KCC Class Action Digest
KCC Class Action Digest September 2015
Class Action Services
KCC Class Action Services partners with counsel to deliver high-quality, cost-effective notice and settlement administration services. Recognized as Best Claims Administrator by The Recorder, The National Law Journal, and The New York Law Journal, KCC has earned the trust and confidence of our clients with our track record as a highly responsive partner. As part of our commitment to practitioners, KCC provides this resource on decisions related to class action litigation in state and federal court. In addition to industry resources, KCC offers interactive CLE-accredited courses geared toward class action settlement administration and legal notification, some of which carry Professional Responsibility CLE credit. Go to www.kccllc.com/class-action/insights/continuing-education to learn more about our courses and schedule a CLE for your law firm or industry event.
INSIDE THIS ISSUE Consumer Finance
pg. 1
Employment
pg. 1
Fair Credit Reporting Act
pg. 2
Insurance Racketeering Influenced and Corrupt Organizations Act
pg. 4 pg. 4
Rule 68 Offer
pg. 5
This KCC Class Action Digest is provided by Patrick Ivie, Executive Vice President Class Action Services. To request a proposal, or schedule a CLE, contact Patrick at 310.776.7385 or [email protected]. @KCC_ClassAction
Subscribe or request to opt-out of the KCC Class Action Digest by sending an email to: [email protected].
Page 1 KCC Class Action Digest CONSUMER FINANCE Military Lending Act Cox v. Community Loans of America Inc., No. 14-12977, 2015 WL 5063167 (11th Cir. Aug 28, 2015) (Jordan, J.). Vehicle loan recipients brought suit against a vehicle-title loan company for violation of the Military Lending Act (“MLA”), specifically alleging that the vehicle-title loan transactions in question had an annual percentage rate of interest exceeding the statutory maximum permissible under the MLA. The District Court for the Middle District of Georgia previously held the damages sought were not merely incidental to equitable relief, denied Plaintiffs’ request to certify a class under Rule 23(b)(2) but nevertheless found certification of a Rule 23(b)(3) class warranted and certified a class. The certification order was appealed. The Eleventh Circuit affirmed the district court’s ruling, reasoning without in-depth explanation that the district court’s analysis of the Rule 23 prerequisites was sufficiently rigorous. The Court also held that an implied private right of action exists under the MLA, and therefore common issues of law exist for class adjudication because the text and structure of the MLA unambiguously confers on covered members of the armed forces and their dependents certain new legal rights and a private remedy, including the ‘right to rescind’ a contract void under the criteria of the statute.
EMPLOYMENT Bank Employees Bell v. PNC Bank, Nat’l Assoc., No 14-3018, 2015 WL 5093052 (7th Cir. Aug 31, 2015) (Rovner, J.). Bank employee brought class action for violations of the Fair Labor Standards Act, Illinois Minimum Wage Law and Illinois Wage Payment and Collection Act, specifically alleging that Defendant failed to pay overtime wages as part of a policy or practice that affected other employees. After the United States District Court for the Northern District of Illinois granted class certification, the Seventh Circuit took an appeal of the decision. The Seventh Circuit affirmed the grant of class certification, finding that the question of whether Defendant had an unofficial policy or practice that required employees class-wide to work off-the-clock overtime hours is a common question capable of class-wide resolution satisfying the commonality requirement, reasoning that case law is clear that these matters must be capable of proof at trial through evidence that is common to the class rather than individual to its members. The Court further reasoned that Plaintiff had offered evidence that the denial of overtime pay came from a broader company policy and not from the discretionary decisions of individual managers, in part based on Plaintiffs’ showing that Defendant regularly required off-the-clock work, including evidence that one regional manager told branch managers not to record overtime worked by their employees and many employees worked overtime without proper compensation. The Court also found predominance satisfied on grounds that the claim that PNC had an unofficial policy that left it liable would prevail or fail as a whole—if there was no common policy, then individuals would be left to claim a specific manager forced her to work off the clock, which is a different legal theory, and even if Defendant cured the issue by offering overtime pay, the evidence could leave a court to determine on the merits that remediation was necessary because of an unwritten policy, a willful policy (which could entitle class members to more damages) or whether Defendant’s written policy constitutes a defense. Accordingly, the Court ruled that the district court was correct to conclude that a class action would be an appropriate and efficient means to resolution.
