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.

Social

Search

Editors

hunt_adam_blog_150x150.png

hunt_adam_common_640x280.jpg

hunt_adam_heroretina_2700x1160.jpg

hunt_adam_mobileretina_750x1040.jpg

hunt_adam_social_600x600.jpg

Partner

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

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.

preece_alex_blog_150x150.png

preece_alex_common_640x280.jpg

preece_alex_heroretina_2700x1160.jpg

preece_alex_mobileretina_750x1040.jpg

preece_alex_social_600x600.jpg

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

<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).

preovolos_penelope_blog_150x150.png

preovolos_penelope_common_640x280.jpg

preovolos_penelope_heroretina_2700x1160.jpg

preovolos_penelope_mobileretina_750x1040.jpg

preovolos_penelope_social_600x600.jpg

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

Zak is an associate in the Litigation Department in Morrison Foerster’s New York office.Zak’s practice focuses on class actions, commercial litigation, white collar defense, government investigations, and antitrust litigation and counseling. He has represented clients before federal and state courts in complex commercial matters, as well as in arbitration tribunals.Zak received his J.D. from New York University School of Law in 2018, where he was inducted into the Order of the Barristers. During law school, Zak also served as the Marden executive editor for the NYU Law Moot Court Board. In 2013, Zak received his B.A. and M.A. in political science from Yale University, receiving honors in his major and the Ellsworth Prize for Best Senior Essay in the Social Sciences.

newman_zak_blog_150x150.png

newman_zak_common_640x280.jpg

newman_zak_heroretina_2700x1160.jpg

newman_zak_mobileretina_750x1040.jpg

newman_zak_social_600x600.jpg

Associate

Zak Newman

Mitchell A. Hokanson is an associate in the Litigation Department of Morrison Foerster’s San Diego office.Mitchell’s practice focuses on commercial litigation and consumer class actions. He has extensive experience with civil litigation, including managing day-to-day strategy, propounding and responding to discovery, taking and defending depositions, and engaging in motion practice. He also has experience providing regulatory advice to clients, including pro bono partners and multinational corporations. Mitchell maintains an active pro bono practice.After law school, Mitchell worked as a judicial clerk for Justice Susan M. Carney of the Alaska Supreme Court, where he drafted bench memoranda and opinions on a wide range of state and federal law topics. Prior to joining MoFo, Mitchell worked for another international law firm, where he was a member of the Complex Civil Litigation practice group, in Los Angeles, California.Mitchell received his J.D. from Columbia Law School, where he was honored as a James Kent Scholar and Harlan Fiske Stone Scholar. While in law school he was the senior executive editor of the Columbia Journal of Environmental Law and worked as a judicial intern for Judge Sandra S. Ikuta of the United States Court of Appeals for the Ninth Circuit and Judge George B. Daniels of the United States District Court, Southern District of New York. Prior to that, Mitchell earned his B.A. from Stanford University.

hokanson_mitchell_blog_150x150.png

hokanson_mitchell_common_640x280.jpg

hokanson_mitchell_heroretina_2700x1160.jpg

hokanson_mitchell_mobileretina_750x1040.jpg

hokanson_mitchell_social_600x600.jpg

Mitchell Hokanson

favicon.ico

favicon-16x16.png

favicon-32x32.png

apple-touch-icon.png

MoFo Favicons

Morrison Foerster’s Class Dismissed blog provides insights and reports on the latest news, developments, and trends that affect consumer-facing companies. Subscribe to receive the latest updates by attorneys from our nationally recognized Consumer Class Action and Product Liability practices.

Welcome to Class Dismissed

class-dismissed-welcome-image.jpeg

class-dismissed-welcome-image

Morrison Foerster’s Class Dismissed blog provides insights and reports on the latest news, developments, and trends that affect consumer-facing companies. 

Class Action

Blog - Terms of Use

Blog - Privacy Policy

Blog - Blog Disclaimer

Blog - Attorney Advertising

morrison-foerster-blog-logo.png

Brings together legal insights and in-depth analyses on trends and complex issues shaping the global technology industry.

MoFo Tech

Equips our clients with the most up-to-date and relevant information on employment and labor law issues.

Employment Law Commentary

Stay on top of emerging issues and stay informed of developments related to the law and business of social media.

Socially Aware

In-depth analysis of developments and trends impacting government contracting.

Government Contracts Insight

The latest news and insights from the nationally recognized Consumer Class Action and Product Liability practices of Morrison & Foerster.

Class Dismissed

  Linkedin

MoFo LinkedIN

Class Dismissed Blog - RSS

Stay Connected

By submitting your data to subscribe to this blog, you approved Morrison & Foerster LLP to email you future information about MoFo news and events. You may opt-out at any time by sending a request to <a href="mailto:mofonews@mofo.com">mofonews@mofo.com</a>. To learn more about how Morrison & Foerster LLP uses and protects your personal data, please view our <a href="https://www.mofo.com/about/privacy-policy.html">Privacy Policy</a> at <a href="https://www.mofo.com/">www.mofo.com</a>.

Never miss a post from Class Dismissed. Enter your email below to stay up-to-date.

