Gibbons Law Alert

Gibbons Law Alert

Category: Class Action Defense

Supreme Court to Finally Decide Definition of Autodialer in TCPA Litigation

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Posted in Class Action Defense

On August 11, 2020

On July 9, 2020, the U.S. Supreme Court granted a long-pending petition for certiorari in Facebook Inc. v. Duguid, Noah, et al. to address a hotly debated question in Telephone Consumer Protection Act (TCPA) litigation: “whether the definition of [automated telephone dialing system] encompasses any device that can ‘store’ and ‘automatically dial’ telephone numbers, even if the device does not ‘us[e] a random or sequential number generator.’” The grant of certiorari comes on the heels of the Court’s sweeping decision in Barr v. American Ass’n of Political Consultants, severing the government debt collection exception to the TCPA’s “autodialer” prohibition as a content-based restriction on free speech. The TCPA broadly prohibits most calls using any ATDS or autodialer, defined by statute as “equipment which has the capacity – (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” Given the lack of clarity in the statutory language, courts have grappled with whether “a random or sequential number generator” must be used to only “store” the numbers, or only to “produce” the numbers, or to “dial” the numbers after having “randomly or sequentially” generated or produced them. Further complicating court interpretations is the FCC’s interpretations stating that a dialing system known as a “predictive...

Third Circuit Affirms Class Certification in In re Suboxone Antirust Litigation

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Posted in Class Action Defense

On August 10, 2020

On July 28, 2020, the Third Circuit in In re Suboxone (Buprenorphine Hydrochloride & Nalaxone) Antitrust Litigation, affirmed certification of a direct purchaser class, concluding that common evidence existed to prove the plaintiffs’ antitrust theory and resulting injury and that the proposed class representative, Burlington Drug Company, Inc., was an adequate class representative. The direct-purchaser plaintiffs alleged that the defendant drug manufacturer of the opioid-treatment drug, Suboxone, engaged in anticompetitive conduct that impeded the entry of generic versions of the drug into the market. Specifically, plaintiffs asserted that defendant “shifted the market” from Suboxone tablets to Suboxone film by the time generic tablets entered the market, thereby maintaining a monopoly and suppressing competition. According to plaintiffs, the defendant’s transition from tablets to film was coupled with six tactics to “eliminate demand for Suboxone tablets and to coerce prescribers to prefer film,” including making false statements about the safety of the tablets and withdrawing brand-name Suboxone tablets from the market. The plaintiffs argued that due to defendant’s anticompetitive conduct, they paid more for brand Suboxone products than they would have for generic tablets. The district court certified the class, and the Third Circuit granted the defendant’s petition for leave to appeal under Rule 23(f). First, the Third Circuit addressed defendant’s argument that plaintiffs did not provide...

Supreme Court Severs TCPA’s Government Debt-Collection Exception as Content-Based Restriction on Free Speech, but Leaves Autodialer Restriction

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Posted in Class Action Defense

On July 16, 2020

The Supreme Court of the United States recently analyzed the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, et seq., highlighting the importance of the Act’s ban on “robocalls,” (i.e., calls placed using an “automatic telephone dialing system” or “autodialer”), but leaving key questions unanswered. In Barr v. American Association of Political Consultants, Inc., the Court upheld the TCPA but severed Congress’s 2015 amendment that allowed entities to make robocalls to collect government-backed debt. Enacted in 1991, the TCPA generally prohibits robocalls to cell phones and home phones. At the heart of the Court’s opinion here was the decision whether to uphold Congress’s 2015 amendment which allowed an exception to the general ban on robocalls for entities collecting government-backed debt. The plaintiffs, organizations that participate in the political system, make calls to citizens for a multitude of purposes, such as discussing political issues, soliciting donations, and conducting polls. If robocalls to cellphones were allowed for political outreach, the plaintiffs believe that their efforts would be more effective and efficient. The plaintiffs filed a declaratory judgment action against the U.S. Attorney General and the Federal Communications Commission to invalidate the TCPA’s entire 1991 autodialer restriction, arguing that allowing certain entities to make robocalls to collect government-backed debt, but prohibiting other robocalls, was a content-based restriction...

