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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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.

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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

<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

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.

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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.

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Mitchell Hokanson

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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.

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The Future of Food: Exploring the World of Cell-Cultivated Cuisine

New California Law Redefines E-Bikes

ICPHSO 2025: Reese’s Law and Corded Blinds

So Long, CPSC?

FDA Seeks to Phase Out Synthetic Color Additives

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In the high-risk Telephone Consumer Protection Act (TCPA) arena, the Ninth Circuit recently offered some respite. On January 10, 2018, the Ninth Circuit limited the potential liability that companies may unknowingly face for the communication practices of their upstream vendors. In Kristensen v. Credit Payment Services, Inc., No. 16-15823 (9th Cir. 2018), the Ninth Circuit affirmed summary judgment for defendant payday lenders, finding that the lenders were not vicariously liable for any unlawful text messages sent by a third-party lead generator. The TCPA plaintiff had received a text message from a company called AC Referral, which contained a link to a loan application website. AC Referral had contracted with lead generator Click Media, which in turn sold customer leads to a lead acquisition company LeadPile. The defendant lenders had hired LeadPile to help acquire customer leads for loans. In 2014, the District of Nevada certified a class of other similar text recipients. Even though the defendant lenders had no contact with the text sender, plaintiff argued that “defendants ratified AC Referral’s unlawful texting by accepting the benefits of the text messages sent by AC Referral while unreasonably failing to investigate its texting methods.” Applying principles of agency law, the Ninth Circuit concluded that the lenders could not be liable under a ratification theory. It was “undisputed that AC Referral did not enter into a contract with any of the lenders or with LeadPile” and “AC Referral did not communicate with or even know of the lenders or LeadPile before the lawsuit was filed.” Thus, because AC Referral never acted as an agent or purported agent of the defendants, there was no act that could be ratified. Summary judgment was also affirmed for the defendant intermediary company Click Media that actually contracted with AC Referral. Click Media’s contract stated that “AC Referral could use text message marketing and required AC Referral to comply with the TCPA.” The Ninth Circuit agreed that the plaintiff “presented no evidence that Click Media had actual knowledge” of the texting violation and “knowledge that an agent is engaged in an otherwise commonplace marketing activity [e.g., texting] is not the sort of red flag that would lead a reasonable person to investigate whether the agent was engaging in unlawful activities.” This ruling could reduce litigation risks for companies that are unaware and have no reason to suspect their vendors are sending communications that may not be in compliance with the TCPA.

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.

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TCPA Vicarious Liability Limited by Ninth Circuit in Texting Class Action

Federally-Backed Debt Collection Exception Not the Supreme Court’s Cup of T(CPA)

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In the high-risk Telephone Consumer Protection Act (TCPA) arena, the Ninth Circuit recently offered some respite. On January 10, 2018, the Ninth Circuit limited

TCPA Vicarious Liability Limited by Ninth Circuit in Texting Class Action

In our California Class Actions 2018 Update, we have outlined several key cases and trends that define the current class actions landscape. From “litigation tourism” to new definitions for unfair and fraudulent, we provide a rundown on the most-watched and influential recent cases.Please click <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/bltf3eba9236fc7ed3a/6273154f8e09542a15b7de53/180108-california-class-actions-2018-update.pdf">here</a> to open the California Class Actions 2018 Update.

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California Class Actions: 2018 Update

Nevada Enacts CCPA-Style Opt-Out Right for Consumers—but Similarities Are Few

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In our California Class Actions 2018 Update, we have outlined several key cases and trends that define the current class actions landscape. From “litigation tou

