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Class Action RoundupSummer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
ATTORNEY ADVERTISING
©2016 Alston & Bird LLP
1 of 11
Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Where the (Class) Action Is
Welcome to the latest edition of Class Action Roundup, highlighting developments in class action litigation from the second quarter of 2016. In this issue, we report on another wide range of case decisions and settlement agreements—and disagreements—that demonstrate the many different ways plaintiffs and defendants argue their cases and how the courts interpret the laws accordingly.
In this quarter’s summary, we feature cases that dealt with common issues of class certification such as statutes of limitation at the state and federal levels, ascertainability of a class, and even the relativity of evidence of damage to a class. In employment cases, overtime pay rules and arbitration agreements continue to be topics of litigation in several states. While it’s uncommon for environmental issues to result in class action litigation, this quarter did witness a case dealing with the bifurcation of liability and damages claims in a case of alleged toxic exposure. Data breach class litigation continues to be a hot topic, with likely no end in the near future as security issues are top of mind for companies across the U.S. This edition also covers a number of cases in products liability and securities that are notable for the decisions from the courts as well as a number of settlements—and settlement denials—that took place during the quarter.
We hope you enjoy reading this issue of Class Action Roundup and find something of interest for your business. Be sure to check our website for a number of legal advisories on many of these class action topics. Please reach out and send us your feedback if you have questions or comments—we appreciate hearing from you.
The Class Action Roundup is published by Alston & Bird LLP to provide a summary of significant developments to our clients and friends. It is intended to be informational and does not constitute legal advice regarding any specific situation. This material may also be considered attorney advertising under court rules of certain jurisdictions.
Authors & EditorsCari K. Dawson [email protected] 404.881.7766
Kyle G.A. Wallace [email protected] 404.881.7808
David R. Venderbush [email protected] 212.210.9532
Amanda M. Waide [email protected] 404.881.4409
David B. Carpenter [email protected] 404.881.7881
Jonathan D. Parente [email protected] 404.881.7184
Jason Rottner [email protected] 404.881.4527
Allison S. Thompson [email protected] 404.881.4536
Geoff C. Rathgeber [email protected] 404.881.4974
Ryan P. Ethridge [email protected] 919.862.2283
Meredith Jones Kingsley [email protected] 404.881.4793
Alex Akerman [email protected] 213.576.1149
Andrew Hatchett [email protected] 404.881.4826
Nicole DeMoss [email protected] 404.881.4945
Austin Lomax [email protected] 404.881.7840
Annalise Peters [email protected] 404.881.7433
Sarah O’Donohue [email protected] 404.881.4734
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Antitrust
� Lawyering Is Not a Criminal Enterprise
In re General Motors LLC Ignition Switch Litigation, No. 14-md-02543 (S.D.N.Y.) (July 15, 2016). Judge Furman. Granting motion to dismiss.
Car owners suing General Motors for injuries allegedly caused by faulty ignition switches failed to establish racketeering claims that lawyers at King & Spalding LLP collaborated with General Motors to “fraudulently conceal information about the defects.” Judge Furman held that allegations that King & Spalding worked with GM to settle cases involving the ignition switch defect to prevent the defect from coming to light are “the stuff that ordinary (albeit perhaps overly aggressive) litigation is made of” and did not amount to a RICO claim.
� Drawing on Fraudulent Concealment Argument, Animator Class May Proceed
Nitsch v. DreamWorks Animation SKG Inc., No. 14-cv-04062 (N.D. Cal.) (May 25, 2016). Judge Koh. Granting class certification.
Animation studios argued that individualized issues of whether former animators’ time-barred claims had been fraudulently concealed prevented class certification. In an issue of first impression within the Ninth Circuit, Judge Koh determined that class certification was permissible even though the entire class of animators had to prove fraudulent concealment to overcome the statute of limitations. She then certified the class, finding that fraudulent concealment was susceptible to common proof.
Trust our leadership: Five Alston & Bird partners appointed to
leadership posts in ABA Antitrust Section.
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� Peeking Under the Hood: Limited Consideration of Merits at Class Cert Stage
Fond Du Lac Bumper Exchange Inc. v. Jui Li Enterprise Company Ltd., Nos. 09-cv-0852, 13-cv-0946, 13-cv-0987, 13-cv-1061 (E.D. Wis.) (June 24, 2016). Judge Adelman. Granting class certification.
