Consumer Law & Policy Blog

Eighth Circuit: CAFA's Interlocutory Appeal Provision Does Not Apply to Non-CAFA Class Actions

    By Brian Wolfman

    Agreeing with the Fifth Circuit, the Eighth Circuit has recently held that the provision of the Class Action Fairness Act authorizing permissive appeals of decisions granting or denying motions to remand applies only to class actions removed from state court under CAFA, not to class actions removed on some other basis (e.g.., diversity under 28 U.S.C. 1332(a)(1)).  See Saab v. Home Depot, Inc., No. 06-8014 (8th Cir. Nov. 22, 2006).  Saab says that the text of 28 U.S.C. 1453, the removal provision added by CAFA, demands that result.  The Eighth Circuit should have stopped there.  But like many other courts interpreting CAFA, it also relied on the Senate Report on CAFA to buttress its conclusion.  That's really too bad.  Courts should be treating the Senate Report as worthless because it was issued after CAFA was enacted.  One lonely district court has made this point.

More on Important Supreme Court Preemption Case: Watters v. Wachovia Bank

By Brian Wolfman

     Today's Washington Post has this informative article on Watters v. Wachovia Bank, which presents the question whether the National Bank Act preempts states' efforts to regulate the lending activities of state-chartered subsidiaries of national banks.  The case will be argued in the Supreme Court on November 29.  We previously posted many of the Supreme Court briefs here.  On the day before the argument, the American Enterprise Institute is sponsoring a forum featuring speakers who take different views on this important preemption question.

Vioxx MDL: Nationwide Class Certification Denied

    By Brian Wolfman

    Judge Eldon Fallon of the U.S. District Court in New Orleans, who is presiding over the Multidistrict Litigation of thousands of Vioxx injury cases, has denied the plaintiffs' request for nationwide class certification.  The plaintiffs argued for nationwide certification on the ground that the substantive law of New Jersey, where the defendant is located, should be applied to all plaintiffs' claims no matter where the plaintiffs lived or ingested Vioxx.  Judge Fallon rejected that argument, holding that the plaintiffs' home states (that is, all 50 states) had a greater interest in the litigation than did New Jersey alone.  (Some consumer class actions have been certified nationally on the theory that the law of the defendant's home state applied to the claims of all plaintiffs.)  One might expect the plaintiffs to try to certify class actions on a state-by-state basis, but Judge Fallon indicated that there are obstacles to any class certification because factual and legal differences predominate over common questions.  Note that in light of the Class Action Fairness Act (CAFA), Vioxx class actions brought in state court only by citizens of the forum state will likely end up in federal court (unless the defendant is a citizen of the forum).  And, if those cases end up in federal court, they will almost certainly be MDL'd to Judge Fallon.

UPDATE:  A commenter has made a point that I should have mentioned in my original post.  There are pre-CAFA state court class actions, and they will not be removable to federal court (at least not under CAFA).  My point about the removability of Vioxx class actions under CAFA applies, of course, only to actions filed after CAFA's effective date.

Defending General Jurisdiction

by Deepak Gupta

Most lawyers don't give a lot of thought to the law of general personal jurisdiction--probably because the law, through a case-by-case analysis, has become pretty well-settled.  But if you stop and think about it, general jurisdiction,  in an increasingly complex and mobile society, is often necessary to preserve meaningful access to the courthouse for consumers.  That's why it's worth noting a recent cert petition, filed by R.J. Reynolds Tobacco Company, that asks the U.S. Supreme Court to radically scale back the doctrine.

When a consumer is defrauded or injured based on a transaction that takes place in Minnesota, for example, and decides to sue in the courts of Minnesota, it's perfectly fair to the defendant for the Minnesota courts to exercise jurisdiction.  That's known as specific personal jurisdiction; the jurisdiction is based on the specific transaction at issue in the case.

What about general jurisdiction?  What if the transaction takes place in Minnesota but the suit is in Florida? If it's a business with minimal Florida contacts, it would be unfair to sue in Florida. But what if the defendant is a behemoth with an office and warehouse space in Florida, employees in Florida, hundreds of millions of dollars of sales in Florida, advertising in Florida, political lobbying activity in Florida, and access to an army of lawyers in Florida?  Surely it would be absurd to say that suing them in Florida under those circumstances would be so unfair that it would violate the corporation's constitutional right to due process.

