Dish Network Hopes for a New Trial of Telemarketing Class Action Lawsuit after $20.5 Million Jury Verdict

View Amanda Pickens’ Complete Bio at robinsonbradshaw.comDish Network has asked the Middle District of North Carolina for a new trial in its telemarketing class action lawsuit after a jury found Dish liable for violations of the Telephone Consumer Protection Act. After a five-day trial ending on January 19th, a jury awarded damages to the class of $20.5 million.

The lawsuit was filed in 2014 by lead plaintiff Thomas Krakauer alleging Satellite Systems Network, an authorized Dish dealer, called him multiple times between 2009 and 2011 despite being listed on the Do Not Call registry. In September 2015, Judge Catherine Eagles certified two classes, both consisting of persons on the Do Not Call registry who received telemarketing calls from Dish or Satellite System Network between 2010 and 2011.

After the United States Supreme Court decided Spokeo Inc. v. Robins, Dish filed a motion to dismiss or, in the alternative, to decertify the class. We highlighted the issues before the Spokeo Court in our previous blog post. In Spokeo, the United States Supreme Court vacated and remanded a decision allowing a consumer who suffered no concrete harm to sue Spokeo Inc. for procedural violations of the Fair Credit Reporting Act. But the Supreme Court left the opportunity open for plaintiffs in other cases to rely on procedural violations entailing a risk of “concrete injury” to establish standing. The Supreme Court found that the Ninth Circuit’s standing analysis was incomplete because it failed to consider both requirements of an injury-in-fact, that the injury be both concrete and particularized. The Ninth Circuit’s opinion concerned only the particularization of the injury-in-fact.

In August 2016, in a six-page opinion, Judge Eagles denied Dish’s motion to dismiss and to decertify the class based on Spokeo. Judge Eagles noted that although Spokeo “clarified the meaning of a concrete injury,” it did not fundamentally change the doctrine of standing. She found that now “a concrete injury ‘must exist,’ but it can be intangible.” Judge Eagles held that the telemarketing calls made in violation of the Telephone Consumer Protection Act were more than bare procedural violations; the calls “form[ed] concrete injuries because unwanted telemarketing calls are a disruptive and annoying invasion of privacy.” Dish sought an interlocutory appeal of this decision, which was also denied.

Now, after a five-day trial and a $20.5 million jury verdict, Dish is hoping for a new trial. Dish claims, among other things, that the verdict violates Dish’s due process rights because Judge Eagles allowed the jury to impose aggregate damages, rather than allowing Dish to defend each individual claim of an improper phone call. The jury calculated damages by assigning $400.00 per call to the 51,119 distinct phones calls, totaling approximately $20.5 million. Plaintiffs’ response to Dish’s motion for a new trial is due March 28th. If Dish’s motion for a new trial is denied, Dish will likely appeal these issues to the Fourth Circuit. Stay tuned for further developments.

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House Passes Fairness in Class Action Act of 2017

View David Wright's Complete Bio at robinsonbradshaw.comLargely following party lines, the House of Representatives on March 9, 2017, passed H.R. 985: Fairness in Class Action Act of 2017, which we highlighted in this space. One central feature of this bill, which we noted, is an appeal as of right of class certification decisions. This provision represents a radical departure from current practice, in which discretionary appeals are infrequently granted to the U.S. Courts of Appeal. A study done several years ago, which looked at seven years of filings, concluded that less than one quarter of such appeals are granted.

As we have explained here, the limited appellate review of class certification decisions have resulted in a variety of procedural gyrations designed to achieve automatic appellate review, particularly in consumer class actions. If this bill is passed by the Senate, no such legerdemain will be required. Going forward, the Courts of Appeal will be required to review class certification decisions.

To be sure, one consequence of an appeal of right for class certification decisions will be the lengthening of class litigation, and with it the consequent expense. But, in purely financial terms, a federal district judge makes no decision that comes close to having the consequences of a decision to certify a class. Should millions of dollars rest on one judge’s determination with no real opportunity for review? The House said “no.” Let’s see whether the Senate agrees.

