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Greenberg Traurig, LLP

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I. Agenda and Introduction

II. Recent Significant Class Action Decisions

III. Recent Trends and Hot Topics in Personal Care

Products Actions and Consumer Class Actions

IV. Strategic Considerations for Preventing, Preparing

for, and Defending Class Actions

V. Q&A

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There have been several significant class action and

CAFA decisions in 2015 and early 2016.

From both the U.S. Supreme Court and circuit courts.

Several others to watch this term.

Increased class action activity in 2015 suggests even

more activity in 2016.

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Circuit courts are split over whether a statutory

violation without concrete harm is sufficient to invoke

Article III standing.

In November 2015, the U.S. Supreme Court heard oral

argument in Spokeo, Inc. v. Robins. Decision is

pending. Issue before the Court:

“Whether Congress may confer Article III standing upon a

plaintiff who suffers no concrete harm, and who therefore

could not otherwise invoke the jurisdiction of a federal

court, by authorizing a private right of action based on a

bare violation of a federal statute.”

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CA Federal District Court Decision

Plaintiff alleged Spokeo disseminated inaccurate

information about his education and income, which made it

harder for him to find employment.

District court held plaintiff failed to allege Spokeo caused

him actual or imminent harm

District court held that allegations of future potential injury

are insufficient to confer Article III standing to invoke

jurisdiction of federal court

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Ninth Circuit Decision

Disagreed with lower court

When Congress creates a private right of action to enforce a

statute, it can be implied that Congress intended to create a

statutory right

Fair Credit Reporting Act does not require actual showing of

harm to establish liability for willful violations

“A statutory cause of action does not require proof of actual

damages, [plaintiff] can suffer a violation of the statutory

right without suffering actual damages”

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Supreme Court’s Spokeo decision will significantly

impact the future of class action litigation

FCRA, TCPA, Truth in Lending Act, Fair Debt Collection

Practices Act, Video Privacy Protection Act, Copyright Act

eBay, Google, Facebook, Yahoo – all filed amici briefs

If Supreme Court finds such statutes confer Article III

standing where there is no concrete injury, class action

litigation will increase.

Justice Scalia held a narrow view on standing.

A 4-4 outcome would leave Ninth Circuit’s decision in place.

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Justice Elena Kagan: “wouldn’t the dissemination of false

information in a credit report be a concrete injury?...seems like

a concrete injury to me. If someone did it to me, I would feel

harmed.”

Justice Sonia Sotomayor: Supreme Court has “always said that

an ‘injury in fact’ is the breach of

a legal right.”

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In 2015, circuit courts weighed in on the Third Circuit’s

“heightened ascertainability requirement” for class

action members.

Federal Rule of Civil Procedure 23 requires that class members

be “feasibly identifiable” to be ascertainable.

Mullins v. Direct Digital LLC, 795 F.3d 654 (7th Cir. 2015)

Rejected Third Circuit’s ascertainability requirement

Heightened requirement “effectively bars low-value consumer

class actions”

Declined requirement named plaintiffs to show that the class

could be feasibly identified

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Mullins v. Direct Digital LLC, 795 F.3d 654 (7th Cir. 2015)

Administrative inconvenience is better addressed under Rule

23(b)(3)

Dismissed unfairness argument – “protecting the interests of

absent class members should not let the perfect become the

enemy of the good”

Rejected due process argument – concerns are protected by

other procedural mechanisms such as bifurcation of liability

and damages phases

On February 29, 2016, Supreme Court denied a petition

for writ of certiorari.

This leaves a circuit split between the 3rd and 7th circuits.

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U.S. Supreme Court reaffirmed AT&T Mobility, LLC v.

Concepcion, 131 S. Ct. 1740 (2011)

DirectTV, Inc. v. Imburgia, 136 S.Ct. 463 (2015)

Class action waiver in consumer arbitration agreement stated

it was unenforceable if the waiver was contrary to state law.

California appellate court held such waivers were

unconscionable.

Supreme Court held class action waivers in arbitration

agreements are enforceable under the FAA, despite contrary

state law.

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Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663 (Jan. 20, 2016)

Supreme Court rejected argument that plaintiff’s claims were

mooted by defendant’s Rule 68 offer of judgment.

“an unaccepted settlement offer has no force. Like other

unaccepted contract offers, it creates no lasting right or obligation.

With the offer off the table, and the defendant’s continuing denial

of liability, adversity between the parties persists.”

This opinion settled a circuit split on the issue, which we discussed

at prior conferences.

The decision did leave open the question of whether mootness of a

named plaintiff’s claim also moots class action as a whole, or

whether payment of complete relief is sufficient to moot a claim.