Subscribe

Class Action and Product Insights for Your Business

Morrison Foerster - Footer

Blogs -  Home Button

Home

Blog - Topics

TCPA

Topics

Blog - Editors

Blog - About

About

Blog - Subscribe

Adam J. Hunt

More

Alexandra Preece Barlow

Mitchell A. Hokanson

Software Gains New Status as a Product Under Strict Liability Law

MAHA Commission Publishes Report to Highlight Childhood Chronic Disease Drivers

Tenth Circuit Denies Challenge to CPSC Rule Regulating High-Powered Magnets

Ousted CPSC Democrats Fight Back Against President Trump

Setting Consumer Standards for Lithium-Ion Batteries Act

LinkedIN

If a company enters an arbitration agreement with a consumer, can its future affiliate companies enforce the arbitration agreement even though the affiliate relationship did not exist at the time the consumer signed the agreement? The Ninth Circuit recently answered “no” in Revitch v. DIRECTV, LLC, __ F.3d __, 2020 WL 5814095 (9th Cir. Sept. 30, 2020), creating a split with the Fourth Circuit. The plaintiff, Jeremy Revitch, alleged that DIRECTV, a satellite television services company, placed prerecorded telemarketing calls to his mobile phone without his consent and in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”). He filed a class action complaint against DIRECTV in 2018. Revitch did not have a service agreement with DIRECTV. He did, however, have a contract for mobile phone wireless services with AT&T Mobility LLC (“AT&T Mobility”) that contained an arbitration agreement, which he entered in 2011. The arbitration agreement provided that “AT&T [Mobility] and you agree to arbitrate all disputes and claims between us. This agreement to arbitrate is intended to be broadly interpreted. It includes, but is not limited to . . . claims arising out of . . . any aspect of the relationship between us, whether based in . . . statute . . . or any other legal theory.”  2020 WL 5814095, at *11. The contract’s definition of AT&T Mobility included all “affiliates.” Id. at *2. AT&T Mobility and DIRECTV became “affiliates” (i.e., companies under common ownership) in 2015 when AT&T Mobility’s parent company, AT&T, Inc., acquired DIRECTV. Accordingly, DIRECTV moved to compel arbitration of Revitch’s complaint pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1–16 (“FAA”). The district court denied the motion on the ground that the arbitration agreement between Revitch and AT&T Mobility did not reflect the parties’ intent to arbitrate his claim against DIRECTV. DIRECTV appealed.The Ninth Circuit affirmed, holding that a valid agreement to arbitrate did not exist between Revitch and DIRECTV, a satellite television company that became an affiliate of AT&T Mobility three years after Revitch signed the wireless services contract containing the arbitration agreement. 2020 WL 5814095, at *5. The court reasoned that “absurd results follow from DIRECTV’s preferred interpretation,” which would require Revitch “to arbitrate any dispute with any corporate entity that happens to be acquired by AT&T, Inc., even if neither the entity nor the dispute has anything to do with providing wireless services to Revitch—and even if the entity becomes an affiliate years or even decades in the future.” Id. at *4. It thus affirmed based on its application of California’s “absurd results” canon of contract construction.   Judge O’Scannlain penned a concurring opinion, suggesting that even if the court analyzed the issue in terms of whether the arbitration clause in Revitch’s contract with AT&T Mobility encompassed his TCPA claim against DIRECTV, rather than asking whether a valid agreement to arbitrate exists between Revitch and DIRECTV, the court still would deny DIRECTV’s motion to compel arbitration. Judge O’Scannlain reasoned that, under the FAA, the claim to be settled by arbitration “must be one ‘arising out of’ the contract or transaction. By negative implication, the FAA does not require the enforcement of an arbitration clause to settle a controversy that does not arise out of the contract or transaction.” 2020 WL 5814095, at *7. Because, in his view, Revitch’s TCPA suit based on allegedly unsolicited advertisements for DIRECTV’s satellite television services is unrelated to Revitch’s contract for wireless services with AT&T Mobility, the suit does not “aris[e] out of” the contract and is not subject to the FAA. Id. at *10.Judge Bennett dissented, explaining that because “[n]either party disputes the existence and validity of the arbitration clause on which DIRECTV . . . relies,” the issue before the court is not one of contract formation, but one of scope: “‘whether the agreement encompasses the dispute at issue.’” Id. (citation omitted). In his view, “affiliates” includes DIRECTV because “[n]othing in the arbitration clause or in the dictionary definition of the word ‘affiliate’ confers any type of temporal scope to the term so that ‘affiliates’ should be read to refer only to present affiliates.” Id. at *11. “Because Revitch agreed to arbitrate ‘all disputes and claims,’” DIRECTV may compel arbitration under the agreement. Judge Bennett further noted that, “[e]ven if some ambiguity exists,” Supreme Court precedent would require the court to construe the agreement to apply to future affiliates and enforce the arbitration clause. Id. at *10 (citing Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1418 (2019) (“[A]mbiguities about the scope of an arbitration agreement must be resolved in favor of arbitration.”)). He further reasoned that the majority’s application of California’s “absurd results” canon disfavors arbitration agreements compared to other contracts and, therefore, contravenes the Supreme Court’s precedent in AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 341–42 (2011). 2020 WL 5814095, at *13.The Ninth Circuit’s decision creates a circuit split on this issue. Just two months ago, in a case involving substantially similar facts and the same arbitration clause, the Fourth Circuit concluded that the consumer-plaintiff formed an agreement to arbitrate with DIRECTV and that her TCPA claim “fit within the broad scope of that agreement, construed, as it must be, to favor arbitration.” Mey v. DIRECTV, LLC, 971 F.3d 284, 286 (4th Cir. 2020). Like Judge Bennett’s dissent, the Fourth Circuit concluded that the arbitration agreement “contains no explicit limitation on the term [affiliates],” and the term’s ordinary meaning includes present and future affiliates. Id. The Fourth Circuit thus concluded that plaintiff Mey formed an agreement to arbitrate with DIRECTV. Further, considering the arbitration agreement’s broad language (i.e., requiring arbitration of “all disputes and claims between us”), and applying the presumption in favor of arbitrability, the court concluded it must enforce the arbitration agreement. Id.Practice Pointers to Takeaway<ul><li>A company’s ability to rely on an arbitration clause in a later-acquired affiliate’s service agreement with a consumer will depend on the jurisdiction. Courts within the Fourth Circuit may enforce such arbitration agreements where the companies did not become affiliates until after the agreement was entered, while courts within the Ninth Circuit may not. It remains to be seen how other circuits will come out. </li></ul><ul><li>Companies should consider drafting arbitration clauses to cover future affiliates and subsidiaries expressly, since the Ninth Circuit opined that “[h]ad the wireless services agreement stated that ‘AT&T’ refers to ‘any affiliates, both present and future,’ we might arrive at a different conclusion.” Revitch, 2020 WL 5814095, at *4 (emphasis added).</li></ul><ul><li>In courts within the Ninth Circuit, all things being equal, a company’s future “successors” or “assignees” likely would have an easier time enforcing an arbitration agreement than a future “affiliate” would since an arbitration agreement’s reference to a “successor” or “assignee” necessarily contemplates an unknown future event. This is something to keep in mind when structuring acquisitions.</li></ul><ul><li>Finally, the court may have reached a different outcome if either DIRECTV or its dispute with Revitch had been materially related to the services provided under Revitch’s wireless services agreement with AT&T Mobility. In that regard, the enforcement of an arbitration agreement by an after-acquired affiliate likely is not entirely foreclosed in the Ninth Circuit.</li></ul>

10_12_classdismissed_blogimage1.jpg

Does a Consumer Arbitration Agreement Apply to a Company’s Future Affiliates? The Ninth and Fourth Circuits Disagree

Does a Consumer Arbitration Agreement Apply to a Company’s Future Affiliates? The Ninth and Fourth Circuits Disagree

10_12_classdismissed_blogimage.jpg

10_12_classdismissed_blogimage

If a company enters an arbitration agreement with a consumer, can its future affiliate companies enforce the arbitration agreement even though the affiliate rel

