After a year of public-private collaboration and considerable anticipation, the National Institute for Standards and Technology’s (NIST) cybersecurity framework for critical infrastructure has arrived. The interest in the framework has only grown after several high profile data breaches in late 2013 have cast an unrelenting spotlight on cybersecurity issues. The framework presents businesses with important questions about whether and how they should use it, and—as cybersecurity-related class actions multiply—how the plaintiffs’ bar intends to invoke the framework.

After attempts at more comprehensive legislation faltered, President Obama issued an executive order (EO 13636) requiring development of the framework. By design, the framework is both voluntary and limited in its application. Most significantly, it only applies to critical infrastructure. In addition, it contemplates the creation of incentives to support its adoption and possible follow-on regulatory “actions to mitigate cyber risks,” and leaves unresolved the ongoing debate over information sharing and attendant liability protections.

But while the framework is voluntary, it likely will be influential. The Administration, for example, has said that in developing the framework it intended to “leverage” “common cybersecurity practices” to improve the cybersecurity of critical infrastructure. For critical infrastructure operators, multiple questions arise, including (1) will regulators rely on the framework; (2) how, if at all, will insurance markets account for the framework; and (3) will plaintiffs’ attorneys invoke the framework to exert leverage of their own via class action litigation.

Even before the framework’s introduction, many observers recognized the possibility that—in light of the SEC’s increasing emphasis on the appropriate disclosure of cyber risks— the plaintiff’s bar would press securities litigation alleging material omissions or misrepresentations about such risks. Recognizing that such lawsuits may be inevitable, businesses that operate critical infrastructure surely will want to take account of the framework both in assessing their cybersecurity posture and in disclosing the existence of cyber risks. In particular, companies should consider whether to incorporate elements of the framework (e.g., a “Framework Profile”) into their public disclosures.

Another significant issue is that, because the framework arguably may facilitate board-level awareness and management of cyber risk, plaintiffs may be more likely to bring actions against officers and directors for breach of fiduciary duties in connection with cyber incidents. Although the success of such actions remains to be seen, the release of the framework underscores the importance of cybersecurity to corporate boards and top executives.

At the same time, in our view, businesses should be reassured by the fact that nothing in the framework suggests that a company’s decision not to adopt an individual element—what it calls an “informative reference”—should form the basis of a future lawsuit, whether for data breach or other harm. Indeed, the framework specifically states that it is not a checklist and that it is not “one-size fits all.” Transforming an “informative reference” from the framework into a stand-alone requirement is not a mandate that the framework contemplates or supports. Attaching liability to individual “informative references” would create static cybersecurity checklists that the framework specifically rejects; indeed, it would frustrate the continued development of appropriate cybersecurity protections that the framework itself is aimed to encourage. Companies should therefore be prepared to defend against attempts to elevate the framework into liability standards, which would frustrate the Framework’s goal of providing a “prioritized, flexible, repeatable, performance-based, and cost-effective approach” to managing cybersecurity risk.

The stakes of cyber attacks are high. So too are the stakes of litigation that are likely to ensue. The NIST Framework doubtless will be cited in that litigation, but, properly understood, it should not form the basis of a claim. To that end, we will be watching closely to see whether the plaintiff’s bar seeks to use the framework in ways that would defeat its stated purposes.

It is no secret that many private class actions are filed as follow-on lawsuits to news reports, government investigations, regulatory developments, and identical earlier-filed class actions. But a recent gambit by the plaintiffs’ bar is among the more creative efforts we have seen. Earlier this week, a well-known plaintiffs’ firm filed Dang v. Samsung Electronics Co., in the Northern District of California. The complaint alleges that Apple’s victory over Samsung (at least in part) in certain highly publicized patent infringement actions establishes that Samsung has violated California’s consumer protection law as well as warranty statutes in 49 states and the District of Columbia.

The background of the patent battle between Apple and Samsung is well known, so we mention only a few highlights. In fall 2013, the federal court for the Northern District of California found Samsung liable for infringing several patents relating to Apple’s iPhone. The International Trade Commission also found that certain devices were infringing and precluded Samsung from importing or selling those devices. The same court already has granted partial summary judgment to Apple in a second patent lawsuit targeting additional Samsung devices, with a jury trial set for the end of March. (The battles are not over, to be sure.)

