Business Litigation Alert Practical Perspectives on Litigation Developments & Trends

Monthly Archives: February 2012

Second Circuit Holds That Concepcion Preemption Analysis Does Not Apply to Federal Statutory Claims, Rejecting Class Action Waiver in Arbitration Agreement Where Individual Plaintiffs Would Be Left Unable to Vindicate Their Rights

By Melissa DeHonney on Posted in Class Action

In In re: American Express Merchants’ Litigation (Feb. 1, 2012) (“AmEx III”), the Second Circuit refused to enforce American Express’s class action waiver where the “practical effect” would be to deprive plaintiffs of the ability to vindicate their federal statutory rights. By framing the issue in terms of the ability to vindicate federal statutory rights, the Second Circuit sidestepped the preemption analysis mandated by the United States Supreme Court in AT&T Mobility LLC v. Concepcion. But whether AmEx III is ultimately reversed, or deemed to carve out an exception to Concepcion where federal statutory rights are at issue, it brings into sharp focus the real question on everyone’s mind: Can companies bar class actions in both courts and arbitral forums in favor of bilateral arbitration, and if so, how?

Best Practice for Retention of Federal Jurisdiction to Enforce a Settlement Agreement

By Anthony A. Dean on Posted in General Litigation

Since the vast majority of civil cases end in settlement, litigants must remain mindful of ensuring judicial enforcement of a settlement agreement. If you thought all that was necessary to provide for continuing judicial supervision is a clause in your settlement agreement or stipulation of dismissal stating that the federal court shall retain jurisdiction to enforce its provisions, please think again. As District Judge Noel L. Hillman recently emphasized in Brass Smith, LLC v. RPI Industries, Inc., federal courts are courts of limited jurisdiction and jurisdiction cannot be created by the private agreement of the parties. Nor do district courts have “inherent power” to enforce settlements. Unless you have taken the proper steps or there is an independent basis for jurisdiction (such as diversity of citizenship or a federal question), you will probably be obliged to bring a new action in state court to enforce your settlement agreement.

Third Circuit, En Banc, Approves Settlement Class Containing Members Who Lack “Viable Claim”

By Jennifer Marino Thibodaux on Posted in Class Action

The U.S. Court of Appeals for the Third Circuit has issued an en banc opinion in Sullivan v. DB Investments, Inc. affirming a District Court’s certification of two nationwide settlement classes. In sum, though the multiplicity of states’ laws would affect the predominance inquiry in a litigated nationwide class action, in the settlement context, the Circuit eased the burden somewhat by declining to require a showing that each class member possess “a viable claim” based upon what would have been the applicable state statute or law.

New Jersey Chancery Division Determines Insurance Agents are Not Franchises for Purposes of the New Jersey Franchise Practices Act

By Robert C. Brady on Posted in General Litigation

New Jersey insurers and insurance agents must be aware that agents are not entitled to the broad protections of the New Jersey Franchise Practices Act (“NJFPA”) pursuant to a recent Chancery Division decision in DeLuca v. Allstate Insurance Co., in which the Court held that insurance agents do not meet the definition of a “franchise.” The Court thus concluded that Allstate Insurance Company was free to terminate its agents pursuant to the terms of their respective agency agreements, which permitted termination with or without cause.

Bankruptcy Court Service of Process Rules Set Traps for the Unwary

By Jeffrey S. Berkowitz on Posted in General Litigation

The Supreme Court’s decision in Stern v. Marshall has generated renewed focus on what types of cases and claims can be resolved in an adversary proceeding in the bankruptcy courts, and what types of cases will have to be resolved in the federal district courts. The resulting shift should serve as a reminder that, while the Federal Rules of Bankruptcy Procedure governing adversary proceedings are similar to and modeled on the Federal Rules of Civil Procedure, there are significant differences. For example, because the Bankruptcy Rules regarding service of process may result in a shorter time within which a defendant must respond, corporations must remain mindful of these differences and avoid relying upon the more well-known Federal Rules.

New Jersey Framework for Analyzing Attorneys’ Fee Awards, Including Contingency Fee Enhancements, Unchanged

By James J. La Rocca on Posted in General Litigation

Last week, the New Jersey Supreme Court reiterated that lawyers who represent clients on a contingency basis in disputes brought under New Jersey laws that permit the recovery of attorneys’ fees can recover an additional fee “enhancement” pursuant to the framework the Court set forth nearly 20 years ago in Rendine v. Pantzer, 141 N.J. 292 (1995) . The decision, Walker v. Guiffre, Case Nos. 72-10, 100-10 (N.J. Jan. 25, 2012), is noteworthy for businesses that all too frequently must weigh the risk of paying their opponents’ attorneys’ fees when deciding whether to settle disputes – particularly those companies that wishfully thought the reins on contingency fee enhancers might be tightened in light of two recent decisions by New Jersey appellate courts.