Page 2 KCC Class Action Digest Truck Drivers Blair v. TransAm Trucking, Inc., No. 09-cv-2443, 2015 WL 5006076 (D. Kan. Aug. 20, 2015) (Melgren, J.). Truck drivers brought suit against trucking company for violations of the Fair Labor Standards Act (“FLSA”) and Kansas Wage Payment Act (“KWPA”), alleging that Defendant failed to pay minimum wages, failed to pay wages due, made improper deductions and misclassified Defendant truck leasers as independent contractors. Plaintiffs sought class certification of their KWPA claims and conditional certification of collective claims under the FLSA. The Court granted both class certification for the KWPA claims and conditional certification of collective claims under the FLSA. As a preliminary matter, the Court found it was not unfair to allow Plaintiff to amend the complaint and significantly alter the class definition, reasoning that the new definition narrows the class from the one proposed in the complaint, and it is early enough in the proceedings that Defendant will not be prejudiced. Turning to its certification decisions, the Court reasoned in support of Rule 23 class certification that the rule’s requirements were satisfied. In terms of numerosity, the Court found an estimated 1,000 class members sufficient. With respect to commonality, the Court found it satisfied on grounds that the common question is whether class members are employees or independent contractors. The Court then found typicality satisfied on grounds that the named plaintiffs have KWPA claims similar to those of other class members, and are not otherwise antagonistic to the class. The Court also found adequacy satisfied. Turning then to Rule 23(b), the Court found (based on analysis of Kansas Supreme Court decisions and also precedent from the Seventh Circuit Court of Appeals) that common issues predominate over individualized issues, noting that the relevant question is whether Defendant had the right to control, not whether it actually exercised control—and whether Defendant had the right to control can be determined from the applicable written independent contractor agreements, equipment lease agreements, and owner-operator handbook, all of which are substantially the same for all drivers. Next, the Court found superiority satisfied because Plaintiffs’ claims rely on much of the same evidence and will require many of the same witnesses. Turning then to conditional certification under the FLSA, the Court first found plaintiffs to be similarly situated, noting the presence of numerous, substantial allegations that the drivers were collectively the victims of a single decision, policy or plan, as they (1) all received the same training; (2) were provided with the same handbook of policies; (3) entered into the same independent contractor and equipment lease agreements; (4) were paid under similar per-mileage pay policies; (5) have essentially the same job duties of driving to make deliveries; (6) were classified as independent contractors and prohibited from driving for anyone other than Defendant; and (7) generally the allegation that Defendants were engaged in a pattern or practice of not paying overtime. The Court then approved the notice.
FAIR CREDIT REPORTING ACT Job Applicants Manuel v. Wells Fargo Bank, Nat’l Assoc., No. 14-cv-238, 2015 WL 4494549 (E.D. Va. Aug. 19, 2015) (Payne, J.). Job applicants brought suit against a bank for violation of the Fair Credit Reporting Act (“FCRA”), specifically alleging that Defendant procured consumer reports for employment purposes without meeting the delineated statutory requirements, and made adverse actions without providing the consumer a copy of the report or a description of their rights. Plaintiffs sought certification of both an Impermissible Use and an Adverse Action class.
Page 3 KCC Class Action Digest The Court certified the Impermissible Use class and modified the Adverse Action class definition. In support of its decision, the Court found the Impermissible Use class to be readily ascertainable in light of the fact that Defendant retains detailed employment and application records of all individuals rejected for employment, and also admitted that it can identify these current or prospective employees and also describes the process by which a criminal background check is conducted in its stipulations. The Court also found the Adverse Action Class to be ascertainable because “adverse action” is the equivalent of “rejected for hire” and no other adverse actions are contemplated. The class definition was modified to replace the term “adverse action” with “rejected for employment.” Turning then to the elements of Rule 23, the Court found the numerosity requirement satisfied for both proposed classes, reasoning that not only was it uncontested, but Defendant stipulated that (1) at least 1,000 current or prospective employees were subjected to the background check process and signed the waiver at issue for the Impermissible Use class; and (2) at least 1,000 current or prospective employees were notified that the applicant’s criminal background may preclude employment, and were mailed the relevant documents. In terms of commonality, the Court found the Impermissible Use class satisfied it, noting that the Court had previously held that the question of whether a standard waiver form violated 1681b(b)(2) was a common question, and served as a common question here. The Court likewise noted that the question of willfulness is also a common question when, as here, there is no contention Defendant’s state of mind varied in any way toward individual consumers. Next, the Court found the Adverse Action class satisfied commonality on grounds that the question of whether Defendant’s