Gibbons Law Alert

Gibbons Law Alert

Category: Class Action Defense

Delaware District Court Allows for Single Claim to Proceed Against Amazon in Illinois Biometric Information Privacy Act Class Action Suit

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Posted in Class Action Defense / Privacy Class Actions

On May 3, 2023

The Illinois Biometric Information Privacy Act (BIPA) is designed to protect and regulate the use of both “biometric identifiers” and “biometric information” of Illinois residents. “Biometric identifiers,” for instance, include “a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry.” In contrast, “biometric information” means “any information … based on an individual’s biometric identifier used to identify an individual.” On March 29, 2023, in McGoveran v. Amazon Web Servs., Inc., the United States District Court for the District of Delaware granted in part Amazon Web Services (“Amazon”) and Pindrop Security’s (“Pindrop”) motion to dismiss a proposed class action brought pursuant to BIPA for lack of standing, based on a strict interpretation of the definitions of “biometric identifiers” and “biometric information” and the plaintiffs’ failure to adequately allege that they suffered any concrete, actual, or imminent injury as a result of the defendants’ conduct. In McGoveran, a group of Illinois residents alleged that Amazon and Pindrop violated BIPA by extracting their biometric information for authentication purposes when the plaintiffs called John Hancock to discuss their retirement accounts. At the outset, the court held that the plaintiffs lacked Article III standing to bring a claim under BIPA Section 15(a) and Section 15(c) or to otherwise obtain injunctive relief. Under Section 15(a), a company is...

Fifth Circuit Affirms District Court’s Grant of a Motion to Strike Class Allegations

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Posted in Class Action Defense

On April 5, 2023

The Fifth Circuit Court of Appeals recently affirmed the grant of a pre-discovery motion to strike class allegations. In Elson v. Black, 14 women from seven states sought to bring a putative class action against the defendant companies, alleging that the defendants falsely advertised its FasciaBlaster product. Specifically, the plaintiffs alleged that the FasciaBlaster had been falsely advertised as a product that would eliminate cellulite, help with weight loss, and relieve pain. The district court, in a three-sentence opinion, struck the class allegations, finding that the class failed to establish commonality. The next day, the district court dismissed the remainder of the plaintiffs’ claims in their entirety. While the Fifth Circuit Court of Appeals found the district court opinion to be “inappropriately brief,” it agreed that the class could not be certified, nor could the plaintiffs establish their claims of fraud. However, the appellate court reversed and remanded the district court’s ruling dismissing two plaintiffs’ express warranty claims, finding that the court failed to apply the law of a specific jurisdiction. The appellate court held that the class could not be certified under Rule 23(a)’s commonality requirement and Rule 23(b)(3)’s predominance requirement. First, the plaintiffs’ claims were governed by different states’ laws, and the plaintiffs were unable to meet their burden establishing that “such differences...

Appellate Division Holds Plaintiffs Can State a Claim Under New Jersey’s CFA and TCCWNA Statutes Where an Advertised Discount Is Alleged to Be Illusory

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Posted in Class Action Defense

On March 22, 2023

A recent split decision from the New Jersey Appellate Division called into question whether the “ascertainable loss” requirement for pleading a claim under the New Jersey Consumer Fraud Act (NJCFA) is the same as the “aggrieved consumers” requirement under the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA). Without deciding that question, the court found that the pleading sufficiently alleged both in asserting that the defendant inflated its prices to offer an illusory discount. The plaintiffs alleged that the defendant, SPARC Group LLC, falsely advertised clothing at two of its Aeropostale stores as being discounted from a higher price when the clothing allegedly had never been sold in those stores at the higher price. The plaintiffs asserted that this “markup to markdown” practice violates both the NJCFA, the TCCWNA, and the common law. The trial judge dismissed the complaint for failure to state a claim and largely rested her decision on a determination that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed. The majority noted some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The New Jersey Supreme Court has held that an “ascertainable loss” must be “quantifiable and measurable” and not “hypothetical or illusory,” while the...

