It’s pretty common in consumer class actions in California for the plaintiffs to assert causes of action seeking damages as well other causes of action for various equitable remedies (such as restitution). Sometimes, plaintiffs abandon the damages claims in order to get a bench trial on the equitable claims or in an effort to improve their chances of certifying a class. In Sonner v. Premier Nutrition, the Ninth Circuit affirmed the dismissal of consumer-protection claims seeking solely equitable relief because legal damages were available in the same amount for the same alleged harm.
In a very big deal for TCPA class actions, the Supreme Court granted review today in Facebook, Inc. v. Duguid. The petition (pdf) raises the most significant issue in litigation under the Telephone Consumer Protection Act (TCPA): what kind of equipment constitutes an “automatic telephone dialing system” (ADTS) triggering the TCPA’s restrictions on calls and texts? (The other question presented by the petition—the constitutionality and severability of the exception for government debts—was decided by the Court earlier this week.)
As we have reported, there is a deep circuit split over how to read the statutory language defining an ATDS: “equipment that has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1).
The issue presented in Duguid is “whether the definition of an ATDS in the TCPA encompasses any device that can ‘store’ and ‘automatically dial’ telephone numbers, even if the device does not ‘us[e] a random or sequential number generator.” This issue is critically important, because if a device that merely can dial a number from a preselected list—such as an iPhone—qualifies as an ATDS, the TCPA’s restrictions will prohibit an immense amount of activity that is commonly thought to be lawful. The issue has been litigated across the country, and the resolution of whether a device used for dialing or texting counts as an ATDS is frequently the central merits issue (one that is sometimes outcome-determinative) in TCPA litigation.
In Duguid, the Ninth Circuit adhered to its sweepingly broad definition of ATDS that it had adopted in Marks v. Crunch San Diego, LLC. (Here’s our report on Marks.) The Second Circuit recently agreed with the Ninth Circuit in Duran v. LaBoom Disco; those decisions conflict with the views of the Eleventh Circuit in Glasser v. Hilton Grand Vacations Co. and the Seventh Circuit in Gadelhak v. AT&T Services, Inc., in which Archis and other firm lawyers represented AT&T.
Briefing should begin over the summer and the case is likely to be argued in late 2020.
Earlier this week, the Supreme Court issued its long-awaited decision in Barr v. American Association of Political Consultants, a First Amendment challenge to the Telephone Consumer Protection Act (TCPA). The bottom line: The TCPA as we know it lives on (at least for now).
The plaintiffs who challenged the statute contended that because the TCPA’s bar on unsolicited autodialed calls or texts contained an exception for communications aimed at collecting U.S. government debt, that differing treatment amounted to is an impermissible content-based restriction on speech. The Court splintered on two issues: (1) whether this exception was a First Amendment violation, and (2) if so, what’s the remedy? A group of six Justices concluded that the TCPA contravened the First Amendment, and a differently composed group of seven Justices agreed that the proper remedy was to sever the government-debt exception rather than invalidate the autodialing restriction across the board.
One of the key issues in any case under the Telephone Consumer Protection Act (TCPA) is whether the plaintiff consented to be called or texted. If the recipient has provided “prior express consent,” the TCPA permits calls or texts to either (i) wireless numbers using autodialers or artificial or prerecorded voices; or (ii) residential telephones using artificial or prerecorded voices. 47 U.S.C. § 227(b)(1)(A)(iii) (cellular telephones); id. § 227(b)(1)(B) (residential telephones). Courts currently are divided on the impact of contracts specifying that consumers agree in advance to receive such calls or texts.
One of the most hotly-contested issues in litigation under the Telephone Consumer Protection Act (TCPA) is what equipment counts as an “automatic telephone dialing system” (ATDS) triggering the TCPA’s restrictions. In 2018, the D.C. Circuit threw out the FCC’s interpretation of the statutory definition of an ATDS—which was so broad as to encompass smartphones—as arbitrary and capricious. (See our report on the D.C. Circuit’s ACA International v. FCC decision.) In the wake of that decision—while parties await the FCC’s new rule—courts around the country have been weighing in how best to interpret the statutory text.
The issue is now the subject of a deep circuit split. In recent months, both the Seventh Circuit in Gadelhak v. AT&T Services, Inc. and the Eleventh Circuit in Glasser v. Hilton Grand Vacations Co. (pdf) have concluded that equipment that dials from a pre-selected list of phone numbers does not qualify as an ATDS. (Disclosure: Mayer Brown represented AT&T in Gadelhak; Archis was on the briefs in the Seventh Circuit.) The Seventh and Eleventh Circuits thus rejected the Ninth Circuit’s more expansive interpretation of ATDS in Marks v. Crunch San Diego, LLC. (See our report on Marks.) The Second Circuit, in contrast, recently followed the Marks interpretation in Duran v. La Boom Disco.
In light of this growing divide, lawyers on both sides of the “v.” are waiting for the Supreme Court to step in.
The Supreme Court has resolved many important questions about personal jurisdiction. But somewhat surprisingly, it has not decided a fundamental question that arises in class actions – to establish specific personal jurisdiction (meaning case-linked personal jurisdiction) over a defendant, must the plaintiff establish that the defendant has sufficient connections to the forum with respect to all plaintiffs’ claims, or only the named plaintiffs’ claims? Not only has the Supreme Court not decided this question, but no court of appeals has yet decided it. The D.C. Circuit will likely be the first, in a case now pending – Molock v. Whole Foods Market. We filed a brief (pdf) in Molock on behalf of the Chamber of Commerce and the Business Roundtable.
