In two recent precedential decisions, JPay, Inc. v. Kobel and Herrington v. Waterstone Mortgage Corp., the Eleventh and Seventh Circuits, respectively, held that whether an arbitration may proceed on a class-wide basis (or as a collective action when a claimant is seeking relief under the Fair Labor Standard Act) is a “question of arbitrability” to be decided by the courts, unless the parties specifically delegate that responsibility to an arbitrator. The Supreme Court previously noted the lack of a majority decision on the subject in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. and declined to address this question in Oxford Health Plans LLC v. Sutter, leaving the decision to the circuits. In JPay, the dispute arose when two plaintiffs, users of JPay’s fee-for-service amenities to send money to inmates, filed suit alleging the service dissuaded users from sending funds through free paper money orders, and that the fees charged by JPay were “exorbitant” and used to “fund kickbacks to corrections departments.” JPay’s Terms of Service included a provision that the American Arbitration Association (AAA) would arbitrate and govern any disputes, claims, or controversies that arose between the parties and “[t]he ability to arbitrate the dispute, claim or controversy shall likewise be determined in...
Tagged: Courts of Appeal – Other
The Sixth Circuit Reaffirms its Holding in Glazer v. Whirlpool Allowing Plaintiffs with Moldy Washers to Proceed United as a Class
The litigations involving allegedly defective Whirlpool washing machines are back in the legal headlines with the most recent installment hailing from the Sixth Circuit’s decision in Glazer v. Whirlpool Corp., a decision which—following remand from the Supreme Court of the United States—reaffirmed a prior order certifying a class action lawsuit. The Sixth Circuit’s certification order may, however, face scrutiny from the Supreme Court once again.
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.