California Class Actions: 2018 Update

On December 4, 2017, a panel of the California Court of Appeal unanimously affirmed a trial court’s denial of class certification for alleged violations of California’s unfair competition, consumer protection, and false advertising laws.  In so doing, the court upheld the lower court’s conclusions that the proposed class for Plaintiff’s UCL and FAL claims was not ascertainable and that common questions did not predominate among class members for the CLRA claim.Case background.  Plaintiff James Noel alleged that an inflatable kid’s swimming pool purchased at Defendant’s drugstore was smaller than it appeared on the pool’s packaging box.  The box also displayed the pool’s dimensions, which Noel did not contend were inaccurate.  He sued the drugstore on behalf of all consumers who had purchased the pool, claiming violations of California’s unfair competition, consumer protection, and false advertising laws.The trial court denied Noel’s motion for class certification, finding that the proposed class for the UCL and FAL claims was not ascertainable because Noel failed to establish that the other purchasers of the pool could be identified.  The court further concluded that common questions did not predominate as to the CLRA claim.  The court reasoned that some members of the class may not have relied on the picture of the pool on the packaging box but instead looked to the advertised pool dimensions.  This prevented the questions of reliance and causation from being litigated on a classwide basis.Absent class members not ascertainable under UCL and FAL classes.  On appeal, Noel insisted the proposed class was ascertainable because his class definition was clear: “All persons who purchased the Ready Set Pool at a Rite Aid store located in California within the four years preceding the date of the filing of this action.”  But the court explained that the class definition was “beside the point”; the problem was that Noel adduced no evidence of records through which to identify class members, as required by Sotelo v. Medianews Group, Inc., 207 Cal. App. 4th 639 (2012).  “While Noel was not required to actually identify the 20,000-plus individuals who bought pools,” the panel explained, “his failure to come up with any means of identifying them was a legitimate basis for denying class certification.”  The court attributed this failure to Noel’s premature filing of the class certification motion without first taking sufficient discovery to learn what records could be used to identify the purchasers.The court recognized that its reasoning existed in tension with another recent Court of Appeal decision, Aguirre v. Amscan Holdings, Inc., 234 Cal.App.4th 1290 (2015).  According to the court, Aguirre held that a class plaintiff need not establish a means of identifying absent class members at the class certification stage; rather, the method for identifying class members need only be set forth at the remedial stage when it becomes necessary to prove class membership or damages.  The court disagreed with Aguirre: “To ignore the issue of identifying class members for notice purposes gives short shrift to due process considerations in play at the certification stage.”  While recognizing that some class actions must ultimately dispense with personal notice, the court preferred a “more pragmatic and flexible approach” to class certification that leaves the trial court discretion to determine whether a method for identifying absent class members must be established during class certification proceedings.Common issues did not predominate for CLRA class.  Noel next argued that the trial court erred in finding that class issues did not predominate over individual issues for the CLRA claim.  In affirming the trial court’s denial of class certification, the Court of Appeal explained that Noel had to establish that the misrepresentation would have been material to any reasonable person; otherwise, the issues of reliance and causation would vary among consumers and thus would not be subject to common proof.  The court found reasonable the trial court’s conclusion that some consumers may have relied on the advertised dimensions instead of on the pictures on the pool’s packaging.Denial of a continuance.  At the class certification hearing, Noel’s counsel requested the opportunity to conduct further discovery so that he could more fully develop facts to support his motion.  On appeal, Noel argued the trial court erred in denying his request, citing the general rule that continuances should be liberally granted.  The court rejected this argument, succinctly explaining that “Noel’s counsel was in control of the litigation; no one forced him to file a premature class certification motion.”Takeaways.  The Court of Appeal summarized the case’s takeaway: “What occurred here provides an object lesson in the risks of brushing the issue [of ascertainability] aside in connection with class certification and leaving it to be addressed at the conclusion of the proceedings.”  A plaintiff who fails to take sufficient discovery prior to moving for class certification may be unable to show how absent class members can be identified.

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California Appellate Court Upholds Denial of Class Certification on Ascertainability Grounds

California Appellate Court Upholds Denial of Class Certification on Ascertainability Grounds

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On December 4, 2017, a panel of the California Court of Appeal unanimously affirmed a trial court’s denial of class certification for alleged violations of Cali

