Supreme Court continued to focus on class action litigation during this term, handing down a number of significant rulings relating to jurisdiction, class certification, and arbitration of putative class claims. The many decisions relating to class action issues indicates that the Court continues to be interested in the development of the law under Rule 23.
The Court eliminated some potential for jurisdictional gamesmanship in class actions when it held that plaintiffs may not avoid federal jurisdiction under the Class Action Fairness Act of 2005 by stipulating to damages less than $5 million. Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345, 1350–51 (2013). In a separate case, the Court found that a named plaintiff's mooted claims deprived the Court of jurisdiction over proposed class and collective actions. Genesis HealthCare Corp. v. Symczyk, 133 S. Ct. 1523, 1532 (2013).
The Court again addressed the standards for class action certification, revisiting issues similar to those addressed in the landmark 2011 case, Wal-mart v. Dukes. In Comcast Corp. v. Behrend, the Court reiterated the importance of evaluating expert evidence related to damages when determining the appropriateness of class certification. 133 S. Ct. 1426, 1432–33 (2013). The Court addressed the fraud-on-the-market presumption of reliance in securities claims, holding that a securities plaintiff need not prove materiality at class certification to benefit from the presumption. Amgen Inc. v. Connecticut Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1204 (2013).
Finally, in two separate opinions, the Court again examined issues relating to arbitration and putative class actions. First, in Oxford Health Plans LLC v. Sutter, the Court upheld an arbitrator's decision to allow class-wide arbitration even though the arbitration clause at issue did not expressly allow class-wide arbitration. 133 S. Ct. 2064, 2071 (2013). This ruling was more favorable to class-wide arbitration than was expected, given the 2010 decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662, 684 (2010). The Court also held that under the Federal Arbitration Act, contractual provisions that waive one's right to pursue class-wide relief are enforceable even if those waivers effectively preclude vindication of a federal statutory right because the cost of litigation would far exceed the potential for any individual recovery. American Express Co. v. Italian Colors Restaurant, 133 S .Ct. 2304, 2312 (2013).
Article by Jon Chally and Lawrence A. Slovensky.
Jon Chally, jchally@kslaw.com; Lawrence A. Slovensky, lslovensky@kslaw.comThe
