U.S. Supreme Court Update

Transcription

1 Hot Topics in the High Court: U.S. Supreme Court Update Presented by: Susan L. Bickley, Blank Rome LLP Cheryl S. Chang, Blank Rome LLP William R. Cruse, Blank Rome LLP Ann B. Laupheimer, Blank Rome LLP Raymond G. Mullady, Blank Rome LLP Wayne Streibich, Blank Rome LLP

2 Wal-Mart Stores, Inc. v. Dukes: Class Action Certification Standards

3 Wal-Mart v. Dukes Boys Against The Girls 5-4 Decision It may be enough that the expert [is] saying that gender bias can creep into a system like that simply because of the natural phenomenon that people tend to feel comfortable with people like themselves Justice Kagan

4 If Only All Class Action Cases Could Be This Exciting

5 Wal-Mart Stores, Inc. v. Dukes Decisions at issue? To certify a class of 1.5 million female Wal-Mart employees for Title VII sex discrimination claims concerning pay & promotion decisions To certify claims for monetary relief (back pay) under Fed. R. Civ. P. 23(b)(2) Supreme Court s Decision? Class certification requirements not met Court clarified standards for class certification.

6 Background Facts Plaintiffs claim Wal-Mart s allowing store managers broad discretion over pay/promotion violates Title VII Theory: uniform corporate culture infects the discretionary decision-making of managers Significantly, Plaintiffs say all women employees nationwide are victims But Wal-Mart operates 3400 stores, 4 types, divided into 7 divisions, i i 41 regions with stores per region, and employs thousands of managers

7 Rigorous Analysis Required Class certification only if rigorous analysis shows Rule 23 prerequisites satisfied Rule 23 is not a mere pleading standard. A party seeking class certification... must affirmatively demonstrate his compliance.... Rigorous analysis frequently will entail evaluation of the merits of the underlying claim Court rejects contrary interpretations. i

8 Rule 23(a) Commonality Standard Commonality: the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Not enough to list common questions --- even in droves --- or to recite a common injury. Standards of Proof Significant proof: required to bridge gap between individual discrimination claim and conclusion that a company policy is reason why Plaintiffs were disfavored in pay/promotion Here, significant proof of a general policy of discrimination was lacking.

9 Plaintiffs Evidence Found Lacking Statistical evidence: Did not establish "the uniform, store-by-store disparity upon which the plaintiffs' theory of commonality depends - No "significant proof" of a "general policy of discrimination" at Wal-Mart. Evidence of local discretion: [A]llowing discretion by local supervisors... should itself raise no inference of discriminatory conduct. Must challenge a specific practice that ties the class together disparity in numbers not enough. Anecdotal reports: 120 female employees anecdotes evidence too weak to show company wide policy - [A] few anecdotes selected from literally millions of employment ment decisions prove nothing at all

10 Expert Testimony Sociologist expert conducted a social framework analysis of Wal-Mart's culture finding strong culture making it vulnerable to discrimination Commenting on district court conclusion below that Daubert did not apply to expert testimony at the certification stage of class-action proceedings, Court says, We doubt that is so. Even if the sociologist s analysis had been properly considered, it did nothing to advance respondents case -- we can safely disregard what he has to say.

11 Backpay Claims Improperly Certified Under Rule 23(b)(2) Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. " "[I]ndividualized monetary claims belong in Rule 23(b)(3)" requires findings predominance and superiority before such a class can be certified.

12 No Trial by Formula Individualized defenses cannot be avoided by sampling and extrapolation Rule 23 cannot be used to abridge, enlarge or modify any substantive right,'" such as Wal-Mart s defenses The Court of Appeals believed that it was possible to replace such proceedings with Trial by Formula.... We disapprove that t novel project. An employer will have the right to raise any individual affirmative defenses it may have, and to demonstrate that the individual applicant was denied an employment opportunity for lawful reasons.

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14 Speech or Jerky Physician Prescribing Data Disgusting but Delicious Snack Food

15 Subject Matter of the Case Vermont s prescriber data restriction law, which prohibits: Pharmaceutical manufacturers and pharmaceutical marketers from using prescriber data for marketing prescription drugs Health insurers, self-insured employers, pharmacies and others from selling prescriber data for marketing prescription drugs Public policies allegedly supporting the restriction: Protect the privacy of prescribers and prescribing information Protect the public health Ensure healthcare costs are contained Similar data restriction laws passed in New Hampshire and Maine, and draft laws before several other state legislatures

16 Holding Unconstitutional restriction on commercial speech The law on its face burdens disfavored speech by disfavored speakers. The State has burdened a form of protected expression that it found too persuasive. At the same time, the State has left unburdened those speakers whose messages are in accord with its own views. This the State cannot do. 6-3 Decision Majority: Kennedy (author), Roberts, Scalia, Thomas, Alito, and Sotomayor Dissent: Breyer (author), Ginsburg, and Kagan

17 Commentary Blank Rome s submission of a amicus brief on behalf of national and state associations of biotechnology companies Where does the legal landscape go from here? A complete ban? Greater physician control? More disclosure by physicians? More disclosure by detailers?

