The California legislature made headlines on June 28 when it passed—and the Governor signed—AB 375, a sweeping new data privacy bill known as the “California Consumer Privacy Act.” As further described in our colleagues’ report, the Act grants broad new privacy rights to customers of certain companies doing business in California. In addition, the Act both provides for enforcement by the California Attorney General and creates a private right of action for some violations. Because of the latter feature, this new legislation may pave a new road to court for class actions in the wake of data breaches affecting California consumers.
Archis A. Parasharami, a litigation partner in Mayer Brown's Washington DC office, is a co-chair of the firm's Consumer Litigation & Class Actions practice, recently named by Law360 as one of the top five class action groups of the year. He also is a member of the firm's Supreme Court & Appellate practice.
Archis routinely defends businesses in class action litigation in federal and state courts around the country. He brings substantial experience to all aspects of complex litigation and class actions, with a particular focus on strategy issues, multidistrict litigation, and critical motions seeking the dismissal of class actions or opposing class certification. He also has helped businesses achieve settlements on highly favorable terms in significant class actions. Archis frequently speaks on developments in the class action arena, and has been quoted on a number of occasions in the National Law Journal, Corporate Counsel, and the Wall Street Journal Law Blog.
Over the past few years, the Supreme Court has heard several cases involving class action procedure, including China Agritech, Inc. v. Resh; CalPERS v. ANZ Securities, Inc.; and Microsoft Corp. v. Baker. Today, the Supreme Court continued this trend, granting review to decide whether Rule 23(f)’s 14-day deadline to file a petition for permission to appeal an order granting or denying class certification is subject to equitable exceptions. Nutraceutical Corp. v. Lambert, No. 17-1094.
Today the Supreme Court held in China Agritech, Inc. v. Resh (pdf) that the filing of a putative class action does not delay the time for others to file their own successive class action lawsuits. The decision should give businesses confidence that they will not face an endless series of class actions over the same conduct.
This morning I attended the oral argument in China Agritech, Inc. v. Resh (PDF). The case arises against the backdrop of the long-standing rule declared in American Pipe and Construction Co. v. Utah (1974) that the filing of a putative class action tolls the time for absent class members to bring individual claims while the case remains pending as a potential class action. The question in China Agritech is whether American Pipe’s equitable tolling rule applies beyond the context of individual actions and also allows absent class members to file a successive putative class action after the statute of limitations period has run.
Last Friday, a panel of the D.C. Circuit issued its decision in ACA International v. FCC (pdf). The decision, which arrived nearly 17 months after the oral argument, struck down key elements of the FCC’s controversial 2015 Declaratory Ruling and Order interpreting the Telephone Consumer Protection Act (TCPA).
Here are the key takeaways from the decision:
- The court held that the FCC’s broad definition of an automatic telephone dialing system (ATDS), which threatened to include all smartphones, is arbitrary and capricious, and required the FCC to reconsider its definition.
- The court overturned the FCC’s conclusion that a caller could be subjected to liability for calls placed or text messages sent to a phone number that had been reassigned after a “safe harbor” of a single errant call or text. Because the “safe harbor” ruling was arbitrary and capricious, the court concluded that the FCC was required to reexamine whether a caller should be liable for any calls or texts to reassigned numbers.
- The panel sustained the FCC’s rule authorizing consumers to retract their consent to receive autodialed calls or text messages through “any reasonable means.” But the panel decision notes that the FCC’s rule doesn’t speak to situations where parties have contractually agreed to a specific method of revocation.
Unless the FCC seeks further appellate review (which seems unlikely), the agency will be reconsidering the autodialer and reassigned-number issues. Notably, the composition of the FCC has changed since the 2015 order; the chairman of the FCC is Commissioner Ajit Pai, who dissented from the 2015 ruling.
We summarize the decision in detail below. In the meantime, we expect businesses facing TCPA litigation to take at least three possible approaches.
First, the D.C. Circuit’s decision reopens a number of questions that plaintiffs have argued were resolved by the FCC’s 2015 ruling, and parties will seek to litigate those issues.
Second, the FCC will have something new to say on each of the issues remanded to it by the D.C. Circuit, and businesses and trade associations will doubtless want to participate in that regulatory discussion—especially given their extensive experience on the receiving end of TCPA lawsuits.
Third, and relatedly, a number of courts will surely find it more efficient to wait for the FCC’s pronouncements on these issues before allowing TCPA litigation to proceed.
The anti-arbitration rule issued by the Consumer Financial Protection Bureau in July is now just one short step away from elimination.
The Senate tonight voted 51-50 (with Vice President Pence casting the deciding vote) to invalidate the CFPB’s rule under the Congressional Review Act (“CRA”). That vote follows the House of Representatives’ disapproval of the rule in July.
The last remaining step is the President’s signature on the legislation, which seems highly likely given the Administration’s statement today (pdf) urging the Senate to invalidate the rule.
The President’s approval will trigger two provisions of the CRA.
First, the rule “shall not take effect (or continue)” (5 U.S.C. § 801(b)(1)). In other words, the rule no longer has the force of law and businesses are no longer required to comply with its terms.
Second, the CFPB may neither re-issue the rule “in substantially the same form” nor issue a new rule that is “substantially the same” as the invalidated rule—unless Congress enacts new legislation “specifically authoriz[ing]” such a rule (5 U.S.C. § 801(b)(2)). The scope of this “substantially the same” standard has not been addressed by the courts, but it seems clear that at the very minimum the Bureau cannot issue (a) a new rule banning class action waivers; (b) an express ban of pre-dispute arbitration clauses; (c) a rule that has the practical effect of eliminating pre-dispute arbitration clauses; or (d) any other rule that imposes similar burdens on the use of arbitration.
