Consumer Law & Policy Blog

Second Circuit Joins Growing Chorus Placing Burden of Proof on Proponent of CAFA Jurisdiction and Slams CAFA's Fake Legislative History

    By Brian Wolfman

    The Second Circuit has just joined a number of other circuits in holding that the party invoking federal jurisdiction under the Class Action Fairness Act -- usually a defendant seeking to remove a class action from state court -- bears the burden of proof on CAFA's basic jurisdictional prerequisites (100 class members, minimal diversity, $5 million in controversy).  See Blockbuster, Inc. v. Galeno, No. 05-8019-cv (2d Cir. 12/26/06).

     I have whined on this blog on multiple occasions, including here and here, that the courts have failed to point out that the Senate Report on CAFA is not genuine legislative history because it was issued after CAFA's enactment.  In Blockbuster, the Second Circuit slammed the defendant's reliance on the Senate Report for a number of reasons and then came close to holding that the Report is not worth the paper that it's written on:  "Moreover, the Senate report was issued ten days after the enactment of the CAFA statute, which suggests that its probative value for divining legislative intent is minimal."  Right on!

        So . . . After placing the burden of proof on the removing defendant, the Second Circuit remanded the case to the district court to make findings on the jurisdictional prerequisites.  (In case you're wondering, the plaintiffs in the case claim that Blockbuster's supposed "no late fee" policy was deceptive as a matter of New York statutory and common law.)

     Noted Pittsburgh consumer lawyer Mike Malakoff is among the lawyers for the plaintiffs.  [Disclosure:  I provided a bit of assistance on the appeal.]

Ninth Circuit Cuts Exxon Valdez Punitive Damages By Half to $2.5 Billion

by Brian Wolfman

    As the Washington Post reports, in a 2-to-1 ruling on Friday, the Ninth Circuit reversed a $5 billion punitive damages award (actually, $4.5 billion plus interest) in the Exxon Valdez oil spill litigation, holding that the award exceeded constitutional limits.  In contrast to the previous two times the punitive damages issue had been before the appeals court, this time the Ninth Circuit did not remand to the district court; it just set the punitive award on its own - - at $2.5 billion.  The dissent would have upheld the entire award.  The lengthy opinions in the case are available here.  All three judges agreed that Exxon's conduct -- including putting an alcoholic in command of a massive oil tanker -- was highly reprehensible, and, thus, deserving of substantial monetary punishment.

    Is the litigation now over?  Don't bet on it.  With so much at stake, you have to figure the parties will at least petition the Ninth Circuit for en banc review.  And, with Exxon claiming that a proper punitive award should not have exceeded $25 million, why wouldn't the company, if en banc review is denied, keep the $2.5 billion in its coffers and spend a little more dough to petition the Supremes for further review?

    By the time Exxon is required to file its Supreme Court petition, we may have heard from the High Court in Phillip Morris v. Williams, which involves a punitive damages award in a tobacco personal-injury case.  Deepak Gupta blogged about the Halloween argument in Williams here.  It's possible that Exxon will be able to parlay the Supreme Court's eventual ruling in Williams into a plea to remand the Exxon Valdez litigation back to the Ninth Circuit for reconsideration in light of Williams.  It's too early to tell, of course, but rest assured that both Exxon and the plaintiffs' counsel are already considering these (and no doubt other) possibilities.

    In case you're wondering, the Exxon Valdez ran aground in 1989.

Partial D.C. Circuit Victory in Hurricane Katrina Housing Assistance Case

by Deepak Gupta

A few weeks ago, I posted about our victory on behalf of Hurricane Katrina evacuees in a lawsuit against FEMA in the U.S. District Court for the District of Columbia. The court ruled that FEMA's procedures for notifying hurricane evacuees of their ineligibility for housing assistance were so inadequate that they violated minimal constitutional standards of due process. To remedy that violation, the court ordered FEMA to provide new notices and appeal rights to thousands of families (most of them in Houston and other cities in Texas), restore their short-term housing assistance, and make retroactive payments to those whose benefits were cut off after the case was filed. Over the past several weeks, we've been fighting FEMA's efforts to resist complying with the court's order, while at the same time fighting FEMA's efforts to stay the order in the D.C. Circuit. Many of the filings in the case can be found at this link.