District of New Jersey Analyzes Article III Standing Requirement in the Class Action Context Under the Supreme Court’s Decision in TransUnion

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Posted in Class Action Defense / Privacy Class Actions

On November 10, 2022

In a post-TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) victory for the class action defense bar, the District of New Jersey has further clarified the standing requirement for showing concrete harm. In Schultz v. Midland Credit Management., Inc., the Honorable Madeline Cox Arleo, U.S.D.J. granted defendant Midland Credit Management, Inc.’s (“Midland”) motion for summary judgment because the plaintiffs failed to establish concrete harm and thus lacked standing. In Schultz, the plaintiffs filed a putative class action against Midland alleging that the collection agency issued collection letters with false Internal Revenue Service (IRS) reporting language in violation of the Fair Debt Collection Practices Act (FDCPA). Midland sent letters to the plaintiffs stating: “We will report forgiveness of debt as required by IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case.” Pursuant to the Department of Treasury and IRS regulations, Midland only needed to report discharges of indebtedness greater than $600. As the plaintiffs’ debts were below the $600 threshold, the plaintiffs argued that the IRS reporting language was false, deceptive, and misleading in violation of the FDCPA because the language implied that “there could be ‘negative consequences with the [IRS]’ and ‘deliberately fail[ed] to disclose that such reporting is required under...

New Jersey Appellate Division Finds No Ascertainable Loss Where a Plaintiff Never Used a Product and Made Hypothetical Allegations of Loss

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Posted in Class Action Defense

On July 18, 2022

On May 31, 2022, the Appellate Division in Hoffman v. Pure Radiance, Inc. affirmed the trial court’s order granting summary judgment for a defendant and dismissing the plaintiff’s Consumer Fraud Act (CFA) claims because the plaintiff could not show that he suffered an ascertainable loss where he never used the product and his allegations were not supported by facts. In this putative class action, serial plaintiff Harold Hoffman sued defendant Pure Radiance, Inc., alleging that it falsely marketed a hair growth product. Specifically, Pure Radiance advertised that its product Re-Nourish could help an individual regrow “a thick, full head of hair, even after years of balding” and was “the world’s first and only hair loss solution that revives dead hair follicles” to regrow hair “in just 30 days.” The advertisement also showed a before-and-after picture of a man’s head, with the before picture showing a balding head and the after picture showing a full head of hair. Based on this advertisement, Hoffman purchased the product and then, after researching the product but before ever trying it himself, filed a proposed class action alleging, among other things, that the ad contained material misrepresentations and that he suffered an ascertainable loss by reason of his purchase of the product for $108.90. Significantly, Hoffman did not receive the...

Third Circuit Holds That Non-Signatory Medical Practices Were Bound by Arbitration Agreements Entered Into by Practices’ Purchasing Agents

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Posted in Class Action Defense

On July 11, 2022

In In re Rotavirus Vaccines Antitrust Litigation, Merck Sharp & Dohme Corp. secured a victory in the Third Circuit, which held in a precedential decision that the plaintiffs’ antitrust bundling claims must be arbitrated. The medical practice plaintiffs contracted with “Physician Buying Groups” (PBGs) that arranged for the purchase of Merck’s vaccines at a discount through the drugmaker’s loyalty program. The matter involved two sets of contracts. The first set, between Merck and the PBGs, entitled participating PBG members to discounts if they purchased a threshold quantity of vaccines from Merck. These contracts contained an arbitration provision. The second set of contracts, between the PBGs and the medical practice plaintiffs, gave the plaintiffs discounts on Merck vaccines for enrolling in the PBGs. Thus, the PBGs operated as middlemen: the plaintiffs bought their vaccines directly from Merck but received discounts for belonging to PBGs. The plaintiffs were not parties to the contracts between Merck and the PBGs; as such, the plaintiffs did not sign on to the relevant arbitration provisions. The District Court for the Eastern District of Pennsylvania held that the PBGs did not have authority to bind the plaintiffs to the arbitration agreements, in part because the plaintiffs were not aware of those agreements. Reversing, the Third Circuit held that the PBGs, as agents,...

