This article will discuss the impact to date of the four class action decisions of the Supreme Court’s last Term and the potential impact on antitrust class actions going forward. Most notably, the Court’s decision in Tyson Foods clarified that plaintiffs may rely on “representative evidence” to prove liability and damages at class certification, and its decision in Spokeo solidified the “concrete and particularized” injury requirement for Article III standing while leaving open the question of what constitutes a “risk of real harm.” In Campbell-Ewald, the Court limited the so-called “picking-off exception” in class actions by ruling that an unaccepted settlement offer or offer of judgment to a named class representative does not moot the plaintiff’s case. And in DIRECTV, the Supreme Court continued its recent line of decisions on the enforceability of class action litigation waivers, confirming that arbitration agreements must be interpreted in the same way as other legitimate contracts.
Tyson Foods Evaluates the Acceptability of Representative Evidence for Class Certification
In Tyson Foods, Inc. v. Bouaphakeo, the defendant contended that a class of employees could not rely on statistics to prove that they worked more than forty hours a week as a result of time spent donning and doffing protective gear before and after working. The Supreme Court ruled 6-2 that when appropriate, plaintiffs may rely on “representative evidence” to prove classwide liability. Specifically, Justice Kennedy, writing for the majority, declared that statistical evidence is admissible in a class action if “each class member could have relied on that sample to establish liability if he or she had brought an individual action.”
The Court significantly also declared in Tyson Foods that “when ‘one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.’” Therefore, when common issues predominate, the presence of uninjured class members should not defeat class certification. On remand, the Supreme Court noted, a question remains as to whether the damages awarded by the jury could be apportioned at judgment in such a way that only injured class members would recover.
As a result of the Supreme Court’s decision in Tyson Foods, depending on the nature of the claim and intended purpose of the evidence, class action plaintiffs may be able to rely on statistical and other representative evidence to establish the presence of common questions of liability and damages. Furthermore, establishing commonality and predominance under Federal Rule of Civil Procedure 23 is simpler post-Tyson Foods, as the Supreme Court recognized that representative evidence that is sufficient to support an individual plaintiff’s claim is admissible in a class action. Since the Supreme Court decision, the Court of Federal Claims declared in St. Bernard Par. Gov’t v. United States, “[Tyson Foods] held that ‘representative evidence’ can be used to satisfy FRCP 23(a)(3)’s predominance inquiry, rejecting the requirement of ‘person-specific’ evidence of liability.”
Even when individualized proceedings may be necessary for damage calculations or affirmative defenses, post-Tyson Foods, courts have consistently held that class certification may still be appropriate. As the Ninth Circuit explained in Vaquero v. Ashley Furniture Industries, Inc., under Tyson Foods, the rule is clear that “the need for individual damages calculations does not, alone, defeat class certification.”
Applying this rule in an antitrust case, in In re Delta/AirTran Baggage Fee Antitrust Litigation, the Northern District of Georgia stressed that, “[t]he predominance requirement does not require that every issue in the case be susceptible of common proof.” Moreover, the court specifically rejected the defendants’ argument that certain class members benefitted from the alleged price-fixing conspiracy, thereby defeating class certification. The district court explained that, even if offsetting of benefits was relevant, such considerations “would go at most to calculation of damages, not the fact of injury.”
Following Spokeo, Questions Remain as to What Constitutes a “Concrete Injury”
In Spokeo, Inc. v. Robins, the Supreme Court considered the requirements for establishing injury in fact in order to establish Article III standing. The plaintiff in that case brought a class action alleging that Spokeo had disseminated false information about him and class members in violation of the Fair Credit Reporting Act. In the 6-2 majority opinion, Justice Alito declared that a plaintiff must establish “both concrete and particularized” harm in order to have standing to pursue a statutory cause of action in federal court. The Court went on to explain that, while “[a] concrete injury must be ‘de facto’; that is, it must actually exist,” “intangible injuries can nevertheless be concrete.” Justice Alito explained that while “Article III standing requires a concrete injury even in the context of a statutory violation,” “[t]his does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.” Furthermore, “the violation of a procedural right granted by statute can be sufficient . . . a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.”