Manufacturers of automotive sheet metal parts contended that the direct purchasers’ documentary evidence did not establish common conspiratorial conduct and offered an expert disputing the direct purchasers’ evidence of common impact and damages. Judge Adelman refused to weigh in on a “battle of experts” and engaged in a restrained review of the merits before certifying the class. n
Adam Biegel Matthew Kent Leslie Overton John Snyder Valarie Williams
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Consumer Protection
� No Concrete Harm, No Foul: The Supreme Court’s Spokeo Decision
Spokeo Inc. v. Robins, No. 13-1339 (U.S.) (May 16, 2016). Vacating and remanding to the circuit court.
This U.S. Supreme Court decision may have far-reaching implications for plaintiffs seeking to enforce purely statutory rights under statutes like the Fair Credit Reporting Act (FCRA), Telephone Consumer Protection Act (TCPA), Fair Debt Collection Practices Act (FDCPA), Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA), Lanham Act, and Employee Retirement Income Security Act (ERISA). Particularly in the class action context, the new ruling has the potential to substantially limit claims alleging a purely technical violation of a statute absent actual harm or a material risk of harm, adding a further inquiry to complicate Rule 23’s commonality and predominance requirements. Read more about this decision in the advisory on our website.
� Sedan’s Sham Stickers Stick: GM Stuck with Class Action
Geri Siano Carriuolo v. General Motors Company, No. 15-14442 (11th Cir.) (May 17, 2016). Affirming order certifying class.
The lower court certified a class of Florida purchasers and leasers of the 2014 Cadillac CTS that had misleading NHTSA stickers. GM provided safety rating window stickers even though the NHTSA had not actually rated the vehicles. The Eleventh Circuit did not buy GM’s argument that, while some class members may have known that the safety ratings were inaccurate, some may not have been aware of the sticker at all, and each person negotiated an individual price with the dealer. The court held that the mental state of the consumer is irrelevant—all that mattered under Florida’s law was whether the sticker was inaccurate
and whether an objective person would be deceived. As the court put it, “by inaccurately communicating that [the cars] had attained three perfect safety ratings, General Motors plainly obtained enhanced negotiating leverage that allowed it to command a price premium.… Because that theory is consistent for all class members,” the district court did not abuse its discretion certifying the class.
� California’s “Substantial Interest”: No Stale Claims in IUD Class Action
Medinger v. Bayer Healthcare Pharmaceutica Inc., No. 15-355 (2nd Cir.) (July 1, 2016). Affirming order dismissing case.
In a potentially far-reaching decision, the Second Circuit held that California’s statute of limitations applies to the personal injury claims of out-of-state plaintiffs.
Need to know more Spokeo? The media listens to Alston & Bird attorneys: Brett Coburn and Derin Dickerson in Law360;
Derin Dickerson in Corporate Counsel; Dominique Shelton in Privacy Advisor.
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Derin DickersonBrett Coburn Dominique Shelton
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Bayer designed, manufactured, and marketed an intrauterine contraceptive device sold under the Mirena brand name, which allegedly injured Brittany Medinger and her fellow classmates. Medinger filed her case in California, and it was eventually transferred to the Southern District of New York as part of multidistrict litigation. The MDL court dismissed the complaint, holding that the plaintiffs’ claims were time barred under California’s two-year statute of limitations. On appeal, Medinger argued that the district court erred in applying California’s statute of limitations rather than the longer statutes of limitations of the states in which the alleged injuries occurred.
The Second Circuit affirmed the district court’s application of California’s statute of limitations, holding that California had the most substantial interest in the case: “California’s interest in applying its own law is strongest when its statute of limitations is shorter than that of the foreign state, because a state has a substantial interest in preventing the prosecution in its courts of claims which it deems to be stale.”
� Brother, You Need More Evidence
DiCuio v. Brother International Corp., No. 15-2548 (3rd Cir.) (June 29, 2016). Affirming summary judgment.
Robert DiCuiou alleged that Brother designed their printers to signal “Toner Life End” before the color cartridges inside the printers had run out of useable toner. A district court granted Brother’s motion for summary judgment because the plaintiffs’ evidence of printer use for their current color print cartridges did not prove their results from former cartridges they were suing about.
The circuit court affirmed holding that the plaintiffs failed to carry their burden to show a genuine dispute over the average coverage of their color cartridges. The court rejected their argument that the maintenance reports on currently installed color cartridges provided evidence of average printing habits relevant to prior color cartridges. Without relevant evidence, what could the plaintiff prove?
