This week’s recap examines a recent appellate ruling that provides a nice roadmap for arguing a plaintiff’s theory of damages cannot satisfy Rule 23’s predominance requirement, as well as another district court’s efforts to parse out the contours of standing based on statutory violations post-Spokeo.
How an Individualized Damages Inquiry Can Preclude Certification: It’s generally accepted that a damages theory that requires individualized proof as to the measure of class members’ damages does not necessarily doom a class under Rule 23(b)(3)’s predominance requirement. However, where individualized inquiries are necessary simply to establish the fact of damages, then denying certification under Rule 23(b)(3) may be appropriate. The U.S. Court of Appeals for the Third Circuit illustrated this point nicely in affirming the district court’s denial of class certification sought by students alleging their law school published misleading employment statistics about its graduates by including part-time and non-legal positions in its totals. The court held that the plaintiffs’ damages theory—that the misleading statistics inflated the cost of tuition for all applicants—required individualized inquiries as to how these statistics impacted each class member’s decision-making process in choosing to pay tuition.
FACTA Claim Withstands Post-Spokeo Challenge to Plaintiff’s Standing: We’re all watching to see how Spokeo’s intricate line-drawing regarding what types of statutory violations provide a basis for standing plays out on the ground. A recent decision from the U.S. District Court for the Southern District of Florida held that a putative class representative who claimed she received a receipt from a retailer containing her credit card’s expiration date in violation of the Fair and Accurate Credit Transactions Act (“FACTA”) established standing sufficiently to withstand a motion to dismiss. Citing Spokeo, the Court reasoned that FACTA creates a substantive legal right for consumers to receive receipts that protect their personal financial information by truncating their personal credit card numbers and expiration dates, and that the violation of this right constituted a concrete harm sufficient to give the plaintiff standing to pursue her claims.
Ninth Circuit Weighs in on Two Arbitration Provisions: Last week was a big one for anyone following the status of class action waivers in arbitration agreements in the Ninth Circuit. In a widely covered decision, the Ninth Circuit held that a class-action waiver in an employment agreement violated the employees’ right under the National Labor Relations Act “to engage in . . . concerted activities for . . . mutual aid or protection.” Look for a detailed analysis of that ruling and its implications here soon. In the meantime, defense practitioners can take solace in the Ninth Circuit’s ruling affirming the lower court’s enforcement of an arbitration agreement included in a direct-to-consumer genetic testing company’s online terms of service. The Ninth Circuit rejected the putative class representatives’ arguments that the arbitration clause’s fee-shifting provision, forum-selection clause, and provision exempting intellectual property disputes were unconscionable.
Putative Class Member Frozen Out Based on HVAC Repair History: The U.S. District Court for the Eastern District of Pennsylvania denied certification of a putative class representative’s claims against an HVAC manufacturer regarding an allegedly defective evaporator coil that leaked refrigerant during normal use. The court held the named plaintiff was neither a typical nor adequate class representative because an HVAC servicer replaced several parts in addition to the evaporator coil when the plaintiff’s unit malfunctioned, and because the evaporator coil itself was discarded rather than returned, precluding further testing as to whether it was defective. In addition, the court held that predominance was lacking because class members would have to present individualized proof to show what defect caused their HVAC unit to malfunction.