Alison Frankel

Class action firm maligned by 7th Circuit wants its reputation back

By Alison Frankel
January 17, 2014

There’s essentially no way to undo the reputational harm of a judicial opinion. If a federal judge – especially an appellate judge – has something bad to say about you in a published opinion, your permanent record (as we used to say in grade school) is forever besmirched even if it later turns out that the opinion was based on misinformation. You can’t sue a judge for libel for what’s said in an opinion, and judicial rulings live on forever.

N.Y. judge: Defendant can’t settle unless class can be certified

By Alison Frankel
January 16, 2014

I’ve been writing a lot recently about the struggles of the 5th Circuit Court of Appeals to find consensus on the constitutionality of a settlement class that sweeps in uninjured claimants. Two different 5th Circuit panels have reached different conclusions on that issue in a pair of overlapping appeals in BP’s epic class action settlement of claims stemming from the 2010 Deepwater Horizon oil spill: Judge Edith Clement, in an opinion last October, said that trial judges may not approve certification of a class that includes members who lack constitutional standing; but last week, two judges on another 5th Circuit panel upheld certification of the BP class, with Judge Eugene Davis citing decisions by other federal circuits that acknowledged the reality of uninjured class members swept into global settlements. The 5th Circuit’s divide highlights the complexity of the underlying question, which is as important for defendants as it is for plaintiffs: Can a defendant buy global peace through a class action settlement when the class might not otherwise be certifiable?

Why does SCOTUS want SG view on Madoff trustee suits vs bank enablers?

By Alison Frankel
January 15, 2014

Last Wednesday, JPMorgan Chase resolved civil and criminal allegations of enabling Bernard Madoff to swindle customers of his defunct broker by agreeing to pay $2.6 billion, including $543 million to Irving Picard of Baker & Hostetler as trustee for Madoff’s defrauded investors. Two days later, the U.S. Supreme Court gave Picard and his Baker & Hostetler team reason to hope that JPMorgan won’t be the last bank to cough up millions to Madoff customers: The court invited the U.S. solicitor general to submit a brief expressing the federal government’s position on Picard’s request that the Supreme Court review the 2nd Circuit Court of Appeals’ dismissal of Picard’s claims against the banks he has accused of enabling Madoff’s scheme.

With 5th Circuit split on class constitutionality, what’s next for BP?

By Alison Frankel
January 14, 2014

Considering that BP’s resolution of claims stemming from the Deepwater Horizon oil spill in 2010 is the biggest single-defendant private settlement in U.S. history, it’s only fitting that the case has generated a spectacular – and procedurally peculiar – appellate record on the constitutionality of class actions. As you’ve probably heard, on Friday a divided panel of the 5th Circuit Court of Appeals upheld certification of the settlement class, rejecting BP’s argument that class certification must be reversed if the class includes uninjured claimants. Friday’s majority opinion by Judge Eugene Davis directly contradicts a previous analysis of the constitutionality of the BP class by his 5th Circuit colleague Judge Edith Clement in a distinct but overlapping BP appeal decided in October. Since both 5th Circuit appellate rulings on the BP class included dissents, we now have opinions from five different 5th Circuit judges on whether a settlement that dishes out money to uninjured class members can survive constitutional scrutiny. For us class action geeks, these BP appeals are a fascinating debate with enormous consequences. For BP, the conflicting decisions present a multibillion-dollar strategic turning point.

Why (most) consumer data breach class actions vs Target are doomed

By Alison Frankel
January 13, 2014

Who doesn’t empathize with the 70 million Target customers whose private information was supposedly hacked? No one likes to worry about identity theft and impaired credit ratings, the odds of which, according to Reuters, drastically increase for data breach victims. But that doesn’t mean Target customers have a cause of action in federal court. I don’t see how the vast majority of hacked Target shoppers can get past the threshold constitutional requirement that they show an actual injury, at least under the U.S. Supreme Court’s 2013 definition of injury in Clapper v. Amnesty International.