� All of the Olives from All Over Left All of the Olive Oil Litigation Flowing Like … Olive Oil
Rohini Kumar v. Salov North America Corp., No. 14-cv-02411 (N.D. Cal.) (July 15, 2016). Judge Rogers. Granting motion for class certification.
Despite saying its olive oil was “imported from Italy,” Rohini Kumar alleged that Salov, an olive oil company, grew the olives in Tunisia, Greece, and Spain, mixed in a little Italian olive oil, and then shipped the oil to California. Kumar sought to certify a class of similar purchasers of Salov olive oil in California under a variety of state consumer protection laws.
The trial court certified the class. The court brushed aside a scattershot of arguments that the class representative was not adequate, finding that a prior DUI and friendship with an attorney in one of the two law firms representing her were not bars to her participation. The central question, the court reasoned, is whether Salov’s labels were likely to deceive a reasonable consumer. The court concluded that the product label itself is the primary evidence on all class claims that were intended to create the false impression that the olive oil was Italian. The court found that the class was ascertainable because the class definition specified a time period and the specific varieties of olive oil covered. The plaintiffs put forward a material misrepresentation that the olive oil was Italian, which could lead to higher prices and consumer reliance. n
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Employment
� Seventh Circuit Creates New Split Involving Class Action Waivers
Lewis v. Epic Systems Corp., No. 15-2997 (7th Cir.) (May 26, 2016). Affirming denial of defendant’s motion to compel arbitration.
The Seventh Circuit created a circuit split when it held that arbitration agreements containing class action waivers are illegal in the employment context. Such waivers, according to the court, violate the National Labor Relations Act’s regulations preventing employers from hindering collective activities by workers. The Seventh Circuit has now split with the Second, Fifth, Eighth, and Eleventh Circuits, creating an opening for Supreme Court review.
� Disgruntled HP Employees Have Reason to Be More Disgruntled
Benedict v. Hewlett-Packard Company, No. 13-cv-00119 (N.D. Cal.) (July 13, 2016). Judge Freeman. Decertifying collective.
A California district court decertified a class of Hewlett-Packard technical support employees who alleged that HP failed to pay them for overtime work. Having previously conditionally certified a Fair Labor Standards Act (FLSA) collective action of HP employees, the court reversed course against the 135-member collective action on the ground that the employees had different jobs, managers, and salaries. The “substantial variation” in the employees’ work would require “significant individualized inquiries” that defeated predominance.
� Financial Advisors Don’t Cash In on Overtime Suit
In re Morgan Stanley Smith Barney LLC Wage and Hour Litigation, No. 11-cv-03121, MDL 2280 (D.N.J.) (Apr. 11, 2016). Judge Martini. Denying class certification.
A New Jersey district court denied class certification to groups of financial advisors claiming they were “nonexempt” employees under federal wage and hour laws. The plaintiffs argued that the close supervision from Morgan Stanley managers and supervisors made them nonexempt employees. In denying class certification, the court determined that because the plaintiffs engaged in different prospecting practices and were subject to different management styles, the class lacked typicality and commonality. n
Jim Evans explains to USA Today why Uber is in the driver’s seat in “Employee Suit Ruling Could Be Win for Uber.”
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Jim Evans
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Environmental
� Eighth Circuit Strikes “Manufactured” Predominance
Ebert v. General Mills Inc., No. 15-1735 (8th Cir.) (May 20, 2016). Reversing class certification.
Environmental cases—with many individualized issues—often do not lend themselves to class litigation. So it was surprising last year when a district court certified a class of residents that claimed that TCE vapors from the cereal manufacturer’s former plant threatened their homes.
What was not as surprising was the Eighth Circuit’s reversal. In a stern ruling, the appellate court accused the district court of bifurcating liability and damages issues to “manufacture” predominance and satisfy the Rule 23(b)(3) inquiry. Bifurcation, the Eighth Circuit found, unraveled any efficiencies gained by the class proceeding. Emphasizing the individualized nature of the residents’ claims (e.g., different properties, exposure pathways), even the Rule 23(b)(2) proceeding was reversed for lack of cohesion.
The takeaway? Ebert cautions against bifurcating liability and damages issues to create common issues and solidifies the general rule that environmental claims and class actions mix as poorly as oil and water.
� Strictly Applying Removal Rules, Court Denies Remand
Hostetler v. Johnson Controls Inc., No. 15-cv-00226 (N.D. Ind.) (July 11, 2016). Judge DeGuilio. Denying remand and retaining jurisdiction over CAFA action.
