Morrison Foerster’s Class Dismissed blog provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class actions lawsuits and product liability issues that affect consumer-facing companies. Through Class Dismissed, attorneys from our nationally recognized Consumer Class Action and Products Liability practices offer a real-time assessment of the developments in matters that are shaping the industry. This blog examines the full spectrum of consumer-related class action and product liability lawsuits ranging from false advertising, privacy, consumer product safety, ADA, food misbranding, TCPA, environment, retail, and government actions as well as nationwide and multidistrict litigation class actions.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Julie Park protects her clients’ products no matter what kind of product issue they face—whether it is planning for new product development, recalling an existing product, or defending clients against product liability or consumer class actions. Drawing on her deep technical and legal expertise, Julie counsels clients on consumer product safety regulation and pharmaceutical and medical device preemption while also managing complex and multijurisdictional litigation both in state and federal court.

Julie Y. Park

<div class="videoWrapper"><iframe frameborder="0" class="sticky-video" allowfullscreen="1" title="Meet Penny Preovolos, Litigation Partner" src="https://www.youtube-nocookie.com/embed/hv7hYn-Bl7c?rel=0&showinfo=0;vq=hd1080" title="iframe"></iframe></div>Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products. According to Chambers USA, Penelope has a “great reputation for antitrust and product liability work” and is a “superb all-around antitrust lawyer.”Penelope was named the 2019 Antitrust Lawyer of the Year by the Antitrust, UCL, and Privacy Section of the California Lawyers Association. She was co-chair of MoFo’s antitrust practice for 14 years. She has served as chair of the Antitrust and Trade Regulation Section of the State Bar of California and as a member of the Ninth Circuit Advisory Committee on Local Rules and Operations. She is an editor of and frequent contributor to Morrison & Foerster’s <a href="https://classdismissed.mofo.com/">Class Dismissed blog</a>, as well as a frequent speaker about class action and antitrust issues.More About PenelopePenelope clerked for the Honorable Charles M. Merrill, United States Court of Appeals for the Ninth Circuit. She graduated cum laude from Harvard Law School, where she was executive editor of the Harvard Civil Rights – Civil Liberties Law Review. Penelope was a member of Phi Beta Kappa at the University of California, Berkeley. She was awarded the University Medal, the highest undergraduate honor at the university, as well as the English Departmental Citation (awarded to the outstanding graduate in that department).

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Senior Counsel

Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products.

Penelope A. Preovolos

Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class action lawsuits. Claudia also regularly counsels clients in the food, cosmetics, retail, and technology industries. She represents companies in false advertising disputes before the National Advertising Division (NAD) of the Council of Better Business Bureaus, Inc.<h5>More about Claudia</h5>Claudia is active in MoFo’s pro bono efforts, and recently traveled to El Paso, Texas, to work with families separated and detained at the border. She is also supervising a pro bono collaboration with Equal Rights Advocates, a nonprofit fighting for gender justice in work places and schools across the country. The initiative will help students who have been victims of sexual assault, attempted assault, or harassment find support and seek justice. Claudia is also a board member of Bay Area Legal Aid and a former board member of Equal Rights Advocates. Claudia is an editor and frequent contributor to MoFo’s <a href="https://classdismissed.mofo.com/">Class Dismissed</a> blog, which provides reports about the latest defense news, developments, and trends in class action lawsuits and product liability issues that affect consumer-facing companies. Her perspectives are also respected in the larger legal community: Claudia has published articles about class action and false advertising issues, and is a co-author of Chapter 7 — “Unfair Competition in California Business Litigation 2016” — of The Recorder. She also regularly speaks at conferences on class action and advertising trends. Claudia is currently serving as a Lawyer Representative for the Northern District of California. She received her J.D. degree in 2004 from Berkeley Law (Boalt Hall School of Law), where she was an associate editor of the Berkeley Technology Law Journal.

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Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class actions.

