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Top 10 Key Class Action Points for 2019

Some legal commentators and lawyers have pronounced the death of class actions in light of significant changes in the law in the last fifteen years, including the passage of the Class Action Fairness Act and the Supreme Court’s blessing of class action waivers in AT&T Mobility v. Concepcion and American Express v. Italian Colors. But, to paraphrase Monty Python and the Holy Grail, class actions are not dead yet and may be growing stronger. In fact, available data does appear to point to increased class action filings.  Like it or not, class actions are not going away anytime soon. Because class actions remain “bet the company” cases, business owners and litigators have good reason to stay informed about the latest developments in class action law. Here are the top 10 class action issues to watch in 2019:

1. Class Action Settlements

Class action settlements have become the most controversial and fastest moving area of class action law. The December 2018 Amendments to Fed. R. Civ. P. 23 made clear that federal courts likely will spend considerable time scrutinizing the details of any class settlement before granting preliminary approval or approving class notice.  Even before the 2018 Amendments, many federal courts were suggesting changes to settlement agreements before preliminarily approving them. The 2018 Amendments ensure that this trend will continue. Going forward, class action litigants should expect courts to challenge the details of settlement agreements and perhaps demand data to support its fairness. To illustrate, the Northern District of California has already issued procedural guidance regarding the disclosures of claims rates. Class action litigants should expect other courts to begin demanding similar data before preliminary approval or after payout. Courts may also impose a delay in the approval or distribution of any attorney fees or connect its approval to claims data. In addition to these trends, the use of cy pres standards remain hotly debated. The Supreme Court was poised to address the use of cy pres this term in Frank v. Gaos, but it appears the Court may address a different question instead. The result of the above trends is that class actions will become more difficult to settle (and, even if a settlement is reached, the settlement process will be more costly for all parties). 

2. Standing

The standing of class action plaintiffs remains a key unresolved question in light of the vague language in the Supreme Court’s 2016 decision in Spokeo v. Robbins. The standing question drives the result for a host of statutory claims, and may be part of the reason for the filings of data privacy/breach cases. The Supreme Court could revisit Spokeo this term in Frank v. Gaos. The Court initially granted cert in Frank to address cy pres standards but, during oral argument, the Court raised concerns about the plaintiff’s standing. Rather than remand the case, the Court ordered additional briefing on that issue. This suggests that the Court may soon offer additional guidance on Spokeo.

3. Personal Jurisdiction

Personal jurisdiction has become a hotly debated issue. In Bristol-Myers Squibb Co. v. Superior Court of California, the Supreme Court held that each mass action plaintiff must satisfy the test for specific personal jurisdiction, and fail that test when their injuries have no connection to the forum state. There is a split in the lower courts over whether Bristol-Myers Squibb applies to class actions. If the answer is yes, then most class actions will likely be filed in the home state of the defendant (or cause the pursuit of state-wide only classes). 

4. Arbitration and Aribtrability

Arbitration remains a key battleground for class actions. When it applies, it often eliminates the possibility of a class action based upon the Supreme Court’s decisions in Concepcion and Italian Colors.  Plaintiffs continue their efforts to avoid arbitration and the “click-wrap” cases (those where the plaintiff assents to a contract by clicking on a computer screen) are at the forefront of this battle.  Along the same lines, the question of “who decides” whether an arbitration agreement applies also remains hot. Just last month, the Supreme Court held that, if the parties have clearly delegated the decision on arbitrability to the arbitrator, it does not matter whether the argument for arbitration is “wholly” meritless; the arbitrability question still must go to the arbitrator. Another arbitrability question to watch is who decides if class-wide arbitration is allowed under the arbitration clause (the court or the arbitrator). There is a growing circuit split on this issue. 

5. Arbitration and Employment

The enforceability of arbitration clauses in employment contracts also remains an important, and hotly contested, issue. Last year, the Supreme Court in Epic Systems reversed an NLRB’s decision holding that class action waivers in employment contracts are prohibited by the National Labor Relations Act. The Court held that the FAA, not the NLRA, governs such agreements. On the other hand, a few weeks ago the Supreme Court—in a decision which caught some by surprise—held that an exception in the FAA allowed truck drivers (even if independent contractors) to avoid arbitration.

6. Tolling

Last year, the Supreme Court made clear in China Agritech  that American Pipe tolling applies only to individual claims – not subsequent class action claims even if the earlier class action was dismissed for a nonmerits reason.  This is a decision with far reaching implications, providing defendants with far more certainty over their exposure and preventing the refilling of “piggyback” class actions over decades.  On the other hand, China Agritech may increase class action filings during the limitations period as plaintiffs rush to beat the statute of limitations rather than taking a “wait and see” approach.  However, it is not yet clear how plaintiffs will react to the end of piggyback tolling.  

7. Ascertainability

The proper standard for applying ascertainbility remains unascertainable. This requirement is not an express element of Rule 23(a) or (b), but most courts agree that the Rule requires a class definition that is precise enough so that the defendant and the court can determine who is in and who is out of the class. Courts are split on how much detail is necessary (or what quantum of evidence is required) to prove that a class is ascertainable at the class certification stage.  Some courts only require a class definition which is objective; other courts go further and require a showing of administrative feasibility in identifying class members. In light of the circuit split, it seems likely the Supreme Court will weigh in on this issue in the near future. 

8. The TCPA

The flood of class action brought under the Telephone Consumer Protect Act continues.  This year saw the D.C. Circuit ruling in ACA International, essentially sending the question of what constituted an autodialer back to the FCC (among other things).  Possible ambiguity in this ruling has led to a split in the District Courts over this question.  Further, the “wrong number” version of the TCPA class action continues to be filed. There still are questions over how the TCPA applies to texting cases. The standing question and the ascertainability questions mentioned above will also impact these class actions. In short, TCPA cases are not going away any time soon. 

9. Food Labeling Cases

The labeling/food cases are also being filed at an increased pace over the last several years (although they tend to be concentrated in the Ninth Circuit). These class actions concern: food ingredients, sugar disclosures, claims regarding “health” of food, “organic” or “GMO” disclosures, slack fill, country of origin disclosures, among many others.  These claims typically raise ascertainability questions and sometimes standing questions.  The same can be said of the trend in some states regarding the filing of state law privacy cases (for instance, the biometric cases).

10. Removal Jurisdiction

The Supreme Court will consider this term (in Home Depot U.S.A., Inc. v. Jackson) whether a newly added, third party defendant can remove a class action to federal court under the Class Action Fairness Act.  CAFA normally allows removal when there is minimal diversity and more than $5 Million in controversy.  But it is unclear whether a third party defendant who is brought into the case after extensive litigation in state court can remove the action under CAFA.  

The above issues are likely to generate significant and interesting jurisprudence over the next year. Still, they are not the only issues relevant to class action law (for instance, third party litigation funding or the trend towards the creation of fewer MDL’s). With class actions alive and well, it is as important now more than ever for business owners and litigators to carefully monitor the developments in class action law so that they can ensure their business practices and litigation strategies conform to the more recent legal developments.