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In a decision that could be useful to defendants in highly-regulated industries that face class action claims predicated on violations of federal law, a recent Sixth Circuit opinion confirmed that implied preemption applies to state-law claims predicated on violations of the EPA’s vehicle fuel economy and emissions regulations. This decision confirms the expansion of the implied preemption defense to a new industry, and may signal further expansions in the future. …

Continue Reading A Closer Look: Sixth Circuit Expands Implied Preemption Defense

Late last year, our colleagues highlighted a wave of class action litigation asserting novel claims under state wiretap laws against website operators that use session replay software and chatbots on consumer websites.  Federal district courts in California have now ruled on the first round of chatbot cases, most brought by a handful of “tester” plaintiffs under the California Invasion of Privacy Act (“CIPA”), Cal. Penal Code §§ 630 et seq., and have nearly uniformly rejected the claims.  These initial favorable rulings should be helpful for defendants facing similar claims.…

Continue Reading A Closer Look: Courts Reject California Wiretap Claims Based on Website Chat Features

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

From the implementation of the EU Representative Actions Directive to an explosion of claims in the UK Competition Appeal Tribunal, coupled with an ever-increasing role for litigation funders, class actions in both the UK and the EU are now taking off. We take a look at some of the key developments below.…

Continue Reading A Closer Look: The Rise of Class Actions in the UK and the EU

Under the Ninth Circuit’s 2020 decision in Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), plaintiffs cannot recover equitable relief in federal court if they have an adequate legal remedy.  More than two years later, district courts remain divided on how to apply Sonner at the pleading stage, with some postponing the analysis to later stages and others routinely dismissing equitable claims.  In courts that take the stricter view, Sonner can be a useful tool for narrowing the claims class action defendants must litigate in a federal case, particularly in California, where common consumer protection claims are largely limited to equitable remedies.  That said, a pair of recent Ninth Circuit decisions highlights that defendants should carefully consider the risk that a plaintiff will refile dismissed equitable claims in state court.…

Continue Reading A Closer Look: Equitable Jurisdiction in the Ninth Circuit After Sonner

If a tree falls in the forest but no one is around to hear it, did it make a sound?  Philosophers disagree.  If a product contains a contaminant but no one gets sick, did it cause an injury?  Judges disagree.

In the 2000s, enterprising plaintiffs’ attorneys attempted to push the boundaries of existing tort law by arguing that plaintiffs are entitled to damages for defects even when they cause no physical injury.  These so-called “no-injury” theories of liability were largely rejected by courts.  E.g., Rivera v. Wyeth-Ayerst Lab’ys, 283 F.3d 315, 320–21 (5th Cir. 2002) (dismissing “no-injury products liability law suit”); Johnson v. Bankers Life & Cas. Co., 2014 WL 4494284, at *7 (W.D. Wis. Sept. 12, 2014) (recognizing that in the “consumer product context, courts routinely find lack of standing where—while a product may have been defective in the hands of others—the individual plaintiffs did not suffer the defect and, therefore, suffered no injury”).

While these cases closed the door on “no-injury” product liability claims, they left open the possibility of other “no-injury” claims, such as claims that a manufacturing defect breached a warranty or constituted fraud.  E.g., Cole v. Gen. Motors Corp., 484 F.3d 717, 723 (5th Cir. 2007) (“Notably in this case, plaintiffs may bring claims under a contract theory based on the express and implied warranties they allege.”).

Whether and when “no-injury” claims are viable is a hotly debated question.  As more fully discussed below, courts disagree on whether a plaintiff who has purchased a contaminated or defective product—but who has successfully used the product for its intended purpose while suffering no physical injury—can maintain a claim.…

Continue Reading A Closer Look: Does Purchasing a Defective or Contaminated Product Always Cause an Article III Injury?

Banks, lenders, and other financial institutions who submit information to credit reporting agencies should take note of a recent Third Circuit decision adopting a “reasonable reader” standard for evaluating whether a credit report was inaccurate or misleading under Fair Credit Reporting Act (“FCRA”).…

Continue Reading Third Circuit Adopts “Reasonable Reader” Standard to Evaluate FCRA Claims.

Manufacturers of over-the-counter (OTC) medications often move to dismiss consumer class actions based on federal preemption.  The Federal Food, Drug, and Cosmetic Act (FDCA) contains an express preemption clause that forbids states from enforcing laws relating to OTC drugs that are “different from or in addition to, or that [are] otherwise not identical with, a requirement under” the FDCA.  21 U.S.C. § 379r(a).  (Section 379r also contains a savings clause that exempts product liability actions from its preemptive scope.  See id. § 379r(e).)  Similar preemption provisions exist for food and cosmetics.  Id. §§ 343-1(a), 379s(a).  Although most courts have interpreted the FDCA’s express preemption provisions broadly, a minority have limited their application.  As discussed below, the minority view involves distinguishable circumstances and is inconsistent with the FDCA’s statutory text.…

Continue Reading A Closer Look: Express Federal Preemption for OTC Medications Subject to Monographs

            The Supreme Court recently declined to review the Sixth Circuit’s decision in Sevier County Schools Federal Credit Union v. Branch Banking & Trust Co., 990 F.3d 470 (6th Cir. 2021), which presents a potential challenge to enforcing arbitration clauses added to standard account agreements.  The cert denial serves as a reminder that companies introducing arbitration agreements should take care to follow all contractual change-of-term requirements and create a record of affirmative customer assent whenever possible.…

Continue Reading A Closer Look: Arbitration Clauses Added to Account Agreements Face Risks After Supreme Court Declines Review of Sixth Circuit’s BB&T Decision

Class action plaintiffs often attempt to drag an out-of-state parent company into a forum based solely on the contacts of a subsidiary under the so-called alter ego theory of personal jurisdiction (sometimes called a jurisdictional veil-piercing theory).  This theory allows a court to impute a subsidiary’s contacts with a forum to its parent when the subsidiary is found to be an “alter ego” of the parent company. 

Companies must understand how courts apply the alter ego jurisdictional theory and best practices to minimize the unique risks this theory presents.…

Continue Reading A Closer Look: Avoiding Personal Jurisdiction Under An Alter Ego Theory