In a precedential decision interpreting the New Jersey Consumer Fraud Act (CFA), the Third Circuit determined that an automobile insurance carrier may be liable under the CFA for deceptively inducing one of its customers into releasing claims against another party represented by the carrier. In Alpizar-Fallas v. Favero, Defendant’s car struck Plaintiff’s vehicle, causing serious injury and damages. Both parties were insured by Defendant’s insurance company, Progressive. A Progressive claims adjuster arrived at Plaintiff’s home and presented her with a document that he claimed required her signature. The adjuster represented that by signing the document Plaintiff would expedite the claim process. Plaintiff signed the document relying on the adjuster’s statements. The document, however, was a “comprehensive general release of any and all claims” against defendant driver, also insured by Progressive. Plaintiff was not advised by the adjuster to seek counsel. Plaintiff subsequently brought a putative class action against Progressive for violation of the CFA. On Progressive’s motion, the district court dismissed Plaintiff’s claims, reasoning that the CFA did not apply to “an insurance company’s refusal to pay benefits” but only to the “sale or marketing” of the policies. On appeal, the Third Circuit reversed, holding that the district court mischaracterized...
In a decision that may broaden application of the “local controversy” exception to removal under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(4), the Third Circuit recently affirmed the remand of a putative class action to New Jersey state court holding a corporate defendant with New Jersey citizenship could be considered a “local defendant” because it did not fully divest itself of liability after previously transferring its potential liabilities to a Delaware entity and, thus, remained a real party in interest. In Walsh v. Defenders, Inc., putative class members filed their complaint in New Jersey Superior Court alleging that the contracts they entered into with Defendants related to the class members’ purchase of home security equipment and monitoring services violated New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) and the New Jersey Consumer Fraud Act (“NJCFA”). Defendants removed the matter to federal court asserting CAFA jurisdiction, and Plaintiff moved to remand under CAFA’s local controversy exception. After initially denying Plaintiff’s motion to remand, the District Court granted Plaintiff’s motion for reconsideration when additional discovery showed that the only defendant with New Jersey citizenship, ADT SSI-Tyco, had contracted with 35.3% of the putative class members. Defendants appealed and...
In Tyson Foods, Inc. v. Bouaphakeo, the Supreme Court of the United States definitively answered the question of whether statistical “representative evidence” may be used in class actions to establish that “questions of law or fact common to class members predominate over any questions affecting only individual members” pursuant to Rule 23(b)(3). According to the Court’s much-anticipated opinion, the answer is yes: “Its permissibility turns not on the form a proceeding takes – be it a class or individual action – but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”
Third Circuit Confirms Prospective Application of New Jersey Supreme Court’s Shelton Decision, Dooming Underlying Class Action
In a recent precedential decision, the Third Circuit, in Bohus, et al. v. Restaurant.com, held that the New Jersey Supreme Court’s Shelton decision — responding to a question of law certified by the Third Circuit as to the proper interpretation of the Truth in Consumer Contract, Warranty, and Notice Act (“TCCWNA”) — may be applied prospectively, thus defeating the class claims and leaving only two individual claims for a $100 penalty.
In Byrd v. Aaron’s Inc., the United States Court of Appeals for the Third Circuit added to, and clarified, its “quartet” of ascertainability cases to resolve the “apparent confusion in the invocation and application of ascertainability in this Circuit.” The plaintiffs in Byrd brought a class action claiming violations of the Electronic Communications Privacy Act of 1986 because laptop computers had “spyware” installed, which had captured a wide array of personal information from the users including photographs and screenshots of websites visited. Adopting the recommendation of the Magistrate Judge, the District Court denied class certification for failure to establish ascertainability, finding that the proposed classes were both “underinclusive” (i.e., did not include all individuals whose information was gathered) and overinclusive (not every computer user had data intercepted), and that it was insufficient to propose that “household members” be identified by public records. “Because the District Court confused ascertainability with other relevant inquiries under Rule 23,” it “erred in determining that the Byrds’ proposed classes were not ascertainable.”
Third Circuit Confirms That Challenged Expert Testimony Must Survive Daubert Challenges in Order to Demonstrate Conformity with Rule 23
Drawing upon its own precedent and that of the Supreme Court in Comcast v. Behrend, the Third Circuit recently held in In re Blood Reagents Antitrust Litig. that a district court must resolve any Daubert challenges to proffered expert testimony as part of its “rigorous analysis” of the requirements for class certification.
Seventh Circuit Rejects Unbalanced “Division of Spoils” Between Class Counsel and Class Members in RadioShack Settlement
In Redman v. RadioShack Corp., the Court of Appeals for the Seventh Circuit, in an opinion by Judge Richard Posner, reversed and remanded the district court’s judgment approving the settlement terms for a class action filed against RadioShack Corp. alleging violation of the Fair and Accurate Credit Transactions Act. The court expressed concern about “the division of spoils between class counsel and class members” and found it likely that “each class member has a valid claim to a good deal more than one $10 coupon, and it would seem therefore that the equities favor a reallocation of some of what we are calling the spoils from class counsel to class members who have submitted claims for the coupons.”
Third Circuit Finds Proposed Dual Service as Class Counsel and Class Representative Does Not Preclude CAFA Removal
The Third Circuit recently considered whether the District Court properly denied a motion for remand brought by a pro se plaintiff, an attorney also seeking to serve as class counsel, who argued that since his “dual service” precluded class certification in federal court, the defendant could not aggregate the proposed class’s claims to satisfy the $5 million amount in controversy under the Class Action Fairness Act (“CAFA”). In affirming the denial of the plaintiff’s remand motion, the Third Circuit built upon recent Supreme Court precedent confirming that a plaintiff cannot stipulate to less than $5 million in damages to avoid the federal court’s subject matter jurisdiction under CAFA.
Supreme Court to Address Evidentiary Requirements for Determining Removal Jurisdiction in Class Actions
The Supreme Court of the United States granted certiorari in Dart Cherokee Basin Operating Company, LLC v. Owens, to resolve a circuit split over the evidentiary standard for determining removal jurisdiction pursuant to the Class Action Fairness Act (“CAFA”). Specifically, the Court will consider “[w]hether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required ‘short and plain statement of the grounds for removal’ enough?”
In a precedential opinion, the Third Circuit in Vodenichar v. Halcón Energy Properties, Inc., clarified the “home state” and “local controversy” exceptions to federal subject matter jurisdiction under the Class Action Fairness Act (“CAFA”). The decision provides guidance on two undefined terms within CAFA, adopting broader interpretations for what makes a defendant a “primary defendant” for purposes of the home state exception and what constitutes an “other class action” for purposes of the local controversy exception.