Consumer Products

Arbitration

While the use of masks to combat the spread of COVID-19 has become a politicized issue in the United States, the scientific community largely agrees that wearing face coverings is one of the most effective ways to slow infections.[1] State and local governments have issued orders requiring residents to wear masks in public, with some advising employers to provide their employees with face coverings or reimburse the reasonable cost of obtaining one.[2] Governor Gavin Newsom of California, for example, has issued a number of mandates to slow infections. One of those mandates is that all individuals must wear a mask or face covering in public or common spaces statewide. Federal agencies such as the CDC and OSHA have issued non‑binding guidelines that also advise people to wear masks in public.[3]It might seem that as long as businesses comply with these federal, state, and local requirements and guidelines regarding masks, they can expect to be shielded from lawsuits related to their mask-related policies.[4] A few recently filed putative class action lawsuits, however, show that plaintiffs and their attorneys are nevertheless seeking ways to turn mask issues into litigation.Mask-Related Lawsuits Alleging Violations of the Americans with Disabilities Act (“ADA”)The ADA prohibits discrimination against people with disabilities in employment (Title I)[5] and in places of public accommodation (Title III).[6] In recent months, several plaintiffs alleging disabilities have filed lawsuits claiming that businesses they have frequented violated Title III of the ADA by denying the plaintiffs public accommodations due to the businesses’ mask policies.First, on July 30, 2020, Cali Bunn, who alleges that she suffers from a severe hearing loss, filed a class action complaint against Nike, Inc. in San Francisco County Superior Court.[7] According to Bunn, she relies on lip reading and visual cues to understand speech. Bunn alleges that while she was visiting a Nike store in San Diego, she had difficulty understanding the salesperson because the salesperson wore a face mask. Bunn alleges she felt embarrassed and was deprived of “friendly and personalized customer service” due to her disability.[8]Then, on August 21, 2020, more than 60 plaintiffs filed a complaint against Giant Eagle, Inc. and C&J Grocery Co., LLC (owner and operator of a Giant Eagle store) (“Giant Eagle”) in the Western District of Pennsylvania.[9] The plaintiffs allege they suffer from respiratory limitations, asthma, nervous system issues, and/or post-traumatic stress disorder, among other conditions, which allegedly prevents them from being able to wear masks. The plaintiffs further allege that Giant Eagle employees refused to allow them to shop at the Giant Eagle stores and asked them to leave because they were not wearing masks. Plaintiffs also claim that “there was no significant risk to the health or safety of others if Giant Eagle modified its policies, practices and procedures” by allowing them to shop without masks and noted that the CDC acknowledged “the need for a medical exception to the mask requirement.”[10]These lawsuits show that businesses should give careful thought to balancing the need to comply with applicable federal, state, and local orders and guidelines regarding the use of masks and providing reasonable accommodations for people with disabilities under the ADA. There is no one-size-fits-all approach for striking the right balance between complying with the ADA and efforts to stop the spread of COVID-19. Companies should consider what alternatives for patrons with disabilities are reasonable and economically feasible based on the nature of their public‑facing businesses. Options for customers and other visitors whose disabilities prevent them from wearing masks may include, where feasible, providing expanded curbside, online, or other contactless services.Employee Lawsuits Regarding Face Mask PoliciesCompanies should also consider that the mask-related policies they adopt and enforce for their customers may not be the right fit for their employees. In recent months, employees have filed suit against their employers seeking damages for allegedly dangerous working conditions related to COVID-19. Some of these claims are based on purportedly unsafe mask practices.For example, on May 19, 2020, employees and their family members filed a putative class action lawsuit in Illinois state court against the McDonald’s Corporation and a subsidiary alleging claims for public nuisance and negligence due to the alleged failure of McDonald’s to maintain adequate COVID-19 safety protocols.[11] The employees allege that in some McDonald’s restaurants, workers do not regularly wear masks.[12] The employees further allege that they each were provided with only one mask, which became dirty after multiple uses. The court granted in part plaintiffs’ emergency motion for a preliminary injunction. The court found that although a McDonald’s subsidiary provided employees with a sufficient number of masks, the subsidiary was not enforcing its mask policy or complying with the Illinois Governor’s mask requirements. The court ordered the McDonald’s subsidiary to train employees on social distancing in a manner consistent with the Governor’s executive order and enforce mask wearing policies when employees are not six feet apart.COVID-19 presents a new safety concern for employers. Consulting with counsel can help determine what safeguards can and should be implemented in the workplace. Depending on the nature of the work and workplace, issues employers may want to consider could include remote work options, flexible return-to-work plans, appropriate and feasible return-to-work logistics, and reasonable accommodations for vulnerable groups.Key TakeawaysWith so many constituents, businesses may feel as if they are caught between a rock and a hard place. On one hand, customers are suing businesses for requiring them to wear masks. On the other hand, employees are suing them for not enforcing mask-related policies and guidelines. In developing their COVID-19 protocols, businesses must simultaneously consider their obligations as public accommodations to customers and other visitors and their obligations as employers. Doing so requires not only knowledge of applicable rules and guidance but also an eye toward flexibility.Morrison & Foerster’s <a href="https://www.mofo.com/capabilities/class-actions-mass-torts.html">Class Action + Mass Torts Group</a>, <a href="https://www.mofo.com/capabilities/employment-labor.html">Employment + Labor Group</a>, and Coronavirus Task Force have advised and represented many clients on developing COVID-19 protocols and emerging claims related to COVID-19. To stay a step ahead, our team continuously analyzes newly filed lawsuits as well as COVID-19 government orders, guidance, and trends. [1] “Use of Masks to Help Slow the Spread of COVID-19.” Centers for Disease Control and Prevention. Accessed September 16, 2020. [2] “Industry Guidance to Reduce Risk.” Coronavirus COVID-19 Response. California, State Government. Accessed September 16, 2020. <a href="https://covid19.ca.gov/industry-guidance/">https://covid19.ca.gov/industry-guidance/</a>.[3] “Use Masks to Help Slow Spread.” Centers for Disease Control and Prevention. Centers for Disease Control and Prevention. Accessed September 16, 2020. See also United States Department of Labor. COVID-19 Frequently Asked Questions, Occupational Safety and Health Administration. Accessed September 16, 2020. [4] The HEALS Act, the Senate’s July proposed stimulus package, included the SAFE TO WORK Act, which, if enacted, would create a broad liability shield for employers and businesses faced with coronavirus exposure claims as well as certain other specified coronavirus-related claims. Safeguarding America’s Frontline Employees to Offer Work Opportunities Required to Kickstart the Economy Act (“SAFE TO WORK ACT”), S.4317, 116th Cong. (2020); see also “The SAFE TO WORK Act: An In-Depth Guide for Employers to the Senate’s Proposed Coronavirus Liability Shield.” Morrison & Foerster LLP. Accessed September 17, 2020. <a href="https://www.mofo.com/resources/insights/200811-safe-to-work-act.html">https://www.mofo.com/resources/insights/200811-safe-to-work-act.html</a>. With the House and Senate unable to agree on a stimulus package, the SAFE TO WORK Act has thus far not progressed past its assignment to the Senate Judiciary Committee on July 27, 2020. In the meantime, several states (not including California) have enacted legislation shielding businesses from civil liability for COVID-19-related injuries, losses, or deaths. [See, e.g. COVID-19 Liab. Safe Harbor, 2020 N.C. ALS 89, 2020 N.C. Sess. Laws 89, 2020 N.C. Ch. 89, 2019 N.C. HB 118, enacted, July 2, 2020; Georgia COVID-19 Pandemic Business Safety Act, 2020 Ga. ALS 588, 2020 Ga. Laws 588, 2020 Ga. Act 588, 2020 Ga. SB 359, enacted August 5, 2020; and 2020 Bill Text NV S.B. 4B, enacted August 11, 2020.][5] 42 U.S.C. §§ 12111-12117.[6] 42 U.S.C. § 12182(a).[7] Cali Bunn v. Nike, Inc., (S.F.Super.Ct., Jul. 30, 2020, No. CGC-20-585683) 2020 WL 4383483.[8] See Bunn Compl. ¶ 11.[9] Second Amended Consolidated Complaint, Pletcher v. Giant Eagle, Inc., No. 2:20-cv-754 NBF (W.D. Pa. Aug. 21, 2020), ECF No. 32.[10] See Pletcher SACC ¶ 290.[11] Massey v. McDonald’s Corp. et al., No. 20 CH 4247, 2020 Ill. Cir. LEXIS 465 (Ill. Cir. Ct. June 24, 2020).[12] See Complaint, Massey v. McDonald’s Corp. et al., No. 20 CH 4247 at ¶ 81 (Ill. Cir. Ct. June 24, 2020).

sosa-acosta_michelle_blog_150x150.png

sosa-acosta_michelle_common_640x280.jpg

sosa-acosta_michelle_heroretina_2700x1160.jpg

sosa-acosta_michelle_mobileretina_750x1040.jpg

sosa-acosta_michelle_social_600x600.jpg

Michelle Sosa-Acosta is an associate in the  Securities Litigation, Securities Enforcement, and Investigations + White Collar Defense Groups in Morrison Foerster’s San Francisco office. 

Michelle Sosa-Acosta

02_28_elc_blog_600px_v2_image.jpg

Are You Covered? Warnings From Recent Face Mask Litigation

Using Waivers to Curb COVID-19 Legal Exposure

While the use of masks to combat the spread of COVID-19 has become a politicized issue in the United States, the scientific community largely agrees that wearin

Are You Covered? Warnings From Recent Face Mask Litigation

Coronavirus (COVID-19)

Along with making their advertising materials eye-catching and influential, consumer‑facing companies need to ensure that their representations about products and services comply with advertising laws. This article discusses basic advertising law, some things to avoid and some things to do. Although every state has its own consumer protection laws, our focus is on federal and California law.This article was originally published in Today’s General Counsel on September 15, 2020. The full article is available on pages 24–26 of the <a href="https://issuu.com/todaysgc/docs/tgc_fa20_issuu?fr=sMjBhNDI5ODIwMg" target="_blank">fall digital issue</a>.

Energy Drink Manufacturer

Consumer Electronics MDL

Computer Power Management System Litigation

Run Them Sweet, LLC v. CPA Global Limited

Online Billing Practices Class Action

Lipitor Antitrust Litigation

American Booksellers Association v. Barnes &amp; Noble, Inc.


