Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

Last November I posted about two decisions on motions to dismiss issued by Judge Otrie Smith in the MDL involving bisphenol-A ("BPA") in baby bottles, sippy cups and infant formula, which is pending in the Western District of Missouri.  Apparently the "Bottle Defendants" -- who had not received the benefit of federal preemption in Judge Smith's opinion -- moved to reconsider on the breach of warranty and unjust enrichment claims or, in the alternative, certify the issues for interlocutory appeal.  On Tuesday, the court issued an opinion denying the motion.

Growing up in my small Missouri town, I was always an optimist.  Indeed, I was an actual member of the Optimist Club, which began its weekly meetings at the incorrigibly optimistic hour of  6:30 a.m.  I'm prone to viewing the sippy cup as half full, rather than half empty. 

And so you would expect me to be encouraged by this little nugget in Judge Smith's order denying the defendants' motion.  The court acknowledged that its prior order might have been unclear in its discussion of unjust enrichment.  The court had never intended to suggest that all plaintiffs "automatically and necessarily have a valid claim for unjust enrichment."  Slip op. at 2.  Rather, unjust enrichment is an individual issue because of the differences in state laws and in the factual situations of the plaintiffs:

The Court's holding is, essentially, that its "benefit of the bargain" analysis did not affect the unjust enrichment claims because the "benefit of the bargain" does not play a role in the analysis -- at least, for some jurisdictions.  In contrast to the law of warranty (which is somewhat uniform because of the states' adoption of the Uniform Commercial Code), the law of unjust enrichment cannot be confidently described as uniform.  When this observation is coupled with the differing circumstances of each Plaintiff (and potential Plaintiff), the Court cannot conclude that no purchaser can assert a claim for unjust enrichment.  Ultimately, differences in individual circumstances and the content of state laws make it impossible for the Court to hold that all consumers either have or do not have a cause of action as a matter of law.

Id. at 3.

Thus, although the Bottle Defendants don't get a free ride to the Eighth Circuit just yet, Judge Smith has clearly given them a present, as there is no way he can certify an unjust enrichment class consistent with that opinion.

Hit my sippy cup again, bartender!

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That Fred Burnside gets TWO gold stars today!  First, he informed me that the Ninth Circuit refused to hear the appeal of the decision denying class certification in the Xbox litigation.  Now he shares with us a well-written opinion from the Washington Supreme Court holding that a trial court in wireless telephone litigation correctly refused to certify a nationwide class action.

The decision in Schnall v. AT&T Wireless Servs., Inc., No. 80572-5 (Wash. Jan. 21, 2010) (en banc) is particularly timely because its reasoning on the Washington Consumer Protection Act stands in stark contrast to the decision I highlighted on Tuesday, which had effectively read the causation requirement out of Florida's Deceptive and Unfair Trade Practices Act.  But I've gotten ahead of myself.

In Schnall, plaintiffs had brought a putative nationwide class action against AT&T Wireless, claiming that its collection of a "universal connectivity charge" violated the customers' contracts and violated Washington's Consumer Protection Act.  The trial court had refused to certify the class, but the intermediate appellate court had reversed, reasoning that the challenge to a standardized contract was capable of class adjudication.

The Washington Supreme Court reversed the class certification, making four important points.  First, the court held that the trial court had not abused its discretion in holding that the need to apply the law of 50 states made the putative nationwide class fail the predominance requirement.  The Washington Supremes observed that the trial court was correct in honoring the choice of law provision in the contracts, which required the application of the law of the place where the customer signed the contract.  Further, it cited at length the federal precedents recognizing that the need to apply the law of 50 states generally makes class certification untenable, because the variations in state laws may swamp common issues and defeat predominance.  Slip op. at 11.  For example, in the context of the Schnall complaint, the court observed that, for those states that recognize it, "[t]he availability of the voluntary payment doctrine alone could abrogate AT&T's liability for all customers who voluntarily paid the [fee] after receiving the informational flyer."  Id. at 12.

Second, the Washington Supremes noted in their analysis of the superiority factor that:

Washington has no interest in seeing contracts executed by AT&T representatives in other states with citizens of those states examined and adjudicated in Washington courts.  Certified as a nationwide class action, this case would present an unwarranted and unnecessary burden on the state judicial system, all at a large cost to taxpayers.  There is no sound reason in this case for this court to force Washington trial courts to entertain the contract claims of citizens from around the nation.  Their state courts are equally as prepared, if not better situated to apply the contract laws of their states.  The trial court did not abuse its discretion by denying nationwide certification of the plaintiffs' contract claims.

Id. at 15 (citation omitted).

Third, the Washington Supremes recognized that the state's Consumer Protection Act ("CPA") does not apply extraterritorially to provide a cause of action to nonresidents whose claims arose in other states.  Id. at 16.  This geographic restriction is inherent in the language of the statute, but as the court recognized, it also emanates from the CPA's "history as a tool used by the State attorney general to protect the citizens of Washington."  Id.  The AG, the court noted, has no power beyond the state's borders and is charged with protecting only Washington residents.  Thus, regardless of whether it is the official Attorney General or a "private attorney general" suing to enforce the statute, the jurisdictional limitation applies and a "private claimant cannot state a CPA claim by proving the defendant's practices affect the public interest or the citizens of another state."  Id. at 17 (emphasis in original).

Fourth -- and this is where the decision stands in stark contrast to the one I discussed on Tuesday -- the Washington Supremes reiterated that even for Washington plaintiffs, proof of causation is an essential element of a CPA claim.  Id. at 18.  Indeed, "proximate cause in a class action cannot be established by 'mere payment' of an allegedly injurious charge."  Id.  Rather, "in the context of private CPA actions where plaintiffs seek damages, more than a mere capacity to deceive must be shown to establish 'some causal link between defendant's unfair act and [consumer's] injury," and, "[i]n the context of private misrepresentation cases, a plaintiff can satisfy the 'but for' causation requirement by showing she relied on the misrepresentation."  Id. at 20 (citation omitted).  In the context of the Schnall case, that meant that where the plaintiff actually knew that the charge was being levied, the alleged "misrepresentation" had been eliminated as the "but for" cause of the injury.  Id. at 21.  Accordingly, even for Washington residents to whom the CPA applied, the issue of causation could be an individual issue that would defeat predominance.  But because the trial court had not analyzed that question sufficiently, the Washington Supremes remanded the case with instruction to consider the question in the context of a statewide class.

