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Class Actions Quarterly Update: Supreme Court

The Supreme Court ruled on several cases involving class actions in the last few months. A case awaiting certiorari could dramatically change the jurisdictional requirements for plaintiffs in class actions across the country.

At the end of the 2019-2020 term, the Court issued opinions in Thole et al. v. U.S. Bank N.A. et al., 140 S. Ct. 1615 (2020) and Barr v. Am. Ass’n of Political Consultants, Inc., 140 S. Ct. 2335 (2020). In Thole, the Court addressed whether a putative class of plaintiffs had Article III standing to bring claims against their former employer and other defendants under the Employee Retirement Income Security Act of 1974 (ERISA). The plaintiffs argued that defendants breached the duties of loyalty and prudence under ERISA by poorly investing the assets of their defined-benefit retirement plan. In a defined-benefit retirement plan, retirees receive a fixed payment each month, and the payments do not fluctuate with the value of the plan or based on investment decisions by plan fiduciaries. The Court drew a distinction between these plans and defined-contribution plans, like 401(k)s, where the benefits are tied to the value of the accounts and can turn on plan fiduciaries’ investment decisions. The Court affirmed the lower Court’s dismissal because the plaintiffs lacked Article III standing, specifically noting that regardless of the outcome of the case, the plaintiffs would still receive the exact same monthly benefits they are already entitled to receive.

In Barr v. Am. Ass’n of Political Consultants, the Court addressed a challenge to the Telephone Consumer Protection Act (TCPA), which prohibits the use of robocalls to cellular and residential telephone lines. 

Congress amended the TCPA in 2015 to permit robocalls to cell phones made for the sole purpose of collecting a debt owed to or guaranteed by the federal government. The plaintiffs in this case, political and polling organizations, brought a declaratory judgment action alleging that the federal-backed debt exemption violated the Free Speech clause because it did not allow other types of calls to be made. Plaintiffs asked the Court to strike down the entire TCPA, thereby allowing the plaintiff organizations to make robocalls related to political and other non-debt issues.

The Supreme Court affirmed the Fourth Circuit’s ruling and found that the debt-collection exception to the TCPA’s robocall restriction impermissibly favored debt-collection speech over political and other speech in violation of the First Amendment. Rather than invalidating the entire TCPA, however, the Court, applying the doctrine of severability found that the debt-collection exception was invalid and severed it from the remainder of the statute. 

The Court’s opinion noted that the TCPA “imposes tough penalties for violating the robocall restriction. Private parties can sue to recover up to $1,500 per violation or three times their actual monetary losses, which can add up quickly in a class action.” Id. at 2345. There likely will be an increase in TCPA-related class action litigation in the wake of this ruling. Plaintiffs can now file cases based on robocalls made to collect federally-back debt. Disputes based on other categories of robocalls also can move forward now that the Supreme Court has upheld the TCPA robocall prohibitions.

More recently, the Court denied Major League Baseball’s request to hear a case involving a dispute between Minor League players and Major League Baseball over the way Minor League players are compensated. The Minor League players filed a class action lawsuit in the Northern District of California claiming that they are paid less than minimum wage for their work as players. A number of the players were certified as a class by the District Court in a March 7, 2017 Order. The class was certified under the Fair Labor Standards Act but was narrower than the class of plaintiffs proposed in the complaint. The class action lawsuit at the district court has stayed since 2017 while the MLB appealed class certification to the Ninth Circuit and the Supreme Court. The Ninth Circuit affirmed the District Court’s certification of the class in August of 2019, and the Supreme Court denied MLB’s request for certiorari to appeal the class certification in October of 2020. See KS City Royals Baseball v. Senne, No. 19-1339, 2020 WL 5882289, at *1 (U.S. October 5, 2020) and Senne v. Kansas City Royals Baseball Corp., 934 F.3d 918 (9th Cir. 2019). The case will now return to the District Court to proceed as a class action litigation.

Finally, the Supreme Court will decide in the current term whether to grant certiorari to Ally Financial, Inc. regarding its request to decertify a class certified by Missouri state courts that includes plaintiffs across the country alleging violations of the Uniform Commercial Code in various states. In Ally Financial Inc. v. Alberta Haskins, et alSee Pet. for Cert., Ally Fin. Inc. v. Haskins, No. 20-177, 2020 WL 5751260 (U.S. August 14, 2020) the plaintiffs allege that Ally violated provisions of the UCC when it repossessed their automobiles, including through deficient pre- and post-disposition notices. Ally’s argues that a failure to comply with the UCC on a national level is not a valid claim because the laws involving the UCC vary across different states. Class certification requires, among other components, similarity of the applicable law.

Ally also raises due process and personal jurisdiction issues. An amici curiae brief filed in the case by a collection of entities that support Ally, including the Chamber of Commerce and the American Bankers Association, explained that this case arises out of Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (BMS) and its progeny. In BMS, the Court left open the question of whether, in a class action, the Due Process Clause permits a court to exercise specific personal jurisdiction over the defendant with respect to all class members’ claims, even though some class members’ claims lack a sufficient connection to the forum. Federal district courts have been split on the issue, so the amici argue that the issue is ripe for adjudication by the Supreme Court. In BMS, the Supreme Court held that a state court could not assert specific personal jurisdiction over the defendant with respect to all claims in a mass tort action because some of the plaintiffs’ claims lacked the necessary connection to the forum. Ally, and its amici, ask the Court to grant certiorari and apply the principles of BMS to class actions.

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