Gibbons Law Alert

Gibbons Law Alert

Author: Caroline E. Oks

Eleventh Circuit Eliminates Incentive Awards for Named Plaintiffs in Class Action Settlements

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Posted in Class Action Defense

On October 19, 2020

The Eleventh Circuit Court of Appeals recently upended what has become common practice in class action settlements by ruling that “incentive” awards to named plaintiffs are unlawful. In Johnson v. NPAS Solutions, LLC, the plaintiff filed a class action lawsuit under the Telephone Consumer Protection Act (TCPA) alleging that the defendant used an automatic telephone dialing system to call cell phones without the proper consent. Less than eight months after the complaint was filed, the parties jointly filed a notice of settlement for an award of $1,432,000. The District Court preliminary approved the settlement and certified the class for settlement purposes. In addition, that order permitted the plaintiff to petition the court to receive an amount not to exceed $6,000 “as acknowledgement of this role in prosecuting this case on behalf of class members.” The court also set a date for class members to opt out of the class settlement and a date three weeks later for class counsel to submit their petition for attorneys’ fees and costs. One person objected to the settlement on the grounds that (1) the objection deadline was set before the deadline for class counsel to file their attorneys’ fee petition, which she contended violated Federal Rule of Civil Procedure 23 and the Due Process Clause; (2) the amount of...

Non-Consensual “Quick Peek” Revisited: FRE 502(d) Cannot Be Used to Compel Production of Potentially Privileged Information Without a Privilege Review

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Posted in E-Discovery: Legal Decisions and Court Rules

On October 1, 2020

The District Court for the District of Columbia recently confirmed that FRE 502(d) orders cannot be used to force a responding party to produce potentially privileged documents without the opportunity to first review them. In doing so, the court found that such an order would not only violate the producing parties’ right to determine in the first instance how it reviews and produces, but would potentially compel the production of privileged information and thus would constitute “an abuse of discretion.” In Equal Employment Opportunity Commission v. George Washington University, the EEOC filed a discrimination action on behalf of a former executive assistant against defendant, George Washington University, alleging that defendant’s former athletic director treated the former executive assistant less favorably compared to her male co-worker, a former special assistant. The discovery dispute concerned four requests for production of documents served by plaintiff: three seeking thousands of emails from the work accounts of defendant’s former athletic director and his two assistants; and one seeking information related to workplace complaints against the former athletic director. Defendant argued that plaintiff’s requests were overbroad and unduly burdensome—that is, that compliance with the requests would impose costs that were “not proportional to the needs of the case,” under the proportionality dictates of FRCP 26. By its decision, the court resolved...

Raising the Specter of Discovery Abuse: The Importance of Developing a Discovery Record Before Filing a Motion to Compel

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Posted in E-Discovery: Legal Decisions and Court Rules

On July 27, 2020

Two recent decisions highlight the importance of establishing a record of discovery abuse before filing a motion to compel based upon the commonly held suspicion that a responding party is withholding information and/or has failed to adequately preserve or search for information. Even in situations where a party is convinced that an adversary has failed to produce discoverable information, a litigant will face an uphill climb in pursuing a motion to compel in the absence of concrete evidence as to an adversary’s discovery shortfalls, including evidence of data deletion, untimely or absent preservation efforts, and/or the failure to produce information produced by other parties or third-parties that clearly should be in the possession of the responding party. Winn-Dixie Stores, Inc. v. Eastern Mushroom Marketing Cooperative (E.D. Pa.) In a recent decision from the Eastern District of Pennsylvania, Judge Schiller denied plaintiffs’ motion to compel in a case where plaintiffs insisted that “there simply must be responsive documents,” but plaintiffs were unable to provide any specific evidence to support their speculation. In this antitrust litigation involving allegations that defendants colluded to raise the price of fresh agarics mushrooms, plaintiffs sought all documents from defendants regarding the sale of mushrooms to plaintiffs. In particular, numerous discovery disputes ensued after the court entered an order requiring defendants to...

