Current Class-Action Issues

by JD Supra Perspectives

“Ascertainability” has been a hot topic in the class-action arena, and the Supreme Court had an opportunity to address the ascertainability issue this term, but decided not to. In short, “ascertainability” refers to the parties’ or the court’s ability to actually identify the members of a putative class. The question is whether plaintiffs must demonstrate that their putative class is ascertainable before the court can certify the class under Rule 23. This was an emerging issue back in 2011. See Jason P. Steed, “‘Ascertainability’ as a Bar to Class Certification,” 23 Appellate Advocate 4 (Summer 2011). And since then, the courts’ disagreement over whether ascertainability is an additional requirement for class certification (along with numerosity, typicality, etc.), has grown more complicated.

The U.S. Supreme Court has been asked several times to resolve this issue, and it was asked to do so this term in a case called Conagra Brands, Inc. v. Briseño, No. 16-1221. But in October the Court denied the petition in Briseño. So practitioners who are approaching the class-certification stage of a class action will have to continue paying close attention to the law of their circuit—and to the variations of law across other circuits—so that they can properly position themselves for appeal. You never know whether your case will be the one that finally takes an issue like ascertainability to the Supreme Court.

Though the Court has declined to address ascertainability this term (for now), it has granted petitions to resolve two other class-action issues. The first issue has arisen in several cases that have been consolidated under Epic Systems Corp. v. Lewis, No. 16-285. The question in Epic Systems is whether provisions in the National Labor Relations Act, which protect collective actions by employees, prevent employers from enforcing arbitration agreements that would require employment-related disputes to be resolved through individual arbitration, instead of through class or collective proceedings.

Epic Systems follows on the heels of other cases wherein the Court has held that class-arbitration waivers are enforceable. See, e.g., DIRECTV, Inc. v. Imburgia, 577 U.S. ___ (2015); AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). But Imburgia and Concepcion were about consumer agreements. Epic Systems is about employer-employee agreements and involves a tension between the Federal Arbitration Act and the NLRA. As Justice Breyer put it during oral argument, Epic Systems has the potential to change labor law going “back to the New Deal.” Thus, practitioners in the labor-and-employment arena should keep a close eye on Epic Systems. The case was argued on the first day of the term, but the Court is likely to be closely divided on this issue—so a decision might not be made till the term is almost over.

The other class-action issue to be resolved this term arose in Cyan, Inc. v. Beaver County Employees Retirement Fund, No. 15-1439. Cyan is scheduled for argument in December, and asks the Court to decide whether state courts have subject-matter jurisdiction to hear a “covered class action” (as defined by the Securities Litigation Uniform Standards Act), where the covered class action alleges only federal securities claims. Because this question has been addressed mostly by district courts in removal proceedings, the circuit courts have been largely precluded from weighing in. Thus, Cyan is one of those rare cases where the Supreme Court will decide an issue that does not involve an established circuit split.

Right now, Epic Systems and Cyan are the only two class-action cases on the Supreme Court’s calendar. But the Court will continue to fill its 2017–2018 calendar by granting petitions through mid-January—so additional class-action issues could make their way to the Court this term. (Petitions granted after mid-January will likely be heard in the Court’s 2018–2019 term.)

In the meantime, there are always class-action issues arising in the lower courts. For example, in Geary v. Green Tree Servicing LLC, the Southern District of Ohio noted a circuit split over “whether it is sufficient that the named class plaintiff has standing, regardless of whether unnamed class members do.” No. 2:14-CV-00522, 2017 WL 2608691, at *5 (June 16, 2017). Noting that the Sixth Circuit has not yet taken a side in this circuit split, the district court determined for itself that establishing standing for the named plaintiffs was sufficient, because requiring plaintiffs to establish more than a “risk of real harm” for all unnamed plaintiffs “would eviscerate the class action device.” Id. The Sixth Circuit denied a request for permissive appeal, but it eventually may have to take a side on this question.

Similarly, in Valenzuela v. Union Pacific Railroad Company, the District of Arizona referred to a circuit split over whether courts can certify an “issue class” where Rule 23’s predominance requirement has not been satisfied for the action as a whole. See No. CV-15-01092-PHX-DGC, 2017 WL 1398593, at *2 (April 19, 2017); see also Gates v. Rohm and Haas Co., 655 F.3d 255, 272–273 (3d Cir. 2011) (discussing circuit split). In Valenzuela the district court declined to certify an issue class, based on its conclusion that an issue class would not materially advance the litigation. 2017 WL 1398593, at *3. And—though the Ninth Circuit has already held (contrary to other circuits) that an issue class may be certified even where the predominance requirement has not been satisfied for the action as a whole—the Ninth Circuit eventually may have to determine whether the “materially advances” standard is the proper standard for deciding whether to certify an issue class. See id. at *2–3 (citing only district court decisions as authority for using this standard). As in Geary, the circuit court avoided the question for now by denying the request for appeal.

These are just a few examples of current class-action issues coming up through the appellate courts. Practitioners on both sides of the docket need to be aware of these issues—and aware not only of the law in their circuit but also of any existing circuit splits—so that they can anticipate opposing arguments and position themselves effectively for appeal.

Kilpatrick Townsend’s Jason Steed is an appellate attorney with extensive experience representing clients in both state and federal appellate courts across the nation. Jason represents clients in a variety of industries and has handled appeals arising from a broad spectrum of practice areas. He was recognized in 2017 as one of the “Best Lawyers in Dallas” by D Magazine. Jason was selected by his attorney peers as a Texas “Rising Star” for 2016 and 2017 in Texas Monthly. He is a recipient of the 2016 “Fastcase 50” Award for innovative contributions to legal practice and was named “Appellate Lawyer of the Week” by Texas Lawyer in July 2015, following a big win at the Supreme Court of Texas.

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