18 McIntyre and Goodyear Personal Jurisdiction in Tort Cases

19 Supreme Court Opinions Jurisdiction Goodyear v. Brown, 131 S. Ct. 2486, 180 L. Ed. 2d 796 (2011) McIntyre v. Nicastro, 131 S. Ct. 2780, 180 L. Ed. 2d 765 (2011) Jurisdiction Over a Foreign Defendant A Brief Review: The person is found / served within the state. Specific jurisdiction arising i from the foreign defendant purposefully availing itself the benefits and protections of the forum state General jurisdiction arising from continuous and systematic contacts in the forum state.

20 Supreme Court June 27, 2011 Opinions Goodyear v. Brown, 131 S. Ct. 2486, 180 L. Ed. 2d 796 (2011) Addressed straightforward issue of general jurisdiction Opinion by Justice Ginsburg for unanimous Court McIntyre v. Nicastro, 131 S. Ct. 2780, 180 L. Ed. 2d 765 (2011) Addressed trickier issue of specific jurisdiction Plurality opinion by Justice Kennedy, joined by Chief Justice Roberts, Justices Scalia and Thomas Concurring opinion by Justice Breyer, joined by Justice Alito Dissenting opinion by Justice Ginsburg, joined by Justices Sotomayor and Kagan

21 Goodyear v. Brown Slam Dunk on Issue of General Jurisdiction Case Facts Bus Accident in France Held: Goodyear USA s foreign subsidiaries i not amenable to suit in North Carolina on claims unrelated to any of their activities in North Carolina Stream of Commerce Analogy does not apply to question of general jurisdiction Activity in forum state must be Continuous and Systematic

22 McIntyre v. Nicastro Case Facts Metal shredding machine accident Chance for Supreme Court majority to clarify befuddling Asahi plurality lit opinion i Instead, Asahi replaced with befuddling plurality opinion in McIntyre Stream of commerce theory clarified (sort of); forseeability no longer the touchstone of jurisdiction Jurisdiction is based on actions, not expectations ti

23 Take Away from Brown and McIntyre You can determine where you are amenable to suit Served in the forum state you are stuck. Substantial business interest in the forum state (continuous and systematic contacts) may convey general jurisdiction Directing activities to the forum state (product sales or product deliveries), may convey specific jurisdiction

24 AT&T v. Concepcion and CompuCredit v. Greenwood

25 AT&T v. Concepcion p Plaintiff bought a cell phone and service from AT&T. Brought a consumer protection class action about pricing THE CELL PHONE SALES AGREEMENT REQUIRED ARBITRATION AND PROHIBITED CLASS ACTIONS Issue: whether class action waiver made arbitration provision unconscionable 9th Circuit: class action waiver unconscionable under California law Not preempted by FAA

26 AT&T v. Concepcion p U.S. Sup. Ct.: Reversed in 5-4 decision ( (April 27, 2011)) California law making class action waivers unconscionable were preempted by the FAA Although Section 2 of FAA preserves generally applicable contract defenses nothing in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment FAA ss objectives of the FAA objectives.

27 AT&T v. Concepcion Likely Impact of Concepcion: Permits waiver of class actions in consumer contracts. Class action waiver will not invalidate arbitration provision under state laws Requiring consumers to arbitrate cases on an individual basis could lead claimants to abandon small-money cases rather than litigate. (OR leaves it to the free market and competition.) Justice Breyer: What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim?

28 AT&T v. Concepcion: Long-Term Consequences? Shareholder Litigation Potential impact on shareholder class actions? Eliminating shareholder class action in favor of arbitration of idiid individual claims li Inclusion of class action waiver in corporate charter or by-laws? Potential problems Consumer Agreements End of the Class Action? Not so FAST Proposed Arbitration Fairness Act, would eliminate forced arbitration clauses in employment, consumer, and civil rights cases New Consumer Financial Protection Bureau to study arbitration agreements

29 CompuCredit v. Greenwood CompuCredit marketed subprime credit card to consumers with low or weak credit Consumers signed binding arbitration provision and agreement to waive right to court trial Credit Reporting Organization Act ( CROA ) expressly Requires right to sue a credit card repair organization; AND holds waivers of any rights provided under CROA to be void Wanda Greenwood sues CompuCredit for violations of CROA and Unfair Competition Law CompuCredit moves to compel arbitration

30 CompuCredit p v. Greenwood What is a Right to Sue and does it preclude Arbitration

31 CompuCredit v. Greenwood What is a Right to Sue and does it preclude Arbitration Or, as Alice put it: whether you can make words mean so many different things?

32 CompuCredit v. Greenwood What is a Right to Sue and does it preclude Arbitration Or, as Alice put it: whether you can make words mean so many different things? 9th Circuit: sue does not mean arbitrate U.S. Sup. Ct. - oral argument on Oct. 11, 2011 Justices Ginsburg & Kagan: sue means sue Justice Scalia: right to sue language merely provides notice and not a substantive right

33 CompuCredit v. Greenwood: Consequences to Consumer Credit Agreements? The Death of consumer class actions may have been greatly exaggerated. Is the entity a Credit Repair Organization subject to CROA? any person offers for consideration to: (i) improve any consumer's credit record, credit history, or credit rating; or (ii) provide advice or assistance to any consumer with regard to any activity or service described in clause (i); But does NOT include Nonprofits, Creditors or Depository Institutions Dodd-Frank, Obama re-election, Consumer Financial Protection Bureau will all play into the life or death of forced arbitration for consumers!