All posts by David Wright

Seventh Circuit Weighs In on “White or No Underwear” Policy

View David Wright's Complete Bio at robinsonbradshaw.comOccasionally, we see something outside of the Carolinas that is quirky enough to merit a mention in this space.  Such is the Seventh Circuit’s recent decision in Mulvania v. Sheriff of Rock Island County, No. 16-1711 (7th Cir. Mar. 9, 2017).  According to Wikipedia, “In 2015 Rock Island (Illinois) was ranked the 32nd ‘Best Small City’ in the country.”  Not influencing those rankings, apparently, was the policy of the Rock Island County Jail, which “requires female detainees to wear either white underwear or no underwear at all.”  What, you ask, might be the “compelling government interest” that allegedly supports such a policy?  As the Seventh Circuit described, “[t]he Sheriff’s sole stated rationale for the underwear policy was to prevent detainees from extracting ink from colored underwear.”  This was a problem, in the Sheriff’s mind, because “detainees could use that ink to make tattoos.”   Despite the dearth of examples of such tattoo creation by detainees, the Sheriff testified that the policy was founded on such “security concern[s].”  This policy apparently has not been confined to Rock Island County; indeed, the defense argued that the white underwear policy was “within the correctional mainstream.”

The district court denied certification of the “underwear class” and granted summary judgment in favor of defendants.  On the merits, the Seventh Circuit reversed, holding that the record supported the inference that “the asserted security concern about tattoo ink from underwear is not genuine.”

The district court’s class certification decision was based on predominance and numerosity.  As to predominance, the court found that the “damages would vary for individual class members based on factors such as how long a detainee was deprived of her underwear, whether she was on her menstrual cycle or pregnant and other considerations.”  The absence of a “simple or formulaic method to calculate damages,” in the view of the lower court, precluded class certification.

The Seventh Circuit summarily reversed this determination, noting that “this reasoning was a mistake.”  According to the Court of Appeals, “it has long been recognized that the need for individual damages determinations at [a] later stage of the litigation does not itself justify the denial of certification.”

Alas, however, there were not enough underwear detainees to mount a class challenge.  After observing that “a forty-member class is often regarded as sufficient to meet the numerosity requirement,” the Seventh Circuit held that the class period only yielded 29 members–there was no basis upon which the plaintiffs’ amended complaint “related back” to the initial complaint, which might have supported a higher number.

It remains unclear, as of this post, whether Rock Island’s policy has been amended and whether this case will impact its ranking as the “Best Small City.”

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page

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.

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page

Seventh Circuit Weighs in on Offers of Judgment

View David Wright's Complete Bio at robinsonbradshaw.comIn this space, we concentrate on class action decisions in the Carolinas, as well as Fourth Circuit and United States Supreme Court precedent. Occasionally, though, we venture beyond these jurisdictions to highlight issues of particular note, including those where courts are divided. We’ve previously reported here how offers of judgment interact with mootness. In Campbell-Ewald Co. v. Gomez, the United States Supreme Court held that an unaccepted settlement offer, even if it offers all relief sought in the case, does not render a case moot when the affected party seeks relief on behalf of a class. Last Friday, the Seventh Circuit considered a question not resolved by Gomez: What happens when the named representative accepts a Rule 68 offer of judgment? Can he still appeal the denial of class certification? Like the question of appellate standing upon which the Supreme Court accepted certiorari in Microsoft, the answer is significant.

In Wright v. Calumet City, Illinois, No. 14-cv-10351 (7th Cir. Feb. 17, 2017), the Seventh Circuit acknowledged a split of authority on this question: “Where the Rule 68 offer is accepted but by its terms exempts the class certification issue, courts are divided as to whether the plaintiff retains a concrete interest sufficient to meet the case or controversy requirement of Article III.” The Seventh Circuit noted that Wright’s claim to standing was particularly strained because he accepted the Rule 68 offer without reservation, and he preserved no interest in receiving an incentive award. Wright argued that he had a sufficient interest in the case because his offer of judgment did not include attorney’s fees for the class claim (as opposed to his individual claim), but – as the Seventh Circuit observed – Lewis v. Continental Bank Corp.,  494 U.S. 472, 480 (1990) holds that “an interest in attorneys’ fees is, of course, insufficient to create an Article III case or controversy where none exists.” The court noted that there is some tension between Lewis and Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980), in which the Supreme Court allowed plaintiffs, whose individual claims had been satisfied, to appeal the denial of class certification based on their asserted interest in shifting attorney’s fees to the class members. But the court distinguished Wright’s case from Roper on the ground that Wright had accepted the Rule 68 offer “as satisfaction of all of the relief that he sought in the district court.” In Roper, by contrast, the district court entered judgment for the plaintiffs in the amount tendered by the defendant, even though the plaintiffs had refused that offer. Thus, even under Roper, Wright’s claims are moot.

There will likely be more permutations on the Rule 68/mootness issues, so stay tuned.