The court's conclusion forcefully shuts Washington's doors to putative nationwide class actions:

In sum, we agree with the trial court that this action should not be certified as a nationwide class action.  Washington need not apply its Consumer Protection Act, or its contract laws, to the citizens of other states in order to protect the interests of the citizens of Washington.  A nationwide class would be unmanageable and unduly burdensome on the trial court and the state judicial system and serve no real benefit to plaintiffs who are free to bring statewide class actions in their home states. 

Id. at 22.

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Loyal reader Fred Burnside just informed me that the Ninth Circuit has denied the plaintiffs' Rule 23(f) petition to appeal of the denial of class certification in In re Microsoft Xbox 360 Scratched Disk Litigation, No. C07-1121-JCC, Slip op. (W.D. Wash. Oct. 5, 2009).  Previously I had posted on the district court's decision, which refused to apply the law of the defendant's residence to a putative nationwide class and recognized that causation and damages require individualized proof where most class members have not experienced the alleged product malfunction.

Congratulations to Davis Wright Tremaine!

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Previously I posted about a New York trial court which held that ordinary forum non conveniens principles do not apply in "mass tort litigation," opting to keep for itself and a New York jury the job of adjudicating the claims of nonresidents whose claims arose in other states.  In that post, I contrasted the trial court's decision -- which is currently on appeal -- with the decision of another New York trial court that had refused to retain the product liability claims of nonresidents whose claims arose in other states.  That decision, too, was on appeal.  Today it was decided in the defendant's favor.

In Avery v. Pfizer, Inc., slip op. (N.Y. App. Div., 1st Dep't Dec. 22, 2009), the court unanimously affirmed the dismissal of 17 plaintiffs' individual product liability suits alleging personal injuries from having taken the defendant's cholesterol-lowering medicine.  Each of the plaintiffs was, like the named plaintiff, a non-resident whose claim arose in his or her home state:

[Plaintiff] . . . is a resident of Georgia; his physician who recommended and prescribed the drug, and on whose recommendation [plaintiff] solely relied, lives in Georgia; [plaintiff] ingested the drug in Georgia and suffered his injuries in Georgia; all of [plaintiff's] treating physicians are in Georgia; and all of [plaintiff's] witnesses are in Georgia.

Slip op. at 1-2.

Plaintiffs had argued that a New York forum was especially appropriate here because the allegedly fraudulent representations emanated from New York and allegedly were developed here.  But the court flatly rejected that argument, holding that "Plaintiff's 'bare assertion[s]' of fraud allegedly committed at defendant's corporate headquarters in New York, are insufficient to create a substantial nexus with New York outweighing the compelling reasons for dismissal."  Id. at 2 (citation omitted).

The court also explicitly rejected the argument -- advanced in the plaintiffs' briefs -- that "mass torts" are somehow different and require disregarding the standard forum non conveniens factors that apply in other cases.  Because the trial court was the coordinating court for all New York state court cases involving Pfizer's cholesterol-lowering medicine, plaintiffs reasoned, it should hear all such cases, regardless of the state of their origin. 

Of course, much of the concern underlying the traditional forum non conveniens rule is that a local court should not get ensnared in interpreting and applying the nuances of a single state's foreign law.  The irony of plaintiff's "mass torts" exception is that it would enmesh New York's coordinating courts in interpreting and applying the law not just of one state, but of as many as 50 foreign jurisdictions. 

The First Department understood that foreign law was the law that would apply to these cases.  In holding that New York's interest was "insufficient" to outweigh the compelling reasons for dismissal, the court cited Devore v. Pfizer, Inc., 58 A.D. 3d 138, 143 (1st Dep't 2008), in which the First Department had held -- on a nearly identical complaint -- that the "locus of the tort" was in the plaintiff's home state and that the governing law thus would not be New York law, but the law of plaintiff's home state.

Ultimately, the First Department rejected the OxyContin court's "mass torts" exception explicitly:  "We decline to disregard the traditional forum non conveniens factors in favor of a 'mass tort litigation' standard."  Slip op. at 2 (citing Matter of OxyContin II, 23 Misc. 3d 974 (N.Y. Sup. Ct., Richmond Co. 2009)).

Now, all that remains is for the Appellate Division, Second Department to do the same.

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This week I submitted an amicus brief for the Chamber of Commerce of the United States of America in a particularly interesting appeal in New York's Appellate Division, Second Department, which is an intermediate court of appeal.  The issue is whether a single state court should be allowed to arrogate to itself the power to coordinate and try individual product liability cases involving one medicine brought by plaintiffs from across the nation, or whether traditional forum non conveniens principles should apply to require the dismissal of such claims by foreign plaintiffs.

The appeal arises out of litigation over OxyContin, a powerful pain medicine that can cause serious injuries when abused.  New York -- like the federal system and many states -- has a procedure for coordinating cases filed throughout the state before one judge, i.e., a state MDL procedure.  The New York State OxyContin cases have been coordinated before a justice in Staten Island.  Although the plaintiffs' counsel in these cases are predominantly just a few New York law firms, most of the plaintiffs themselves are not from New York.  Indeed, from the trial court's opinion, it appears that there were a total of 1,190 non-resident claimants before the court during the entire course of the litigation, and only 223 New York plaintiffs.  Put differently, 81% were foreign litigants, while only 19% were New Yorkers.

The defendant manufacturer -- a Connecticut company -- settled one batch of claims, which led to more filings.  Subsequently, it moved for forum non conveniens dismissal, arguing that where the medicine was marketed, prescribed, and ingested in another state, allegedly causing injury in that state, New York's common law forum non conveniens factors required dismissal of the claim in favor of the foreign forum.  The defendant noted that most of the witnesses resided in other states -- including the physicians, whose testimony is key to failure to warn claims because of the learned intermediary doctrine.  Other non-resident witnesses -- including neighbors, co-workers, friends and family who may have seen the plaintiffs engaging in the misuse and abuse of other prescription and illegal drugs -- also are key to the defense of these claims.  And yet all of these non-resident witnesses reside outside of the subpoena power of a Staten Island court.