On August 17, 2017, the Second Circuit Court of Appeals vacated a district court’s denial of Uber’s and Mr. Travis Kalanick’s motions to compel arbitration in a case involving price-fixing accusations.  In Meyer v. Kalanick, No. 16-2750 (2d Cir. Aug. 17, 2017), the Second Circuit held, as a matter of law, that plaintiff Spencer Meyer received objectively reasonable notice of the terms of service and unambiguously assented by clicking “register” on his smartphone when he signed up to use Uber’s services.  The Second Circuit also remanded for consideration of whether Uber and Mr. Kalanick waived the right to compel arbitration by defending the lawsuit.This was a heavily watched case with amici support on both sides.  The foes of arbitration hoped to use Meyer to call into question the viability of all click-through protocols that many companies use for their terms and conditions, not just Uber.Background of the Case.  In 2015, Mr. Meyer, on behalf of a putative class of Uber riders, filed an action against Mr. Kalanick, alleging that the Uber App allows drivers to fix prices amongst themselves, in violation of the Sherman Act, 15 U.S.C. § 1, and the Donnelly Act, N.Y. Gen. Bus. Law § 340.  Uber was subsequently joined as a defendant in 2016.  Uber and Mr. Kalanick filed motions to compel Meyer to arbitrate.  Judge Rakoff of the Southern District of New York denied the motions, concluding that Mr. Meyer did not have reasonably conspicuous notice of the terms of service and did not unambiguously manifest assent to the terms.  See Meyer v. Kalanick, 200 F. Supp. 3d 408, 420 (S.D.N.Y. 2016).  The district court did not reach Meyer’s other defenses to arbitration, including whether defendants waived their right to arbitrate by actively participating in the litigation.The District Court’s Determinations Were Subject to De Novo Review.  Plaintiff argued that the Second Circuit was limited to clear-error review of the district court’s findings and legal conclusions.  The Second Circuit disagreed, finding that it would review de novo the denial of a motion to compel arbitration.  While factual findings upon which a conclusion was based would be reviewed for clear error, the facts in Meyer were undisputed.Beyond “Clickwrap” and “Browsewrap.” The court discussed web-based contracts, noting that it had previously distinguished web-based contracts as either “clickwrap” or “browsewrap” agreements.  “Clickwrap” agreements, which courts routinely uphold, require a user to click an “I agree” box after being presented with the terms and conditions of use.  “Browsewrap” agreements, on the other hand, generally post terms and conditions on a website via a hyperlink at the bottom of the screen.  Because no affirmative action is required in “browsewrap” agreements, the determination of the validity of these agreements depends on whether the user has actual or constructive knowledge of the terms and conditions.  The Second Circuit noted, however, that not all interfaces would fit neatly into the “clickwrap” or “browsewrap” categories.  As such, classification of web-based contracts would not resolve the notice inquiry. The Parties Mutually Assented to the Agreement.  Under California law, the Second Circuit considered whether the undisputed facts established that there was: (1) reasonably conspicuous notice of the existence of contract terms; and (2) unambiguous manifestation of assent to those terms.  Analyzing Uber’s agreement, the court found both requirements were established.In analyzing the first requirement, the court considered “the perspective of a reasonably prudent smartphone user.”  Looking at the interface at issue in the case, the court concluded that the design of the screen and language used rendered the notice provided reasonable as a matter of law.  First, the registration payment screen was uncluttered.  The text on that screen advised Uber users that “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.”  This text, along with a hyperlink to the terms of service, appeared directly below the buttons for registration.  Even more, the entire screen was visible without scrolling.  Finally, although the text was in a small font, its dark print contrasted with the bright white background, and the hyperlinks were in blue and underlined.The court also found that the fact that the terms of service were available by hyperlink did not preclude a determination of reasonable notice because the hyperlinked text was reasonably conspicuous.  Additionally, the court disagreed with the district court’s determination that the location of the arbitration clause within the terms of service was itself a “barrier to reasonable notice.”  Accordingly, the Uber App provided reasonably conspicuous notice as a matter of law.In analyzing the second requirement, the court found that although Meyer’s assent to arbitration was not express, it was unambiguous in light of the objectively reasonable notice of the terms.  A reasonable user would know that, by clicking the registration button, he or she was agreeing to the terms and conditions accessible via the hyperlink.  Plaintiff argued that the fact that clicking the register button had two functions—creation of a user account and assent to the terms of service—rendered plaintiff’s assent ambiguous.  The court disagreed.  The physical proximity of the notice  regarding the terms of service to the register button made clear to a user that the linked terms pertained to the action the user was about to take.The court concluded that, as a matter of law, Meyer agreed to arbitrate his claims with Uber.The District Court Would Decide the Issue of Waiver.  Plaintiff argued in the alternative that defendants waived their right to arbitrate by actively litigating the underlying lawsuit.  Although a defense of waiver would normally be decided by the arbitrator, the court found that, here, the district court could properly decide the question because defendants had participated in litigation.  As such, the court remanded the case to the district court to consider whether defendants had waived their right to arbitrate.The court’s decision signals what factors at least one Court of Appeal will consider in determining the validity of consent in hybrid agreements—those agreements that don’t fall expressly into the “clickwrap” or “browsewrap” categories.  It also confirms the validity of the electronic registration process used by Uber and many other companies.Request to amend its opinion denied.  On Tuesday, August 29, 2011, the Second Circuit denied Plaintiff’s motion to have the Second Circuit amend its August 17, 2017 opinion.  Plaintiff requested that the Second Circuit include language in its opinion stating that the district court could consider the extent to which Plaintiff may have been unable to see Uber’s Terms of Service hyperlink (an argument made by plaintiff in Metter v. Uber Technologies, Inc., Case No. 3:16-cv-06652-RS).  The Court denied the motion without prejudice to Plaintiff raising the issue in the district court in the first instance.

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Second Circuit Scraps District Court’s Denial of Uber’s Motion to Compel Arbitration

Second Circuit Scraps District Court’s Denial of Uber’s Motion to Compel Arbitration

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On August 17, 2017, the Second Circuit Court of Appeals vacated a district court’s denial of Uber’s and Mr. Travis Kalanick’s motions to compel arbitration in a