Claudia M. Vetesi

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office.Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.Alexandra has significant trial experience. She has first-chaired a one-week jury trial and second-chaired a five‑week jury trial, both involving multiple claims and witnesses. She also has extensive experience in alternative dispute resolution, representing clients at mediations, mandatory settlement conferences, and early neutral evaluations.Alexandra enjoys tracking developments and keeping her clients updated on product liability and personal injury claims, frequently writing or presenting on emerging areas such as autonomous vehicles and smart devices. Alexandra’s experience also extends to professional liability, warranty claims, eminent domain, and construction law.Alexandra earned her J.D. from the University of San Diego School of Law. While in law school, the San Diego Law Review published her comment on the recovery of damages by plaintiffs in a persistent vegetative state, and she also served as a comment editor. She received her B.A. from the University of California, Los Angeles, where she majored in Political Science and minored in Spanish. A San Diego native, she attended a Spanish immersion school through the eighth grade. Alexandra is active in the San Diego community, advising students at a local college. She is also a member of several legal organizations in San Diego, including Lawyer’s Club, the Association of Business Trial Lawyers, and Wallace Inn of Court.

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Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra’s litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, automobiles, AI, and robotics. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow

Adam J. Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.Mr. Hunt has extensive experience representing consumer products companies, financial institutions, and technology firms in class action cases and complex commercial disputes before state and federal trial courts, as well as in arbitrations. Clients seek Mr. Hunt’s counsel for his creative, strategic thinking in high-stakes, high-profile matters. He has represented clients facing claims under false advertising, antitrust, and privacy laws throughout the country, securing wins at the pleading stage, summary judgment, and trial, in addition to negotiating favorable settlements, often early in the case. Representative experience includes successfully securing rulings dismissing two putative false advertising class action cases against one of the best-known consumer electronics companies in the world; obtaining a complete win on summary judgment for a major shipping and logistics company in a multimillion-dollar commercial dispute; appearing as counsel at trial for a leading financial institution in a $100 million commercial dispute, winning a bench trial verdict; and prevailing on motions to dismiss false advertising class actions against a leading Greek yogurt company.Mr. Hunt is also an editor of the firm’s <a href="https://classdismissed.mofo.com/" target="_self">Class Dismissed blog</a>, which provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class action lawsuits that affect consumer-facing companies.Mr. Hunt maintains an active pro bono practice and is the recipient of the New York State Bar Association’s 2017 President’s Pro Bono Service Award for the First Judicial Department, the 2018 Public Service Award from New York University School of Law, and Morrison Foerster’s Kathi Pugh Award for Pro Bono Services.Mr. Hunt received his B.A. with honors from Swarthmore College and his J.D. cum laude from New York University.

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Adam Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

Adam Hunt

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When can you compel arbitration of a putative class action? The law is developing quickly and still doesn’t provide a crystal clear answer. The Ninth Circuit re

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One Estopp Shop: The Ninth Circuit Weighs in on the Use of Equitable Estoppel to Compel Arbitration in Two Recent Decisions

One Estopp Shop: The Ninth Circuit Weighs in on the Use of Equitable Estoppel to Compel Arbitration in Two Recent Decisions | Class Dismissed

