Year-end lists are funny things. They take a sort-of arbitrary starting and stopping point, and then they cram a bunch of prejudices into a (usually) arbitrary number of items. And then people take them kind of seriously. But they can be handy ways of catching trends one did not see before. And in a year that has seen the beginning of a new debate over the shape of Rule 23, looking at the trends in caselaw can be important. This year’s cases include some pro-plaintiff and some pro-defendant, and some hard to quantify. But most of them are notable because they highlight one (or more) of the key debates facing class action practice in the middle of the ‘Teens. So, without further ado, and in order only of jurisdiction:
- Halliburton Co. v. Erica P. John Fund (“Halliburton II”) (S. Ct.). In its second review of the Halliburton case, the Supreme Court upheld the “fraud on the market” presumption of Basic, Inc. v. Levinson. But it also contained important explication of how the Supreme Court would treat a merits inquiry at the class certification stage.
- Dart Cherokee Basin Op Co LLC v Owens (S. Ct.). The Supreme Court held that a defendant is not required to submit evidence in favor of a removal petition; a short and plain statement is enough. (The defendant may need to submit evidence in response to a motion to remand, but it cannot be faulted for not doing so at the outset.) The Court also reaffirmed that there is no presumption against CAFA removals.
- EQT Prod. Co. v. Adair (4th Cir.). With this opinion Fourth Circuit became the second Circuit Court of Appeals to clarify the ascertainability standard, joining the Third Circuit. This is another topic on the Advisory Committee’s agenda, and the spread of a clearer, practical standard is likely to influence those discussions. [Disclsoure - McGuireWoods worked on this case, although it did not represent either of the two titular parties.]
- Mabary v. Home Town Bank, N.A. (5th Cir.); Stein v Buccaneers LP (11th Cir.). Rule 68 offers of judgment have become one of the most controversial tools in the federal rules—at least as they are applied to class actions. This year, the Fifth and Eleventh Circuits decided to weigh in on whether an offer of judgment can moot a class action, and both said “no.” This leaves most of the appellate circuits holding against the practice (the Seventh Circuit remains a holdout). Neither case addressed the use of a Rule 68 offer as a cost-limiting device. Did I mention that (1) this is on the Advisory Committee’s Study Agenda, and (2) the Supreme Court has hinted the tactic might pass muster?
- Eubank v. Pella Corp. (7th Cir.). Judge Posner has two settlement opinions in this year’s list. In this first one, he reverses a settlement full of red flags, including close personal relationships between class counsel and some named plaintiffs, wholesale substation of named plaintiffs who objected to the settlement, and counsel whose contemporaneous ethics problems disqualified them from representing the proposed class.
- Pearson v. NBTY, Inc. (7th Cir.). Judge Posner’s second reversal of a class settlement zeroes in on several of the issues that will preoccupy the Rules Advisory Committee, including the proper role of objectors (he thinks they serve a valuable function in aiding the courts’ oversight of settlements), and the appropriate use of cy pres relief. (Like many other judges, he would restrict it.) Given the upcoming debates, this is likely to be an influential opinion.
- Berger v. Home Depot USA, Inc., (9th Cir.). The Ninth Circuit made a technical point, but an important one for plaintiffs seeking to appeal an adverse ruling in a class action. Rather than take their chances on the very discretionary Rule 23(f) interlocutory appeal, a class plaintiff can stipulate to dismissal, and then appeal the adverse ruling; the stipulated dismissal is still “adverse” enough to justify the decision. I’d expect to see quite a few of these going forward. The Whirlpool trial verdict.
- The Whirlpool washing machine cases have been closely watched since the Sixth and Seventh Circuits first affirmed certification of classes where the vast majority of class members had suffered no concrete harm. The subsequent re-affirmation in light of Behrend made these cases even more important. The trial verdict from the first classwide trial (in Ohio) vindicated Whirlpool, but also showed the dangers (to both sides) of certifying “no injury” classes. While the victory has made the rhetorical debate over no-injury cases more interesting (plaintiffs claim it shows that the system works; defendants worry about the effects on absent class members who might have actual injuries), the fact of the verdict itself is likely to have serious impact on how plaintiffs and defendants alike try these cases going forward.
- The Adequacy Trilogy. Three district court cases took the Supreme Court’s direction to require affirmative evidence that Rule 23(a) has been met seriously, and decided to require affirmative evidence of adequacy: Diaz v. Res. Credits Sols., Inc., 297 F.R.D. 42, 52 (E.D.N.Y. 2014) (denying certification where “Plaintiff has not satisfied her burden of demonstrating she is an adequate representative of the putative class” because “the Court has been provided with no evidence concerning the Plaintiff’s basic knowledge of this lawsuit or whether she is able to make intelligent decisions based on advice from her counsel”); In re Kosmos Energy Ltd. Secs. Litig., 2014 U.S. Dist. LEXIS 36365, *38 (N.D. Tex. Mar. 19, 2014) (“plaintiffs seeking certification must produce actual, credible evidence that the proposed class representatives are informed, able individuals, who are themselves—not the lawyers—actually directing the litigation”); and Labou v. Cellco Partnership, 2014 U.S. Dist. LEXIS 26974 (E.D. Cal. Mar. 3, 2014) (“Plaintiff’s contention that she is an adequate representative simply because she pled she is an adequate representative falls short of that burden.”). The end result added some life back into a long under-enforced requirement.