actions violated §1681b(b)(3)(a) was common to the class. Furthermore, any issues raised by Defendant need not be resolved by the Court in an individualized manner and can largely be resolved by the joint stipulations and undisputed testimony. The Court further noted that all class members will have suffered an adverse action in the relevant time period, and the adverse action for all was rejection of employment. Here the Court noted that Defendant had stipulated to the fact that the initial Pre-Adverse Action Notice was sent automatically after an employee was marked ineligible for employment as part of standard policy and procedure; if the FCRA was violated, that violation happened when the code for ineligible was entered by one of Defendant’s employees, not when an applicant received the applicable letter. In terms of typicality, for both the Impermissible Use and Adverse Action classes, the Court found it satisfied, noting in support of its ruling in the context of the Impermissible Use Class that (1) all members of the proposed class assert identical claims under 1861b(b)(2) and signed identical forms containing the same language that would be at issue in this case; (2) there are no factual differences between Plaintiff’s claims and the class members’ claims; and (3) the issue of willfulness would also likely satisfy the typicality requirement. In terms of the Adverse Action class, the Court reasoned that the FCRA was violated when Defendant’s employee labeled an applicant as ineligible for hire in its systems before a letter was sent out. The Court noted that the procedures by which an individual was rejected were standardized and subjected to the same timeline of procedures. After quickly finding adequacy satisfied, the Court turned to predominance, finding it satisfied for the Impermissible Use class because each class member’s case is based on the same FCRA disclosure form and thus, the form will have a direct impact on every class member’s effort to establish liability. Likewise, the Court found predominance satisfied for the Adverse Action class in light of Plaintiff’s contention that Defendant always entered the ineligible for employment code before sending the adverse action notice, which itself was the adverse action, thus exposing class members to the same risk of harm every time Defendant did so. The Court also noted that all putative class members share the same adverse action—rejection of employment— and no individualized inquiry is necessary to determine when a class member received the relevant FCRA disclosures or to determine the issues of willfulness (as Defendant had standardized procedures). Finally, the question of statutory damages may be individualized, but is minimally influential in the predominance analysis.
Page 4 KCC Class Action Digest The Court then found superiority satisfied, observing that (1) class members’ claims for statutory damages are small when compared to the effort it would take to assert them individually in court; (2) many plaintiffs will not be aware that their rights were violated because of the technical nature of the FCRA; (3) a class action would preserve judicial economy, potentially enabling settlement of the aforementioned class-wide issues; (4) individual members are likely to receive the same award in class litigation; there is no related litigation pending that bears on this analysis; with class members located across the country; (5) it is desirable to hear the case in one forum for consolidated resolution; and (6) the similarity of the factual and legal issues indicates a class action would be manageable from the parties’ and court’s perspective.
INSURANCE Meyer v. American Family Mutual Ins. Co., No. 14-cv-05305, 2015 WL 5156594 (W.D. Wash. Sep. 2, 2015) (Leighton, J.). Auto insured brought suit against insurance company for violation of the Washington Administrative Code 284-30-350(1), specifically alleging that Defendant failed to disclose the availability of diminished value compensation to its insureds, and if pressed to pay this benefit, failed to pay the benefit fairly and adequately. Plaintiffs sought class certification. The Court granted class certification. First considering numerosity, the Court noted Defendant conceded it and further noted that it appeared to be satisfied based upon the numbers of underinsured motorist coverage for property damage (UIM PD) claims made in the State of Washington under Defendant’s policies during the proposed class period. Commonality was also satisfied, on grounds that there were numerous common questions at issue, including (1) whether Defendant violated the Washington Code by failing to disclose the availability of a diminished value benefit to its insured; (2) whether Defendant’s procedure for responding to a diminished value claim is appropriate; and (3) whether diminished value compensation, when given, was adequate. The Court then noted that typicality was satisfied in light of the fact that Plaintiff’s claims that Defendant fails to both inform their insureds of their right to receive diminished value compensation, as well as fails to fairly and adequately compensate those who request this benefit mirror the absent class members’ claims. Turning then to predominance, the Court found it satisfied on grounds that the aforementioned common issues predominate over any individualized damage disputes, as certification will not impede Defendant’s ability to defend against individual claims. Next, the Court found the superiority requirement satisfied because it is desirable to concentrate these identical claims in a class action rather than have individuals adjudicate their claims separately for a small amount of damages.
