By William M. Strom

On November 17, the U.S. Supreme Court dismissed its review of two related antitrust class actions involving ATM fees and, in an atypical move, explained its reason why. In each of the consumer class actions, Visa, Inc. v. Osborn (No. 15-961) and Visa, Inc. v. Stoumbos (No. 15-962), plaintiffs below had persuaded the D.C. Circuit to allow them to maintain antitrust challenges against credit card company rules preventing independent ATM operators from imposing lower fees for transactions processed on networks that are not owned by Visa or MasterCard.

Petitioners, the credit card companies and associated banks, had argued in their petition for certiorari that allegations of their participation in a business association were not enough to support an action for antitrust conspiracy, and that the D.C. Circuit decisions allowing the challenges to go forward created a direct conflict with the rule in the Ninth Circuit. Certiorari was granted on June 28, 2016, to resolve the question “[w]hether allegations that members of a business association agreed to adhere to the association’s rules and possess governance rights in the association, without more, are sufficient to plead the element of conspiracy in violation of Section 1 of the Sherman Act.” But after making changes to their legal team, petitioners argued in merits briefing that the credit card companies and banks were engaged in a joint venture—a single entity that is incapable of engaging in a conspiracy as a matter of law. The respondent class and the United States as amicus curiae argued in their briefs that petitioners’ shift in legal argument amounted to an abandonment of the position advanced in the petition for certiorari.

The Court agreed and dismissed the petition as improvidently granted. This permits the consumers’ class actions to proceed in the lower courts and leaves the question of Sherman Act liability for the activities of business associations open, at least until another case presents a more appropriate vehicle.

The U.S. Supreme Court’s order of dismissal can be found here. Additional coverage of the cases is available from SCOTUSBlog.

By Sandra Hanian

Last month, Judge Sterling Johnson, Jr. of the Eastern District of New York dismissed a putative class action alleging that Pfizer misled consumers regarding the amount of Advil they were purchasing because of the size of Advil’s packaging. The plaintiffs alleged that the size of the product packaging led them to believe that the packages would be filled to capacity with pills, but they actually contained “excessive empty space” or non-functional slack-fill in violation of New York, Florida, and California state consumer protection laws. The plaintiffs alleged that they did not rely on the labels specifying the number of pills in each product at issue when making their purchasing decisions. 

The court rejected the plaintiffs’ claims, holding that, as a matter of law, it was not possible that Pfizer’s packaging could mislead a reasonable consumer when it clearly displayed the total pill-count on the label.  In so holding, the court noted that “[i]t defies logic to accept that the reasonable consumer would not rely upon the stated pill count” and that the plaintiffs did not and could not show that they did not receive the total number of pills that were listed on the packages’ labels.  Moreover, “the suggestion that [packaging] laws should cover [the plaintiffs’] failure to read an unambiguous tablet-count does not pass the proverbial laugh test.”

Fermin v. Pfizer Inc., No. 15-2133, 2016 WL 6208291 (E.D.N.Y. Oct. 18, 2016).

By William M. Strom

On November 15, plaintiffs lost their TRO motion in a proposed consumer class action alleging that Anthem Blue Cross of California made unannounced benefits cuts for renewing health insurance customers who purchased from Anthem or from the state’s health insurance exchange, Covered California.  Plaintiffs contend that Anthem is switching health insurance customers without warning from Preferred Provider Organizations (PPOs), which cover some out-of-network services, to Exclusive Provider Organizations (EPOs), which offer no out-of-network coverage, in violation of the federal Affordable Care Act (ACA) and California state consumer protection law.  Plaintiffs cite notices Anthem sent to many of its California customers earlier this year assuring customers that their plans would be renewed if they took no action.  In truth, plaintiffs allege, Anthem will switch these customers from PPOs to EPOs.  As a result of these switches, say plaintiffs, some health insurance customers will lose access their physicians.  Plaintiffs seek a court order requiring Anthem to keep customers’ existing health insurance plans in place.

Judge John Shepard Wily, Jr., of the Superior Court of California, Los Angeles County, denied plaintiffs’ motion for TRO on the ground that plaintiffs had yet to suffer injury due to the health-plan changes, which are not scheduled to take effect until January. Plaintiffs have not filed a notice of appeal to date.  Anthem spokesperson Darrel Ng said that the company was pleased with the court’s decision and that state regulators have approved Anthem’s policy changes.

The case is Simon v. Blue Cross of California, Superior Court of California, Los Angeles County, No. BC639205. Click here to read the L.A. Times’ report on the case.

By Jessica R. Amunson

In recent years, a 35-year-old New Jersey statute known as the Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) has soared in popularity with plaintiff’s lawyers bringing putative class actions.  These class actions target retailers’ online terms and conditions and often focus on minor technical problems that plaintiffs claim run afoul of the TCCWNA.  With a $100 penalty provided by the statute for each violation, commentators have found that in the TCCWNA, “[c]lass action lawyers … may have struck gold.”  A report from the New Jersey Civil Justice Institute describes the dramatic increase in new cases filed under the TCCWNA.  However, the tide may be turning as several recent decisions from federal district courts question whether plaintiffs have suffered any harm from purported violations of the TCCWNA and whether plaintiffs can therefore meet the Article III standing requirements as recently articulated by the Supreme Court in Spokeo, Inc. v. Robins, 578 U.S. ___ (2016). 

By Alexander M. Smith

In October 2014, the FCC issued an order affirming its position that the Telephone Consumer Protection Act (TCPA) requires senders of fax advertisements to include an opt-out notice on those faxes, even if the recipient had previously consented to receive those faxes.  That order also acknowledged, however, that some parties who sent solicited faxes “may have been reasonably uncertain” about this requirement and granted a retroactive waiver of the opt-out requirement.   The FCC’s efforts to split the baby prompted appeals from both sides before the D.C. Circuit:  a group of class action plaintiffs appealed on the basis that the retroactive waiver was improper, and a separate group of class action defendants appealed on the basis that the TCPA only empowers the FCC to regulate unsolicited faxes.  This Tuesday, the court heard oral argument on both appeals.  As Law360 reports, the panel appeared “sympathetic” to the defendants’ position that the FCC “overstepped its authority” by regulating solicited faxes. 

As previously reported, Jenner & Block Partner Nancy Libin wrote an article for The Hill in September analyzing the Federal Communications Commission’s (FCC) proposed privacy rules for broadband providers, which she called both “anti-consumer” and “anti-competitive.” Ms. Libin recently wrote another article on the topic for The Hill, this time discussing the FCC’s last-minute request to include a prohibition against mandatory arbitration clauses. Ms. Libin examines the call to “slip[] a major restriction on arbitration agreements into the privacy rules,” which she suggests would be “certain to provoke court challenges and put the entire broadband privacy proceeding at risk.” She notes that restricting arbitration would be particularly troubling for consumers because class-action lawyers will be able to lump consumers into giant cases that will generate major legal fees rather than promote timely solutions to the consumers’ problems.  On October 27, the agency adopted the proposed rules without taking any action on mandatory arbitration clauses, but FCC Chairman Tom Wheeler said that the agency has begun an internal process to address the issue by February of next year. To read the full article, please click here.