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 pro

Penelope Preovolos

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

vetesi_claudia_blog_150x150.png

vetesi_claudia_common_640x280.jpg

vetesi_claudia_heroretina_2700x1160.jpg

vetesi_claudia_mobileretina_750x1040.jpg

vetesi_claudia_social_600x600.jpg

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 mat

Claudia Vetesi

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

classdismissedblog-advertising.jpg

Advertising Checklist for In-House Counsel

Advertising Checklist for In-House Counsel

classdismissedblog-advertising

Along with making their advertising materials eye-catching and influential, consumer‑facing companies need to ensure that their representations about products a

False Advertising

Does a plaintiff who files a class action alleging false advertising have Article III standing to seek injunctive relief—even when that plaintiff is a past purchaser of the product, and therefore is aware of the defendant’s allegedly false statements regarding the product?The Ninth Circuit said “sometimes” in Davidson v. Kimberly-Clark Corp.[1] There, the plaintiff purchased wipes that the defendant described as “flushable,” but that plaintiff alleged caused severe damage to her home plumbing.[2] Although it was “a close question,” the Ninth Circuit held the plaintiff had pleaded enough to establish standing because she plausibly alleged that she wished to purchase truly flushable wipes and had no way of determining whether she could rely on the defendant’s “flushable” label without buying the product and flushing it.[3]Recently, in Berni v. Barilla S.p.A.,[4] the Second Circuit seemingly came out the other way. In Berni, the defendant changed the design, but not the size, of its pasta boxes.[5] The plaintiffs brought a putative slack-fill class action, alleging the new boxes contained less pasta than the old boxes.[6] The Second Circuit concluded that “future harm [was] not likely”—chiefly because these past pasta purchasers, once deceived, were “not bound to purchase [the] product again.”[7] And even if they did, as past purchasers, they are aware of how much pasta is in the new boxes. The requested injunction “[would] not materially improve their position as knowledgeable consumers.”[8]Some commentators have indicated that these decisions are irreconcilable, creating a circuit split. We disagree. The Ninth Circuit’s holding in Davidson is narrower than it first appears. The court found that a false advertising plaintiff suffers an enjoinable injury when she plausibly continues to be unable to tell from the product or its packaging whether the statements at issue were false.Several district courts in the Ninth Circuit have made this point clear, distinguishing Davidson where plaintiff could not plausibly allege continuing deception. For example, these courts have dismissed false advertising claims on grounds that the plaintiff lacked standing because:<ul><li>the defendant’s products’ nutrition labels informed the plaintiff whether the products actually contained real white chocolate;[9]</li><li>the plaintiff could “easily determine the number of pretzels in each package by simply reading the label” or “could feel the bag to determine whether it is filled with pretzels or air”;[10]</li><li>the plaintiff alleged he was now aware what “No Sugar Added” meant;[11] or</li><li>the plaintiff admitted she now knew how the defendant calculated net carbs.[12]</li></ul>As these courts explained, “Unlike Davidson, where plaintiff could not know without purchasing the flushable wipes whether the wipes were truly flushable, [the plaintiffs] do not need to purchase the [p]roducts again in order to know whether” the defendants allegedly misrepresented product information.[13] So too in Berni. There, the plaintiffs could not plausibly assert that they were unable to tell how much pasta was in the new packages after having purchased the product with both the old and new product designs.Note too that Davidson was an appeal from a motion to dismiss, while Berni was an appeal from a final class settlement judgment. The Davidson court had to take the plaintiff at her word (and still acknowledged it was “a close question”); the Berni court could look further at the facts. Moreover, in Berni, the district court had certified a settlement class. Yet as the court pointed out, “a class may not be certified under Rule 23(b)(2) if any class member’s injury is not remediable by the injunctive or declaratory relief sought.”[14] “[T]here is no reason to believe that all, or even most, of the class members—having suffered the harm alleged—will choose to buy it in the future.”[15] Even if they did, the “next time they buy one of the newer pastas, they will be doing so with exactly the level of information that they claim they were owed from the beginning.”[16]Although there is some tension between Davidson and Berni, there is not as much distance between the cases as it might seem. Regardless of where they file suit, plaintiffs and class members seeking injunctive relief for their false advertising claims must satisfy Article III’s requirements.[1] 889 F.3d 956 (9th Cir. 2018).[2] Id. at 961–62.[3] See id. at 970–72.[4] 964 F.3d 141 (2d Cir. 2020).[5] Id. at 143–44.[6] Id. at 144.[7] Id. at 147.[8] Id. at 148.[9] Joslin v. Clif Bar & Co., No. 4:18-cv-04941-JSW, 2019 WL 5690632, at *4 (N.D. Cal. Aug. 26, 2019).[10] Cordes v. Boulder Brands USA, Inc., No. CV 18-6534 PSG (JCx), 2018 WL 6714323, at *4 (C.D. Cal. Oct. 17, 2018).[11] Rahman v. Mott’s LLP, No. 13-cv-03482-SI, 2018 WL 4585024, at *3 (N.D. Cal. Sept. 25, 2018).[12] Fernandez v. Atkins Nutritionals, Inc., No. 3:17-cv-01628-GPC-WVG, 2018 WL 280028, at *14 (S.D. Cal Jan. 3, 2018).[13] See Joslin, 2019 WL 5690632, at *4.[14] Berni, 964 F.3d at 146.[15] Id. at 148.[16] Id.

class_dismissed_blog_image_600px_shutterstock_587209007_thumbnail.jpg

Fool Me Once, No Injunctive Relief on Behalf of a Class of Purchasers

Fool Me Once, No Injunctive Relief on Behalf of a Class of Purchasers

class_dismissed_blog_image_600px_shutterstock_587209007_image.jpg

Does a plaintiff who files a class action alleging false advertising have Article III standing to seek injunctive relief—even when that plaintiff is a past purc

The Ninth Circuit recently issued an opinion holding that district courts usually need not engage in rigorous analysis under the predominance inquiry of Rule 23(b)(3) before certifying a settlement class. In Jabbari v. Farmer,[1] the Ninth Circuit affirmed the district court’s certification of a settlement class that asserted both a federal claim and state law claims, rejecting objectors’ protests that differences in state law claims precluded certification. The Ninth Circuit’s decision clarifies what the court recognized was a “blurred” standard under its prior decisions and confirms that a more relaxed predominance analysis applies when certifying a settlement class.Case BackgroundShahriar Jabbari alleged that Wells Fargo’s pattern of setting unachievably high sales quotas induced its employees to open multiple accounts in his and others’ names without their consent. The account then allegedly incurred fees, which were charged to the customers. The complaint alleged that because customers were unaware the new accounts existed, they did not pay the fees, resulting in calls from debt collectors seeking to collect on the unpaid fees. The nonpayment allegedly harmed the customers’ credit.Jabbari sued Wells Fargo in the Northern District of California in a putative class action, alleging violations of the federal Fair Credit Reporting Act (FCRA) and Electronic Fund Transfer Act; California statutory law; Arizona statutory law; and common law. The parties reached a class action settlement after a motion to dismiss was filed in the district court. But a group of objectors entered the fray, arguing that the court should not certify a settlement class due to differences in various state law claims asserted in the complaint. The district court certified the settlement class, however, and rejected the objectors’ arguments, remarking that because FCRA claim was “equally applicable in all states,” any differences among state laws did not preclude certification of the settlement class. Several objectors to the class settlement appealed to the Ninth Circuit.Ninth Circuit’s DecisionThe Ninth Circuit affirmed the district court’s certification of the settlement class. The court noted that although variations in state law can “complicate” the predominance analysis under Rule 23(b)(3), the Circuit’s previous decisions drew distinctions between the predominance inquiry required when certifying a class for trial and certifying a settlement class. For example, in Hanlon v. Chrysler Corp., the court affirmed certification of a settlement class that involved different states’ consumer protection laws without a choice-of-law analysis.[2] But another Circuit decision seemingly took a different tack. In Mazza v. Am. Honda Motor Co.,[3] the Ninth Circuit reversed a district court’s certification of a trial class in because the district court had applied California law despite material differences with the laws of other states.Recognizing that the line between Hanlon and Mazza was “blurred,” the Ninth Circuit sought to clarify the settlement-class predominance inquiry using its en banc decision in Hyundai. There, the district court had certified a class for settlement, finding that common questions predominated regarding the accuracy of Hyundai’s fuel-economy statements for its cars. A three-judge panel of the Ninth Circuit initially reversed, faulting the lack of a proper choice-of-law analysis and conflicting state laws. But the en banc Court of Appeals reversed, holding that for a settlement class, the district court “need not inquire whether the case, if tried, would present intractable management problems.” In addition, the full Ninth Circuit held that, despite any variance in state law, the common questions that the district court identified were sufficient to satisfy the predominance requirement for a settlement class.Applying Hyundai, the Ninth Circuit in Jabbari found that the district court did not abuse its discretion in certifying a settlement class. The court held that foregoing a choice-of-law analysis—already approved in this context in Hyundai—“applie[d] with even greater force” where the class was unified by a claim under federal law. In particular, the court reasoned that the FCRA claim was subject to collective proof, such as by showing Wells Fargo systematically and willfully obtained consumer reports unlawfully. Finally, the court held that the district court did not commit reversible error in finding that the FCRA claim would best drive the case to resolution, stating that district courts need not assess in a predominance inquiry the importance of every claim a class might assert.Key TakeawaysThe Jabbari decision confirms that, for settlement classes, courts can conduct a less stringent predominance inquiry and that settling parties now have one less theory favored by professional objectors to worry about. Would-be objectors will now have less fodder for attacking a district court’s predominance analysis. In particular, where a federal claim unifies the class, the existence of other possible state-law claims (even those subject to material differences) will likely not undermine certification for settlement, provided that the unifying claim can drive the resolution of the litigation. This makes sense given the judicial preference for settling cases, following a general trend across the circuits of narrowing the paths to object to (and in some cases, improperly thwart)[4] class action settlements.[1] 2020 WL 4046029 (9th Cir. Jul. 30, 2020).[2] 150 F.3d 1011 (9th Cir. 1998).[3] 666 F.3d 581 (9th Cir. 2012).[4] See, e.g., Pearson v. Target Corp., No. 19-3095, 2020 WL 4519053 (7th Cir. Aug. 6, 2020) (prohibiting private payments to settle objections to a class action settlement, what the court deemed colloquial “objector blackmail,” and ordering disgorgement of such payments).