The Dang lawsuit alleges that Samsung induced consumers to purchase its devices by concealing its infringing activities, and that once those activities became known, the resale prices of Samsung smartphones and tablets “dropped dramatically,” injuring consumers and unjustly enriching Samsung. Mr. Dang alleges that “[h]ad [he] known the Product he purchased infringed on the patents held by [Samsung’s] competitor, Apple, he would not have purchased the Product.” He seeks to represent everyone in the U.S. who has purchased one of the allegedly infringing devices since 2008—a proposed class that undoubtedly totals in the millions.

Will Dang become a model for other plaintiffs’ lawyers to follow? The short answer: It depends on whether courts will accept the notion that the alleged infringement harms consumers (as opposed to competitors). Color us skeptical—to put it mildly, we have a number of questions:

  • How plausible is it that the interpretation of complex technology patents matters to consumers when they purchase a product?
  • How many Samsung purchasers even know that there is litigation involving Apple patents, much less the determination of the claims?
  • In light of the Ninth Circuit’s decision in Mazza v. American Honda Motor Co.—a case we have discussed before—what are the chances that a nationwide class could be certified given the variations among state warranty and consumer protection laws?
  • Is it realistic to believe that injury and damages can be proven on a classwide basis?

Nevertheless, it is easy to see why plaintiffs’ lawyers might find these kinds of cases attractive. If the result of a battle between competitors is that a product has been determined to be infringing by a court or agency, that may substantially reduce the work a plaintiffs’ lawyer needs to do to pursue the case. And that lawyer will likely argue that key aspects of liability have already been established before the class action even gets started.

The theory espoused in Dang parallels the strategies used by plaintiffs’ firms in the recent wave of false advertising class actions against food and beverage manufacturers. As we have discussed, many of these lawsuits rely on California’s wholesale incorporation of the federal Food Drug and Cosmetic Act (“FDCA”). Plaintiffs attempt to convert alleged technical violations of FDCA labeling requirements into consumer claims alleging that the mere sale of such products is illegal—without the need to show that class members actually were deceived by or relied on the alleged mislabeling. And most of those lawsuits have landed in the Northern District of California—now known as the nation’s “Food Court.”

It’s no coincidence that the Dang lawsuit was filed in the Northern District of California by two plaintiffs’ firms that are highly active in the Food Court wars. Will plaintiffs’ lawyers next flock to copycat class actions seeking to leverage findings of patent infringement? Stay tuned. We’ll be monitoring the situation.


Since 2006, companies based outside California have been alert to the potential burdens of class actions under California’s Invasion of Privacy Act (“CIPA”), Cal. Penal Code § 630 et seq. The laws of most states, as well as federal law, allow telephone calls to be recorded with the consent of one party to the call. Accordingly, companies in those states usually can record customer service calls for quality-assurance purposes without the need to procure the customer’s consent because the call-center employee, as a party to the call, can consent to the recording. California, however, is one of 12 states that allow recording only if all parties to the call consent. (The other so-called “two-party consent” states are Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, Pennsylvania, and Washington.) The plaintiffs’ bar has been trying to use California’s extremely pro-plaintiff privacy laws, such as the CIPA, to turn this innocuous business practice into an opportunity to extract class-action settlements from companies.

In 2006, the California Supreme Court held that CIPA applies even when one party to the conversation is outside California in a state that authorizes recording with the consent of a single party to the call. Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95 (2006). The court explained that, under California’s choice-of-law rules, California had the overriding interest in applying its privacy laws, such as CIPA, whenever “national or international firms” headquartered outside of California record “conversations with their California clients or customers.” And, like Flanagan v. Flanagan, 27 Cal. 4th 766 (2002), Kearney applied CIPA regardless of the content of the conversations, though that likely was because Kearney involved calls to a financial institution and Flanagan involved calls between family members—i.e., situations where callers arguably have an expectation of privacy. Nonetheless, an onslaught of consumer class actions followed and continue to this day.

