Tagged: Courts of Appeal – Seventh Circuit

Eleventh and Seventh Circuits Hold Class and Collective Arbitration Are Questions of Arbitrability

In two recent precedential decisions, JPay, Inc. v. Kobel and Herrington v. Waterstone Mortgage Corp., the Eleventh and Seventh Circuits, respectively, held that whether an arbitration may proceed on a class-wide basis (or as a collective action when a claimant is seeking relief under the Fair Labor Standard Act) is a “question of arbitrability” to be decided by the courts, unless the parties specifically delegate that responsibility to an arbitrator. The Supreme Court previously noted the lack of a majority decision on the subject in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. and declined to address this question in Oxford Health Plans LLC v. Sutter, leaving the decision to the circuits. In JPay, the dispute arose when two plaintiffs, users of JPay’s fee-for-service amenities to send money to inmates, filed suit alleging the service dissuaded users from sending funds through free paper money orders, and that the fees charged by JPay were “exorbitant” and used to “fund kickbacks to corrections departments.” JPay’s Terms of Service included a provision that the American Arbitration Association (AAA) would arbitrate and govern any disputes, claims, or controversies that arose between the parties and “[t]he ability to arbitrate the dispute, claim or controversy shall likewise be determined in arbitration.” The plaintiffs filed a demand for arbitration on a class basis, and, in response,...

Seventh Circuit Affirms Dismissal of Data Privacy Class Action on Article III Standing Grounds

Since the United States Supreme Court decided Spokeo, Inc. v. Robins in May 2016, lower courts have struggled to consistently determine whether a plaintiff has standing to sue in federal court, which, as the Spokeo court explained, “requires a concrete injury even in the context of a statutory violation.” That is, even when Congress has made something unlawful and authorized an award of statutory damages for the unlawful act, the mere violation of that law is not itself sufficient to confer standing to sue under Article III of the U.S. Constitution. But precisely what is required to demonstrate sufficient “injury” under Article III remains unclear after Spokeo, especially in the data-breach and data-privacy contexts. In Gubala v. Time Warner Cable, Inc., however, a unanimous Seventh Circuit decision, authored by Judge Posner, held that the defendant’s possible failure to comply with a requirement contained in the Cable Communications Policy Act (requiring the destruction of personally identifiable information (“PII”) if the information is no longer necessary for the purpose for which it was collected) did not afford the plaintiff Article III standing to sue for violation of the statute where his personal information was not released or disseminated in any way. The plaintiff in Gubala had subscribed to Time Warner cable services in 2004, which required him to...

Seventh Circuit Rejects Unbalanced “Division of Spoils” Between Class Counsel and Class Members in RadioShack Settlement

In Redman v. RadioShack Corp., the Court of Appeals for the Seventh Circuit, in an opinion by Judge Richard Posner, reversed and remanded the district court’s judgment approving the settlement terms for a class action filed against RadioShack Corp. alleging violation of the Fair and Accurate Credit Transactions Act. The court expressed concern about “the division of spoils between class counsel and class members” and found it likely that “each class member has a valid claim to a good deal more than one $10 coupon, and it would seem therefore that the equities favor a reallocation of some of what we are calling the spoils from class counsel to class members who have submitted claims for the coupons.”