In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), the United States Supreme Court held that a defendant’s unaccepted offer of complete relief under Federal Rule of Civil Procedure 68 did not moot a class plaintiff’s claim or require dismissal of the action.  However, the Supreme Court expressly left open the question of whether an unaccepted offer plus a tender of payment of the full amount of the plaintiff’s individual claim could moot a class plaintiff’s claim or require dismissal of the action.  (See our prior client alert on Campbell-Ewald).Testing an Issue Left Open By Campbell-Ewald, Defendant Tries to Moot Plaintiff’s ClaimOn June 20, 2017, the Seventh Circuit became the latest court to weigh in on the question left open by Campbell-Ewald.  In Fulton Dental, LLC v. Bisco, Inc., No. 15 C 11038 (EEC) (7th Cir. June 20, 2017), the Court considered whether an unaccepted offer of judgment and tender of payment under Federal Rule of Civil Procedure 67 to fully settle—and thereby moot—a plaintiff’s individual claims would also moot putative class action claims.  Relying on Campbell-Ewald, the Court held that an unaccepted offer of judgment could not be forced on an unwilling party under Rule 67 or 68, even if the offer was accompanied by a tender of payment.On December 8, 2015, plaintiff Fulton Dental, LLC filed a class action complaint against defendant Bisco, Inc., alleging it received an unsolicited fax from Bisco in violation of the Telephone Consumer Protection Act (TCPA).  On January 18, 2016, two days before the Campbell-Ewald decision, Bisco made a Rule 68 offer of judgment to plaintiff to settle its individual claims, plus injunctive relief, fees, and costs.  Relying on the Supreme Court’s ruling that “an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case,” plaintiff rejected the offer.  Seeking to test the issue left open by Campbell-Ewald, Bisco then moved for leave to deposit $3,600—the maximum possible damages plaintiff could receive, plus fees and costs—with the district court, and then argued that plaintiff’s claim was moot.Expanding on Campbell-Ewald, Court Finds Settlement Cannot Be Forced on Unwilling Party under Rule 67The Seventh Circuit rejected Bisco’s argument that Campbell-Ewald’s express reservation of the issue of whether a tender of payment would moot a class plaintiff’s claim “meant to say that a proposed settlement structured this way could be forced on a plaintiff.”  The Court found this to be “a risky assumption,” and decided in favor of the plaintiff, holding that under Campbell-Ewald, “an unaccepted offer is not binding on the offeree,” even if a tender of payment is offered.  The Court found Bisco’s offer under Rule 67, not Rule 68, was no reason to diverge from the Supreme Court’s holding. Instead, the Court noted that Campbell-Ewald “drew no distinction between unaccepted Rule 68 settlement offers and other unaccepted settlement or contract offers.”  Thus, the Court saw “no principled distinction between attempting to force a settlement on an unwilling party through Rule 68, as in Campbell-Ewald, and attempting to force a settlement on an unwilling party through Rule 67.”TakeawayFulton is one of several post-Campbell-Ewald cases rejecting defendants’ attempts to moot a putative class action by mooting the named plaintiff’s individual claims.  See, e.g., Weitzner v. Sanofi Pasteur, Inc., No. 14-3423, 2016 WL 1359220 (3d Cir. Apr. 6, 2016) (see our Weitzner post); Bais Yaakov of Spring Valley v. Graduation Source, LLC, No. 14-cv-3232 (NSR), 2016 WL 872914, at *1 (S.D.N.Y. Mar. 7, 2016); Brady v. Basic Research, L.L.C., 312 F.R.D. 304, 306 (E.D.N.Y. 2016)  (see our Brady post).However, a judge in the Southern District of New York saw things differently in Leyse v. Lifetime Entertainment Services, LLC, No. 13 Civ. 574 (AKH), 2016 WL 1253607 (S.D.N.Y. Mar. 17, 2016), holding that a defendant’s payment of plaintiff’s individual claims plus court costs required entry of judgment.  (For more information on Leyse, see our post <a href="http://classdismissed.mofo.com/tcpa/point-counterpoint-new-york-federal-court-holds-payment-of-plaintiffs-claim-ends-lawsuit-under-campbell-ewald/">here</a>).

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A Twist on Campbell-Ewald: Seventh Circuit Rejects Effort to Moot Class Action Claims Under F.R.C.P. 67

A Twist on Campbell-Ewald:  Seventh Circuit Rejects Effort to Moot Class Action Claims Under F.R.C.P. 67

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In Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), the United States Supreme Court held that a defendant’s unaccepted offer of complete relief under Federal