Spokeo has already been widely cited by both plaintiffs and defendants in pending class actions, and those decisions that have applied Spokeo are divided as to whether the Supreme Court intended to establish a new test for standing. Thus, the Third Circuit quoted Spokeo in In re Nickelodeon Consumer Privacy Litigation for the premise that, when analyzing whether an intangible harm qualifies as an injury-in-fact, courts “should consider whether the purported injury ‘has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.’”
Courts remain divided, however, as to whether the Spokeo standard always requires a showing of concrete injury or whether the assertion of a statutory right can still waive the requirement of showing individual harm. In Tourgeman v. Collins Fin. Services, Inc., the Southern District of California adopted the former view, explaining that, “in order to have Article III standing, as the Supreme Court’s decision in Spokeo clarified, [the plaintiff] needs to do more than just point to a statutory violation, he needs to show an actual injury.” In contrast, a recent decision in the Southern District of Florida relied on Spokeo in support of the latter view, holding, “the Supreme Court recognized where Congress has endowed plaintiffs with a substantive right, as opposed to creating a procedural requirement, the plaintiffs may sue to enforce such a right without establishing additional harm.”
For plaintiffs bringing claims under the antitrust laws, Spokeo should have little impact, since Congress has established a substantive test for antitrust injury in Section 4 of the Clayton Act..
The Picking-Off Exception is Alive and Well After Campbell-Ewald
Campbell-Ewald Co. v. Gomez addressed the tactic known as “picking off” named plaintiffs in class actions. In that case, Campbell-Ewald made a Rule 68 offer of judgment prior to class certification, as well as an independent settlement offer. After the plaintiff did not accept the settlement offer and allowed the Rule 68 offer to lapse, Campbell-Ewald filed a motion to dismiss, arguing that its offer to provide the plaintiff complete relief rendered the plaintiff’s individual claim moot and therefore eliminated the Article III case or controversy. Justice Ginsburg, writing for the 6-3 majority, held that “an unaccepted settlement offer or offer of judgment does not moot a plaintiffs’ case.” The Court did not opine as to “whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount,” noting, “[t]hat question is appropriately reserved for a case in which it is not hypothetical.” With regard to class certification, the Court declared that, “a would-be class representative with a live claim of her own must be accorded a fair opportunity to show that certification is warranted.”
In Richardson v. Bledsoe, the Third Circuit concluded that the Supreme Court’s Campbell-Ewald decision justified a ruling that “when a would-be class representative is not given a ‘fair opportunity’ to show that certification is warranted (perhaps because her individual claim became moot before she could reasonably have been expected to file for class certification), she should be permitted to continue seeking class certification for some period of time after her claim has become moot.”
As to the open question whether the tender of payment followed by a motion for entry of judgment moots a plaintiff’s claim, the only appellate court to consider similar scenario has held that a plaintiff’s claim is not mooted until the relief is received. In Chen v. Allstate Insurance Co., the Ninth Circuit explained, “[a]s we read Campbell–Ewald, a lawsuit—or an individual claim—becomes moot when a plaintiff actually receives all of the relief he or she could receive on the claim through further litigation.”
Arbitration Agreements Must Be Interpreted as Contracts, Says Court in DIRECTV
In DIRECTV, Inc. v. Imburgia, DirectTV moved to compel arbitration of customers’ claims, arguing that the Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion allowed enforcement of the company’s contract, which required individual arbitration but included language making the arbitration provision unenforceable if “the law of your state” barred such class arbitration waivers. In a majority opinion authored by Justice Breyer, the Supreme Court ruled 6-3 that, under Concepcion, the Federal Arbitration Act (“FAA”) preempted California state law that prohibited unconscionable class action waivers, because arbitration contracts must be placed “on equal footing with all other contracts.” Therefore, the Court held, the phrase the “law of your state” could not include invalid state law with regard to arbitration, since courts would not “reach a similar conclusion in similar cases that do not involve arbitration.” Justice Thomas’s dissent asserted that the FAA does not apply to proceedings in state courts, while Justice Ginsburg, with whom Justice Sotomayor joined, argued in dissent that the arbitration clause should have been read in the manner most protective of consumers, not the drafting enterprise.