Can plaintiffs spring a class action on defendants in the late stages of a case? The Seventh Circuit recently answered no in Ali v. City of Chicago, 34 F.4th 594 (7th Cir. 2022), rejecting so-called stealth class actions and reaffirming a seemingly obvious rule: a class action “must be brought as a class action.”
Continue Reading Seventh Circuit Rejects “Stealth” Class Actions
The Third Circuit’s recent decision in Allen v. Ollie’s Bargain Outlet, Inc., — F.4th —-, 2022 WL 2284654 (3d Cir. 2022), gave close scrutiny to two elements of the class certification inquiry – numerosity and commonality – that are often deemed satisfied with little analysis, and rejected the district court’s reliance on inferences drawn from limited evidence.
The Sixth Circuit recently made it more difficult for plaintiffs to certify a class where individualized inquiries are needed to identify class members.
In Tarrify Properties LLC v. Cuyahoga County Ohio, 2022 WL 2128816 (6th Cir. June 14, 2022), the Sixth Circuit addressed a claim that Ohio’s tax-foreclosure statute operates as a taking under the federal and Ohio constitutions. The plaintiff in Tarrify owned delinquent property that was transferred to an authorized land bank, and plaintiff argued that the transfer—which prevented the owner of the delinquent property from recovering the difference between the value of the land and the tax liability—amounted to a taking. Plaintiff sought certification of a class of owners in which “the total value of [their] property exceeded the amount of the impositions on that property at the time the transfer occurred.” Id. at *2. The district court denied plaintiff’s motion for class certification, plaintiff appealed, and the Sixth Circuit affirmed.
Continue Reading Sixth Circuit Adds Teeth to Rule 23’s Ascertainability Requirement
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
On May 23, 2022, the Supreme Court unanimously held that a party opposing arbitration is not required to demonstrate prejudice to show that the other party has waived its contractual arbitration rights.
Before today’s decision, nine federal courts of appeals had adopted the rule that a “party can waive its arbitration right by litigating only when its conduct has prejudiced the other side.” Morgan v. Sundance, 596 U.S. __ (2022). Two other circuits had held no showing of prejudice was required.
Continue Reading Supreme Court Decision Makes It Easier to Waive Right to Arbitration
One of the most common failings of plaintiffs’ counsel is inadequate due diligence on the individuals they put forward as putative class representatives. Defense counsel should not repeat that mistake.
It is not unusual for putative class representatives to have flawed personal claims or to be subject to important individual defenses. A named plaintiff may also present facts that make his claim demonstrably atypical of the class, or he may have baggage – such as a past criminal conviction for fraud – that make him facially inadequate as a class representative. Sometimes it turns out a named plaintiff isn’t even a member of the proposed class.
The Southern District of California recently declined to certify a class based on plaintiffs’ failure to offer class wide proof of deception and materiality. In Gross et al. v. Vilore Foods Company, Inc., plaintiffs alleged that Kern fruit juice products were deceptively labeled as “100% Natural” or made with whole fruit when the drinks in fact contained artificial ingredients. Plaintiffs brought claims under various California laws, including the UCL, CLRA, and FAL. To certify a class, plaintiffs were required to offer common proof both that the challenged representations were deceptive or misleading to a reasonable consumer; and that the challenged representations were material, meaning a reasonable person would attach importance to the representations that Kern’s fruit juice is “100% natural” or made with whole fruit. The court held that plaintiffs satisfied neither burden.
First, as to deception, the only evidence Plaintiffs cited was their expert’s report. Plaintiffs’ expert purported to assess the importance consumers placed on certain product attributes, and how claims such as “artificially flavored” affected their willingness to pay for a product. Plaintiffs’ expert concluded that consumers were willing to pay approximately 29% more for a Kern product that did not disclose its use of artificial flavors, and approximately 30% less for a product disclosing that it contained artificial flavors. The court found this evidence insufficient because consumers’ willingness to pay more or less for a product said nothing about whether the labels at issue would lead consumers to believe that the products did not contain artificial flavors, or contained only natural flavors. As a result, the court held that Plaintiffs’ expert’s opinion could not constitute common proof of deception.
Continue Reading Consumer Survey Did Not Constitute Common Proof of Deception or Materiality
A recent Fifth Circuit decision continues the trend of courts rejecting putative class and collective actions where absent class members are subject to arbitration agreements.
Exotic dancers sued A&D Interests, Inc. (doing business as the “Heartbreakers Gentlemen’s Club”) in a putative Fair Labor Standards Act collective action for allegedly misclassifying the club’s dancers as independent
In a recent decision, the Seventh Circuit answered a key question in Rule 23 commonality analyses: whether at the certification stage plaintiffs need to establish the terms of an allegedly common policy, or only its mere existence. Ross v. Gossett, — F.4th —-, 2022 WL 1421315 (7th Cir. May 5, 2022).
The putative class consisted of all Illinois Department of Corrections inmates housed in April through July 2014 at four IDOC correctional centers. They sued various IDOC officials for alleged constitutional violations stemming from prison-wide “shakedowns” executed by the defendants for purposes of sanitation and to discover and remove contraband. They further alleged that the shakedowns were conducted pursuant to a single, unified policy across all four prisons.
A recent lawsuit alleges that Bumble Bee Foods, one of the nation’s largest producers of canned tuna, does not use a “fair and safe supply chain,” as the company’s marketing claims.
The suit is the latest in a surge of cases filed under D.C.’s unique consumer-protection statute. The plaintiff, a D.C.-based nonprofit focused on labor rights, alleges that Bumble Bee’s primary tuna supplier (and now parent company) relies on fishing methods that are prone to labor abuses.
Separate from the merits, the suit raises thorny issues about when claims under D.C.’s Consumer Protection Procedures Act (“CPPA”) can be removed to federal court.
Continue Reading Plaintiffs Try to Hook Bumble Bee Tuna with Deceptive Marketing Claim