Invalidation of the rule under the CRA also will moot the pending broad-based industry lawsuit against the CFPB challenging the legality of the regulation. (Mayer Brown represents the plaintiffs in the litigation).
We have repeatedly discussed in this space the ongoing debate among the federal courts about ascertainability—a red-hot topic in class action litigation these days. (For a more detailed look at our views on the ascertainability doctrine, see the amicus brief (pdf) that we filed on behalf of the National Association of Manufacturers in support of a pending cert petition.) That topic—and the debate among the lower courts—shows no sign of slowing down, as evidenced by new decisions issued by the Second, Sixth, and Third Circuits over the past two months. The central takeaway from these decisions is that while ascertainability is not a panacea for defendants facing consumer class actions, the doctrine (or variations on the ascertainability theme) should help defeat class actions in many circuits when class members cannot be identified without individualized inquiries.
As many of our readers know, the Supreme Court will hear arguments next term in a trio of cases examining whether class waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act. Many observers—including the two of us—believed that the issue had been settled by the Supreme Court’s decisions in AT&T Mobility LLC v. Concepcion (2011) and American Express Co. v. Italian Colors Restaurant (2013). But—as detailed on our blog—in 2012 the National Labor Relations Board concluded in the D.R. Horton case that Section 7 of the National Labor Relations Act (NLRA), which protects the ability of employees to engage in “concerted activities” (for example, union organizing), supersedes Concepcion (and by extension, American Express) and requires that employees be allowed to bring class actions (either in court or in arbitration).
Over the past several years, a circuit split has developed over whether the Board’s approach in D.R. Horton rests on correct interpretations of the FAA and NLRA, with the majority of courts rejecting the Board’s position. In January, the Supreme Court granted review in three cases—NLRB v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris—to resolve the split. Briefing on the merits is now underway. We filed our amicus brief on behalf of the U.S. Chamber last Friday, and—while we believe our brief makes compelling arguments (which we discuss below)—the big development in these cases was the amicus brief that the United States filed on Friday.
Significantly, the United States has changed its position since last October, when the DOJ represented the NLRB in filing the petition for certiorari in Murphy Oil. That petition was a full-throated defense of the D.R. Horton rule, consistent with efforts by a number of federal agencies during the Obama Administration to circumvent Concepcion by banning class waivers or banning predispute arbitration entirely. Last Friday, however, the United States broke with the Board’s position, filing an amicus brief in support of Murphy Oil and the other two companies.
As the government explained in its brief on Friday, the Solicitor General’s office has concluded that its earlier briefs got the issue wrong:
In Murphy Oil, this Office previously filed a petition for a writ of certiorari on behalf of the NLRB, defending the Board’s view that agreements of the sort at issue here are unenforceable. After the change in administration, the Office reconsidered the issue and has reached the opposite conclusion. Although the Board’s interpretation of ambiguous NLRA language is ordinarily entitled to judicial deference, courts do not defer to the Board’s conclusion as to the interplay between the NLRA and other federal statutes. We do not believe that the Board in its prior unfair-labor-practice proceedings, or the government’s certiorari petition in Murphy Oil, gave adequate weight to the congressional policy favoring enforcement of arbitration agreements that is reflected in the FAA.
We’ve previously blogged about Bristol-Myers Squibb v. Superior Court (“BMS”), in which the Supreme Court granted certiorari to review a decision of the California Supreme Court that adopted an unusual—and extraordinarily expansive—view of California courts’ power to exercise specific personal jurisdiction over a defendant.
We filed an amicus brief on behalf of the Chamber of Commerce of the United States of America, the California Chamber of Commerce, the American Tort Reform Association, and the Civil Justice Association of California, arguing that the California court’s holding conflicted with numerous Supreme Court decisions making clear that in order to invoke specific jurisdiction, a plaintiff’s claims must arise out of the defendant’s in-state conduct. (The views in this post are ours, and not those of our clients.)
The case was argued in April, and the Court announced its decision today. The result is an 8-1 opinion rejecting the California Supreme Court’s approach and, in our view, recognizing important limits imposed by the Fourteenth Amendment’s due process clause on the ability of courts to adjudicate cases that aggregate the claims of plaintiffs from many jurisdictions.
The immediate impact of the decision is to limit the forums where nationwide mass actions in state court can proceed to those states in which the defendant is subject to general jurisdiction (usually the state of incorporation and principal place of business). In addition, as we discuss below, the decision raises substantial questions about whether nationwide class actions can proceed in jurisdictions where a defendant is not subject to general jurisdiction. Continue Reading Supreme Court’s Decision In Bristol-Myers Squibb v. Superior Court Rejects Expansive View Of Specific Jurisdiction
Today’s decision by the Supreme Court in Microsoft Corp. v. Baker puts an end to a tactic used by plaintiffs in the Ninth Circuit to manufacture an immediate appeal of an order denying class certification. When a federal district court grants or denies class certification, Federal Rule of Civil Procedure 23(f) allows the losing party to ask the court of appeals for permission to appeal immediately. Otherwise, the parties must litigate the case to a final judgment—the named plaintiffs’ individual claims if certification has been denied, or the class claims if certification has been granted—to obtain appellate review of the district court’s class certification determination. But the Ninth Circuit created an exception to this rule by authorizing a plaintiff who has had class certification denied to dismiss his or her individual claims with prejudice and then file an appeal from that self-generated judgment.
After the oral arguments in Baker, it seemed likely that the Supreme Court would reject that exception. And that is exactly what the Court decided today. Much more interesting is how they got there: Although all eight participating Justices agreed on the outcome, they took different approaches to the question presented. Continue Reading Supreme Court rejects end runs around Rule 23(f) by use of “voluntary dismissal” tactic