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

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

Julie Y. Park

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

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Senior Counsel

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

Penelope A. Preovolos

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

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

Claudia M. Vetesi

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

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

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

Alexandra Barlow

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

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

Adam Hunt

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The Ninth Circuit gets more requests to appeal class-certification decisions under Rule 23(f) than any other court.  How do those requests fare?  We take a look below, drawing from <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3589733">this invaluable nationwide study</a> by Professor Bryan Lammon.BackgroundFederal Rule of Civil Procedure 23(f) provides a way to immediately appeal orders granting or denying class certification.  These interlocutory orders ordinarily would be appealable only after final judgment.  But Rule 23(f) was added in 1998 because the class-certification decision is often a make-or-break moment.  If the class is certified, the defendant feels overwhelming pressure to settle; if not, the plaintiff might drop the case.  By allowing appeal before those pressures kick in, Rule 23(f) creates a chance to correct errors in these high-stakes decisions and to develop the law.A Rule 23(f) appeal, however, is not automatic.  A party must file a petition for permission to appeal, and the court of appeals has discretion over whether to grant it.  To make that decision, the Ninth Circuit looks for:  (1) a “death-knell situation” coupled with a “questionable” decision, (2) “an unsettled and fundamental issue” of class-action law important to the litigation and likely to evade end-of-case review, or (3) manifest error.  Chamberlan v. Ford Motor Co., 402 F.3d 952, 959 (9th Cir. 2005).In the Ninth Circuit, Rule 23(f) petitions go to the motions panel, which rotates monthly.  Just two judges decide the petitions (unless they call in a third judge, for example if the first two disagree).  The motions panel typically issues only a brief order without reasoning; if the petition is granted, the case then goes to a merits panel for full briefing, argument, and decision.A look at the Ninth Circuit’s Rule 23(f) docket Despite their high stakes for the parties, Rule 23(f) petitions get little fanfare sitting on the motions panel’s docket.  We’d like to shed some light on that docket.  Our data below come from Prof. Lammon’s analysis of all Rule 23(f) petitions filed from 2013 through 2017, plus our own research on Ninth Circuit petitions filed from 2018 through 2021.Volume:  The Ninth Circuit gets a ton of Rule 23(f) petitions.  The Ninth Circuit decides far more Rule 23(f) petitions than any other circuit—unsurprising given its size.  In Prof. Lammon’s 2013-2017 data, the Ninth Circuit got over 50 petitions a year, while the next closest courts (the Second and Seventh Circuits) each got fewer than 20 annually.  And the Ninth Circuit’s pace hasn’t dropped: from 2018 to 2021, the court saw an average of about 60 petitions per year. Rule 23(f) outcomes:  It’s tough to seek Rule 23(f) appeal in the Ninth Circuit, especially as a defendant.  The Ninth Circuit is one of the stingiest courts in the country when it comes to permission to appeal under Rule 23(f).  Prof. Lammon found the Ninth Circuit granted only 18% of Rule 23(f) petitions from 2013 to 2017—lower than any other circuit but one (the D.C. Circuit, which decided only 7 petitions in that period).  We found the Ninth Circuit had a similarly low grant rate from 2018 to 2021, about 20%.  And that rate was only 10% for petitions filed last year (2021).  