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Marshall v. Nat’l Football League, 787 F.3d 503 (8th Cir. 2015)

Settlement did not award money directly to class members

Established a licensing agency and provided up to $42m to

create Common Good Entity

Plaintiffs argued distribution of settlement funds directly to

third parties without first attempting to compensate class

members violates fundamental principles of aggregate litigation

8th affirmed the settlement

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On February 29, 2016, the Supreme Court denied a

petition for writ of certiorari.

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Poertner v. Gillette Co., 618 Fed. App’x 624 (11th Cir. 2015)

Settlement to give $50m in direct benefits to class members

who bought Duracell batteries.

Actual recovery was less than $350,000.

Duracell also agreed to donate $6m of batteries to charities.

Class counsel was awarded $5.6m in fees.

11th Circuit affirmed the settlement.

On March 21, 2016, the Supreme Court denied a petition

for writ of certiorari.

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Briggs v. Merck Sharp & Dohme, 796 F.3d 1038 (9th

Cir.)

Whether plaintiffs in 5 consolidated cases ever proposed to

try jointly the claims of one hundred or more persons, to

constitute a “mass action” under CAFA.

Court held that none of the plaintiffs’ actions qualified as a

proposal.

Remark to federal court of plaintiffs’ intent to join Byetta JCCP if remanded did

not qualify as a proposal – federal court lacked any authority to join the cases

to JCCP.

Plaintiffs’ filing of their cases in CA state court while defendant-initiated

Byetta JCCP was pending, did not constitute a proposal to jointly try cases and

not a mass action under CAFA.

Add-on petition that stated plaintiffs did not seek joint trial did not trigger

CAFA mass action jurisdiction. .

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Briggs v. Merck Sharp & Dohme (cont’d)

Corber v. Xanodyne Pharmaceuticals, Inc., 771 F.3d 1218

(9th Cir. 2014)

Court held plaintiffs’ petition for coordinated proceeding “for

all purposes” amounted to proposal for joint trial and

triggered mass action jurisdiction under CAFA.

Briggs and Corber focused on wording of plaintiffs’

petition.

CAFA “mass action” jurisdiction in 9th Circuit will be a

case-by-case analysis.

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Eagle US 2 LLC v. Abraham, 627 Fed.Appx. 351 (5th

Cir. 2015)

“Whether the district court’s application of a presumption against

removal in Class Action Fairness Act (CAFA) cases in direct defiance

of a decision of this Court can be allowed to go uncorrected; (2)

whether these “Louisiana cumulation” complaints comprise an

action “similar” to a “class action” under 28 U.S.C. § 1332(d)(1)(B);

and (3) whether the Fifth Circuit also erred by rejecting Eagle’s

argument in the alternative that the purportedly separate complaints

qualified as a CAFA “mass action” under 28 U.S.C. §

1332(d)(11)(B)(i) because those complaints together included “100

or more persons.”

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Justice Scalia

applied a strict view

on class uniformity

and class standing.

A more liberal

replacement could

result in the

loosening of such

restrictions on

plaintiffs in class

actions.

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Eckler and Engel v. Neutrogena Corp., 238 Cal. App. 4th

433 (Cal. App. 2d Dist. 2015)

Allegations: sunscreen labeling was misleading and deceptive

advertising under CA consumer protection laws

Terms “sunblock” “waterproof” “sweatproof” - FDA prohibited

on June 17, 2011 with a compliance date of Dec. 17, 2012

Plaintiffs argued defendant should have removed those terms

even before FDA compliance date

Plaintiffs also argued SPF 50 was misleading as to the efficacy

of SPF50+ sunscreen

Court held claims were entirely preempted

18 month safe harbor reflected FDA cost-benefit analysis

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Bimont v. Unilever United States, Inc., 2015 WL 5256988

(S.D.N.Y. Sept. 9, 2015)

Allegations: misstating actual weight of usable product in each

deodorant stick, misstating total net weight of each stick, and

failing to state amount of slack fill in each stick

Deodorants at issue were both cosmetics and OTC drugs, subject

to FDCA and FDA regulations

Court held claims were preempted

FDA was given authority to regulate slack-fill in cosmetics, drugs,

and food but only chose to regulate food – “tantamount to a

conscious decision by the agency to permit slack-fill”

