Gibbons Law Alert

Gibbons Law Alert

Author: Michael R. McDonald

Seventh Circuit Affirms Dismissal of Data Privacy Class Action on Article III Standing Grounds

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Posted in Class Action Defense

On March 31, 2017

Since the United States Supreme Court decided Spokeo, Inc. v. Robins in May 2016, lower courts have struggled to consistently determine whether a plaintiff has standing to sue in federal court, which, as the Spokeo court explained, “requires a concrete injury even in the context of a statutory violation.” That is, even when Congress has made something unlawful and authorized an award of statutory damages for the unlawful act, the mere violation of that law is not itself sufficient to confer standing to sue under Article III of the U.S. Constitution. But precisely what is required to demonstrate sufficient “injury” under Article III remains unclear after Spokeo, especially in the data-breach and data-privacy contexts. In Gubala v. Time Warner Cable, Inc., however, a unanimous Seventh Circuit decision, authored by Judge Posner, held that the defendant’s possible failure to comply with a requirement contained in the Cable Communications Policy Act (requiring the destruction of personally identifiable information (“PII”) if the information is no longer necessary for the purpose for which it was collected) did not afford the plaintiff Article III standing to sue for violation of the statute where his personal information was not released or disseminated in any way. The plaintiff in Gubala had subscribed to Time Warner cable services in 2004, which required him to...

California District Court Dismisses Facebook’s TCCWNA “Website Terms and Conditions” Lawsuit in Light of Valid Choice-of-Law Provision

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Posted in Class Action Defense

On February 6, 2017

New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) ushered in a wave of class actions last year, targeting various provisions in retailers’ websites “terms and conditions.” Broadly speaking, the TCCWNA prohibits “consumer contracts” from containing language that violates any “clearly established legal right[s].” New Jersey courts have not been alone in adjudicating these cases, however, as a number of similar lawsuits have been brought in other jurisdictions, including California federal district courts. For example, on September 7, 2016, the Central District of California dismissed the complaint in Candelario v. Rip Curl, Inc. on standing grounds, holding that because the plaintiff’s “only connection to the Terms and Conditions appears to be her decision to read them” and because her complaint essentially alleged only “bare procedural violation[s]” of the TCCWNA – without more – she could not satisfy “the injury-in-fact requirement of Article III.” Even more recently, although on different grounds, the Northern District of California dismissed a “website terms and conditions” class action against Facebook. In Palomino v. Facebook, Inc., as in Candelario, the plaintiffs alleged that the social media company’s website terms and conditions violated the TCCWNA because of “provisions that purport to ‘1) disclaim liability for claims brought for Defendant’s negligent, willful, malicious and wanton misconduct; 2) bar claims for personal and economic injury...

Nordic Naturals Vindicated Again with Third Circuit Affirming Class Action Dismissal and Granting Sanctions for Frivolous Appeal under FRAP 38

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Posted in Class Action Defense

On September 19, 2016

On September 14, 2016, in a precedential opinion, the Third Circuit upheld the dismissal of a serial, pro se attorney’s class action lawsuit against international dietary supplement manufacturer Nordic Naturals, Inc., which asserted label-related claims under the N.J. Consumer Fraud Act. Notably, the Third Circuit also entered a separate order, which granted Nordic’s motion for sanctions under Federal Rule Appellate Procedure 38 for Plaintiff’s frivolous appeal.

E-Commerce in New Jersey Threatened by Rise of TCCWNA Class Actions

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Posted in Class Action Defense

On September 7, 2016

Owners and operators of e-commerce websites should be aware of an eruption in threatened and filed class actions against online retailers under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”). The TCCWNA was enacted decades ago, as the New Jersey Supreme Court has explained, to “prohibit[] businesses from offering or using provisions in consumer contracts, warranties, notices and signs that violate any clearly established right of a consumer.” Yet, as laudable as this goal may be, with the potential for class-wide statutory penalty damages, the brevity and breadth of the statute has led to a tidal wave of litigation now targeting terms and conditions within e-commerce websites—an application of the law that could not have even been conceived of when the TCCWNA was passed in 1981.