Judge DeGuilio rejected Indiana residents’ bid to remand their groundwater contamination case against Johnson Controls to state court. After litigating the case in state court for nearly a year, Johnson
Controls removed under the Class Action Fairness Act (CAFA). Residents argued that removal was untimely, that Johnson Controls waived its right to remove, and that the “local controversy” exception to federal jurisdiction applied.
Applying the rules literally and strictly, Judge DeGuilio ruled that even though Johnson Controls likely knew the amount in controversy was met, the 30-day removal clock never began running because residents never “affirmatively and unambiguously” specified the required $5 million amount required to allow for removal. Similarly, on waiver, the court concluded that because removability was not facially and unambiguously clear, Johnson Controls could not waive the right to remove. Finally, after finding serious flaws in residential survey sampling and striking the residents’ expert report, Judge DeGuilio held that the residents failed to meet their burden to prove that more than two-thirds of the proposed class are Indiana citizens. n
You can count on Meaghan Boyd and Geoff Rathgeber’s “Five Tips for Retention of Expert Witnesses” in Today’s General Counsel.
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Meaghan Boyd Geoff Rathgeber
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Privacy
� No Standing in Federal Court for Experian Plaintiffs
Maudie Patton v. Experian Data Corp., No. 15-cv-01871 (C.D. Cal.) (May 6, 2016). Judge Selna. Granting motion to dismiss and remanding.
James Selna granted Experian’s motion to dismiss for lack of subject-matter jurisdiction and remanded to state court a putative class action arising from an alleged data breach in which hackers allegedly obtained stored information from Experian’s database, including the plaintiffs’ personally identifiable information (PII). In remanding the case, Judge Selna explained that circuit precedent requires a “credible” and “real and immediate” threat of identity theft to establish standing and, unfortunately, the plaintiffs’ allegations—specifically, the defendants’ failure to take appropriate measures to protect themselves from the hack, identity fraud, and failure to provide notice—were not injuries-in-fact. Citing Ninth Circuit precedent, Krottner v. Starbucks Corp., Judge Selna explained that the “[p]laintiffs’ speculative fear of identity theft is not the ‘credible,’ ‘real and immediate’ threat of harm required for Article III standing in data breach cases.” Judge Selna rejected Experian’s futility argument for remanding the case, explaining that re-removing the case to federal court under a state statute would be “contrary to well-settled Article III law.”
� Out with the Old and In with the New
In re Zappos.com Inc. Customer Data Security Breach Litigation, No. 12-cv-00325, MDL No. 2357 (D. Nev.) (May 6, 2016). Judge Jones. Granting in part and denying in part motion to dismiss.
Judge Jones granted in part and denied in part Zappos’s second motion to dismiss a class action arising from the retailer’s 2012 data breach that compromised the personal information of approximately 24 million
Zappos customers. Before the court was the plaintiffs’ third amended complaint (TAC), which included the addition of two “new” plaintiffs, alleging injury from the 2012 incident. Judge Jones again dismissed (this time with prejudice) the “old” plaintiffs’ allegations, among others, that the incident devalued the old plaintiffs’ PII and that the threat of identity theft and fraud constituted injury-in-fact, explaining that the TAC lacked facts explaining how the plaintiffs’ PII became less valuable as a result of the breach and that the threat of theft or fraud was “conjecture.” Judge Jones did, however, reject Zappos’s argument that the new plaintiffs’ allegations were not traceable to the 2012 incident, explaining that the new plaintiffs’ allegations of injury—harm and use of credit, time spent closing fraudulent accounts, and lost funds and business—were sufficient to establish standing. Judge Jones also dismissed the new plaintiffs’ state-law claims, including negligence, breach of contract, and unjust enrichment. n
Be proactive in identifying and remediating vulnerabilities. Kim Peretti, Lou Dennig, and
Jason Wool explain why “You Don’t Need a Data Breach to Face Regulatory Scrutiny” in Law360.
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Lou DennigKim Peretti Jason Wool
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Products Liability
� Proposed Curling Iron Class Action Goes Up in Flames
Wilson v. Conair Corp., No. 14-cv-00894 (E.D. Cal.) (June 3, 2016). Judge Shubb. Denying motion for class certification.
A California federal judge denied class certification in a lawsuit alleging electrical defects in a Conair curling iron. Although the named plaintiff filed suit on behalf of all people who purchased the curling iron in California, her individual product liability and personal injury claims failed to meet the typicality and adequacy requirements. The judge found that the plaintiff may have different litigation incentives than the proposed class members because her claims are based on specific physical injuries and discontinued use of the product, while others may have experienced different results.