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Judge Gorsuch’s Class Action Opinions After Shook

View Susan Huber's Complete Bio at robinsonbradshaw.com View Kevin Crandall’s’s Complete Bio at robinsonbradshaw.comToday we continue our analysis of Judge Gorsuch’s class action opinions from the Tenth Circuit in an effort to better understand how he may rule if confirmed for the Supreme Court. Last week, we examined Judge Gorsuch’s decision in Shook v. Board of County Commissioners, and we will take up his remaining class action opinions below.

McClendon v. City of Albuquerque, 630 F.3d 1288 (10th Cir. 2011)

In McClendon v. City of Albuquerque, decided three years after Shook, Judge Gorsuch again demonstrates judicial restraint. In McClendon, prisoners brought a class action against the City of Albuquerque, Bernalillo County, and various individuals involved in operating the Bernalillo County Detention Center. The parties entered into a pair of settlement agreements in 2005, but four years later the district court issued an order withdrawing its approval of the settlement and giving the plaintiffs permission to rescind those agreements after it found that the County misrepresented certain facts during settlement negotiations. The Tenth Circuit held that the order was not a “final decision,” subject to appeal under 28 U.S.C. § 1291. A final decision, Judge Gorsuch reasoned, dissociates the court from the case and ends the litigation on the merits, while the order withdrawing a settlement approval does “[j]ust the opposite: the order ensures litigation on the merits will continue in the district court.”

Judge Gorsuch empathized with the defendants’ desire for an appeal that might avoid further litigation in a previously settled case that was already fifteen years old: “the delays and costs associated with civil litigation in modern America are substantial and worrisome, and even the most hard-boiled litigator may raise an eyebrow at a case lasting as long as this one.” But neither the utility of the appeal nor the advanced age of the case swayed Judge Gorsuch to take an appeal beyond the bounds of the express authority in § 1291: “Congress’s direction demands our respect, not our rewriting.” Judge Gorsuch concluded his opinion by emphasizing the importance of judicial restraint:

[O]ne thing we may never do is disregard the bounds of our legal authority and assert § 1291 jurisdiction over an appeal where it doesn’t exist. To do so in this case would compound any error the defendants imagine with an impropriety of our own, making matters worse not better. It is, after all, a “central principle of a free society that courts,” no less than the other branches of government, “have finite bounds of authority.” . . . We must respect that principle and those bounds no less when it is hard to do so than when it is easy.

Hammond v. Stamps.com, Inc., 844 F.3d 909 (10th Cir. 2016)

The Tenth Circuit’s holding in Hammond v. Stamps.com, Inc.—that the minimum amount in controversy under the Class Action Fairness Act need only be legally possible and not factually probable—is hardly noteworthy, as it falls squarely in line with the law from other Courts of Appeals. But in Judge Gorsuch’s opinion, his most recent in the class action arena, we see the hallmarks of conservative jurisprudence: interpreting statutory text (here, “in controversy”) with its “traditional meaning”; citation to the Federal Judiciary Act of 1789; and a nod toward the late Justice Antonin Scalia’s textualist approach with a citation to his book, Reading Law. Indeed, it is only after a three-page textual and historical deep dive that Judge Gorsuch cites in the final paragraph of the opinion the “several courts [that] have held as we do today.”

For those of you who yearn to know the facts of the case, Elizabeth Hammond brought a putative class action in New Mexico state court, alleging that Stamps.com engaged in misleading and unlawful trade practices by insufficiently disclosing its subscription fees to customers. She alleged that “hundreds or thousands of persons” called to cancel their Stamps.com subscriptions as a result of Stamps.com alleged wrongdoing, and each class member would “likely” receive $31.98 in damages (the cost of subscribing for two months) or $300 in statutory damages. Stamps.com presented uncontested evidence that 312,680 customers had cancelled their subscriptions during the likely class period, and the company removed the case to federal court because the amount in controversy well exceeded the $5 million threshold for the Class Action Fairness Act. The trial court granted Ms. Hammond’s motion to remand, ruling that the company had not met its burden of establishing the minimum amount in controversy because it failed to exclude from its calculations those customers who cancelled their subscriptions for reasons unrelated to the allegations in the complaint, or as Judge Gorsuch put it, “without proof from Stamps.com establishing how many of its customers were actually deceived, the district court thought the company couldn’t satisfy the $5 million ‘in controversy’ requirement.” The Tenth Circuit vacated and remanded the district court’s remand order, ruling that federal jurisdiction was proper under CAFA: the proponent of jurisdiction should not have to “argue against himself, task[ed] with the job of proving his own likely liability in a sufficient number of individual cases simply to get a foot in the door of the federal courthouse.”

