Justia Class Action Opinion Summaries

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

Sophia Zhou and other investors filed a federal securities fraud class action against Desktop Metal, Inc. and several of its corporate officers after the company's stock price dropped in late 2021. The stock lost value following Desktop Metal's disclosure of an internal investigation that revealed corporate mismanagement and necessitated the recall of two key products. Zhou alleged that the defendants engaged in fraudulent schemes, including manufacturing Flexcera resin at non-FDA-registered facilities and marketing the PCA 4000 curing box for use with Flexcera without FDA certification.The United States District Court for the District of Massachusetts dismissed Zhou's complaint for failure to state a claim. Zhou appealed, arguing that the district court erred in dismissing her "scheme liability" claim and that she adequately stated a securities fraud claim based on material misrepresentations and omissions. The district court had found that Zhou did not preserve her scheme liability claim and that her complaint failed to plead any materially false or misleading statement or omission.The United States Court of Appeals for the First Circuit reviewed the case de novo. The court concluded that Zhou did not preserve her scheme liability claim because she failed to adequately argue it in her opposition to the motion to dismiss or in her supplemental briefing. The court also determined that the district court correctly found that Zhou's complaint did not allege any materially false or misleading statements. Specifically, the court held that statements about Flexcera's FDA clearance, regulatory compliance, and product qualities were not rendered misleading by the alleged omissions. Consequently, the court affirmed the district court's dismissal of Zhou's complaint. View "Zhou v. Desktop Metal, Inc." on Justia Law

Plaintiffs brought a putative class action against Live Nation Entertainment, Inc., and Ticketmaster LLC, alleging anticompetitive practices in violation of the Sherman Act. The plaintiffs had purchased tickets through Ticketmaster’s website, which required them to agree to Ticketmaster’s Terms of Use. These terms included an arbitration agreement mandating that disputes be resolved by an arbitrator from New Era ADR, using expedited/mass arbitration procedures.The United States District Court for the Central District of California denied the defendants' motion to compel arbitration. The court found that the clause delegating the authority to determine the validity of the arbitration agreement to the arbitrator was unconscionable under California law, both procedurally and substantively. The court also held that the entire arbitration agreement was unconscionable and unenforceable. The defendants appealed this decision.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The appellate court held that the delegation clause and the arbitration agreement as a whole were unconscionable under California law. The court found that the delegation clause was part of a contract of adhesion and that the terms on Ticketmaster’s website exhibited extreme procedural unconscionability. Additionally, the court identified several features of New Era’s arbitration rules that contributed to substantive unconscionability, including the mass arbitration protocol, lack of discovery, limited right of appeal, and arbitrator selection provisions.The Ninth Circuit also held that the application of California’s unconscionability law to the arbitration agreement was not preempted by the Federal Arbitration Act (FAA). As an alternate and independent ground, the court held that the FAA does not preempt California’s prohibition of class action waivers in contracts of adhesion in large-scale small-stakes consumer cases, as established in Discover Bank v. Superior Court. The court concluded that Ticketmaster’s Terms and New Era’s Rules were independently unconscionable under Discover Bank. The decision of the district court was affirmed. View "HECKMAN V. LIVE NATION ENTERTAINMENT, INC." on Justia Law

TD Ameritrade offers brokerage services to retail investors, allowing them to trade stocks through its online platform. The company routes customer orders to trading venues for execution. Roderick Ford, representing a group of investors, alleged that TD Ameritrade's order-routing practices violated the company's duty of best execution by prioritizing venues that paid the company the most money rather than those providing the best outcomes for customers. Ford claimed this violated § 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and that CEO Frederic J. Tomczyk was jointly liable under § 20(a) of the Act.A magistrate judge initially recommended denying Ford's motion for class certification due to the predominance of individual questions of economic loss. However, the district court certified a class, believing Ford's expert's algorithm could address these issues. The Eighth Circuit reversed this decision, stating individual inquiries were still necessary. Ford then proposed a new class definition and moved again for certification under Rule 23(b)(3), (b)(2), and (c)(4). The district court certified the class under Rule 23(b)(3) and alternatively under Rule 23(b)(2) and (c)(4).The United States Court of Appeals for the Eighth Circuit reviewed the district court's certification order for abuse of discretion. The court found that Ford's new theory of economic loss, based on commissions paid, did not align with the previous definition of economic loss and still required individualized inquiries. Consequently, the court held that the district court abused its discretion in certifying the class under Rule 23(b)(3). The court also found that the alternative certifications under Rule 23(b)(2) and (c)(4) were improper due to the predominance of individual issues and the lack of cohesiveness among class members. The Eighth Circuit reversed the district court's order and remanded for further proceedings. View "Ford v. TD Ameritrade Holding Corp." on Justia Law

The City of Los Angeles contracted with PricewaterhouseCoopers (PwC) to modernize the billing system for the Department of Water and Power (LADWP). The rollout in 2013 resulted in billing errors, leading the City to sue PwC in 2015, alleging fraudulent misrepresentation. Concurrently, a class action was filed against the City by Antwon Jones, represented by attorney Jack Landskroner, for overbilling. Discovery revealed that the City’s special counsel had orchestrated the class action to settle claims favorably for the City while planning to recover costs from PwC.The Los Angeles County Superior Court found the City engaged in extensive discovery abuse to conceal its misconduct, including withholding documents and providing false testimony. The court imposed $2.5 million in monetary sanctions against the City under the Civil Discovery Act, specifically sections 2023.010 and 2023.030, which allow sanctions for discovery misuse.The California Court of Appeal reversed the sanctions, interpreting the Civil Discovery Act as not granting general authority to impose sanctions for discovery misconduct beyond specific discovery methods. The appellate court held that sections 2023.010 and 2023.030 do not independently authorize sanctions but must be read in conjunction with other provisions of the Act.The Supreme Court of California reversed the Court of Appeal’s decision, holding that the trial court did have the authority to impose monetary sanctions under sections 2023.010 and 2023.030 for the City’s pattern of discovery abuse. The Supreme Court clarified that these sections provide general authority to sanction discovery misuse, including systemic abuses not covered by specific discovery method provisions. View "City of Los Angeles v. Pricewaterhousecoopers, LLP" on Justia Law