Prof. Lammon found a statistically significant gap between the Ninth Circuit and the most generous Rule 23(f) court (the Fifth Circuit, with a grant rate of 50%).It’s especially tough to be a defendant filing a Rule 23(f) petition in the Ninth Circuit.  On the surface of Prof. Lammon’s data, Ninth Circuit plaintiffs and defendants seemingly had similar success—19% and 17% of petitions granted, respectively.  What is noteworthy about that parity, however, is that nationally defendants seeking Rule 23(f) review do better than plaintiffs. So while the Ninth Circuit’s 19% grant rate for plaintiffs was in line with the national plaintiffs’ average of 21%, the Ninth Circuit defendants’ rate (17%) was quite a bit below the national defendants’ average of 27%.  And even the surface-level parity in Prof. Lammon’s data has disappeared in recent years—we found from 2018 to 2021 that Ninth Circuit plaintiffs had a whopping 29% grant rate, while defendants sat at a measly 13%.  (That recent disparity, though, was biggest in 2018-2019 and lessened in 2020-2021.)  As Prof. Lammon explains, these figures come with caveats, and he found little statistically significant evidence of courts treating plaintiffs and defendants differently.  But to the extent there is a difference in the Ninth Circuit, it appears to disfavor defendants. Merits outcomes:  In the Ninth Circuit, reversal of class-certification decisions is relatively rare.  Once Rule 23(f) appeal is granted, courts of appeals nationwide reverse the district court roughly half the time (54% for 2013-2017 petitions).  But the Ninth Circuit reverses less often:  37% for 2013-2017 petitions, and 44% for 2018-2021 petitions.  These reversal rates, Prof. Lammon found, do not differ significantly depending on which party is appealing.  The Ninth Circuit’s low 23(f) grant rate, combined with its low reversal rate, means that only a few lucky petitioners achieve their ultimate goal—reversal of a class certification grant or denial.Timing:  The Ninth Circuit generally decides Rule 23(f) petitions in 3 months.  We found the Ninth Circuit decides Rule 23(f) petitions in about 85 days on average—in line with the national average according to Prof. Lammon’s data.  But there’s a lot of variation behind that average.  Many petitions were decided more quickly—over 30% of the petitions we saw were decided within 60 days, and over 60% within 90 days—but some took much longer, with 17% taking longer than 120 days.The timing is roughly similar whether the petition is granted or not.  Grants took slightly longer—90 days on average, compared to 83 days for denied petitions—but it’s unclear whether that’s a meaningful difference.Amicus participation:  Petition-stage amici are rare.Amici weighed in on Rule 23(f) petitions in only 4% of the Ninth Circuit cases we looked at.  That’s not surprising, as the deadlines for these petitions are so tight, there’s not much time for amici to get involved (14 days to file the petition and 10 days to file the response). When amici did participate at the Rule 23(f) stage in the cases we saw, the petition was granted four times as often.  But it’s impossible to draw firm conclusions from that.  Not only is our data set small, but we can’t tell which of those petitions would have been granted even without amicus participation.  After all, if a petition was strong enough to grab amici’s attention, it might have been strong enough on its own to grab the court’s attention as well.  On the other hand, the presence of an amicus brief does signal to the court that the issue presented by petitioner is of interest to other parties.The bottom lineRule 23(f) petitions are a valuable tool for disappointed litigants to get appellate review and for courts to develop class-action law.  And they are popular in the Ninth Circuit, which has more Rule 23(f) activity than any other court.  But the Ninth Circuit uses its Rule 23(f) power relatively sparingly, granting review less often and—even when it does grant review—affirming the district court more often.

