Justia Class Action Opinion Summaries

A plaintiff filed a putative class action against a dietary supplement company, alleging that the supplement Hydro BCAA was mislabeled. The plaintiff claimed that preliminary testing showed the supplement contained more carbohydrates and calories than listed on its FDA-prescribed label. The plaintiff tested the supplement using FDA methods but did not follow the FDA’s twelve-sample sampling process.The United States District Court for the Southern District of California dismissed the complaint, holding that the Food, Drug, and Cosmetic Act preempted the claims because the plaintiff did not plead that he tested the supplement according to the FDA’s sampling process. The district court noted a divide among district courts on whether plaintiffs must plead compliance with the FDA’s testing methods and sampling processes to avoid preemption.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the plaintiff’s complaint allowed a reasonable inference that the supplement was misbranded under the Act, even without allegations of compliance with the FDA’s sampling process. The court found that the plaintiff’s preliminary testing of one sample, which showed significant discrepancies in carbohydrate and calorie content, was sufficient to survive a motion to dismiss. The court emphasized that plaintiffs are not required to perform the FDA’s sampling process at the pleading stage to avoid preemption.The Ninth Circuit reversed the district court’s dismissal, allowing the plaintiff’s state-law claims to proceed. The court concluded that the plaintiff’s allegations were sufficient to avoid preemption and stated a plausible claim that the supplement was mislabeled under the Act. View "SCHEIBE V. PROSUPPS USA, LLC" on Justia Law

The case involves a putative class action filed by Christine Pino on behalf of herself and others against Grant Cardone and his associated entities, alleging violations of the Securities Act of 1933. Pino claims that Cardone made misleading statements and omissions on social media about the internal rate of return (IRR) and distribution projections for real estate investment funds, and misstated material facts regarding the funds' debt obligations.The United States District Court for the Central District of California initially dismissed the case under Federal Rule of Civil Procedure 12(b)(6), concluding that Cardone and his entities were not "sellers" under § 12(a)(2) of the Securities Act and that the statements in question were not actionable. Pino appealed, and the Ninth Circuit Court of Appeals reversed in part, holding that Cardone and his entities could be considered statutory sellers and that some of the statements were actionable. The case was remanded for further proceedings.Upon remand, Pino filed a second amended complaint, and the district court again dismissed the claims without leave to amend, holding that Pino had waived subjective falsity by disclaiming fraud and failed to plausibly allege subjective and objective falsity. The court also found that the omission of the SEC letter did not support a claim and that the debt obligation statement was not material.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court's dismissal. The Ninth Circuit held that Pino did not waive subjective falsity by disclaiming fraud and sufficiently alleged that Cardone subjectively disbelieved his IRR and distribution projections, which were also objectively untrue. The court also held that Pino stated a material omission claim under § 12(a)(2) by alleging that Cardone failed to disclose the SEC letter. Additionally, the court found that Pino sufficiently alleged that Cardone misstated material facts regarding the funds' debt obligations, which could be considered material to a reasonable investor. The Ninth Circuit reversed the district court's dismissal and allowed the claims to proceed. View "PINO V. CARDONE CAPITAL, LLC" on Justia Law

A publicly traded company, CoreCivic, which operates private prisons, faced scrutiny after the Bureau of Prisons raised safety and security concerns about its facilities. Following a report by the Department of Justice's Inspector General highlighting higher rates of violence and other issues in CoreCivic's prisons compared to federal ones, the Deputy Attorney General recommended reducing the use of private prisons. This led to a significant drop in CoreCivic's stock price and a subsequent shareholder class action lawsuit.The United States District Court for the Middle District of Tennessee, early in the litigation, issued a protective order allowing parties to designate discovery materials as "confidential." This led to many documents being filed under seal. The Nashville Banner intervened, seeking to unseal these documents, but the district court largely maintained the seals, including on 24 deposition transcripts, without providing specific reasons for the nondisclosure.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court emphasized the strong presumption of public access to judicial records and the requirement for compelling reasons to justify sealing them. The court found that the district court had not provided specific findings to support the seals and had not narrowly tailored the seals to serve any compelling reasons. The Sixth Circuit vacated the district court's order regarding the deposition transcripts and remanded the case for a prompt decision in accordance with its precedents, requiring the district court to determine if any parts of the transcripts meet the requirements for a seal within 60 days. View "Grae v. Corrections Corp. of Am." on Justia Law