TCCWNA Back Before the New Jersey Supreme Court

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Posted in Class Action Defense

On August 23, 2016

This year the federal courts in New Jersey have seen a dramatic uptick in the filing of class action lawsuits seeking statutory damages under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”), particularly cases targeting merchants selling or promoting goods or services via the internet. These cases are premised on the notion that the “terms and conditions” or “terms of use” on a company’s website constitute a contract and thus subject companies to potentially massive class-wide penalty damages should the terms of use contain language which violates the TCCWNA. As motions to dismiss are pending in many of these cases, the federal courts in New Jersey may soon provide further clarity on a number of important questions, including: (1) whether online website users are “aggrieved consumers” as required under the statute; (2) whether plaintiffs bringing bare TCCWNA claims have Article III standing given the U.S. Supreme Court’s recent Spokeo decision; and (3) whether the statute reaches contractual provisions wholly unrelated to a consumer’s transaction.

Parties Must Clearly Agree to Delegate Arbitrability to an Arbitrator, Says the NJ Supreme Court

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Posted in Class Action Defense / General Litigation

On July 28, 2016

In its most recent pronouncement on arbitration clauses, the New Jersey Supreme Court confirmed that it is for the Court, and not an arbitrator, to determine whether the parties have agreed to arbitrate consumer fraud claims in the absence of a clear delegation clause to the contrary. In Morgan v. Sanford Brown Inst., the New Jersey Supreme Court reversed an order of the Appellate Division holding that arbitrability was for the arbitrator to decide, finding that under Atalese v. U.S. Legal Servs. Grp. and First Options of Chi., Inc. v. Kaplan, the agreement to delegate arbitrability to an arbitrator must, as with the other arbitration provisions, clearly inform the average consumer of the rights he or she is giving up.

New Jersey Federal Court Confirms TCCWNA Doesn’t Reach “Omissions”

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Posted in Class Action Defense

On July 11, 2016

In the thick of a torrent of litigation, mostly class actions, premised upon purportedly unlawful contractual provisions under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) – a statute that permits “no-injury” claims – the District of New Jersey has reaffirmed a bright-line rule concerning this law: Omissions don’t trigger liability.

Contractual Limitations Period Bars TCCWNA Class Action

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Posted in Class Action Defense

On June 28, 2016

Class actions brought under the New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) are on the rise. This year alone, Wal-Mart, J. Crew, Avis, Toys R Us, and Apple – among many others – have been sued under this unique state statute that prohibits certain types of unlawful provisions in consumer contracts and other documents. In the past decade, courts have continued to expand the scope of this law – from the New Jersey Supreme Court, which, in 2013, instructed lower courts to construe the statute broadly, to the District of New Jersey, which, in 2014, allowed a TCCWNA class action to go forward against contracts containing commonly-worded exculpatory and indemnification provisions.

Third Circuit in Chesapeake Appalachia: Incorporating AAA Rules Not Enough to Satisfy the Onerous Burden of Overcoming Presumption in Favor of Judicial Resolution of Class Arbitrability

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Posted in Class Action Defense

On February 3, 2016

In Chesapeake Appalachia, L.L.C. v. Scout Petroleum, L.L.C., the Third Circuit picked up where it left off after Opalinski v. Robert Half International Inc. In Opalinski, the Circuit held, for the first time, that “the availability of class arbitration constitutes a ‘question of arbitrability’ to be decided by the courts—and not the arbitrators—unless the parties’ arbitration agreement ‘clearly and unmistakably’ provides otherwise.”

Class Action Plaintiffs Have Standing Based on Actual Injuries and Costs of Mitigation Following Corporate Hacking, Says Seventh Circuit

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Posted in Class Action Defense

On August 6, 2015

The Court of Appeals for the Seventh Circuit recently held that class action plaintiffs alleging injuries due to corporate hacking scandals have standing to pursue those claims in federal court, based on both actual injuries suffered repairing damage done by fraudulent charges, as well as costs of mitigating potential future harm, such as credit monitoring. Remijas v. Neiman Marcus Group, LLC, No. 14-3122 (7th Circ. July 20, 2015). As with other cases that come to the same conclusion, the court placed great emphasis on the fact that the data thieves were specifically targeting personal data, as well as the company’s admission of the breach and offer of a year of credit monitoring to those whose information had been exposed.

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