Hot Topics in the High Court: U.S. Supreme Court Update

Hot Topics in the High Court: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 LLPWilliam R. Cruse, Blank Rome LLP

Ann B. Laupheimer, Blank Rome LLP

Raymond G. Mullady, Blank Rome LLP

Wayne Streibich, Blank Rome LLP

@BlankRomeLLP #EmergingIssues7

Wayne Streibich, Blank Rome LLP

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


Wal-Mart v. DukesBoys Against The Girls 5 4 DecisionBoys 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 naturalcreep into a system like that simply because of the natural phenomenon that people tend to feel comfortable with people like themselves” Justice Kagan


If Only All Class Action Cases All Class Action Cases Could Be This Exciting


Wal-Mart Stores, Inc. v. Dukes ,• Decisions at issue?

T tif l f 1 5 illi f l W l M t l f Titl – 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. y y ( p y)23(b)(2)

• Supreme Court’s Decision?– Class certification requirements not met – Court clarified standards

for class certification.


Background Factsg

• Plaintiffs claim Wal-Mart’s allowing store managers broad g gdiscretion 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 di i i 41 i i h 80 85 i d l divisions, 41 regions with 80-85 stores per region, and employs thousands of managers


“Rigorous Analysis” Required g y q

• Class certification only if “rigorous analysis” shows Rule 23 y g yprerequisites 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 i iinterpretations.


Rule 23(a) Commonality Standard( ) y• Commonality: “the capacity of a classwide proceeding to

generate common answers apt to drive the resolution of the 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 • 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 reason why Plaintiffs were disfavored in pay/promotion

• Here, “significant proof” of a general policy of discrimination was lacking.


g

Plaintiffs’ Evidence Found Lacking g• Statistical evidence: Did not establish "the uniform, store-by-store

disparity upon which the plaintiffs' theory of commonality depends“ - No p y p p y y p"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 –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 literall millions of emplo ment decisions pro e nothing at all”


from literally millions of employment decisions prove nothing at all”

Expert Testimonyp y

• Sociologist expert conducted a “social framework analysis” 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 Daubertdid 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.”


Backpay Claims Improperly CertifiedU d R l 23(b)(2)Under Rule 23(b)(2)

“Rule 23(b)(2) applies only when a single injunction or • “Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class " the class.

• "[I]ndividualized monetary claims belong in Rule 23(b)(3)" —• [I]ndividualized monetary claims belong in Rule 23(b)(3) —requires findings predominance and superiority before such a class can be certified.


No “Trial by Formula”y

• Individualized defenses cannot be avoided by sampling and y p gextrapolation — 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 th t l j t ”that novel project.”

• An employer “will have the right to raise any individual affirmative defenses it may have and to demonstrate that the affirmative defenses it may have, and to demonstrate that the individual applicant was denied an employment opportunity for lawful reasons ”


lawful reasons.

Speech or JerkySpeech or JerkyPhysician Prescribing Data Disgusting but Delicious

Snack Food


Subject Matter of the Casej• Vermont’s prescriber data restriction law, which prohibits:

– Pharmaceutical manufacturers and pharmaceutical marketers from using prescriber data for marketing prescription drugsHealth insurers self insured employers pharmacies and others from – Health insurers, self-insured employers, pharmacies and others from selling prescriber data for marketing prescription drugs

• Public policies allegedly supporting the restriction:p g y pp g– 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

Holdingg

• Unconstitutional restriction on commercial speechp– “The law on its face burdens disfavored speech by disfavored

speakers.”S f f f– “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. p gThis the State cannot do.”

• 6-3 Decision– Majority: Kennedy (author), Roberts, Scalia, Thomas, Alito, and

SotomayorDissent: Breyer (author) Ginsburg and Kagan


– Dissent: Breyer (author), Ginsburg, and Kagan

Commentaryy

• 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?


McIntyre and Goodyear –Personal Jurisdiction in Tort CasesPersonal Jurisdiction in Tort Cases


Supreme Court Opinions – Jurisdictionp p• 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)• McIntyre v. Nicastro, 131 S. Ct. 2780, 180 L. Ed. 2d 765 (2011)

• Jurisdiction Over a Foreign Defendant –A B i f R iA Brief Review:

• The person is found / served within the state.S ifi j i di ti i i f th f i • Specific jurisdiction arising from the foreign defendant purposefully availing itself the benefits and protections of the forum statebenefits and protections of the forum state

• General jurisdiction arising from “continuous and systematic” contacts in the forum state


and systematic contacts in the forum state.

