Class Action Settlements

First Circuit Affirms Barefoot Running Shoes Class Settlement

Barefoot-shoes
By: Alexander M. Smith

On December 31, 2015, the First Circuit upheld a class action settlement between Vibram USA, Inc. and purchasers of Vibram FiveFingers footwear. The plaintiffs brought claims on behalf of a putative nationwide class under the consumer protection laws of Massachusetts, including Mass. Gen. Law. ch. 93A and 266, as well as claims on behalf of a putative Florida subclass under the Florida Deceptive and Unfair Trade Practices Act, F.S.A. §§ 501.201 et seq. The lawsuit alleged that Vibram represented that its FiveFingers shoes (which were advertised to facilitate “barefoot running”) would improve body awareness, reduce lower back pain and injury, and improve foot health, allegedly without sufficient scientific studies to substantiate these claims. The parties then settled, and the District of Massachusetts (Woodlock, J.) approved the settlement after a hearing. Pursuant to the settlement, class members received a settlement notice stating that the estimated recovery would be approximately $20 to $50 per pair. Due to a “higher-than-expected” number of claims, class members received only approximately $8.44 per pair of shoes, prompting a group of objectors to appeal. Although the court acknowledged the disparity between the estimated and the actual payment, it nonetheless held that this discrepancy did not void the settlement and that a refund of $8.44 was a fair settlement amount given the uncertainty plaintiffs would face at trial. It likewise dismissed the objectors’ other concerns, including the imposition of a proof-of-purchase requirement on objectors (but not on class members), the form of injunctive relief, the inclusion of a clear-sailing provision, and the total amount of attorney’s fees.

Bezdek v. Vibram USA, Inc., 809 F.3d 78 (1st Cir. 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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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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Delay In Seeking Arbitration Waived Right To Arbitrate

GavelBy: Howard S. Suskin

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

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