There has been a lot said already about the effect on product liability (especially drug) cases and “mass actions” as a result of the United States Supreme Court’s June 17, 2017 decision in Bristol-Myers Squibb Co. v. Superior Court of California, No. 16-466.  But what about consumer class actions?  California is a destination venue not just for mass tort cases.  It is also the principal destination of litigation-tourism for consumer class actions that seek nationwide classes.  For example, a recent Chamber of Commerce study reports that three-fourths of food-related consumer class actions are filed in just four states, with California (36%), New York (22%), Florida (12%), and Illinois (7%) leading the way.<a name="_ftnref1" href="#_ftn1">[1]</a>  Does Bristol-Myers have anything to teach us about the continuing viability of those suits?It does.  If you are a non-resident sued in a nationwide class action (and/or suit is brought against you on behalf of one or multiple state-only non-resident plaintiff classes), Bristol-Myers may provide relief.  The rationale of the eight-to-one decision is grounded in traditional concepts of personal jurisdiction, but make no mistake: the real message of Bristol-Myers is its rejection of “litigation tourism,” and that rationale will apply to putative nationwide consumer class actions brought against non-resident defendants.  The decision could affect hundreds of existing class action cases.  This post explains.Bristol-Myers In Brief.In Bristol-Meyers, 678 plaintiffs from 34 states (including 86 from California) brought claims in California state court alleging that they were injured by Plavix, a prescription drug manufactured by the defendant.  In the superior court, Bristol-Myers Squibb (BMS), an out-of-state company, moved to quash service of summons, arguing that the California court lacked personal jurisdiction as to claims brought by the non-California plaintiffs.  The superior court denied the motion, finding that BMS was subject to general jurisdiction in California.  The California Court of Appeal disagreed that BMS was subject to general jurisdiction but found that California courts had specific jurisdiction over the nonresidents’ claims against BMS.At the California Supreme Court, BMS argued that the non-California plaintiffs’ claims were not causally linked to BMS’s conduct in the state.  A divided California Supreme Court rejected BMS’s “causal connection” argument, applied a “sliding scale” test to determine BMS’s relation to the forum, and found that BMS’s “nationwide marketing, promotion, and distribution” of the challenged product created a “substantial nexus” between the nonresident plaintiffs’ claims and BMS’s forum activities.The United States Supreme Court overruled the California Supreme Court’s finding of specific jurisdiction over BMS, stating that the “sliding scale approach” to personal jurisdiction in California had “no support” in the Court’s past decisions.  Rather, specific personal jurisdiction requires an “adequate link” between the nonresident plaintiff’s claims and the forum state; Bristol-Myers rejects the California Supreme Court’s “sliding scale” approach to personal jurisdiction.  The firm published a Client Alert summarizing the decision, providing expert analysis and offering key takeaways on June 20, 2017.  Because there was no “adequate link” between the company’s contacts related to Plavix in the state and the plaintiffs’ claims, specific jurisdiction over non-resident claims was inappropriate.A Blow to “Litigation Tourism”Bristol-Meyers delivers a serious blow to “litigation tourism”—the all-too-common practice of class action plaintiffs bringing claims in the most favorable venue regardless of residency or company contacts with the forum.  While litigation-tourism has been most prevalent in food misbranding cases, especially to California, it extends to all kinds of class actions, including product liability and defect cases, privacy cases, financial services litigation, and cases brought under federal statues such as the Telephone Consumer Protection Act.  After Bristol-Myers, tenuous connections to the forum won’t cut it, and non-resident plaintiffs can no longer piggyback on the claims of resident plaintiffs against an out-of-state defendant to remain in the forum.  Rather, to sue in a forum other than the plaintiffs’ or defendant’s state of residence, plaintiffs must now demonstrate an “adequate link” between the defendant’s conduct in that forum and their claims.Recharging the Defense Against Plaintiffs Seeking to Import Out-of-State LawBristol-Myers is not just consistent with prior cases addressing plaintiff attempts to apply out-of-state law in a particular forum; it potentially provides those decisions with a jolt of energy.  California courts have declined to apply materially different state law to cases involving geographically diverse classes.  See, e.g., Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012).  Bristol-Myers potentially bolsters this principle by giving it a due process backing.TakeawaysBristol-Myers has the potential to affect numerous pending and future class actions.  Plaintiffs will need to carefully consider the contours of their class vis-à-vis the defendant they choose to sue and the forum in which they choose to litigate or face a motion to dismiss for lack of personal jurisdiction.  The question for defendants is one of strategy: what are the consequences of such a motion?  Plaintiffs have various options: they may file a nationwide class action where the defendant resides (if the defendant is resident in the United States and its state of residence permits nationwide classes); they may file actions in all or most states where the purported class members reside; or they may limit their class to California residents.  If plaintiffs file actions in multiple jurisdictions, the end result may be MDL practice to once again coordinate the action in a single court.  Defendants thus will want to evaluate all the circumstances of their particular case in deciding whether to file a Bristol-Myers motion.<a name="_ftn1" href="#_ftnref1">[1]</a> See <a href="http://www.instituteforlegalreform.com/uploads/sites/1/TheFoodCourtPaper_Pages.pdf">http://www.instituteforlegalreform.com/uploads/sites/1/TheFoodCourtPaper_Pages.pdf</a>, at p. 2.*Co-author Spencer Sean McManus was a summer associate in our San Francisco office.

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Supreme Court Says “No” to “Litigation Tourism”

Supreme Court Says “No” to “Litigation Tourism”

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There has been a lot said already about the effect on product liability (especially drug) cases and “mass actions” as a result of the United States Supreme Cour