Companies facing CIPA suits have been making progress. More and more courts are recognizing that CIPA was not intended to apply to calls to customer-service centers. See Shin v. Digi-Key Corp., 2012 WL 5503847 (C.D. Cal. Sept. 17, 2012); Sajfr v. BBG Commc’ns, Inc., 2012 WL 398991 (S.D. Cal. Jan. 10, 2012). They’ve also recognized that customer-service calls usually do not involve private information. See Faulkner v. ADT Sec. Servs., Inc., 706 F.3d 1017, 1020 (9th Cir. 2013); Shin; Safjr. And they’ve found that individualized issues of privacy and consent under CIPA preclude class certification. See Torres v. Nutrisystem, Inc., 289 F.R.D. 587 (C.D. Cal. 2013).

The recent decision in Jonczyk v. First National Capital Corp., No. 13-cv-959-JLS (C.D. Cal. Jan. 14, 2014), provides another arrow in companies’ quivers—and a large one at that. In that case, First National and its employee were located in California and the plaintiff called in from her home in Missouri. The district court applied a conflict-of-law analysis and concluded that the law of Missouri (a one-party consent state) should apply, not California’s CIPA. The court distinguished Kearney, which involved Salomon Smith Barney’s California clients, and held that California had little interest in a Missouri resident’s claims, while Missouri had valid interests in limiting the reach of its wiretapping statute. In so holding, the court cited our victory in Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) for the proposition that “maximizing consumer and business welfare … does not inexorably favor greater consumer protection.” The district court’s extension of Mazza to the privacy context, and CIPA specifically, represents a significant step forward for companies doing business in California. The decision should be particularly helpful to companies in California who receive out-of-state customer calls that are recorded.

When state attorneys general file suits to seek monetary recoveries based on claimed injuries to private citizens, those lawsuits look like, walk like, and quack like class actions. In fact, in most of these so-called “parens patriae” cases, the same private plaintiffs’ lawyers that bring private class actions are retained to represent states in exchange for the potential to garner substantial attorneys’ fees. While most class actions and mass actions of significance can be removed to federal court under the Class Action Fairness Act of 2005 (“CAFA”), the Supreme Court held today in Mississippi ex rel. Hood v. AU Optronics Corp. (pdf), that lawsuits in which the state is the sole named plaintiff do not as a technical matter fall within CAFA’s coverage of “mass actions,” and therefore that such lawsuits may proceed in state courts. The likely impact of the decision is that businesses will face more class-action-style cases in state-court forums.

CAFA allows defendants to remove, among other things, “mass actions” from state to federal court. Under the statute, a mass action is “any civil action … in which monetary relief claims of 100 or more persons are proposed to be tried jointly.” 28 U.S.C. § 1332(d)(11)(B)(i). The question facing the Court in Hood was whether a parens patriae suit filed by a State as the sole plaintiff constitutes a mass action when the suit includes claims for restitution based on injuries suffered by the State’s citizens.

The case arose out of a lawsuit filed in state court by the State of Mississippi alleging that manufacturers of liquid crystal displays (“LCDs”) had formed a cartel to restrict competition and raise prices. The State sought, among other forms of relief, restitution for its own purchases of LCD products and for the purchases of its citizens. The manufacturers removed the case to federal court, arguing that it qualified as a mass action. The district court found that the case was a mass action, but remanded under CAFA’s “general public exception.” On appeal, the Fifth Circuit reversed, agreeing with the district court that the case qualified as a mass action but finding that no exception to federal jurisdiction under CAFA existed. The Fifth Circuit’s decision conflicted with rulings in the Fourth, Seventh and Ninth Circuits, which had all held that similar lawsuits were not “mass actions” under CAFA.

The Supreme Court granted review to resolve the circuit split. Today, in a unanimous opinion by Justice Sotomayor, the Court reversed the Fifth Circuit’s decision, holding that such parens patriae actions do not qualify as mass actions under CAFA. The Court held that the “100 or more persons” language in CAFA’s mass action provision refers to named plaintiffs only, and does not encompass unnamed persons who are real parties in interest. Slip op. 5-10. Citing CAFA’s numerosity requirement (28 U.S.C. § 1332(d)(5)(B)), the Court noted that Congress knew how to include unnamed persons in a definition, but chose not to do so with respect to mass actions. Id. at 6. Further, the Court determined that the “100 or more persons” were later specified as the “plaintiffs” in the same provision and that the term “plaintiffs” could not include unnamed parties. Id. at 6-8. The Court concluded that construing “plaintiffs” to include unnamed real parties in interest would stretch the meaning of “plaintiff” beyond its common understanding as a party who brings a civil suit. Id. at 8-9.

