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December 2015

US Supreme Court Predicting the Future For Class Actions

By: Jeremy M. Creelan

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During its next term, the Supreme Court will consider whether class action defendants can end the cases against them simply by offering complete relief to individually named plaintiffs and offering nothing to the classes those plaintiffs purport to represent.[1]

The legal issue involves the intersection of two Federal Rules of Civil Procedure, namely the effect that Rule 68—which allows defendants to serve offers of judgment on specified terms and requires plaintiffs to respond to them—has on Rule 23, which governs class actions.  Some circuit courts have held that when a Rule 68 offer of judgment offers a plaintiff all the relief available to him, he can have no further interest in litigation and his legal claims are moot.  In the class action context, at least one circuit has further held that when a defendant makes a complete offer of judgment under Rule 68 before the plaintiff has moved for class certification, the plaintiff can have no interest in representing the class.  Under this analysis, the plaintiff’s class claims are moot in addition to his or her individual claims. 

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Proof of Classwide Injury & Damages Found Possible in Target Data Breach Litigation

By: Reena R. Bajowala

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The fallout from the late 2013 data security breach involving the Target Corporation is not over yet.  After Target announced that financial information of more than 40 million consumers could be at risk, a flurry of lawsuits were filed by consumers and financial institutions.  The consumer suits settled.  The financial institution suits live on (for now) in In re Target Corp. Customer Data Security Breach Litigation, No. 14-2522 (D. Minn. Sept. 15, 2015), where a class of financial institutions who issued credit cards to Target consumers alleged that they were injured by Target’s failure to prevent hackers from accessing customer data in the form of replacing cards and reimbursing fraud losses. 

Plaintiffs sought Rule 23(b)(3) class certification.  Target opposed, arguing that the injuries are “risk of future harm” that financial information might in the future be used, so cannot be established with classwide proof.  The court noted that the banks already reissued cards and that some have already incurred losses from payments.  Target countered that there was no requirement that the plaintiffs reissue cards, so the voluntary act cannot be used by the plaintiffs to establish their own injuries.  The court rejected the argument, holding that “[w]hether a specific action was legally mandated is not required to establish injury or causation.”  The court commented that the “absurdity of this suggestion is evident from the fact that Target itself reissued all of its RedCards . . . in the weeks after the breach.” 

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CAFA PRIMER

By: Kate SpelmanCafa

This post is intended to give readers a basic understanding of the Class Action Fairness Act of 2005 (“CAFA”).  This post is not intended to be a comprehensive review or recitation of the law.

Many litigators perceive state courts as more plaintiff-friendly than their federal counterparts.  As such, plaintiffs often prefer litigating class action lawsuits in state court, while defendants prefer removing these suits to federal court.

However, federal courts have limited subject matter jurisdiction, as they can generally hear only two types of cases: (1) cases involving federal law (“federal question jurisdiction”), and (2) cases involving parties from different states where the amount in controversy exceeds

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Class (De-)Certification

By: Alexander Smith

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Class certification is often the pivotal moment in a class action. In many cases, the prospect of ruinous liability – to say nothing of the difficulty of trying a class action – induces defendants to settle shortly after the class is certified.  But class certification does not necessarily guarantee that plaintiffs will win: because class certification orders are “inherently tentative,” a court may revisit its decision to certify a class if it no longer appears that the class satisfies the requirements of Rule 23.[1]  And as a recent case from the Southern District of New York demonstrates, a defendant may successfully obtain decertification even after a jury renders its verdict.[2]

That case, Mazzei v. Money Store, arose out of allegations that a pair of mortgage servicers (and former lenders) unlawfully assessed late fees and accelerated the balance due on loans that fell into default.  The plaintiff, who took out a second mortgage from the defendants, brought a class action on behalf of a putative class of mortgage borrowers.  The court certified a class of plaintiffs who were charged late fees after their loans were accelerated, and the jury ultimately found in the plaintiffs’ favor.  The defendants then moved to decertify the class on the basis, among others, that the plaintiffs had failed to demonstrate the existence of a contractual relationship between the plaintiff borrowers and the defendant servicers on a classwide basis.  

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