BP America, Inc. v. Oklahoma ex rel. Edmondson, 613 F.3d 1029 (10th Cir. 2010)

In an earlier CAFA jurisdictional decision, the Tenth Circuit in BP America granted discretionary leave for the propane gas distributor to appeal an order remanding the case to Oklahoma state court. The merits of the jurisdictional question—whether the Attorney General’s lawsuit, brought on behalf of the state and not any individual consumers, constitutes a “mass action” involving monetary relief to 100 or more people under CAFA—were not at issue at this preliminary stage of the appeal.

Judge Gorsuch’s opinion adopts multiple factors to consider in deciding whether to grant discretionary leave to appeal under CAFA § 1453, including whether the appeal presents an important, unsettled, or at least “fairly debatable” CAFA-related question and a weighing of the relative harms to the parties should an appeal be refused or entertained.

Heller v. Quovadx, Inc., 245 F. App’x 839 (10th Cir. 2007)

Although it actually predates Shook, the unpublished decision of Heller v. Quovadx, Inc., is worth noting, if only to highlight the wry humor employed by Judge Gorsuch in dismissing a non-class member’s argument that denying him standing to object to a settlement would violate his Fifth Amendment rights. In addition to the fact that the non-class member presented “no evidence or relevant legal argument to support his contentions,” he also “spen[t] the bulk of his brief noting the inefficiencies and burdens of paper-based litigation.” Perhaps a sentiment with which class action lawyers and judges can relate all too well.

Substantively, the Tenth Circuit affirmed the district court’s determination that the non-class member lacked standing to object to the proposed settlement. Non-class members opposed to a proposed settlement cannot object directly and instead must seek to intervene under Rule 24.

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Recent Filings – February Digest

View Amanda Pickens’ Complete Bio at robinsonbradshaw.comNot every class action court filing in North and South Carolina becomes a full-length post on our blog. Here is a recap of February’s filings:

Bradley, et al. v. Samsung Electronics, et al., No. 1:17-cv-00171 (M.D.N.C. February 28, 2017) (purported class action brought under various state consumer protection and trade practice laws alleging defendants manufactured home washing machines with a defect that caused explosion during normal use.)

Matthews, et al. v. TCL Communication Inc.,  No. 3:17-cv-00095 (W.D.N.C. February 27, 2017) (putative class action removed from Mecklenburg County state court to federal court brought under state consumer laws alleging defendants removed a key compatibility feature of a specific brand of Smartphone which rendered the phone defective).

Cash-Davis, et al. v. Access Community, et al.; No. 3:17-cv-00466 (D.S.C. February 16, 2017) (putative class action and collective action originally filed in Lexington County state court, removed to federal court and brought under FLSA and state wage and hour laws alleging defendants changed the terms of employees’ pay arrangements and failed to pay compensation due).

Holland, et al v. Fulenwider Enterprises, Inc., et al., No. 1:17-cv-00048 (W.D.N.C. February 15, 2017) (purported collective and class action brought under FLSA alleging defendants misclassified assistant managers working at local KFC, Taco Bell, and Long John Silver franchises and failed to pay overtime wages).

Helen Holland, et al v. Bojangles’ Restaurants, et al., No. 3:17-cv-00050 (W.D.N.C. February 6, 2017) (purported class action and collective action brought under FLSA by employees alleging defendants misclassified them and failed to pay overtime compensation).

King, et al. v. Smooth Sailing, et al., No. 4:17-cv-00309 (D.S.C. February 2, 2017) (collective and class action alleging defendants failed to pay wages owed to employees in violation of FLSA and state wage and hour laws).

E&G, et al. v. Mount Vernon Mills, et al., No. 6:17-cv-00318 (D.S.C. February 2, 2017) (putative class action alleging violations of the Telephone Consumer Protection Act based on unsolicited facsimile transmission advertisements to plaintiffs).