Introduction.  Yesterday, on June 12, 2017, the Supreme Court issued its decision in Microsoft Corp. v. Baker et al., a closely watched case in the class action world, and one on which we previously reported <a href="http://classdismissed.mofo.com/class-certification/class-dismissed-but-not-quite-supreme-court-to-review-appealability-of-class-certification-denials-when-plaintiffs-voluntarily-dismiss-case/">here</a>.  Baker presented the following question:  Can a plaintiff who is denied class-action certification and denied Rule 23(f) permission to appeal create an appealable “final judgment” by voluntarily dismissing his or her claims with prejudice?  The Supreme Court’s answer is a resounding “no.”The Court’s decision will impact a number of class certification denials currently pending in the Ninth Circuit, which plaintiffs appealed based on similar Baker dismissals.  The decision also shuts the door to plaintiffs attempting an end-run around Rule 23(f)’s permissive appeal standard.  We describe the background, decision, and implications of Baker in more depth below. Baker Background.  The fact pattern in Baker mirrors that of other class certification decisions on appeal.  Plaintiffs sued Microsoft on behalf of themselves and a putative class of similarly situated consumers after they purchased allegedly defective X-Box consoles.  The district court struck the plaintiffs’ class allegations, effectively denying class certification.  The Court of Appeals denied plaintiffs permission to appeal under Rule 23(f).  Rather than pursue their individual claims, plaintiffs voluntarily dismissed the action, but reserved the right to revive their claims if the district court’s class certification decision was reversed.  Plaintiffs appealed, the Ninth Circuit reversed the district court’s decision, and Microsoft appealed to the Supreme Court. Majority and Concurring Opinions—Same Answer, Different Reasoning.  The Supreme Court unanimously rejected plaintiffs’ voluntary-dismissal tactic, but offered different explanations for why it was impermissible.  The majority opinion, authored by Justice Ginsberg and joined by Justices Kagan, Kennedy, Sotomayor, and Breyer, concluded that plaintiffs’ voluntary dismissal does not constitute a “final judgment” under 28 U.S.C. § 1291.  The concurring opinion, issued by Justice Thomas and joined by Justice Alito and Chief Justice Roberts,<a name="_ftnref1" href="#_ftn1">[1]</a> however, found the tactic impermissible under Article III.<ul><li>Majority—No “Final Judgment.”  The majority’s decision that plaintiffs’ voluntary dismissal is not a “final judgment” required for immediate appeal under § 1291 was based on two guiding principles:</li></ul>First, in Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), the Supreme Court held that the “death knell doctrine”—i.e., that a refusal to certify could effectively end a putative class action where the cost of litigating substantially outweighed the value of the plaintiff’s individual claim—did not warrant mandatory appellate jurisdiction of an interlocutory class certification order.  The Court’s decision in Cooper was grounded in a number of factors: (i) the possibility for multiple appeals of class certification decisions based on different reasoning; (ii) the fact that appellate courts would be forced into the trial process; and (iii) the one-sidedness of the doctrine, which operated only in favor of plaintiffs despite the importance of class certification for defendants.  The availability of interlocutory review under § 1292(b)—which requires district court certification of “controlling questions of law”—would provide sufficient review of class certification order, the Coopers Court held.Plaintiffs’ voluntary-dismissal tactic, the majority in Baker held, was even more likely to invite protracted litigation and piecemeal appeals than the death-knell theory in Coopers, as courts under the death-knell doctrine could decline to hear a case if they believed the cost-benefit analysis did not apply.  Appeals courts facing voluntary dismissals similar to plaintiffs’ do not even have such a control here, the majority held.  The reasoning in Cooper, the majority concluded, accordingly applies with even stronger force here.Second, the majority looked to the purpose of Rule 23(f) for guidance.  That rule allows the court of appeal to grant permission to appeal an order granting or denying class certification.  In creating the Rule, the drafters struck a balance between the competing concerns in Coopers, providing class certification litigants with an alternative mechanism to appeal that did not require district court certification while simultaneously allowing appeals courts to control the process to prevent abusive litigation tactics.The majority held that plaintiffs’ voluntary dismissal “undercuts Rule 23(f)’s discretionary regime.”  They rejected plaintiffs’ argument that Rule 23(f) is irrelevant because plaintiffs appealed a “final judgment.”  “Plaintiffs in putative class actions cannot transform an interlocutory order . . . into a final judgment within the meaning of § 1291 simply by dismissing their claims with prejudice,” the Court held.  A decision to the contrary would undermine the purpose and process of Rule 23(f).<ul><li>Concurring Opinion—No Article III Jurisdiction.  The Concurring Opinion took a different approach, rejecting the Majority’s reading of “finality” under § 1291, and instead finding that plaintiffs’ appeal faltered under Article III of the Constitution.  When plaintiffs voluntarily dismissed their claims, they consented to judgment against them by the court, the concurrence reasoned.  After that, the parties were no longer adverse, and there was no longer a “case or controversy” as required for Article III jurisdiction.  The concurrence rejected plaintiffs’ argument that the possibility of pursuing a class action constitutes a “controversy,” as class claims require viable individual claims, which plaintiffs had relinquished.  Without an Article III “case or controversy,” the Ninth Circuit lacked jurisdiction to hear plaintiffs’ appeal.</li></ul> Takeaway.  Baker will have an immediate impact on a number of cases pending appeal, particularly in the food misbranding arena, where parties appealed based on stipulated dismissals to get clarity from the Ninth Circuit on applicable class certification standards.    Baker also removes a powerful weapon in plaintiffs’ counsel’s arsenal—they will no longer be able to force piecemeal litigation through long delays from class certification to appeal.  Overall, Baker is a win for companies facing class certification claims.<a name="_ftn1" href="#_ftnref1">[1]</a> Justice Gorsuch did not take part in the consideration or decision of the case.