In addition, the Court noted CAFA’s requirement that a removed case shall not be transferred to another court “unless a majority of the plaintiffs in the action request transfer.” Id. at 10. If “plaintiffs” included unnamed parties, the Court found, it would be difficult for a court to poll all of the real parties in interest to decide whether the case could be transferred. Id. In addition, the Court found that the mass action provision functions largely as a “backstop” to ensure that plaintiffs cannot evade federal jurisdiction under CAFA by naming a host of plaintiffs rather than using the class device. Id. at 11. According to the Court, if Congress wanted CAFA to authorize removal of representative actions brought by a state, it would have provided for the removal under the class action mechanism, not the mass action provision. Id.

Finally, the Court found that it was not proper in the mass action context to apply a background principle requiring courts to look behind the pleadings to ensure that parties are not improperly creating or destroying diversity jurisdiction. Id. at 11-13. According to the Court, this background principle had not previously been applied to count up unnamed parties but was typically applied to determine which parties’ citizenship should be considered in determining diversity. Id. at 12. In addition, by prohibiting defendants from joining unnamed individuals to turn a case into a mass action, see 28 U.S.C. 1332(d)(11)(B)(ii)(II), Congress indicated that it did not want courts to look behind the pleadings to attempt to find the real parties in interest. Id. at 13.

Today’s decision is highly significant for businesses. State attorneys general already have been filing enforcement actions in increasing numbers. And, as we have discussed before, some members of the plaintiffs’ bar have been lobbying states to deputize them as acting attorneys general so that they may file lawsuits as parens patriae actions in order to avoid federal jurisdiction and instead proceed in state court, which they perceive as a more hospitable forum. The Court’s decision today will likely encourage the private plaintiffs’ bar to redouble those efforts.

In nearly nine years on the books, the Class Action Fairness Act of 2005 (“CAFA”) has generated a host of decisions interpreting its provisions. Because the state of the law on CAFA—and class actions in general—is in constant flux, practitioners should certainly make use of online resources (like this blog) to stay up to date. But sometimes what’s needed is a desktop reference that places at one’s fingertips the answers to how to remove a case under CAFA—or how to resist that removal. To fill that need, the ABA’s Section of Litigation recently issued The Class Action Fairness Act: Law and Strategy, edited by Gregory C. Cook.

[Readers should be aware that we received a free review copy of the book.]

This book, dedicated solely to CAFA, provides a thorough analysis of the statute’s provisions and the key judicial decisions interpreting it. In addition, the book offers a number of practical tips for both plaintiffs’ and defense lawyers.

The book opens with a broad overview of CAFA and its expansion of federal jurisdiction over class actions and mass actions. The jurisdictional changes brought about by CAFA are neatly summarized at the close of the introduction in a quick reference chart, which presents a side-by-side comparison of federal diversity and removal jurisdiction over class actions before and after the enactment of CAFA.

Practitioners will also want to bookmark the series of flowcharts preceding the introduction—“CAFA At A Glance”—which were created by Arizona lawyer Kathryn Honecker. Offering visual step-by-step guidance in navigating through the thicket of CAFA’s jurisdictional provisions, including the often thorny “Local Controversy” and “Home State” exceptions to federal jurisdiction, these charts should help orient practitioners—particularly those not already well versed in the minutiae of CAFA—in the right direction.

