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October 2016

Samsung Faces First Class Action Lawsuit Over Fire-Prone Note 7

21027306669_9a8485e5a9_oBy Christina Aryafar

On October 11, 2016, Samsung Electronics announced that it is stopping production of its Galaxy Note 7 smartphones after several reports that the phone overheated and caught fire.  Less than one week later, John Waudby of Nevada, Robert Spuntak of Pennsylvania, and Mohamad Ibrahim of California filed a consumer class action lawsuit against Samsung in New Jersey federal court.  Waudby v. Samsung Elecs. Am., Inc., No. 2:16-cv-07334-CCC-JBC (D. N.J.).  While Samsung is facing several other lawsuits in connection with the exploding phones (see, e.g., Taylor v. Samsung Elecs. Am., Inc., et al., No. 3:16-cv-50313 (N.D. Ill.), Strobel v. Samsung Elecs. Am., Inc., et al., No. 9:16-cv-81755-KAM (S. D. Fla.), and Covert v. Samsung Elecs. Am., Inc., et al., No. 5:16-cv-06041-HRL (N.D. Cal.)), the Waudby Complaint is the first to assert classwide allegations. 

The Waudby plaintiffs allege that they suffered monetary damages while waiting for a replacement for their Note 7 phones because they “continued to incur monthly device and plan charges from their cellular carriers for phones they could not safely use.”  Compl., ¶ 4.  They assert causes of action for breach of express warranty, common law fraud, and breach of the duty of good faith and fair dealing on behalf of a nationwide class consisting of “[a]ll persons and entities in the United States who purchased or leased a Samsung Galaxy Note 7.”  Compl., ¶ 32.  In the alternative, plaintiffs – perhaps anticipating that the court may reject their multi-state claims – seek to represent three sub-classes of Note 7 customers from Nevada, Pennsylvania, and California. 

Plaintiffs seek monetary and punitive damages, as well as an injunctive relief requiring Samsung to repair, recall, or replace the Note 7s. 

Spokeo and Wheel – Rolling Thru Recent Circuit Court Cases

By Kate T. Spelman

PillarsFive months have passed since the Supreme Court’s decision in Spokeo, Inc. v. Robins, where the Court held (on the one hand) that a “violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact,” but also (on the other hand) that a plaintiff cannot establish standing by alleging a “bare procedural violation” because “Article III standing requires a concrete injury even in the context of a statutory violation.”  In the intervening time period, Spokeo has been cited by almost 200 federal district courts attempting to apply the Supreme Court’s directives.  However, only a handful of federal courts of appeal have waded into the fray.  A review of these appellate decisions provides helpful insights into how the lower federal courts are (or should be) applying the Supreme Court’s opinion.  In fact, three general rules can be gleaned from these decisions:

First, a plaintiff may have standing to sue based solely on a defendant’s failure to disclose information when such disclosure is statutorily mandated.

In Church v. Accretive Health, Inc., the Eleventh Circuit found that the plaintiff had standing to assert a claim for violation of the Fair Debt Collections Practices Act based solely on the defendant’s alleged failure to include in its letter to the plaintiff certain disclosures required by the Act.  For example, the letter did not expressly state that it was sent by a “debt collector ... attempting to collect a debt and that any information obtained will be used for that purpose,” nor did it alert the plaintiff that “unless the consumer, within thirty days after receipt of notice, disputes the (Continued) validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector.”  The plaintiffs alleged no actual damages aside from the defendant’s alleged failure to include the required disclosures.  However, the court noted that, in certain instances, a plaintiff can rest on the deprivation of a Congressionally-created right to satisfy the standing inquiry.  Because Congress had created “a new right—to receive the required disclosures in communications governed by the FDCPA—and a new injury—not receiving such disclosures,” the plaintiff satisfied Article III’s injury-in-fact requirement.   

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What Game Developers Must Understand About IP Law to Avoid Costly Lawsuits

Reflection-pad-gaming-gamepadJenner & Block Partner David R. Singer was recently featured in a lengthy Inside Counsel article that discusses what video game creators should understand about the law that protects their investment against copycat game developers. Having their games cloned, or being accused of cloning games, is a growing threat for game developers. Understanding what protections intellectual property (IP) law provides early in the game-developing process can help developers avoid costly lawsuits. In the article, Mr. Singer alerts game developers to the limitations of IP law, offering tips on how to work around the limitations and advising video game creators on what they need to be able to show in order to prove trade dress infringement should they face the threat of a copycat. 

Click here to read the full article.

HHS Issues HIPAA Guidance Related to Cloud Services

New-Development-IconBy David Saunders and Heidi Wachs

The Department of Health and Human Services (HHS) has published formal guidance that makes clear that most Cloud Servicer Providers (CSPs) that create, receive, maintain or transmit electronic Protected Health Information (ePHI) are Business Associates and thus governed by HIPAA. While the overall conclusion, that CSPs that handle ePHI are Business Associates, is not particularly revolutionary, HHS’s formal guidance provided details as to HHS’ evaluation of CSPs, which those who work with CSPs and handle ePHI should take note of.

