Category: Litigation & Arbitration

1
 Supreme Court Grants Cert. to Consider Whether Offer of Complete Relief Moots TCPA Class Action
2
Proposed Arbitration Fairness Act Would Ban Pre-Dispute Arbitration Clauses in Consumer Contracts
3
Client of Blast Fax Solutions Provider Hit with $22 Million TCPA Judgment
4
Supreme Court Won’t Review Class Arbitrability Question Now, But Second Circuit May Hear Case That Could Generate Circuit Split

 Supreme Court Grants Cert. to Consider Whether Offer of Complete Relief Moots TCPA Class Action

By Andrew C. Glass, Joseph C. Wylie II, Gregory N. BlaseJennifer J. Nagle, Eric W. Lee

The United States Supreme Court recently granted certiorari in a Telephone Consumer Protection Act class action challenging text messages which a U.S. Navy vendor sent to recruit new sailors.  In Campbell-Ewald Company v. Gomez, No. 14-857, the Supreme Court will review (1) whether a defendant’s offer to provide complete relief as to individual claims deprives the plaintiff of Article III standing, and (2) whether such an offer can also prevent a putative class plaintiff from proceeding where no class has yet been certified.

In Campbell-Ewald, the plaintiff brought suit under the TCPA for himself and a putative class of individuals who the plaintiff claimed had not provided consent to receive a recruiting text message from the Navy.  Before the plaintiff moved for class certification, the defendant made a Rule 68 “offer of judgment” offering the plaintiff  complete monetary and non-monetary relief.  When the plaintiff rejected the offer, the defendant moved to dismiss on the basis that its offer of complete relief mooted both the plaintiff’s individual and class claims under Article III.

The district court denied the motion to dismiss.  On appeal, the Ninth Circuit agreed with that aspect of the district court’s ruling.  The Supreme Court’s review should resolve a split among the circuits as to the effect of a Rule 68 offer in the class action context.  A decision, however, is not likely until June 2016.  Our recent client alert by Irene C. Freidel and Jennifer J. Nagle, To Offer or Not to Offer: Post Genesis, Uncertainty Continues Regarding the Impact of Rule 68 Offers of Judgment in the Class Action Context, provides additional discussion of Rule 68 and offers of judgment in class actions, more generally.

Campbell-Ewald is the second case in which the Supreme Court recently granted cert., which could have potential impacts on TCPA class action litigation.  In addition, in Spokeo, Inc. v. Robins, No. 13-1339, which will also be heard next term, the Supreme Court will consider whether a plaintiff must have suffered actual harm in order to have standing to sue for statutory damages under the Fair Credit Reporting Act.  That statute, like the TCPA, appears to permit recovery of statutory damages upon the showing of a violation, and the federal circuit courts of appeal are currently split over whether a plaintiff may state a claim for statutory damages without separately showing injury-in-fact as a necessary prerequisite for standing.  The Supreme Court’s resolution of this issue in the FCRA context may have significant implications for class action and individual litigation under a wide range of federal statutes, including the TCPA.  For more information on the Spokeo case, please see our recent post in K&L Gates Consumer Financial Services Watch blog.

Proposed Arbitration Fairness Act Would Ban Pre-Dispute Arbitration Clauses in Consumer Contracts

By Andrew C. Glass, Robert W. Sparkes, III, Roger L. Smerage, Eric W. Lee

Two members of Congress are seeking to expand the reach of a federal ban on pre-dispute arbitration agreements to cover nearly all consumer contracts.  The proposed legislation would have a widespread effect, barring the use of pre-dispute arbitration provisions in credit card agreements, auto loan agreements, wireless telephone service contracts, and many other types of consumer-facing agreements that often contain such provisions.

On April 29, 2015, Senator Al Franken (D-Minnesota) and Representative Hank Johnson (D-Georgia) introduced the Arbitration Fairness Act of 2015 (“AFA”) (S. 1133; H.R. 2087).  The proposed legislation would amend the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq. (“FAA”), to prohibit parties from entering into agreements to arbitrate consumer disputes in advance of a dispute arising.  The bar on pre-dispute arbitration agreements would also apply in the context of employer, antitrust, and civil rights disputes.

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Client of Blast Fax Solutions Provider Hit with $22 Million TCPA Judgment

By Joseph C. Wylie II, Molly K. McGinley, and Nicole C. Mueller

A new decision once again highlights the dangers that companies face if their independent contractors engage in conduct that violates the Telephone Consumer Protection Act, and highlights the need to monitor contractor compliance with the TCPA.  In City Select Auto Sales, Inc. v. David/Randall Assocs., Inc., a federal court in New Jersey recently found a roofing company, David/Randall Associates, liable for $22.4 million under the TCPA for the actions of its blast fax solutions provider, Business to Business Solutions (B2B).  The plaintiff had alleged that the roofer and its president were liable for the transmission of fax advertisements 44,832 times to 29,113 different fax numbers by its independent contractor, B2B, without obtaining the prior express invitation or permission of the recipients and without including an FCC-required opt-out notice.

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Supreme Court Won’t Review Class Arbitrability Question Now, But Second Circuit May Hear Case That Could Generate Circuit Split

By Andrew C. Glass and Roger L. Smerage

The United States Supreme Court recently declined to review a Third Circuit decision holding that ordinarily a court, not an arbitrator, determines the availability of classwide arbitration.  Opalinski v. Robert Half International, Inc.  761 F.3d 326 (3d Cir. 2014), cert. denied No. 14-625, — S. Ct. —-, 2015 WL 998611 (U.S. Mar. 9, 2015).  The Opalinski decision is important to businesses that use consumer arbitration agreements.  The benefits of traditional, individual arbitration – such as lower costs, confidentiality, and the limited scope of an arbitrator’s award – are typically not present in class arbitration.  Having a judge, rather than an arbitrator, make the decision of whether to compel individual or class arbitration is meaningful because a judge’s ruling is subject to the regular appellate review process, while an arbitrator’s ruling is subject to only very limited judicial review.

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