Also well worth a read is the detailed chapter on CAFA’s legislative history, authored by Scott Nelson of Public Citizen Litigation Group—a respected appellate advocate who routinely represents plaintiffs (and often is one of our opponents in litigation and public policy debates). He chronicles the efforts of five Congresses—and the lively debates outside of Congress—that culminated in CAFA’s enactment in 2005. Nelson identifies the problem that Congress ultimately focused on in adopting CAFA: the willingness of certain state courts to certify virtually any proposed class and to tolerate abuses of the class-action device (and of analogous procedures like mass actions and representative proceedings). These “magnet” jurisdictions attracted nationwide or multistate class actions against businesses. The chapter details the inside baseball of the legislative process as CAFA evolved into an intricate framework of requirements for establishing and exceptions to federal jurisdiction over class and mass actions. A condensed version of this history is presented as a handy timeline at the conclusion of the chapter.

The remaining chapters, too, are worthwhile for class-action practitioners (and other CAFA aficionados). They break down each of CAFA’s provisions, ranging from the $5 million amount-in-controversy requirement to the separate provisions for mass actions to the notice requirements for proposed class action settlements. Practitioners can jumpstart their research process by consulting the relevant chapter or chapters as they confront CAFA-related issues.

In short, The Class Action Fairness Act: Law and Strategy has without a doubt earned a place on our bookshelves. We look forward to the next edition.

The American Tort Reform Association has released its annual report on “Judicial Hellholes”—a term it popularized for jurisdictions in which defendants often contend that they can’t get a fair shake. This year’s report identifies California, Louisiana, New York City, West Virginia, Madison & St. Clair Counties (Illinois), and South Florida as the most unfavorable jurisdictions. According to the report, these jurisdictions suffer from (among other things) overly-aggressive plaintiffs’ bars, expansive liability rules, court procedures that advantage plaintiffs, and welcoming attitudes toward forum-shopping out-of-town plaintiffs.

While the report is worth reading in full, here are some of the highlights that jumped out at us:

  • California won the slot as the top Judicial Hellhole, serving as “a breeding ground for consumer class actions, disability-access lawsuits and asbestos claims”—and an “unemployment rate [that] is one of the nation’s highest,” which the report indicates shouldn’t be surprising given the productivity-stifling effects of the skyrocketing costs of litigation. The Report highlighted the Northern District of California’s receptiveness to food-labeling and food-marketing class actions, noting that “[b]y one count, . . . more than 100 consumer class actions were filed against food makers in 2012 alone, five times the number filed four years earlier.” The report suggests that the “unpredictable” outcomes of litigation in “Food Court” have the perverse effect of harming consumers, “as litigation costs are invariably passed on to them in the form of higher food prices.” (According to a Law360 article, some advocates of class-action litigation have pushed back against California’s #1 ranking, contending the report focused on a “small number of clearly abusive lawsuits” rather than (in their view) providing a fuller context.)
  • According to the report, a decision from the West Virginia Supreme Court of Appeals is likely to increase the pressure for defendants to settle even meritless suits by allowing a plaintiff’s attorney’s fees to factor into the calculation of punitive damages. An individual sued her mortgage lender, alleging it had made an unconscionable loan. After a bench trial, the trial court agreed, and awarded the plaintiff “about $17,000 in restitution,” in addition to “void[ing] the remainder of the $144,800 loan obligation,” and “awarded the plaintiff nearly $600,000 in attorney fees and costs.” The trial court included that attorney-fee award as part of the compensatory damages used in calculating a punitive-damages award with a 3x multiplier—equal to a $2.2 million punitive damages award. The West Virginia high court agreed in Quicken Loans v. Brown, 737 S.E.2d 640 (2012), concluding that the state Consumer Credit and Protection Act’s fee-shifting provision is “compensatory in nature.” When the court remanded for the trial court to make written findings in support of the punitive-damages award, the case was reassigned to another judge who “increased the multiplier” and ultimately awarded approximately $3.5 million in punitive damages.
  • The report touched on a phenomenon we have described in the past: State attorneys general around the country hire contingency-fee plaintiffs’ lawyers to sue companies in the name of the state. According to the report, after the Attorney General of Louisiana hired plaintiffs’ firms that had donated to his campaign, he defended himself against accusations of cronyism by noting that state law authorized no-bid contracts for professional services. Meanwhile, the West Virginia Supreme Court of Appeals rejected a challenge to that state’s AG’s practice of hiring outside contingency-fee lawyers to pursue claims for damages that, by statute, could only be recovered by the state. The report went on to note that the Nevada attorney general hired a plaintiffs’ firm to pursue claims against mortgage lenders under a “deal that gives the private firm ‘virtual veto power’ over any settlement offer” in a nationwide settlement. The report asks—as we have—whether state AG actions should be permitted at all when the AG hires private class-action lawyers to bring the case, and the government is involved in name only.