I'm oversimplifying a bit, but that's basically the position that R.J. Reynolds has taken in its cert petition.  Reynolds wants the Court to hold that any contacts that are "sales-related," no matter how extensive, can never support general jurisdiction.  Taken to its logical extreme, this would mean that consumers could only assert general jurisdiction over R.J. Reynolds in North Carolina, or over Wal-Mart in Arkansas.  Working with Los Angeles lawyer Jean-Claude Andre through the Supreme Court Assistance Project, we wrote this Brief in Opposition to Reynolds' petition.  Among other things, the brief points out that no court has ever adopted Reynolds' radical position and so there's no conflict among the courts and it's unclear how the proposed categorical exception for "sales-related" contacts would even work in practice.  A few days ago, Reynolds filed its reply.   A decision should be announced on December 4.  We'll keep you posted.

Second Circuit Agrees to Hear Interlocutory Appeal of Judge Weinstein's Class Certification in Massive "Light" Tobacco Case

    By Brian Wolfman   

    The Second Circuit has granted the tobacco industry's request to hear an interlocutory appeal seeking reversal of Judge Jack Weinstein's September 2006 certification of a national class action challenging the industry's deceptive marketing of so-called "light" tobacco products.  (Basically, the plaintiffs allege that the tobacco industry deceived consumers into believing that "light" cigarettes are healthier than ordinary cigarettes.)  After the Wall Street Journal criticized Judge Weinstein's ruling and joked that the judge had been influenced by something he'd been smoking, CL&P contributor Steve Gardner responded, explaining why Weinstein's ruling was "the opposite of radical."

    The Second Circuit had earlier stayed the district court proceedings while it considered whether to hear the appeal, thus putting off the trial, which Weinstein had scheduled for January 2007.  An early trial is now impossible, as the Second Circuit will presumably get full briefing from the parties and amici and set the case for oral argument.

     As explained here, just last year, the Second Circuit overturned another Weinstein class action ruling in the Simon II case.  There, Weinstein had certified a national non-opt-out punitive damages class of people diagnosed with smoking-related disease.  There are significant differences between the "light" tobacco case and Simon II, and we will see if those differences are enough to lead to a different result this time around.

14 Top-Side Briefs Filed in FCRA Cases

by Deepak Gupta

In Safeco v. Burr and GEICO v. Edo, set for argument on January 16, the U.S. Supreme Court will decide whether a "willful" violation of the Fair Credit Reporting Act can be established by proof that the defendant recklessly disregarded the law. My colleague Scott Nelson, who is counsel for the respondents in both cases along with Scott Schorr of Portland, Oregon, has already summarized the case in this prior post and posted the the decision below, the petitions in Safeco and Geico, and our Brief in Opposition.

The other side's briefs have just been filed: two insurance company petitioners' briefs, the Solicitor General's brief, and a slew of industry amicus briefs--for a whopping total of 14 briefs in all. This is a perfect illustration of a point made by Brian Wolfman and Paul Bland at a panel on Supreme Court litigation in Miami this past weekend: Does anyone really believe that the Justices will have the time to carefully study all of these briefs?

(A sidebar: On the problem of amicus overload at the Court, see these two articles. Justice Ginsburg is quoted as saying that "she has her law clerks arrange the briefs into three piles: must-read briefs; those she could skim or read selected pages from; and then, the 'skip' pile that she does not need to read at all. The first pile, she said pointedly, is 'very thin.' The largest pile, she said sheepishly, is the 'skip' pile." Needless to say, when you have 14 briefs on one side of the case, the odds that a good number will end up in the 'skip' pile is pretty high.)

Supreme Court Asks for Solicitor General's Views in Important Preemption Case

    By Brian Wolfman

    In an order issued yesterday, November 6, the Supreme Court asked (read: required) the Solicitor General to express the views of the United States in an important preemption case from the Second Circuit, Riegel v. Medtronic.  The Court will consider the S.G.'s views before deciding whether to grant certiorari.  The question in Riegel is whether the Medical Device Amendments to the Food, Drug, and Cosmetic Act preempt state-law suits seeking damages for injuries from medical devices that have received FDA pre-market approval.  The circuits have been split on this question for seven years, and the state appellate courts are split as well.  My colleague, Allison Zieve, is the plaintiff's lead counsel.  Allison blogged about the case on October 19, and many of the key documents from the case are contained in that post.  In addition, SCOTUSblog reporter extraordinaire Lyle Denniston provided an excellent report yesterday on Riegel after the Supreme Court issued its "SG-advise" order.   If history is any guide, the S.G. will file his brief no earlier than May 2007.

California Supreme Court Grants Review In Important Consumer Protection Cases

    By Brian Wolfman

    CL&P readers may recall that, back on September 15, I blogged about recent California appellate decisions holding that Proposition 64 -- which imposes tighter standing requirements for private litigation under California's consumer protection statutes -- requires plaintiffs to show reliance on a defendant's unfair or deceptive act or practice.  I noted that Public Citizen and the Center for Auto Safety had filed an amicus letter asking the California Supreme Court to review these cases.  That letter explained that a reliance requirement would be antithetical to one of the basic purposes of modern consumer protection statutes: to override the obstacles to proving common-law fraud, one element of which is reliance.