The trial court denied the manufacturer's motion to dismiss.  See In re OxyContin II, 23 Misc. 3d 974, 881 N.Y.S.2d 812 (Sup. Ct. 2009).  It held that "mass torts are different," and that the interests of economy across the nation's judicial system and the need for uniformity of decisions outweighs any marginal burden on a New York state court that already is adjudicating the coordinated claims of New York plaintiffs.  The trial court seemed to express its disappointment that the Joint Panel on Multidistrict Litigation twice had refused to create a federal multidistrict litigation to coordinate the pre-trial proceedings in the cases.  And seeing a need, it decided to step in to manage discovery and promote settlements.

But unlike a federal MDL, this is a court that cannot transfer cases back to their home venues.  Keeping them means trying them.  And the court seemed to discount the conflict of laws problems presented by such claims.  Yet choice of law issues factor heavily in the prior New York precedents that granted forum non conveniens dismissal even in individual claims.  It cannot be the intention of New York's highest court, the Court of Appeals, that a New York trial court should saddle itself with the job of discerning the nuances of product liability law for 50 states.  Particularly in the area of product liability, where the law represents complicated public policy choices that may not have been ruled upon by a state's highest court, fundamental principles of comity suggest that New York trial courts should avoid adjudicating such claims.

Moreover, New York's citizens and litigants deserve more husbandry of New York's scarce judicial resources.  Trying foreigners' claims takes citizen jurors, judges, and scarce judicial resources away from deciding the backlogged claims of New York residents.  Moreover, imposing the peculiar rules of New York's Civil Practice Law and Rules on non-residents' claims deprives the defendant of discovery tools available in other jurisdictions -- such as expert depositions -- that can be essential in pharmaceutical product liability claims.

Interestingly, the Appellate Division, First Department -- which covers Manhattan -- last week heard an appeal raising the opposite forum non conveniens issue in a case argued for the defendants by one of my partners, Mark Cheffo.  There, the trial court had granted Pfizer's motion to dismiss a number of individual product liability cases involving the cholesterol-lowering medicine Lipitor.  See Wilson v. Pfizer, Inc., 2008 WL 2468538 (N.Y. Sup. Ct. June 13, 2008).  The issue was whether the trial court had abused its discretion in using the recognized forum non conveniens factors to dismiss the claims in favor of filing in the plaintiffs' home states.  The plaintiffs had argued in their briefs that the trial court's decision in Oxycontin II should control.  Mass torts are different, they said.  At the oral argument, which was very brief, the justices seemed to recognize that the locus of the tort was where the doctor received any representations, decided to prescribe the drug, and treated the plaintiffs' alleged injury.  The law of the plaintiffs' residences thus would control.  And presumably the primary witness in these pharmaceutical product liability cases -- the learned intermediary -- would lie outside the subpoena power of a New York court.  What abuse of discretion could there be in deciding that such cases should be dismissed in favor of the plaintiffs' home fora?  A decision in this appeal is expected early next year.

Recently, the U.S. Court of Appeals for the Second Circuit affirmed an MDL transferee's decision to dismiss the entire litigation in favor of proceeding in Brazil.  See Lleras v. Excelaire Servs., Inc., 2009 WL 4282112 (2d Cir. Dec. 2, 2009).  In Lleras, a mass tort was not "different."  Ordinary forum non conveniens principles applied.  The case involved a plane crash in the Amazon rainforest.  The plaintiffs and decedents were Brazilian citizens.  The Second Circuit held that the trial court had "properly found that 'the important factors of lack of jurisdiction in this forum over potentially liable parties and the lack of compulsory process over witnesses and evidence in Brazil, together with other considerations, swing the balance sufficiently to make this forum genuinely inconvenient and a Brazilian forum significantly preferable.'"  Id. at *1 (citation omitted).

The doctrine of forum non conveniens is increasingly important in product liability and mass tort litigation.  In the early part of the 20th Century, tort suits were filed at home, where the plaintiff lived and was injured.  But with the advent of national and international corporations, broad distribution of products, and lawyer advertising, suits increasingly are filed in states far from plaintiffs' home, but where plaintiffs can still obtain personal jurisdiction over the defendant.  Forum non conveniens is an increasingly important tool to protect a forum's limited resources and its citizens, as well as defendants.

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California state courts are reluctant to apply their Unfair Competition Law to a nationwide class.  Perhaps it's because they recognize that theirs is one of the most liberal (and standardless) consumer fraud statutes in the nation.  Whatever the cause, this reluctance made it all the more notable when Judge Christina A. Snyder held -- with little conflicts-of-law analysis whatsoever -- that the UCL could be applied to a nationwide class of advertisers suing Citysearch.  See Menagerie Productions v. Citysearch, 2009 WL 3770668 (C.D. Cal. Nov. 9, 2009).

Plaintiffs sought to represent a nationwide class of advertisers who had elected to have their advertising priced by the number of clicks on their ads.  CitySearch recognized that "spiders," "robots," and other tools often try to click on advertisers' ads, and these do not represent potential sales.  Thus, CitySearch represented that it employed "industry leading traffic quality systems . . . to detect unusual and fraudulent click behavior.  Attempts to artificially drive up an advertiser's clicks, whether manually or via robots or other deceptive tools, will be detected by our systems and automatically thrown out."

Plaintiffs claim CitySearch failed to identify fraudulent clicks, and that they paid too much for their advertising as a result.  They asserted breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the Unfair Competition Law.

The court found that the requirements of Rule 23(a) were met, ignoring the defendant's arguments that plaintiffs had not seen the alleged misrepresentations and that CitySearch had had individual dealings with complaining advertisers, which made the plaintiffs' claims atypical.

The court then analyzed whether the proposed class met the requirements of Rule 23(b)(3).  It held that the breach of contract count met the predominance requirement because the language of the contract -- which was the same for all class members -- was unambiguous, and it specified that California law would govern.  Even if the language were not unambiguous, the court reasoned, the extrinsic evidence that the court would rely upon would be representations on CitySearch's website that were uniform for all class members.  It similarly held that the breach of the covenant of good faith and fair dealing count also met the predominance requirement.

