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Author: Gibbons P.C.
Third Circuit Sets Framework for Numerosity Inquiry and Lists Factors to Consider When Determining “Whether Joinder would be Impracticable” Under Rule 23(a)(1)
One of the prerequisites for class certification under Rule 23(a) is that “the class is so numerous that joinder of all members is impracticable,” which is commonly referred to as the “numerosity” requirement. Notably, Rule 23(a)(1) is “conspicuously devoid of any numerical minimum required for class certification.” For the first time, the Third Circuit has “provide[d] a framework for district courts to apply when conducting their numerosity analyses” in a recent precedential opinion. Defendants opposing class certification must be aware of this framework, particularly since numerosity is an often overlooked prerequisite yet may provide ample grounds for defeating certification in certain actions.
In Suit Alleging Misleading Employment Rates, Third Circuit Rejects Class Certification Premised Upon Invalid Damages Theory
The Third Circuit recently affirmed a decision from the District Court of New Jersey denying class certification in an action alleging that Widener University School of Law defrauded its students by publishing and marketing misleading statistics about graduates’ employment rates. In its precedential opinion adjudicating plaintiffs’ interlocutory appeal pursuant to Fed. R. Civ. P. 23(f), the Third Circuit concluded that although the District Court misconstrued plaintiffs’ damages theory, the error was harmless because the Court would have nonetheless concluded that plaintiffs failed to satisfy the predominance requirement. This opinion, authored by Circuit Judge Chagares, is an example of defendants defeating class certification when plaintiffs cannot proffer a valid method of proving class-wide damages, as required by the U.S. Supreme Court in Comcast v. Behrend several years ago.
Court Compels Arbitration of Lawsuit Filed by Employees Discharged After Discovery of Personal Text Messages About a Coworker on a Company-Issued iPad
A recent decision from the District of New Jersey granting a motion to compel arbitration not only reinforces the strong federal policy in favor of arbitration, but also highlights issues pertaining to company-issued devices and employees’ personal use of these devices. While employed by Anheuser-Busch, Victor Nascimento received a company-issued iPad. Nascimento and other employees exchanged text messages about a coworker over their personal cell phones outside of the work day, but the messages were received on Nascimento’s company-issued iPad because the iTunes account on his iPad was linked to his personal cell phone.
Employers drafting arbitration clauses for employment contracts and others drafting arbitration agreements generally need to be familiar with the line of New Jersey cases involving arbitration clauses, including the Appellate Division’s recent opinion in Anthony v. Eleison Pharmaceuticals LLC, Docket No. A-932-15T4 (App. Div. July 18, 2016), where the court held that an arbitration clause that does not include reference to a waiver of plaintiff’s statutory rights or a jury trial does not constitute a valid waiver of the right to have claims decided in a judicial forum.
With the close of the United States Supreme Court’s 2015-16 term, we offer this wrap up of the Court’s term, focusing on decisions of special interest from the business and commercial perspective (excluding patent cases): Upon being granted a discharge from a Bankruptcy Court, a bankrupt’s debts are discharged unless a particular debt falls within one of the Bankruptcy Code’s statutory exclusions. One of those exclusions is for debts arising from “false pretenses, a false representation, or actual fraud.” Husky Int’l Elecs., Inc. v. Ritz asked whether a debt arising from a fraudulent transfer made for the purpose of frustrating a creditor, but accomplished without making a false representation, is subject to this exclusion.
In Tyson Foods, Inc. v. Bouaphakeo, the Supreme Court of the United States definitively answered the question of whether statistical “representative evidence” may be used in class actions to establish that “questions of law or fact common to class members predominate over any questions affecting only individual members” pursuant to Rule 23(b)(3). According to the Court’s much-anticipated opinion, the answer is yes: “Its permissibility turns not on the form a proceeding takes – be it a class or individual action – but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”
In the increasingly crowded field of pay-for-delay litigation, the FTC blazed a new trail last week when – for the first time – it sued a branded drug maker for agreeing not to launch its own “authorized generic” in competition with a generic competitor. The so-called “no-AG commitment” was part of a deal struck by Endo Pharmaceuticals Inc. in exchange for a promise by Impax Laboratories to postpone by 2½ years its release of a lower-cost generic version of Endo’s lucrative Opana ER painkiller. That deal, according to the Complaint filed on March 30 in federal court in the Eastern District of Pennsylvania, let Endo prolong its alleged monopoly and, with it, the supracompetitive profits it earned from Opana. Meanwhile, the lower prices that come with the entry of a generic were delayed.
Recent DGCL Sections Facilitate Ratification, Validation of Defective Corporate Acts; Minimal Reported Court Activity To Date But More Expected
It’s been more than a year since the Delaware General Corporation Law added sections 204 and 205, allowing boards of directors to ratify, or the Court of Chancery to validate, defective corporate acts, including the issuance of stock that did not fully comply with corporate formalities. The Delaware General Assembly’s unanimous adoption of sections 204 and 205 elevated substance over form by giving effect to corporate action that at all times was treated as validly authorized, even if the action was technically deficient.
With the close of the United States Supreme Court’s 2014-15 term, we offer this wrap up of the Court’s term, focusing on the Court’s most important business and commercial cases (excluding patent cases). Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund: It is widely known that if the registration statement an issuer files with the SEC contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading, then a purchaser of securities sold pursuant to the registration statement may sue the issuer for damages.