02_21_employmentlaw_blog_v1-1_thumbnail.jpg

Ninth Circuit Confirms No Choice-of-Law Analysis Necessary to Certify Settlement Class

Ninth Circuit Confirms No Choice-of-Law Analysis Necessary to Certify Settlement Class

02_21_employmentlaw_blog_v1-1_image.jpg

The Ninth Circuit recently issued an opinion holding that district courts usually need not engage in rigorous analysis under the predominance inquiry of Rule 23

FCRA

The Ninth Circuit recently issued an opinion addressing standing and willfulness under the Fair Credit Reporting Act (FCRA). In Ramirez v. TransUnion,[1] the Ninth Circuit affirmed a jury verdict and punitive damages award, although it reduced those damages by a third. The court held for the first time that “each class member must have standing to recover damages,” but also found that the class members’ standing need not be demonstrated at the class certification stage and that the class members had standing even if their credit reports had not been shared with any third party. In addition, the court looked to a prior court ruling against the defendant involving the same issues in finding the violations were willful and warranted the award of punitive damages.Case Background Sergio Ramirez alleged he was unable to buy a car because his credit report indicated he was on an Office of Foreign Assets Control (OFAC) terrorist watch list. TransUnion sent Ramirez a report without this information and with a conflicting letter indicating his name did match a name on the watch list. It turns out he was not on the watch list, but someone else with the same first and last name was on that list.In 2012, Ramirez filed a lawsuit against TransUnion in the Northern District of California, seeking to represent a nationwide class of consumers whom TransUnion had falsely identified as being on the terrorist watch list, alleging willful failure to use reasonable procedures to prevent false positives and related claims. The court certified a class, and a jury then ruled against TransUnion on all claims, awarding the class approximately $8 million in statutory damages and $52 million in punitive damages. TransUnion appealed to the Ninth Circuit.Ninth Circuit DecisionStandingFor the first time, the Ninth Circuit announced that “every member of a class certified under Federal Rule of Civil Procedure 23 must satisfy the basic requirements of Article III standing at the final stage of a money damages suit when class members are to be awarded individual monetary damages.”[2] The court found that each of the 8,185 class members had standing regardless of whether a third party accessed their credit reports. Judge McKeown agreed that all members of a damages class should have standing at trial, but she dissented in part because no evidence in the record supported finding a “serious likelihood of disclosure.”Willful Violation and PunitivesThe Ninth Circuit rejected TransUnion’s arguments that its conduct was based on reasonable but mistaken interpretations of the statute. The panel relied heavily on an earlier Third Circuit decision addressing the same product, where that court rejected TransUnion’s argument that the product was not covered by the FCRA and explained how to reduce false matches. As the Ninth Circuit explained, “TransUnion was provided with much of the guidance it needed to interpret its obligations under FCRA with respect to OFAC alerts back in 2010,” but “[d]espite this warning, TransUnion continued to use problematic matching technology and treat OFAC information as separate from other types of information on consumer reports.”[3] The court relied on TransUnion’s failure to implement the Third Circuit’s guidance in finding the FCRA violations were willful.The Ninth Circuit characterized TransUnion’s delay in making policy changes as “reprehensible”[4] in affirming the award of punitive damages. The court found the amount of the award was constitutionally excessive, though, and reduced it from $52 million to $32 million.TransUnion’s petition for rehearing en banc was denied on April 8, 2020.[5] On April 15, 2020, the court stayed its mandate for 90 days pending TransUnion’s filing of a petition for writ of certiorari.[6]Key TakeawaysStanding. The court emphasized that its decision did not change the showing required at class certification It noted that “district courts and parties should keep in mind that they will need a mechanism for identifying class members who lack standing at the damages phase.”[6]  Defendants should consider how this analysis impacts arguments in opposing class certification.Willful Violations and Punitives. The court’s analysis underscores the importance of staying on top of court rulings, particularly at the appellate level. Although TransUnion had made some changes to its OFAC notifications in accordance with the Third Circuit’s Cortez decision, under the facts of this case, the Ninth Circuit appeared to find its actions to be too little too late. Courts and juries rarely award punitive damages in FCRA suits,[7] but the prior appellate ruling and hot button terrorist watch-list topic appears to have made this case the exception.­­­­­­­­­­­­­­­[1] Ramirez v. TransUnion LLC, 951 F.3d 1008, 1016 (9th Cir. 2020).[2] Id. at 1017.[3] Id. at 1032.[4] Id. at 1037.[5] Ramirez v. TransUnion LLC, No. 17-17244, 2020 U.S. App. LEXIS 11100, at *2 (N.D. Cal. Apr. 8, 2020).[6] Ramirez v. TransUnion LLC, No. 17-17244, 2020 U.S. App. LEXIS 12024, at *1 (N.D. Cal. Apr 25, 2020).[7] Austin Krist, “<a href="https://columbialawreview.org/wp-content/uploads/2016/02/December-2015-10-Krist-CORRECTED.pdf">Large-Scale Enforcement of the Fair Credit Reporting Act and the Role of the State Attorneys General</a>,” Columbia Law Review, Vol. 115:2311, p. 2322 (characterizing punitive damages awards in FCRA suits as “rare”).

shutterstock_631603847_600x400-1_thumbnail.jpg

Ninth Circuit Addresses FCRA Standing Analysis and Emphasizes Importance of Remedial Measures

Ninth Circuit Addresses FCRA Standing Analysis and Emphasizes Importance of Remedial Measures

shutterstock_631603847_600x400-1_image.jpg

The Ninth Circuit recently issued an opinion addressing standing and willfulness under the Fair Credit Reporting Act (FCRA). In Ramirez v. TransUnion,[1] the Ni