District of New Jersey Denies Class Certification in Product Defect Case Against BMW

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Posted in Class Action Defense

On June 12, 2020

The District of New Jersey recently denied class certification in a putative class action alleging a product defect in BMW engines. Afzal v. BMW of North America, LLC concerned whether BMW defectively designed its car engine so that a component wears out too quickly and failed to disclose that defect to purchasers. Two Plaintiffs, both California residents who allegedly suffered premature rod bearing wear, filed a putative class action raising various causes of action including violations of several California consumer protection statutes, breach of warranty, and fraud. Plaintiffs sought certification of two classes: (1) the Dealership Class and (2) the Warranty Class. The “Dealership Class” was defined as: “All persons who after November 12, 2011, purchased a model year 2008 to 2013 BMW M3 (the “Class Vehicle”) in California from an authorized BMW dealership, and who resided in California at the time of that purchase, and who as of the date of the Court’s Certification Order, either 1. Currently owns a Class Vehicle with 120,000 miles or less; or 2. Currently or formerly owned a Class Vehicle and, when the Class Vehicle had 120,000 miles or less, incurred out-of-pocket costs to replace the connecting rod bearings in the Class Vehicle.” The “Warranty Class” was defined as: “All persons who after November 12, 2011, purchased a...

Third Circuit Clarifies How Arbitration Language Should be Presented to Consumers

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Posted in Class Action Defense

On May 28, 2020

The Third Circuit recently issued a precedential decision further explaining the requirements when presenting consumers with otherwise enforceable language requiring arbitration. In Bacon v. Avis Budget Group Inc., six plaintiffs rented cars from defendant Payless Car Rental, Inc., a subsidiary of defendant Avis Budget Group, Inc. At the rental counter, plaintiffs each signed identical one-page rental agreements, which, among other things, itemized charges and fees and showed whether the customer had accepted or declined certain products and services. Each plaintiff signed below the final paragraph, which provided: “I agree the charges listed above are estimates and that I have reviewed & agreed to all notices & terms here and in the rental jacket.” The rental jackets were kept at the rental counter, typically near the rental associate’s computer terminal or printer. The rental associates were trained to give a rental jacket to each customer after the customer signed the agreement and to any customer who requested one, but the associates were not trained to alert customers to the additional terms in the rental jacket. The rental associates said nothing about the rental jacket when plaintiffs reviewed their agreements. After plaintiffs signed their agreements, the rental associate folded the agreement into thirds, placed it into the rental jacket, and handed the jacket to plaintiffs. The rental...

Appellate Division Enforces Provision Prohibiting Class Arbitration

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Posted in Class Action Defense

On May 5, 2020

In Curiale v. Hyundai Capital America Inc., the New Jersey Appellate Division reversed an order denying a motion to compel arbitration by Hyundai’s financing company (“HCA”), based on an arbitration clause in a motor vehicle retail order. The Appellate Division rejected the trial court’s finding that the arbitration clause was ambiguous because it stated that the parties must arbitrate any claims and then explicitly stated that the provision bars “class action arbitration.” The Arbitration clause provided: AGREEMENT TO ARBITRATE ANY CLAIMS. READ THE FOLLOWING ARBITRATION PROVISION CAREFULLY, IT LIMITS YOUR RIGHTS, INCLUDING THE RIGHT TO MAINTAIN A COURT ACTION. The parties to this agreement agree to arbitrate any claim, dispute, or controversy, including all statutory claims and any state or federal claims, that may arise out of or relating to the sale or lease identified in this agreement. By agreeing to arbitration, the parties understand and agree that they are waiving their rights to maintain other available resolution processes, such as a court action or administrative proceeding, to settle their disputes. … The parties also agree to waive any right (i) to pursue any claims arising under this agreement including statutory, state or federal claims, as a class action arbitration, or (ii) to have an arbitration under this agreement consolidated with any other arbitration or...

District of New Jersey Further Clarifies TCPA’s Reach For Text-Marketing Campaigns

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Posted in Class Action Defense

On April 2, 2020

In a recent decision, Chief Judge Freda L. Wolfson of the District of New Jersey further clarified the reach of the Telephone Consumer Protection Act (TCPA) as it relates to certain text marketing campaigns by businesses. In Eisenband v. Pine Belt Automotive d/b/a Pine Belt Nissan, Eisenband filed a putative class action lawsuit against an automotive dealership, Pine Belt, claiming that Pine Belt had violated the TCPA by using an Automated Telephone Dialing System (ATDS), otherwise known as an autodialer, to send a text message to his cell phone. Eisenband had telephoned Pine Belt in 2017 requesting information about the cost of leasing a specific vehicle and instructed Pine Belt to call him back on his cell phone with the requested pricing information. Pine Belt’s sales representative obtained the cost estimate data and returned the call, as requested, but Eisenband decided not to enter into a lease for the vehicle. A few days later, Pine Belt sent Eisenband a promotional text message concerning lease options on other vehicles, which prompted him, about one week later, to file a class action lawsuit seeking statutory damages of up to $1,500 per text message, for himself and for every person in the putative class who received such text messages. Discovery revealed that Pine Belt had sent the text...