Appellate Division Affirms Dismissal of Class Action Claims and Compels Arbitration in Case Against Sirius XM

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Posted in Class Action Defense

On February 9, 2022

In Parrella v. Sirius XM Holdings, Inc., the Appellate Division upheld a 2020 trial court decision dismissing a Sirius XM radio customer’s proposed class action complaint and compelling arbitration. The plaintiff had claimed that the satellite radio provider falsely advertised discounts in order to induce customers to reactivate their Sirius radio accounts. The radio provider moved to dismiss the complaint and compel arbitration, which it alleged was required under the parties’ customer agreement. The plaintiff had a 15-year relationship with the radio provider, during which he used its services for various intervals of time. The plaintiff restarted or cancelled his services and each time, upon renewal, he received a copy of the customer agreement. The plaintiff had also contacted Sirius XM customer service to discuss reactivating his account, at which time the customer service representative informed the plaintiff of the customer agreement and told him where he could find a copy of that agreement on the company’s website. The customer agreement clearly and conspicuously contained a binding arbitration clause. Based on these facts, the trial court held that the plaintiff impliedly assented to the terms of the customer agreement and therefore was compelled to arbitrate his claims. In his appeal, the plaintiff alleged that the trial court incorrectly found that he impliedly assented to the...

Second Circuit Holds Monetary Compensation for Survey Participation Not an “Unsolicited Advertisement” Under the TCPA; Disagrees with Third Circuit

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Posted in Class Action Defense

On January 20, 2022

The Second Circuit recently held, in Bruce Katz, M.D., P.C. v. Focus Forward, LLC, that an unsolicited faxed invitation offering $150 to participate in a market research survey does not constitute an “unsolicited advertisement” under the Telephone Consumer Protection Act of 1991 (the “TCPA”). The TCPA defines “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.” The Second Circuit reasoned that the subject fax transmissions “plainly do not advertise the availability of any property, goods, or services” and therefore “cannot reasonably be construed” as unlawful advertisements. The panel did note, however, that its holding may not necessarily extend to all “communications, including faxed surveys, offering the recipient both money and services,” as some such communications could incur liability under the TCPA depending on the specific content of the communication. The Second Circuit’s holding in Katz departed from the reasoning in the Third Circuit’s divided opinion in Fischbein v. Olson Research Group, Inc. The faxes at issue in Fischbein consisted of requests to doctors to participate in market research surveys in exchange for monetary compensation. The Third Circuit held that such faxes are advertisements, reasoning that “an offer of payment in exchange for participation...

Eleventh Circuit Holds That Administrative Feasibility is Not a Precondition for Class Certification

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Posted in Class Certification Opinions

On July 19, 2021

The Eleventh Circuit Court of Appeals recently analyzed a “hotly contested issue in class action practice” – whether administrative feasibility is a requirement for class certification under Federal Rule of Civil Procedure 23. Breaking from the First, Third, and Fourth Circuits and agreeing with the Second, Sixth, Seventh, Eighth, and Ninth Circuits, the Eleventh Circuit held putative class representatives need not prove the existence of an administratively feasible method to identify absent class members as a precondition for certification of a class action.

Eighth Circuit Rules That Plaintiff Can File Motion to Strike Class Action Without Waiving Right to Compel Arbitration

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Posted in Class Action Defense

On July 15, 2021

In Donelson v. Ameriprise Financial Services, Inc., the Eighth Circuit reversed and remanded a district court’s decision that had denied both a motion to strike class action allegations and a motion to compel arbitration. The plaintiff was invited to create an Ameriprise account by defendant Sachse, who worked as a broker and investment advisor at defendant Ameriprise. The two met over lunch, where Sachse brought, and filled out himself, a copy of the account application. After the account application was signed, but not read, by the plaintiff, it was alleged that Sachse “badly mishandled [Plaintiff’s] investment account.” The plaintiff brought suit alleging violations of § 10(b) and § 20(a) of the Securities Exchange Act and Rule 10b-5, as well as breach of fiduciary duty under 15 U.S.C. § 80b-6, and, after finding other Sachse clients who had experienced similar problems with their accounts, sought to represent them in a Rule 23(b)(2) class action. The defendants moved to strike the class action allegations and to compel arbitration, which the district court denied. The defendants appealed. On appeal, the court addressed the question of whether the defendants waived their right to arbitrate when they simultaneously moved to strike the class action allegations. The court found that they had not. Ultimately, the court determined that when the defendants...

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