Supreme Court Issues Important Jurisdictional Ruling in Plavix Case

646545By Meenakshi Krishnan

On Monday, June 19, the Supreme Court held 8-1 in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County that California courts lacked specific jurisdiction to entertain claims brought by plaintiffs who were not California residents, as there was an insufficient connection between the forum and the specific claims at issue. 

In Bristol-Myers Squibb Co., a group of plaintiffs—86 California residents and 592 residents from other states—filed several state law claims in California Superior Court, alleging health damage caused by Plavix, a drug manufactured and sold by Bristol-Myers. The nonresident plaintiffs did not claim that they procured Plavix through any California source, nor did they claim they were injured or treated for their injuries in California. Bristol-Myers did not develop, market, manufacture, or otherwise work on Plavix in California, though the drug was sold in the state. Bristol-Myers asserted lack of personal jurisdiction, and after the Supreme Court’s decision in Daimler AG v. Bauman, the California Court of Appeal held that California courts had specific jurisdiction over the nonresidents’ claims. The California Supreme Court affirmed, applying a “sliding scale approach to specific jurisdiction.” Under that approach, “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.” The Supreme Court granted certiorari to decide whether the California courts’ exercise of jurisdiction in this case violated the Due Process Clause and subsequently reversed and remanded.

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Nanomaterial Reporting Rule Update

6a01310fa9d1ee970c01b7c901cfe4970bBy E. Lynn Grayson 

EPA recently extended the effective date of the final reporting and recordkeeping requirements for certain chemical substances when they are manufactured or processed at the nanoscale. EPA has delayed the effective date of the January 12, 2017 final rule from May 12, 2017 to August 14, 2017.

Industry sought to repeal the rule, or at a minimum, obtain an extension of the effective until EPA adopts guidance explaining how to comply with the new two-fold requirements including: 1) companies that make, import or process a distinct or “discrete” form of a nanoscale chemical at some time in the future are to provide information to EPA (135 days before they make, import or process the chemical or within 30 days of deciding to manufacture or process the chemical); and 2) companies must comply with a one-time obligation to report information known or reasonably attainable regarding any nanoscale chemicals made or processed at any time during the past three years. Based upon the information EPA receives, the Agency could decide to require new toxicity, exposure or other data or it could decide to impose restrictions on commercial activity.

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Supreme Court Holds That Voluntary Dismissal Does Not Permit Appellate Review of Class Certification Orders

Us-supreme-court-building-2225765_1920By Alexander M. Smith

This morning, the Supreme Court held 8-0 in Microsoft Corp. v. Baker that the named plaintiffs in a class action cannot appeal a denial of class certification (or the granting of a motion to strike class allegations) by voluntarily dismissing their claims.  A five-Justice majority held that this tactic was barred because a voluntary dismissal under these circumstances does not constitute a “final order” under 28 U.S.C. § 1291, while three Justices concurred in the judgment on the basis that such a voluntary dismissal extinguishes the adversity necessary to give rise to Article III standing.  (The Consumer Law Roundup has covered Baker in three previous posts.) 

In Baker, the plaintiffs had filed a putative class action against Microsoft alleging that a defect in the Xbox 360 resulted in scratched discs.  After the district court granted Microsoft’s motion to strike the plaintiffs’ class allegations, the named plaintiffs voluntarily dismissed their claims against Microsoft so that there would be a “final decision” from which they could appeal the denial of class certification.  The Ninth Circuit held, inter alia, that a stipulated dismissal of an individual claim is an adverse and appealable final judgment.  The Supreme Court granted certiorari to address this jurisdictional issue and subsequently reversed.

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They’re Heeeere! Get Ready for the Specter of Mandatory Initial Discovery in All Cases, Even Consumer Class Actions and Other Complex Cases

Pexels-photo-268460By Jill M. Hutchison 

The Mandatory Initial Discovery Pilot Project has started in the District of Arizona (for cases filed after May 1, 2017) and the Eastern Division of the Northern District of Illinois (for cases filed on or after June 1, 2017).  See General Order 17-08 (D. Az. Apr. 14, 2017); General Order 17-005 (N.D. Ill. Apr. 27, 2017).  The bottom line is that the pilot project will require defendants in these courts to quickly marshal the relevant facts and in short order produce a level of substantive disclosures, documents, and ESI that could pose a considerable challenge in consumer class actions and other complex cases.  While these requirements set an ambitious goal for responsive pleadings and early disclosure of a broad swathe of information, there are proactive measures companies can take to be better prepared to respond to consumer class actions in the tight timeframe set by the pilot project.   