In this case, plaintiffs in a class action alleged that several corporations in the broiler chicken market violated antitrust laws by engaging in bid rigging and reducing the supply of broiler chickens. The plaintiffs claimed that these actions led to anomalous dips in sales, which they attributed to collusion on price and output. The class action was divided into two tracks: Track 1, which omitted bid-rigging allegations for faster discovery and trial, and Track 2, which included bid-rigging theories and state law claims by indirect purchasers.The United States District Court for the Northern District of Illinois allowed the class to place claims against Simmons Foods, Inc. and Simmons Prepared Foods, Inc. on Track 1. Simmons settled for $8 million, but several class members, including the Boston Market group, objected to the settlement. They argued that the settlement was inadequate and that they should not be included in the class because they had filed their own antitrust suits. However, they missed the deadline to opt out of the class, and the district court approved the settlement.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court held that the settlement's release language was broad enough to cover bid-rigging claims and that the $8 million settlement was reasonable. The court noted that the Boston Market group did not provide evidence that the settlement amount was unreasonably low. Additionally, the court observed that the class had lost a related trial and that criminal antitrust prosecutions against some firms had ended in mistrials or acquittals, indicating uncertainty about the plaintiffs' prospects. The court affirmed the district court's approval of the settlement. View "Boston Market Corporation v Mountainaire Farms, Inc." on Justia Law

Plaintiffs, representing a putative class, filed an antitrust lawsuit against Grubhub Inc., Postmates Inc., and Uber Technologies, Inc. (collectively, "Defendants"). The plaintiffs alleged that the defendants violated Section 1 of the Sherman Antitrust Act and its state analogues by entering into no-price competition clauses (NPCCs) with restaurants, which prevented the restaurants from offering lower prices through other channels. The plaintiffs claimed that these NPCCs led to artificially high prices for restaurant meals. The class included customers who purchased takeout or delivery directly from restaurants subject to NPCCs, customers who dined in at such restaurants, and customers who used non-defendant platforms to purchase from these restaurants.The United States District Court for the Southern District of New York denied the defendants' motion to compel arbitration. The court held that the scope of the arbitration clauses was an issue for the court to decide and that the clauses did not apply to the plaintiffs' claims as they lacked a nexus to the defendants' Terms of Use. The court also found that the plaintiffs had not agreed to Grubhub's Terms of Use.The United States Court of Appeals for the Second Circuit reviewed the case. The court affirmed the district court's decision in part, ruling that the question of arbitrability for the plaintiffs' claims against Grubhub is for the court to decide and that Grubhub's arbitration clause does not apply to the plaintiffs' antitrust claims. However, the court reversed the district court's decision in part, finding that Grubhub had established an agreement to arbitrate with the plaintiffs and that the threshold question for the plaintiffs' claims against Uber and Postmates is for the arbitrator to decide. The case was remanded for further proceedings consistent with this opinion. View "Davitashvili v. Grubhub" on Justia Law

Plaintiffs sued Qualcomm Inc., alleging that its business practices violated state and federal antitrust laws. These practices included Qualcomm’s “no license, no chips” policy, which required cellular manufacturers to license Qualcomm’s patents to purchase its modem chips, and alleged exclusive dealing agreements with Apple and Samsung. The Federal Trade Commission (FTC) had previously challenged these practices, but the Ninth Circuit reversed the district court’s ruling in favor of the FTC, holding that Qualcomm did not violate the Sherman Act.The district court in the current case certified a nationwide class, but the Ninth Circuit vacated the class certification order and remanded to consider the viability of plaintiffs’ claims post-FTC v. Qualcomm. On remand, plaintiffs proceeded with state-law claims under California’s Cartwright Act and Unfair Competition Law (UCL). The district court dismissed the tying claims and granted summary judgment on the exclusive dealing claims. The court found that the Cartwright Act did not depart from the Sherman Act and that plaintiffs failed to show market foreclosure or anticompetitive impact in the tied product market. The court also rejected the UCL claims, finding no fraudulent practices and determining that plaintiffs could not seek equitable relief.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of the tying claims and the summary judgment on the exclusive dealing claims under the Cartwright Act. The court held that Qualcomm’s “no license, no chips” policy was not anticompetitive and that plaintiffs failed to show substantial market foreclosure or antitrust injury. The court also affirmed the rejection of the UCL claims but vacated the summary judgment on the UCL unfairness claim related to exclusive dealing, remanding with instructions to dismiss that claim without prejudice for refiling in state court. View "KEY V. QUALCOMM INCORPORATED" on Justia Law

A controller orchestrated a merger that consolidated Sears, Roebuck and Co. and Kmart Corporation under Sears Holdings Corporation. The controller, through his investment funds, owned a majority of the new entity. In 2012, Sears Holdings spun off Sears Hometown and Outlet Stores, Inc. (the Company) as a separate public entity, with the controller retaining a majority stake. In 2019, the Company merged with an acquisition subsidiary, with each share converted into the right to receive $3.21. Some stockholders sought appraisal, while others pursued a plenary action alleging breaches of fiduciary duty.The Court of Chancery of the State of Delaware coordinated the appraisal proceeding and the plenary action for discovery and trial. The court certified a class in the plenary action, which was later modified to explicitly include stockholders who sought appraisal. During the appraisal proceeding, the Company and its post-merger parent became insolvent, rendering the appraisal claimants as general creditors with no prospect of recovery. The Fund, an appraisal claimant, opted to join the plenary action. The court found the merger was not entirely fair and determined a fair price of $4.06 per share, awarding incremental damages of $0.85 per share to the class members who had received the merger consideration.The Fund, having not received the merger consideration, sought to recover the full fair price damages award. The court held that under the precedent set by the Delaware Supreme Court in Cede & Co. v. Technicolor, Inc., the Fund was entitled to the full fair price damages of $4.06 per share without any offset for the merger consideration it did not receive. The court concluded that the Fund could opt out of the appraisal proceeding and participate in the plenary action remedy, ensuring it was made whole. View "In re Sears Hometown and Outlet Stores, Inc. Stockholder Litigation" on Justia Law