    I'm happy to report that today the California Supreme Court granted review.   We plan to file an amicus brief on the merits.  I will keep you posted.

Latest on NCLC's Miami Consumer Rights Litigation Conference

by Jon Sheldon

This year's NCLC Consumer Rights Litigation Conference is being held in Miami November 9-13. Here is the latest:

1. Over 660 people have already registered and the number is likely to exceed 700 by next week.

2. There is so much interest in this year's conference that room blocks have filled up at the Hyatt Regency (where the conference is being held), the Courtyard Marriott, and the Radisson Miami.  NCLC has arranged a group rate with the Marriott Biscayne Bay Hotel & Marina (1-800-228-9290) and the Doubletree Grand Hotel Biscayne Bay (1-800-222-8733). In order to receive the negotiated group rate of $169 per night, individual attendees must ask for the group block by name: National Consumer Law Center.  Both hotels are a short ride from the Hyatt Regency by Metromover, a free people-mover system that serves downtown Miami.

3.  The Friday (Nov. 9) intensive on Mortgage Servicing is already sold out, but there is still space available for the all-day Friday intensives on  Auto Sales and Financing Fraud and also Doing Well While Doing Good: Secrets to Running a Profitable Consumer Law Practice. 

4. Also Friday at 11:30 AM the main conference starts with over 10  roundtables and other special sessions. The main conference gets into high gear Saturday and Sunday with over 30 sessions to choose from on those days. This year's advance registration shows strong interest in predatory lending, foreclosures, arbitration, debt collection, and trial practice sessions, with fair credit reporting and auto topics not far behind. But there are many other options too--everything from electronic payments to reverse mortgages to ethical issues in class action settlements.

5. Monday  (Nov. 12)  there is still space available for two well-received intensives:  The Class Action Symposium and Beyond Bankruptcy Reform: Getting Mortgage Servicers on Track in Chapter 13, and Bankruptcy Reform Update.

6. We cannot list all the special meetings and events that are happening at the conference that weekend, but highlights are the NACA Media and Trial Advocacy Awards and the NACA annual meeting, the Carnival de Abogados, a special showing of MAXED OUT (pre-release of an amazing new movie on debt), and various special luncheons and receptions.

7. You can register in person at the conference registration table at the Hyatt Regency or go to http://www.consumerlaw.org.  All registrants are required to sign a certification relating to their representation of consumer rather than business interests.

Punitive Damages in the Supreme Court: Today's Big Argument. Or Maybe Not.

by Deepak Gupta

Because lots of consumer protection statutes permit consumers to seek punitive damages, the Supreme Court's decisions limiting the availability of punitive awards can have a big impact on the enforcement of consumer rights and, more generally, on the ability of the civil law to deter bad corporate conduct.  The Rehnquist Court, with a few exceptions (Justices Scalia, Thomas, and Ginsburg didn't go along), was very activist in curtailing what it saw as unconstitutionally excessive punitive damage awards.  As a matter of substantive due process, the Court decreed in BMW v. Gore, punitive awards must be evaluated according to three "guideposts": the degree of reprehensibility of the conduct, the ratio between punitive and compensatory damages, and a comparison of the amount of punitive damages to any civil or criminal penalties that could be imposed for comparable misconduct.  Following up in State Farm Mutual Auto. Ins. Co. v. Campbell, the Court divined a specific numerical limit in the Due Process Clause: few awards exceeding a "single-digit ratio" between punitive and compensatory damages generally will satisfy due process.  The upshot is that, when it comes to proportionality, the constitutional limitations on civil damages against rogue corporations are a lot stricter than the limitations on the imprisonment of real people.

Today, the Roberts Court got its first chance to shape the Court's controversial jurisprudence in this area when it heard arguments in Phillip Morris v. Williams, a highly-anticipated case from Oregon involving punitive damages of $79 million in an individual tobacco case.  The case is about whether juries can punish for harms to other people, the application of BMW and State Farm to the tobacco/personal injury context, and the extent to which the second "guidepost" trumps the rest.  Or so everyone thought.   Based on today's oral arguments, however, the case may end up turning on the meaning of a jury instruction that was never given.  And the smart money seems to be on the case being sent back to the Oregon state courts for a clarification of exactly what it meant when it upheld the denial of that jury instruction.  It seems likely the Court may end up ducking the bigger questions for now.

A lot has been written about this case already.  Rather than add to it, I've rounded up links to the argument transcript, reactions to today's oral arguments by those who were in the courtroom, and some of the prior commentary.  (I participated in a moot for the respondent's counsel, Bob Peck, last week, but I didn't make it down to the Court this morning to watch the arguments.)