The Roundup covers notable class action decisions each month from federal appellate courts, as well as notable Supreme Court class action cert petitions.
Third Circuit
Forsythe v. Teva Pharmaceutical Industries Ltd. – The district court certified a securities class action against Teva, which filed a Rule 23(f) petition seeking permission to appeal that order. Teva argued that the Third Circuit should take the interlocutory appeal to resolve a novel issue, namely “the reach of Section 10(b) of the Securities Exchange Act with respect to dual-listed securities.” The Third Circuit rejected this argument on the ground that this novel issue went to the merits of the suit, not to “the certification decision itself,” and emphasized “the narrow focus of interlocutory review intended by the drafters of Rule 23(f).” Teva also argued that the district court erred in its predominance analysis because the plaintiff flouted Comcast’s command that a proposed classwide damages methodology must match the class’s theory of liability. The Third Circuit rejected this argument as well, stressing that “Comcast poses a low bar to class certification,” and denied Teva’s 23(f) petition accordingly.
Ninth Circuit
Betschart v. Oregon – A divided Ninth Circuit panel held that a group of prisoners can bring a habeas petition as a class action in a case about Oregon’s failure to fund public defenders for indigent criminal defendants awaiting trial. The court based its decision on Ninth Circuit precedent and Oregon’s failure to even challenge class certification. But Trump appointee Judge Patrick Bumatay dissented on class certification and the merits, arguing that whether habeas relief can be sought on a class basis “remains an open question at the Supreme Court.” The Supreme Court had asked the Ninth Circuit to consider whether a Rule 23 class action is “an appropriate vehicle” for seeking habeas relief after Wal-Mart Stores Inc. v. Dukes. “[G]iven more recent changes in the legal landscape regarding class actions, I question whether [the Ninth Circuit precedents relied on by the panel majority] remain good law,” wrote Judge Bumatay in his dissent. Since due process claims like this one turn on individualized inquiries, he explained, a class action would not be suitable for a statewide group of criminal defendants, each facing different charges and presenting different risks of flight and danger.
Tenth Circuit
Chieftain Royalty Co. v. SM Energy Co. – When an appeals court reverses an attorneys’ fee award and asks the lower court to recalculate fees, does class counsel need to send a new class notice about the new fee motion? Yes, according to the Tenth Circuit. The court remanded a $17.3 million fee award in an oil and gas royalty dispute for a second do-over because counsel failed to send a separate class notice about the second fee award. The court held that Rule 23(h) required the notice because counsel based the first fee motion on one-third of the $52 million settlement fund but based the second fee motion on a lodestar calculation of reasonable hours and a reasonable hourly rate, backed by extensive fee records. Judge Timothy Tymkovich dissented, arguing that the mistake was harmless. On remand, the class settlement got larger and the fee award got slightly smaller as a percentage of the settlement. Plus, even though there was no second notice, two class members, who had brought the first appeal, objected to the second fee award as well. The court also affirmed awarding the class representative, an oil and gas executive, a $232,440 incentive award, based on a $300 hourly rate, for helping with the litigation.
Eleventh Circuit
Drazen v. Pinto – A class settlement of a suit against the GoDaddy.com website provider gave class members the choice of receiving a $150 voucher for GoDaddy web services or a $35 cash award. That choice made the settlement a “coupon settlement” under the Class Action Fairness Act (CAFA), subjecting the attorneys’ fee award to heightened scrutiny, the Eleventh Circuit held in part of an opinion written by Senior Judge Gerald Tjoflat and joined by two active circuit judges. CAFA’s language “anticipates that what it labels ‘coupon settlements’ will not always be composed entirely of coupons,” Judge Tjoflat wrote. Siding with the Fourth and Second Circuits in a circuit split over the meaning of “coupon” in CAFA, the Eleventh Circuit also defined a coupon under CAFA “as a voucher, certificate, or form that can be exchanged for one or more goods or services, or for a discount on one or more goods or services.”
Because the district court had not treated the settlement as a coupon settlement under CAFA, the Eleventh Circuit reversed an $8.75 million attorneys’ fee award, which had been based, in part, on 25% of the $35 million possible value of the settlement. Rather than rely on the total possible value of the coupons, the court held that to the extent fees were based on the value of the coupons, they must be based on the value of coupons actually redeemed, typically a much lower amount than the settlement’s total possible value. District courts could also base fees on the lodestar amount, or on a combination of the lodestar and the value of redeemed coupons. And district courts could make the award after class members had redeemed the coupons, usually months after approval of the class settlement, or could rely on experts to estimate the redemption rate.
Judge Tjoflat’s lengthy opinion would have included many other holdings, but Judges Charles Wilson and Elizabeth Branch joined only the part of his opinion about coupon settlements. For more on this decision, please see our prior blog post and podcast.
Supreme Court
Coinbase Inc. v. Suski – The U.S. Supreme Court held that when parties have agreed to two separate contracts, one sending arbitrability disputes to arbitration and the other sending arbitrability disputes to the courts, the courts must decide which contract governs. For more on this decision, please see this blog’s discussion of it.