As we explain in the brief, the Supreme Court has gone a long way toward resolving this question. Two terms ago, the Supreme Court decided Bristol-Myers Squibb v. Superior Court (BMS) (pdf), which addressed how courts should assess personal jurisdiction in a mass tort action. In that case, 86 California residents and 592 plaintiffs from other states sued BMS in California, alleging injuries from taking the drug Plavix. The nonresident plaintiffs did not claim any connections to California: They “were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California.” The California Supreme Court nevertheless upheld the state court’s assertion of specific personal jurisdiction over the defendant for all of the plaintiffs’ claims. The U.S. Supreme Court reversed, explaining that due process requires a plaintiff-by-plaintiff, claim-by-claim assessment, so a court in an action with multiple plaintiffs must find that the defendant has the necessary connection to the forum for each plaintiff’s claim.
We think that the same principles apply to class actions. The Molock case helps to illustrate the point. In Molock, residents of the District of Columbia and residents of many other states sued Whole Foods in federal court in D.C. to challenge certain employment practices. Like the nonresident plaintiffs in BMS, the nonresident plaintiffs in Molock did not live or work in the District of Columbia. Their claims simply are not based on any conduct that occurred in the forum. And they should not be able to bootstrap their claims against Whole Foods just because those claims are similar to the resident plaintiffs’ claims.
In our brief, we urge the D.C. Circuit to adopt the following rule: A court may allow a class action to proceed only if the defendant is subject to specific personal jurisdiction in the forum with respect to every class member’s claim. If some class members cannot show the necessary connection between their claims and the defendant’s activities in the forum, then they could not maintain their claims as individual actions in the forum – and so they should not be able to bring them in a class action, either. This is the same rule that the Supreme Court applied in BMS; the only difference is that BMS was a mass action and Molock is a class action. But the requirements of due process are the same. A defendant should not be required to come to a jurisdiction to defend itself against claims when that jurisdiction has no real interest in those claims. And the Rules Enabling Act reinforces this point, because it bars plaintiffs from using the class-action device to abridge defendants’ substantive rights, including the right to contest personal jurisdiction over any individual claim.
Our brief also explains why a contrary rule would be troubling. It would encourage abusive forum shopping, permitting plaintiffs’ lawyers to bring a nationwide class action suit anywhere that even a single individual whose claim has a requisite forum connection is willing to sign up as a named plaintiff. That result would make the due process limitations on personal jurisdiction all but meaningless, and it would violate basic principles of federalism by permitting a court in a state that has no legitimate interest in the vast majority of the putative class’s claims to nonetheless adjudicate those claims.
Briefing is still ongoing in Molock, and it is currently scheduled to wrap up in April. The D.C. Circuit has not yet scheduled oral argument. We will keep you posted on the latest developments in this case and other appeals presenting the same issue.
Class action defendants usually prefer to have their cases heard in federal court, where the protections of Federal Rule of Civil Procedure 23 apply and where courts and juries are less likely to disfavor an out-of-state business. And as every class action defense lawyer knows, the Class Action Fairness Act of 2005 (“CAFA”) puts a significant thumb on the scale in favor of having large class actions heard in federal court, allowing for removal of most class actions in which the amount in controversy exceeds $5 million and there is minimal diversity of citizenship between the defendants and the members of the putative class. But how should CAFA apply when one business sues a consumer and the consumer files as a counterclaim a class action against a different business? Today, the Supreme Court heard oral arguments in Home Depot U.S.A., Inc. v. Jackson, a case presenting that question. (One of us attended the oral argument.)
On November 1, 2018, the U.S. District Court for the Northern District of California published updated procedural guidance for class action settlements (the “Guidance”). While the court made changes to align its rules with the December 1, 2018 amendments to Federal Rule of Civil Procedure 23, the court also sought to provide better information for parties and courts in negotiating and approving settlements. It became the first federal district court to require parties to class action settlements to publicly disclose a broad range of detailed settlement information. The following is an overview of key changes.
On December 1, 2018, the amendments to the Federal Rule of Civil Procedure 23 took effect. These amendments primarily alter rules governing federal class action notice, settlement, and appeal. The following is an overview of key changes.
Plaintiffs frequently seek to certify class actions where the proposed classes contain a significant number of uninjured persons. The First Circuit recently reversed the certification of such a class in In re Asacol Antitrust Litigation, concluding that a class cannot be certified where the “individual inquiries” necessary to resolve whether each class member has suffered an injury-in-fact “overwhelm common issues.” When such inquiries are needed to ensure that a defendant’s due process and jury trial rights are honored, a plaintiff cannot satisfy Rule 23(b)(3)’s predominance requirement. The court also rejected the plaintiff’s proposal to outsource these individualized inquiries to claims administrators.
We discuss the opinion in detail after the jump, but here are key takeaways for busy readers:
- The decision explains why a proposed damages class likely fails the predominance test—and therefore cannot be certified—if there are more than a negligible number of uninjured class members and there is no administratively feasible way to weed out those uninjured class members without individualized inquiries.
- The use of affidavits by class members to establish injury (or any other element of their claim) does not suffice to avoid individualized inquiries so long as the defendant plans to contest those affidavits, because a class cannot be certified on the premise that a defendant will not be entitled to challenge a class member’s ability to prove the elements of his or her claim.
- Policy justifications for consumer class actions cannot relax the requirements of Rule 23 or defendants’ due process and jury trial rights.