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Joe Palmore co-chairs Morrison Foerster’s Appellate and Supreme Court practice. Chambers USA describes him as “an outstanding oral advocate,” who is “calm, focused, effective and doesn’t back down,” and has “complete command of the facts.” Joe “writes great briefs” (Chambers USA), with one client recounting that “the Court mirrored the language he thoughtfully chose in its ultimate order” (Legal 500).

Joseph R. Palmore

Joseph R. Palmore is co-chair of the firm's Appellate and Supreme Court Practice Group and Managing Partner for the Washington, D.C. office. Before joining Morrison Foerster, Joe was an Assistant to the Solicitor General at the United States Department of Justice and the Deputy General Counsel of the Federal Communications Commission (FCC).

Joseph Palmore

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How Do Rule 23(F) Petitions Fare In The Ninth Circuit?

How Do Rule 23(F) Petitions Fare In The Ninth Circuit?

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The Ninth Circuit gets more requests to appeal class-certification decisions under Rule 23(f) than any other court.  How do those requests fare?  We take a look

Class certification is often discussed as a “stage” of litigation, but the Second Circuit’s recent decision in Jin v. Shanghai Original, Inc. et al<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn1">[1]</a> is a good reminder that, even after a class is certified, class treatment must remain appropriate throughout the litigation. In Jin, the Second Circuit upheld the decertification of a class after “red flags” alerted the court that plaintiffs’ counsel was no longer serious about taking the case to trial. The opinion is particularly significant in practice areas where settlement is the expectation and trial the exception—and it provides a roadmap for defense counsel contemplating a motion to decertify if class counsel does not remain diligent. Whether to do so may depend on the case. A class decertified for counsel’s failures of representation may just be scooped up and reasserted by a different (and more adequate) lawyer. But in cases with serious proof problems, class decertification on adequacy grounds may effectively end the litigation. Case BackgroundIn Jin, employees of Joe’s Shanghai restaurants<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn2">[2]</a> sued the restaurant chain in federal court in New York, alleging wage and hour violations under New York Labor Law (“NYLL”) and the Fair Labor Standards Act.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn3">[3]</a>  The district court certified a class of employees at a single location for the NYLL claims only under Rule 23(b)(3),<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn4">[4]</a> and appointed John Troy of Troy Law, PPLC as class counsel.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn5">[5]</a>  The case then proceeded toward trial.Just five days before trial was scheduled to start, however, the district court sua sponte decertified the class, holding that the representation provided by class counsel was no longer adequate.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn6">[6]</a>  The district court noted “numerous red flags” over the preceding months, including class counsel’s failure to investigate their own claims that defendants had induced class members to opt out and repeated failure to submit a joint pretrial order that complied with the judge’s practice requirements.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn7">[7]</a>  When class counsel submitted a revised witness list shortly before trial, it became apparent that class counsel planned to call only two class members to testify.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn8">[8]</a>  The district court deemed this pretrial submission a “significant intervening event” triggering decertification.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn9">[9]</a>  In particular, the district court noted that the rights of absent class members would be put in jeopardy where the relevant payroll and other pay-related records no longer existed, making “substantial testimony critical to plaintiffs’ class claim.”<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn10">[10]</a>The Second Circuit’s DecisionThe Court of Appeals affirmed, holding that the trial court acted within its discretion because class counsel’s conduct made clear that “counsel was no longer adequately representing the class.”<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn11">[11]</a>  The court explained, “Rule 23(g) requires courts to consider several criteria, including counsel’s efforts investigating the claims, experience with class actions, knowledge of the area of law, and resources.”<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn12">[12]</a> Further, the Court of Appeals made clear that trial courts do not require a “significant intervening event” to decertify a class that no longer meets the requirements of Rule 23, reversing a handful of district court decisions to the contrary.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn13">[13]</a>  A court may—and should—decertify sua sponte whenever it determines that a class falls short of the requirements, including where class counsel’s representation of absent class members is deficient. This decision reinforces the trial court’s oversight role in class action litigation, and clarifies that class counsel’s representation from beginning to end must meet the standards of Rule 23 in order to maintain class certification. Notably, however, the Court specifically left open the question of what standard applies if a defendant moves to decertify a class, noting that “[b]ecause the issue of whether a significant intervening event or a similar type of showing might be appropriate when a defendant moves to decertify is not before us, we do not address this issue.”<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftn14">[14]</a>TakeawaysThe Second Circuit’s decision is reassuring for defense counsel when facing opportunistic or incompetent class counsel. By building a record of unprofessional behavior, defense counsel has recourse to the court to seek decertification of the class, regardless of the standard that applies to such motions. Indeed, even though the decision does not explicitly resolve the governing standard in the Second Circuit for motions to decertify, it is a reminder that defendants can move to decertify a class at any point during the litigation if they amass evidence that the class no longer satisfies the requirements of Rule 23. Seeking decertification on the basis of class counsel’s performance may not be the right strategy in every instance—for instance, where another firm is likely to step in to prosecute the case. But a motion to decertify on the basis of inadequate representation may prove a useful tool where there are serious issues that render the claims unattractive to plaintiffs’ counsel—like the problems of proof in Jin.    <a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref1">[1]</a>   No. 19-3782, slip op. (2d Cir. March 9, 2021).<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref2">[2]</a>  The authors and editor wish to disclose the consumption of a significant number of soup dumplings.  They are very good, but are best not eaten over a computer keyboard.  Views regarding soup dumplings are our own and are not the views of Morrison & Foerster LLP.  <a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref3">[3]</a>Id. at 4; Jin v. Shanghai Original, Inc., No. 16-CV-5633 (ARR) (JO), 2019 WL 11816612 (E.D.N.Y. July 10, 2019). <a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref4">[4]</a>   The district court retained supplemental jurisdiction over the state law claims without discussion.  No. 19-3782, slip op. at 3 n.1.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref5">[5]</a>Id. at 4; 2019 WL 11816612 at *1.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref6">[6]</a>   2019 WL 11816612 at *1.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref7">[7]</a>Id. at *3 (counsel finally submitted a pretrial order that only “substantially complied” with the judge’s practice rules).<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref8">[8]</a>Id. at *2.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref9">[9]</a>Id. at *3.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref10">[10]</a>Id. at *2 n.4.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref11">[11]</a>   No. 19-3782, slip op. at 24. <a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref12">[12]</a>Id. at 5.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref13">[13]</a>Id. at 22.<a href="file:///C:/Users/MXC47/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/ELGW9P9V/CAMT%20-%20Second%20Circuit%20Decision%20Serves%20as%20Cautionary%20Tale%20to%20Would%20(004)%20-%202093556%20(003).DOCX#_ftnref14">[14]</a>Id. at 23 n.18.

