Lex Arbitri

Several recent cases arising under the federal Food, Drug, and Cosmetic Act (“FDCA” or the “Act”), 21 U.S.C. § 301 et seq., highlight the usefulness of preemption as a defense against putative class actions concerning drugs, cosmetics, dietary supplements, medical devices, and other consumer products subject to the Act. The FDCA provides for exclusive enforcement by the FDA and has no private right of action. Implied preemption also extends to state law claims based on allegations that the defendant violated FDA regulations. Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 349 n.4 (2001) (citing 21 U.S.C. §337(a)) (“The FDCA leaves no
Continue Reading FDCA Preemption: A Powerful Tool for Defending Class Actions

False advertising and labeling consumer class actions filed against consumer packaged goods companies have surged in the last few years, with more than 300 new cases filed each year since 2021. More than a quarter of these have been filed in California federal courts. A key question in many of these cases is what information the reasonable consumer would read and rely on from the product packaging. In June 2023, the Ninth Circuit weighed in on this topic, providing helpful guidance to companies.
Continue Reading The Ninth Circuit Declares that Ambiguity can be Cured with Back Label

The Ninth Circuit recently struck a blow against plaintiffs’ attorneys’ ability to recover handsome attorney’s fee awards in class action settlements when there is little actual benefit to the class. In Lowery v Rhapsody International, Inc., No. 22-15162 (9th Cir. June 7, 2023), a Ninth Circuit panel reversed the U.S. District Court for the Northern District of California’s award of $1.7 million in attorney’s fees to plaintiffs’ counsel in a copyright class action, finding that the fee award was not reasonable when compared to the class’ actual recovery of $52,841, without any injunctive relief.
Continue Reading Ninth Circuit Slashes Exorbitant Attorney’s Fee Award That Would “Make the Average Person Shake Her Head in Disbelief”

Blockbuster Video may be extinct, but an obscure law designed to protect the privacy of video-tape renters is very much alive—the Video Privacy Protection Act (“VPPA”), 18 U.S.C. § 2710, et seq. Enacted in 1988 after The Washington Post published a profile of Supreme Court nominee Robert Bork’s video-rental history, VPPA prohibits any “video tape service provider” from knowingly disclosing a consumer’s personally identifiable information (“PII”) to a third party without the consumer’s express consent. The VPPA entitles prevailing plaintiffs to liquidated damages of $2,500 per violation.
Continue Reading Cutting the Cord on Video Privacy Protection Act Claims – The Emerging Non-Consumer Defense

In recent years, website operators have increasingly used chatbots to improve customer engagement and provide customer support. In the past several months, however, the plaintiffs’ bar has expressed concerns about the privacy implications of these chatbots, and has brought a wave of litigation challenging their use under the California Invasion of Privacy Act (CIPA).
Continue Reading The Tides are Turning on a Wave of California Privacy Litigation

In Oberstein v. Live Nation Ent. Inc. No. 21-56200 (9th Cir. Feb. 13, 2023), the Ninth Circuit addressed the question of whether the arbitration and class action waiver clauses on Ticketmaster’s and Live Nation’s websites effectively prevented plaintiffs from bringing suit. Plaintiffs in the case sought to bring a class action lawsuit against Ticketmaster and Live Nation alleging as the basis for antitrust claims that the companies used their market power to charge above-market prices for concert tickets. Ticketmaster and Live Nation sought to compel the named plaintiffs to individual arbitration under the binding arbitration and class action waiver clauses
Continue Reading Ninth Circuit Decision in Live Nation and Ticketmaster’s Favor Highlights Subtleties of Drafting Enforceable Arbitration Provisions

Among other things, the federal TCPA imposes liability for calling/texting cell phone numbers using an Automatic Telephone Dialing System (“ATDS”) without sufficient prior express consent. As defined by the TCPA, ATDS is “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.” The TCPA grants a private right of action and allows a plaintiff to recover statutory penalties of $500 per call/text in violation, or up to $1,500 for a knowing or willful violation. These statutory penalties have made the TCPA a favorite among
Continue Reading The Ninth Circuit Further Narrows The Meaning Of ATDS Under The Telephone Consumer Protection Act