Adam J. Hunt

When can you compel arbitration of a putative class action? The law is developing quickly<a href="#_ftn1" name="_ftnref1" id="_ftnref1">[1]</a> and still doesn’t provide a crystal clear answer. The Ninth Circuit recently weighed in on two cases examining what happens when the parties don’t have an arbitration agreement to begin with. In Stafford v. Rite Aid Corporation and Franklin v. Community Regional Medical Center, et al., the defendants sought to compel arbitration on the basis of equitable estoppel, based on arbitration agreements between the defendants and third parties. The Ninth Circuit affirmed the district court’s denial of the motion to compel arbitration in Stafford but came to the opposite conclusion in Franklin. The decisions show that the nature of the parties’ business and relationships, and the allegations in the complaint, can shape whether a dispute is arbitrable.<h3>STAFFORD V. RITE AID CORPORATION</h3>The Parties’ Relationship and Claims at Issue:Plaintiff Byron Stafford filed a putative class action against Rite Aid Corporation, alleging that it had fraudulently inflated the reported prices of prescription drugs to insurance companies. This practice allegedly resulted in plaintiff and others being overcharged for co-payments to Rite Aid.<a href="#_ftn2" name="_ftnref2" id="_ftnref2">[2]</a> According to plaintiff, Rite Aid submitted claims for prescription drugs to the insurance company through its pharmacy benefits manager, who coordinated insurance reimbursements and co-payment calculations. The price on a claim form submitted to the pharmacy benefits manager allegedly determined the price that plaintiff was charged for his prescription drugs. Plaintiff claimed that because Rite Aid reported an improperly high price to the pharmacy benefits manager, Stafford paid more for the drugs than he should have. Based on these allegations, plaintiff asserted claims against Rite Aid under California’s Unfair Competition Law and the California Consumer Legal Remedies Act and for unjust enrichment and negligent misrepresentation.Rite Aid and plaintiff did not have a contract between them containing an arbitration clause. But, Rite Aid moved to compel arbitration based on the theory of equitable estoppel, arguing that plaintiff’s claims were intertwined with Rite Aid’s contracts with the pharmacy benefits managers, which contained arbitration clauses, and thus plaintiff’s claims were subject to arbitration. Under California law, plaintiffs can be bound by arbitration clauses in contracts they did not sign if the claims asserted are “dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement contained the arbitration clause.”<a href="#_ftn3" name="_ftnref3" id="_ftnref3">[3]</a>The Ninth Circuit Affirms the Denial of Rite Aid’s Motion to Compel:The district court denied Rite Aid’s motion to compel, finding that the principles of equitable estoppel did not bind plaintiff to the arbitration provisions in contracts he did not sign because his claims were based on Rite Aid’s alleged fraudulent actions rather than any breach of Rite Aid’s contracts with the pharmacy benefits managers. Rite Aid appealed, and the Ninth Circuit affirmed.The Ninth Circuit similarly held that equitable estoppel was inapplicable to plaintiff’s claims because he was not seeking damages for Rite Aid’s breach of its contracts with the pharmacy benefits managers, but rather for Rite Aid’s alleged fraud. The Ninth Circuit therefore found “irrelevant” Rite Aid’s contracts with the pharmacy benefits managers because “Rite Aid’s duty not to commit fraud is independent from any contractual requirements with the pharmacy benefits managers.”<a href="#_ftn4" name="_ftnref4" id="_ftnref4">[4]</a> Because plaintiff’s claims did not depend on Rite Aid’s contractual obligations, the Court held that equitable estoppel did not bind plaintiff to the arbitration agreements in contracts to which he was not a party.<h3>FRANKLIN V. COMMUNITY REGIONAL MEDICAL CENTER, ET AL.</h3>The Parties’ Relationship and Claims at Issue:The same day Stafford came out, the Ninth Circuit issued its opinion in Franklin, a putative wage and hour lawsuit asserting claims under the Fair Labor Standards Act and California law.<a href="#_ftn5" name="_ftnref5" id="_ftnref5">[5]</a> Plaintiff was employed as a nurse by staffing agency United Staffing Solutions Inc. (“USSI”), and USSI assigned her to work at the defendant hospital. USSI and plaintiff signed two arbitration agreements—one in her employment agreement and another in the assignment contract governing her wages, overtime, shifts, and reimbursements at the hospital. The hospital was not a signatory to either contract, and no contracts existed between either (a) the hospital and plaintiff or (b) the hospital and USSI. Instead, the hospital contracted with a managed service provider to source nursing staff like plaintiff, and the managed service provider in turn contracted with USSI to provide the nursing staff for the hospital. Under this multi-party arrangement, the hospital retained supervision over plaintiff, but did not pay her directly. Rather, the hospital paid the managed service provider, which then paid USSI, which then paid plaintiff for her work.