Commercial Litigation Alert Blog

Supreme Court to Finally Decide Definition of Autodialer in TCPA Litigation

Supreme Court to Finally Decide Definition of Autodialer in TCPA Litigation

On July 9, 2020, the U.S. Supreme Court granted a long-pending petition for certiorari in Facebook Inc. v. Duguid, Noah, et al. to address a hotly debated question in Telephone Consumer Protection Act (TCPA) litigation: “whether the definition of [automated telephone dialing system] encompasses any device that can ‘store’ and ‘automatically dial’ telephone numbers, even if the device does not ‘us[e] a random or sequential number generator.’” The grant of certiorari comes on the heels of the Court’s sweeping decision in Barr v. American Ass’n of Political Consultants, severing the government debt collection exception to the TCPA’s “autodialer” prohibition as a content-based restriction on free speech. The TCPA broadly prohibits most calls using any ATDS or autodialer, defined by statute as “equipment which has the capacity – (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” Given the lack of clarity in the statutory language, courts have grappled with whether “a random or sequential number generator” must be used to only “store” the numbers, or only to “produce” the numbers, or to “dial” the numbers after having “randomly or sequentially” generated or produced them. Further complicating...

Third Circuit Affirms Class Certification in In re Suboxone Antirust Litigation

Third Circuit Affirms Class Certification in In re Suboxone Antirust Litigation

On July 28, 2020, the Third Circuit in In re Suboxone (Buprenorphine Hydrochloride & Nalaxone) Antitrust Litigation, affirmed certification of a direct purchaser class, concluding that common evidence existed to prove the plaintiffs’ antitrust theory and resulting injury and that the proposed class representative, Burlington Drug Company, Inc., was an adequate class representative. The direct-purchaser plaintiffs alleged that the defendant drug manufacturer of the opioid-treatment drug, Suboxone, engaged in anticompetitive conduct that impeded the entry of generic versions of the drug into the market. Specifically, plaintiffs asserted that defendant “shifted the market” from Suboxone tablets to Suboxone film by the time generic tablets entered the market, thereby maintaining a monopoly and suppressing competition. According to plaintiffs, the defendant’s transition from tablets to film was coupled with six tactics to “eliminate demand for Suboxone tablets and to coerce prescribers to prefer film,” including making false statements about the safety of the tablets and withdrawing brand-name Suboxone tablets from the market. The plaintiffs argued that due to defendant’s anticompetitive conduct, they paid more for brand Suboxone products than they would have for generic tablets. The district court certified the class, and the Third Circuit granted the defendant’s petition for leave to appeal...

Supreme Court Severs TCPA’s Government Debt-Collection Exception as Content-Based Restriction on Free Speech, but Leaves Autodialer Restriction

Supreme Court Severs TCPA’s Government Debt-Collection Exception as Content-Based Restriction on Free Speech, but Leaves Autodialer Restriction

The Supreme Court of the United States recently analyzed the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, et seq., highlighting the importance of the Act’s ban on “robocalls,” (i.e., calls placed using an “automatic telephone dialing system” or “autodialer”), but leaving key questions unanswered. In Barr v. American Association of Political Consultants, Inc., the Court upheld the TCPA but severed Congress’s 2015 amendment that allowed entities to make robocalls to collect government-backed debt. Enacted in 1991, the TCPA generally prohibits robocalls to cell phones and home phones. At the heart of the Court’s opinion here was the decision whether to uphold Congress’s 2015 amendment which allowed an exception to the general ban on robocalls for entities collecting government-backed debt. The plaintiffs, organizations that participate in the political system, make calls to citizens for a multitude of purposes, such as discussing political issues, soliciting donations, and conducting polls. If robocalls to cellphones were allowed for political outreach, the plaintiffs believe that their efforts would be more effective and efficient. The plaintiffs filed a declaratory judgment action against the U.S. Attorney General and the Federal Communications Commission to invalidate the TCPA’s entire 1991 autodialer restriction, arguing that allowing certain entities...

