Where the (Class) Action Is

Welcome back to the Class Action & MDL Roundup! Our fall edition covers notable class actions from the third quarter of 2021.

Click here to watch the latest installment of our video highlight. This quarter, our partner from the Securities Litigation Group, Andy Sumner, discusses SPAC-related class actions.

It was another active quarter with significant activity across all areas we monitor in the Roundup. COVID-19 continues to impact a variety of industries across these areas, keeping the courts particularly busy. Insurance companies saw the bulk of this activity with cases ranging from breach of contract to coverage claims involving losses due to stay-at-home orders. On the consumer protection front, a district judge denied class certification in a case involving claims that ticket refunds were not received after event cancellations or delays due to COVID-19.

Other notable decisions covered include the Sixth Circuit reversing the dismissal of a Telephone Consumer Protection Act (TCPA) class action involving prerecorded calls and the Fourth Circuit reversing a class certification decision on numerosity grounds in an antitrust case. Additionally, the Second Circuit held that once an ERISA plaintiff demonstrates a loss to an ERISA plan, the burden shifts to the defendant to disprove damages. This ruling aligns itself with other circuit courts approving of this burden-shift approach, furthering the current circuit split.

We wrap up the Roundup with a summary of class action settlements finalized in the first quarter. We hope you enjoy this installment and, as always, welcome your feedback on this issue.

 

Antitrust/RICO

  • When the Numbers Don't Add Up: District Court's Numerosity Analysis Falls Short

    In re Zetia Antitrust Litigation, No. 20-2184 (4th Cir.) (Aug. 4, 2021). Vacating class certification order and remanding.

    In a rare move, the Fourth Circuit reversed a class certification decision on numerosity grounds. The plaintiff pharmaceutical buyers had sought to certify a class of 35 putative members, which fell within a "gray area" of the law: more than a presumptively uncertifiable class of 19 members but less than a presumptively certifiable class of 41 members. The district court found that judicial economy favored certifying the class because multiple individual trials would involve the same theories of liability and evidence, so a class action would conserve judicial resources. According to the Fourth Circuit, because Rule 23(a) speaks to the impracticability of joinder, the district court should have focused on whether judicial economy favored a class action or favored joinder, rather than focusing on individual trials. Indeed, under the district court's contrary analysis, judicial economy would always favor class certification, which is simpler to manage than individual lawsuits.

  • Whose Law Is It Anyway? Ninth Circuit Vacates Massive Class Cert Decision on Faulty Choice-of-Law Analysis

    Stromberg v. Qualcomm Inc.    , No. 19-15159 (9th Cir.) (Sept. 29, 2021). Vacating class certification order and remanding.

    The Ninth Circuit vacated the district court's decision to certify a nationwide class of up to 250 million indirect cellphone purchasers based on an erroneous choice-of-law analysis. Applying California's "governmental interest" test, the district court concluded that California had an interest in applying its Cartwright Act—which permits indirect purchasers to bring antitrust claims, effectively repealing Illinois Brick—whereas states that did not repeal Illinois Brick had no interest in applying their laws to the current dispute. That conclusion ignored that non-repealer states had made a policy decision regarding how to effectively enforce antitrust laws and promote business within their borders. Thus, those states had an interest in applying their laws to bar antitrust claims brought by indirect purchasers. Because California law did not apply uniformly to the class, the class could not show that common issues of law predominated.

  • Ascertainability Still Alive and Well in the Third Circuit

    In re Niaspan Antitrust Litigation, No. 2:13-md-02460 (E.D. Pa.) (Aug. 17, 2021). Judge DuBois. Denying class certification.

    Judge DuBois denied a renewed motion for class certification brought by end-payor plaintiffs in a pay-for-delay dispute, ruling that the plaintiffs failed to satisfy the ascertainability requirement of Rule 23(b)(3). Judge DuBois recognized that in addition to the other requirements for class actions in the Federal Rules of Civil Procedure, the Third Circuit requires that a Rule 23(b)(3) class be currently and readily ascertainable. To satisfy this ascertainability requirement, plaintiffs must show that the class is defined with reference to objective criteria and there is an administratively feasible mechanism for determining whether putative class members fall within the class definition. Here, the plaintiffs had not shown that they could distinguish between class members and intermediaries— excluded from the class definition—without review of the individual contractual relationships underlying each transaction.

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