� Engine Defect Class Action Is No Longer Stalled
Falco v. Nissan North America, No. 13-cv-00686 (C.D. Cal.) (Apr. 5, 2016). Judge Pregerson. Granting motion for class certification.
Three classes of Nissan drivers are allowed to move forward with their class action lawsuit over defective timing-chain tensioning systems that allegedly lead to total engine failure. The classes consist of California and Washington residents who have already incurred costs due to the defect and California residents who have not yet paid for repairs. Although none of the current named plaintiffs reside in Washington, the judge found that Nissan purchases in that state constitute commerce that directly affects the people of Washington and thus fall under the state’s Consumer Protection Act. The judge relied on proof of common allegations about vehicle defects, the effect on safety, Nissan’s knowledge of the issue, and post-warranty damages among the reasons for granting class certification.
� Proposed Classes in Moldy Infant Sleeper Lawsuit Inadequate
Harris v. Fisher-Price Inc., No. 13-cv-00076 (N.D. Ala.) (Apr. 5, 2016). Judge Bowdre. Denying motion for class certification.
A federal judge in Alabama declined to certify two nationwide classes of consumers of Fisher-Price’s Newborn Rock ’n Play Sleeper, which the plaintiffs contend is prone to developing dangerous mold. The plaintiffs proposed one class for purchasers of the sleeper and another for parents who received it as a gift. In addition, they suggested that there be eight state subclasses for adjudicating claims that Fisher-Price violated various warranty and consumer protection laws. The judge held that individual questions predominated over any common issues that could be answered through certification and that the proposed classes lacked ascertainability. n
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Just when you thought you’d reached your destination, “NHTSA Autonomous Vehicle Rules Take an Unexpected Turn,” warns Todd Benoff in Law360.Tod Benoff
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Securities
� High Court Says Federal Securities Laws Do Not Bar State Suits
Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, No. 14-1132 (U.S.) (May 16, 2016). Remanding to state court.
A unanimous U.S. Supreme Court held that the Securities Exchange Act of 1934 does not block shareholders from bringing state securities and racketeering claims in state court, even when those state-law claims reference federal law. Merrill Lynch argued that because the state-law claims at issue were based on violations of federal duties, they fell under Section 27 of the Exchange Act, which confers federal jurisdiction over all cases “brought to enforce any liability or duty created by” the statute. The Court didn’t see it that way. Instead, the Court held that the Securities Exchange Act creates the same test for establishing federal jurisdiction as the general test for whether a federal court has jurisdiction: whether the case “arises under” federal law. Under this test, the state-law claims did not create federal question jurisdiction.
� A Blow to Big Banks, Possible Colluders, in the Second Circuit
In re LIBOR-Based Financial Instruments Antitrust Litigation, No. 13-3565 (2nd Cir.) (May 23, 2016). Vacating judgment and remanding to district court.
The Second Circuit overturned a three-year-old decision that had largely ended a series of lawsuits brought by consumers and government regulators against 16 global banks. The now-revived complaints alleged that the 16 banks conspired to rig the key interest rate benchmark LIBOR. The Second Circuit held that the lower court had misapplied antitrust law by finding that the plaintiffs failed to
prove that the banks were operating in a competitive environment. To the contrary, the Second Circuit held that it did not matter how the collusion came about. Given the potential scope of liability, the banks may be put under pressure to settle.
� Court Grants Cert in Stock Offering Suit
In re Montage Technology Group Ltd. Securities Litigation, No. 14-cv-00722 (N.D. Cal.) (April 21, 2016). Judge Illston. Granting class certification.
A group of investors alleging that Montage Technology Group misled them ahead of a stock offering were granted class certification. The crux of the plaintiffs’ claims is that Montage failed to disclose that a company accounting for greater than 50% of its revenue was actually owned and controlled by an undisclosed affiliate. Judge Illston deemed that this omission was material and ruled that the investors relied on the company’s concealed relationship with the subsidiary. n
Four for “40 Under 40”: Alston & Bird’s Kevin Gooch, Ted Kang, Heather Ripley, and Helen Su named to elite group of
attorneys around the country.
