Gibbons Law Alert

Gibbons Law Alert

Category: Class Action Defense

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...

Following Duguid, South Carolina District Court Limits Reach of TCPA’s Autodialer Definition

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Posted in Class Action Defense / Privacy Class Actions

On July 8, 2021

In April 2021, the U.S. Supreme Court resolved a circuit split interpreting the Telephone Consumer Protection Act’s (TCPA) definition of “automatic telephone dialing system” or (ATDS). In Facebook, Inc. v. Duguid, the Court held that the clause “using a random or sequential number generator” in the statutory definition of ATDS, 47 U.S.C. § 227(a)(1), modifies both “store” and “produce,” thereby “specifying how the equipment must either ‘store’ or ‘produce’ telephone numbers.” Accordingly, “a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called.” Duguid thus reversed the Ninth Circuit’s interpretation that the clause “using a random or sequential number generator” modifies only “produce,” such that a device could be an autodialer if it has the capacity to store and automatically dial numbers, even if the numbers are not generated by a random or sequential number generator. Under Duguid, equipment that makes calls to “targeted…numbers linked to specific accounts” are excluded from liability under the TCPA. In June, the U.S. District Court for the District of South Carolina had the opportunity to apply the Supreme Court’s decision. In Timms v. USAA Federal Savings Bank, the plaintiff sought to recover damages from the defendant for alleged violations of the Fair...

Consumer Fraud Class Action Dismissed With Prejudice: Law Enforcement Tows Are Not Covered by the New Jersey Predatory Towing Prevention Act

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Posted in Class Action Defense

On June 21, 2021

On June 14, 2021, Judge Thomas J. Walsh of the Superior Court of New Jersey put an end to the long-running putative class action lawsuit in Kiley v. Tumino’s Towing, which sought to exploit regulations promulgated under the Predatory Towing Prevention Act (PTPA) by the Director of the Division of Consumer Affairs (DCA). The action was removed to federal court under the Class Action Fairness Act, where the magistrate judge initially denied a motion to remand and permitted jurisdictional discovery, but the district court judge later remanded back to state court. Finally addressing the merits, the Superior Court granted the defendants’ motion to dismiss the complaint, with prejudice, agreeing with Tumino’s Towing that the PTPA was not applicable to the towing services requested by law enforcement and performed in accordance with a duly-authorized municipal ordinance. As such, the plaintiff’s sole remaining cause of action for alleged violation of the Consumer Fraud Act (CFA) could not stand. In Kiley, the complaint alleged that the plaintiff’s vehicle was towed by Tumino’s Towing, at the request of the Ridgefield Park Police Department, because his vehicle was illegally parked during a snow emergency. After paying his parking ticket at police headquarters, the plaintiff was given a vehicle release authorization, which he brought to Tumino’s Towing to obtain the release...

Class Action Dismissal Highlights Limits to the “Picking Off” Exception to Mootness

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Posted in Class Action Defense

On May 12, 2021

The District of New Jersey recently dismissed a putative class action lawsuit against Capital One Bank, finding the plaintiff’s recovery during the suit of the full amount of damages sought mooted her claim. The would-be class representative, plaintiff Ellen Fensterer, sued Capital One Bank to recover funds used to purchase British Airways flight tickets. After COVID-19 imposed travel restrictions and caused the flights to be canceled, Fensterer sought recovery of $4,906.31 in expended funds and rewards points. Neither British Airways nor Capital One Bank provided Fensterer’s requested refund, causing Fensterer to file a putative class action against Capital One Bank—and not British Airways—for recovery of the funds. Then, during the pendency of the lawsuit, British Airways issued the full refund sought by Fensterer, and Capital One Bank processed that refund and credited Fensterer’s account. Because a non-party ultimately provided the exact remedy sought, the District of New Jersey applied the general rule of mootness, rather than the “picking off” exception, and accordingly dismissed Fensterer’s claim. The “picking off” exception prevents the loophole that would otherwise allow Capital One Bank (or any defendant) to simply buy off the named plaintiff’s claims before class certification, thereby preventing class certification indefinitely, causing piecemeal litigation, and undermining the purpose of class action litigation generally. But that did not happen...

District Courts Now Split on Whether Provision in TCPA is Unconstitutional

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Posted in Class Action Defense

On May 11, 2021

Earlier this year, we wrote about Lindenbaum v. Realgy, a decision from the U.S. District Court for the Northern District of Ohio, which dismissed the plaintiff’s “robocall” class action under the Telephone Consumer Protection Act (TCPA), based on the Supreme Court’s 2020 holding that a statutory exception for automated calls to collect government debts was unconstitutional. Because 47 U.S.C. § 227(b)(1)(A)(iii) was unconstitutional at the time of the alleged violations, the district court determined that it lacked subject matter jurisdiction and dismissed the lawsuit. Lindenbaum is currently on appeal before the Sixth Circuit (No. 20-4252). On March 18, 2021, the ACLU joined the fight by filing an amicus brief in support of the defendant, arguing that the defendant cannot be held “liable under a discriminatory statutory scheme that punishes only disfavored speakers.” Since Lindenbaum, the Middle District of Florida, in Hussain v. Sullivan Buick-Cadillac-GMC Truck, Inc., also held that this provision in the TCPA is unconstitutional. Similar to Lindenbaum, the plaintiff in Hussain alleged that she received pre-recorded phone calls and voicemails from the defendants without her consent. The defendants sought dismissal of the plaintiff’s complaint, alleging that the TCPA was unconstitutional and unenforceable during the time the phone calls were made, due to the unconstitutional provision. The Middle District of Florida, relying on Lindenbaum...

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