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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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 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

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Supreme Court Slams the Back Door Around Rule 23(f) in Microsoft v. Baker

Supreme Court Slams the Back Door Around Rule 23(f) in Microsoft v. Baker

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Introduction.  Yesterday, on June 12, 2017, the Supreme Court issued its decision in Microsoft Corp. v. Baker et al., a closely watched case in the class action

Bruton v. Gerber, No. 15-15174.  The district court had dismissed Plaintiff’s unjust enrichment claim, denied class certification for lack of an “ascertainable class,” and granted summary judgment to Gerber because Plaintiff lacked evidence of deception.  The Ninth Circuit reversed the rulings and remanded the case.Background of the Case.  Plaintiff alleged that the labels on certain Gerber baby food products included claims about nutrient and sugar content that violated FDA’s regulations as incorporated into California law.  Plaintiff sued over 69 different Gerber products, with 66 labeled both with and without challenged labels during the class period.  Plaintiff brought claims under California’s consumer protection laws, as well as for unjust enrichment/quasi-contract.Unjust Enrichment/Quasi-Contract.  The Ninth Circuit first found that the district court erred in dismissing Plaintiff’s unjust enrichment/quasi-contract claim at the motion to dismiss stage.  While acknowledging that it was uncertain whether unjust enrichment was a standalone cause of action under California law at the time of the district court’s order, it held that the California Supreme Court had since clarified that an independent claim for unjust enrichment could proceed.  As such, it reversed the dismissal and remanded for the district court’s consideration of whether there are other grounds on which Plaintiff has failed to state a claim for unjust enrichment.Class Certification.  The Court of Appeals next addressed class certification.  It held that the district court erred in holding that the class could not be certified because it was not “ascertainable.”  It clarified that, again, the district court’s ruling contravened a later Ninth Circuit decision:  Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017).  In Briseno, the Ninth Circuit used different terminology for what the district court called “ascertainability” and held that there was no separate “administrative feasibility” requirement for class certification.  Because the district court’s decision ran contrary to Briseno, the Court reversed and remanded for further consideration regarding whether class certification is appropriate.Summary Judgment.  Finally, the Ninth Circuit reversed the lower court’s ruling on summary judgment.  First, it held that the district court erred in holding that there was no genuine dispute of material fact on Plaintiff’s claims that Gerber’s labels were deceptive under California consumer deception laws.Second, the Court confirmed that Plaintiff presented a viable theory of deception:  the combination of (a) claims on Gerber’s products in violation of FDA regulations and (b) the lack of such claims on competitors’ products made Gerber’s labels likely to mislead the public into thinking that Gerber’s products were of a higher quality than competitor products.Third, the Court held that Plaintiff had submitted sufficient evidence to create a genuine issue of material fact:  (a) Gerber’s and competitors’ labels, (b) Plaintiff’s deposition testimony that she was misled, and (c) two FDA warning letters on the claims.  The key evidence, the Court confirmed, is the labels:  “[a] reasonable jury observing Gerber’s labels and comparing them to those of its competitors could rationally conclude that Gerber’s labels were likely to deceive members of the public.”Finally, the Court held that the district court erred in granted summary judgment to Gerber on Plaintiff’s “unlawful” prong under the UCL.  It found that Plaintiff’s allegations that Gerber “misbranded” its products were sufficient to defeat summary judgment and that the “reasonable consumer test” did not apply to Plaintiffs’ unlawful claims.Takeaways.  Although an unpublished decision, Bruton v. Gerber answers some open questions in the consumer class action litigation field while leaving others unanswered.As for ascertainability, Bruton solidifies the Ninth Circuit’s position that there is no “administrative feasibility” requirement for class certification, but it does not address whether a class is ascertainable where consumers cannot reliably determine whether they are eligible to join the class due to label variations on products during the class period.  This issue has also been briefed in the Jones v. ConAgra appeal, which is pending the U.S. Supreme Court’s decision in Baker v. Microsoft.  (Read our prior blog post on Baker <a href="http://classdismissed.mofo.com/class-certification/class-dismissed-but-not-quite-supreme-court-to-review-appealability-of-class-certification-denials-when-plaintiffs-voluntarily-dismiss-case/">here</a>.)  It remains to be seen whether the Ninth Circuit will address this aspect of “ascertainability” as part of its ruling in the Jones case.As for deception, Bruton arguably lowers the bar for evidence that a plaintiff must submit to get past summary judgment.  Labels, the Court suggests, are enough.  It remains to be seen whether this decision holds and how Bruton will impact consumer class action litigation.