Appellate & Supreme Court

Earlier this month, the Ninth Circuit held that state law cannot expand or confine a federal court’s power to issue equitable restitution because federal courts are bound by traditional equitable principles, which require, among other things, a showing of an inadequate remedy at law. Thus, the Ninth Circuit affirmed the district court’s dismissal of plaintiff’s claims for restitution where she failed to establish an inadequate legal remedy.[1]Plaintiff sought to avoid a jury trial by voluntarily dismissing her damages claim and instead seeking to try her equitable restitution claims to the court.Plaintiff Kathleen Sonner (“Sonner” or “plaintiff”) represented a certified class of California consumers who claimed that Premier’s Joint Juice did not provide the advertised joint health benefits. Plaintiff sought damages under the Consumer Legal Remedies Act (CLRA), restitution under California’s Unfair Competition Law (UCL) and the CLRA, and injunctive relief under the UCL and CLRA.After more than four years of litigation and on the eve of trial, Sonner sought leave to amend to voluntarily dismiss her CLRA claim for damages and proceed solely with claims for equitable restitution under the UCL and CLRA. The unorthodox move to dismiss a claim for money damages was motivated by plaintiff counsel’s desire to avoid a jury trial in favor of a bench trial. Plaintiff’s counsel advised the district court that it would continue to seek the same $32 million in equitable restitution that it sought as money damages under the CLRA. Premier opposed plaintiff’s eleventh-hour maneuver on the grounds that she had an adequate remedy at law (money damages under the CLRA) so plaintiff was prohibited from seeking equitable restitution. Premier advised the court that, if plaintiff were granted leave to amend, Premier would move to dismiss the equitable restitution claims.Although the district court granted plaintiff leave to file an amended complaint and vacated the jury trial, the judge strongly cautioned plaintiff’s counsel that if he ultimately granted Premier’s motion to dismiss, he would not allow plaintiff to amend her complaint for a third time to reallege the previously dismissed CLRA damages claim. Plaintiff’s counsel disregarded the district court’s warning and filed an amended complaint that only contained claims for equitable relief.Premier moved to dismiss the restitution claims pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that Sonner needed to—but could not—establish that she lacked an adequate legal remedy as required by both federal equitable principles and California law. After full briefing and oral argument, the district court granted Premier’s motion to dismiss, holding that plaintiff could not proceed on her equitable claims for restitution in lieu of a claim for damages. Specifically, the district court concluded that equitable restitution claims brought under the UCL and CLRA remained subject to the inadequate-remedy-at-law doctrine, and that plaintiff failed to establish that she lacked an adequate legal remedy for the same past harm for which she sought equitable restitution. The district court also denied Sonner’s request to amend her complaint to reallege the CLRA damages claim that she had voluntarily dismissed.Ninth Circuit affirms district court’s order.On appeal, Sonner argued (along with amici the CA Attorney General and Consumer Attorneys of CA), that because her UCL and CLRA claims arise under California law and the court’s jurisdiction rests in diversity, state law alone decides whether she must show a lack of an adequate legal remedy before obtaining restitution under those statutes. Sonner and the Amici further argued that the California legislature abrogated the inadequate-remedy-at-law doctrine for equitable restitution claims under the UCL and CLRA.The Ninth Circuit rejected this argument, finding that pursuant to Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), and Guaranty Trust Co. of New York v. York, 326 U.S. 99 (1945), federal courts must apply equitable principles derived from federal common law to claims for equitable restitution under California’s UCL/CLRA. Thus, state law cannot circumscribe a federal court’s equitable powers even when state law affords the rule of decision.The Court held that, “[r]egardless of whether California authorizes its courts to award equitable restitution under the UCL and CLRA, when a plain, adequate, and complete remedy exists at law, we hold that federal courts rely on federal equitable principles before allowing equitable restitution in such circumstances. And because Sonner fails to demonstrate that she lacks an adequate legal remedy in this case, we affirm the district court’s order dismissing her claims for restitution.”[2]The Ninth Circuit further explained that “the strong federal policy protecting the constitutional right to a trial by jury outweighs [a state’s] procedural interest.”[3] Following federal common law, plaintiffs must establish that they lack an adequate remedy at law before obtaining equitable restitution. The Ninth Circuit held that Sonner failed to make such a showing because the complaint did not allege she lacked an adequate legal remedy, and she failed to explain how seeking the exact same amount of money she requested in damages for the same harm was inadequate or incomplete.[4]Lastly, the Ninth Circuit held that the district court did not abuse its broad discretion in denying leave to amend, considering it cautioned Sonner that a third amendment would be “unfair, prejudicial, and an affront to the judicial system.”[5]TakeawaysWhen litigating in federal court, defendants should consider moving to dismiss equitable claims for restitution when the plaintiff has an adequate legal remedy, even if state law authorizes its courts to award equitable restitution. Federal courts rely on federal equitable principles before allowing equitable restitution in such circumstances. See Mort v. United States, 86 F.3d 890, 892 (9th Cir. 1996) (“It is a basic doctrine of equity jurisprudence that courts of equity should not act . . . when the moving party has an adequate remedy at law.” (ellipsis in original) (quoting Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992))). Thus, a plaintiff must establish that she lacks an adequate remedy at law before securing equitable restitution for past harm, even under consumer protection statutes like California’s UCL, CLRA, and False Advertising Law.Notably, the relevant test is whether an adequate damages remedy is available, not whether plaintiff elects to pursue it, or whether plaintiff will be successful in that pursuit. See, e.g., McKesson HBOC, Inc. v. New York State Common Ret. Fund, Inc., 339 F.3d 1087, 1093 (9th Cir. 2003) (holding that equitable relief was not available to plaintiff because it had “potential legal claims against any number of parties,” and “[w]hether [a plaintiff] chooses to pursue these remedies… does not alter the availability of the remedies at law.”); United States v. Elias, 921 F.2d 870, 874 (9th Cir. 1990) (“[f]ailure to comply with a remedy at law does not make it inadequate so as to require the district court to exercise its equitable jurisdiction.”); Rhynes v. Stryker Corp., 2011 WL 2149095, at *4 (N.D. Cal. May 31, 2011) (“[p]laintiffs’ argument that they will have no adequate remedy at law if their other claims fail is unavailing. Where the claims pleaded by a plaintiff may entitle her to an adequate remedy at law, equitable relief is unavailable.” (emphasis in original)). Therefore, even if a plaintiff fails to assert a legal remedy, defendants should investigate whether an adequate remedy at law is available. If so, defendants should consider moving to dismiss equitable claims for restitution.[1] Sonner v. Premier Nutrition Corp., No. 18-15890, 2020 WL 3263043 (9th Cir. June 17, 2020).[2] Id. at *8.[3] Id. at *5.[4] Id.[5] Id. at *8.

Ninth Circuit Holds Plaintiffs Not Entitled To Equitable Restitution Under UCL/CLRA If Adequate Remedy At Law Is Available

Earlier this month, the Ninth Circuit held that state law cannot expand or confine a federal court’s power to issue equitable restitution because federal courts

Ninth Circuit Holds Plaintiffs Not Entitled To Equitable Restitution Under UCL/CLRA If Adequate Remedy At Law Is Available

