A common feature in class action settlements is an incentive (or service) award for each named plaintiff—an extra payment above and beyond what they would receive as ordinary class members that is in theory designed to compensate them for the work of being a named plaintiff. A circuit split has developed over whether incentive awards are permissible in federal class action lawsuits. But the Supreme Court’s guidance on whether these awards are improper will have to await another day, because the Court recently denied the petitions for review in Johnson v. Dickenson, No. 22-389, and Dickenson v. Johnson, No. 22-517.Continue Reading Supreme Court declines to hear challenge to validity of incentive awards
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.
We recently noted that the Ninth Circuit had granted a Rule 23(f) petition in Chen v. Allstate Insurance Co.—on the issue whether a named plaintiff can refuse an offer of judgment for full relief and persist in litigating a class action—and was expected to issue a briefing schedule soon. Leaving aside the substance of the case, there is nothing unusual about the practice the Ninth Circuit followed in Chen. That is standard operating procedure virtually everywhere, although in a few rare instances courts of appeals have ordered briefing and argument on both the Rule 23(f) petition and the…
Continue Reading The Seventh Circuit’s Unique Approach To Handling Rule 23(f) Petitions
Can a plaintiff who bought a security in one offering bring a class action on behalf of purchasers in other offerings if the plaintiff alleges a misstatement common to all of the offerings? In cases under Sections 11 and 12 of the 1933 Securities Act—particularly those involving mortgage-backed securities—the consensus view had been that a plaintiff lacked standing to assert class claims regarding offerings in which the plaintiff did not buy. On September 6, the Second Circuit rejected that consensus view in NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co. (pdf)., creating a split with the First Circuit’s decision in Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp. (pdf), 632 F.3d 762 (1st Cir. 2011). Plaintiffs’ lawyers may seek to use the NECA-IBEW decision to broaden class litigation against securities issuers and underwriters.
Continue Reading NECA-IBEW: Second Circuit Rules That Plaintiffs Sometimes Have Standing to Bring Class Claims Covering Securities Offerings Other Than Ones in Which They Bought