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Kevin Gooch Ted Kang Heather Ripley Helen Su
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Class Action Roundup | Summer 2016
• WHERE THE (CLASS) ACTION IS
• CONSUMER PROTECTION
• ANTITRUST
• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
Settlements
� Objectors to Have Their Day in Court
Shane Group Inc. v. Blue Cross Blue Shield of Michigan, Nos. 15-1544, 15-1551, 15-1552 (6th Cir.) (June 7, 2016). Vacating approval of class settlement and remanding.
Various individual and corporate plaintiffs filed putative class actions against Blue Cross Blue Shield of Michigan, alleging that the insurer engaged in an illegal price-fixing scheme. After consolidating the actions, the district court sealed the related filings and summarily approved the class. A group of objecting class members moved to intervene, but the district court denied their motion. On appeal, the Sixth Circuit reversed, concluding that the district court had conflated the standard for entering a protective order with the more demanding standards for sealing judicial records from public view and emphasizing the public’s keen and legitimate interest in the case.
� AmEx Gift Card Holders Finally Cash Out
Kaufman v. American Express Travel Related Services Co., No. 07-cv-01707 (N.D. Ill.) (Mar. 2, 2016). Judge Gottschall. Approving $6.7 million settlement.
The court granted final approval of a settlement for claims concerning American Express gift cards after previously denying it twice. It was reluctant to deny it a third time because it feared the class could conceivably get nothing if the litigation proceeded further. In computing attorneys’ fees, the court looked to the comparison of the requested fees to the benefit to the class. It lowered the fee award to class counsel from a requested $1.5 million to $1 million, which reflected 34% of the value of the benefit to the class.
� Third Circuit Affirms Small Settlement, Big Attorneys’ Fees
Landsman & Funk P.C. v. Skinder-Strauss Associates, No. 15-2485 (3rd Cir.) (Feb. 16, 2016). Affirming settlement.
An objector sought to overturn a settlement that contained an award of $58,325 to the class, $10,000 to the plaintiff, and approximately 3.5 times the amount in attorneys’ fees, with a reversion of $348,333 of the settlement fund to the defendant. In affirming the settlement, the Third Circuit determined that applying the lodestar method for attorneys’ fees was not an abuse of discretion, despite the objector’s argument that the fees should be based on the amount claimed rather than the entire fund. The court determined that, under prior precedent, the district court appropriately found the settlement was fair and reasonable and did not fail to serve the interests of the class.
� Parties Agree to Class Settlement; Court Says No
Bell v. Consumer Cellular Inc., No. 15-cv-00941 (D. Or.) (May 31, 2016). Judge Simon. Denying joint motion for preliminary approval of class action settlement.
The plaintiffs brought a hybrid class action suit and collective action under the FLSA and Oregon wage laws against employer Consumer Cellular. The parties jointly moved for preliminary approval of a class settlement and a proposed notice to the settlement class. The court
160 Alston & Bird attorneys were named to the 2017 edition of The Best Lawyers in America©, and 11 were named “Lawyers
the Year” in their practices.
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• CONSUMER PROTECTION
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• EMPLOYMENT
• ENVIRONMENTAL
• SECURITIES
• PRODUCTS LIABILITY
• PRIVACY
• SETTLEMENTS
refused to approve either. Regarding the proposed settlement, the court found that the plaintiffs did not address any of the elements of Rule 23 or explain why an opt-in class was more appropriate than an opt-out class. The court found the proposed settlement notice lacking in multiple ways, including: (1) the requirement that class members obtain their own copies of the settlement agreement; (2) the notice’s failure to notify recipients of certain rights to object to the settlement; and (3) the notice’s failure to state the incentive award. The court denied the motion without prejudice and invited the parties to address the identified deficiencies in future briefing.
� Security Guards Work to Secure Settlement
Deatrick v. Securitas Security Services USA Inc., No. 13-cv-05016 (N.D. Cal.) (Feb. 24, 2016). Judge Tigar. Approving conditional class certification for settlement and denying preliminary approval of the settlement.
Current and former employees of Securitas Services USA, a nationwide private security company, brought suit for FLSA and California wage and labor violations, alleging a failure to properly calculate and pay overtime wages. The court had previously certified a class for the FLSA claims, but the plaintiffs also sought certification of a proposed class for their state-law claims. The court granted that motion, finding that all Rule 23 requirements were met. However, the court denied the parties’ proposed settlement, finding that the incentive award was disproportionate to other class members’ recovery, given that it was 270 times the size of the average class award. The court further found that the parties’ plan to take “reasonable steps” when notices were undeliverable was vague and that the parties had not presented any rationale for requiring a claim form for the opt-in FLSA class but not for the California law opt-out class. n