DOJ and FTC Issue Final Vertical Merger Guidelines

DOJ and FTC Issue Final Vertical Merger Guidelines

On June 30, 2020, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) finalized their much-anticipated Vertical Merger Guidelines. The new Guidelines, which were last updated in 1984, seek to increase transparency around the analytical techniques, practices, and enforcement policies that U.S. antitrust authorities use to regulate mergers between firms at different stages of the supply chain (e.g., a furniture maker that acquires a producer of timber). Vertical mergers generally raise fewer anticompetitive concerns than horizontal mergers between direct competitors. This, in part, is because consolidation along the supply chain tends to result in lower prices, as distributors and finished goods manufacturers can source inputs at cost rather than at the markup they would pay to a third-party supplier. But, as the Guidelines make clear, vertical mergers “are not invariably innocuous”: a merged firm could raise the price for – and even withhold – a necessary input from its rivals or exploit sensitive business information about rivals that it obtains as part of the merger. These so-called unilateral effects threaten harm to competition in the relevant market if rivals wind up abandoning the market, leaving consumers with higher prices and less innovation as a result. Per the Guidelines,...

New Jersey Supreme Court Holds That Individualized Proof of Damages Is Required Absent a Basis for Presumption of Class-Wide Damages Capable of Reliable Mathematical Calculation

New Jersey Supreme Court Holds That Individualized Proof of Damages Is Required Absent a Basis for Presumption of Class-Wide Damages Capable of Reliable Mathematical Calculation

In Little v. Kia Motors America, Inc., a litigation spanning nearly two decades, the New Jersey Supreme Court held that, although aggregate proof of damages can be appropriate in some settings, individualized proof of damages based on the actual costs incurred by the class members was required in the case before it. Class members had to show they incurred “actual costs” as a result of an alleged defect in order to recover damages. In 2001, plaintiff filed a putative class action asserting breach of warranty and other claims on her behalf and on behalf of other New Jersey owners and lessees of certain Kia models. Plaintiff alleged that the vehicles had a defective brake system which rendered the vehicles’ front brakes susceptible to premature wear. After a four-week trial, the jury returned a verdict in favor of plaintiff and the class on the class-wide warranty claim, awarding zero damages for alleged diminution-in-value but $750 per class member on the out-of-pocket loss theory, which had been premised on an expert’s estimate of the amount of money an average owner would pay for brake repairs over the vehicles’ lives as a result of the alleged defect. On defendant’s motion for a new...

DOJ Updates Corporate Compliance Program Evaluation Guidelines to Invite the Practice of Continuous and Evolving Improvements Through Data Analysis

DOJ Updates Corporate Compliance Program Evaluation Guidelines to Invite the Practice of Continuous and Evolving Improvements Through Data Analysis

The Department of Justice (DOJ) recently updated its Evaluation of Corporate Compliance Programs guidelines, which federal prosecutors consider when making decisions to prosecute corporate compliance violations, impose monetary penalties, and require future compliance commitments. The guidelines highlight what prosecutors should deem relevant in evaluating a corporate compliance program, both at the time of the offense(s) and at the time of the charging decision and resolution. In turn, the guidelines serve as a roadmap for corporate compliance and control personnel in designing a corporate compliance program, allocating resources to the program, evaluating the efficacy of the program in practice, and redesigning the program as needed on a regular basis. The updates make clear that the DOJ is interested in the continuous evaluation and evolution of corporate compliance programs, and that prosecutors will now be examining whether and how a compliance program incorporates data analytics. As before, the guidelines instruct federal prosecutors to ask three questions, though now slightly revised as follows: Is the compliance program well designed? Is the program adequately resourced and empowered to function effectively? Does the program work in practice? A welcome addition to the guidelines is a stated recognition that the circumstances of the company, e.g., size,...

District of New Jersey Denies Class Certification in Product Defect Case Against BMW

District of New Jersey Denies Class Certification in Product Defect Case Against BMW

The District of New Jersey recently denied class certification in a putative class action alleging a product defect in BMW engines. Afzal v. BMW of North America, LLC concerned whether BMW defectively designed its car engine so that a component wears out too quickly and failed to disclose that defect to purchasers. Two Plaintiffs, both California residents who allegedly suffered premature rod bearing wear, filed a putative class action raising various causes of action including violations of several California consumer protection statutes, breach of warranty, and fraud. Plaintiffs sought certification of two classes: (1) the Dealership Class and (2) the Warranty Class. The “Dealership Class” was defined as: “All persons who after November 12, 2011, purchased a model year 2008 to 2013 BMW M3 (the “Class Vehicle”) in California from an authorized BMW dealership, and who resided in California at the time of that purchase, and who as of the date of the Court’s Certification Order, either 1. Currently owns a Class Vehicle with 120,000 miles or less; or 2. Currently or formerly owned a Class Vehicle and, when the Class Vehicle had 120,000 miles or less, incurred out-of-pocket costs to replace the connecting rod bearings in the Class Vehicle.”...

