Classified Monthly: A Roundup of Class Action Decisions From Federal Appellate Courts

Carlton Fields

Carlton Fields

Welcome to the inaugural edition of Classified Monthly: A Roundup of Class Action Decisions from Federal Appellate Courts.

The Roundup normally will arrive in your inbox the first week of each month and will cover the previous month’s notable decisions. Because December was a light month for decisions, this inaugural edition covers both November and December.

Second Circuit

Krasner v. Cedar Trust Realty, Inc. – This decision interprets the “securities-related” exception to CAFA jurisdiction. CAFA exempts from its grant of original diversity jurisdiction any class action that solely involves a claim “that relates to rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security.” The Second Circuit distills the key principles from a trilogy of cases in which it construed the “securities-related” exception, and then applies those principles to find that this putative shareholder class action falls within that exception to CAFA jurisdiction.

Third Circuit

In re Wawa, Inc. Data Security Litigation – This decision concerns Rule 23(h)’s requirement that fee awards to class counsel be “reasonable.” An objector (Ted Frank) argued that class counsel’s fee award should have been based on the benefits claimed by the class, rather than the benefits made available to the class, and that the clear-sailing provision in the settlement agreement was evidence of collusion between class counsel and Wawa. The district court “saw itself as bound to consider only the funds made available to the class,” but the Third Circuit found that the law permits consideration of both the benefits actually claimed and the benefits made available, with the benefits actually claimed being “a sensible starting line to begin the fee award analysis.” The Third Circuit also found the district court’s treatment of the clear-sailing provision too cursory. It remanded for the district court to take a “closer look” at the fee award with the benefit of the “fresh guidance” in this decision.

Fifth Circuit

Bourque v. State Farm Mutual Automobile Insurance Co. – This is the latest in a series of appeals the Fifth Circuit has decided concerning auto insurance policies that promise to pay policyholders the “actual cash value” of totaled vehicles. Putative class actions have been filed against several insurers attacking the way that they calculate “actual cash value.” In this decision and a predecessor, Sampson v. USAA, the Fifth Circuit has found that these putative classes fail the predominance requirement because they cannot establish liability on a classwide basis.

Sixth Circuit

Weidman v. Ford Motor Co. – The Sixth Circuit granted Ford’s Rule 23(f) petition, vacated the class certification order, and remanded for “more searching consideration.” The Sixth Circuit found that the district court had insufficiently considered whether the issue classes it certified met the commonality requirement. The issues concerned the braking systems on the 2013–2018 Ford F-150. Ford argued that those braking systems had been significantly changed in 2016 and 2018, and that because of these changes the issue classes lacked commonality. The Sixth Circuit instructed the district court to address that argument more thoroughly on remand.

Hardwick v. 3M Co. – The district court certified a statewide class of nearly 12 million Ohioans. In a Rule 23(f) interlocutory appeal, the defendants raised a host of issues, including whether Rule 23(b)(2) classes are subject to a cohesion requirement. The Sixth Circuit confined its decision to the traceability element of standing, finding that the named plaintiff had not adequately alleged traceability. (Disclosure: Carlton Fields submitted an amicus brief on behalf of the Product Liability Advisory Council in this appeal.)

Ninth Circuit

Kim v. Allison – The Ninth Circuit took the uncommon step of finding the class representative inadequate, reversing an order that had certified a class and approved a class settlement. The case involved an age discrimination claim against Tinder, which allegedly charged people over 30 more money to join than younger users. The court found that the named plaintiff had a conflict of interest representing the entire class because she was bound by an arbitration agreement she signed when she joined Tinder. Several thousand people in the putative class had not signed the agreement. Because the named plaintiff had to arbitrate her claim, the court held that she lacked a strong incentive to press the other class members’ claims, rather than settle. The court also found she had not vigorously prosecuted the class’s claims, instead settling quickly without much discovery and objecting only half-heartedly to Tinder’s motion to compel arbitration.

Eleventh Circuit

Ponzio v. Pinon – In a case of first impression within the circuit, the Eleventh Circuit set out parameters for objections to class settlements. The court held that objectors must provide “sufficient specifics” to enable the court and parties to evaluate the objections. Once the objectors raise proper objections, the burden shifts to the settlement’s proponents to show the objections do not affect the fairness, reasonableness, or adequacy of the settlement. In this case, the Eleventh Circuit held that the district court did not abuse its discretion in rejecting the objections to the settlement.

Supreme Court

There were no class action decisions from the U.S. Supreme Court in November or December. There were some cert petitions of interest, and the Roundup will sometimes cover those. Here are a few notables:

  • Medical Transportation Management v. Harris – This petition asks the court to clarify, given a circuit split the petition says has emerged in the wake of Wal-Mart, what constitutes “significant proof” that a policy or practice has uniformly injured a class.
  • Brinker International, Inc. v. Steinmetz – This petition argues that an Eleventh Circuit decision created a circuit split by misconstruing Tyson Foods v. Bouaphakeo to permit a putative class to meet the predominance requirement with a damages model that assigns an “average” damages amount to each class member, regardless of variations among putative class members in the amount or even the existence of damages.
  • Apple Inc. v. Epic Games, Inc. – The court denied certiorari in this case, where Apple asked the court to take up the issue of universal injunctions. More specifically, Apple asked the court to decide whether, “in the absence of class certification, a federal court is precluded from entering an injunction that extends to nonparties without a specific finding that such relief is necessary—as to all nonparties—to redress any injury to the individual plaintiff.”

Last but certainly not least, here are three of the most notable articles that Classified published in 2023:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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