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October Term 2018 Preview: The Supreme Court’s Class Action Docket

SCOTUSBy Alexander M. Smith

The Supreme Court’s next term kicks off next week, when the court re-convenes for its first oral argument since last April.  The docket currently features four cases of interest to the consumer law and class action bar:

  • In Lamps Plus, Inc. v. Varela, a divided panel of the Ninth Circuit construed a provision stating that “arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to my employment” to authorize class arbitration, even though the plaintiff’s employment agreement with Lamps Plus did not expressly authorize class-wide arbitration.  The Supreme Court granted certiorari to determine whether the Federal Arbitration Act “forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements.” 
  • In Frank v. Gaos, the district court authorized a class-wide settlement of a lawsuit alleging that Google violated federal and state privacy laws by disclosing users’ search terms to third parties, even though the settlement consisted only of cy pres relief and attorneys' fees.  A divided panel of the Ninth Circuit affirmed, rejecting the objectors’ arguments that (1) a settlement that provided no direct relief to the class was inappropriate and (2) that the cy pres beneficiaries, which had previously received settlement funds from Google and which were affiliated with the law schools attended by class counsel, were improper.  The Supreme Court granted certiorari to determine “[w]hether, or in what circumstances, a cy pres award of class action proceeds that provides no direct relief to class members supports class certification and comports with the requirement that a settlement binding class members must be ‘fair, reasonable, and adequate.’”

  • In Nutraceutical Corp. v. Lambert, the plaintiff filed a motion for reconsideration of the district court’s order decertifying the class twenty days after the district court entered its order, and he filed a Rule 23(f) petition for interlocutory review of the decertification order after the district court denied his motion for reconsideration.  Although Rule 23(f) requires that a petition for interlocutory review be filed within fourteen days of the district court’s order, the Ninth Circuit nonetheless granted the Rule 23(f) petition, holding that the fourteen-day deadline in Rule 23(f) was not jurisdictional.  The Ninth Circuit also held that the deadline to file a Rule 23(f) petition was tolled because the plaintiff had orally informed the district court that he would seek reconsideration, even though it acknowledged that this outcome conflicted with the law of several other circuits.  The Supreme Court granted certiorari to determine whether the Ninth Circuit “erred when it held that equitable exceptions apply to mandatory claim-processing rules—such as Federal Rule of Civil Procedure 23(f), which establishes a 14-day deadline to file a petition for permission to appeal an order granting or denying class-action certification—and can excuse a party’s failure to file timely within the deadline specified by Federal Rule of Civil Procedure 23(f), in conflict with the decisions of the U.S. Courts of Appeals for the 2nd, 3rd, 4th, 5th, 7th, 10th and 11th Circuits.” 
  • In Home Depot U.S.A. Inc. v. Jackson, a bank filed a debt collection action against the defendant, who brought a third-party class action counterclaim against Home Depot and Carolina Water Systems, Inc., which he alleged had engaged in unfair and deceptive trade practices.  After the bank dismissed its debt collection action against the original defendant and counterclaim plaintiff, Home Depot sought to remove the class action counterclaim to federal court under the Class Action Fairness Act, 28 U.S.C. § 1332(d) (“CAFA”).  Relying on the Supreme Court’s decision in Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941), the district court granted the counterclaim plaintiff’s motion to remand and held that Home Depot was not a “defendant” eligible to remove the action to federal court under CAFA.  The Fourth Circuit affirmed.  The Supreme Court granted certiorari to determine (1) whether “an original defendant to a class-action claim can remove the class action if it otherwise satisfies the jurisdictional requirements of the Class Action Fairness Act when the class action was originally asserted as a counterclaim against a co-defendant” and (2) whether the “Court’s holding in Shamrock . . . ‘that an original plaintiff cannot remove a counterclaim against it’ extend[s] to third-party counterclaim defendants.” 

We will update the blog with updates on the outcome of these cases, as well as more information on additional class action or consumer law cases the Court adds to its docket.