Gibbons Law Alert

Gibbons Law Alert

Tagged: Class Actions

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

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Posted in Class Action

On November 21, 2024

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...

New Jersey Supreme Court Confirms the Enforceability of Class Action Waivers

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Posted in Class Action Defense

On July 25, 2024

The New Jersey Supreme Court issued a unanimous opinion on July 10, 2024, holding that class action waivers in consumer contracts are not per se contrary to public policy. While such waivers may be unenforceable if they are unconscionable or violate other tenets of state contract law, the opinion confirms that there is no blanket prohibition on them – a positive development for businesses in New Jersey. Pace v. Hamilton Cove concerned a putative class action filed by residential tenants of Hamilton Cove Apartments, a luxury apartment complex in a high crime area. In its advertisements, brochures, and oral statements to prospective tenants during tours, Hamilton Cove Apartments promised that the complex would have “elevated, 24/7 security,” with security personnel stationed round-the-clock near each building’s entrance. The plaintiffs alleged that the promises were knowingly false when made, and that they relied on those representations in deciding to sign the lease. The lease contained a “Class Action Waiver” Addendum, by which the lessee “expressly waive[d] any right and/or ability to bring, represent, join, or otherwise maintain a Class Action.” The defendants moved to dismiss the plaintiffs’ Consumer Fraud Act (CFA) claim, arguing in pertinent part that a class action was not necessary to vindicate the plaintiffs’ interests and, in any event, that the leases contained class...

Fourth Circuit Revives Claim that Faxes Promoting Free Webinars are “Unsolicited Advertisements” Under the TCPA

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Posted in Class Action Defense

On July 19, 2024

Last month, the Fourth Circuit in Family Health Physical Medicine, LLC v. Pulse8, LLC, et al. revived Family Health’s putative class action, finding that it plausibly alleged facts sufficient to state a claim that the defendant’s fax invitation to attend a free webinar was an “unsolicited advertisement” under the Telephone Consumer Protection Act of 1991 (the TCPA). In doing so, the Fourth Circuit revisited its recent holding in Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC that an “unsolicited advertisement” does not include offers or solicitations with no commercial component or purpose. Under that reasoning, a fax promoting a free webinar would seem not to fall within the TCPA’s definition of an “unsolicited advertisement.” However, because Family Health’s complaint alleged that the webinar was being used to market Pulse8’s healthcare coding technology, the court drew a reasonable inference that Pulse8 sent the fax hoping to persuade recipients to use its products. As a transmission of “information with a commercial nexus to the sender’s business,” the fax was therefore plausibly alleged to qualify as an advertisement. To survive a motion to dismiss, the Fourth Circuit continued, Family Health was not required to plead facts alleging the specific products or services that were promoted. Rather, it was reasonable to infer that a company that invites you to...

New Jersey Supreme Court Holds “Illusory Discounts” Do Not Support a Claim of Ascertainable Loss Under the Consumer Fraud Act

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Posted in Class Action Defense

On April 25, 2024

In a 4-3 opinion, the New Jersey Supreme Court held that the mere purchase of a product falsely represented as “discounted” does not, without more, satisfy the “ascertainable loss” element under the New Jersey Consumer Fraud Act (NJCFA). In Robey v. SPARC Group LLC, the plaintiffs – a proposed class of shoppers at the retail clothing store Aéropostale – alleged that the store advertised clothing as being discounted when, in fact, the items had never been offered or sold at the higher prices off of which the “discount” was taken. The plaintiffs contend that this practice of so-called “illusory discounts” violated the NJCFA, the Truth in Consumer-Contract, Warranty and Notice Act (TCCWNA), and various common law contract rights. The trial court dismissed the complaint for failure to state a claim, determining that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed, noting some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The Supreme Court granted certification and reversed, finding that the plaintiffs’ NJCFA claim failed because they could show neither of the two recognized types of “ascertainable loss” for a claim based on a seller’s alleged deception: an out-of-pocket loss or a loss of the benefit-of-the-bargain. First, the plaintiffs...