To read the full Jenner & Block client alert on this subject, please click here

What a Change in IARC’s Classification Means for Products That Have Been Branded (Possibly, Probably) Cancer-Causing

IStock_000009666174MediumBy Jill M. Hutchison

The International Agency for Research on Cancer (“IARC”), the specialized cancer agency of the World Health Organization, garnered attention in June 2016 when it deemed coffee “not classifiable” in terms of whether it increases human cancer risk.  Though this new category may sound ambivalent, it was quite notable because IARC had previously classified coffee as “possibly carcinogenic.”  When IARC classifies an agent as carcinogenic, probably carcinogenic, or even possibly carcinogenic, it often triggers a series of burdensome labeling obligations and gives rise to a wave of litigation for companies whose products contain the substance, even in trace amounts.  Just what are IARC’s classifications, what are the significant obligations and litigation risks that classification by IARC as a (possible, probable) carcinogen may set in motion for consumer product companies, and what effect does a reversal by IARC have on those obligations and litigation risks?

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Consider Guidance on Wearable Devices

Arrow-Left-IconJenner & Block Partner Mary Ellen Callahan and Associate Emily A. Bruemmer examine privacy issues related to wearable devices such as smartwatches or fitness trackers in an article published in the Los Angeles and San Francisco Daily Journal.  The authors explain that the Future of Privacy Forum (FPF) in the summer released guidelines for consumer wearables and wellness devices.  They discuss what these best practices might mean for creators of these two broad categories of devices.  Their analysis includes companies developing wearables or mobile apps for the global market.  “It’s too early to say whether more government regulation may be in store for the rapidly expanding universe of wearables and wellness apps, but for now companies would be wise to consider implementing the fair information privacy principles including the FPF’s best practices as a rule of thumb – or a rule of wrist-wearing device – in order to provide privacy protections with wearables and wellness apps,” they conclude.  The article is the latest installment of Ms. Callahan’s regular Privacy and Information Governance (PIG) Tales column in the Daily Journal.

To read the article, please click here.

How Far Does American Pipe Tolling Reach?

By Reena R. Bajowala

Supreme Court 35719-0001The Supreme Court started another term this week.  One granted petition of interest is DeKalb County Pension Fund v. Transocean Ltd., which arises out of the Second Circuit’s ruling that the filing of a putative Rule 23 class action does not suspend the three-year period of repose for claims brought under Section 14(a) of the Securities Exchange Act.  In so ruling, the Second Circuit declined to extend to “statutes of repose” the Supreme Court’s landmark holding in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), that “statutes of limitations” are tolled for all putative class members.  Quick primer:  A statute of limitations is typically based on when a plaintiff experiences harm associated with the legal injury.  A statute of repose, on the other hand, is a time limit that is triggered by an event unconnected to the harm – such as the date a stock was first offered for sale.  Courts have typically held that statutes of limitations can be equitably tolled, while statutes of repose are stricter and cannot.  In DeKalb County, the consequences of applying the statute of repose were significant.  The plaintiff filed suit within the period of repose and moved for lead plaintiff status after the period of repose had expired.  The court denied the motion, finding him to be a flawed representative, and consequently held that the claims of the class were time-barred.  With DeKalb County, the Court will resolve a circuit split.  In Joseph v. Wiles, 223 F. 3d 1155 (10th Cir. 2000), the Tenth Circuit held that American Pipe tolling does apply because statutes of repose are subject to tolling that is legal (as opposed to equitable) in nature, like that which occurs when an action is commenced and class certification is pending, and arises from the procedures set forth in Rule 23.  The Court granted certiorari on this question two years ago, but later dismissed its order as “improvidently granted.”  Public Employees’ Retirement System v. IndyMac MBS, 134 S. Ct. 1515 (2014). 

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The Ninth Circuit Splits the Baby in California Consumer Class Action Brazil v. Dole

New-Update-IconBy Kate T. Spelman

As we recently reported, on September 12 the Ninth Circuit heard oral argument in two appeals with potentially wide-ranging implications for California consumer class actions.  Less than three weeks later, on September 30, the Ninth Circuit issued its decision in one of those appeals, Brazil v. Dole.  In Brazil, the plaintiffs challenged the “all natural fruit” labels on Dole fruit products under California’s consumer protection statutes.  The district court dismissed the plaintiffs’ unjust enrichment claim and their illegal product theory at the pleading stage, then later decertified the class based on the plaintiffs’ failure to present a viable class-wide damages model.  The district court then granted summary judgment to Dole after finding that the plaintiffs had failed to present sufficient evidence of a likelihood of consumer deception.  The plaintiff appealed. 

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