Scope of the Pilot Project and Its Requirements

The two courts’ respective Standing Orders outline the details of the project, which will run for three years and applies to nearly all civil cases.  See General Order 17-08 (D. Az.) and Standing Order Regarding Mandatory Initial Discovery Pilot Project (N.D. Ill.).  The only civil cases exempted from the project are (1) actions under the Private Securities Litigation Reform Act, (2) patent cases governed by local rule, (3) cases transferred for consolidated administration by the Judicial Panel on Multidistrict Litigation, and (4) the assortment of cases listed in Rule 26(a)(1)(B) (i.e., review on administrative record, in rem forfeiture actions arising from federal statute, any proceeding challenging a criminal conviction or sentence, cases brought by someone in custody without the aid of an attorney, actions by the U.S. to recover benefit payments, actions by the U.S. to collect on government-guaranteed student loans, proceedings ancillary to cases in other courts, and actions to enforce arbitration awards).  Parties are not allowed to opt out. 

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Johnson & Johnson Deactivates Aveeno Active Naturals Lawsuit with $6.75 Million Settlement

IStock_000007449611LargeBy Kate T. Spelman

On May 26, the plaintiffs in Goldemberg v. Johnson & Johnson Consumer Cos. Inc. filed a motion for preliminary approval to settle their class claims against Johnson & Johnson related to the defendant’s Aveeno Active Naturals brand of personal care products.  The lawsuit, filed in 2013 in the Southern District of New York, alleged that the Aveeno products were falsely advertised as “natural” when they in fact contain synthetic and unnatural ingredients.  In October 2016, the Court certified classes of California, New York, and Florida consumers.  The proposed settlement seeks to certify a class of Aveeno Active Naturals Products consumers nationwide.  Johnson & Johnson has agreed to fund a $6.75 million settlement, and will remove the term “Active Naturals” from the front label of its products. 

This settlement is the latest in a long line of class action settlements related to “natural” products ranging from foods to beauty care products to household cleansers.  In October 2016, for example, Unilever reached a $3.26 million settlement related to its TRESemme Naturals hair products, and in November 2016 Blue Diamond Growers settled a lawsuit related to its Almond Breeze and Nut Thins “natural” and “all natural” products for almost $9 million.  In January 2017, Method Products reached a $2.8 million settlement regarding its “natural” and/or “naturally derived” cleaning products.

These lawsuits, which follow a familiar pattern, seek to capitalize on the lack of government regulation regarding use of the term “natural” on consumer products.  Although the FDA is currently in the rulemaking process with respect to use of the term “natural” on food labeling, there is little indication as to when a final regulation will issue.  In the meantime, the debate over what constitutes a “natural” product will continue to rage in the courts.

The case is Goldemberg v. Johnson & Johnson Consumer Cos. Inc., No. 7:13-cv-03073 (S.D.N.Y.).

Count Down and Gear Up for the Strict Requirements of the EU General Data Protection Regulation

By Nancy C. Libin

DataAs of May 25, 2018, all companies that offer goods or services to residents of the European Union (“EU”) will be required to comply with the EU General Data Protection Regulation (“GDPR”).

Companies must begin to get their houses in order now, however. The GDPR will impose strict requirements and hefty penalties for non-compliance, with fines running as high as 4% of a company’s total global annual turnover. Companies will have to conduct thorough assessments of the personal data that they collect, maintain, use, and disclose, as well as review their contracts with vendors and their policies and procedures with respect to such data, so that they can make any necessary changes well before the GDPR becomes effective.

Below are brief descriptions of key provisions of the GDPR and what they mean for U.S. companies:

Affects U.S. Companies That Do Business in the EU or That Process Data on Behalf of Such Companies. The GDPR will apply to an extremely wide range of companies: data controllers (entities that, alone or with others, determine how personal data will be processed and for what purpose) and data processors (entities, such as cloud providers, that process personal data on behalf of a data controller) that (1) are established in the EU, or (2) that are not established in the EU, but that offer goods and services to EU residents or track EU residents online (e.g., for marketing purposes).

