The Roundup covers notable class action decisions from federal appellate courts and notable Supreme Court class action cert petitions.

First Circuit

Nightingale v. National Grid USA Service Co. – This is a decision about Massachusetts consumer protection law with a notable class action overlay. A Massachusetts statute prohibits unfair or deceptive trade practices or acts, and a Massachusetts regulation provides that a debt collector violates this statute if it communicates with debtors too frequently (as defined by the regulation). The plaintiff filed a putative class action against the defendants alleging they did just that. The district court denied class certification, finding that the putative class did not satisfy the predominance requirement because whether class members were injured under the Massachusetts statute would have to be determined on an individual basis. The district court then granted summary judgment for the defendants on the named plaintiff’s individual claims, finding as a matter of law that the named plaintiff had not shown a cognizable injury under the Massachusetts statute. The First Circuit reversed the district court’s grant of summary judgment, holding that the district court had misunderstood the Massachusetts statute. The First Circuit also—and this is what matters most for our purposes—reversed the district court’s denial of class certification. The circuit court explained that “because the district court’s injury analysis underpinned its denial of class certification,” the class certification analysis must be revisited by the district court in light of the circuit court’s summary judgment ruling. Specifically, the district court had found that the call logs submitted by the plaintiff could not establish predominance because individual inquiry would have to be made into whether each call was a severe enough invasion of privacy to constitute “intrusion upon seclusion.” The First Circuit held instead that “mere receipt of the unwanted debt collection calls would constitute a cognizable invasion of privacy” under the Massachusetts statute, which meant that the calls logs “might serve as ‘common proof’ that Defendants invaded each class member’s privacy.”

Second Circuit

Bacher v. Boehringer Ingelheim Pharmaceuticals Inc. – This decision deepened a circuit split concerning the “mass action” provision of the Class Action Fairness Act (CAFA). CAFA not only expands federal subject-matter jurisdiction over class actions but also confers jurisdiction over “mass actions.” CAFA defines “mass actions” as civil actions “in which monetary relief claims of 100 or more persons are proposed to be tried jointly,” and provides that actions consolidated “solely for pretrial purposes” do not qualify as “mass actions.” The defendants argued that nine civil actions filed in Connecticut state court, each with between 80 and 99 individual plaintiffs asserting personal injury claims related to the heartburn drug Zantac, constituted a mass action under CAFA because the plaintiffs sought to consolidate the actions. The defendants removed the actions on that basis. The plaintiffs moved for remand, arguing that they sought consolidation solely for pretrial purposes. The district court remanded, and the Second Circuit affirmed. The main legal issue in the appeal was whether intent matters in applying CAFA’s “mass action” provision. A 2–1 panel majority held that it does, explaining that “the district court correctly understood CAFA as requiring a determination of whether the Plaintiffs intended to seek a joint trial—that is, whether a reasonable observer would conclude that Plaintiffs acted with the intention of bringing about a joint trial.” With that holding, the Second Circuit sided with the Third, Tenth, and Eleventh Circuits and against the Sixth Circuit, which had held that in determining whether claims “are proposed to be tried jointly” a court should consider only the text of the proposal in question—here, a motion to consolidate—not the intent of the plaintiffs in making the proposal. The dissent did not explicitly reject the majority’s interpretation of CAFA, instead seeming to depart from the majority on the grounds that both it and the district court got the intent of the plaintiffs wrong here.

