Gibbons Law Alert

Gibbons Law Alert

Tagged: Standing

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...

Non-Settling Insurers Now Have a Seat at the Bankruptcy Table

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Posted in Bankruptcy / Insurance

On June 20, 2024

Justice Sonia Sotomayor delivered the Supreme Court’s unanimous opinion1 in Truck Insurance Exchange v. Kaiser Gypsum Company, Inc., et al. (Case No. 22-1079) (“Kaiser Gypsum”). Reversing the opinion of the United States Court of Appeals for the Fourth Circuit in In re Kaiser Gypsum Co., Inc., 60 F.4th 73 (4th Cir. 2023), the Court held that, pursuant to section 1109(b) of the Bankruptcy Code, “[a]n insurer with financial responsibility for a bankruptcy claim is sufficiently concerned with, or affected by, the proceedings to be a ‘party in interest’ that can raise objections to a reorganization plan.” In doing so, the Court rejected, as “conceptually wrong” and making “little practical sense,” the “insurance neutrality” doctrine that denies insurers the status of parties in interest in confirmation-related matters if the proposed plan neither increases the insurer’s pre-petition obligations nor impairs its rights under the insurance policies it has issued to the debtors. Kaiser Gypsum is an asbestos mass tort Chapter 11 case. A plan of reorganization (“KG Plan”) was confirmed on September 12, 2021. The KG plan provided, inter alia, for uninsured claims to be administered by an asbestos claims trust (“KG Asbestos Trust”), while insured claims were to be resolved through the tort system and paid (less a small deductible) by the debtors’ primary liability insurer,...

Acheson Hotels, LLC v. Laufer: SCOTUS to Decide Whether Self-Appointed “Tester” Plaintiffs Have Standing to Sue Under the ADA

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Posted in Appellate / General Litigation

On July 31, 2023

During its next term, the United States Supreme Court will review the First Circuit Court of Appeals’s holding in Acheson Hotels, LLC v. Laufer that a self-appointed Americans with Disabilities Act (ADA) “tester” plaintiff has Article III standing to challenge a place of public accommodation’s failure to provide disability accessibility information on its website, even if the plaintiff has no intention of visiting that place of public accommodation. In this first review of an ADA Title III case in almost two decades, the Supreme Court will address an issue that has split the circuit courts across the country. The Supreme Court’s merits decision could have significant ramifications for ADA litigation that has been wildly proliferating in the Second Circuit and elsewhere for the past decade. By way of background, a DOJ-promulgated regulation – 28 C.F.R. § 36.302(e)(1)(ii) – provides that a “public accommodation” operating a “place of lodging” must “with respect to reservations made by any means … [i]dentify and describe accessible features in the hotels and guest rooms offered through its reservations service in enough detail to reasonably permit individuals with disabilities to assess independently whether a given hotel or guest room meets his or her accessibility needs.” In September 2020, Deborah Laufer, a self-proclaimed “tester” plaintiff who has filed more than 600 federal lawsuits under...

Delaware District Court Allows for Single Claim to Proceed Against Amazon in Illinois Biometric Information Privacy Act Class Action Suit

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Posted in Class Action Defense / Privacy Class Actions

On May 3, 2023

The Illinois Biometric Information Privacy Act (BIPA) is designed to protect and regulate the use of both “biometric identifiers” and “biometric information” of Illinois residents. “Biometric identifiers,” for instance, include “a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry.” In contrast, “biometric information” means “any information … based on an individual’s biometric identifier used to identify an individual.” On March 29, 2023, in McGoveran v. Amazon Web Servs., Inc., the United States District Court for the District of Delaware granted in part Amazon Web Services (“Amazon”) and Pindrop Security’s (“Pindrop”) motion to dismiss a proposed class action brought pursuant to BIPA for lack of standing, based on a strict interpretation of the definitions of “biometric identifiers” and “biometric information” and the plaintiffs’ failure to adequately allege that they suffered any concrete, actual, or imminent injury as a result of the defendants’ conduct. In McGoveran, a group of Illinois residents alleged that Amazon and Pindrop violated BIPA by extracting their biometric information for authentication purposes when the plaintiffs called John Hancock to discuss their retirement accounts. At the outset, the court held that the plaintiffs lacked Article III standing to bring a claim under BIPA Section 15(a) and Section 15(c) or to otherwise obtain injunctive relief. Under Section 15(a), a company is...

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...

Lack of Plaintiff Article III Standing Proves Fatal to Eleventh Circuit in FACTA Class Action Settlement

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Posted in Class Action Defense

On January 25, 2021

In a 7-to-3 en banc decision, the Eleventh Circuit vacated a high-stakes $6.3 million class settlement on standing grounds. In James Price v. Godiva Chocolatier, Inc., et al, the court held that a named plaintiff lacked standing to bring a claim under the Fair and Accurate Credit Transactions Act (FACTA) on behalf of a proposed settlement class. The plaintiff, Dr. David Muransky, filed a class action complaint against Godiva claiming a violation of FACTA, which prohibits “merchants from printing more than the last five digits of the card number (or the card’s expiration date) on receipts offered to customers.” After visiting a Godiva retail store in Florida, the plaintiff was handed a receipt that contained the first six and the last four digits of his credit card number–a technical violation of FACTA. The plaintiff claimed that the violation was “statutory in nature” and did “not intend[] to request any recovery for personal injury.” The plaintiff further framed the class’s harm from violations as “irreparable harm as a result of the defendant’s unlawful and wrongful conduct,” and that “Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft.” The putative class was so large that Godiva could have faced statutory damages, punitive damages, and costs of more than $342...

