Category: Consumer Class Action Defense

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...

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.”...

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...

Second Circuit Affirms Expansive Reach of Preemption Provision of Food Drug and Cosmetic Act, Defeating False Labeling Class Action Premised Upon Consumer Protection Statutes

Second Circuit Affirms Expansive Reach of Preemption Provision of Food Drug and Cosmetic Act, Defeating False Labeling Class Action Premised Upon Consumer Protection Statutes

On May 11, 2020, the Second Circuit in Critcher v. L’Oréal USA, Inc., affirmed the dismissal of a putative class action, holding that the broad preemption clause of the Food Drug and Cosmetic Act (“FDCA”), 21 U.S.C. § 379s, barred plaintiffs from seeking to impose additional or different labeling requirements through their state consumer protection law claims, where Congress and the FDA already had provided for specific labeling requirements. In Critcher, purchasers of the defendant’s “liquid cosmetics” products claimed that while the net-quantities on the products’ labels were accurate, the product packaging was misleading because it omitted critical information that the creams could not be fully dispensed from the containers. Because they could not utilize the represented quantity of product, the plaintiffs claimed that they were deceived into buying more of the cosmetics than they could use. The District Court dismissed the complaint, concluding, among other things, that the claims were expressly preempted by the FDCA, and alternatively, preempted by the Federal Packaging Labeling Act (FPLA), 15 U.S.C. § 1451, et seq. On appeal, the plaintiffs argued that mere compliance with that net quantity disclosure requirement was not enough because it had the effect of making the packaging misleading in...

Does “100% Natural” Mean “No GMOs”? First Circuit Holds That Deceptive Label Claim Not Barred Where FDA Leaves Question Unresolved

Does “100% Natural” Mean “No GMOs”? First Circuit Holds That Deceptive Label Claim Not Barred Where FDA Leaves Question Unresolved

On May 7, 2020, the First Circuit in Lee v. Conagra Brands, Inc., reversed the dismissal of a consumer fraud class action on the ground that the complaint plausibly stated that the product’s “100% Natural” statement may be deceptive to a consumer where the product contains genetically modified organisms (GMOs). In Lee, the plaintiff claimed that a “100% Natural” representation on the product label for Wesson Oil enticed her to buy the product because it indicated to her that the oil was GMO-free, when in fact it was not. She filed a class action alleging unfair or deceptive trade practices in violation of the Massachusetts consumer fraud law, Chapter 93A. The district court granted Conagra’s motion to dismiss, finding that the “100% Natural” language was “consistent with the FDA’s longstanding policy for the use of the term ‘natural’ on the labels of human food.” Additionally, the district court held that the FDA does not require a product to disclose on its label the use of GMOs. An act or practice violates Chapter 93A if it is “either unfair or deceptive.” The First Circuit’s decision addressed only the “deceptive” prong as plaintiff failed to raise, and thus waived, any argument that...

Third Circuit in Chesapeake Appalachia: Incorporating AAA Rules Not Enough to Satisfy the Onerous Burden of Overcoming Presumption in Favor of Judicial Resolution of Class Arbitrability 0

Third Circuit in Chesapeake Appalachia: Incorporating AAA Rules Not Enough to Satisfy the Onerous Burden of Overcoming Presumption in Favor of Judicial Resolution of Class Arbitrability

In Chesapeake Appalachia, L.L.C. v. Scout Petroleum, L.L.C., the Third Circuit picked up where it left off after Opalinski v. Robert Half International Inc. In Opalinski, the Circuit held, for the first time, that “the availability of class arbitration constitutes a ‘question of arbitrability’ to be decided by the courts—and not the arbitrators—unless the parties’ arbitration agreement ‘clearly and unmistakably’ provides otherwise.”

New Authority for Class Action Defendants Allowing Merits-First Bifurcated Discovery 0

New Authority for Class Action Defendants Allowing Merits-First Bifurcated Discovery

The cost and burden of class action discovery often puts undue pressure on defendants to settle cases that have little or no merit. To relieve this pressure, courts sometimes permit bifurcated discovery, with the parties first addressing class certification issues and later, if warranted, merits issues. Recently, in Physicians Healthsource, Inc. v. Janssen Pharms., Inc., the District of New Jersey ordered bifurcated discovery but reversed the normal mechanics, limiting the first phase to merits issues before permitting any class discovery. The result is the same, though: potentially enormous time- and cost-savings. This strategy may be worth considering in cases where there are potentially dispositive merits issues.

Lessons to Learn in the Wake of the Sixth Circuit’s Decision Upsetting the Class Settlement in the Dry Max Pampers Litigation 0

Lessons to Learn in the Wake of the Sixth Circuit’s Decision Upsetting the Class Settlement in the Dry Max Pampers Litigation

There have been a flurry of federal appellate court decisions this year and last scrutinizing and overturning class settlements (see In re HP Inkjet Printer Litig. and Radcliffe v. Experian, merely by way of example). That trend continued on August 2, 2013, with In re Dry Max Pampers Litigation, a case involving Pampers marketed with “Dry Max technology,” where the Sixth Circuit upset a settlement awarding class counsel $2.73 million in attorneys’ fees and the named plaintiffs $1,000 “per ‘affected child.’” The Court found it offered the class representatives and class counsel “preferential treatment” at the expense of unnamed class members, who received nothing save what the Sixth Circuit characterized as “worthless injunctive relief.” Though the latest decisions out of the Third and Seventh Circuits addressing the bona fides of attorneys’ fee awards in class settlements — see Kirsch v. Delta Dental and Silverman v. Motorola — held that the deals there passed muster, both sides of the bar would be well served by taking note of what went wrong in In re Dry Max.