April 24, 2019 / 8:27 PM / 8 months ago

Latest battle in war on class actions: 7th, D.C. Circuits will scrutinize nationwide cases

(Reuters) - Sometimes threats to curtail class actions arise with little warning.

Take, for example, last year’s ruling by a three-judge panel of the 9th U.S. Circuit Court of Appeals in In re Hyundai and Kia, striking down a nationwide class action settlement because the trial judge didn’t give enough consideration to shades of difference in state consumer laws. Or the Emulex case at the U.S. Supreme Court, in which the company and its amici suggested for the first time that shareholders may not have a right to sue over tender offer disclosures. (The controversial Hyundai panel decision is under en banc review at the 9th Circuit; the Supreme Court on Tuesday dismissed the Emulex case, leaving shareholders’ right of action unaddressed.)

Want more On the Case? Listen to the On the Case podcast.

More often, as in the long corporate campaign to entrench mandatory arbitration, class action warfare is slow and deliberate. The latest big battle, in which corporate defendants are pushing to kill nationwide class actions under the Supreme Court’s 2017 ruling in Bristol-Myers Squibb v. Superior Court of California, is a great illustration of the relentlessness of class action opponents. Defendants have been pounding arguments about the personal jurisdiction of absent class members for nearly two years in the trial courts - and now two federal circuits are poised to hear them out.

In the Bristol-Myers case, as you may recall, the Supreme Court ruled that plaintiffs who lived outside of California could not sue Bristol-Myers in a mass personal injury case in California state court because California does not have specific jurisdiction to hear claims by nonresidents. It’s important to remember that the Supreme Court opinion addressed a mass tort, in which each plaintiff filed an individual suit, rather than a class action. In fact, in a footnote to Justice Sonia Sotomayor’s dissent, the court highlighted that its opinion “does not confront the question whether its opinion here would also apply to a class action in which a plaintiff injured in the forum state seeks to represent a nationwide class of plaintiffs, not all of whom were injured there.”

That footnote did not stop class action defendants from attempting to capitalize on the Bristol-Myers decision. Their argument: The same due process concerns that precluded non-Californians from suing Bristol-Myers in California should bar named plaintiffs from leveraging their personal jurisdiction to sue on behalf of class members from other states. (Defendants concede that plaintiffs from all over the country can sue in states where companies are incorporated or headquartered.)

In the two years since the Supreme Court’s ruling, dozens of federal district judges have considered whether Bristol-Myers bars nationwide class actions in jurisdictions other than a defendant’s home states. Most of them, according to a list of cases in a 7th Circuit brief by a class action plaintiff, have distinguished between federal-court class actions and the state-court mass litigation addressed in the Supreme Court’s Bristol-Myers case.

A year ago, for example, U.S. District Judge Amit Mehta of Washington, D.C., refused to dismiss class action underpayment claims by Whole Foods grocery employees outside of his jurisdiction. Judge Mehta found that because the federal rules for class actions include due process safeguards for defendants, the Supreme Court’s Bristol-Myers decision “does not require a court to assess personal jurisdiction with regard to all non-resident putative class members.”

But some trial courts, especially in Illinois, have sided with defendants. Last October, U.S. District Judge Virginia Kendall of Chicago granted a motion by the healthcare technology company IQVIA to strike non-Illinois residents from a proposed nationwide class alleging violations of the Telephone Consumer Protection Act. Judge Kendall held that the Due Process Clause of the Fourteenth Amendment – the clause underlying the Supreme Court’s Bristol-Myers ruling – precludes courts from exercising personal jurisdiction in a prospective class action that includes claims by absent class members from states other than Illinois.

This division amongst trial courts is now at issue before both the D.C. Circuit, in the Whole Foods case, and the 7th Circuit in the IQVIA case. And it’s sufficiently consequential that both sides of the class action lobby have mobilized. Whole Foods and IQVIA have amicus backing from the U.S. Chamber of Commerce and the Washington Legal Foundation. (The Business Roundtable is an amicus in the Whole Foods case but has not appeared in the IQVIA appeal.) Plaintiffs in the Whole Foods appeal are backed by Public Citizen. In the IQVIA case, the American Association of Justice has filed an amicus brief backing the prospective class.

The private law firms representing amici in the appeals are also a good indicator of their significance. AAJ’s counsel in the IQVIA appeal at the 7th Circuit is Gupta Wessler – which is also representing the prospective class in the Whole Foods case at the D.C. Circuit. The Chamber has Mayer Brown. These two firms have been leading the way, albeit on opposite sides, in cutting-edge class action litigation going back to the Supreme Court’s review of class action waivers in 2011’s AT&T Mobility v. Concepcion.

Broadly speaking, class action plaintiffs and their amici contend that the federal rules and Supreme Court precedent require that only named plaintiffs in class actions – and not every absent class member – must establish personal jurisdiction to sue a defendant in the named plaintiff’s home state. They argue that the Fourteenth Amendment due process considerations at the heart of the Supreme Court’s Bristol-Myers decision don’t even come into play in federal courts, which are subject to the Fifth Amendment’s due process restrictions. The whole point of class actions, according to their proponents’ briefs, is to promote efficiency and reduce duplicative litigation – an objective that would be utterly undermined if plaintiffs were required to file dozens of statewide class actions instead of aggregating their claims in a single case with jurisdiction established by the named plaintiff.

Defendants and the amici, meanwhile, insist that the due process principles of Bristol-Myers apply just as well to class actions as to mass actions: If absent class members cannot establish personal jurisdiction, they cannot bring claims. Defendants cite the Rules Enabling Act, which prohibits any abridgment of defendants’ substantive rights, including the right to contest personal jurisdiction. They also argue that the Fourteenth Amendment’s interstate due process protections kick in even in federal court because the federal rule governing how defendants can be served with plaintiffs’ lawsuits generally requires courts to follow the procedures of the state in which they are located.

As you can probably tell from my capsule summaries, these appeals raise really complex, deep-rooted questions about class actions and due process. Their outcomes could decide the fate of nationwide class action litigation.

I should add the caveat that the 7th Circuit may not get to a merits ruling. The court agreed to hear an interlocutory appeal by the class but also requested briefing on its jurisdiction because the trial court decision under review was not, technically, a class certification ruling but a ruling on IQVIA’s motion to strike claims by out-of-state plaintiffs. IQVIA’s lawyers at Morrison & Foerster argue that Judge Kendall’s decision is not reviewable, in addition to arguing that it was correct. The class reply brief is due on May 3. Whole Foods, which is represented by Greenberg Traurig, has a May 10 deadline for its reply brief at the D.C. Circuit. Oral arguments have not yet been scheduled in either case.

The views expressed in this article are not those of Reuters News.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below