Third Quarter 2020 Update On Class Actions

• Published date: 12 November 2020
• Subject Matter: Litigation, Mediation & Arbitration, Media, Telecoms, IT, Entertainment, Class Actions, Advertising, Marketing & Branding
• Law Firm: Gibson, Dunn & Crutcher
• Author: Mr Theodore J. Boutrous Jr., Christopher Chorba, Theane Evangelis, Kahn A. Scolnick and Bradley J. Hamburger

This update provides an overview and summary of key class action developments during the third quarter of 2020 (July through September).

Part I discusses an important Second Circuit decision regarding claims for injunctive relief in false advertising class actions.

Part II describes an Eleventh Circuit opinion in which a divided panel held that 19th-century Supreme Court decisions prohibit the very common practice of providing incentive awards to class representatives.

Part III covers two decisions from the Ninth Circuit relating to the Class Action Fairness Act's amount-in-controversy requirement.

I. The Second Circuit Holds That It Is Improper to Certify an Injunctive-Relief Class of Past Purchasers of an Allegedly Falsely Advertised Product

In a very significant decision impacting false advertising class actions, the Second Circuit in Berni v. Barilla S.p.A., 964 F.3d 141 (2d Cir. 2020), held that district courts cannot certify a Rule 23(b)(2) injunctive-relief class of past purchasers of products that were allegedly falsely advertised.

Berni involved the allegation that boxes of pasta they had purchased were underfilled in violation of New York's General Business Law ' 349(a), which prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce." Id. at 144. The parties reached a settlement in which the defendant agreed, among other things, to include disclosures on its boxes regarding the amount of pasta contained in them. Id. The district court certified an injunctive-relief class for settlement purposes under Rule 23(b)(2) and entered final approval of the settlement. An objector appealed.

The Second Circuit held that the objector had standing to appeal even though he was not personally deceived by the packaging, id. at 145-46, and it then reversed the grant of class certification, holding that a Rule 23(b)(2) class may be certified only where the injunctive relief sought would be "proper for each and every member of the group of past purchasers." Id. at 146. In this case, such relief would not be proper, according to the court, because past purchasers were under no obligation to buy the product again, and, even if they did, would already have the information they claimed to lack at the time of their initial purchase. As such, they were "not likely to encounter future harm of the kind that makes injunctive relief appropriate." Id. at 147-48.

The Berni decision is a critical ruling in favor of class-action defendants, as...