Internal Investigations and Compliance in a Post-Pandemic Environment: Risks and Opportunities

Internal Investigations and Compliance in a Post-Pandemic Environment: Risks and Opportunities

The COVID-19 pandemic has presented not only novel challenges, but also opportunities for companies hoping to enhance or regain productivity while preventing wrongdoing and maintaining robust compliance functions. As workplaces reopen, historical challenges will persist and new risks will emerge. To be best positioned during this transition phase and beyond, companies should embrace the opportunity to evaluate their existing compliance processes and make the adjustments now that are necessary to adapt to a risk landscape that will likely never again be the same. Empower Legal, Compliance, and Investigative Resources Responsible companies will not be receptive to attempts to excuse misconduct due to the pandemic, nor will regulators. After all, there will be no “pandemic defense” to wrongdoing, and hindsight tends to be unforgiving—particularly through the lens of regulators looking at current events months or years from now. And as businesses emerge from state stay-at-home orders, an increased focus on productivity threatens to exacerbate the already heightened risk environment. It is critical that compliance, legal, and internal and external investigative resources be empowered to mitigate these risks effectively. Some immediate mitigation actions to be considered include: Conducting mandatory training on the enhanced risk environment and compliance best practices. Assessing existing policies...

Third Circuit Clarifies How Arbitration Language Should be Presented to Consumers

Third Circuit Clarifies How Arbitration Language Should be Presented to Consumers

The Third Circuit recently issued a precedential decision further explaining the requirements when presenting consumers with otherwise enforceable language requiring arbitration. In Bacon v. Avis Budget Group Inc., six plaintiffs rented cars from defendant Payless Car Rental, Inc., a subsidiary of defendant Avis Budget Group, Inc. At the rental counter, plaintiffs each signed identical one-page rental agreements, which, among other things, itemized charges and fees and showed whether the customer had accepted or declined certain products and services. Each plaintiff signed below the final paragraph, which provided: “I agree the charges listed above are estimates and that I have reviewed & agreed to all notices & terms here and in the rental jacket.” The rental jackets were kept at the rental counter, typically near the rental associate’s computer terminal or printer. The rental associates were trained to give a rental jacket to each customer after the customer signed the agreement and to any customer who requested one, but the associates were not trained to alert customers to the additional terms in the rental jacket. The rental associates said nothing about the rental jacket when plaintiffs reviewed their agreements. After plaintiffs signed their agreements, the rental associate folded the agreement into...

Third Circuit Holds Solicitations to Purchase Products and for Participation in Surveys can be Advertisements Under the TCPA

Third Circuit Holds Solicitations to Purchase Products and for Participation in Surveys can be Advertisements Under the TCPA

On May 15, 2020, the Third Circuit in Fishbein v. Olson Research Group, Inc. held “that solicitations to buy products, goods, or services can be advertisements under the TCPA and that solicitations for participation in . . . surveys in exchange for [money] by the sender were for services within the TCPA” making such solicitations advertisements that fall within the TCPA’s ambit. This opinion comes just one year after the Third Circuit issued its precedential decision in Mauthe v. Optum, Inc., holding that, in order for a fax to be considered an advertisement under the TCPA, “there must be a nexus between the fax and the purchasing decision of an ultimate purchaser whether the recipient of the fax or a third party,” meaning that “the fax must promote goods or services to be bought or sold, and it should have profit as an aim.” The consolidated appeal in Fishbein arose from two District Court decisions, Fishbein v. Olson Research Group, Inc., which involved a fax offering the recipient money in exchange for participating in a medical study, and Mauthe v. ITC, Inc., which involved faxes that offered the recipient money in exchange for completing surveys. After applying the Third Circuit’s...