<div align="center" style="margin-bottom: 15px;"><img src="https://media2.mofo.com/v3/images/blt5775cc69c999c255/blt1c85f96dfef80244/627315da8e09542a15b7de7b/210528-class-dismissed.gif?format=auto&quality=60" alt="Arbitration Chart" type="asset" sys-style-type="download"></div>In 2018, plaintiff filed a putative class and collective action against the hospital, alleging violations of the FLSA, California Labor Code, and California Unfair Competition law for the hospital’s purported failure to pay plaintiff for work she performed during meal breaks and off the clock, failure to provide accurate itemized wages statements, and failure to reimburse her for travel expenses. The hospital moved to compel arbitration of plaintiff’s claims.The Ninth Circuit Affirms the Compelling Plaintiff’s Claims to Arbitration:The district court granted the hospital’s motion to compel arbitration under the theory of equitable estoppel. It found that even though the hospital was a non-signatory to the arbitration provisions between Franklin and USSI, plaintiff’s statutory claims against the hospital were intimately founded in and intertwined with her contracts with USSI. Plaintiff appealed, and the Ninth Circuit affirmed.The Ninth Circuit ultimately followed the California Court of Appeal’s decision in Garcia v. Pexco, LLC, 217 Cal. Rptr. 3d 793 (Ct. App. 2017), which held that an employee’s Labor Code claims against a staffing agency’s non-signatory client were subject to arbitration because they were “intimately founded in and intertwined with” his employment contract with the staffing agency that contained binding arbitration provisions. The Ninth Circuit in Franklin found that “[i]t does not matter that Franklin’s allegations are leveled only at the Hospital and not USSI” because “[i]n matters of equity, such as the application of equitable estoppel, it is the substance of the plaintiff’s claim that counts, not the form of its pleading.”<a href="#_ftn6" name="_ftnref6" id="_ftnref6">[6]</a> Based on the allegations and claims asserted in the complaint, the Court found that plaintiff’s employment with USSI “is central to her claims.”<a href="#_ftn7" name="_ftnref7" id="_ftnref7">[7]</a> Because USSI was responsible for various employment practices plaintiff alleged were violated (including paying her), and plaintiff’s other claims required reference to the terms of her contracts with USSI, plaintiff could not avoid arbitration simply because she had sued only the hospital and omitted any mention of USSI in her complaint.<h3>TAKEAWAYS</h3>Stafford and Franklin are reminders that the way a company structures its business and contractual relationships can subject even the most carefully drafted arbitration provisions to an uncertain future. Applying the same principles of equitable estoppel, the Stafford court found the plaintiff’s fraud-based claims were not subject to arbitration, while the Franklin court found the plaintiff’s employment-related claims must be arbitrated. These two decisions—issued the same day by the same Court (albeit different panels of judges)—demonstrate the fact-specific analysis involved if a motion to compel is not based on a direct agreement containing an arbitration provision between the plaintiff and defendant.Morrison & Foerster’s Class Actions and Mass Torts attorneys have advised companies on a variety of arbitration-related issues. They can provide further insights on these recent court decisions, share best practices, and help draft and present arbitration provisions based on the needs of your business.<a href="#_ftnref1" name="_ftn1" id="_ftn1">[1]</a> See, e.g., our October 2020 post on how appellate courts have addressed “delegation clauses” in arbitration agreements. Available at <a href="https://classdismissed.mofo.com/topics/recent-appellate-decisions-on-delegation-clauses-arbitration-agreements.html">https://classdismissed.mofo.com/topics/recent-appellate-decisions-on-delegation-clauses-arbitration-agreements.html</a>.<a href="#_ftnref2" name="_ftn2" id="_ftn2">[2]</a> See generally Stafford v. Rite Aid Corp., No. 20-55333, 2021 WL 2024511 (9th Cir. May 21, 2021).<a href="#_ftnref3" name="_ftn3" id="_ftn3">[3]</a> Id. at *3 (quoting Goldman v. KPMG, LLP, 92 Cal. Rptr. 3d 534, 542 (Ct. App. 2009)).<a href="#_ftnref4" name="_ftn4" id="_ftn4">[4]</a> Id. at *4.<a href="#_ftnref5" name="_ftn5" id="_ftn5">[5]</a> See generally Franklin v. Cmty. Reg'l Med. Ctr., No. 19-17570, 2021 WL 2024516 (9th Cir. May 21, 2021).<a href="#_ftnref6" name="_ftn6" id="_ftn6">[6]</a> Id. at *6.<a href="#_ftnref7" name="_ftn7" id="_ftn7">[7]</a> Id.