On the UCL claim, the court found that the predominance requirement was met for the "fraudulent" prong of the UCL because, it reasoned, there was no need to adjudicate individual circumstances; rather, applying In re Tobacco II, 46 Cal. 4th 298, 320 (2009), the court concluded that the case would be adjudicated under a "reasonable consumer standard" that focuses on whether members of the public were likely to be deceived."  Thus, there would be no individualized proof of deception, reliance, and injury caused thereby.

The court reached a different conclusion for the "unfairness" prong of the UCL.  There, the court held that the test for "unfairness" requires a balancing of effects and motives that make the plaintiffs' individual expectations relevant in determining the extent of the harm.  As such, the court concluded that the predominance requirement was not met for claims under the "unfairness" prong of the UCL.

Incredibly, the court's entire analysis of whether the UCL could be applied to a nationwide class based on the California residence of defendant CitySearch is contained in this sentence:

Furthermore, the Court agrees that California's UCL can be applied to the nationwide class, as CitySearch has not shown that any "differences between California law and the law of other jurisdictions are material," nor that "other states have an interest in applying their laws to this case."

2009 WL 3770668 at *15 (citation omitted).  To begin with, the burden on choice of law is the plaintiffs' as proponents of the class, not CitySearch's.  As yesterday's post showed, without an extensive choice of law analysis, plaintiffs cannot even begin to meet that burden.  But beyond that, come on:  there is no evidence of the differences between the California UCL and other states' UCLs being material?  Really?!!  How about the fact that every other state requires some sort of proof of actual deception that causes injury -- for each class member?  Or the fact that some states, like South Carolina, do not even allow class actions under their consumer fraud statutes?

The CitySearch opinion has a number of points that would appear to present appealable error, including the court's conclusions on superiority in which the proposed trial plan utterly ignores the defendants' individual defenses.  But this conclusion -- applying California's UCL to a nationwide class -- is the most wrong and least supported in the opinion, which should make it rife for an appeal to the Ninth Circuit.

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It's hardly news when another court refuses to certify a personal injury class action.  These days, it's almost a given that such litigation presents too many individual issues of fact to meet the predominance standard of Rule 23(b)(3).

But the recent decision from Judge Terrence Boyle in the Panacryl Sutures Multidistrict Litigation is notable for its considerable discussion of the choice of law problems presented by such claims.  See In re Panacryl Sutures Prods. Liab. Cases, No. 5:08-MD-1959-BO, Slip op. (E.D.N.C. Nov. 13, 2009).  In this case, plaintiffs alleged that they suffered personal injuries as a result of having been implanted with absorbable surgical sutures that were designed to remain in the body for 24-36 months after surgery to provide wound support.  The sutures had been the subject of a Class II recall by the defendant.  Plaintiffs alleged that they were prone to cause a high rate of infection, and that the defendant failed to warn of that fact.  Interestingly, the opinion never once quotes the proposed class definition, but we know that it was a putative nationwide class with representatives from North Carolina, Wisconsin, and Arkansas.

The court began its analysis with the choice of law issue, and it took the plaintiffs to task for not having provided a comprehensive survey of the substantive laws potentially applicable to all class members' claims, holding that they failed to carry their burden of proving that common questions of law predominate.  Slip op. at 4.

Nevertheless, the court completed the analysis, noting the differences in the substantive laws of the various states, and examining the factors identified in Section 6 of the Restatement (Second) of Conflict of Laws to determine what law governs in a tort action.  The court rejected the plaintiffs' suggestion that the law of the manufacturer's residence should govern, instead holding that the interests of the class members' home states in protecting their residents from in-state injuries caused by foreign companies outweighed New Jersey's interest in regulating domestic corporations.  Slip. op. at 6-7.  It noted that plaintiffs would not likely have imagined that their claims could be governed by foreign New Jersey law, and that the defendant had to expect to be subject to the laws of all jurisdictions in which it sold products.  The court also held that the plaintiffs' home states were where the injuries occurred, where the conduct causing the injury (sale and marketing) occurred, and where the relationship between the defendant and the plaintiffs was centered.  Id. at 9.

The court also cited a recent New Jersey Supreme Court decision -- Rowe v. Hoffman LaRoche, Inc., 917 A.2d 767 (N.J. 2007) -- in which the court held that applying New Jersey law to a Michigan plaintiff's claims merely because the drug was made in New Jersey "completely undercuts Michigan's interests, while overvaluing our true interest in this litigation."  Accordingly, the court held that the law of each class member's home jurisdiction would apply to his or her claims.

The court found that the numerosity and commonality requirements of Rule 23(a) were satisfied, but the conflict of laws problem required a finding that the typicality and adequacy of representation requirements of Rule 23(a) were not satisfied.  Slip op. at 12-14.

In analyzing the predominance requirement of Rule 23(b)(3), the court noted that "[c]ourts have generally found that common questions of fact do not predominate in medical products liability cases."  Id.  But beyond the individual fact issues trumping the predominance of any common issues, the conflict of law issues also required the same result.  Indeed, once again the court took plaintiffs to task for failing to provide an "'extensive analysis' of the laws of the interested jurisdictions showing that variations among the applicable state laws do not pose 'insuperable obstacles" to class certification."  Id. at 15.

Judge Boyle also rejected a proposed trial plan that would have used "issue classes" to decide common issues even though Rule 23(b)(3)'s requirements were not satisfied.  In the proposed trial plan, "Phase One" would have addressed "common issues of liability and general causation," and "Phase Two" would have consisted of "individual trials to determine specific causation and damages."  Id. at 18.  In rejecting the plan, the court stated:

But Rule 23(c)(4) may not be used to manufacture predominance for the purposes of Rule 23(b)(3).  Plaintiffs' trial plan does not eliminate the necessity of applying the laws of several jurisdictions or the individualized inquiry into whether Panacryl Sutures caused each plaintiff's injuries.  And even under Plaintiffs' proposed trial plan, the difficulty of applying the laws of several states to issues of liability and general causation would remain.

Id. at 19.