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Whirlpool Defeats Multi-State Certification Bid Reliant on “Kitchen Sink” Expert Report

Storm_Hurricane_iStock_000022250449XLargeBy Reena R. Bajowala 

Recently, a federal court in Chicago rejected an attempt to certify multi-state classes of consumers who purchased allegedly defective ovens manufactured by the Whirlpool Corporation.  The plaintiffs claimed that the ovens had a design defect rendering them inoperable after one or more self-cleaning cycles.  Plaintiff moved for class certification, relying almost exclusively on the opinion of proffered expert Albert de Richemond, a professional engineer with a master’s degree from Virginia Tech, as proof of a common defect in all ovens purchased by class members (i.e, as proof of commonality).  One of the key lessons from Wal-Mart Stores Inc. v. Dukes, 564 U.S. 338, 350 (2011), was that commonality “is not the raising of common questions – even in droves – but rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.”

De Richemond’s report addressed a confluence of alleged defects relating to the thermostat, the thermo-regulator, lack of proper insulation, heat-resistance of component parts, excessive temperatures for the self-cleaning cycle, insufficient cooling fans and various ineffective fuses.  The class representatives’ class certification and Daubert briefing generally followed suit, referring to this “undifferentiated mass of potential problems” as the defect.  

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Class Action Goes “To The Dogs” When Plaintiff Fails to Sufficiently Allege Damages from “Made in the USA” Claim

By Reena R. Bajowala

Dog-foodA federal court in Chicago recently dismissed a lawsuit brought by Dale Sabo, an Illinois resident seeking to represent a multi-state class of consumers who bought defendant Wellpet LLC’s pet food products. Sabo alleged that the products were falsely labeled “Made in the USA,” but instead contain vitamins and minerals sourced from outside the United States in violation of Illinois, California, New York and six other state consumer fraud statutes.  Sabo alleged that he places a premium on American-made products and is willing to pay more for them.  In addition, he claims that a majority of Americans feel the same way, particularly given recent reports of recalls linked to foreign-sourced ingredients. 

To prevail on a consumer fraud claim, though, a plaintiff must plead actual damages, i.e., actual pecuniary loss.  The court found that plaintiff failed to do so. While Sabo alleged that he “paid more for the products than they were actually worth,” the court held that he failed to provide the factual foundation “to moor his subjective estimation of the products’ worth.”  Neither did he allege that products that lacked domestic-source designations were less expensive.  As a result, “while he alleges that he (and other consumers) are willing to pay a premium for goods made in the United States, he stops short of alleging that he in fact paid more for defendant’s . . . American-made” products.  Because the damages allegation was too speculative, the Court dismissed the lawsuit.

Sabo v. Wellpet, LLC, 2017 WL 1427057, ___ F. Supp. 3d ___ (N.D. Ill. Apr. 4, 2017). 

Cybersecurity Issues Influence World Events

Pexels-photo-326522By Mary Ellen Callahan

Two events affecting cybersecurity will have both immediate and lasting impact on cybersecurity, cyber policy and cyber requirements for companies for years to come.  

Wannacry Ransomware Attack

The event with the most immediate impact on companies and inter connectivity is the ransomware attack which started Friday May 12, and as of time of publication affected at least 230,000 servers in 150 countries. The WannaCry attack is the most widespread and simultaneous cyber attack, locking up servers and demanding payment of $300 per server (payable in bitcoin).

The WannaCry attack allegedly exploited vulnerabilities that were disclosed in March 2017.  The ransomware capitalized on certain exploits in standard Microsoft code.

The source of the exploit is less relevant than the direct impact on companies and servers that had not patched the vulnerability since Microsoft released an update in April.  Those companies were held captive, often shutting down communications and contact until a decision to pay was made. 

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Spate of Deceptive Luxury Outlet Pricing Suits Slows, But is its End in Sight?

New-Update-IconThe past few years have seen a dramatic increase in class actions against luxury fashion brands concerning the practice of affixing allegedly deceptive reference prices on goods sold in outlet stores.  According to the plaintiffs in these suits, certain brands mislead consumers by including a “Was,” “Manufacturer Suggested Retail Price,” or similar reference price on the tags of articles made exclusively for sale in outlet stores.  Since made-for-outlet goods were never actually sold at the reference price, plaintiffs allege that the reference prices convey fictitious price reductions to entice consumers in violation of various consumer protection statutes.  

There are indications that this line of cases is on the decline.  But is its end truly in sight?

In an article written for the Luxury Law Alliance Newsletter, Jenner & Block Partner Jeremy M. Creelan and Law Clerk Nicolas G. Keller investigate the answer to this question while providing recommendations to luxury brands that operate outlet stores. 

Continue to their article, “US Outlet Pricing Class Action Update – Another Dismissal but No Death Knell”