New Jersey Supreme Court Holds That Individualized Proof of Damages Is Required Absent a Basis for Presumption of Class-Wide Damages Capable of Reliable Mathematical Calculation

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Posted in Class Action Defense

On July 2, 2020

In Little v. Kia Motors America, Inc., a litigation spanning nearly two decades, the New Jersey Supreme Court held that, although aggregate proof of damages can be appropriate in some settings, individualized proof of damages based on the actual costs incurred by the class members was required in the case before it. Class members had to show they incurred “actual costs” as a result of an alleged defect in order to recover damages. In 2001, plaintiff filed a putative class action asserting breach of warranty and other claims on her behalf and on behalf of other New Jersey owners and lessees of certain Kia models. Plaintiff alleged that the vehicles had a defective brake system which rendered the vehicles’ front brakes susceptible to premature wear. After a four-week trial, the jury returned a verdict in favor of plaintiff and the class on the class-wide warranty claim, awarding zero damages for alleged diminution-in-value but $750 per class member on the out-of-pocket loss theory, which had been premised on an expert’s estimate of the amount of money an average owner would pay for brake repairs over the vehicles’ lives as a result of the alleged defect. On defendant’s motion for a new trial and to decertify for purposes of repair damages, the trial court decertified the class...

District of New Jersey Denies Class Certification in Product Defect Case Against BMW

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Posted in Class Action Defense

On June 12, 2020

The District of New Jersey recently denied class certification in a putative class action alleging a product defect in BMW engines. Afzal v. BMW of North America, LLC concerned whether BMW defectively designed its car engine so that a component wears out too quickly and failed to disclose that defect to purchasers. Two Plaintiffs, both California residents who allegedly suffered premature rod bearing wear, filed a putative class action raising various causes of action including violations of several California consumer protection statutes, breach of warranty, and fraud. Plaintiffs sought certification of two classes: (1) the Dealership Class and (2) the Warranty Class. The “Dealership Class” was defined as: “All persons who after November 12, 2011, purchased a model year 2008 to 2013 BMW M3 (the “Class Vehicle”) in California from an authorized BMW dealership, and who resided in California at the time of that purchase, and who as of the date of the Court’s Certification Order, either 1. Currently owns a Class Vehicle with 120,000 miles or less; or 2. Currently or formerly owned a Class Vehicle and, when the Class Vehicle had 120,000 miles or less, incurred out-of-pocket costs to replace the connecting rod bearings in the Class Vehicle.” The “Warranty Class” was defined as: “All persons who after November 12, 2011, purchased a...

Third Circuit Clarifies How Arbitration Language Should be Presented to Consumers

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Posted in Class Action Defense

On May 28, 2020

The Third Circuit recently issued a precedential decision further explaining the requirements when presenting consumers with otherwise enforceable language requiring arbitration. In Bacon v. Avis Budget Group Inc., six plaintiffs rented cars from defendant Payless Car Rental, Inc., a subsidiary of defendant Avis Budget Group, Inc. At the rental counter, plaintiffs each signed identical one-page rental agreements, which, among other things, itemized charges and fees and showed whether the customer had accepted or declined certain products and services. Each plaintiff signed below the final paragraph, which provided: “I agree the charges listed above are estimates and that I have reviewed & agreed to all notices & terms here and in the rental jacket.” The rental jackets were kept at the rental counter, typically near the rental associate’s computer terminal or printer. The rental associates were trained to give a rental jacket to each customer after the customer signed the agreement and to any customer who requested one, but the associates were not trained to alert customers to the additional terms in the rental jacket. The rental associates said nothing about the rental jacket when plaintiffs reviewed their agreements. After plaintiffs signed their agreements, the rental associate folded the agreement into thirds, placed it into the rental jacket, and handed the jacket to plaintiffs. The rental...

Third Circuit Holds Solicitations to Purchase Products and for Participation in Surveys can be Advertisements Under the TCPA

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Posted in Class Action Defense

On May 27, 2020

On May 15, 2020, the Third Circuit in Fishbein v. Olson Research Group, Inc. held “that solicitations to buy products, goods, or services can be advertisements under the TCPA and that solicitations for participation in . . . surveys in exchange for [money] by the sender were for services within the TCPA” making such solicitations advertisements that fall within the TCPA’s ambit. This opinion comes just one year after the Third Circuit issued its precedential decision in Mauthe v. Optum, Inc., holding that, in order for a fax to be considered an advertisement under the TCPA, “there must be a nexus between the fax and the purchasing decision of an ultimate purchaser whether the recipient of the fax or a third party,” meaning that “the fax must promote goods or services to be bought or sold, and it should have profit as an aim.” The consolidated appeal in Fishbein arose from two District Court decisions, Fishbein v. Olson Research Group, Inc., which involved a fax offering the recipient money in exchange for participating in a medical study, and Mauthe v. ITC, Inc., which involved faxes that offered the recipient money in exchange for completing surveys. After applying the Third Circuit’s precedential opinion in Optum, the District Courts dismissed the plaintiffs’ cases under Federal Rule of...