Supreme Court June 27, 2011 Opinions p , p

• Goodyear v. Brown, 131 S. Ct. 2486, 180 L. Ed. 2d 796 (2011)y ( )– 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 ThomasConcurring opinion by Justice Breyer joined by Justice Alito– Concurring opinion by Justice Breyer, joined by Justice Alito

– Dissenting opinion by Justice Ginsburg, joined by Justices Sotomayor and Kagan


Goodyear v. Browny• “Slam Dunk” on Issue of General

Jurisdiction– Case Facts – Bus Accident in France

H ld G d USA’ f i b idi i t – Held: Goodyear USA’s foreign subsidiaries 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 jurisdictionto question of general jurisdiction

– Activity in forum state must be “Continuous and Systematic”


McIntyre v. Nicastroy• Case Facts – Metal shredding machine

accident• Chance for Supreme Court majority to clarify

b f ddli A hi l lit i i befuddling Asahi plurality opinion • Instead, Asahi replaced with befuddling

plurality opinion in McIntyreplurality opinion in McIntyre– “Stream of commerce” theory clarified (sort of);

forseeability no longer the “touchstone of forseeability no longer the touchstone of jurisdiction”

– Jurisdiction is based on actions, not t ti


expectations

Take Away from Brown and McIntyrey y• 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 jurisdictionmay convey general jurisdiction

• Directing activities to the forum state (product sales or product deliveries) may (product sales or product deliveries), may convey specific jurisdiction


AT&T v. ConcepcionandandCompuCredit v. Greenwood


AT&T v. Concepcionp• 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 ACTIONSAND PROHIBITED CLASS ACTIONS– Issue: whether class action waiver

made arbitration provision unconscionable

– 9th Circuit: class action waiver unconscionable under California lawunconscionable under California law

• Not preempted by FAA


AT&T v. Concepcionp• U.S. Sup. Ct.: Reversed in 5-4 decision

( )(April 27, 2011) – California law making class action waivers

unconscionable were preempted by the FAAunconscionable 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 of the FAA’s objectives ” of the FAA s objectives.


AT&T v. Concepcionp• Likely Impact of Concepcion:

– Permits waiver of class actions in consumer contracts. – Class action waiver will not invalidate arbitration provision under state

laws 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 wouldJustice Breyer: What rational lawyer would have signed on to represent the Concepcionsin litigation for the possibility of fees stemming from a $30.22 claim?”


AT&T v. Concepcion:L T C ?Long-Term Consequences?Shareholder Litigation Consumer Agreementsg

• Potential impact on shareholder class actions?

g

• End of the Class Action?• Not so FASTclass actions?

• Eliminating shareholder class action in favor of arbitration of i di id l l i

• Not so FAST• Proposed Arbitration Fairness

Act, would eliminate forced individual claims

• Inclusion of class action waiver in corporate charter or by-laws?

arbitration clauses in employment, consumer, and civil rights cases in corporate charter or by laws?

• Potential problemscivil rights cases

• New Consumer Financial Protection Bureau to study


arbitration agreements

CompuCredit v. Greenwoodp

• CompuCredit marketed subprime credit card to consumers p pwith low or weak credit

– Consumers signed “binding arbitration provision” and agreement to i i ht t t t i lwaive right to court trial

• Credit Reporting Organization Act (“CROA”) expresslyR i “ i ht t ” dit d i i ti AND– 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 • Wanda Greenwood sues CompuCredit for violations of CROA

and Unfair Competition Law– CompuCredit moves to compel arbitration


CompuCredit moves to compel arbitration

CompuCredit v. Greenwoodp• What is a Right to “Sue” and does it preclude Arbitration


CompuCredit v. Greenwoodp• 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?”


CompuCredit v. Greenwoodp• 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?”so many different things?• 9th Circuit: “sue” does not mean “arbitrate”• U S Sup Ct oral argument on Oct 11 2011• U.S. Sup. Ct. - oral argument on Oct. 11, 2011• Justices Ginsburg & Kagan: “sue” means “sue”

Justice Scalia: “right to sue” language merely • Justice Scalia: “right to sue” language merely provides notice and not a substantive right


CompuCredit v. Greenwood:Consequences to Consumer Credit Agreements?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:– 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 • (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!


Hot Topics in the High Court: U.S. Supreme Court Update

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