In certain circumstances and states, class action waivers may mitigate the exposure risks inherent in class action lawsuits. A decision from the Eastern District of New York illustrates some of the procedural challenges defendants may face in seeking to enforce a waiver at the outset of a case in some circumstances. See Berger v. JetBlue Airways Corp., 2024 WL 4107243, at *4 (E.D.N.Y. Sept. 6, 2024).Continue Reading New York Federal Court Declines to Find Class Claims Waived at Pleadings Stage
Second Circuit
A Closer Look: The Importance of Expert Testimony for “Reasonable Consumer” Claims
By Jeffrey Huberman on
Companies in the food, beverage, pharmaceutical, and other industries continue to face litigation regarding their products’ labeling, including as to whether certain representations on labels are deceptive or misleading. In the Second Circuit and elsewhere, these lawsuits tend to turn on what an objective “reasonable consumer” would understand the representation at issue to mean, and whether that “reasonable consumer” would likely be misled under the circumstances. In Bustamante v. KIND, LLC, 2024 WL 1917155 (2d Cir, May 2, 2024), the Second Circuit confirmed how important expert testimony can be to that question, and how efforts to exclude expert testimony can ultimately be the difference between winning and losing. Continue Reading A Closer Look: The Importance of Expert Testimony for “Reasonable Consumer” Claims
Second Circuit Blocks Use of Arbitration Clause to Prevent Class Action ERISA Claims
By Nick Pastan on
Last week, a divided Second Circuit panel affirmed a district court ruling denying a motion to compel arbitration of a putative class action seeking classwide equitable remedies under ERISA for alleged mismanagement of an employee stock ownership plan. The Second Circuit found the defined contribution plan’s mandatory arbitration clause unenforceable because it limited plaintiff’s ability to assert a claim that would result in any relief other than individual relief, and specifically prevented him from pursuing the plan-wide remedy authorized by ERISA Section 502(a)(2). The Court’s decision extends the “effective vindication exception” and raises questions about the extent to which plans can force individual arbitration of ERISA claims that apply to an entire plan.
In Cedeno v. Sasson, 2024 WL 1895053 (2d Cir. May 1, 2024), the plaintiff asserted claims under ERISA Sections 502(a)(2) and 409(a), alleging that defendants breached fiduciary duties by purchasing stock shares for purportedly more than fair market value, saddling the Plan with tens of millions of dollars of debt and decreasing its value. Continue Reading Second Circuit Blocks Use of Arbitration Clause to Prevent Class Action ERISA Claims
Supreme Court rejects pure omission claims under SEC Rule 10b–5
By Jordan Joachim, Andrew Timmick & Tyler Jankauskas on
In a short, unanimous opinion on April 12, 2024, the Supreme Court shut the door on “pure omission” claims under Rule 10b–5 and made clear that the Rule is limited to claims based on false or misleading statements.
The case, Macquarie Infrastructure Corp. v. Moab Partners, L.P., concerns alleged omissions in Defendant Macquarie’s SEC filings related to its subsidiary’s operation of bulk liquid storage terminals. In 2016, the United Nations’ International Maritime Organization issued a regulation limiting this subsidiary’s ability to store high-sulfur fuel oil, its single largest product. Though the regulation was set to take effect in 2020, Macquarie did not discuss the regulation in its public filings.Continue Reading Supreme Court rejects pure omission claims under SEC Rule 10b–5
A Closer Look: Second Circuit Steps In to Reverse Decision Refusing To Enforce “Click-Wrap” Mandatory Arbitration Agreement
By Alyssa McGraw & Andrew Soukup on
On November 3, the Second Circuit reversed a lower court decision denying a motion to compel arbitration in a putative class action against Klarna. See Edmundson v. Klarna, Inc., 85 F.4th 695 (2d Cir. 2023). The decision offers guidance (and support) for companies looking to enforce similar “click-wrap” agreements with mandatory arbitration provisions.Continue Reading A Closer Look: Second Circuit Steps In to Reverse Decision Refusing To Enforce “Click-Wrap” Mandatory Arbitration Agreement
Second Circuit Holds that Rule 23(e) Prohibits Presumption of Fairness of Arm’s-Length Negotiated Class Settlements
By Jeffrey Huberman & Sonya Winner on
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.Continue Reading Second Circuit Holds that Rule 23(e) Prohibits Presumption of Fairness of Arm’s-Length Negotiated Class Settlements
Fifth Circuit Declines to Wade Into Circuit Split on Relationship Between Standing and Class Certification
By Isaac Chaput & Jonah Panikar on
In a recent published decision, the Fifth Circuit declined to articulate a rule for the “order and depth in which” it “grapples with constitutional standing and the Rule 23 inquiry.” Chavez v. Plan Benefit Services, Inc., __ F.4th __, No. 22-50368, 2023 WL 5160393 (5th Cir. Aug. 11, 2023). The court concluded that the plaintiffs—three employees who participated in health and retirement plans administered by the defendants—had standing to sue on behalf of absent class members who participated in thousands of different benefits plans administered by the defendants. The court went on to affirm the district court’s certification of two classes, each under both Rules 23(b)(1)(B) and 23(b)(3).Continue Reading Fifth Circuit Declines to Wade Into Circuit Split on Relationship Between Standing and Class Certification