Second Circuit Affirms Expansive Reach of Preemption Provision of Food Drug and Cosmetic Act, Defeating False Labeling Class Action Premised Upon Consumer Protection Statutes

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Posted in Class Action Defense

On May 15, 2020

On May 11, 2020, the Second Circuit in Critcher v. L’Oréal USA, Inc., affirmed the dismissal of a putative class action, holding that the broad preemption clause of the Food Drug and Cosmetic Act (“FDCA”), 21 U.S.C. § 379s, barred plaintiffs from seeking to impose additional or different labeling requirements through their state consumer protection law claims, where Congress and the FDA already had provided for specific labeling requirements. In Critcher, purchasers of the defendant’s “liquid cosmetics” products claimed that while the net-quantities on the products’ labels were accurate, the product packaging was misleading because it omitted critical information that the creams could not be fully dispensed from the containers. Because they could not utilize the represented quantity of product, the plaintiffs claimed that they were deceived into buying more of the cosmetics than they could use. The District Court dismissed the complaint, concluding, among other things, that the claims were expressly preempted by the FDCA, and alternatively, preempted by the Federal Packaging Labeling Act (FPLA), 15 U.S.C. § 1451, et seq. On appeal, the plaintiffs argued that mere compliance with that net quantity disclosure requirement was not enough because it had the effect of making the packaging misleading in that a consumer would think the amount identified on the label is the amount accessible....

Does “100% Natural” Mean “No GMOs”? First Circuit Holds That Deceptive Label Claim Not Barred Where FDA Leaves Question Unresolved

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Posted in Class Action Defense

On May 12, 2020

On May 7, 2020, the First Circuit in Lee v. Conagra Brands, Inc., reversed the dismissal of a consumer fraud class action on the ground that the complaint plausibly stated that the product’s “100% Natural” statement may be deceptive to a consumer where the product contains genetically modified organisms (GMOs). In Lee, the plaintiff claimed that a “100% Natural” representation on the product label for Wesson Oil enticed her to buy the product because it indicated to her that the oil was GMO-free, when in fact it was not. She filed a class action alleging unfair or deceptive trade practices in violation of the Massachusetts consumer fraud law, Chapter 93A. The district court granted Conagra’s motion to dismiss, finding that the “100% Natural” language was “consistent with the FDA’s longstanding policy for the use of the term ‘natural’ on the labels of human food.” Additionally, the district court held that the FDA does not require a product to disclose on its label the use of GMOs. An act or practice violates Chapter 93A if it is “either unfair or deceptive.” The First Circuit’s decision addressed only the “deceptive” prong as plaintiff failed to raise, and thus waived, any argument that the label was “unfair.” Noting that its “analysis begins and ends with the allegations in...

Third Circuit Reverses Class Certification in In re Lamictal Direct Purchaser & Antitrust Consumer Litig.; Next up, In re Suboxone

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Posted in Class Action Defense

On May 6, 2020

On April 22, 2020, the Third Circuit in In re Lamictal Direct Purchaser & Antitrust Consumer Litig., reversed class certification, concluding that the evidence did not establish that common proofs could be used to prove class-wide injury. The circuit court faulted the district court’s predominance analysis for failing to resolve factual disputes, weigh competing expert evidence, and make a prediction as to how these issues would play out at trial. Central to the ruling was the issue of antitrust impact. After brand and generic pharmaceutical manufacturers of the prescription drug Lamictal, or generic lamotrigine, settled a patent litigation, direct purchasers of these drugs sued claiming the settlement violated the antitrust laws as an impermissible “reverse payment agreement.” The brand manufacturer was alleged to have “paid” the generic to stay out of the market by promising not to launch an authorized generic (“AG”). The direct payor plaintiffs argued that they paid more for the drugs than they would have otherwise based on the theory that, on average, the price of a generic is lower when there are two generics rather than just one. The Third Circuit granted the manufacturer-defendants’ petition for leave to appeal under Rule 23(f). First, the Third Circuit rejected direct purchasers’ argument that certification was controlled by a comment in Tyson Foods v....

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