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Jessica’s practice focuses on complex civil litigation, with an emphasis on class action, financial services litigation and enforcement, and commercial disputes. Recent representative matters include the defense of a leading marketplace lender in a putative nationwide class action under state usury laws; a major consumer products company in multidistrict antitrust litigation; a

Jessica Kaufman

Jessica’s practice focuses on complex civil litigation, with an emphasis on class action, financial services litigation and enforcement, and commercial disputes. Recent representative matters include the defense of a leading marketplace lender in a putative nationwide class action under state usury laws; a major consumer products company in multidistrict antitrust litigation; a professional services firm in a malpractice action; a lingerie company facing consumer protection claims, including claims of false advertising; and financial institutions facing claims under the federal and state contract and antitrust laws, RICO Act, Right to Financial Privacy Act, Fair Debt Collection Practices Act, and state unfair and deceptive practices statutes. She also regularly advises and represents clients in complex commercial disputes.What do you like best about your work? Our work is our role as problem solvers. As litigators, we help clients address immediate problems. But when we know our clients and their businesses well, our clients also turn to us for longer term advice, to help identify issues before they arise, and think about how to do things better.What do you enjoy doing in your free time? I try to work with my hands. I started learning wheel-thrown pottery last year and enjoy forcing my family and friends to accept impractically shaped mugs, not just at Christmas, but — lucky for them — all year long.How do you see your practice changing in the next few years? I see my practice including more state AG enforcement work in the years ahead. The regulatory environment for our financial services clients is poised to change dramatically at the federal level; active AGs in New York and California will see that as an opportunity to fill the void.

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.

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Second Circuit Affirms Class Decertification Based on Inadequate Representation

Second Circuit Affirms Class Decertification Based on Inadequate Representation

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Class certification is often discussed as a “stage” of litigation, but the Second Circuit’s recent decision in Jin v. Shanghai Original, Inc. et al[1] is a good