One of the more alarming recent developments in the class-action arena is the increase in actions by state attorneys general that mirror private class actions. These state AG actions aren’t like the typical enforcement action, in which the government pursues claims for civil penalties that are distinct from the relief sought in the private class action. Instead, these are copycat actions in every sense of the word. The state AG seeks restitution or disgorgement that is equivalent to the remedies requested in the private class action. And increasingly, the state AG is handing over the reins entirely to class-action plaintiffs’ lawyers, who sometimes get to call themselves “special assistant state attorneys general”—and usually get a big chunk of the ultimate recovery.

We’ve written before about this new breed of parens patriae action. But we wanted to focus on a different problem, which several Justices of the Supreme Court asked about during oral argument in Mississippi ex rel. Hood v. AU Optronics Corp. Specifically, the defendants targeted by these suits are being asked to pay damages twice for a single injury:

JUSTICE GINSBURG: But now we have the consumers who were affected, they’ve already been paid [in the settlement of the private class action]. So how does it work for the Attorney General’s suit? What is the impact of the class action that has already gone forward and been completed on the Attorney General’s claim?

* * *

CHIEF JUSTICE ROBERTS: What prevents * * * attorneys general from around the country sitting back and waiting * * * as private class actions proceed, and as soon as one settles or the plaintiffs’ class prevails, taking the same complaint, maybe even hiring the same lawyers, to go and say, well, now we are going to bring our parens patriae action. We know how the trial is going to work out or we know what the settlement is going to look like, and we are going to get the same amount of money for the State?

When asked about the fairness of this one-two punch, the lawyer for the Mississippi AG punted, suggesting that it is a matter of state law whether the judgment in the consumer class action could preclude a double recovery in the parens patriae action.

But that cannot be the whole picture. There are strong arguments that principles of federal due process forbid states from authorizing that kind of double dipping by removing well-established claim preclusion (res judicata) protections.

Those principles may also inform how state law approaches the question. Indeed, such arguments recently were successful in New Mexico ex rel. King v. Capital One Bank (USA) N.A. (pdf).

In that case, the New Mexico AG sought (among other things) restitution for New Mexico consumers who had subscribed to the defendant’s payment-protection plans. Yet the defendant had already reached a nationwide class settlement that resolved privately brought consumer-protection claims seeking restitution for the amounts New Mexico consumers had paid for these plans.

The district court agreed that the New Mexico AG’s claims for restitution were barred by res judicata under state law. The court first pointed out that the prior class settlement expressly discharged the claims of “all those who claim through [the class members] or who assert claims on their behalf (including the government in its capacity as parens patriae).”

The court next concluded that the claims in the current suit undoubtedly arose out of the same transaction or occurrence as the previously settled claims, and that the New Mexico AG was in privity with the class in the earlier private class action because both sought to remedy the same injury to the same group of people. Finally, the court added that “as a policy matter, the class members * * * should not be allowed to receive ‘double recovery.’”

Naturally, we think that the district court got it right. It remains to be seen whether the Tenth Circuit and district courts elsewhere will agree. Given the significance of this issue, we will keep our eyes open for future cases raising it and report on them.

Law Seminars International is once again holding its annual class actions conference in Chicago on December 9 and 10.  As in past years, the organizers have put together a great group of speakers to address the most recent developments affecting class actions .  For my part, I am looking forward to speaking on an issue we cover frequently on the blog:  the impact of arbitration on class-action litigation.

 A copy of the conference’s agenda is available here.  If any of the blog’s readers plan to attend the conference (or will be in Chicago during that time), I would love to hear from you.

From a practitioner’s standpoint, one of my five least-favorite recent developments in federal class-action practice is the explosion in the number of premature motions for class certification that would-be class representatives file.

