March 11, 2020 / 8:45 PM / 24 days ago

Nationwide class actions are safe, thanks to the D.C. and 7th Circuits

(Reuters) - In the space of two days, two federal circuits have assured the future of nationwide class actions, rejecting defendants’ arguments that under the U.S. Supreme Court’s 2017 ruling in Bristol-Myers Squibb v. Superior Court of California, federal courts cannot assert jurisdiction over absent class members who have no connection to the forum in which the case was filed.

On Tuesday, the District of Columbia U.S. Circuit Court of Appeals ruled (2020 WL 1146733) that Whole Foods, the defendant in a employment class action, could not challenge the personal jurisdiction of absent class members because they are not parties to the case until the class is certified. To be sure, the D.C. Circuit majority – Judges David Tatel and Merrick Garland – did not completely rule out the prospect that courts may not turn out to have personal jurisdiction over class members. But under the D.C. Circuit’s ruling, as Judge Laurence Silberman said in his dissent, plaintiffs’ lawyers can conduct nationwide discovery before a reckoning on the scope of the class. As a practical matter, delaying that jurisdictional reckoning until after class certification is a boon to class counsel.

On Wednesday, the 7th Circuit held even more decisively in Mussat v. IQVIA that the Supreme Court’s Bristol-Myers ruling does not apply in class actions. In Bristol-Myers, as you may recall, the Supreme Court ruled that California did not have personal jurisdiction over the claims of out-of-state plaintiffs in a mass tort action. The justices’ ruling did not address its application to federal-court class actions, as Justice Sonia Sotomayor noted in her dissent. But according to the 7th Circuit, class actions in federal court are different from mass actions in state court. Under the Federal Rules of Civil Procedure, wrote Judge Diane Wood for a panel that included Judges Michael Kanne and Amy Coney Barrett, named plaintiffs in class actions have to establish their jurisdiction to bring representative claims. But the rest of the class does not.

“IQVIA urges a major change in the law of personal jurisdiction and class actions,” the 7th Circuit said. “This change is not warranted by the Supreme Court’s decision in Bristol-Myers.”

Plaintiffs’ lawyer Matthew Wessler of Gupta Wessler, who represented the class in the D.C. Circuit’s Whole Foods case, says the D.C. and 7th Circuit rulings “reaffirm that the rules and framework of how you litigate class actions remains the same,” he said. “Nothing about Bristol-Myers changes the federal practice of class action litigation.”

Daniel Edelman of Edelman Combs Latturner & Goodwin, who won the 7th Circuit case on behalf of a class of plaintiffs who claim IQVIA sent unsolicited faxes in violation of the Telephone Consumer Protection Act, said it’s telling that the 7th Circuit opinion is short and straightforward. “Most courts have not found this to be a difficult issue,” he said. “The 7th Circuit got it right.”

Whole Foods counsel Gregory Casas of Greenberg Traurig declined to comment. IQVIA lawyer Joseph Palmore of Morrison & Foerster did not immediately respond to my email.

Class action defendants must now pin their hopes of reining in class actions with Bristol-Myers jurisdictional arguments on the 9th Circuit. That court agreed last October to hear an interlocutory class certification appeal in Moser v. Health Insurance Innovations, in which U.S. District Judge William Hayes of San Diego found (2019 WL 3719889) that defendants had waived their jurisdictional challenge under Bristol-Myers.

The Whole Foods and IQVIA cases came to the appellate courts in quite different postures. Whole Foods asserted the jurisdictional argument in a motion to dismiss, which was denied (297 F.Supp.3d 114) in the trial court. IQVIA cited Bristol-Myers in a successful motion to strike the class definition (2018 WL 5311903). And the circuits’ reasoning was not identical. The D.C. Circuit majority, for instance, relied heavily on the Supreme Court’s 2011 ruling in Smith v. Bayer (131 S.Ct. 2368), which isn’t even mentioned in the 7th Circuit opinion.

But both appellate courts based their decisions on the proposition that absent class members are not full parties to class actions. (Both opinions cited the Supreme Court’s 2002 decision in Devlin v. Scardelletti, 122 S.Ct. 2005.) When federal courts look at venue or jurisdictional diversity questions, the 7th Circuit said, they consider only named plaintiffs, not unnamed and prospective class members. So there’s no reason, the 7th Circuit said, to treat personal jurisdiction differently: “The named representatives must be able to demonstrate either general or specific personal jurisdiction, but the unnamed class members are not required to do so,” the court said.

Whole Foods argued at the D.C. Circuit that even if prospective class members are absent until class certification, their claims are before the court. Regardless of whether those potential plaintiffs are parties or not, the grocer said, defendants cannot be subject to claims for which the court does not have personal jurisdiction. It also argued that trial courts must resolve jurisdictional challenges early in litigation. The D.C. Circuit majority found that the first argument was supported only by stray dicta from the Supreme Court – and the second was expressly contradicted by such Supreme Court decisions as Amchem v. Windsor (117 S.Ct. 2231).

Judge Silberman – the lone judge from either the D.C. or 7th Circuit panels to side with defendants on the implication of Bristol-Myers – said in his dissent that the implications for class actions would not be so dire if courts could not exercise personal jurisdiction over claims by absent plaintiffs without a tie to the forum. Plaintiffs can always sue in jurisdictions where defendants are based – “110 miles down the road (to) Wilmington,” in the Whole Foods case. Or plaintiffs could bring statewide class actions in their own states, rather than relying on a nationwide class action.

But for now, thanks to Judge Silberman’s colleagues in the majority in the D.C. Circuit and to the 7th Circuit in the IQVIA case, class action plaintiffs and their lawyers won’t have to resort to such work-arounds. Despite Bristol-Myers, nationwide class actions are alive and well.

The views expressed in this article are not those of Reuters News.

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