Federal law does not explicitly require that “usable” net weight

be disclosed

Federal law permits net weight variation - intentional underfilling

does not change the outcome

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Lip balm litigation

Alleging product caused dry and blistered lips

Parmesan cheese litigation

Alleging misleading label/name because the product also contains

cellulose/wood pulp

Cellulite Cream litigation

Alleging misleading advertising because creams did not combat

cellulite

Honest Tea litigation

Alleging misleading labels touting antioxidants

Talc Litigation

Alleging talc in body powder can cause cancer

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Since January 2015, FDA has issued:

10 Warning Letters addressing drug claims made for

products marketed as cosmetics

7 Warning Letters highlighting the difference between

cosmetics and medical devices

2 Warning Letters related to microbial contamination

1 Warning Letter related to safety and labeling violation

We frequently see these sorts of FDA actions cited in

follow-on lawsuits

Evidence of non-compliance/negligence per se

Seeking to use FDA determination of misleading advertising

as de facto determination of fault by manufacturer

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Conducted by Joanna M. Shepherd, professor at Emory

University School of Law

All class action settlements from 2005-2015 (located on

Westlaw or Lexis) – 2,158 cases

Applied 4 criteria to identify no-injury cases – resulted in

432 cases

Results:

2.5% of 432 were tried

Rest were settled for a total of approximately $4 billion

37.9% went to class action lawyer fees

Of the remaining 63.1% (over $2.4 billion), at most 15% went to

actual class members

Result is only 9% (at best) of available funds went to those for

whom they were intended

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Defendants should work to incorporate the findings from

this study into briefing and oral argument opposing cy pres

proposals and no-injury class actions.

Use these statistics to show harm and unfairness imposed

in allowing no-injury class actions to proceed.

Costs of no-injury class actions are passed on to consumers in

the form of higher prices, lower product quality, and reduced

innovation.

Recent eye drop litigation handled by GT:

Dismissed on lack of standing because plaintiff could not show an

injury-in-fact

On appeal to Third Circuit, where this study may be a powerful

tool to show what is really driving these cases (the LAWYER$)

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Hain Celestial settlement

In January 2016, consumer objected to $9.4m settlement

Alleges settlement provides excessive attorneys’ fees while class

member only get partial refunds and coupons

Alleges class counsel will receive $4m in fees

$2 coupons can’t be combined, so class members have to pay

additional cash to use the coupons

Both the plaintiffs’ attorneys and the corporate defendant

may understandably just want the litigation to be over.

Increased scrutiny from courts and the public may scuttle

proposed resolutions of consumer class actions and

prevent swift resolution.

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There has been a general trend of increasing consumer-

based class actions in the U.S.

Consumer fraud claims have become a staple of litigation

brought by both government and private plaintiffs across

industries and in venues across the country.

Class actions are often filed soon after a major regulatory

action such as warning letters or recalls

Consumer class actions can also be the basis for a Citizens

Petition to the FDA or other catalyst for regulatory scrutiny.

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Consumer fraud claims may be instituted under both state

and federal consumer fraud statutes

They can be asserted by private citizens and State

Attorneys General

Money-making venture for many states, and law firms they hire.

Plaintiffs generally pursue actions under state consumer

fraud statutes

Certain states’ consumer fraud statutes may be attractive

to plaintiffs:

Legal standards vary from state to state

Standing requirements may be lower

May not require evidence of reliance

May permit attorneys fees and punitive damages

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Monitor your industry and regulatory agencies

Monitor plaintiffs’ website and blogs and social media

Assess emerging threats

Avoid litigation through preparation and preemption

Do not be an easy target

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1. Remove to federal court if not already there

CAFA removability – assess mass action jurisdiction

Diversity, federal question?

Consider removal before service if you are a home state

defendant.

2. Push for Early Motions:

Assess grounds for Motions to Dismiss including insufficient

pleadings (Twombly/Iqbal)

Where applicable, file early motion to dismiss based on lack of

standing

No injury-in-fact

Preemption motion

Early Motion for Summary Judgment

Motion to Strike Class Allegations

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3. Class certification –

Educate Judge From the Outset

Hit key themes early

Ascertainability – push for the heightened standard

No commonality of injury/claims

Class is not actually numerous

No basis for membership of representatives in the proposed

class—is proof of purchase likely to be difficult or

impossible to verify?

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4. Post-Certification

Targeted, efficient discovery

File motion for summary judgment

File Daubert motion(s)

File decertification motion after discovery

Consider making offer of judgment to individual plaintiff to

potentially moot class action

Object to cy pres settlements in no-injury actions

Try the case

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Goals:

Discourage the Opposition

Early Case Assessment

Develop case themes and company story

Formulate early, targeted discovery

Balance business and litigation objectives

Consider alternative fee structures

Be efficient/economical

Being prepared to try the case