Today, the D.C. Circuit ruled on FEMA's stay request, granting in part and denying in part. The court left intact the injunction requiring new notices to the evacuees, but stayed the prospective restoration and retroactive relief. You can read the court of appeals ruling here and a report by the Houston Chronicle here. Earlier, excellent coverage of the story in the Chronicle is available here, here, here.

Below the jump, I've posted the statement of my colleague Mike Kirkpatrick, lead counsel in the case.

Don't Forget About NCLC's Consumer Law Practice Manuals

by Brian Wolfman

    The recent publication of revised editions of two National Consumer Law Center practice manuals reminded me that I wanted to post something about the availability of NCLC's publications.  This month, NCLC came out with the 6th edition of Fair Credit Reporting and the 8th edition of Consumer Bankruptcy Law and Practice.  These manuals are part of NCLC's 17-volume set of consumer law practice manuals.  They are available as a set or one-by-one.  Each volume provides a comprehensive textual review of the subject matter supported by the relevant legal authorities. The manuals come with searchable CD-Roms that contain statutes, legislative histories, agency documents, sample pleadings, and other items.  I find the manuals extremely useful because they help me get a jump-start on research, giving me ideas for further inquiry and saving me time.  And, for the uninitiated, the manuals also provide a background understanding of the relevant body of law before delving into the nitty-gritty.  My personal favorites are Fair Debt Collection and Consumer Class Actions.

    I'm not NCLC's publicist, I'm not on commission, and NCLC didn't ask me to do this.  But I know a good thing when I see it.  If you are interested in learning more about NCLC's publications, everything you need to know is available here.

A Bit More on Judge Posner's Decision in the Slave Descendants Litigation

by Brian Wolfman

    Steve Gardner's recent post on Judge Posner's decision in In re African-American Slave Descendants Litigation is highly recommended reading.  One additional point that may be of interest:  Near the beginning of the opinion, Judge Posner holds that the multidistrict litigation statute, 28 U.S.C. 1407, allows an MDL transferee court to decide dispositive motions.  So, a transferee court can, for instance, grant summary judgment in thousands of cases transferred to it from around the country.  This ruling may well be consistent with the text of the statute.  But is it good policy?  Is it good for consumer plaintiffs?  More than 7 years ago, in testimony to the House Judiciary Committee, I suggested that Congress might want to rein in such expansive power.  Any thoughts?

Just What You're Hankerin' For: A Bevy of Articles About CAFA

Need some enthralling holiday reading?  Looking for a great stocking stuffer?  You're in luck!  The Loyola of Los Angeles Law Review has published a bunch of articles available here on the Class Action Fairness Act.  After a foreword by Georgene Vairo, here's what you get:

• Removal, Remand, and Other Procedural Issues Under the Class Action Fairness Act of 2005 by Lauren D. Fredricks

• Plaintiffs' Paradise Lost: Diversity of Citizenship and Amount in Controversy Under the Class Action Fairness Act of 2005 by Cameron Fredman

• Once More Into the Breach, Dear Friends: the Case for Congressional Revision of the Mass Actions Provisions in the Class Action Fairness Act of 2005 by S. Amy Spencer

• New Rules for Class-Action Settlements: the Consumer Class Action Bill of Rights by Jennifer Gibson

• The Class Action Fairness Act of 2005: a First Year Retrospective Review by Lonny Sheinkopf Hoffman

Anti-Pretexting Bill Passes Senate, Expected to Become Law

    By Brian Wolfman

    Over at U.S. PIRG's Consumer Blog, Ed Mierzwinski explains that last night the U.S. Senate agreed to a bill earlier passed unanimously by the House that criminalizes pretexting for the purpose of obtaining the phone records of a private individual.  Ed points out both that "pretexting" is a euphemism for lying and that the bill, which is expected to be signed by the President, is weaker than legislation favored by consumer advocates.  The bill does not preempt state law, however, as did some versions of the legislation.  The legislation may not be enforced vigorously, as it does not create an express private right of action.  A House Judiciary Committee Report on the legislation appears here.    