Sharing Communication with Public Relations Firm Destroys Privilege

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Posted in General Litigation

On June 25, 2019

The Southern District of New York recently held that sharing attorney-client privileged communications with a public relations firm destroys that privilege. Universal Standard brought a trademark infringement and unfair competition suit against Target. During the course of discovery, documents were produced consisting of emails between Universal Standard, its outside counsel, and BrandLink, a public relations firm. When Universal Standard sought to claw back the documents because they were privileged, Target refused. The court considered whether the fact that emails between Universal Standard and its counsel were also shared with BrandLink should result in a waiver, or whether the communications fall under one of several possible exceptions to the general rule that “disclosure to a third party by the party of a communication with his attorney eliminates whatever privilege the communication may have originally possessed.” First, the court considered whether BrandLink was “essential to allow communications between the attorney and the client, such as an interpreter or accountant.” This exception applies where the third party enables counsel to understand aspects of the client’s own communications that could not otherwise be appreciated, but not where the communications are merely important to the attorney’s ability to represent the client. Here, the emails involved discussions regarding a public relations strategy surrounding the filing of the lawsuit and whether to issue...

Third Circuit Establishes Framework for Determining Third-Party Based Liability under the TCPA

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Posted in Class Action Defense

On June 24, 2019

In a recent precedential decision, the Third Circuit held that an unsolicited fax seeking information does not constitute an unlawful advertisement under the Telephone Consumer Protection Act (TCPA). Now, to “establish third-party based liability under the TCPA, a plaintiff must show that the fax: (1) sought to promote or enhance the quality or quantity of a product or services being sold commercially; (2) was reasonably calculated to increase the profits of the sender; and (3) directly or indirectly encouraged the recipient to influence the purchasing decisions of a third party.” In Robert W. Mauthe, M.D., P.C. v. Optum, Inc., the plaintiff claimed that it received unsolicited faxes from Defendants in violation of the TCPA. Defendants maintain a national database of healthcare providers, containing providers’ contact information, demographics, specialties, education, and related data. Defendants market, sell, and license the database typically to healthcare, insurance, and pharmaceutical companies, who use it to update their provider directories, identify potential providers to fill gaps in their network of providers, and validate information when processing insurance claims. To maintain the accuracy of the database, Defendants send unsolicited faxes to healthcare providers listed in the database, requesting them to respond and correct any outdated or inaccurate information. These faxes also advised recipients that “[t]here is no cost to you to participate...

Supreme Court Further Restricts Class Arbitration Finding It Must be Unambiguously Authorized

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Posted in Class Action Defense

On May 9, 2019

In a 5-4 decision authored by Chief Justice Roberts, joined by Justices Thomas, Alito, Gorsuch, and Kavanaugh, the U.S. Supreme Court in Lamps Plus Inc. v. Varella held that courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis. Lamps Plus Inc. v. Varella involved an employee who had filed a class action against his employer. Lamps Plus responded by seeking to compel arbitration on an individual rather than a classwide basis. The district court dismissed the case and compelled arbitration, but on a class basis. Lamps Plus appealed, and the Ninth Circuit upheld the district court’s decision. The Ninth Circuit’s reasoning hinged on the fact that the arbitration agreement was ambiguous about the availability of class arbitration. The Ninth Circuit thus distinguished Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662 (2010), arguing that in Stolt-Nielsen the parties had stipulated that the agreement was silent about class arbitration, whereas the parties had no such stipulation in Lamps Plus. Because the Ninth Circuit held that the agreement was ambiguous, the appellate court turned to California’s contra proferentem rule and held that this state law contract principle required the court to interpret the ambiguous language against the drafter—here, Lamps Plus. The Supreme Court reversed because the principle...

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