RACKETEERING INFLUENCED AND CORRUPT ORGANIZATIONS ACT Reyes v. NetDeposit, LLC, No. 14-1228, 2015 WL 5131287 (3d Cir. Sep. 2, 2015) (McKee, J.). Bank customers brought class action against a bank and payment-processor subsidiaries alleging civil violations of the Racketeering Influenced and Corrupt Organizations Act (“RICO”). Specifically, Plaintiffs allege NHS Systems, a telemarketer, obtained bank account information and engaged Modern Payments to cause Zions Bank to initiate unauthorized ACH debits from bank accounts. After the United States District Court for the Eastern District of Pennsylvania initially denied class certification due to a failure of commonality, Plaintiffs appealed. The Third Circuit remanded the action to the District Court, first finding that the district court applied the wrong standard of proof at the class certification stage, noting that perfect proof of Plaintiffs’ “complete sham” theory was not required, and the preponderance of evidence standard should be applied instead—the standard is
Page 5 KCC Class Action Digest not whether it is mathematically or scientifically possible that one of these telemarketers is not a ‘complete sham’, but rather that it must be established that it is more likely than not that each of the telemarketers and Defendants operated a ‘complete sham’ as alleged. The Court noted that Plaintiffs need not actually establish absolute proof of fraud at the certification stage; and the high transaction failure rates for the transactions in question could lead a court to conclude there was actual presumed conformance by Zions Bank and Modern Payments. In terms of commonality and predominance, the Court found that the district court improperly concluded that Plaintiffs’ evidence of the inordinate return rates for the transactions results in individualized inquiries as to each telemarketer sufficient to defeat commonality, reasoning that commonality does not require perfect identity of questions of law or fact among all class members, and that here the elements of a RICO claim satisfy commonality because even though there are slight variations in the telemarketers’ and Defendants’ conduct underlying the claims regarding the exact offer to Plaintiffs to get their account information, this case is not concerned with damages that result from the exercise of anyone’s discretion; and the sham theory here relies on a common mode of behavior and general policy of fraud.
RULE 68 OFFER Telephone Consumer Protection Act Bais Yaakov of Spring Valley v. ACT, Inc., No. 14-1789, 2015 WL 4979406 (1st Cir. Aug. 21, 2015) (Kayatta, J.). A private high school brought suit against a college entrance examination services provider for violation of the Telephone Consumer Protection Act, alleging that Defendant sent unsolicited faxes without notice of certain rights of the recipient as required by law. The District Court for the District of Massachusetts previously denied Defendant’s motion to dismiss, holding that an unaccepted offer of judgment did not moot Plaintiff’s claim. Defendant appealed, presenting the question of whether Defendant’s unaccepted offer for individual relief in a putative class action moots the action. The First Circuit affirmed the district court’s denial of Defendant’s motion to dismiss, holding that Defendant’s unaccepted and withdrawn Rule 68 offer did not moot this litigation. The Court first disregarded certain arguments put forth by Plaintiff, including that (1) regardless of the settlement offer it retains an outstanding economic interest under Roper in both sharing attorney’s fees with other class members and a possible incentive award for serving as lead plaintiff, noting that Roper has an uncertain future with the holding called into question in Genesis Healthcare; and (2) Plaintiff’s interest in having a class certified is sufficient to defeat Defendant’s mootness argument, reasoning that the First Circuit’s own decision in Cruz limits the inquiry to determining whether the named plaintiff’s individual claim was indeed fully resolved by the tendering of the Rule 68 offer. In support of its decision, the Court reasoned that an unaccepted Rule 68 offer cannot, by itself, moot a plaintiff’s claim, citing in support that all five circuit courts to consider whether a plaintiff who has refused a Rule 68 offer has “received complete relief” (such that there remains no individual case or controversy sufficient to satisfy Article III standing) rejected that contention. The Court further reasoned that (1) an unaccepted Rule 68 offer does not, in itself, provide any relief; (2) nothing in Rule 68 or any other rule contemplates use of a rejected offer to secure a dismissal of a case; (3) Rule 68 specifies a rejected offer is withdrawn and is not admissible; (4) Rule 68 leaves it to the plaintiff to decide whether to accept the offer or risk having to pay the costs incurred after the offer was made, even if the plaintiff wins the case; and (5) the offer amounted to far less than what Plaintiff claimed a right to recover, providing only a single statutory award for each missing notice instead of an award for each required element of the notice that was not sent. The
Page 6 KCC Class Action Digest Court further observed that Defendant never filed a motion nor did it amend its offer to clarify the disagreement about the measure of damages under the applicable statutes. The Court distinguished certain cases cited by Defendant, including Lewis, Already, and Overseas Military.