Judge Boyle's opinion is an excellent recent example of a trial court confronting head-on the proof problems presented by a personal injury class action and refusing to vary the substantive law (including the elements of causes of action, as well as individual defenses) just to achieve the so-called "procedural efficiency" of a classwide trial.

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An Alabama federal court recently held that the Torture Victims Protection Act does  not authorize wrongful death claimants to bring suit for their own damages, but instead merely authorizes them to sue for the torture victim’s own injury.  In Baloco v. Drummond Co., Case No. 7:09-CV-00557-RDP, Slip op. (N.D. Ala. Nov. 9, 2009) (subscription to AmLaw Daily may be required to see opinion), the children of alleged torture victims sued Drummond Company for wrongful death damages that they had suffered as a result of their fathers’ murders in Columbia, which allegedly were committed by Colombian paramilitary organizations at the behest of the defendant to prevent union organizing.

Previously, wives and family members had brought suit against Drummond under the Alien Tort Claims Act, the TVPA, and Columbian common law for the injuries suffered by their murdered family members, which suit had resulted in summary judgment for Drummond on the wrongful death claims and a jury verdict for Drummond on the ATCA claim for allegedly aiding and abetting the murders.  Slip op. at 3.

In analyzing the motion to dismiss, Judge David Proctor first had to decide whether the claims of these plaintiffs were barred by the res judicata effect of the earlier judgment.  In addition to a final judgment rendered by a court of competent jurisdiction, res judicata requires that the parties in the two actions be identical, or at least in privity.  It also requires that the same cause of action be involved in both cases.  Analyzing the pleadings in the first action, Judge Proctor determined that many of the plaintiffs before him had also been plaintiffs in the first action and asserted the same claim.  Judge Proctor considered their argument that res judicata should not apply to them because they had learned new facts since the first action that supported their claim.  But the court distinguished between new factual developments that occur that may justify not applying res judicata, and the mere discovery of new evidence that existed at the time of the first action, which does not.

Nevertheless, there were three plaintiffs who could not be eliminated on res judicata grounds at the pleading stage, and so the court moved on to consider the question of their standing to bring their claims.  The TVPA provides a federal cause of action for torture and extrajudicial killing.  The claim may be brought by the victim or on his behalf by his legal representative or one who would be a claimant in an action for wrongful death.  Plaintiffs argued that this allowed them to sue for their own wrongful death damages.  The court concluded, however, that the TVPA does not allow recovery for injuries except those suffered by the torture victim himself; the mention of wrongful death in the statute defines who may bring the claim, but does not alter the fact that the claim is for the victim’s damages, not those of his family.  Slip op. at 13-16.  Accordingly, the court held that plaintiffs lacked standing to sue under the TVPA.

Plaintiffs also asserted claims under the Alien Tort Claims Act.  But the ATCA provides no guidance on the issue of standing.  Judge Proctor reasoned that “[i]n the case of the [ATCA], several courts, including the Eleventh Circuit, have referenced the TVPA as the most analogous statute.”  Id. at 16.  The court thus held that because the plaintiffs lack standing under the TVPA, they lack standing under the ATCA as well.

Finally, in declining to exercise supplemental jurisdiction over the Columbian common law claims, the court noted that the issues of Columbian law were so complex that it would be impossible for the court to navigate them.

 

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How many litigators -- after having served that killer set of interrogatories, cross-examined that prevaricating expert, or filed that surgical strike of a dispositive motion -- have returned home to secretly slay the "evildoers" (as #43 used to call them) in a game of Halo 3?  Apparently one too many.  Since 2005, Microsoft has been defending cases alleging a defect in its Xbox 360 video gaming system.  The central allegation is that the Xbox loading tray allows the video game disc to load in such a way that it can be thrown or "chucked" from its spindle, and that the disc is then moving at such force that deep groves are gouged into the disc as it rattles around the inside of the machine, making the disc inoperable.

Loyal reader Fred Burnside of Davis Wright Tremaine LLP forwarded for our benefit yesterday's decision from Judge John C. Coughenour denying certification of a nationwide class in the litigation.  See In re Microsoft Xbox 360 Scratched Disc Litigation, No. C07-1121-JCC, Slip op. (W.D. Wash. Oct. 5, 2009).  The decision is important because it rejects the notion of applying the law of the defendants' residence to all members of the class, and because it recognizes that in a case where most class members have not experienced the problem, causation and damages are issues that require individualized proof.

Shortly before the release of the product, Microsoft had observed the issue of scratched discs.  Because its engineers determined that the problem occurred only if the machine was moved during game play (as the disc was spinning), the company put a warning sticker over the disc tray mechanism that read "Do not move console with disc in tray" and included an instruction in the user manual.  Microsoft had received roughly 55,000 complaints about scratched game disks, but this represented less than 1% of product owners.

Plaintiffs were residents of Pennsylvania, Washington, and California.  They sought certification of a class applying the law of Washington, Microsoft's residence.  The court analyzed choice of law first.

Microsoft had an interesting choice of law clause in its Xbox 360 warranty:

If you acquired the Xbox Product in the United States, the laws of the State of Washington, U.S.A., will apply to this Limited Warranty.  The laws of your state of residence will apply to any tort claims and/or any claims under any consumer protection statutes.

Slip op. at 5 (emphasis in original).

The court determined that the forum, Washington, would apply a contractual choice of law clause unless:  (1) without the provision, Washington law would apply; (2) the chosen state's law violates a fundamental public policy of Washington; and (3) Washington's interests in the outcome outweighs the chosen state's interests.  Id. (citation omitted).

The court proceeded to analyze two Washington Supreme Court decisions in which the court refused to apply forum selection clauses because they were violative of Washington's public policy:  Dix v. ICT Group, 161 P.3d 1016 (Wash. 2007), and McKee v. AT&T Corp., 191 P.3d 845 (Wash. 2008).  Although the court conceded that, at first glance, the cases seemed to support plaintiffs' position, it reasoned that, on closer scrutiny, they did not:

In Dix, AOL's provision would have required Washington residents to litigate in courtrooms on the other side of the country.  Microsoft's provision requires no such thing, and in fact subjects Microsoft to liability in the plaintiff's most convenient forum, his or her home state.  In McKee, AT&T's choice-of-law provision would have required that Washington residents hire an attorney familiar with New York law.  Microsoft's provision imposes no such burden, and in fact obligates Microsoft to familiarize itself with the consumer-protection laws of fifty different states. . . .  Microsoft's choice-of-forum provision . . . is enforceable, because it leaves open a "feasible alternative for seeking relief."  See McKee, 191 P.3d at 852.  Aggrieved Xbox customers have the option of filing statewide class-action suits in their home states.  Plaintiffs fail to point to a Washington case holding that the State's public policy is to guarantee nationwide class-action resolution of small claims, and this court does not read Dix and McKee as stating that much.