Dow Jones chooses weak weapon in suit vs news aggregator Ransquawk

By Alison Frankel
January 10, 2014

Like most creators of news content – those of us who used to be known as “reporters” – I worry a lot about the value of information. Unless information consumers – those of you who used to be called “readers” – won’t pay for the content we provide, news organizations can’t make enough money to keep our owners happy. The journalism business is now in the slow and painful process of figuring out how to convince readers that news is worth paying for.

Too late for MBS investors to sue in N.Y. state? Try federal court!

By Alison Frankel
January 9, 2014

We are just beginning to witness the impact of the ruling last month by the New York State Appellate Division, First Department, that the six-year statute of limitations for breach-of-contract claims based on mortgage-backed securities begins to run on the securities’ closing date. As you surely recall, a unanimous state appeals court flatly rejected contrary reasoning by State Supreme Court Justice Shirley Kornreich, who had ruled that the breach in MBS contracts occurs not at the moment the deal closes but when the issuer refuses an MBS trustee’s demand for the repurchase of underlying mortgages that don’t live up to the issuer’s representations and warranties. Kornreich’s interpretation would have permitted MBS mortgage repurchase, or put-back, claims to be filed throughout the life of the securities. Instead, the appeals court essentially capped put-back exposure for MBS issuers. It’s only been a couple of weeks since the appellate ruling, but as the New York Commercial Litigation Insider reported Wednesday, state-court judges have already begun tossing mortgage repurchase cases filed more than six years after the MBS closing date.

FDA punts again on GMO labeling, in boon to class action plaintiffs

By Alison Frankel
January 8, 2014

A couple months back, I told you that labeling of food containing genetically modified ingredients could be one of the rare issues in which private litigation has more impact than federal regulation on industry practices. That prospect has become more likely than ever, thanks to a letter that the Food and Drug Administration sent Monday to three federal judges overseeing consumer class action claims involving food with bio-engineered ingredients.

New Delaware Supreme Court nominee Strine speaks! (Well, sort of)

By Alison Frankel
January 8, 2014

On Wednesday, Delaware Governor Jack Markell nominated Chancellor Leo Strine of Chancery Court to become chief justice of the state’s Supreme Court. Assuming Strine’s nomination is approved, Chancery Court is going to be a much less colorful place. Strine is a legal mastermind – with an unpredictable and outspoken judicial demeanor. Occasionally, his off-tangent courtroom riffs have landed him in trouble. In 2012, for instance, Strine said he regretted comments he made during a hearing involving fashion entrepreneur Tory Burch in which he asked her attorney if Burch is Jewish and compared her dispute with her former husband to a “drunken WASP-fest.” Strine was also gently chided last year by his future colleagues on the Delaware Supreme Court for using judicial opinions to express his “world views.”

Halliburton alert! New briefs argue Congress never endorsed Basic

By Alison Frankel
January 7, 2014

Last February, when Chief Justice John Roberts and Justice Samuel Alito of the U.S. Supreme Court sided with the court’s liberal wing in Amgen v. Connecticut Retirement Plans, they joined an opinion that left intact the standard for certification of a class of securities fraud plaintiffs. Amgen, as you probably recall, had asked the court to impose a requirement that shareholders prove the materiality of supposed corporate misrepresentations in order to win class certification. The majority refused, in a decision written by Justice Ruth Ginsburg. Among other things, Justice Ginsburg said that if Congress had wanted to tinker with the Supreme Court’s 1988 precedent on securities class certification, Basic v. Levinson, it could have done so in 1995, when lawmakers passed the Private Securities Litigation Reform Act, or again in 1998, when the Securities Litigation Uniform Standards Act became law. Instead, Justice Ginsburg wrote in Amgen, “Congress rejected calls to undo the fraud-on-the-market presumption of classwide reliance endorsed in Basic.”