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Ninth Circuit Revives Gerber Baby Food Class Action

Ninth Circuit Revives Gerber Baby Food Class Action

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Bruton v. Gerber, No. 15-15174.  The district court had dismissed Plaintiff’s unjust enrichment claim, denied class certification for lack of an “ascertainable 

On April 13, 2017, in Azoulai v. BMW of N. Am. LLC (Case No. 16-cv-00589), the U.S. District Court for the Northern District of California dismissed a proposed consumer fraud class action against BMW of North America LLC (BMW) concerning the soft-closing automatic doors (SCA) in various BMW models. While many automotive defect claims are brought as pure product liability actions, the plaintiffs in Azoulai sought to “hybridize product liability and consumer fraud doctrines” in pursuit of a more lucrative fraud-based class action damages award. Encouragingly, the court rejected these efforts, finding that slamming doors are a known hazard (that was warned against) and that the consumer fraud doctrine was inapplicable.BackgroundIn 2002, BMW introduced SCA on certain automobile models. The SCA feature “auto-activates and pulls the door of the vehicle to the frame of the automobile and firmly closes it when the door is within 6mm of the closed position.” The Azoulai plaintiffs claimed that the “SCA crushed their fingers while drawing the doors of their vehicles to the closed position.” They contended that the SCA should have included a sensor that halted its operation if it detected small objects (like fingers) between the door and the frame of the vehicle. But rather than focus on their physical injuries, the plaintiffs alleged deception in their lawsuit against BMW. Specifically, they claimed that BMW “wrongfully induced Plaintiffs to purchase and/or lease their vehicles by concealing [the alleged defect], and that Plaintiffs would have paid less for their vehicles or would not have purchased or leased them at all had they known of the defect.”Plaintiffs sued for breaches of warranties, as well as violations of the California Consumer Legal Remedies Act (CLRA) and the California Unfair Competition Act (UCL). Plaintiffs did not bring product liability claims.StandingThe court held that the plaintiffs lacked standing because they did not allege facts showing an injury derived from the legal theories alleged in their pleading. To allege standing for fraud-based claims, a plaintiff must plead facts that establish an economic, as opposed to purely physical, injury. The court found that plaintiffs failed that test. Although their physical injuries might have conferred standing under a traditional product liability theory, plaintiffs “expressly decline[d] to assert [a product liability] claim,” opting instead to pursue fraud-based claims. As the court stated, “[r]ather than seeking to recover for their injuries, Plaintiffs bring this suit grounded in consumer fraud[.]” In short, plaintiffs’ actual injuries and theories of liability didn’t match.The court also concluded that plaintiffs had no basis for their contention that their vehicles “declined in value because the SCA lacked a [safety] sensor.” The court noted that plaintiffs did not allege that an added safety sensor was bargained for or was built in to the purchase price of the vehicles. The court further stated that plaintiffs did not allege that the SCA design received negative attention from the media, thus decreasing the value of their vehicles. Accordingly, the court rejected plaintiffs’ hybridization attempt, holding that they suffered no injury in fact related to BMW’s alleged fraud, and therefore lacked standing.Plaintiffs’ Deficient Claims The court further rejected arguments that BMW overstated the safety of the SCA and concealed a design defect in the technology. Specifically, plaintiffs alleged that BMW misrepresented that the SCA “safely” closes the doors of the vehicles and that BMW actively concealed that the SCA lacked a safety sensor. The court rejected these claims.BMW argued that its marketing statement that the SCA operates “safely” was mere puffery and, therefore, not actionable under the CLRA or UCL, and did not create a warranty. In order to be actionable (and not considered puffery), a statement must be “specific and measureable”—it cannot be generalized, vague, or unspecified.<a href="#_ftn1" name="_ftnref1">[1]</a> The court held that there is nothing “specific and measurable” about the word “safely.” This determination proved fatal to all of plaintiffs’ claims.To allege a concealment or “failure to disclose” claim under the CLRA or UCL, plaintiffs are required to allege that the undisclosed defect posed an unreasonable safety hazard. Plaintiffs’ claims failed for two reasons. First and foremost, they did not adequately allege existence of a defect in the design of the SCA. Second, the court noted that even if plaintiffs had established the existence of a defect, their claims would still fail because they were unable to allege an unreasonable safety risk posed by the SCA. “Humans have been slamming their fingers in doors since doors were invented,” noted the court, and “[s]lamming one’s finger in a car door, while plausibly hazardous, is an anticipated risk of using any door, and is a risk of which BMW expressly warns consumers.”ConclusionAzoulai illustrates the perils of overreaching. Had plaintiffs brought product (or strict) liability claims for the injuries allegedly caused by the SCA, and sought damages to compensate for their medical bills and reasonable related expenses, the outcome might have been different. However, electing to bring fraud-based class action claims with the hope of a larger payoff closed the door on any plaintiff recovery.<a href="#_ftnref1" name="_ftn1">[1]</a> Anunziato v. eMachines, Inc., 402 F. Supp. 2d 1139 (C.D. Cal. 2005).