class actions

Issues

In 2012, Brandon W. Owens filed a class action petition in Kansas state court, alleging that Dart Cherokee Basin Operating Company and Cherokee Basin Pipeline owed royalty payments derived from certain gas wells. Dart and Cherokee sought to remove the case to federal court, asserting jurisdiction under 28 U.S.C. § 1332(d), commonly known as the Class Action Fairness Act of 2005 (“CAFA”). In their notice of removal, Dart and Cherokee did not include supporting evidence of its allegation that the jurisdictional amount was met. Dart and Cherokee contend that mere allegations of the amount in controversy is sufficient to establish jurisdiction if there is no dispute over that amount. In opposition, Owens argues that the notice of removal has to contain factual evidence supporting federal jurisdiction. The Supreme Court will decide how much evidence of the jurisdictional requirements—if any—a CAFA defendant seeking removal is required to include in his or her notice of removal. The resolution of this case will have a significant impact on a defendant’s burden in seeking removal and, in turn, large effects on the availability of a federal forum for many state court defendants.

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Cy press settlements allow courts to distribute portions of class action settlement funds to outside beneficiaries—such as non-profit organizations—for the indirect benefit of the class.  This case asks the Supreme Court to decide whether lower courts violated Federal Rule of Civil Procedure 23(e) when they certified a cy pres settlement, which did not award settlement money to class members, in a class action against Google. Petitioner and class member Theodore H. Frank asserts that the courts should not have certified the cy pres class settlement because it was not “fair, reasonable, and adequate” in the meaning of Rule 23(e), given that it did not compensate class members for their injuries. Frank argues that the attorney fees of class counsel were disproportionate given that class members received no return and contends that cy pres awards generate potential conflicts between interests of class counsel and their clients. Finally, Frank contends that in the case at hand, class counsel had conflicts with the beneficiaries of the cy pres settlement. Other class members, such as Paloma Gaos, and Google respond that the cy pres settlement was “fair, reasonable, and adequate,” as distributing settlement money to each class member would be infeasible. Google and Gaos further indicate that the attorney fees were court-approved and state that Frank does not actually contest the award of attorneys’ fees. Finally, Google and Gaos assert that class counsel had no conflicts with the beneficiaries of the cy pres settlement, as the beneficiaries were chosen on their own merits. The outcome of this case has large implications for class action members, their freedom of speech, their due process rights, and to the awarding of cy pres settlements.

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Shady Grove Orthopedic Associates filed a class action lawsuit in federal court, arguing that Allstate Insurance Companyviolated New York law in failing to pay interest to policyholders. The district court dismissed the case on the grounds that New York law prevented a class action lawsuit in this context, and the Second Circuit affirmed. This case concerns the application of state law in federal court under the Erie Doctrine, particularly whether New York class action law applies in federal court and whether it conflicts with Rule 23 of the Federal Rules of Civil Procedure. Shady Grove argues that Rule 23 is the comprehensive class action rule for federal courts, and that New York law cannot undermine federal court procedure. Allstate claims that state law applies because plaintiffs would have different rights in state and federal court. The case will address Rule 23 and the ability of states to restrict class action lawsuits.

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This case asks the Supreme Court to determine whether Article III or the typicality requirement of Federal Rule of Civil Procedure 23 (“FRCP”) should allow a class action claiming statutory damages when most of the class members did not suffer actual injury, or an injury similar to that of the class representative. Petitioner TransUnion, LLC (“TransUnion”) argues that in order for a class in a statutory damages action to have standing under Article III, each absent class member must show common concrete injury and, if future risk constitutes the injury, must demonstrate that such risk is certainly impending. TransUnion asserts that to achieve typicality under FRCP 23, a class representative’s facts must be substantially shared with those of the rest of the class. Respondent Sergio L. Ramirez (“Ramirez”) counters that a class may show Article III injury by demonstrating that the harm caused by a statutory violation is analogous to that of common law claims. Ramirez also asserts that the typicality requirement is satisfied when a class representative shares the same interest and has suffered injury common to the absent class members. This case involves questions of how the Court should weigh the role of class actions and statutory damages in protecting consumers against the due process rights of litigants.

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Respondent Betty Dukes and other women have brought a Title VII employment discrimination case against Petitioner Wal-Mart Stores. The United States District Court for the Northern District of California certified a class action comprised of all women employed at any Wal-Mart store since December 26, 1998 who may have been or will be subjected to Wal-Mart’s allegedly discriminatory practices and policies. Wal-Mart appealed, challenging the class certification, but the United States Court of Appeals for the Ninth Circuit affirmed the district court’s ruling. Wal-Mart now appeals to the Supreme Court, arguing that the class certification does not meet the requirements of Federal Rule of Civil Procedure 23(a). Wal-Mart also claims that class certification was improper under Federal Rule of Civil Procedure 23(b)(2) because the employees primarily seek monetary compensation in the form of back pay, and Rule 23(b)(2) does not authorize certification of claims seeking monetary relief. On the other hand, the employees assert that they meet the requirements for class certification under Rule 23(a) because all female employees face the same Wal-Mart policies and share the common issue of discriminatory treatment under those policies. The employees further argue that class actions certified under Rule 23(b)(2) are not precluded from seeking monetary relief, and deny that back pay is a form of monetary compensation. The Supreme Court’s decision will affect the evidence required to bring an employment discrimination class action suit, the relief available to plaintiffs in a class action, and employers’ willingness to settle to avoid liability in class actions.

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