Class action claims have taken on a new twist in the wake of COVID-19. Already, the global pandemic has generated litigation across a broad swath of areas, including privacy, data security, and consumer, among others. To date, hundreds of business lawsuits related to the pandemic are pending, with dozens more filed weekly. According to the U.S. Chamber of Commerce Litigation Center, activity to date is only the “tip of the iceberg.” Per Steven Lehotsky, chief counsel for the Chamber Litigation Center, businesses can expect more “opportunistic class action lawsuits down the road.” In this alert, we provide an overview of the first wave of pandemic-related class action litigation trends and project what businesses should expect next.First wave of COVID-related class actions Privacy and data security litigation. Among the first cases filed related to the pandemic were a variety of privacy and data security related class actions. Plaintiffs focused on companies that now have a spotlight on them due to increased usage during shelter-in-place orders. Across the technology industry, a variety of online services are <a href="https://hbr.org/2016/04/blitzscaling">blitzscaling</a>—or rapidly growing—based on skyrocketing demand from consumers for food delivery, e-commerce, and virtual social connections. In California, in particular, the pandemic coincided with the California Consumer Privacy Act (CCPA) coming into force on January 1, 2020. Despite some calls to delay enforcement in light of COVID-19, California’s Attorney General plans to begin enforcing the law starting July 1, 2020 as planned. AG Xavier Bacerra’s office <a href="https://iapp.org/news/a/making-sense-of-calls-to-delay-ccpa-enforcement-amidst-covid-19/">has stated</a>, “We encourage businesses to be particularly mindful of data security in this time of emergency.”Telephone Consumer Protection Act (TCPA). TCPA cases continue to be active as COVID-19 issues have emerged. MoFo’s Class Dismissed blog recently <a href="https://classdismissed.mofo.com/tcpa/text-messaging-in-a-time-of-covid-19-fcc-guidance-on-emergency-messages-and-restrictions-on-telemarketing-in-new-york/">reviewed </a>the March 20, 2020 FCC Declaratory Ruling allowing certain calls for “emergency purposes” amidst the pandemic. That does not mean, however, that there is a blanket exemption from the TCPA’s rules governing certain calls and messages, and multiple TCPA lawsuits have been filed involving coronavirus-related communications. In a case filed in late April, the Texas Attorney General sued two parties for alleged violations of the TCPA and the Texas state law corollary. Specifically, the lawsuit alleges that a marketing service advertised health benefit plans by stating that they “include coronavirus testing and treatment.” <a href="https://www.courtlistener.com/recap/gov.uscourts.azd.1238468/gov.uscourts.azd.1238468.1.0.pdf">Another lawsuit</a>, filed by private plaintiff attorneys in Florida in March 2020, alleges that a golf course company sent text messages referencing COVID-19, stating “Stay safe in these crazy times by golfing at top 100 courses[.]”Beyond privacy, data security, and TCPA, class actions in other consumer areas have seen an uptick across the board.Health claims from shutting down too late. Multiple cases filed against cruise lines, for example, assert claims that cruise ships improperly continued operations despite allegedly knowing that passengers were showing symptoms of COVID-19.[1]Cancellation and refund claims. As businesses have been forced to shutter in response to the pandemic, plaintiffs have filed a slew of class actions alleging claims related to recurring membership charges and refunds. Multiple cases throughout the country have targeted gyms, levying causes of action for breach of contract and consumer protection laws.[2] Travel and vacation-related businesses have also been in the cross-hairs. Resorts, airlines, and vacation destinations—and even online event businesses—are facing a variety of class actions alleging claims such as unjust enrichment, fraudulent misrepresentation, conversion, and breach of contract.[3] Nor have educational institutions been spared. As schools moved classes online, lawsuits have been filed seeking reimbursement for room and board and reimbursement for the lost benefits of in-person education.[4]False advertising related to health benefits. With hundreds of millions of Americans suddenly seeking to stock up on supplies such as hand sanitizers, sellers of such products have been faced with scrutiny both from federal law enforcement officials (<a href="https://www.mofo.com/resources/insights/200416-law-enforcement-covid-19.html">covered</a> in a recent alert by MoFo’s national security and crisis group) as well as private plaintiff attorneys.[5]Insurance litigation. Insurance companies face a litany of lawsuits relating to denial of coverage for business interruption, as insurers have claimed in some instances that losses caused by COVID-19 are excluded from coverage. Plaintiffs such as restaurants, bakeries, dental practices, and others forced to shutter have filed cases. One group including several well-known restaurateurs such as Wolfgang Puck, Daniel Boulud, and Dominique Crenn, has banded together to create the Business Interruption Group (BIG), whose <a href="https://werbig.org/">website </a>promises to “bring BIG legal action in every state” against insurers.Financial services institutions. Banks across America have moved rapidly to participate in the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) Paycheck Protection Program (PPP), helping small businesses procure funding to maintain jobs during state-ordered shutdowns. Many of these institutions now face lawsuits related to eligibility and processing for PPP loans, as well as disputes over commercial loans and foreclosures. As with the TCPA, state AGs have gotten involved here, too. Arizona’s AG, for instance, in mid-March 2020 sent a <a href="https://www.azag.gov/sites/default/files/2020-03/Letter%20to%20Financial%20Institutions%20and%20Lending%20Institutions%20Serving%20Arizonans_3_19_2020.pdf">letter </a>to over 1,000 financial institutions requesting a suspension of foreclosures, repossessions, and evictions for a certain amount of time, as well as waivers for late fees and default interest for credit card account holders.Securities cases. Plaintiff attorneys have aimed their sights at securities litigation as well—bringing cases against companies whose stock prices have fallen alongside broader market volatility. Theories range from false and misleading statements minimizing the pandemic’s impact on a company’s business, to alleged false claims based on developments of treatments or vaccines.[6] MoFo’s Coronavirus Task Force has been following <a href="https://www.mofo.com/resources/insights/200505-us-sec-staff-issues.html">recent U.S. Securities and Exchange Commission guidance</a> for companies in this area.Policy advocacy in the wake of COVID-19 litigationAs the first wave of pandemic-related cases works its way through the pleading stages of litigation, advocates are simultaneously working to influence litigation policy as well.These efforts have already resulted in various liability limitations at multiple levels of government. At the federal level, the CARES Act contains certain liability protections for respirator manufacturers that have had to ramp up research, development, and distribution efforts. The U.S. Department of Health and Human Services has also provided guidance on tort liability immunity granted under the Public Readiness and Emergency Preparedness Act (the “PREP Act”), as <a href="https://classdismissed.mofo.com/fda/hhs-guidance-broadens-prep-act-immunity-tightens-focus-on-public-private-cooperation/">discussed </a>by our colleagues in MoFo’s Class Dismissed blog. Many states too have instituted liability protections for certain healthcare industries and medical facilities.[7]Others, meanwhile, have attempted to leverage the pandemic to advance policy goals related to challenging pre-dispute arbitration agreements. As documented by the Institute for Legal Reform, early drafts of COVID-19 relief bills in the U.S. House and Senate, as a result, contained provisions aimed at invalidating arbitration clauses in disputes about business loans and employee sick leave, among other topics.Wave two: What to expect from the next set of COVID-19 related lawsuits Wave one of pandemic class action litigation has crashed ashore. The next wave may not be far behind. In the privacy and data security arena, we expect to see more cases. The FBI, DOJ, and international law enforcement agencies have warned of unprecedented criminal hacking activity in the wake of the pandemic. There have been reports that attackers have successfully lurked in a company’s infrastructure before discovery, sometimes for weeks or even months. Given this, the ongoing surge in COVID-19 related hacking activity is likely to result in publicly revealed data breaches in the coming months. Such breaches may trigger class actions under the CCPA’s private right of action, discussed <a href="https://www.cpomagazine.com/data-protection/anticipating-ccpa-litigation-in-2020-steps-to-take-now/">here</a>, among other state data breach and notice statutes.Other privacy lawsuits will stem from implementation of biometric track and trace technology. Illinois’ biometric privacy statute, the Biometric Information Privacy Act (BIPA)—already a source of frequent litigation—will continue to be the focus of new class actions. Similar statutes, some creating even greater exposure, are being contemplated in states such as <a href="https://lis.virginia.gov/cgi-bin/legp604.exe?201+sum+HB1215&201+sum+HB1215">Virginia</a>. To facilitate virus response and containment, organizations will look towards pooling data and leveraging anonymized datasets to perform epidemiological studies. Given advancements in de-anonymization and disaggregation technologies, this may lead to the filing of creative and new privacy claims.Just as a series of class actions arose from pandemic-related shutdowns, so too will lawsuits come as communities begin to re-open towards a new normal. Litigation around compliance with government guidelines, negligence causes of action related to safety measures, lawsuits around COVID-19 treatments, newly developed personal protective equipment and other products, and claims around social distancing implementation appear to be on the horizon. As noted above, lawmakers and regulators are keenly aware of such litigation risk and may attempt to support reopening by crafting or expanding safe harbors.How should businesses shore up in the face of the COVID-19 class action litigation wave? Morrison & Foerster’s Class Action + Mass Torts Group and Coronavirus Task Force have advised and represented many clients on emerging claims related to COVID-19. MoFo’s Litigation team routinely helps companies prepare for and respond to litigation risks including matters involving the CCPA, TCPA, BIPA, and other consumer causes of action that are being explored in this new pandemic environment. To stay a step ahead, our team has been analyzing newly filed lawsuits as well as COVID-19 publications and trends. For new products, incorporating risk analysis up front in the design process is vital. Particularly around issues of privacy and data security, organizations should be mindful of notice, consent, and other statutory and regulatory issues—especially in the areas of biometrics and data analytics. As always, organizations will benefit from strong contracts, clear representations in public facing policies, and careful consideration as to pre-dispute arbitration clauses. More time at home has not slowed down the pursuit of class action lawsuits or the need for thoughtful compliance practices.[1] See, e.g., Turner v. Costa Crociere SPA, No. 20-cv-21481 (S.D. Fla. Apr. 7, 2020); Archer v. Carnival Corporation, et al., No. 20-cv-02381 (N.D. Cal. Apr. 8, 2020).[2] See, e.g., Namorato v. New York Sports Clubs, No. 20-cv-02580 (S.D.N.Y. Mar. 26, 2020); Barnett v. Fitness International, LLC, No. 0:20-cv-60658 (S.D. Fla. Mar. 30, 2020); Delvecchio v. Boston Sports Clubs, No. 20-cv-10666 (D. Mass. Apr. 5, 2020).[3] See, e.g., McMillan v. StubHub, No. 20-cv-00319 (W.D. Wis. Apr. 2, 2020); Rutledge v. Do LaB Inc. (Cal. Super. Ct. Mar. 24, 2020); Ruiz v. Magic Mountain LLC, et al., No. 2:20-cv-03436 (C.D. Cal. Apr. 13, 2020); Carisi v. Events and Adventures California, No. 3:20-cv-02260 (N.D. Cal. Apr. 2, 2020).[4] See, e.g., Rosenkrantz, et al. v. Arizona Board of Regents, 2:20-cv-00613 (D. Ariz.); Rickenbaker, et al. v. Drexel University, 2:20-cv-01358 (D. S.C.); Student A, et al. v. Liberty University, 6:20-cv-00023 (W.D. Va.); Church, et al. v. Purdue University, et al., 4:20-cv-00025 (N.D. Ind.); Dixon, et al. v. University of Miami, 2:20-cv-01348 (D. S.C.).[5] See, e.g., David v. Vi-Jon, Inc. dba Germ-X, No. 20-cv-99999 (S.D. Cal. Mar. 5, 2020); Gonzalez v. Gojo Indus., Inc., No. 1:20-cv-888 (S.D.N.Y. Feb. 1, 2020).[6] Douglas v. Norwegian Cruise Lines, No. 20-cv-21107 (S.D. Fla. Mar. 12, 2020); Atachbarian v. Norwegian Cruise Lines et al., No. 1:20-cv-21386 (S.D. Fla. Mar 31, 2020); McDermid v. Inovio Pharmaceuticals, Inc., No. 20-cv-01402 (E.D. Pa. Mar. 12, 2020).[7] Arizona Executive Order No. 2020-27 (Mar. 11, 2020); Arkansas Executive Order No. 18 (Apr. 14, 2020); Connecticut Executive Order No. 7V (Apr. 7, 2020); Georgia Executive Order No. 04.14.20.01 (Apr. 14, 2020); Illinois Executive Order No. 19 (Apr. 1, 2020); Indiana Executive Order No. 13 (Mar. 6, 2020); Michigan Executive Order No. 30 (2020); New Jersey Executive Order No. 112 (Apr. 1, 2020); New York Executive Order No. 202.10 (Mar. 23, 2020); North Carolina Executive Order No. 130 (Apr. 8, 2020).