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Class Action Services
KCC Class Action Services partners with counsel to deliver high-quality, cost-effective notice and settlement administration services. Recognized as Best Claims Administrator by The Recorder, The National Law Journal, and The New York Law Journal, KCC has earned the trust and confidence of our clients with our track record as a highly responsive partner. As part of our commitment to practitioners, KCC provides this resource on decisions related to class action litigation in state and federal court. In addition to industry resources, KCC offers interactive CLE-accredited courses geared toward class action settlement administration and legal notification, some of which carry Professional Responsibility CLE credit. Go to www.kccllc.com/class-action/insights/continuing-education to learn more about our courses and schedule a CLE for your law firm or industry event.
INSIDE THIS ISSUE Consumer Finance
pg. 1
Employment
pg. 1
Fair Credit Reporting Act
pg. 2
Insurance Racketeering Influenced and Corrupt Organizations Act
pg. 4 pg. 4
Rule 68 Offer
pg. 5
This KCC Class Action Digest is provided by Patrick Ivie, Executive Vice President Class Action Services. To request a proposal, or schedule a CLE, contact Patrick at 310.776.7385 or [email protected]. @KCC_ClassAction
Subscribe or request to opt-out of the KCC Class Action Digest by sending an email to: [email protected].
Page 1 KCC Class Action Digest CONSUMER FINANCE Military Lending Act Cox v. Community Loans of America Inc., No. 14-12977, 2015 WL 5063167 (11th Cir. Aug 28, 2015) (Jordan, J.). Vehicle loan recipients brought suit against a vehicle-title loan company for violation of the Military Lending Act (“MLA”), specifically alleging that the vehicle-title loan transactions in question had an annual percentage rate of interest exceeding the statutory maximum permissible under the MLA. The District Court for the Middle District of Georgia previously held the damages sought were not merely incidental to equitable relief, denied Plaintiffs’ request to certify a class under Rule 23(b)(2) but nevertheless found certification of a Rule 23(b)(3) class warranted and certified a class. The certification order was appealed. The Eleventh Circuit affirmed the district court’s ruling, reasoning without in-depth explanation that the district court’s analysis of the Rule 23 prerequisites was sufficiently rigorous. The Court also held that an implied private right of action exists under the MLA, and therefore common issues of law exist for class adjudication because the text and structure of the MLA unambiguously confers on covered members of the armed forces and their dependents certain new legal rights and a private remedy, including the ‘right to rescind’ a contract void under the criteria of the statute.
EMPLOYMENT Bank Employees Bell v. PNC Bank, Nat’l Assoc., No 14-3018, 2015 WL 5093052 (7th Cir. Aug 31, 2015) (Rovner, J.). Bank employee brought class action for violations of the Fair Labor Standards Act, Illinois Minimum Wage Law and Illinois Wage Payment and Collection Act, specifically alleging that Defendant failed to pay overtime wages as part of a policy or practice that affected other employees. After the United States District Court for the Northern District of Illinois granted class certification, the Seventh Circuit took an appeal of the decision. The Seventh Circuit affirmed the grant of class certification, finding that the question of whether Defendant had an unofficial policy or practice that required employees class-wide to work off-the-clock overtime hours is a common question capable of class-wide resolution satisfying the commonality requirement, reasoning that case law is clear that these matters must be capable of proof at trial through evidence that is common to the class rather than individual to its members. The Court further reasoned that Plaintiff had offered evidence that the denial of overtime pay came from a broader company policy and not from the discretionary decisions of individual managers, in part based on Plaintiffs’ showing that Defendant regularly required off-the-clock work, including evidence that one regional manager told branch managers not to record overtime worked by their employees and many employees worked overtime without proper compensation. The Court also found predominance satisfied on grounds that the claim that PNC had an unofficial policy that left it liable would prevail or fail as a whole—if there was no common policy, then individuals would be left to claim a specific manager forced her to work off the clock, which is a different legal theory, and even if Defendant cured the issue by offering overtime pay, the evidence could leave a court to determine on the merits that remediation was necessary because of an unwritten policy, a willful policy (which could entitle class members to more damages) or whether Defendant’s written policy constitutes a defense. Accordingly, the Court ruled that the district court was correct to conclude that a class action would be an appropriate and efficient means to resolution.