On June 7, 2019, an en banc Ninth Circuit panel affirmed certification of a nationwide settlement class and held, 8-3, that class certification criteria are applied less strictly in a settlement context.[1]  Hyundai II preserves the ability to certify nationwide settlement classes while maintaining more demanding requirements for litigation classes.  As noted in our earlier post, the prior panel decision,[2] which denied certification, sent class action lawyers into a tizzy, creating concerns about the viability of nationwide class settlements.  Hyundai II reversed course, holding that the predominance requirement differs in a settlement context because there is no need to consider the manageability of individual issues at trial.Case BackgroundAs we discussed in our previous post, a flurry of class actions were filed nationwide after the EPA launched an investigation regarding complaints that Hyundai and Kia had overstated the fuel efficiency of some of their vehicles.  The MDL panel consolidated the cases before Judge Wu in the Central District of California, and Judge Wu granted plaintiffs’ motion for certification of the settlement class.  The three-judge panel in Hyundai I vacated the trial court’s decision, holding that the Rule 23(b)(3) predominance inquiry required a choice-of-law analysis, as well as proof of classwide deception, essentially identical to what is required for certification of a litigation class.On July 27, 2018, the Ninth Circuit granted en banc review of the panel decision.Predominance Analysis  Hyundai II held that Rule 23(b)(3) predominance factors must be considered in light of the reason for which certification is sought—litigation or settlement.  Citing the Supreme Court’s decision in Amchem,[3] the Ninth Circuit held that in the settlement context, manageability problems created by the need to resolve individual issues at trial are not a concern because no trial will occur.  Instead, the focus is on the Rule 23 provisions intended to protect absent class members by blocking “unwarranted or overbroad class definitions.”Individual Issues Regarding Exposure and Reliance Did Not Defeat Predominance for a Settlement ClassIn Hyundai II, the Ninth Circuit concluded that common issues predominated regarding exposure and reliance, because so-called “Monroney stickers” containing the alleged fuel efficiency misrepresentations were present on every new car.  The Objectors-Appellants argued that the class of used-car purchasers may not have seen the “Monroney stickers” because they were not required to be displayed on used cars.  The trial court had rejected this argument on the basis that the alleged misrepresentations were part of a nationwide, concerted marketing effort.  The Hyundai II panel, however, did not decide whether Hyundai’s and Kia’s advertising was substantial enough to support an inference of reliance under the Tobacco II standard in a litigation context.<a name="_ftnref4" href="#4033971-v3-Hyundai_-_Ninth_Circuit_Article.docx">[4]</a>  Rather, the court limited its decision to the settlement context and concluded that the potential individual issues would apply only to a subset of the class and thus did not defeat predominance for the settlement class overall.  Moreover, the potential individual issues would “primarily implicate trial management issues, which we do not consider when conducting a predominance analysis for a settlement class.”Variations in State Law Did Not Defeat Predominance for a Settlement ClassHyundai II rejected the objectors’ argument that, in the settlement context presented, Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), required the district court to address variations in state law affecting claims by used car purchasers.  While a party litigant could “timely invoke the law of a foreign state,” here, no objector had presented an adequate choice-of-law analysis, or argued that differences between the consumer protection laws of all fifty states precluded certification of a settlement class.  As such, the district court was not obligated to address choice-of-law issues, and the Ninth Circuit would not decertify the class for lack of such an analysis.Moreover, the Ninth Circuit held that Mazza was “readily distinguishable.”  There, unlike in the case before the court, the foreign law proponent had “exhaustively detailed the ways in which California law differs from the laws of the 43 other jurisdictions,” and showed how applying the facts to those disparate state laws made “a difference in this litigation.”  The en banc panel emphasized that:  “Importantly, the Mazza class was certified for litigation purposes.  The prospect of having to apply the separate laws of dozens of jurisdictions presented a significant issue for trial manageability, weighing against a predominance finding.”Finally, Hyundai II concluded that application of California law did not violate due process notwithstanding that, under Virginia law, Virginia residents’ claims might be time-barred if they opted out.  Significantly, the Ninth Circuit held that the Virginia objector was free to opt out, but “could not opt out on behalf of anyone else.”  The decision thus eliminates the threat sometimes made by objectors to opt out an entire subclass.Settlement Approval Was Otherwise ProperUnlike a number of recent Ninth Circuit decisions that have been notably critical of the details of class settlements, the en banc panel in Hyundai II rejected a variety of challenges to the settlement and settlement procedures.  It held that both the long form and short form notices were proper.  The long form notice adequately described the terms of the settlement and informed settlement class members that additional compensation could be received.  The short form notice “was designed to be, as the name suggests, short.”  It satisfied its “primary purpose” of alerting class members to the settlement; it provided a high-level overview of the process (including critical dates), and explained where class members could obtain additional information and claim forms.Hyundai II also rejected the argument that claim forms were not necessary and that the claim forms were overly burdensome.  Although the participation rate of lump sum claimants was only 23 percent, the Ninth Circuit noted that it had approved class action settlements “where less than five percent of class members filed claims.”  Finally, the Ninth Circuit found no evidence of collusion between class counsel and the automakers, noting that there was no “clear sailing” provision, no reversion of unclaimed funds to the defendants, and no disproportionate distribution of settlement funds to class counsel.DissentIn her dissent, Judge Ikuta, who authored the original panel decision, largely adopted the analysis contained in that decision.  The dissent argues that settlement classes are not different, and that the trial court should have done a full choice-of-law analysis, as would have been required for a litigation class.TakeawaysHyundai II reaffirms that, in appropriate cases, nationwide settlement classes can be certified under a less stringent standard than litigation classes.  At the same time, the decision is cabined to the settlement context and preserves intact the far more demanding predominance analysis required for certification of a litigation class.________________________________________________________________[1] In re Hyundai and Kia Fuel Economy Litig., 2019 WL 2376831 (June 6, 2019) (“Hyundai II”).[2] In re Hyundai and Kia Fuel Economy Litig., 897 F.3d 1003 (9th Cir. 2018) (“Hyundai I”).[3] Amchem Products Inc. v. Windsor, 521 U.S. 591 (1997).[4] In re Tobacco II Cases. 46 Cal. 4th 298 (2009).