On June 13, 2022, the Supreme Court issued its highly anticipated decision on the issue of whether 28 U.S.C. § 1782 permits district courts to order discovery for use in international commercial arbitration or ad hoc investment arbitration. See ZF Automotive, Inc. v. Luxshare, Ltd., 142 S.Ct. 2078 (2022). In a unanimous opinion authored by Justice Amy Coney Barrett, the Court held that section 1782 does not authorize discovery for use in those two forms of international arbitration because only a governmental or intergovernmental adjudicative body qualifies as a “foreign or international tribunal.”
Continue Reading The Supreme Court Rules That § 1782 Does Not Apply to Private Arbitrations

On December 10, 2021, the U.S. Supreme Court granted certiorari in two cases to determine whether district courts can compel discovery proceedings in private foreign arbitrations. The two consolidated cases are ZF Automotive US, Inc., et al. v. Luxshare, Ltd. and AlixPartners, LLP, et al. v. The Fund for Protection of Investors’ Rights in Foreign States.
Continue Reading Supreme Court Set To Resolve Circuit Split Concerning Foreign Arbitration Discovery Rules

Since 2019, a staggering number of “flavor” lawsuits have been filed, with dozens of putative class actions filed in a single month and more than 100 in 2021 alone.  While some lawyers appear to have an insatiable appetite for filing these suits, courts appear to find them mostly unpalatable.  The complaints  allege that packaging on food and beverage items is false and misleading because the challenged products do not contain certain ingredients or because the flavor is achieved by using ingredients other than or in addition to what consumers “expect” to be the source of the flavor.  Manufacturers of plant
Continue Reading Are Flavor Cases Fizzling? Two More Courts Grant Motions to Dismiss

In Brice v. Haynes Investments LLC, No. 19-15707 (9th Cir. Sept. 16, 2021), the Ninth Circuit considered an appeal by shareholders in Native American tribe-linked online lenders of a district court order denying the shareholders’ motion to compel arbitration. The Ninth Circuit reversed the order because, under the terms of the parties’ agreement, the enforceability of the arbitration agreement was a question for the arbitrator, not the judge, to decide.
Continue Reading Class Action Waivers Redux: Ninth Circuit Upholds Arbitration Provision Delegating Enforceability Determination to Arbitrator

Continuing the trend of recognizing Illinois’ Biometric Information Privacy Act (“BIPA”) as a muscular privacy-protective statute, the Illinois Appellate Court for the First District has ruled that the most common statutory violations of BIPA are subject to a five-year statute of limitations. BIPA imposes several duties on companies that collect, store or use biometric data—e.g., fingerprints, facial geometry scans—from Illinois residents. Prevailing plaintiffs may recover liquidated damages ranging from $1,000 to $5,000 for each BIPA violation (plus attorneys’ fees), and these provisions incentivize plaintiffs’ lawyers to bring BIPA claims as class actions.
Continue Reading Illinois Appellate Court Affirms 5-Year Statute of Limitations Period for Certain BIPA Claims

On August 12, 2021, the Ninth Circuit Court of Appeals decided whether Washington state law reverse-preempts the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), in which case the state law would bar the enforcement of arbitration clauses in insurance contracts in states with similar anti-arbitration laws. CLMS Management Services LP et al. v. Amwins Brokerage of Georgia LLC et al., –F.4th—, 2021 WL 3557591 (9th Cir. 2021).  While the Ninth Circuit agreed with the defendants that state law does not reverse-preempt the Convention, plaintiffs have indicated that they will seek review in
Continue Reading Supreme Court May Be Asked to Decide Whether State Insurance Laws Reverse-Preempt the New York Convention

The Supreme Court further limited consumer lawsuits in TransUnion, LLC v. Ramirez, siding with credit reporting agency TransUnion in a 5-4 decision holding that thousands of consumers improperly flagged as potential terrorists do not have standing to sue the company for damages. TransUnion expands upon Spokeo, Inc. v. Robins, 2578 U.S. 330, 340 (2016) in limiting standing under the Fair Credit Reporting Act (FCRA) and Article III to plaintiffs who have suffered a concrete harm, not just the violation of a statutory right. As a practical matter, TransUnion significantly narrows plaintiffs’ ability to assert claims in federal court on behalf
Continue Reading Supreme Court Addresses Class Action Standing in Ramirez Case: Requires “Concrete” Injury for Article III Standing for Class Members