I understand the motivation behind these motions—often filed along with the initial complaint. Of course, they are not seriously intended to induce a ruling on class certification; to the contrary, they expressly request that the issue be tabled until the completion of discovery. The real reason that plaintiffs’ counsel file these motions is that they want to preclude the defendant from mooting the putative class action by making an offer of judgment under Rule 68 to the named plaintiff for the full amount of his or her claims. The idea is that by having moved for class certification—even if only nominally—the plaintiff has done enough to start the ball rolling towards certification to allow the class action to continue even if the named plaintiff’s claims are extinguished. And while many creative ideas are dreamed up in the offices of plaintiffs’ lawyers, this is not one of them: This particular tactic stems from Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011), in which the Seventh Circuit held that a putative class action was moot after a Rule 68 offer, but suggested the possibility that mootness could be avoided by an early motion for class certification.

There can be no debate that these motions are annoying. They represent pure busywork for everyone involved: the plaintiff has to draft them, even if that amounts simply to parroting the requirements of Rule 23; the defendant often has to file a response or enter a stipulation to postpone further briefing; and the court has to juggle its calendar to account for these Potemkin motions. The paperwork alone results in a lot of dead trees (or their virtual equivalent). And these motions don’t save any time or effort in the fraction of these cases that actually reach the class-certification stage; the briefing inevitably must be redone following discovery. Moreover, these motions risk cluttering up judges’ pending-motions reports.

Unsurprisingly, there has been some judicial backlash against these motions. The latest example—which is nicely understated—is from Judge Stefan R. Underhill of the District of Connecticut, who described one such motion in a TCPA class action, Physicians Healthsource Inc. v. Purdue Pharma LP, No. 3:12-cv-1208 (D. Conn. Sept. 8, 2013), as “hasty” and “under-developed.”

In what I imagine will be an oft-copied move, rather than acceding to the plaintiff’s request to defer consideration of the motion until after discovery, Judge Underhill denied the motion without prejudice. He explained that even if a “place-holder” motion for class certification could prevent an offer of judgment from mooting a putative class action, “it does not follow that an initial, under-developed motion—like the one at bar—must linger on the docket while the court awaits the filing of a later, fully-developed motion following discovery.” That is because an order denying certification is “inherently tentative” and can be “modif[ied] in light of subsequent developments in the litigation.”

In my view, plaintiffs are mistaken in believing that the filing of an underbaked motion for class certification can ever stave off a finding of mootness. In Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), the Supreme Court made clear that a class action survives the mooting of the named plaintiff’s claims only if the putative class already has “acquire[d] an independent legal status.” And in my view, that happens only if the class is actually certified (Sosna v. Iowa, 419 U. S. 393 (1975)), or would have been certified but for an erroneous denial of class certification (United States Parole Comm’n v. Geraghty, 445 U. S. 388 (1980)). Yet these premature motions (understandably) do not even seek a ruling on class certification; they ask that any such ruling be postponed until after discovery and re-briefing. These motions add nothing to the allegations in the complaint asserting the existence of a putative class and therefore can offer no greater protection against mootness.

One final note: In Physicians Healthsource, Judge Underhill made clear that one reason he thought that the plaintiff’s motion for class certification was pointless was because “the Second Circuit * * * has never adopted” the Seventh Circuit’s mootness rule from Damasco. It’s true that, unlike the Seventh Circuit, the Second Circuit has held that an unaccepted offer of judgment for full relief doesn’t automatically moot the named plaintiff’s claims. But Judge Underhill’s implication—that would-be class counsel has nothing to fear from an offer of judgment—is mistaken. In McCauley v. Trans Union LLC, 402 F.3d 340 (2d Cir. 2005), the Second Circuit merely explained that the “better resolution” of a case in which an offer of judgment for full relief has been extended is “entry of a default judgment against” the defendant along the terms of the offer. So the named plaintiff’s individual claims would be just as dead as they would be under the Seventh Circuit’s mootness rule.

The bigger issue—which we’ll leave for another day—is whether, after the Supreme Court’s decision in Genesis, a Rule 68 offer of full relief to a named plaintiff has the effect of mooting a putative class action. Stay tuned!