Page 2 KCC Class Action Digest Truck Drivers Blair v. TransAm Trucking, Inc., No. 09-cv-2443, 2015 WL 5006076 (D. Kan. Aug. 20, 2015) (Melgren, J.). Truck drivers brought suit against trucking company for violations of the Fair Labor Standards Act (“FLSA”) and Kansas Wage Payment Act (“KWPA”), alleging that Defendant failed to pay minimum wages, failed to pay wages due, made improper deductions and misclassified Defendant truck leasers as independent contractors. Plaintiffs sought class certification of their KWPA claims and conditional certification of collective claims under the FLSA. The Court granted both class certification for the KWPA claims and conditional certification of collective claims under the FLSA. As a preliminary matter, the Court found it was not unfair to allow Plaintiff to amend the complaint and significantly alter the class definition, reasoning that the new definition narrows the class from the one proposed in the complaint, and it is early enough in the proceedings that Defendant will not be prejudiced. Turning to its certification decisions, the Court reasoned in support of Rule 23 class certification that the rule’s requirements were satisfied. In terms of numerosity, the Court found an estimated 1,000 class members sufficient. With respect to commonality, the Court found it satisfied on grounds that the common question is whether class members are employees or independent contractors. The Court then found typicality satisfied on grounds that the named plaintiffs have KWPA claims similar to those of other class members, and are not otherwise antagonistic to the class. The Court also found adequacy satisfied. Turning then to Rule 23(b), the Court found (based on analysis of Kansas Supreme Court decisions and also precedent from the Seventh Circuit Court of Appeals) that common issues predominate over individualized issues, noting that the relevant question is whether Defendant had the right to control, not whether it actually exercised control—and whether Defendant had the right to control can be determined from the applicable written independent contractor agreements, equipment lease agreements, and owner-operator handbook, all of which are substantially the same for all drivers. Next, the Court found superiority satisfied because Plaintiffs’ claims rely on much of the same evidence and will require many of the same witnesses. Turning then to conditional certification under the FLSA, the Court first found plaintiffs to be similarly situated, noting the presence of numerous, substantial allegations that the drivers were collectively the victims of a single decision, policy or plan, as they (1) all received the same training; (2) were provided with the same handbook of policies; (3) entered into the same independent contractor and equipment lease agreements; (4) were paid under similar per-mileage pay policies; (5) have essentially the same job duties of driving to make deliveries; (6) were classified as independent contractors and prohibited from driving for anyone other than Defendant; and (7) generally the allegation that Defendants were engaged in a pattern or practice of not paying overtime. The Court then approved the notice.
FAIR CREDIT REPORTING ACT Job Applicants Manuel v. Wells Fargo Bank, Nat’l Assoc., No. 14-cv-238, 2015 WL 4494549 (E.D. Va. Aug. 19, 2015) (Payne, J.). Job applicants brought suit against a bank for violation of the Fair Credit Reporting Act (“FCRA”), specifically alleging that Defendant procured consumer reports for employment purposes without meeting the delineated statutory requirements, and made adverse actions without providing the consumer a copy of the report or a description of their rights. Plaintiffs sought certification of both an Impermissible Use and an Adverse Action class.
Page 3 KCC Class Action Digest The Court certified the Impermissible Use class and modified the Adverse Action class definition. In support of its decision, the Court found the Impermissible Use class to be readily ascertainable in light of the fact that Defendant retains detailed employment and application records of all individuals rejected for employment, and also admitted that it can identify these current or prospective employees and also describes the process by which a criminal background check is conducted in its stipulations. The Court also found the Adverse Action Class to be ascertainable because “adverse action” is the equivalent of “rejected for hire” and no other adverse actions are contemplated. The class definition was modified to replace the term “adverse action” with “rejected for employment.” Turning then to the elements of Rule 23, the Court found the numerosity requirement satisfied for both proposed classes, reasoning that not only was it uncontested, but Defendant stipulated that (1) at least 1,000 current or prospective employees were subjected to the background check process and signed the waiver at issue for the Impermissible Use class; and (2) at least 1,000 current or prospective employees were notified that the applicant’s criminal background may preclude employment, and were mailed the relevant documents. In terms of commonality, the Court found the Impermissible Use class satisfied it, noting that the Court had previously held that the question of whether a standard waiver form violated 1681b(b)(2) was a common question, and served as a common question here. The Court likewise noted that the question of willfulness is also a common question when, as here, there is no contention Defendant’s state of mind varied in any way toward individual consumers. Next, the Court found the Adverse Action class satisfied commonality on grounds that the question of whether Defendant’s