Wiretap Act Class Action for Technology Company

BIPA Class Action for Social Media App

RICO and Fraud Class Action for Waste Management Company 

Copyright Class Action for AI Company

CCPA and Data Breach Class Action for Leading Software Company

TCPA and Other Class Actions for Major Technology Company

Wiretap Act Action Against a Major Consumer Electronics Manufacturer

cheung_tiffany_blog_150x150.png

cheung_tiffany_common_640x280.jpg

cheung_tiffany_heroretina_2700x1160.jpg

cheung_tiffany_mobileretina_750x1040.jpg

cheung_tiffany_social_600x600.jpg

Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

Tiffany Cheung

Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

02_28_elc_blog_600px_v2_thumbnail.jpg

Class Action Litigation in the Wake of COVID-19

Class action claims have taken on a new twist in the wake of COVID-19. Already, the global pandemic has generated litigation across a broad swath of areas, incl

Class Action Litigation in the Wake of COVID-19

Privacy

Government Actions

Earlier this year, the Ninth Circuit held that plaintiffs cannot avail themselves of liberal discovery rules in order to locate class representatives. The court found that Rule 26(b)(1) of the Federal Rules of Civil Procedure, which governs the discovery process, does not authorize discovery before class certification when such discovery is to help plaintiffs locate a putative class representative.<a href="#_ftn1" name="_ftnref1">[1]</a>Plaintiff Sought Discovery to Follow the Thread to a Putative Class Representative Plaintiff William Rushing, a resident of Kentucky, purchased bedding from Defendant Williams-Sonoma online. He brought suit in California Superior Court bringing individual and class claims under California law, alleging that the thread count was much lower than the advertised 600 threads per square inch. Williams-Sonoma removed the case to federal court, where the district court used a choice-of-law analysis to conclude Kentucky law applied to Plaintiff’s claims.Because Plaintiff’s class action claim was impermissible under Kentucky consumer law, Plaintiff needed a California class representative to keep the action alive. Thus, Plaintiff “sought to obtain discovery from Williams-Sonoma for the sole purpose of aiding his counsel’s attempt to find a California purchaser of bedding from Williams-Sonoma who might be willing to sue.”<a href="#_ftn2" name="_ftnref2">[2]</a> The district court ordered Williams-Sonoma to produce a list of customers and subsequently denied its request for leave to file a motion for reconsideration. Williams-Sonoma sought a writ of mandamus to vacate the district court’s discovery order.Ninth Circuit Vacates Discovery Order that Required Production of a Customer List  The Ninth Circuit granted the writ and vacated the discovery order. Judge Ferdinand Fernandez, writing for the majority panel, explained that seeking discovery of the names of potential class members—for the purpose of finding a named class plaintiff—is not within the purview of relevant evidence under Rule 26(b)(1). In so ruling, the Ninth Circuit panel relied on Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (1978), in which the Supreme Court held that federal discovery rules cannot subject a defendant to an order directing it to compile a list of class members for identifying those to whom individual notice must be sent.<a href="#_ftn3" name="_ftnref3">[3]</a>Judge Fernandez also explained that the 2015 amendment to Rule 26(b)(1) narrowed the scope of discovery, which now requires that it be “relevant to any party’s claim or defense.”<a href="#_ftn4" name="_ftnref4">[4]</a> That amendment “was intended to restrict and not broaden the scope of discovery.”<a href="#_ftn5" name="_ftnref5">[5]</a> In In re Williams-Sonoma, the Ninth Circuit did not buy plaintiff’s argument that the information sought was broadly relevant to class certification issues. That contention “[did] not undercut, or water down, the primary point that using discovery to find a client to be the named plaintiff before a class action is certified is not within the scope of Rule 26(b)(1).”<a href="#_ftn6" name="_ftnref6">[6]</a> Accordingly, the Ninth Circuit concluded that the district court’s decision was clear error as a matter of law and vacated the discovery order.In a lengthy dissent, Judge Richard Paez explained that the district court had not erred because it remains “an open question” whether Rule 26(b)(1) may be used as a pre-certification tool to find a named class representative.<a href="#_ftn7" name="_ftnref7">[7]</a> As he read it, Oppenheimer Fund only stands for the proposition that class counsel cannot rely on Rule 26 or any other federal discovery rule to attempt to notify potential class members that a class action has been certified. Instead, class counsel must rely on Rule 23(d), which outlines the procedures for conducting the class action. Judge Paez also explained that Rule 23(d) “provides district courts with residual powers to regulate communication with absent class members outside of formal notice requirements” even before class certification, primarily in light of the fiduciary duties that class counsel owe putative class members.<a href="#_ftn8" name="_ftnref8">[8]</a>TakeawaysWhen served with pre-certification discovery that appears designed to locate a putative class representative for the plaintiffs, defendants should object on the ground that the information sought is not within the scope of Rule 26(b)(1) because it is not “relevant to any party’s claim or defense.”<a href="#_ftn9" name="_ftnref9">[9]</a> On the other hand, defendants should keep in mind that Rule 23(d) may be an appropriate source of authority for court orders directing a defendant to compile a list of potential putative class members in order to facilitate the sending of notice, but it is unlikely that such disclosures are proper before class certification.<a href="#_ftnref1" name="_ftn1">[1]</a> See In re Williams-Sonoma, Inc., 947 F.3d 535, 540 (9th Cir. 2020).<a href="#_ftnref2" name="_ftn2">[2]</a> Id. at 538.<a href="#_ftnref3" name="_ftn3">[3]</a> See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 350-55 (1978). The Supreme Court explained that relevancy in discovery means the information sought is “aimed at illuminating issues in the case,” not facilitating class notice. Id. at 354.<a href="#_ftnref4" name="_ftn4">[4]</a> In re Williams-Sonoma, Inc., 947 F.3d at 539 (quoting Rule 26(b)(1)).<a href="#_ftnref5" name="_ftn5">[5]</a> Id.<a href="#_ftnref6" name="_ftn6">[6]</a> Id. at 540.<a href="#_ftnref7" name="_ftn7">[7]</a> Id. at 542 (Paez, J., dissenting).<a href="#_ftnref8" name="_ftn8">[8]</a> Id. (citation omitted).<a href="#_ftnref9" name="_ftn9">[9]</a> Fed. R. Civ. P. 26(b)(1).