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 Class Action and Multidistrict Litigation

 

September 2019

 

Recent case review:

Stop Texting Me!  While unsolicited texts are annoying everywhere, there is a Circuit split on when they confer standing. 

On August 28, 2019, the Eleventh Circuit addressed the issue of when an unsolicited text can create standing for a claim (in a putative class action) in the case of Salcedo v. Hanna, No. 17-14077 (11th Cir. 2019)[ https://law.justia.com/cases/federal/appellate-courts/ca11/17-14077/17-14077-2019-08-28.html].  The plaintiff in Salcedo claimed that a single unsolicited text message from his former lawyer regarding additional services violated the TCPA, and sought class treatment of his claim.  The district court declined to dismiss the case on an initial dispositive motion, but the Eleventh Circuit took the issue on interlocutory appeal under 28 U.S.C. § 1292(b).

The Eleventh Circuit reversed, finding that receiving a text message “is not the kind of harm that constitutes an injury in fact.” It analogized “[t]he chirp, buzz, or blink of a cell phone receiving a text message” to “walking down a busy sidewalk and having a flyer briefly waived in one’s face.”  Scardo at p. 19.  Unlike a junk fax, a text is not burdensome to a recipient – it is just annoying.  “[R]eceiving a text message uses no paper, ink, or toner” and doesn’t preclude receiving other messages, texts or phone calls at the same time. While some recipients may have to pay a fee per text message received, the plaintiff did not allege that he paid any such fee.  As a result, “receiving a fax message is qualitatively different from receiving a text message.”

Importantly, the Eleventh Circuit used the term “qualitative” multiple times in its opinion (section “F” of the opinion is actually titled “Quality, not Quantity,” p. 19) with respect to the content of the defendant’s alleged contact with the plaintiff, showing the willingness to wade into the facts of the alleged harm and content of the communication. 

The Eleventh Circuit’s decision stands in contrast to the Ninth Circuit’s 2017 holding in a very similar context.  In Van Patten v. Vertical Fitness Group, LLC, 847 F.3d 1037 (9th Cir. 2017) [http://cdn.ca9.uscourts.gov/datastore/opinions/2017/01/30/14-55980.pdf], the Court held that two unsolicited texts to a consumer from a gym where he had a previous membership were sufficient to confer standing under the TCPA.  While the Court affirmed summary judgment from the District Court on other grounds, the issue of standing was decided in the plaintiff’s favor.  The Eleventh Circuit addressed this case directly in its opinion in Salcedo, saying the Ninth Circuit’s reasoning on this topic was unpersuasive and based on a “broad overgeneralization” of congressional intent.  Scardo at p. 14. 

We can probably all attest that unsolicited texts are not going away soon enough – so this area of the law may continue to evolve as plaintiffs work to make this annoyance a costly claim for defendants. 

Section Notes:

FYI, the leadership of our section has undergone some changes.  While I remain the Chair of the section, several new Vice Chairs have joined the team this year.  Sonia Bjorkquist, Ryan Beckett, Rich Dukes, Wystan Ackerman, Bo Phillips, and Rachel Reynolds will all serve in this capacity this year. 

For the Scottsdale meeting in March of 2020, we will be partnering with the Appellate section to discuss interlocutory appeals in the context of Class and MDL matters.  Neil Hartzell, Marcy Greer and Tim Pratt will form the panel, and it looks to be a great topic and group of speakers. 

As always, if you have written something related to the Section or would like to, please reach out to me or one of the vice chairs and we can help getting it published in the appropriate FDCC materials. 

 

Andy Johnson

ajohnson@bradley.com

 

March 2019

 

Class Action & MDL Practice Section

 

For Whom The Rule Tolls: Rule 23(f) Not Subject to Equitable Tolling

By Rachel Tallon Reynolds

Lewis Brisbois Bisgaard & Smith, LLP, Seattle WA

 

            Federal Rule of Civil Procedure 23(f) provides in pertinent part that a party appealing a class action certification decision “must file a petition for permission to appeal with the circuit clerk within 14 days after the order is entered…”  In a recent decision, the Supreme Court clarified any confusion about the practical application of the 14-day timeline for Rule 23(f) appeals.

 

            Neutraceutical Corp. v. Troy Lambert, 586 U.S. ____ (2019) (Case No. 17-1094, Feb. 26, 2019), involved the appeal of a court order decertifying a class action alleging that a company’s marketing practices violated California’s consumer protection laws.  The District Court initially granted class certification, however the Court subsequently ordered the class decertified.  Ten days after the Court’s decertification order, the respondent appeared at a status conference and advised that the would “want to file a motion for reconsideration” in the future, and the Court told respondent to file the motion for reconsideration not later than 20 days after the decertification order. 

 

            In accordance with the Court’s directive, the respondent filed his motion for reconsideration 20 days after the decertification order.  The Court denied the motion for reconsideration more than three months later.  14 days after the order denying the motion for reconsideration, the respondent filed his Rule 23(f) petition to the Ninth Circuit Court of Appeals for permission to appeal the decertification order entered more than four months prior.  Despite the plain language of the 14 day rule, the Ninth Circuit deemed the petition timely.  The Ninth Circuit concluded that the time limit was equitably tolled in light of the respondent’s diligence and because he had informed the Court of his intention to seek reconsideration within the 14 day period. 