Guthrie v. Rainbow Fencing Inc. – The plaintiff sought a default judgment against his former employer for unpaid wages and statutory damages stemming from its failure to provide the plaintiff with wage notices and wage statements required by New York Labor Law Section 195. The district court entered a default judgment for the unpaid wages but not for the statutory damages on the grounds that the plaintiff lacked Article III standing to seek statutory damages. The plaintiff appealed, and the Second Circuit affirmed. District courts in the Second Circuit had divided on the question of what a plaintiff needs to plead to allege his employer’s failures to provide the statutorily required wage notices and wage statements are more than “bare procedural violations, divorced from any concrete harm,” as the Supreme Court put it in Spokeo. Some district courts had found that a plaintiff need not make specific (as opposed to conclusory) allegations that the statutory violations caused “downstream harm.” On the opposite end of the spectrum, other district courts had found that a plaintiff needed to allege more than that the statutory violations hindered his efforts to obtain the wages and benefits owed to him. The Second Circuit rejected both of those approaches as inconsistent with the Supreme Court’s TransUnion decision. The Second Circuit explained that “a plaintiff must show some causal connection between the lack of accurate notices and the downstream harm.” For example, a plaintiff “who has plausibly shown that defective notices led him or her to lose wages” has shown a “concrete interest” and so “is not simply policing legal infractions in the abstract.” Because the plaintiff in this case merely alleged bare statutory violations, he lacked Article III standing to sue over those statutory violations in federal court.

Fifth Circuit

Chavez v. Plan Benefit Services Inc. – This decision concerns both Article III standing and class certification. The defendants design and administer employee benefit programs for non-union employers who compete for government contracts, and so must pay their employees prevailing wages. The defendants operate two trusts, one that covers retirement benefits and the other that covers health and welfare benefits, and participating employers disburse benefits to their employees through those trusts. The named plaintiffs were employees of one participating employer, and the putative class asserted that the defendants mismanaged the trusts in a manner that violated ERISA, including by collecting excessive fees. The putative class encompassed hundreds of thousands of members enrolled in thousands of different plans. The defendants argued that the named plaintiffs lacked Article III standing “to challenge fees that they were never subjected to, in plans that they never participated in, relating to services that they never received, from employers for whom they never worked.” The district court disagreed, and so did the Fifth Circuit. The Fifth Circuit surveyed Supreme Court and sister circuit decisions, concluding that the law is unsettled on whether Article III requires only that the named plaintiffs have standing to pursue their own claims or also requires that their claims be sufficiently similar to the claims of absent class members. Decisions that take the former approach—which the Fifth Circuit, following Newberg on Class Actions, calls the “class certification approach”—treat the relationship between the claims of the named plaintiffs and the claims of absent class members as a matter addressed by Rule 23, not Article III, while decisions that take the latter approach—the “standing approach,” in the words of the Fifth Circuit and Newberg—treat the relationship between the claims of the named plaintiffs and the claims of absent class members as implicating Article III. The Fifth Circuit found that it did not need to decide between the two approaches because on either approach Article III was satisfied. The defendants also argued that Rule 23 was not satisfied because the variety of plans and fees at issue would require thousands of minitrials and thus defeated predominance. Again, the district court and the Fifth Circuit disagreed. The district court found that the putative class met the requirements for certification under Rule 23(b)(1) or 23(b)(3). The Fifth Circuit reversed the district court’s Rule 23(b)(1) determination, finding that because that putative class’s claims were primarily for damages, certification under Rule 23(b)(1) was not appropriate. But the Fifth Circuit affirmed certification under Rule 23(b)(3). It agreed with the district court that the issue of whether the defendants were fiduciaries to the two trusts they operated predominated. The Fifth Circuit instructed that on remand the district court must perform a more rigorous analysis of how the class action should be tried by crafting a “detailed trial plan” that specifically addresses which issues would be resolved “commonly” and which issues would be resolved “individually.”

Zaragoza v. Union Pacific Railroad Co. – This decision concerns American Pipe tolling and is a straightforward enough application of that doctrine that the particulars do not merit discussion. The case is noteworthy because the Fifth Circuit joined a few of its sister circuits in endorsing two points about American Pipe tolling. The first is that a plaintiff is considered to have been a member of a class for American Pipe tolling purposes unless the class definition unambiguously excluded him from the class. The second is that when a court is determining whether a plaintiff was a member of a class for American Pipe tolling purposes, the court is not limited to considering just the complaint and the class certification motion—other materials in the record can be considered as well.

