Class Dismissed: A Closer Look at Recent Changes in Class Action Litigation

Last fall, we noted a number of class action-related issues in front of the United States Supreme Court and several amendments to Rule 23 being considered by the Federal Civil Rules Advisory Committee. Although the Advisory Committee has not yet made any concrete revisions to Rule 23, two class action cases which had been pending in front of the Supreme Court for some time have now been decided. One of the opinions issued by the Court favored class-action plaintiffs, while the other was more business-friendly. As outlined below, the recent SCOTUS decisions and Advisory Committee considerations will have an impact on class action litigation going forward in at least three ways. Specifically, during the 2015-2016 term, the Supreme Court held the following:

• 1) Defendants now cannot use an offer of judgment to moot a class action. Previously, courts were split about whether a class action defendant could use a Rule 68 offer of judgment to moot a class action case. In Campbell - Ewold Co. v. Gomez, the Court definitively rejected using an offer of judgment for this purpose. No. 14-857 (2016). The Court instead held that a defendant’s unaccepted offer of judgment has no force because both parties still have a concrete interest in the outcome of the case.

• 2) Plaintiffs cannot rely on mere statutory violations to create a class; they must still show particularized injury. In Spokeo, Inc. v. Robins, the Court held that class-action plaintiffs must show that they suffered concrete and particularized injury -- that is, an injury that actually exists -- in order to certify a class. No. 13-1339 (2016). A hypothetical or conjectural injury is not sufficient to justify class certification.

And while the Supreme Court moved ahead, by way of contrast, the Civil Rules Advisory Committee tabled a number of class-action-related amendments it had initially put under consideration, including Rule 23 amendments related to offers of judgment, but did leave one important issue open:

• 3) Addressing bad faith objectors to class action settlements. The Civil Rules Advisory Committee has continued substantive discussions about issues that are created by bad faith class action objectors, and noted that the Committee members are nearly unanimous in their support for reform. A number of Committee members recommended requiring district court approval of any payment to objectors made in exchange for withdrawing an appeal or objection. Others suggested that sanctioning lawyers representing bad faith objectors might help address the problem. The Committee is currently working on a new draft of the Rule to address the issues created by bad faith objectors; however, no concrete changes have been approved so far.

These changes to class actions present opportunities and challenges. We will watch to see how these cases play out in the lower courts, and whether the Committee follows through in adopting changes, and will provide an update on where things stand later in the year.

For additional information and discussion on this topic, please get in touch with your regular Calfee contact or one of the attorneys listed below: Mitchell G. Blair 216.622.8361 mblair@calfee.com Fritz E. Berckmueller 216.622.8671 fberckmueller@calfee.com This alert is provided by Calfee, Halter & Griswold LLP for education and information purposes only. This alert is not intended to provide legal advice on specific subjects. The resolution of legal issues depends upon the specific facts of a particular situation and the laws involved and prior results do not guarantee a similar outcome. This alert may be considered advertising under applicable laws. Some links within this alert may lead to web sites. Calfee, Halter & Griswold LLP does not necessarily sponsor, endorse or otherwise approve of the materials appearing in such sites. All trademarks and copyrighted material are the property of their respective owners and the use of such material in this alert, articles, or by Calfee, Halter & Griswold LLP is for informational purposes only and does not indicate sponsorship or endorsement by the trademark or copyright holder of either Calfee or the content of this alert.