Class Action Quarterly Update - Fall 2016

Class Action Defense Alert

Overall Trends

Class action filings during the fall of 2016 continued to be dominated by Telephone Consumer Protection Act (“TCPA”) cases. As of October 1, 2016, nearly 150 cases have been filed; these filings are both daily in frequency and nationwide in scope.[1] Whereas prior monthly trends have shown a similarity of defendants, this fall’s targeted companies run the gambit from food service providers to commercial insurers. Given the mass proliferation of these cases at both a state and federal level nationwide, it is clear that TCPA filings are not a short-lived trend.

Despite the September 2016 decision in Brazil v. Dole, No. 14-17480 (9th Cir. Sept. 30, 2016), “All Natural” litigation continues to be prevalent throughout the United States. While there appears to have been a slight decline in the volume of cases filed in the 9th Circuit, litigation elsewhere is on the rise, particularly in New York – where 9 cases were seen last quarter.

“Slack-fill” litigation, which saw a rise beginning in roughly the summer of 2015, has continued through the last quarter.  Although these cases do not generally result in success for the plaintiffs because of the number of valid justifications manufacturers can rely on for the slack (see Bautista v. CytoSport Inc., Case No. 7:15-cv-09081 (S.D.N.Y.); 21 C.F.R. § 100.100), they continue to drive up litigation costs for food, beverage, and cosmetics manufacturers. 

There has also been an uptick in false advertising litigation as it pertains to products touted as being eco-friendly in some fashion. With the rise in environmental awareness and the availability of these supposedly eco-friendly options, this ilk of litigation may become a mainstay. A high volume of these cases target automobile manufacturers; representations pertaining both to emissions compliance and to fuel efficiency are under fire. Given California’s notoriously stringent emissions standards, it should come as no surprise that 13 out of the 18 cases filed in the past 3 months were all filed in California. Similar allegedly false energy efficiency claims are also being aimed at electronics manufacturers who have represented that their products are compliant with Energy Star standards or may otherwise reduce energy use. A total of 4 such cases were filed in the last quarter.  

Change on the Horizon?

Data breach class actions are also increasingly a trend to watch. While the relative percentage of these data breach class actions may be low, such claims may become more prolific in 2017. A number of cases with important implications for the viability of data breach class actions – particularly focused on the issue of standing requirements – will come up for decision in the coming months. The Fourth Circuit heard oral argument in Beck v. McDonald, Case No. 15-1395/15-1715 related to issues surrounding standing in September 2016 in connection with a case concerning the theft of a hospital laptop containing medical information pertaining to the plaintiffs. Alleruzzo v. Supervalu, Case No. 16-2378/16-2528, a case involving hacked payment card information, has been fully briefed in the Eighth Circuit and will be argued in 2017. Again, one of the primary issues on appeal is standing. Lastly, Attias v. CareFirst, Case No. 16-7108, a class action involving a data breach in connection with a health care insurer, is pending in the District of Columbia Circuit and will be briefed in early 2017. In the coming months, Spokeo may become a smaller part of standing analysis when it comes to data breach class actions.

A Note on Data Compilation 

As part of an ongoing effort to monitor, track, and anticipate trends in class action litigation, Orrick has been tracking all class action filings throughout the United States, including both those cases filed at the state and the federal level. Using Courthouse News Service, Orrick receives daily notifications for each case designated as a class action.[2] Orrick then individually reviews and categorizes the information gleaned and the cases are filtered down to a subset of cases of interest, specifically excluding securities class actions,[3] Fair Debt Collection and Fair Credit Reporting Act class actions, Americans with Disabilities Act and Employee Retirement Income Security Act class actions, low value labor & employment cases filed against individual restaurants, salons, or small entities, and TCPA lawsuits filed specifically against collection agencies. This quarterly update is a high level summary of trends noted across those cases, and the numbers of filings are only representative of such trends.

[1] This number excludes TCPA suits against collection agencies.

[2] Courthouse News Service is a nationwide news service for both lawyers and the news media focused on civil litigation. Instead of aggregating data prepared by various content reporters, Courthouse News publishes its own original news content prepared by its staff of reporters and editors based across the country.

[3] Orrick’s Securities Group maintains its own monitoring efforts for relevant class action activity.