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How Will Justice Gorsuch Rule in Class Actions? A Look at Shook and Judicial Restraint

View John Wester's Complete Bio at robinsonbradshaw.comThe nomination of Tenth Circuit Judge Neil M. Gorsuch for the Supreme Court has jurists and reporters forecasting how, if confirmed, he will rule in cases raising “hot” Constitutional issues. The “hot” question for those of us who litigate class actions is how Justice Gorsuch would engage the next landmark class action, especially since he would replace Justice Antonin Scalia on the Court, author of two of the most significant class action opinions in recent years, Comcast Corp. v. Behrend and Wal-Mart Stores v. Dukes.

We will be examining some of Judge Gorsuch’s opinions in an attempt to answer this question, beginning with the 2008 opinion he wrote for a unanimous panel of the Tenth Circuit, denying class certification, in Shook v. Board of County Commissioners, 543 F. 3d 557. The linchpin of the outcome in Shook was adherence to the abuse of discretion standard of review. Indeed, twice in his opinion, Judge Gorsuch observes that, were the court evaluating whether to certify the class in the first instance, it may well have allowed a class action to proceed. For example, he observed:

In this case, we believe the district court’s decision fell within the boundaries set out by Rule 23(b)(2), governing case law, and the facts as alleged. While we very well may have made a different decision had the issue been presented to us as an initial matter, and while other district courts perhaps could have chosen, or could choose, to certify similar classes, we cannot say the district court’s assessment was beyond the pale.

What comes through as a lodestar for Judge Gorsuch’s reasoning is his vigilance for honoring the rubric of Rule 23, separate from a merits analysis. Shook is a suit alleging violations of the Prison Litigation Reform Act. The 2008 opinion marked a return trip to the Tenth Circuit for the parties. In the first ruling denying class relief, the district court had “conflated” an analysis of the merits of the relief available to the plaintiffs with threshold class certification requirements of Rule 23. Judge Gorsuch was specific in describing this error: “the court focused entirely on the PLRA, reasoning that the relief plaintiffs sought was beyond its jurisdictional competence after the passage of the PLRA and that class certification is properly denied when the court lacks the authority to order the prospective remedy requested.” On remand, the district court repeated the outcome on class certification, denying it again, but, as Judge Gorsuch described the second round: “[the district court] did so this time with reference to Rule 23’s strictures. We find that the district court’s analysis of the Rule 23 framework is free of the legal errors we identified in its first effort.”

Judge Gorsuch’s opinion in Shook reflects careful scholarship—drawing support from leading Supreme Court class action precedent, from decisions by five other circuit courts, and from five law review articles—all evaluating detailed features of Rule 23—to explain why the present case, under an abuse of discretion standard, should remain in the “certification denied” column: “It is precisely these features that distinguish our case from the many and diverse civil rights cases whose certifications we have upheld and will continue to uphold.” His approach in Shook fits the overall reputation for scholarship, judicial restraint, and “rules-following” that Judge Gorsuch has earned during his judicial service.

Taking into account this reputation and his reasoning in Shook, those who labor in class action cases might wonder how far will Justice Gorsuch’s deference to trial court discretion run when the next Wal-Mart-themed case reaches the Supreme Court. Recognizing that the record for each case is distinctive, the trial court ruling in Wal-Mart stood on a significant volume of evidence—statistical and anecdotal—pointing to gender discrimination. As Justice Ginsburg observed in dissent, focusing on the commonality requirement:

The District Court’s identification of a common question, whether Wal-Mart’s pay and promotions policies gave rise to unlawful discrimination, was hardly infirm. The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware. The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.

Would Judge Gorsuch’s adherence to abuse of discretion standard of review and his recognition that trial judges operate within a range of acceptable determinations lead to his siding with Justice Ginsburg’s dissenting view? Or, was Judge Gorsuch’s application of the abuse of discretion standard in Shook influenced by its context, an appeal arising from the district court’s denial of certification? Perhaps we’ll learn the answer with the next Supreme Court class action that pits judicial restraint against an inclination toward denial of certification.

We will continue our analysis of Judge Gorsuch’s class action opinions in future posts.

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