Overlooking the Obvious in the Supreme Court's Disappearing Docket?

by Chris Peterson

Today's  New York Times reports that the Supreme Court has granted cert to 40% fewer cases this term than last.  Furthermore, "[t]he number of cases the court decided with signed opinions last term, 69, was the lowest since 1953 and fewer than half the number the court was deciding as recently as the mid-1980s." All this despite Chief Justice Roberts' stated intention to take more cases under his leadership.

The article goes on to speculate on possible causes of the decline. Some Court watchers hypothesize that the Justices are refusing to vote for cert. because they are worried about loosing. Others speculate that because Congress has not passed as many statutes lately, there are fewer circuit splits on statutory interpretation. A former Deputy Solicitor blames the clerks wondering if they refuse to recommend cert because they are afraid of loosing the high court equivalent of "street cred."  The article also quotes Orin Kerr who suggests we might all be better off anyway.

The Justices themselves are apparently at a loss. The Times reports that "[i]n private conversations, the justices themselves insist that nothing so profound is going on, but rather seem mystified at what they perceive as a paucity of cases that meet the court’s standard criteria."

Here's another clue in the mystery of the declining docket: maybe the cases are being arbitrated. Readers of the Consumer Law and Policy Blog are familiar with the chorus of complaints on the increasing use of mandatory, binding arbitration clauses in boilerplate contracts with borrowers, buyers, and employees. A significant bulk of disputes over federal regulation can now be effectively diverted out of the judicial system into a private, secret, profit-seeking, dispute resolution system. Many doctrinal areas we should expect to create a significant amount of appellate litigation--employment discrimination, employee benefits, warranty law, and consumer credit law--are all amenable to arbitration. The country cannot develop circuit splits without stare decisis.

Obviously we will not know until someone comes up with an empirical study showing the effect of arbitration on the volume of cases meeting the Supreme Court's cert. criteria. Coming up with reliable control variables would probably be tough. I am wondering whether anyone out there in the blogosphere has any clever ideas on a way to measure this?

Consumer Groups File Amicus Brief in Important National Bank Act Preemption Case

     The National Consumer Law Center, the Consumer Federation of America, the Center for Responsible Lending, AARP, Consumers Union, the National Association of Consumer Advocates, Public Citizen, and other consumer groups have filed an amicus brief in an important preemption case pending before the U.S. Court of Appeals for the Second Circuit.  Pacific Capital Bank v. Connecticut, No. 06-4149cv, presents the question whether the states may regulate loan brokers who market tax refund anticipation loans (RALs) to low-income consumers, or, rather, as the district court held, such state regulation is preempted by the National Bank Act.  The brief, written principally by NCLC's Chi Chi Wu, explains that National Bank Act preemption does not apply to non-bank entities, such as loan brokers.

Supreme Court Refuses To Take Up Tobacco Company's Invitation To Remake The Doctrine of General Jurisdiction

    The U.S. Supreme Court today denied review in R.J. Reynolds v. Tuazon, No. 05-1525.  As Deepak Gupta explained in an earlier post linking to the cert. stage briefs, Reynolds was asking the Court to adopt a radical new view of general jurisdiction.  Under that view, a defendant's "sales-related" contacts with the forum state, no matter how extensive, could never support general jurisdiction as a matter of due process.  The Court's denial seems like good news for consumer plaintiffs.