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page

Oral Argument in Class Action Waiver Cases Postponed to October

View David Wright's Complete Bio at robinsonbradshaw.comLast week, we observed that the Supreme Court appeared to be waiting for a ninth justice to decide in an important case involving appealability of class action certification decisions. A news report today* indicates that the Supreme Court has also pushed out arguments concerning the enforceability of class action waivers. As we recently reported in this space, the Court had agreed in three cases to decide whether the NLRA prohibits employers from requiring non-management employees covered by the NLRA to arbitrate their work-related claims individually. For employers, particularly those with a nationwide workforce, this remains one of the few tools available to stave off expensive and risky class litigation from employees. The Court apparently will not hear argument in these cases until the 2017 term, which begins in October. We will be watching the Supreme Court for further developments.

*You may have to register to access the linked article at Law360.

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page

Important Class Action Apparently Awaits the Ninth Justice

View David Wright's Complete Bio at robinsonbradshaw.com
About a year ago, the United States Supreme Court granted Microsoft’s petition to review this question: “Whether a federal court of appeals has jurisdiction under both Article III and 28 U.S.C. Section 1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice.” Briefing in the case was completed last June, but the case has yet to appear in the calendar of the fourth sitting of the Supreme Court’s term, which began January 9, 2017. Although the reasons for the delay aren’t pellucid, this is an important case and likely is being held for a time when a full complement of the Court can decide the question.

The case comes from the Ninth Circuit, which held that 28 U.S.C. Section 1291 provided jurisdiction to review the trial court’s decision to strike class allegations, even though the named plaintiffs had dismissed their claims with prejudice. The district court found that the underlying claims, which alleged that a “design defect in the Xbox console gouges game discs,” could not proceed as a class because individual issues predominated. The plaintiffs sought interlocutory review under Rule 23(f), but the Ninth Circuit declined to take the appeal. Under the Supreme Court’s unanimous decision in Coopers & Lybrand v. Livesay, 437 U.S. 463, 466 (1978), this meant the plaintiffs would need to wait until after final judgment in the case before they would be able to obtain review of the class determination. But litigation is expensive, and trying a case about a few game discs—as opposed to millions of them—is not normally an attractive proposition for plaintiffs’ counsel. In most cases, of course, plaintiffs are loath to dismissing their claims as a condition to obtaining review for class claims, but in consumer litigation—where the individual stakes are quite small—this is not so. So the plaintiffs dismissed their claims with prejudice and filed a notice of appeal with the Ninth Circuit. This allowed them to do what Livesay seemed to prohibit—obtain an immediate appeal.

Relying on previous precedent in the circuit, however, the Ninth Circuit held that “a dismissal of an action with prejudice, even when such dismissal is the product of a stipulation, is a sufficiently adverse—and thus appealable—final decision.” Reaching the merits, the Ninth Circuit reversed the trial court and remanded to allow the class claims to go forward.

This option—if allowed by the Supreme Court—works only for plaintiffs in class action cases, not defendants. If defendants suffer an adverse class certification ruling, and the appellate court does not exercise its discretion to accept the interlocutory appeal, defendants must litigate the case to judgment before obtaining review of the class determination. And appellate courts don’t generally review class certification decisions on an interlocutory basis; one study indicates that less than one-quarter of such petitions are granted. Defendants are thus whipsawed: they can’t obtain interlocutory review of an adverse class certification decision and they can’t afford to take the risk of a class verdict. Put simply, they are at the mercy of a single trial judge and the stakes are enormous. As the Supreme Court has observed, class actions present a significant risk of “in terrorem settlements,” because defendants “[f]aced with even a small chance of a devastating loss . . . will be pressured into settling questionable claims.” AT&T Mobility LLC v. Concepcion, m 131 S. Ct. 1740, 1752 (2011).

But plaintiffs will have an enhanced ability to achieve appellate review if the Ninth Circuit decision is affirmed. Plaintiffs can also try a Rule 23(f) appeal, as they did in Baker. But if they lose, the named plaintiffs can dismiss their claims with prejudice and achieve immediate review of class certification as a matter of right. On its face, this inequality seems to be exactly what the Supreme Court wanted to avoid in Livesay when it refused to recognize the “death knell” doctrine embraced by numerous courts of appeals. There, the Court noted that the doctrine “operates only in favor of plaintiffs even though the class issue—whether to certify, and if so, how large the class should be—will often be of critical importance to defendants as well.”

As evidenced by the amount of amicus participation in this case, this decision is an important one and has significant stakes for consumers and businesses. Our guess is that the current justices are split 4 to 4 on this one, so stay tuned for the outcome of the confirmation process. Judge Gorsuch, for his part, seems to have a conservative view of the finality doctrine. See McClendon v. City of Albuquerque, 630 F.3d 1288 (10th Cir. 2011) (no appellate jurisdiction to consider district court’s order withdrawing approval of a class action settlement, observing that “[s]uch an order simply presses the reset button and marks the case for renewed litigation”).

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page