The family of Ed Napleton, owners of three car dealerships in Illinois and Florida, sued Volkswagen in Chicago federal court on behalf of themselves and other franchise dealers similarly situated in connection with the VW emissions scandal. According to the complaint, the Napleton family opened its first car dealership on the south side of Chicago in 1931, and now owns more than 50 dealerships in 30 different locations in five states. Napleton purchased his first VW dealership in September 2015. Only three days later, the EPA issued its Notice of Violation and announced that VW had admitted that it had used a defective device on 11 million cars worldwide. The complaint alleges that “VW has engaged in policies with respect to franchise dealers that are in direct conflict with federal law designed to protect car dealers from unfair practices by vehicle manufacturers, as well as various franchisee protection laws of several states, causing direct and measurable harm to Plaintiffs. In addition to the their (sic) claims on behalf of all Volkswagen franchise dealers nationwide, Plaintiffs, on behalf of the Volkswagen franchise dealers located in Florida and Illinois, seek damages and injunctive relief under applicable state franchise protection laws.” The Napleton class action lawsuit, the first to be filed on behalf of franchise dealers according to Napleton’s counsel, is in addition to the more than 600 lawsuits currently pending before U.S. District Judge Charles Breyer in San Francisco. Judge Breyer has been asked to approve three different classes: a consumer class, a reseller class and a class of non-Volkswagen dealers.
Class Action Trends
By Jill M. Hutchison
In a recent New York Law Journal article, Partner Jeremy M. Creelan and Associate Daniel H. Wolf explore class action cases before the US Supreme Court. They explain that the Court in recent years has raised the thresholds for class action plaintiffs and other plaintiffs to bring and sustain their claims. “At the start of this Supreme Court term, the court appeared poised to continue this threshold-raising trend,” the authors observe. They examine Campbell-Ewald Co. v. Gomez and Microsoft Corp v. Baker. Associate Jacob D. Alderdice assisted with preparing the article.
To read more on what they have to say, click here.
No resolution of growing rift on acceptable method for establishing ascertainability for small-dollar claims
By Jill M. Hutchison
The Supreme Court recently declined to wade into a developing circuit split on the question of just what constitutes an ascertainable class under Fed. R. Civ. P. 23(b)(3) class. In the case of many consumer products, particularly those that are consumable, like food, cosmetics, and supplements, the defendant is unlikely to have records to document individual customers’ purchases, and the consumers are unlikely to have kept receipts. In such cases, some court have permitted class members to self-identify by affidavit and have held that this identification method is acceptable to create an ascertainable class.
On January 5, 2016, three putative class plaintiffs – Kate McLellan, Teresa Black and David Urban – filed a nationwide class action lawsuit against Fitbit Inc. in the Northern District of California. Fitbits are wrist-based devices that track fitness activity. At the center of the suit is the PurePulse Tracker, which records the wearer’s heart rate during fitness activities. The suit brings a panoply of consumer fraud claims – common law fraud, fraud in the inducement, breach of express and implied warranties, and violations of the California Unfair Competition Law and Consumer Legal Remedies Act, along with parallel claims under Colorado and Wisconsin business codes – but rests upon a central allegation. To wit: plaintiffs claim Fitbit’s advertising representations regarding the consistency and accuracy of its PurePulse Trackers in recording heart rates during intense physical activity are false. The Complaint also challenges Fitbit’s use of a post-purchase agreement, required to activate the PurePulse Tracker, as unconscionable.
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.
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.
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
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. 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.
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.
A defendant in a class action antitrust suit that did not move to compel arbitration until shortly before trial was set to begin was held to have waived its right to arbitrate. In re: Cox Enterprises, Inc. Set-Top Cable Television Box Antitrust Litigation, No. 14-6158 (10th Cir., June 24, 2015). Defendant’s motion to compel arbitration followed extensive discovery, class certification, and potentially dispositive motions. The court found that the defendant’s assertion of its right to arbitrate was overly late and inconsistent with its conduct in litigating the case. Here