UNITED STATES – In a 5-4 decision, the U.S. Supreme Court recently held that classwide arbitration must be explicitly called for in an arbitration agreement to be enforceable. Specifically, the Court held that ambiguity as to whether the parties agreed to arbitration on a classwide basis cannot provide a “contractual basis” sufficient to compel class arbitration. Plaintiff Frank Varela filed the underlying lawsuit against his employer, Lamps Plus Inc., after a hacker gained access to…

To paraphrase Pharaoh Ramses II, so it is written, so it shall be done. In Schein, Inc. v. Archer and White Sales, Inc., 586 U.S. __ (January 8, 2019), the first opinion by Justice Kavanaugh, a unanimous Supreme Court reiterated this principle of the Federal Arbitration Act. Specifically, the Court confirmed that when an arbitration agreement delegates to an arbitrator the question of whether the agreement applies to a particular dispute, courts have no power to decide…

Background Data privacy law is rapidly developing; significant updates to data privacy and protection laws (now enacted in over 100 jurisdictions worldwide) are of increasing importance to class action litigation. Especially after the enactment of the EU General Data Protection Regulation (GDPR) and the Chinese Cybersecurity Law (and its supporting guidelines and regulations), there is a strong push for the enactment of stricter data protection laws in the United States. Practitioners must consider the implications of…

Procedural history

In August 2016, the US Judicial Conference’s Committee on Rules of Practice and Procedure (“Committee”) published proposed amendments to Federal Rule of Civil Procedure 23 governing class actions. The proposed amendments were available for public comment from August 12, 2016 through February 15, 2017. The Committee held several public hearings to discuss the proposed amendment in late 2016 and early 2017. The proposed changes were submitted to the Supreme Court on October 4, 2017. If the Supreme Court accepts the Committee’s proposal, the changes will become effective on December 1, 2018.

Proposed changes and practical implications

The proposed amendments are intended to modernize the notice process, to allow for notice to class members via electronic communications; impose affirmative obligations on a court to consider specific factors relevant to the fairness, reasonableness, and adequacy of a proposed settlement; to curb abuses from “bad faith” objectors; and clarify that certain orders granting “preliminary approval” of class certification may not be appealed.. Each is summarized briefly below.

UNITED STATES – On October 24, 2017, the Senate voted 51-50 to nullify a Consumer Financial Protection Bureau (CFPB) regulation that restricted banks and credit card companies from requiring customers to submit to mandatory arbitration in the event of a dispute. Vice President Mike Pence provided the tiebreaking vote. The Senate’s resolution now goes to President Trump, who is expected to sign the resolution into law.

The rule, which was introduced by the CFPB in July but had not yet taken effect, would have restricted financial institutions from including mandatory arbitration clauses in the fine print of its consumer contracts. This restriction on arbitration agreements would have enabled aggrieved consumers to bring class-action lawsuits against financial institutions with increased ease. Mandatory arbitration clauses are commonly utilized in many types of consumer contracts across the financial industry, including credit card agreements and private student loans. As a result of the Senate’s vote, financial institutions will face fewer class-action suits from its consumers.

The federal Consumer Financial Protection Bureau (CFPB) issued what is being labeled a “brazen” rule[1] on Monday, July 10, 2017, prohibiting financial firms from using class action waivers to manage consumer complaints and disputes.[2] As we have reported in previous client alerts and blog posts[3], the Supreme Court of the United States has previously upheld consumer arbitration clauses and class action waivers, resulting in a significant increase in the adoption of such clauses by consumer-facing…

Consumer-facing corporations had been hopeful over the past two years that a ruling from the United States Supreme Court, in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), would deter and diminish the prevalence of consumer class actions in the U.S. But, when the Supreme Court issued its decision in May 2016, attorneys representing both plaintiffs and defendants claimed victory, foreshadowing the competing interpretations that lower courts would subsequently have for the decision.

The Supreme Court opined in Spokeo that a consumer did not have the right (or “standing”) to bring a class action by alleging only a bare procedural violation of a statute divorced from any concrete harm. The defendants’ class action bar believed the Spokeo decision would curtail all class actions premised on bare claims of technical violations of consumer protection statutes causing no harm. However, instead of curbing such cases, the decision resulted in a split among the federal courts as to the meaning of “concrete harm.” Thus, the decision spawned an increase in litigation by affording both sides the ability to frame the decision in their favor, with the outcome dependent upon a court’s unpredictable interpretation.