New California Appellate Guidance on CLRA Omission Claims

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In a recent published decision, the California Court of Appeal reiterated several concepts central to CLRA omission claims.

To start with, although the CLRA contains a long laundry list of prohibited practices, none of the practices listed expressly involve non-disclosure or concealment.  Instead, the CLRA bars conduct like “Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have…” and  “Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.”

Yet courts nonetheless have typically held that the CLRA may be interpreted to prohibit omissions. In Gutierrez v. Carmax, the California Court of Appeal reaffirmed those holdings.  The court engaged in a comprehensive analysis of the text, the legislative history, prior decisions, and other considerations, and held:

failures to disclose material facts are actionable under the CLRA.  In particular, we conclude paragraphs (5), (7) and (9) of subdivision (a) of Civil Code section 1770 proscribe material omissions in certain situations.

The court also reaffirmed principles concerning a closely related issue: In what circumstances are omissions actionable under the CLRA?  The court signed off on the “four situations” that have been incorporated into CLRA jurisprudence from case law concerning common law fraud.… Read more

New 9th Circuit Opinion on Appealing Class Certification Rulings

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Six months ago, the US Supreme Court appeared to end a controversy.  In the Ninth Circuit, at least, there had been growing confusion over how and when plaintiffs could appeal certification denials.  Rule 23(f) allows either party to request interlocutory review of a certification ruling.  But what happens when Rule 23(f) review is denied or not requested?  Can a plaintiff dismiss her case and then appeal?

In Baker v. Microsoft, that’s what the plaintiff tried.  After the district court struck all of the class allegations from the complaint, the plaintiff petitioned for review under 23(f) and the Ninth Circuit declined review.  The plaintiff then voluntarily dismissed his claims with prejudice so as to manufacture a final decision subject to appellate review.  The Ninth Circuit then agreed to hear the case (and ultimately ruled in plaintiff’s favor).

After a subsequent Ninth Circuit decision appeared to undermine that ruling, the Supreme Court reversed, holding that “Plaintiffs in putative class actions cannot transform a tentative interlocutory order … into a final judgment … simply by dismissing their claims with prejudice.”

Now, the Ninth Circuit has allowed appellate review of a certification denial under different – but not wholly unrelated – circumstances.

In Brown v.Read more

SCOTUS Set to Decide American Pipe Tolling For Subsequent Class Actions

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Last week, the Supreme Court agreed to decide whether the tolling rule of American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974), allows absent class members to bring a subsequent class action outside of a limitations period. The question is an important one to class action practice and will resolve a circuit-level split.

In American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974), and Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983), the Supreme Court held that the claims of absent class members are tolled by the timely filing of a defective class action. Does this mean that the only claims tolled are “the individual claims of purported class members?” Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96 n.3 (1990). Or may purported class members also file a separate class action outside the limitations period?

That question, according to the petition for certiorari, has divided the courts of appeals, with the First, Second, Third, Fifth, Eighth, and Eleventh Circuits declining to toll the limitations period for such follow-on class actions, and with the Sixth, Seventh, and Ninth Circuits extending the limitations period in this scenario based on American Pipe.Read more

9th Circuit Issues Important New Standing Decision

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Late last week, the Ninth Circuit settled a long-running district court split. The split pertains to when consumers have Article III standing to enjoin deceptive business practices. As the Ninth Circuit recognized, “district courts applying California law have split dramatically on this issue.”

The dispute, in short, turns on the requirement that anyone seeking an injunction must be at threat of future injury.  Quite a few courts had held that consumers who had already discovered a particular deception were not at threat of future injury, since they necessarily now knew the nature of the deception and thus could avoid being harmed again.

Many of those courts were not swayed even though they recognized their holdings created a paradox: even though injunctive relief lies at the heart of the UCL, in many cases, no plaintiff could enjoin deceptive conduct (at least in federal court). Those consumers who did not yet know of the deception would not know to file suit, whereas those who did know of the deception, would lack standing to seek an injunction.

As the Ninth Circuit recognized:

Were injunctive relief unavailable to a consumer who learns after purchasing a product that the product’s label is false, California’s consumer protection laws would be effectively gutted, as defendants could remove any such case.

Read more

Supreme Court Applied ‘Settled Principles’ In BMS Ruling

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Leslie Brueckner of Public Justice and I just published an article in Law360 about the Supreme Court’s recent decision in  Bristol-Myers Squibb Co. v. Superior Court. Here it is in full:

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The U.S. Supreme Court’s June 26 ruling in Bristol-Myers Squibb Co. v. Superior Court[1] has been characterized by some in the defense bar as portending a sea change in “specific,” or “case-linked,” personal jurisdiction. Not so fast.

Although the case was closely watched by both sides of the aisle because of its potential to strictly limit plaintiffs’ ability to sue corporations outside of their “home” state, the 8-to-1 ruling was decided on “settled principles” of law[2] — and, as a result, it did not move the legal needle anywhere near as far as the defense bar was hoping.

In this case, both California and nonresident plaintiffs sued Bristol-Meyer Squibb (BMS), a national pharmaceutical company, for personal injuries caused by Plavix, a cardiovascular drug linked to strokes and other serious injuries. Because BMS is incorporated in Delaware and headquartered in New York, and conducts most of its operations on the East Coast, there was no basis for asserting “general,” or “all-purpose,” jurisdiction over BMS in California.[3]

Instead, the question was whether California courts could assert specific jurisdiction over BMS, which exists where the plaintiff’s claims “aris[e] out of or relat[e] to the defendant’s contacts with the forum.”[4]

Specific jurisdiction was a non-issue as to the California plaintiffs because they had bought their Plavix in California and were injured in the state.

