninth Circuit recently held in Chamber of Commerce v. Bonta that the Federal Arbitration Act preempts a California law that criminalizes employer conduct that requires employees to consent to arbitrate claims arising under the California Fair Employment and Housing Act.  This ruling came after the same panel previously held that the law, Assembly Bill 51, was not preempted because it focused on “pre-agreement” behavior and not the arbitration agreement itself.  In 2021, the panel sua sponte decided to rehear the case, apparently after Judge Fletcher (who was in the majority in both decisions) changed his mind on the law’s validity.  In doing so, the panel eliminated a circuit split it had previously created between itself and the First and Fourth Circuits.

Continue Reading Ninth Circuit Reverses Course on Arbitration

Judge Karas in the Southern District of New York recently dismissed two lawsuits alleging that defendants’ beverage products contained synthetic malic acid that functioned as a flavoring agent, rendering the “100% natural flavors” and “natural flavor with other natural flavor” claims on the product labels false and/or misleading.  

Continue Reading New York Federal Court Dismisses Two False Advertising Suits Based on Malic Acid

Dior recently defeated an Illinois Biometric Information Privacy Act (“BIPA”) putative class action on the pleadings by arguing that BIPA’s exemption for patient data captured in a health care setting covered the plaintiff’s use of Dior’s virtual try-on tool while shopping for non-prescription sunglasses.  See Warmack-Stillwell v. Christian Dior, Inc., No. 1:22-CV-04633 (N.D. Ill. Feb. 10, 2023). 

Continue Reading Dior’s Virtual Try-On Tool Fits in BIPA Healthcare Exemption, Illinois Court Says