 

            In a unanimous opinion delivered by Justice Sotomayor, the Supreme Court reversed the Ninth Circuit, holding that Rule 23(f) is not subject to equitable tolling.  The Court noted that the availability of equitable tolling turns on whether the text of a rule leaves room for flexibility.  Where the plain text or the intent of the rules demonstrate a “clear intent to preclude tolling, courts are without authority to make exceptions merely because a litigant appears to have been diligent, reasonably mistaken, or otherwise deserving.”

 

            Post Neutraceutical, litigants must treat Rule 23(f)’s 14 day time limitation as unyielding.  Even if a party seeks alternative relief, including reconsideration, any certification petition to the Court of Appeals must be filed within the 14 day period or the appeal will be deemed waived. 

 

 

December 2018

 

NEW AMENDMENTS TO RULE 23: THE RULE CATCHES UP WITH REALITY

 

By

Bo Phillips and Gillian Clow

Alston & Bird

San Francisco / Los Angeles

 

Effective December 1, 2018, Rule 23 of the Federal Rules of Civil Procedure has been updated in several important ways.  The changes will clarify and modify class action practice, particularly with respect to settlement approval and related issues regarding notice and criteria for assessing fairness.

Revised Rule 23(e)(2) requires the court to determine adequacy of representation and that a settlement proposal was negotiated at arm’s length. It also requires the parties to demonstrate the fairness of the class relief as well as the terms of the fee award.  The Advisory Committee commentary places new emphasis on requiring courts to determine that the form and measure of relief is consistent with the basic certification standards in 23(a) and 23(b), and Rule 23(e)(2)(D) expressly requires that the settlement proposal “treats class members equitably relative to each other.”  These changes will advance the recent trend of more rigorous scrutiny by federal courts of the adequacy of class relief and the appropriateness of the form and magnitude of relief.

Revised Rule 23(c)(2) updates the requirements for notice to the settlement class, including new language that recognizes that electronic or web-based notice may be “the best notice that is practicable under the circumstances.”  These changes will allow courts to fashion more customized approaches to notice, particularly in consumer class actions where identifying and reaching class members may be difficult.  Corporate defendants can expect more pressure from the courts to use web-based forms of notice under the new rule, and the earlier preferences for publication in newspapers and magazines will become less prevalent.  The new rule also requires that “notice must clearly and concisely state in plain, easily understood language” the terms of the proposal.

Perhaps the most significant practical impact of the amendment relates to objections to a proposed settlement.  Over the past two decades, the objection process has been abused at times by “serial objectors” and their lawyers, essentially using the process to extract payments from the parties in exchange for dropping their objections.  Often times, such payments have been made without notice to the court.  Amended Rule 23(e)(5) is intended to prohibit such “shakedowns.”  It provides that “Unless approved by the court after a hearing, no payment or other consideration may be provided in connection with forgoing or withdrawing an objection…” This new requirement of notice to the court and approval by the court of any payments to objectors should reduce significantly the number of objections to fairly negotiated proposals.

Finally, in another change that should streamline the approval process after the preliminary approval hearing, Rule 23(f) has been amended to disallow an appeal of an order of preliminary approval.  While such appeals have not been common in recent years, they occasionally arise in connection with issues around the form and adequacy of notice to the class of the proposed settlement.  The new rule makes clear that any such challenge must await an order of final approval.

These amendments to Rule 23 should bring more consistency throughout the federal courts on matters involving notice and will require, in many instances, a more robust record on the fairness factors prior to approval.  For class action defense practitioners, these new rules may require more work up front in the approval process, but they also should provide greater predictability and much less risk of interference by abusive, self-interested objectors.  Seasoned class action veterans should welcome these changes and use them to reduce the risks of having a fairly negotiated resolution delayed or upended at the end of hard fought litigation.

 

* * *

 

 

 September 2018

 

Winter Meeting in Austin –

Please mark your calendars for March 3/24/2019 - 3/28/2019 2019 FDCC Winter Meeting - Austin, Texas.  We will be teaming up for our section meeting with the Drug and Device and Products Sections to present on a topic related to litigation getting ahead of science in the context of mass actions such as MDLs and class actions.  We hope that this topic will be interesting and helpful to the members of all three sections, and we hope to see you there.

Membership Additions –


As you have probably heard, the FDCC is making efforts to add new qualified members to our group.  President Don Myles has made this a priority, and we all have a duty to try to broaden and improve our great organization in this way.  Please give some thought to who might be not only future members, but future leaders of the FDCC. We would obviously like to strengthen the corporate counsel participation as well as the diversity of our group in this process.  Please pass along your ideas in this regard to me or one of our vice chairs (Rachel Reynolds, Bo Phillips, and Wystan Ackerman).

Publications and Podcasts –

Our members have the opportunity to get published and provide helpful content to the FDCC in upcoming editions of FDCC Insights.  Further, there is a new project underway for FDCC podcasts on substantive issues. If you have ideas for either of these opportunities, please let me know and we can work to get you to the front of the line.  

Substance –

An interesting class action settlement case is currently before the Supreme Court of the United States.  The case is Frank v. Gaos 17-961, being appealed from the Ninth Circuit. Per the summary on www.scotusblog.com, the issue is: “Whether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and comports with the requirement that a settlement binding class members must be ‘fair, reasonable, and adequate.’”  The case is set for argument on October 31, 2018. Stay tuned.

We will try to schedule a section call soon as we prepare for Austin.  


Andy Johnson – Chair

more Calendar

11/6/2019 » 11/8/2019
2019 Insurance Industry Institute (I-3)

3/3/2020 » 3/8/2020
2020 FDCC Winter Meeting

7/26/2020 » 8/2/2020
2020 FDCC Annual Meeting

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