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.

Continue Reading Seventh and Eleventh Circuits Reject, But Second Circuit Follows, Ninth Circuit’s Expansive Autodialer Definition in Marks

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.)

Continue Reading Supreme Court hears oral argument in case involving removal of counterclaim class actions

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.

Continue Reading Northern District of California adopts guidance for class action settlements

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.

Continue Reading December 2018 amendments to Rule 23 are now in effect

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.

Continue Reading First Circuit Reverses Class Certification Where Individualized Inquiries Would Be Required To Identify And Exclude Uninjured Class Members

The key question in many Telephone Consumer Protection Act lawsuits is whether the equipment used to call the plaintiff constitutes an autodialer—that is, an “automatic telephone dialing system” or ATDS—within the meaning of the statute.  TCPA practitioners have been awaiting the FCC’s guidance regarding the definition of an autodialer.  Last spring, the D.C. Circuit set aside the FCC’s expansive definition of that term as arbitrary and capricious.  (See our report on the D.C. Circuit’s ruling in ACA International.)  Since then, the FCC has been working on its new definition.

The Ninth Circuit apparently couldn’t wait.  In Marks v. Crunch San Diego, LLC (pdf), a Ninth Circuit panel held that an ATDS is any “device that stores telephone numbers to be called,” “whether or not the numbers were not generated by a random or sequential number generator.”

Continue Reading Ninth Circuit creates circuit split on what counts as an autodialer under the TCPA

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.

Continue Reading New California Consumer Privacy Act increases the risk of additional data breach class actions

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.

Continue Reading Supreme Court Will Review Whether Rule 23(f) Deadline To Appeal From Class Certification Orders Is Subject To Equitable Exceptions

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.

Continue Reading Supreme Court Holds In China Agritech That American Pipe’s Equitable Tolling Rule Does Not Extend To Successive Class Actions