UNITED STATES – On August 25, 2017, the Seventh Circuit Court of Appeals offered a stern reminder of its distaste for “hollow class-action settlements” that benefit the plaintiffs’ lawyers but not the plaintiffs themselves. See In re Subway Footlong Sandwich Mktg. & Sales Practices Litig., No. 16-1652, 2017 U.S. App. LEXIS 16260 (7th Cir. 2017). In In re Subway, the Seventh Circuit evaluated a class action settlement that arose from claims (not ultimately supported in the lawsuit) that Subway’s “foot long sub” sandwiches (“footlong subs”) did not always live up to their twelve-inch billing. In reversing the district court’s approval of the settlement, the Seventh Circuit reinforced the significance of Rule 23(a) of the Federal Rules of Civil Procedure — requiring that class action representatives “fairly and adequately protect the interests of the class” — and Rule 23(e)(2) — requiring that class action settlements be “fair, reasonable and adequate.” The Seventh Circuit also reinforced the uniqueness of the class action context, in which settlement agreements not only can be, but must be, scrutinized by the district court judge with “the high duty of care that the law requires of fiduciaries.” In so ruling, the Seventh Circuit made clear that district courts facing proposed class action settlements, and the lawyers who prepared them, each have an obligation to ensure that the real people who brought the case are the ones who receive Rule 23’s protection.
EU
The possibility of an EU-wide framework for collective redress is approaching with the closing of the European Commission’s call for evidence on the implementation of the Commission’s Recommendation 2013/396/EU (the “Recommendation”) on 15 August 2015. The Commission will now proceed to formulate its report (the “Report”).
The Report is intended to gather together information about practical experience of collective redress systems across the EU, as the Commission is concerned to determine whether current systems are effective in giving consumers access to justice and enable them to recover damages in the context of: consumer protection, competition, environment, personal data, financial services and investor protection. The evidence collected will be used to determine whether legislative steps at EU level are required in order to impose a minimum procedural standard for collective action regimes in the EU. Although the 2013 Recommendation set out common principles for injunctive and compensatory collective redress mechanisms, it was non-binding.
The D.C. Circuit recently ruled that alleged victims of a data breach have standing to pursue claims, notwithstanding that they have not yet suffered any actual harm as a result of the breach. This ruling adds to the prior circuit court rulings that have reached differing results when addressing the standing issue in data breach cases.
Attias v. CareFirst, Inc., presented a regrettably familiar fact pattern: Plaintiffs were the victims of an alleged data breach at health insurer CareFirst, which exposed their personal and medical data. Plaintiffs filed a class action against CareFirst raising eleven state law causes of action on behalf of a class of all CareFirst customers in Maryland, Virginia, and Washington, D.C.
The UK’s Competition Appeal Tribunal (“CAT”) has refused to certify the £14 billion consumer class claim brought against Mastercard under the English class action regime introduced in October 2015. This is the second collective action filed under that regime and both have failed at this first hurdle in the procedure. However, this does not necessarily signal that the regime cannot be used for appropriate cases and on behalf of carefully designed classes of claimant. The…
“All animals are equal, but some are more equal than others”. This is probably the most famous sentence from George Orwell’s Animal Farm. Sixty-two years after its first publication (on 17 August 1945), the Court of Appeal in Amsterdam had to decide whether this also applies to the beneficiaries of a collective settlement under the Act for the Collective Settlement of Mass Claims (Wet collective afwikkeling massaschade or “Wcam” for short). Fortis Group was a Dutch/Belgium…
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…
CHICAGO – On June 26, the Supreme Court issued its opinion in California Public Employees’ Retirement System v. ANZ Securities, Inc., 582 U. S. ____ (2017), resolving a split of authority when it ruled in a 5-4 decision that California Public Employees’ Retirement System’s (“CalPERS”) complaint was untimely after CalPERS opted out of a putative class only to later file its own complaint alleging the same claims more than three years after the relevant transactions…
CANADA – Concurrent class proceedings can raise procedural and substantive issues, chief among which is how to avoid conflicting judicial determinations from separate courts adjudicating on the same issue. When seeking approval from multiple courts of a global class action settlement, one approach may be to have the various courts preside over the same hearing.
A recent decision of the Supreme Court of Canada in Endean v. British Columbia, 2016 SCC 42 (“Endean“) held that judges of superior courts from different provinces may sit together to hear a motion arising out of concurrent class proceedings in their respective jurisdictions.
In Canada, superior courts are those with general rather than statutorily-granted jurisdiction. There is a separate superior court in each Canadian province.
The Endean decision arose from three concurrent class proceedings which had been commenced in the superior courts of Ontario, British Columbia and Quebec on behalf of individuals infected with Hepatitis C through the Canadian blood supply. It was common ground that each superior court had personal and subject-matter jurisdiction over the parties and issues in their respective proceedings.
All three actions were ultimately certified. The Ontario class included residents in every province except British Columbia and Quebec, meaning all affected Canadians were class members to one of the proceedings.
On May 9, 2017, the Fifth Circuit, in Slade v. Progressive Security Insurance Company, affirmed a lower court’s decision finding that a class-wide damages model did not preclude class certification. However, the Fifth Circuit warned that the plaintiffs’ waiver of the class members’ ability to contest a factor utilized in the damages model could ultimately preclude certification.
In Slade, plaintiffs alleged that their insurance company paid inadequate amounts on their claims for automobile damages. In particular, plaintiffs contended that, in determining how much to pay on an automobile claim, the company improperly relied on a WorkCenter Total Loss tool to calculate the base value for total loss vehicles. The company would then adjust that value using its own internal system based upon the car’s condition. Plaintiffs alleged that the company should have used base amounts provided in more commonly-used sources, such as the National Automobile Dealers Associate Guidebook or the Kelly Blue Book. Notably, at the appellate level, plaintiffs agreed that they would not challenge defendants’ condition adjustments.
The California Supreme Court has narrowed the protection of arbitration agreements with class action waivers with its holding in McGill v. Citibank that arbitration agreements may not preclude public injunctive relief .
In McGill, Citibank was sued by a credit card holder who claimed that its credit insurance program violated the California UCL, CLRA, false advertising law, and insurance code. Among other things, the consumer sought an injunction prohibiting Citibank from continuing the challenged practices. The trial court granted in part the bank’s motion to compel arbitration based on the arbitration clause in the credit card agreement. It denied the motion as it related to the request for injunctive relief by applying the pre-Concepción California Broughton-Cruz rule which holds unenforceable agreements to arbitrate claims for public injunctive relief under the CLRA, UCL, or false advertising law.