Slip op. at 7-8.

The court held that Washington law did not apply to the claims of all class members, but rather the consumer protection laws of each plaintiff's home state should be applied.  The court held that this alone would defeat predominance because "[s]tate consumer protection law varies considerably across the fifty states" and applying fifty states' consumer protection laws would "create innumerable difficulties."  Id. at 9.

But the court also held that individual issues of fact predominate over the common issues.  The court observed that fewer than one percent of Xbox owners had experienced the alleged defect, and recognized that most owners would use the consoles throughout their useful life without experiencing the problem.  Such class members, the court held, would have suffered no damages, and thus determining the issue of damages required an individualized injury.  Id. at 10-11.  Moreover, because the scratched discs may arise from what Microsoft characterized as product misuse, the cause of any damages also was an individualized fact issue that precluded class certification.  Id. at 11.

The decision in the Xbox Scratched Disc Litigation is an important reminder that even where a considerable number of people may have experienced a problem with a product, individual issues of fact and law may still make a class resolution of their claims unmanageable.

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In Wilson v. Hewlett-Packard Co., 2009 WL 3021240 (N.D. Cal. Sept. 17, 2009), the court packed a lot of legal issues into a short opinion.

The plaintiff brought a putative class action, claiming that HP's laptop computers have a defect in the power jack's attachment to the motherboard that causes the solder connection to be interrupted, resulting in the ultimate failure of the laptops.  Initially, plaintiff brought the putative class action in state court alleging that an "abnormally high" number of such laptops were defective, and representing that the individual class members' claims were under $75,000 and that the aggregate liability was under $5 million.  Subsequently, they amended the complaint to allege that all HP laptops of certain models had the defect.  HP removed to federal court under CAFA 129 days after the filing of the original complaint, and plaintiff moved to remand.  The court retained jurisdiction, finding that HP had been justified in relying upon the monetary allegations in the initial complaint to refrain from investigating whether the amount in controversy exceeded $5 million.

The court also granted defendant's motion to dismiss, giving plaintiffs leave to amend.  Plaintiffs had pled three causes of action:  California's Consumer Legal Remedies Act, California's Unfair Competition Law, and breach of warranty.

The court held that the allegations at issue did not impose upon the defendant any duty to disclose under the CLRA, noting that the alleged defect did not involve a risk of physical injury.

It also held that the allegations were insufficient to state a UCL claim under Federal Rule of Civil Procedure 9(b).  Although the complaint alleged violation of ten statutory prohibitions, it gave no facts as to how those prohibitions were violated.  Moreover, the court held that the following statements were non-actionable puffery:  that laptops are designed to "'perform . . . flawlessly,'" that they provide "'easy-to-use technology'" and that they "'enable greater mobility and resource sharing within homes or small offices.'"  Id. at *2.

The court also held that the breach of warranty claim failed because plaintiff's computer failed after the running of the two-year warranty period.  The court rejected plaintiff's argument that a two-year warranty period was unconscionable.

One disappointing bit of dictum in the Wilson decision is the court's statement that, at the pleading stage, California's UCL constitutionally could apply to the claims of out-of-state plaintiffs because the defendant's actions and representations are alleged to have emanated from California.  The decision, however, engages in no conflict of laws analysis and fails to consider any of the large number of decisions that refuse to apply the law of the defendant's residence to facilitate a class action.

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One of the favorite arguments of plaintiffs' counsel is that choice of law problems can be solved by simply applying one law -- the law of the manufacturer's residence -- to the entire class of purchasers.  Typically, that argument is made in support of class certification.  And typically -- unless you happen to be in Oklahoma state court -- that argument is flatly rejected.  Using the factors of the Restatement (Second) Conflicts of Law, it simply makes no sense to apply the law of, say, Michigan to a transaction that occurred in, say, Texas involving a Texas resident and the alleged failure of the product in Texas.  The Texas consumer's legitimate expectations are that the law of her state will govern in such a transaction.

A recent decision out of the Central District of California follows the trend of rejecting the law of the manufacturer's residence as the sole law governing a nationwide consumer class action, but does so in a somewhat unique context:  deciding whether to enforce an arbitration provision.  See In re DirecTV Early Cancellation Fee Litigation, 2009 WL 2912656 (C.D. Cal. Sept. 9, 2009).

In DirecTV, plaintiffs alleged that the defendant's policy of requiring a minimum commitment period and imposing early cancellation fees on those who stopped their service before the end of the commitment period violated California's Unfair Competition Law and the consumer protection laws of various states.  They also pled counts for unjust enrichment, money had and received, and declaratory relief.

The Customer Agreement provided to every subscriber included an arbitration clause.  It adopted the rules of JAMS, waived anyone's right to a class action, and chose the law of the customer's home state to govern the "interpretation and enforcement" of the agreement.  The named plaintiffs were residents of Florida and Virginia.  DirecTV is a California resident.

The court was faced with the question whether to enforce the arbitration agreement.  Although it noted a trend toward not enforcing such agreements -- particularly where they contain class action waivers -- the court noted that the language of the Federal Arbitration Act is mandatory, and the exceptions to it are narrow.  Thus, unless the arbitration provision was unconscionable, the court was required to enforce it.  Unconscionability, the court noted, is governed by the appropriate state law.

Because the court sat in California, it had to use California's conflicts of law rules to determine whether to enforce the Customer Agreement's choice of law provision.  California courts have a strong policy favoring enforcement of choice of law provisions, and only refuse to enforce such provisions where the chosen state has no relationship to the parties or transaction and there is no reasonable basis for the parties' choice, or where applying the law of the chosen state would be contrary to a fundamental policy of California law where California has a materially greater interest in the determination of the issue than the chosen state.  2009 WL 2912656 at *4 (citing Restatement (Second) sec. 187(2)).