Sixth Circuit

Speerly v. General Motors LLC – In this lengthy and significant decision, the Sixth Circuit affirmed certification of a 26-state class (with statewide subclasses for each state) of original purchasers/all purchasers and current owners (depending on the state) of 2015–19 GM vehicles with 8L transmissions. GM made, and the court rejected, a host of arguments against class certification. Three aspects of the decision stand out. First, GM argued that the class should not have been certified because most class members had never had any transmission problems, and so most class members lacked Article III standing to complain about the supposed, unmanifested defect in their transmissions. The Sixth Circuit rejected this argument, noting that “the Plaintiffs produced evidence supporting a suggestion that even if defects had not yet manifested in vehicles, they were likely to develop at some point.” The court further found that “alleging overpaying for a defective product sufficiently provides the Plaintiffs with Article III standing” and that “the appropriate time to address claims of absent class members whose vehicles never have manifested any defect is a Rule 56 motion for summary judgment” (more on that last point in a moment). Second, GM argued that variations in the laws of the 26 states on a number of issues defeated certification. The longest part of the decision is the court’s state-by-state, issue-by-issue rejection of that argument. Third, and finally, one theme that emerges from the decision is that certain potential disparities among class members—uninjured class members, variations in state laws, etc.—could be handled at summary judgment or trial rather than the class certification stage. In that respect and in its Article III standing discussion, this decision contributes to the percolation of class action law in the circuit courts in the wake of TransUnion and other recent Supreme Court decisions.

Eighth Circuit

In re T-Mobile Customer Data Security Breach Litigation – Even though the Eighth Circuit reversed a $78.5 million attorneys’ fee award in this data breach class case, it rejected the broader argument that courts as a rule should award class counsel a smaller percentage of settlement funds as attorneys’ fees in so-called megafund cases involving settlements exceeding $100 million. Instead, the court held that determining a reasonable fee should be a “wide-ranging inquiry that seeks to account for a variety of case-specific circumstances.” As part of that inquiry, courts can consider “the empirical reality” that the percentage of a fee award should often decrease as the size of a settlement fund increases to avoid “the potential that attorneys might receive an undeserved windfall.” In this case, the district court’s $78.75 million fee award consumed 22.5% of the $350 million settlement. Viewed as a percentage, the fee award was only slightly above the 17% to 19% average for such fee awards. But viewed as a multiple of the lodestar fee, the Eighth Circuit held that the award was nearly 10 times higher than the lodestar and showed that plaintiffs’ counsel received a “windfall” in a case settled about a month after they filled the complaint.

Ninth Circuit

Jama v. State Farm Mutual Auto Insurance Co. – The Ninth Circuit’s 2–1 decision created a circuit split concerning whether cases about insurers’ payments of the “actual cash value” of totaled vehicles can be decided on a class basis. Dissenting Ninth Circuit Judge Johnnie B. Rawlinson thought the Ninth Circuit’s own 2022 decision in Lara v. First National Insurance Company of America, which affirmed the denial of class certification, should have controlled. But in an opinion written by visiting U.S. District Judge Jed Rakoff of the Southern District of New York and joined by Ninth Circuit Judge Jennifer Sung, the court reversed the decertification of one of two classes proposed by plaintiffs. The majority held that the “negotiation” class of automobile owners involved common questions that predominated over individual issues. The “negotiation” class challenged State Farm’s reduction, based on a “typical negotiation” that occurs when buying cars, from a vehicle’s “actual cash value” set by the Autosource valuation system. The plaintiffs argued that Washington state law explicitly precluded insurers from reducing “actual cash value” based on a “typical negotiation.” For that reason, the majority said, the district court could calculate damages using across-the-board, common evidence. The dissent argued that, as in Lara, the standard “negotiation” deduction did not mean that injuries could be determined on a standardized basis. In some situations, as in Lara, an auto owner might have received more “actual cash value” for her car compared to the Autosource value, even with the standard “negotiation” deduction. Judge Rawlinson argued that the decision unnecessarily violated the Circuit’s own precedent and created a circuit split with a Fifth Circuit decision relying on Lara.

