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Gibbons Law Alert

Tagged: Class Actions

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

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Posted in Class Action

On February 7, 2025

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

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Posted in Class Action

On January 22, 2025

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

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Posted in Class Action

On December 11, 2024

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

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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...

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