Second Circuit Holds Injunctive Class of Past Purchasers Not Certifiable Under Rule 23(b)(2)

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Posted in Class Action Defense

On September 18, 2020

The Second Circuit recently resolved a conflict among district courts, holding that past purchasers of a product are ineligible for class certification under Rule 23(b)(2) because not all class members would benefit from injunctive relief. Specifically, explained the Court, it is unlikely a purchaser will buy the allegedly deceptive product again, and if they do, they do so with the knowledge of the alleged deception. In Berni v. Barilla S.p.A., plaintiffs initiated a class action alleging that defendant intentionally sold its pasta in misleading boxes that concealed non-functional “slack-fill,” i.e., excessive empty space in the box. The parties reached a settlement, agreeing that defendant would include a minimum “fill-line” on its boxes, to indicate how much pasta was in the container, and a disclaimer that the pasta is sold by weight and not by volume. Neither party challenged the settlement; however, an absent class member objected, arguing that the group of past purchasers could not be certified under Rule 23(b)(2) because past purchasers were ineligible for injunctive relief. The district court disagreed and certified the injunctive class and approved the settlement. The objector appealed. The Circuit Court vacated the district court’s order granting approval of the settlement class, reasoning that injunctive relief was not proper for the group of past purchasers and, thus, the group...

Third Circuit Rejects Buyer’s Remorse as a Cognizable Injury Under Article III

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Posted in Class Action Defense

On November 20, 2018

In In Re: Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litigation, the United States Court of Appeals for the Third Circuit held that buyer’s remorse, without more, does not constitute an economic injury sufficient to establish standing under Article III of the United States Constitution. Plaintiff brought a putative class action against defendant Johnson & Johnson, alleging that perineal use of defendant’s baby powder by women could lead to an increased risk of ovarian cancer. Plaintiff did not allege that she had developed or was at an increased risk of developing ovarian cancer. Nor did she allege that the product was defective in performing the functions for which it was advertised. Furthermore, Plaintiff had used all the product and, thus, was not seeking reimbursement for a product she cannot use. Rather, Plaintiff alleged that she would not have bought the baby powder had she known that it could lead to an increased risk of cancer. The District Court of New Jersey dismissed her complaint for lack of Article III standing. The Third Circuit affirmed. It relied on its analyses in Finkelman v. Nat’l Football League and Cottrell v. Alcon Laboratories to determine that Plaintiff’s allegations were too conjectural to establish standing. It explained that, although a plaintiff need not allege the exact...

Third Circuit Relies on Spokeo to Shed Light on What is Needed For Article III Injury-in-Fact Standing

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Posted in General Litigation

On October 16, 2018

In Long v. SEPTA, the Third Circuit considered whether and when a violation of a statute is a standing-conferring injury-in-fact satisfying the Constitution’s “case or controversy” requirement. At issue in Long was whether the plaintiffs, who were denied employment by SEPTA when background checks disclosed disqualifying criminal histories, could sue SEPTA for failing to provide them with copies of their rights under the Fair Credit Reporting Act (FCRA) and copies of their background consumer reports before being denied employment, both of which are required by FCRA. The district court dismissed the complaint, stating that the plaintiffs did not allege a “concrete injury in fact,” because the alleged FCRA violations were “bare procedural violations.” On appeal, the Third Circuit affirmed the dismissal of the claim based on SEPTA’s failure to provide the plaintiffs notice of their FCRA rights. The Court held that, because the plaintiffs understood their rights well enough to bring the suit, they were not injured by SEPTA’s failure to give them notice of those rights and, therefore, lacked standing to pursue the claim. But the Third Circuit reversed the dismissal of the claim based on SEPTA’s failure to provide copies of the plaintiffs’ consumer reports. The Third Circuit applied the two tests “for whether an intangible injury can be . . . concrete”...

Wrap Up of United States Supreme Court’s 2016-17 Term

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Posted in General Litigation

On July 13, 2017

With the close of the United States Supreme Court’s 2016-17 term, we offer this wrap up of the term’s most important business and commercial cases (excluding patent cases): Kindred Nursing Ctrs, L.P. v. Clark: The Supreme Court continued its full-throated support of arbitration agreements, again rejecting a state supreme court’s effort to apply an ostensibly arbitration-neutral rule of law to invalidate an arbitration agreement. In Kindred, the Kentucky Supreme Court held that an arbitration agreement signed by an attorney-in-fact under a broad power of attorney was invalid because the power of attorney did not expressly give the attorney-in-fact the right to waive the principal’s right to a jury trial. According to the Kentucky Supreme Court, to grant an attorney-in-fact the authority to waive a “fundamental constitutional right,” a power of attorney must grant that authority expressly and unambiguously. Because the right to access the courts and the right to a jury trial are such “fundamental constitutional rights” and because the power of attorney did not expressly and unambiguously waive them, the attorney-in-fact was not authorized to agree to arbitrate the principal’s claims, and no enforceable arbitration agreement was created. The Supreme Court found that the Kentucky Supreme Court’s facially arbitration-neutral rule—that the authority to waive “fundamental constitutional rights” must be expressed unambiguously in a power...

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