Obviously, the states where the plaintiffs lived had a relationship to the contract.  So plaintiffs argued that California, as the home of the manufacturer, had a materially greater interest in applying its law.  The court disagreed, citing Klussman v. Cross Country Bank, 134 Cal. App. 4th 1283, 1299 (2005) for the proposition that a state's interest in general matters of corporate regulation were materially outweighed by a state with a number of significant contacts to a consumer transaction.  Accordingly, the court chose to apply the law of Virginia and Florida to determine whether the Customer Agreement was unconscionable.  Not surprisingly, the court concluded that it was not.  Florida law only voids contracts for unconscionability where there is proof of both procedural and substantive unconscionability.  And in Virginia "unconscionability is 'a narrow doctrine' that invalidates only the most inequitable of contracts."  Id. at *6.

This decision illustrates once again that conflicts of law principles matter in class action litigation, and different states have different rules that impact the claims of their citizens.  Lawyers would be wise to pay close attention to conflicts of law issues in class action cases.

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Ahhhh, the 50-state survey!  The mere mention of its name strikes terror in the hearts of young associates everywhere -- and sparks questions about what to do with the District of Columbia, Puerto Rico, Guam and other non-states.  And yet the 50-state survey is increasingly an essential tool on the class action litigator's workbench.  The more courts scrutinize precisely how a case will be tried on a classwide basis, the more important choice of law (and the differences among state laws) become.

A recent decision from a federal court in Arkansas illustrates precisely how important the choice of law inquiry can be.  In Thompson v. Bayer Corp., 2009 WL 362982 (E.D. Ark. Feb. 12, 2009), the plaintiff challenged the defendants' marketing of One-A-Day Weight Smart vitamins, which purportedly increased the metabolism of people as they age.  The vitamins contained ECGC from an extract of green tea.  Plaintiff alleged there was no evidence this substance actually increased metabolism.

Plaintiff's case was far from specious.  The FTC had ordered the defendants to stop making scientifically unsubstantiated claims about its One-A-Day products in 1991.  In 2007, the FTC sued the defendants for violating the order with their marketing of the Weight Smart vitamins, and the defendants were fined $3.2 million by the FTC.

The plaintiff sought to certify a nationwide "unjust enrichment" class to force defendants to disgorge the profits they had made from their allegedly fraudulent activities.  She specifically defined out of her class any person "claiming personal injury or damage beyond that specifically claimed in this motion."

The court immediately focused on choice of law.  Plaintiff argued that Arkansas law did not conflict with the law of other states on unjust enrichment, and she urged that it was the defendants' burden to establish that a conflict exists.  Applying Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) and Sun Oil Co. v. Wortman, 486 U.S. 717 (1988), the court disagreed.

In analyzing whether Arkansas law conflicts with the law of the other states, the court considered 50-state surveys submitted by both plaintiff and defendants.  Plaintiff had done her best to simplify the differences in state laws, grouping them into three categories:

Plaintiff claims that, in general, the elements of unjust enrichment are as follows:

1.  Defendant must have received something of value;

2.  Defendant, in good conscience, is not entitled to the benefit.

Plaintiff acknowledges, however, that there are three different approaches taken by the states to unjust enrichment claims:

1)  Restitution:  those that follow a restitution approach where a plaintiff must show that a defendant accepted and used a benefit bestowed upon the defendant by the plaintiff, which benefit would be inequitable to retain;

2)  Restitution Plus:  those that follow the restitution approach but also require that there be no adequate remedy at law;

3)  Wrongful Acts:  those that require a plaintiff to show that the defendant benefited from the plaintiff through fraud, duress, misconduct, wrongful acts or taking undue advantage.

According to Plaintiff, the Restitution approach is followed by 37 states, the Restitution Plus approach is followed by seven states, and the Wrongful Acts approach is followed by six states.

Thompson, 2009 WL 362982 at *3-*4.

After analyzing the parties' arguments, the court concluded that the differences in state laws on unjust enrichment were too substantial to allow a nationwide class to go forward.  The court noted: 

Some of the most troublesome differences are those recognized by the Plaintiff, i.e., the disparity in proof required to prove an enrichment was "unjust or wrongful" and the requirement by some states that there be no adequate remedy at law.  However, these are not the only conflicts that exist in this area of law.  There are other differences that Plaintiff has not included in this list including, the direct and indirect benefit elements of unjust enrichment.

Id. at *4.  A number of states preclude claims for unjust enrichment where the plaintiff is not the direct purchaser of the product.  The court observed that this would be a real problem in the case before it, as few, if any, of the plaintiffs could be said to have purchased the vitamins directly from the defendants.

The court's opinion has a very useful discussion of the various differences in state unjust enrichment law.  Ultimately, the court concluded that the variations in unjust enrichment laws caused the proposed class to fail the predominance and superiority requirements of Rule 23(b)(3).  The plaintiff asked, in the alternative, for the certification of a smaller class, or even a statewide class.  The court held that it was not sufficiently briefed, and denied the alternative request without prejudice.

Thompson illustrates the fact that even where the facts supporting a class action may be strong, the variations in the applicable laws may make the class so unmanageable that it is uncertifiable.  Given this fact, the 50-state survey is likely here to stay in the briefing of proposed nationwide class actions.

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In In re Cessna 208 Series Aircraft Products Liability Litigation, MDL No. 1721, 2009 WL 274509 (D. Kan. Feb. 5, 2009), the plaintiffs -- the estates and relatives of 9 Washington residents who perished in a Cessna crash near Naches, Washington -- sued the aircraft manufacturer under a variety of theories for a plane crash allegedly caused by a faulty de-icing system.  Cessna moved to dismiss the fraud and punitive damages counts of the Complaint.

Cessna's motion presented the court with two primary questions:  (1) whose law applied? and (2) were the facts pled in the complaint sufficient to state a cause of action?

The choice of law question was particularly important, because Washington -- unlike Cessna's home state of Kansas -- does not allow punitive damages.  The court used section 145(2) of the Restatement (Second) of Torts to evaluate the most significant relationship, looking at "(a) where the place of the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered."