District Court Affirms United States Copyright Office’s Denial of Copyright Registration for AI-Generated Visual Art

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Posted in Class Action Defense / Privacy Class Actions

On October 2, 2023

Pursuant to the Copyright Act of 1976, “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device” are eligible for immediate copyright protection, provided certain requirements are met. Against this backdrop, Stephen Thaler applied for copyright registration with the United States Copyright Office (USCO) of a piece of visual art produced by a generative artificial intelligence system he created – the “Creativity Machine.” The USCO subsequently denied the application, reasoning that Thaler’s work “‘lack[ed] the human authorship necessary to support a copyright claim,’” as “copyright law only extends to works created by human beings.” After Thaler filed suit against the USCO, both parties moved for summary judgment on the sole issue of whether a work generated entirely by an artificial system should be eligible for copyright protection. On August 18, 2023, in Thaler v. Perlmutter the United States District Court for the District of Columbia granted the USCO’s motion for summary judgment, concluding that “human authorship is an essential part of a valid copyright claim.” The court rejected as contrary to the Copyright Act’s plain language Thaler’s contention that because he created the AI system that “autonomously” produced...

“Say Cheese!” CVS Passport Photo Practices Subject to BIPA Suit

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Posted in Class Action Defense / Privacy and Data Security / Privacy Class Actions

On August 11, 2023

In May 2022, a group of plaintiffs brought a putative class action against CVS Pharmacy, Inc. (CVS) alleging the company violated several provisions of the Illinois Biometric Information Privacy Act (BIPA) through its practices for taking passport photos. On May 4, 2023, in Daichendt and Odell v. CVS Pharmacy, Inc., the United States District Court for the Northern District of Illinois denied CVS’s motion to dismiss, holding the plaintiffs sufficiently stated a claim under Section 15(b) of BIPA. Section 15(b) of BIPA prohibits private entities from collecting “or otherwise obtain[ing] a person’s or a customer’s biometric identifier or biometric information, unless it first”: (1) provides notice of collection; (2) provides notice of the specific purpose of collection; and (3) obtains affirmative written consent. Here, the plaintiffs alleged that CVS required them to “enter[] their names, email addresses, and phone numbers into a computer terminal inside defendant’s stores prior to scanning their biometric identifiers.” Thereafter, CVS’s system would “check” and “verify” an individual’s facial features (i.e., whether the individual is smiling) to comply with government requirements. Against this backdrop, the plaintiffs argued this system violated Section 15(b) because it “collected and stored their personal contact data (‘real-world identifying information’), such as their names and email addresses,” thus allowing CVS the ability to identify the plaintiffs “when...

I’m Sorry, Motion Denied: Washington District Court Rejects Second Try at Class Action Suit Over Amazon Alexa’s Collection of Voice Data

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Posted in Privacy Class Actions

On June 27, 2023

In June 2022, a group of plaintiffs brought a putative class action against Amazon.com (“Amazon”) alleging the company violated several statutory and common law rights through its use of voice data collected through Alexa, its digital assistant software. After the court granted Amazon’s motion to dismiss, the named plaintiffs moved for leave to file an amended complaint. On March 29, 2023, in James Gray and Scott Horton v. Amazon.com, et. al., the United States District Court for the Western District of Washington denied the motion, concluding the plaintiff’s proposed amended complaint (PAC) failed to allege new material facts. The PAC alleged that Amazon failed to disclose to its consumers that it would use the data collected from the voice recordings made by Alexa devices for the purposes of targeted advertising. Accordingly, the plaintiffs asserted, as they had done previously, that Amazon: (1) breached the implied covenant of good faith and fair dealing; (2) violated Washington’s Consumer Protection Act (CPA) and Personality Rights Act (PRA); and (3) violated common law privacy rights. The court dismissed the plaintiffs’ implied covenant claim because the PAC “merely repeat[ed] the same arguments the Court ha[d] already rejected.” For example, the court previously rejected the plaintiffs’ argument that Amazon’s terms and conditions failed to inform them of Amazon’s use of their...

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...

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...

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