actions violated §1681b(b)(3)(a) was common to the class. Furthermore, any issues raised by Defendant need not be resolved by the Court in an individualized manner and can largely be resolved by the joint stipulations and undisputed testimony. The Court further noted that all class members will have suffered an adverse action in the relevant time period, and the adverse action for all was rejection of employment. Here the Court noted that Defendant had stipulated to the fact that the initial Pre-Adverse Action Notice was sent automatically after an employee was marked ineligible for employment as part of standard policy and procedure; if the FCRA was violated, that violation happened when the code for ineligible was entered by one of Defendant’s employees, not when an applicant received the applicable letter. In terms of typicality, for both the Impermissible Use and Adverse Action classes, the Court found it satisfied, noting in support of its ruling in the context of the Impermissible Use Class that (1) all members of the proposed class assert identical claims under 1861b(b)(2) and signed identical forms containing the same language that would be at issue in this case; (2) there are no factual differences between Plaintiff’s claims and the class members’ claims; and (3) the issue of willfulness would also likely satisfy the typicality requirement. In terms of the Adverse Action class, the Court reasoned that the FCRA was violated when Defendant’s employee labeled an applicant as ineligible for hire in its systems before a letter was sent out. The Court noted that the procedures by which an individual was rejected were standardized and subjected to the same timeline of procedures. After quickly finding adequacy satisfied, the Court turned to predominance, finding it satisfied for the Impermissible Use class because each class member’s case is based on the same FCRA disclosure form and thus, the form will have a direct impact on every class member’s effort to establish liability. Likewise, the Court found predominance satisfied for the Adverse Action class in light of Plaintiff’s contention that Defendant always entered the ineligible for employment code before sending the adverse action notice, which itself was the adverse action, thus exposing class members to the same risk of harm every time Defendant did so. The Court also noted that all putative class members share the same adverse action—rejection of employment— and no individualized inquiry is necessary to determine when a class member received the relevant FCRA disclosures or to determine the issues of willfulness (as Defendant had standardized procedures). Finally, the question of statutory damages may be individualized, but is minimally influential in the predominance analysis.
Page 4 KCC Class Action Digest The Court then found superiority satisfied, observing that (1) class members’ claims for statutory damages are small when compared to the effort it would take to assert them individually in court; (2) many plaintiffs will not be aware that their rights were violated because of the technical nature of the FCRA; (3) a class action would preserve judicial economy, potentially enabling settlement of the aforementioned class-wide issues; (4) individual members are likely to receive the same award in class litigation; there is no related litigation pending that bears on this analysis; with class members located across the country; (5) it is desirable to hear the case in one forum for consolidated resolution; and (6) the similarity of the factual and legal issues indicates a class action would be manageable from the parties’ and court’s perspective.
INSURANCE Meyer v. American Family Mutual Ins. Co., No. 14-cv-05305, 2015 WL 5156594 (W.D. Wash. Sep. 2, 2015) (Leighton, J.). Auto insured brought suit against insurance company for violation of the Washington Administrative Code 284-30-350(1), specifically alleging that Defendant failed to disclose the availability of diminished value compensation to its insureds, and if pressed to pay this benefit, failed to pay the benefit fairly and adequately. Plaintiffs sought class certification. The Court granted class certification. First considering numerosity, the Court noted Defendant conceded it and further noted that it appeared to be satisfied based upon the numbers of underinsured motorist coverage for property damage (UIM PD) claims made in the State of Washington under Defendant’s policies during the proposed class period. Commonality was also satisfied, on grounds that there were numerous common questions at issue, including (1) whether Defendant violated the Washington Code by failing to disclose the availability of a diminished value benefit to its insured; (2) whether Defendant’s procedure for responding to a diminished value claim is appropriate; and (3) whether diminished value compensation, when given, was adequate. The Court then noted that typicality was satisfied in light of the fact that Plaintiff’s claims that Defendant fails to both inform their insureds of their right to receive diminished value compensation, as well as fails to fairly and adequately compensate those who request this benefit mirror the absent class members’ claims. Turning then to predominance, the Court found it satisfied on grounds that the aforementioned common issues predominate over any individualized damage disputes, as certification will not impede Defendant’s ability to defend against individual claims. Next, the Court found the superiority requirement satisfied because it is desirable to concentrate these identical claims in a class action rather than have individuals adjudicate their claims separately for a small amount of damages.