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Ninth Circuit Issues New Spokeo Opinion

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Earlier today, the Ninth Circuit issued its long-awaited Article III standing opinion in Robins v. Spokeo.  The Ninth Circuit’s new opinion comes after the Supreme Court vacated and remanded the Ninth Circuit’s earlier opinion in the same case.

The Ninth Circuit’s opinion today continues a trend among the circuit courts, identifying intangible harms arising from statutory violations that constitute concrete harm under Article III.

In reaching its conclusion, the Ninth Circuit borrowed liberally from the recent Second Circuit decision in Strubel.  It also cites a range of other circuit court opinions, suggesting a burgeoning consensus in what had been a murky and arguably dissonant jurisprudence.

The Ninth Circuit laid out its framework as follows:

In evaluating Robins’s claim of harm, we … ask: (1) whether the statutory provisions at issue were established to protect his concrete interests (as opposed to purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests.

To answer the first question, the court examined the statutory purpose, and whether those aims were “‘real,’ rather than purely legal creations.”  In holding that they were, the court also pointed to the fact that similar interests have been protected at common law:

Just as Congress’s judgment about an intangible harm is important to our concreteness analysis, so is the fact that the interest Congress identified is similar to others that traditionally have been protected.

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Third Circuit Crystallizes Post-Spokeo Standard

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The Third Circuit handed down an opinion Monday holding that a violation of the Telephone Consumer Protection Act (TCPA) confers Article III standing even in the case of intangible injuries.

The opinion may prove to be less interesting for its impact on TCPA jurisprudence than for guiding courts in their efforts to understand and apply the Supreme Court’s Spokeo decision.  After all, within the TCPA context, there already appears to be a consensus that statutory violations satisfy Article III’s requirements.

But post-Spokeo, courts have grappled with the opinion’s distinction between “procedural” and “substantive” statutory violations.  Some courts have focused on that distinction; others have found it unhelpful.

The Third Circuit’s new decision, in Susinno v. Work Out World, does not require distinguishing between procedural and substantive harms – even though the Third Circuit’s earlier Horizon decision had emphasized the distinction.  Per Susinno:

We summarize Horizon’s rule as follows. When one sues under a statute alleging “the very injury [the statute] is intended to prevent,” and the injury “has a close relationship to a harm . . . traditionally . . . providing a basis for a lawsuit in English or American courts,” a concrete injury has been pleaded.

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Second Circuit Rejects “Administrative Feasibility” Requirement for Class Certification

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On Friday, the U.S. Court of Appeals for the Second Circuit, in In re Petrobras Securities,  issued an important ruling rejecting a “heightened” ascertainability requirement for class certification. This decision comes as the Supreme Court is being asked to hear this same legal question in a case arising out of the Ninth Circuit. Petrobas shows that any disagreement between the circuits on this issue has grown stale, and Supreme Court review is unlikely.

In Petrobas, the Second Circuit was urged to adopt a rule “under which any proposed class must be ‘administratively feasible,’ over and above the evident requirements that a class be ‘definite’ and ‘defined by objective criteria,’ and separate from Rule 23(b)(3)’s requirements of predominance and superiority.” Slip op. at 28. The court, however, declined to adopt this requirement, because not only was it not required by Rule 23, it was incompatible with this rule. Id. at 35-40. Instead, ascertainability in the Second Circuit is less demanding, requiring only “that a class be defined using objective criteria that establish a membership with definite boundaries.” Id. at 28.

Many in the defense bar understood Second Circuit law differently. For example, the recent cert petition filed by defendants in Conagra Brands, Inc.Read more

Supreme Court Rules on Plaintiffs’ Ability to Appeal Class Certification Denial

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The Supreme Court has issued its opinion in Microsoft v. Baker, ruling class action plaintiffs cannot circumvent the Rule 23(f) procedure governing the appeal of class certification denials by voluntarily dismissing their claims with prejudice.

Following oral argument several months back, the consensus had been that the ruling in Baker would be in Microsoft’s favor.  In fact, even the Ninth Circuit appeared to back away from its holding in Baker, issuing a contrary ruling while Baker remained pending before the Supreme Court.

The predictions proved right, with the Supreme Court issuing a ruling that reached a unanimous result: plaintiffs cannot appeal a denial of class certification unless they either successfully petition for permission to appeal under Rule 23(f) or continue to litigate after the denial of certification until judgment.

Perhaps most interesting about the ruling was the 5-4 split on the underlying reasoning. Justice Kennedy and the liberal wing of the Court premised the majority ruling on the basis that federal courts of appeals lack jurisdiction under the “final judgment rule” of §1291 to review an order denying class certification (or, as here, an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice.… Read more

Second Circuit Reverses Dismissal on Standing Grounds

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It’s axiomatic that – at the pleading stage – all inferences are to be drawn in plaintiffs’ favor. All well pled allegations are to be taken as true.

Yet complaints are often nitpicked, especially by defendants who foresee trouble once discovery is underway.  They search for holes in the pleadings, even when (or especially when) those holes are likely to be filled later with evidence.

That strategy often works.  So plaintiffs can take solace in the new Second Circuit opinion that not only reiterates these general principles, but expressly relies on them to form the backbone of its opinion.

The case is John v. Whole Foods Market Group.  Plaintiff alleged Whole Foods systematically overstated the weights of prepackaged foods, leading to overcharges for its customers.  The case followed a New York Department of Consumer Affairs investigation, which concluded some 89% of Whole Foods’ prepackaged foods featured overstated weights.

Whole Foods moved to dismiss on standing grounds.  It argued that just because the weight of 89% of its food had been overstated, that didn’t necessarily mean that the weight of plaintiff’s food had been overstated.  So, Whole Foods argued, plaintiff could not plausibly allege that he overpaid.  Whole Foods also sought dismissal on the ground that the complaint lacked details about the New York investigation’s methodology.… Read more