D.C. Circuit

Lewis v. Becerra – This decision concerns when named plaintiffs who have prevailed on their individual claims can appeal a denial of class certification. The named plaintiffs were Medicare beneficiaries who were denied Medicare coverage for their continuous glucose monitors and sued on behalf of a putative class. The district court entered judgment for the named plaintiffs on their individual claims but denied class certification, largely because it found that the claims of most putative class members were unexhausted, untimely, or both. The named plaintiffs attempted to appeal the denial of class certification. The government did not question the D.C. Circuit’s jurisdiction, but that court raised jurisdiction on its own and held that the named plaintiffs lacked standing to appeal. (The court mentioned in a footnote that it did not matter whether the Article III analysis was framed in terms of appellate standing or mootness but registered its view that appellate standing “is the more precise analytical framework” and had been employed by the Supreme Court more recently.) The court explained that at oral argument the named plaintiffs had “disavowed any theory of standing based on the possible recovery of costs or fees from absent class members” or “the possible recovery of increased fees from the government under the Equal Access to Justice Act”—in short, any theory of standing based on a “pocketbook” injury. The named plaintiffs instead asserted standing to appeal because the denial of class certification had deprived them of the “right to represent the interests of absent class members.” The court found that this asserted right was merely a “generalized grievance” about a “bare procedural violation”—the district court’s supposed misapplication of Rule 23—“divorced from any concrete harm” to the named plaintiffs. The D.C. Circuit acknowledged that the Second Circuit disagreed in Jin v. Shanghai Original Inc., 990 F.3d 251 (2d Cir. 2021), and explained why it split with its sister circuit. The disagreement between the D.C. and Second Circuits is rooted in different readings of two Supreme Court precedents: Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980), and U.S. Parole Commission v. Geraghty, 445 U.S. 388 (1980). The D.C. and Second Circuit decisions make for interesting reading on how standing doctrine has evolved and where it stands today.

Federal Circuit

Freund v. McDonough – In a rare class action decision from the Federal Circuit, that court had occasion to address both ascertainability and the “inherently transitory” exception to mootness in the class context. A putative class of veterans benefits claimants alleged that they filed timely administrative appeals from Department of Veterans Affairs regional office decisions to the Board of Veterans’ Appeals that were never heard by the board due to a bureaucratic error. The U.S. Court of Appeals for Veterans Claims (the Veterans Court) denied class certification on the ground that the putative class did not satisfy the commonality and adequacy requirements. (The Veterans Court has its own version of Rule 23, which is similar but not identical to Federal Rule of Civil Procedure 23.) The Secretary of Veterans Affairs did not defend the Veterans Court’s commonality and adequacy rulings before the Federal Circuit, and the Federal Circuit found that those rulings were an abuse of discretion for reasons that do not warrant discussion here. The Secretary did defend the Veterans Court’s decision on the alternate grounds that the putative class did not fulfill the ascertainability requirement for class certification. This gave the Federal Circuit an opportunity to stake out its position on ascertainability. That court agreed with “most circuits” that a putative class must satisfy the “traditional test for ascertainability,” which is that “the class is defined by objective criteria,” but disagreed with the “minority of circuits” that “have adopted ‘administrative feasibility’ as part of their ascertainability test.” The court agreed with (for example) the Eleventh Circuit that administrative feasibility can be relevant to whether the superiority requirement for class certification is satisfied but left it to the Veterans Court to analyze that issue in the first instance on remand. As to mootness, the court explained that even when a named plaintiff’s claim is mooted prior to class certification, the class claim can move forward under the “inherently transitory” exception to mootness if the nature of the claim is such that “the trial court will not have even enough time to rule on a motion for class certification before the proposed representative’s individual interest expires.” In this case, the VA had a policy of promptly reactivating appeals that had been erroneously closed once that bureaucratic error was discovered. This policy meant that it was “possible, indeed likely, that an individual claim will become moot before the court can rule on class certification.”