Category: Class Action

Fourth Circuit Rockets Certified Class Due to Lack of Article III Standing

In a 2-1 recent published decision, the Fourth Circuit decertified a class, holding that every class member must be concretely harmed by an alleged statutory violation under the Supreme Court’s seminal holding on Article III standing in TransUnion v. Ramirez. Alig v. Rocket Mortgage, LLC involved statutory and common law claims under West Virginia law by a proposed class of consumers against Quicken Loans, Inc. (now Rocket Mortgage, LLC), alleging that, in refinancing their home-mortgage loans, the consumers paid for “independent appraisals” that were not “independent” at all. In fact, the defendants provided to the appraisers the homeowners’ own estimates of their homes’ values, which they had provided in their loan application. The plaintiffs claimed that the inclusion of the borrowers’ own estimates inflated the appraisals and so compromised the integrity of the appraisal process as to render their appraisals unreliable and worthless. The District Court certified a class of “‘[a]ll West Virginia citizens who refinanced mortgage loans with Quicken, and for whom Quicken obtained appraisals through an appraisal request form that included an estimate of value of the subject property,’” which amounted to 2,769 loans. The court then granted summary judgment to the plaintiffs and class members and awarded them more than $10.6 million in statutory damages, among other relief. On the first appeal, the...

The End of a New ADR Era? Ninth Circuit Affirms Finding of Mass Arbitration Rules as Unenforceable

The Ninth Circuit recently affirmed a district court’s ruling denying a motion by Live Nation and Ticketmaster to compel arbitration of claims by ticket purchasers, finding that the arbitration agreement contained in Ticketmaster’s website Terms of Use was procedurally and substantively unconscionable and thus unenforceable under California law. Notably, the arbitration clause required arbitration with a digital arbitration vendor (New Era ADR) under New Era’s rules for Expedited/Mass Arbitrations. Mass arbitration, a developing dispute resolution system, involves a large group of demands filed on behalf of or against a common party, out of which one plaintiff may be chosen to represent the larger group of plaintiffs, otherwise known as a “bellwether plaintiff.” The plaintiffs in Heckman v. Live Nation Entertainment, Inc. filed a putative class action alleging that the defendants engaged in predatory ticket pricing. In response, the defendants sought to enforce Ticketmaster’s Terms of Use, which required the dispute to be resolved through arbitration. These Terms specifically provided that claims stemming from current or prior online ticket purchases be decided by an arbitrator employed by New Era, who, under its delegation clause, also had the authority to determine the validity of the arbitration agreement. The district court denied the motion to compel arbitration. In affirming the district court’s decision, the Ninth Circuit emphasized the lack...

Third Circuit Upholds Dismissal of ERISA Class Action Seeking $65 Million in Drug Rebates

On September 25, 2024, in a precedential opinion, the Third Circuit affirmed the dismissal of a putative class action under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (“ERISA”), because the plaintiffs failed to allege the financial harm necessary to establish Article III standing. In Knudsen v. MetLife Grp., Inc., the plaintiffs, former employees of defendant MetLife Group (“MetLife”), alleged they were forced to pay higher health insurance premiums because MetLife retained $65 million in drug rebates. The savings from those rebates, according to the plaintiffs, should have been directed to the MetLife-sponsored benefits plan (the “MetLife Plan”).  Had they been, the plaintiffs, along with a proposed class of participants and beneficiaries of the MetLife Plan, would have benefited through: (1) reducing their “ongoing contributions on account of the rebates collected by the [MetLife] Plan[;]” (2) realizing savings in their “co-pays and co-insurance for pharmaceutical benefits[;]” and (3) obtaining drug rebates “in proportion to [participants’] contributions to the [MetLife] Plan.” In July 2023, the district court granted MetLife’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), holding that the plaintiffs failed to show they were owed the drug rebates. Specifically, the plaintiffs did not establish a “concrete stake in the outcome of this lawsuit and have not pled facts...

Without Further Ado: Third Circuit Limits Discovery on Motions to Compel Arbitration

More than a decade after its seminal decision in Guidotti v. Legal Helpers Debt Resolution, L.L.C., the Third Circuit Court of Appeals has clarified that a plaintiff’s claims may be sent straight to arbitration, without any discovery, if there is no challenge to an arbitration agreement’s existence or validity. In Guidotti, the Third Circuit held that unless “it is apparent, based on ‘the face of a complaint, and documents relied upon in the complaint,’” that the “party’s claims ‘are subject to an enforceable arbitration clause,’” then a plaintiff should be given a chance to take “discovery on the question of arbitrability” before a motion to compel arbitration is decided under the summary-judgment standard of Rule 56 of the Federal Rules of Civil Procedure. Because most plaintiffs who file in court craft their complaints to try to avoid arbitration, the practical result of the Guidotti decision was that many cases went to discovery before a ruling on a defendant’s motion to compel – even when discovery was unlikely to impact the outcome. The Third Circuit’s recent published decision in Young v. Experian Information Solutions, Inc. limits the need for such pre-arbitration discovery. In Young, the plaintiff filed a putative class action complaint against Experian in the United States District Court for the District Court of New Jersey...