RACKETEERING INFLUENCED AND CORRUPT ORGANIZATIONS ACT Reyes v. NetDeposit, LLC, No. 14-1228, 2015 WL 5131287 (3d Cir. Sep. 2, 2015) (McKee, J.). Bank customers brought class action against a bank and payment-processor subsidiaries alleging civil violations of the Racketeering Influenced and Corrupt Organizations Act (“RICO”). Specifically, Plaintiffs allege NHS Systems, a telemarketer, obtained bank account information and engaged Modern Payments to cause Zions Bank to initiate unauthorized ACH debits from bank accounts. After the United States District Court for the Eastern District of Pennsylvania initially denied class certification due to a failure of commonality, Plaintiffs appealed. The Third Circuit remanded the action to the District Court, first finding that the district court applied the wrong standard of proof at the class certification stage, noting that perfect proof of Plaintiffs’ “complete sham” theory was not required, and the preponderance of evidence standard should be applied instead—the standard is
Page 5 KCC Class Action Digest not whether it is mathematically or scientifically possible that one of these telemarketers is not a ‘complete sham’, but rather that it must be established that it is more likely than not that each of the telemarketers and Defendants operated a ‘complete sham’ as alleged. The Court noted that Plaintiffs need not actually establish absolute proof of fraud at the certification stage; and the high transaction failure rates for the transactions in question could lead a court to conclude there was actual presumed conformance by Zions Bank and Modern Payments. In terms of commonality and predominance, the Court found that the district court improperly concluded that Plaintiffs’ evidence of the inordinate return rates for the transactions results in individualized inquiries as to each telemarketer sufficient to defeat commonality, reasoning that commonality does not require perfect identity of questions of law or fact among all class members, and that here the elements of a RICO claim satisfy commonality because even though there are slight variations in the telemarketers’ and Defendants’ conduct underlying the claims regarding the exact offer to Plaintiffs to get their account information, this case is not concerned with damages that result from the exercise of anyone’s discretion; and the sham theory here relies on a common mode of behavior and general policy of fraud.
RULE 68 OFFER Telephone Consumer Protection Act Bais Yaakov of Spring Valley v. ACT, Inc., No. 14-1789, 2015 WL 4979406 (1st Cir. Aug. 21, 2015) (Kayatta, J.). A private high school brought suit against a college entrance examination services provider for violation of the Telephone Consumer Protection Act, alleging that Defendant sent unsolicited faxes without notice of certain rights of the recipient as required by law. The District Court for the District of Massachusetts previously denied Defendant’s motion to dismiss, holding that an unaccepted offer of judgment did not moot Plaintiff’s claim. Defendant appealed, presenting the question of whether Defendant’s unaccepted offer for individual relief in a putative class action moots the action. The First Circuit affirmed the district court’s denial of Defendant’s motion to dismiss, holding that Defendant’s unaccepted and withdrawn Rule 68 offer did not moot this litigation. The Court first disregarded certain arguments put forth by Plaintiff, including that (1) regardless of the settlement offer it retains an outstanding economic interest under Roper in both sharing attorney’s fees with other class members and a possible incentive award for serving as lead plaintiff, noting that Roper has an uncertain future with the holding called into question in Genesis Healthcare; and (2) Plaintiff’s interest in having a class certified is sufficient to defeat Defendant’s mootness argument, reasoning that the First Circuit’s own decision in Cruz limits the inquiry to determining whether the named plaintiff’s individual claim was indeed fully resolved by the tendering of the Rule 68 offer. In support of its decision, the Court reasoned that an unaccepted Rule 68 offer cannot, by itself, moot a plaintiff’s claim, citing in support that all five circuit courts to consider whether a plaintiff who has refused a Rule 68 offer has “received complete relief” (such that there remains no individual case or controversy sufficient to satisfy Article III standing) rejected that contention. The Court further reasoned that (1) an unaccepted Rule 68 offer does not, in itself, provide any relief; (2) nothing in Rule 68 or any other rule contemplates use of a rejected offer to secure a dismissal of a case; (3) Rule 68 specifies a rejected offer is withdrawn and is not admissible; (4) Rule 68 leaves it to the plaintiff to decide whether to accept the offer or risk having to pay the costs incurred after the offer was made, even if the plaintiff wins the case; and (5) the offer amounted to far less than what Plaintiff claimed a right to recover, providing only a single statutory award for each missing notice instead of an award for each required element of the notice that was not sent. The
Page 6 KCC Class Action Digest Court further observed that Defendant never filed a motion nor did it amend its offer to clarify the disagreement about the measure of damages under the applicable statutes. The Court distinguished certain cases cited by Defendant, including Lewis, Already, and Overseas Military.
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