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

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Ninth Circuit’s En Banc Hyundai Decision: Less Strict Standard For Settlement Classes

Start Your Engines: The U.S. Supreme Court Will Yet Again Review the Constitutional Limits of Personal Jurisdiction in a Pair of Cases Involving Ford Motor Company

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On June 7, 2019, an en banc Ninth Circuit panel affirmed certification of a nationwide settlement class and held, 8-3, that class certification criteria are app

Ninth Circuit’s En Banc Hyundai Decision: Less Strict Standard For Settlement Classes

In April, a New York federal court denied certification for a purported class alleging that Johnson & Johnson misled customers by placing the words “no trans fat” on labels for its Benecol buttery spreads. See Bowling v. Johnson & Johnson, et al., 1:17-cv-03892, S.D.N.Y. 2017. The court’s order focused on issues highly specific to the lead plaintiff, showing the benefits of carefully investigating the lead plaintiff in class actions.Case BackgroundIn 2017, Suzanna Bowling brought suit against Johnson & Johnson alleging that the labeling for its Benecol buttery spreads was misleading. According to the complaint, the labeling includes text reading “No Trans Fat” and “No Trans Fatty Acids,” some of which is in “all capitalized, bolded letters.” It was these statements that the complaint alleged misled a New York class of customers to purchase, and overpay for, the product.Court Denies Plaintiff’s Motion for Class CertificationThe United States District Judge Alison J. Nathan denied Ms. Bowling’s motion to certify the New York class, finding that Ms. Bowling was not a suitable class representative for a couple of reasons.First, Ms. Bowling had previously settled with Johnson & Johnson, and as a part of that settlement, there was a “covenant not to sue” in place. This covenant, among other aspects of the settlement, could potentially impede the current case were it to proceed. Judge Nathan stated, “It may be that the covenant not to sue is not binding or is inapplicable to Bowling’s claims here, but … the court concludes she will be required to ‘devote considerable time’ to rebutting its applicability.” As a result of this potentially binding covenant, Ms. Bowling was certainly an atypical—and arguably an inadequate—class representative.Second, Ms. Bowling’s credibility suffered “on key issues.” In fact, key allegations in her complaint were demonstrably false. Ms. Bowling stated in the complaint that she purchased Benecol at a particular location and time, but Johnson & Johnson’s internal records showed that Benecol was never sold at that particular location and time. Ms. Bowling also alleged that, after she came to believe that Benecol actually contained trans fats, she immediately wrote Johnson & Johnson requesting a refund. However, Johnson & Johnson’s customer service department found no record of such a refund request.In conclusion, Judge Nathan stated, “Here, defendants have presented unrebutted evidence that Bowling could not have purchased Benecol Light in the manner in which she has testified; she is therefore ‘vulnerable to serious attacks’ on her credibility.” Accordingly, Ms. Bowling’s motion for class certification was denied.TakeawayThis case reinforces that it is imperative for defendants to always carefully investigate the lead plaintiffs, whether by running a background check or asking questions about their prior litigation history during depositions. All too often, as was the case here, the lead plaintiff is an inadequate class representative for personal reasons that are not apparent at first glance. And while the plaintiff’s unsuitability to represent the class may not end the entire litigation, it can certainly stall the proceedings and create leverage for defendants during settlement negotiations.

