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Over the past few years, a number of plaintiffs’ lawyers have attempted—with some success—to circumvent the “mass action” provisions in the Class Action Fairness Act of 2005 (“CAFA”), which allow defendants to remove to federal court certain cases raising “claims of 100 or more persons that are proposed to be tried jointly.” 28 U.S.C. § 1332(d)(11)(B)(i).  Although these lawyers represent 100-plus clients with substantively identical claims, they subdivide their mass actions into multiple parallel cases, often with just under 100 plaintiffs each.  And to avoid the “proposed to be tried jointly” language of CAFA, they remain coy about—or…
Continue Reading En Banc Ninth Circuit Permits Removal Under CAFA of a Subdivided Mass Action

Today is Halloween, an occasion when our thoughts turn to jack o’lanterns, ghosts, and zombies.  We are particularly fascinated by zombies—the dead returned to life. But we’re not the only ones.  In a decision earlier this week, a majority of the National Labor Relations Board voted to reanimate the dead.

The Board’s zombie of choice?  Its decision nearly three years ago in D.R. Horton (pdf), in which the Board sought to push back on arbitration agreements that require individual arbitration rather than class or collective actions.  As our readers know by now, most courts have accepted the Supreme Court’s clear …
Continue Reading NLRB Refuses To Yield On Anti-Arbitration Ruling Despite Near-Unanimous Rejection By Courts

For years, defendants have argued that federal courts may not entertain class-action lawsuits when the plaintiff does not allege that he or she suffered any concrete personal harm and instead relies solely on an “injury in law” based on an alleged exposure to a technical violation of a federal statute. As we (and others) have contended, Article III of the U.S. Constitution places limits on the jurisdiction of federal courts, and therefore forbids lawsuits when a plaintiff has not suffered an “injury in fact”—one of the critical elements of standing. That requirement has constitutional dimensions; as the Supreme Court explained in DaimlerChrysler Corp v. Cuno, “[n]o principle is more fundamental to the judiciary’s proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies.” Thus, although Congress enjoys significant latitude to create private causes of action, it cannot invent standing to sue in federal court when, in the absence of the federal statute, a plaintiff could not allege a real and palpable injury.

Nearly two years ago, the Supreme Court appeared poised to answer the question whether Congress can essentially create Article III standing in First American Financial Corp. v. Edwards. But—in a surprising turn of events—the Court dismissed the case as improvidently granted on the last day of its term. Readers can be forgiven if they don’t remember the occasion, as it was the same day that the Court issued its far more attention-getting rulings in the health-care cases. Yet the non-decision was extremely significant: as Deepak Gupta, one of the leading appellate lawyers in the plaintiffs’ bar, tweeted, “On pins and needles for First Am Fin’l v Edwards standing decision tomorrow. Oh yeah, and I hear there’s some health thing pending too.” Kevin Russell of SCOTUSblog similarly observed: “Lost in the hubbub of the health care decision is the Court’s surprise punt in a case that many (including myself) thought would be the sleeper case of the Term.”

Fast forward to now: As soon as next Friday (March 7), the Supreme Court will decide whether to grant a petition for certiorari (pdf) that we have filed in Charvat v. First National Bank of Wahoo, which presents essentially the same question as in First American: “Whether Congress has the authority to confer Article III standing to sue when the plaintiff suffers no concrete harm and alleges as an injury only a bare, technical violation of a federal statute.”Continue Reading Cert Petition Asks Supreme Court To Decide Whether Congress Can Allow Uninjured Plaintiffs To Sue In Federal Court

We’ve blogged before about plaintiffs’ attempts to circumvent the “mass action” provisions in the Class Action Fairness Act of 2005 (“CAFA”), which  allow defendants to remove to federal court certain cases raising “claims of 100 or more persons that are proposed to be tried jointly.” 28 U.S.C. § 1332(d)(11)(B)(i). To evade removal, creative plaintiffs’ lawyers have subdivided their mass actions into parallel cases of fewer than 100 persons each. Some courts have gone along with the charade. See, e.g., Scimone v. Carnival Corp., No. 13-12291 (11th Cir. July 1, 2013); Abrahamsen v. ConocoPhillips, Co., 503 F. App’x 157, 160 (3d Cir. 2012); Anderson v. Bayer Corp., 610 F.3d 390, 392 (7th Cir. 2010); Tanoh v. Dow Chem. Co., 561 F.3d 945, 950-51 (9th Cir. 2009).

The fight over removal in these gerrymandered mass actions often boils down to one key question:  whether the parallel cases are “proposed to be tried jointly.”  If so, CAFA permits removal.

Recognizing this point, the plaintiffs in these cases frequently remain coy about—or outright deny—an intent to try the parallel mass actions jointly.  But they often go right up to the edge, urging the same state trial court to resolve threshold issues in the cases together—or even simply to consolidate the state-court actions outright. Then, these plaintiffs say, CAFA’s mass-action removal provision doesn’t apply because they say that they have had the claims “consolidated or coordinated solely for pretrial proceedings.” 28 U.S.C. § 1332(d)(11)(B)(ii)(IV) (emphasis added).

But not all courts are falling for this effort to elevate form over substance.Continue Reading Will the En Banc Ninth Circuit Clarify When a Subdivided Mass Action Can Be Removed Under CAFA?

