Supreme Court Sidesteps Class Settlement Issue to Remand, Questioning Article III Standing Under Spokeo

Spokeo

On March 20, 2019, in Frank v. Gaos, 586 U.S. ___ (2019), the United States Supreme Court sidestepped a novel question regarding a cy pres class action settlement, instead remanding the case back to the lower courts with instructions to consider Article III standing issues in light of the high court’s 2016 decision in Spokeo, Inc. v. Robins.[1]

In the class action context, cy pres refers to the practice of distributing settlement funds to public interest or charitable recipients whose work is determined to indirectly benefit class members. Sometimes this is done with a portion of settlement funds (that go unclaimed by class members). Sometimes the cy pres award is the only cash payment (other than fees and costs to counsel), on the theory that this comes as close as possible (“cy près comme possible”) to awarding damages in a case that is not amenable to individual relief. Federal courts—which must review any class action settlement and find that it is “fair, reasonable, and adequate” to the class—have been generally critical of cy-pres-only settlements.

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Courts Solidify Reach of China Agritech

Courts

Circuit courts of appeal are solidifying the reach of the Supreme Court’s June 2018 decision in China Agritech v. Resh[1] and curtailing the availability of equitable tolling in class contexts. The Supreme Court’s decision in China Agritech, which we previously previewed and attended oral arguments for, held that the tolling principles announced in its earlier American Pipe[2] decision do not allow absent class members to file follow-on class action lawsuits where the statute of limitations has otherwise expired on their claims. Recent decisions across several circuit courts of appeal have confirmed our prediction regarding the reexamination of class cases relying upon American Pipe and reigned in plaintiffs’ reliance on tolling in class contexts.

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Conover v. Patriot Land Transfer: RESPA’s Statute of Limitations and Equitable Tolling Clash Again

RESPA

A recent decision in Conover v. Patriot Land Transfer LLC[1] involves what appears to be a run-of-the-mill Section 8 RESPA claim that a title agency supplied borrower leads and data lists in return for lender referrals to the title company. Given that this decision was issued in the context of a motion to dismiss, the well-pleaded allegations were accepted as true and the merits of the allegations (and any Section 8(c) defenses) have not been evaluated, and we don’t know whether the allegations are in fact true or whether section 8(c) defenses exist. The decision sheds some light, however, on how lower courts are approaching RESPA’s statute of limitation and what is a sufficient pleading to pursue an equitable tolling argument for plaintiffs.[2]

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Don’t Delay Rule 23(f) Appeal

Spokeo

In Nutraceutical Corporation v. Lambert, No. 17-1094, 586 U.S. __ (Feb. 26, 2019), the United States Supreme Court once again endorsed the old adage, “When you snooze, you lose”—at least sometimes. Under Federal Rule of Civil Procedure 23(f), either side can file for a permissive appeal of a district court’s adverse class certification (or decertification) ruling. However, Rule 23(f) provides that a court of appeals may only permit an appeal if the petition seeking “permission to appeal is filed with the circuit clerk within 14 days after the order is entered.” Fed. R. Civ. P. 23(f). (Rule 23(f) has been amended since the case began, but the difference is not material to the Supreme Court’s decision. See Nutraceutical, slip op. at 3 n.2.) While courts of appeals have taken various equitable approaches that have effectively tolled or extended that time period, the Supreme Court just put more bite into that 14-day limitation.

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“Stand-Alone” REALLY Does Mean Stand-Alone and the Quest for Clarity

FCRA

Ninth Circuit Court of Appeals interprets the FCRA[1]

On January 29, 2019, the Ninth Circuit Court of Appeals issued a far-reaching opinion that will likely impact the hiring process of prospective employers who conduct background checks on applicants.

Desiree Gilberg (“Gilberg”) brought a class action suit against prospective employers (collectively, “CheckSmart”) alleging violations of the Fair Credit Reporting Act (the “FCRA”) and California’s Investigative Consumer Reporting Agencies Act (the “CICRAA”). The FCRA requires employers who use consumer reports as part of the hiring process to provide an applicant with a “clear and conspicuous” disclosure that the consumer report will be used “in a document that consists solely of the disclosure.” 15 U.S.C. 1681b(b)(2)(A)(i) (emphasis added). The CICRAA has similar requirements. See Cal. Civ. Code §§1785.20(5)(a) & 1786.16(a)(2)(B).

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