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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

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Lead Plaintiff Spreads Her Misleading Butter Case a Little Too Thin

Lead Plaintiff Spreads Her Misleading Butter Case a Little Too Thin

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In April, a New York federal court denied certification for a purported class alleging that Johnson & Johnson misled customers by placing the words “no trans fa

In Hadley v. Kellogg Sales Company, Plaintiff Stephen Hadley, who has filed at least two additional lawsuits alleging the mislabeling of breakfast foods, sought certification of four California subclasses of purchasers of Kellogg’s cereal and cereal bar products.  On August 17, 2018, Judge Koh issued an order that carefully dissected Plaintiff’s request.  The court concluded that Plaintiff had established the requirements for class certification for several of his proposed subclasses challenging health claims on the labels of the products at issue.  Significantly, however, Judge Koh rejected Plaintiff’s attempts to certify a subclass challenging a representation made on the back of packaging of cereal bars.  She also concluded that Plaintiff had not established Rule 23(b)(3)’s predominance requirement as to his deceptive omission theory of liability due to his failure to present a viable damages model.Background. Plaintiff alleges that Kellogg’s use of statements containing terms such as “healthy,” “nutritious,” or “wholesome” on its cereal and cereal bar products misled consumers into believing that those products are healthy, when they are not because of the amount of added sugar they contain.  On this basis, Plaintiff alleges violations of the FAL, CLRA, and UCL, and asserts a claim for breach of warranty.  Plaintiff also predicates his consumer-protection claims on his allegations that Kellogg deceptively failed to disclose to consumers the products’ high sugar content, and that certain of the challenged statements violate FDA regulations.Narrowly Defined Subclasses Prevent Predominance Challenge Based on Lack of Exposure, But Back-of-the-Package Statements Do Not. Kellogg argued that many of the allegedly deceptive statements did not appear on the packaging of the cereal products for a substantial portion of the class period, and that this lack of uniform exposure created significant differences regarding the legal viability of class members’ claims.  The court disagreed.  Judge Koh reasoned that Plaintiff sidestepped this potential problem by narrowly defining the subclasses to include only those individuals who purchased products that actually displayed the challenged statements on their packaging.  Nevertheless, the court agreed with Kellogg that it could not infer class-wide exposure to the “wholesome goodness” statement that only appeared on the back panel of cereal bar packaging.  The court therefore declined to certify a subclass of purchasers of the cereal bar because it would have to conduct individualized inquiries to determine which class members saw the challenged statements.Advantage Realized Model Flunks Comcast for Omission Claims.  Comcast Corp. v. Behrend, 569 U.S. 27 (2013), requires a plaintiff to establish a damages model that matches his or her theory of liability and measures damages across the entire class.  Plaintiff claimed that his expert’s proposed “advantage realized model” satisfied the Comcast requirement for his theory that Kellogg deceptively failed to inform consumers about the allegedly high sugar content of its breakfast products.  Under the advantage realized model, Plaintiff’s expert proposed to measure the market advantage that Kellogg obtained by omitting that information.  The court concluded, however, that this model only provided a measure of nonrestitutionary disgorgement (Kellogg’s unjust enrichment), rather than restitutionary disgorgement (Plaintiff’s loss).  The court explained that nonrestitutionary disgorgement is not a permissible class-wide remedy under the FAL, CLRA, or UCL, and therefore Plaintiff’s damages model was not consistent with his omission theory of liability.Takeaway. Judge Koh’s decision in Hadley emphasizes that plaintiffs challenging multiple statements on multiple products in a single action are not excused from establishing the requirements for class certification for each product at issue and each theory of liability.  Even where defendants cannot entirely defeat class certification, they should parse plaintiffs’ broad requests and direct pointed attacks to particular products or theories of liability that are susceptible to challenge on any class certification requirement.  In particular, Judge Koh’s denial of class certification as to back-of-the-package statements and omission-based claims demonstrates that predominance and damages model requirements remain fruitful areas for opposing class certification.

