In Moses v. New York Times Co., 2023 WL 5281138 (2d Cir. Aug. 17, 2023), the Second Circuit vacated and remanded the approval of a class action settlement because the district court applied the wrong legal standard in determining that the settlement was fair. But in doing so, the court reiterated that incentive awards for class action representatives are permissible in the Second Circuit.
Split Supreme Court Weighs in on Corporate Consent to Personal Jurisdiction
Pennsylvania law requires foreign corporations to register to do business in the Commonwealth and provides that all registrants are subject to suit on “any cause” in the Commonwealth’s courts, regardless of a connection to the jurisdiction. In a split decision, the Supreme Court reversed a Pennsylvania Supreme Court decision finding that this general jurisdiction provision violated the Due Process Clause. Mallory v. Norfolk So. Railway Co., 600 U.S. __ (2023) (slip op. available here).
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Supreme Court Resolves Circuit Split to Require Stays Pending Appeal of Refusals to Compel Arbitration
The Supreme Court, in a 5–4 ruling, has resolved a circuit split on the issue of litigation stays pending appeal of denials of motions to compel arbitration. In the underlying putative class action, Bielski et al v. Coinbase, Inc., 3:21-cv-07478 (N.D. Cal.), Coinbase moved to compel arbitration of the plaintiffs’ claims, but the motion was denied by the district court. The Ninth Circuit—in a split from several other Circuits—declined to stay the district court proceedings while the appeal was pending. The Supreme Court now has ruled that a district court must stay proceedings while an interlocutory appeal on the question of arbitrability is ongoing. The decision means that defendants should be able to minimize ongoing litigation costs while an appeal of an adverse arbitration decision is pending.
Sixth Circuit Rejects Juridical Link Exception to Standing in Class Actions
The Sixth Circuit recently vacated a class certification order in a decision that may make it easier for defendants to defeat putative class actions where a named plaintiff asserts standing based on the injuries of absent class members. Under the “juridical link doctrine,” a named plaintiff may bring a class action against defendants who did not injure them so long as the absent members of the proposed class would have standing to sue those defendants. In vacating a district court order that certified a class based on this doctrine, the Sixth Circuit joined the Second Circuit in rejecting the doctrine and holding that named plaintiffs in a putative class action must have standing to sue every defendant at the time of filing.
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Michigan Federal Court Holds That Manufacturer’s Voluntary Recall Renders Plaintiffs’ Claims Prudentially Moot
Another court in the Eastern District of Michigan recently dismissed a putative class action on prudential mootness grounds, holding that the manufacturer’s voluntary recall program—which was supervised by a federal administrative agency—mooted the plaintiffs’ consumer fraud and warranty claims. See Pacheco v. Ford Motor Co., 2023 WL 2603937 (E.D. Mich. Mar. 22, 2023).
Ninth Circuit Sharpens Predominance Requirement: Looking Behind Plaintiffs’ Fiction in Dismantling Class Certification
The Ninth Circuit continues its efforts to give teeth to the predominance requirement of Rule 23 as a potent tool for defendants to defeat class certification.
Earlier this year, in Bowerman v. Field Asset Services, Inc., 39 F.4th 652 (9th Cir. 2022), amended, — F.4th —-, 2023 WL 2001967 (9th Cir. Feb. 14, 2023), the Ninth Circuit determined that where individualized inquiries were necessary to determine the existence of damages—as opposed to the question of calculating damages—class certification was inappropriate because the class would fail to meet the predominance requirement of Rule 23.
DOJ Weighs in on Enforceability of Arbitration Agreements Involving Servicemembers
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.)
Fourth Circuit Remands Class Action to State Court After Plaintiff Questions His Own Standing
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.
Ninth Circuit Reverses Course on Arbitration
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.
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SCOTUS Dismisses Case on the Scope of the Attorney-Client Privilege
In a one-line order issued last week, the Supreme Court dismissed In Re Grand Jury, No. 21-1397, one of the most significant cases about the attorney-client privilege in decades. The dismissal came just two weeks after oral argument. The Court explained that the writ of certiorari had been “improvidently granted,” meaning the Court should