Plaintiffs, purchasers of coupon processing services, alleged that Inmar, Inc. and its subsidiaries engaged in an anticompetitive conspiracy to raise coupon processing fees. They sought class certification for a manufacturer purchaser class. The district court rejected their attempts to certify the class, leading to this appeal.The United States District Court for the Middle District of North Carolina denied plaintiffs' first two motions for class certification. The first was denied due to discovery issues, and the second was rejected as an impermissible fail-safe class. Plaintiffs' third motion proposed three different class definitions: the Fixed List Class, the Limited Payer Class, and the All Payer Class. The district court rejected all three, finding the Fixed List Class to be a fail-safe class, the Limited Payer Class to be unascertainable and excluding too many injured manufacturers, and the All Payer Class to fail the predominance requirement of Rule 23(b)(3) due to a high percentage of uninjured members.The United States Court of Appeals for the Fourth Circuit reviewed the district court's decision and affirmed the denial of class certification. The court found that the Fixed List Class failed to define a class and improperly shifted the burden to the district court. The Limited Payer Class was deemed unascertainable and not superior due to its exclusion of many injured manufacturers. The All Payer Class failed the predominance requirement as the plaintiffs' expert did not show injury for 32% of the class members, raising both predominance and standing issues. The Fourth Circuit concluded that the district court did not abuse its discretion in denying class certification. View "Mr. Dee's Inc. v. Inmar, Inc." on Justia Law

A plaintiff purchased shares of a company that went public through a direct listing, which involved listing already-issued shares rather than issuing new ones. Following the listing, the company's stock price fell, and the plaintiff filed a class action lawsuit alleging that the registration statement was misleading, thus violating sections 11 and 12(a)(2) of the Securities Act of 1933. These sections impose strict liability for any untrue statement or omission of a material fact in a registration statement or prospectus.The district court denied the defendants' motion to dismiss, despite the plaintiff's concession that he could not trace his shares to the registration statement. The court held that it was sufficient for the plaintiff to allege that the shares were of the same nature as those issued under the registration statement. The Ninth Circuit initially affirmed this decision.The United States Supreme Court vacated the Ninth Circuit's decision, holding that section 11 requires plaintiffs to show that the securities they purchased were traceable to the particular registration statement alleged to be false or misleading. On remand, the Ninth Circuit concluded that section 12(a)(2) also requires such traceability. Given the plaintiff's concession that he could not make the required showing, the Ninth Circuit reversed the district court's decision and remanded with instructions to dismiss the complaint in full and with prejudice. View "PIRANI V. SLACK TECHNOLOGIES" on Justia Law

Local Puerto Rico merchants brought unfair competition claims against major big-box retailers, alleging that during the COVID-19 pandemic, Costco Wholesale Corp. and Wal-Mart Puerto Rico, Inc. violated executive orders limiting sales to essential goods. The plaintiffs claimed that the defendants continued to sell non-essential items, capturing sales that would have otherwise gone to local retailers, and sought damages for lost sales during the 72-day period the orders were in effect.The case was initially filed as a putative class action in Puerto Rico's Court of First Instance. Costco removed the case to federal district court under the Class Action Fairness Act (CAFA). The district court denied Costco's motion to sever the claims against it and also denied the plaintiffs' motion to remand the case to state court. The district court dismissed most of the plaintiffs' claims but allowed the unfair competition claim to proceed. However, it later denied class certification and granted summary judgment for the defendants, concluding that the executive orders did not create an enforceable duty on the part of Costco and Wal-Mart.The United States Court of Appeals for the First Circuit reviewed the case on jurisdictional grounds. The court held that CAFA jurisdiction is not lost when a district court denies class certification. It also held that CAFA's "home state" exception did not apply because Costco, a non-local defendant, was a primary defendant. However, the court found that CAFA's "local controversy" exception applied because the conduct of Wal-Mart Puerto Rico, a local defendant, formed a significant basis for the claims. The court concluded that the district court did not abuse its discretion in denying Costco's motion to sever and determined that the entire case should be remanded to the Puerto Rico courts. The court reversed the district court's denial of the motion to remand, vacated the judgment on the merits for lack of jurisdiction, and instructed the district court to remand the case to the Puerto Rico courts. View "Kress Stores of Puerto Rico, Inc. v. Wal-Mart Puerto Rico, Inc." on Justia Law