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Mixed Results on Class Certification for “Cereal” Plaintiff

Mixed Results on Class Certification for “Cereal” Plaintiff

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In Hadley v. Kellogg Sales Company, Plaintiff Stephen Hadley, who has filed at least two additional lawsuits alleging the mislabeling of breakfast foods, sought

On July 27, 2018, the Ninth Circuit issued an order granting en banc review of its decision in Hyundai and Kia Fuel Econ. Litig., No. 15-56067, 2018 U.S. App. LEXIS 1626 (Jan. 23, 2018). The Ninth Circuit also set oral argument for the week of September 24, 2018, in a separate ruling.As we noted in our February 12, 2018 post, the Ninth Circuit’s January 23 decision denying certification of a settlement class had provided defendants with a power tool in defending against class certification. While the panel is reviewing the decision, however, the Ninth Circuit made clear that the case may not be cited as precedent in any case before the Ninth Circuit.  We will provide relevant updates following the issuance of an opinion.

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Update: Ninth Circuit to Review Hyundai Pro-Defense Decision

Update: Ninth Circuit to Review Hyundai Pro-Defense Decision

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On July 27, 2018, the Ninth Circuit issued an order granting en banc review of its decision in Hyundai and Kia Fuel Econ. Litig., No. 15-56067, 2018 U.S. App. L

Another court has allowed individuals to move past the preliminary stages of litigation by finding that “lost time” and the “time value of money” are injuries. Building on its prior rulings allowing data breach cases to jump over standing hurdles, on April 11, 2018, in Dieffenbach v. Barnes & Noble, Inc., No. 17-2408 (7th Cir. 2018), the court also allowed this data breach case to hop over the damages hurdle at the pleading stage.In Barnes & Noble, the plaintiffs alleged that in 2012, hackers breached PIN pads that Barnes & Noble used to verify customers’ payment information.  This breach allegedly allowed the hackers to steal customers’ names, card numbers, expiration dates, and PINs.  Barnes & Noble then announced to affected customers that it had been a victim of a data breach.  In response to this announcement, some customers allegedly spent monies on credit-monitoring services, while others allegedly expended merely their personal time to sort out issues related to the breach with their credit card companies and/or the police.Two lead plaintiffs brought this litigation: Heather Dieffenbach and Susan Winstead. Ms. Dieffenbach alleged four distinct injuries under California’s Customer Records Act and the Unfair Competition Law, three of which the Court found sufficient to allege injury: (1) her bank took three days to restore funds someone else had used to make a fraudulent purchase; (2) she had to spend time sorting things out with police and her bank; and (3) she could not make purchases using her compromised account for three days.  And Ms. Winstead alleged two theories of injury under Illinois’ Consumer Fraud and Deceptive Business Practices Act: (1) her bank contacted her about a potentially fraudulent charge on her credit card statement and deactivated her card for several days; and (2) the security breach at Barnes & Noble “was a decisive” factor in her renewing a credit-monitoring service.Consistent with its recent rulings in data breach actions, the Seventh Circuit noted that the alleged money spent for credit-monitoring services and the loss of the time value of money and one’s own time satisfied Article III standing. See Remijas v. Neiman Marcus Group, LLC, 794 F.3d 688 (7th Cir. 2015) (data breach plaintiffs may have standing based strictly on an alleged impending harm), and Lewert v. P.F. Chang’s China Bistro, Inc., No. 14-3700 (7th Cir. 2016) (the increased risk of fraudulent charges and identity theft that consumers faced because their data had been stolen was sufficient to confer standing).But the Seventh Circuit this time went further and held that the “time value of money” (the loss of access to plaintiff’s account for three days) and “significant time and paperwork costs incurred to rectify violations” can qualify as economic losses under the California statutory claims asserted. The Court also held that the Illinois plaintiff sufficiently pled injury under the Illinois consumer protection statute based on her allegation that the security breach “was a decisive factor” when she paid to renew her credit-monitoring service.While the Dieffenbach court seems to open the court doors to those who spend time “set[ting] things straight” after a data breach, the court expressly limited its decision to the pleadings stage.  The court stated, “All we hold today is that the complaint cannot be dismissed on the ground that the plaintiffs do not adequately allege compensation damages.”  The court also acknowledged the reality that, because Barnes & Noble was a victim of the data breach too, “[p]laintiffs may face a difficult task showing an entitlement to collect damages from a fellow victim of the data thieves” and that “it is far from clear that this suit should be certified as a class action.”  This is not the last word; plaintiffs continue to face an uphill battle in proving that a class should be certified and that defendant is liable for any damages.