We have frequently chronicled the ongoing efforts of the plaintiffs’ bar to circumvent the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, which held that the Federal Arbitration Act (FAA) requires the enforcement of parties’ agreements to resolve their disputes through individual arbitration rather than class or collective proceedings. One of the most prominent efforts to evade Concepcion has been the National Labor Relations Board’s ruling in D.R. Horton (pdf), which declared that the right of employees to engage in “concerted activities” under Section 7 of the National Labor Relations Act (NLRA) trumps the FAA and requires that employees be allowed to bring class actions (either in court or arbitration). The Board also pointed to the Norris-LaGuardia Act, which provides that employees “shall be free from the interference, restraint, or coercion of employers” in “concerted activities.” In the NLRB’s view, any business subject to the Board’s jurisdiction (and that includes most private-sector businesses) that requires its employees to agree to resolve disputes through individual arbitration has engaged in an unfair labor practice and faces the threat of agency action.

Numerous plaintiffs seeking to invalidate arbitration provisions in employment agreements have claimed that the Labor Board’s D.R. Horton decision establishes the invalidity of arbitration provisions that include a class waiver, but virtually every court to consider the question has declined to follow the NLRB’s lead. Yesterday, in an important decision for employers nationwide, the Fifth Circuit invalidated the Board’s decision, holding in DR Horton, Inc. v. NLRB (pdf) that the NLRB’s position is inconsistent with the FAA. In overturning the Board’s order, the Fifth Circuit noted its agreement with “[e]very one of our sister circuits to consider the issue,” each of which “has either suggested or expressly stated that they would not defer to the NLRB’s rationale, and held arbitration agreements containing class waivers enforceable.” Slip op. at 25 (citing Richards v. Ernst & Young, LLP (9th Cir.), Sutherland v. Ernst & Young LLP (2d Cir.), and Owen v. Bristol Care, Inc. (8th Cir.)). (Our colleague Andy Pincus will be arguing this issue in the Ninth Circuit later this week in Johnmohammadi v. Bloomingdale’s, Inc. on behalf of the U.S. Chamber of Commerce; a PDF of our amicus brief in that case is available here.)Continue Reading Fifth Circuit Overturns NLRB’s Anti-Arbitration D.R. Horton Ruling

The federal Food Drug and Cosmetic Act (“FDCA”)—along with the implementing regulations promulgated by the FDA—sets out a detailed national standard for much of what appears on food and beverage labeling. See 21 U.S.C. §§ 301, et seq.; 21 C.F.R. §§ 101, et seq.; Pom Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170, 1175 (9th Cir. 2012). This national labeling law expressly preempts states from enacting different requirements for labels, including requirements imposed by courts under the guise of redressing a “misleading” or “fraudulent” label. 21 U.S.C. § 343-1; Turek v. Gen. Mills, Inc.,…
Continue Reading Are State-Law Claims for Violating Federal Food Labeling Law Preempted?

Here’s a common scenario:  After unsuccessfully moving for class certification and having a petition for review under Federal Rule of Civil Procedure 23(f) rebuffed, the plaintiff wants to take another shot at an appeal.  Can the plaintiff simply settle his individual claims—subject to his right to appeal the denial of class certification—so that he has a dismissal giving him an automatic right to an immediate appeal?

If you’re in the Third, Seventh, Eighth, or Ninth Circuit, the answer is no. Each of these courts have held that they lack jurisdiction over the appeal of a would-be class representative following such…
Continue Reading Eighth Circuit Holds that a Plaintiff who Settles Individual Claims Lacks Standing to Challenge Denial of Class Certification

The Fourth Circuit recently weighed in on a technical question involving the process for removing a case against multiple defendants to federal court—namely, whether every defendant must actually sign the notice of removal. The Fourth Circuit concluded that “[w]e can see no policy reason why removal in a multiple-defendant case cannot be accomplished by the filing of one paper signed by at least one attorney, representing that all defendants have consented to the removal.” Mayo v. Bd. of Educ., Nos. 11-1816, 11-2037 (4th Cir. Apr. 11, 2013).

The Fourth Circuit is correct. That said, at least some courts are…
Continue Reading Fourth Circuit Nixes Requirement that All Defendants Physically Sign Notice of Removal To Federal Court

Here’s the situation: You’re facing a class action in federal court in which the plaintiffs define the putative class so broadly as to encompass many people who weren’t injured by the alleged wrongdoing. For example, consider a false-advertising class action on behalf of “all purchasers” of a product that the vast majority of purchasers would have used without any problem whatsoever, meaning that the alleged rarely occurring (or entirely hypothetical) defect that the defendant failed to disclose makes no difference to them. What’s the best way to attack this weakness in the complaint?

One option would be to characterize the…
Continue Reading Do the Plaintiffs Lack Standing or Are Their Claims Simply Meritless—or Both?

The Wall Street Journal recently published an editorial urging the Supreme Court to grant the petition for certiorari (pdf) in Whirlpool Corp. v. Glazer—a petition filed by my colleagues Stephen Shapiro, Jeffrey Sarles, and Tim Bishop. The petition seeks review of a decision by the Sixth Circuit (pdf), which affirmed the certification of a class of Ohio purchasers of front-loading Whirlpool washing machines that allegedly are defective because a small fraction may emit moldy odors due to laundry residue. (The action is a bellwether case; many identical class actions have been filed across the country against…
Continue Reading Wall Street Journal Editorial Calls for Supreme Court Review in Whirlpool Corp. v. Glazer