The court noted that the Restatement creates a sort of presumption that the law of the state where the injury occurred will govern, but observed that because the location of air crashes is simply fortuitous, the presumption is easily overcome in air crash cases.

The court reached a curious conclusion.  Although the injury occurred in Washington and the plaintiffs were Washington residents, the court nevertheless chose to apply the law of Kansas because it was Cessna's principal place of business and the place where the misconduct allegedly took place.  And yet, the court noted that Kansas's interests were in both "controlling behavior and in protecting defendant from liability."  Id. at *4.  Of course, the interest in protecting Cessna from liability would have been best served by applying Washington law, which does not allow punitive damages.

Indeed, the court's decision to apply Kansas law without going to the step of evaluating the "interests and public policies of potentially concerned jurisdictions" and the purposes "sought to be achieved by their relevant local law rules" was particularly ironic.  Even in states that allow them, punitive damages are never viewed as a plaintiff's right or entitlement.  Here, the court's decision favored the assertion of a punitive damages claim by residents of a state that bars them as a matter of public policy, using the law of a state that has an interest in protecting the defendant from punitive liability.

Despite the court's nonplussing decision on choice of law, the end result favored the defendant because the court concluded that plaintiffs had failed to meet their pleading burdens for fraud and punitive damages.  The court began by citing Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007) for the proposition that plaintiffs must plead facts -- not labels, conclusions, and legal elements -- sufficient to plead a plausible claim.  2009 WL 274509 at *1.  The court recognized that plaintiffs bear a clear and convincing burden of proof on the issue of reliance -- and yet plaintiffs had not pled that they themselves had received and relied upon any misrepresentations from Cessna.  The court rejected the notion that a presumption of reliance could be borrowed from securities law based on a "fraud on the market" theory.  It concluded that "[b]ecause plaintiffs have not alleged that they knew of Cessna's representations to the FAA or to pilots, they cannot establish that they received the information or that they detrimentally relied on it."  Id. at *6.

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The Second Circuit's recent opinion allowing a pharmaceutical company to be sued in federal court under the Alien Tort Statute for allegedly conducting clinical trials abroad without the minor patients' informed consent is a dangerous -- and standardless -- expansion of tort law that should cause every product manufacturer grave concern.  See Abdullahi v. Pfizer, Inc., Docket Nos. 05-4863-cv (L), 05-6768-cv (CON), slip op. (2d Cir. Jan. 30, 2009).  The majority's opinion scours the globe for multinational accords and documents from "world" organizations for statements that scientific experimentation without informed consent is bad, and from these statements concludes that a non-governmental corporate actor may be held liable in federal court under international common law for violating this so-called "standard."  If this decision is not corrected either by rehearing en banc or on appeal, can similar suits about pollution, climate change, or even products liability be far behind?

Let's be clear at the outset:  no one is advocating studying the effectiveness of new medicines without obtaining informed consent from the patients being treated.  The question raised by Abdullahi is what is the source of the legal obligation that an entity or individual may be sued for violating?  Is it international law?  Or is it -- as is the case with nearly all civil liability -- a question of national law embodied in statute and/or common law with recognizable elements and types of allowable damages?

Judge Richard Wesley, in his Abdullahi dissent, properly recognized that any claim brought under the Alien Tort Statute must be analyzed within that statute's historical context.  The ATS originally was passed in 1789, and now provides that the "district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States."  28 U.S.C. sec. 1350.  As Justice Souter explained in his opinion in Sosa v. Alvarez-Machain, 542 U.S. 692, 714-15 (2004), the "law of nations" at that time encompassed three basic spheres:  (1) general norms governing the behavior of nation states with each other, (2) judge-made law regulating the conduct of individuals outside domestic boundaries (such as admiralty law), and (3) rules binding individuals for the benefit of nation states.  Blackstone had defined three specific offenses for this third sphere:  violation of safe conduct requests, infringement of the rights of ambassadors, and piracy.  

According to Justice Souter, "[i]t was this [third] narrow set of violations of the law of nations, admitting of a judicial remedy and at the same time threatening serious consequences in international affairs, that was probably on the minds of the men who drafted the ATS with its reference to tort."  Id. at 715; see also id. at 720.

Sosa counsels that courts exercise great caution when asked to apply the ATS beyond the issues of safe conduct, ambassadorial infringement, and piracy:

Still, there are good reasons for a restrained conception of the discretion a federal court should exercise in considering a new cause of action of this kind.  Accordingly, we think courts should require any claim based on the present-day law of nations to rest on a norm of international character accepted by the civilized world and defined with a specificity comparable to the features of the 18th-century paradigms we have recognized.

Id. at 725 (emphasis added). 

Justice Souter identified five reasons for exercising such caution.  First, unlike in 1789, when the "common law" was viewed to exist outside of any state and was to be "discovered," today we understand that the "common law" is created and chosen by human beings.  Second, and as a result, the federal courts have gotten out of the business of making common law, looking "for legislative guidance before exercising innovative authority over substantive law.  It would be remarkable to take a more aggressive role in exercising a jurisdiction that remained largely in shadow for much of the prior two centuries."  Id. at 726.  Third, the Supreme Court has repeatedly eschewed creating private rights of action -- and thereby deferring to Congress -- because of the practical policy considerations about how the proscriptions should be enforced.  Fourth, creating common law under the ATS would necessarily result in placing limitations on the power of foreign governments and their citizens, which is not the typical role of the judiciary.  And fifth, "[w]e have no congressional mandate to seek out and define new and debatable violations of the law of nations, and modern indications of Congressional understanding of the judicial role in the field have not affirmatively encouraged greater judicial creativity."  Id. at 728.

Thus, the Supreme Court concluded that:

[W]e are persuaded that federal courts should not recognize private claims under federal common law for violations of any international law norm with less definite content and acceptance among civilized nations than the historical paradigms familiar when section 1350 was enacted. . . .  And the determination whether a norm is sufficiently definite to support a cause of action should (and, indeed, inevitably must) involve an element of judgment about the practical consequences of making that cause available to litigants in the federal courts.

Id. at 732-33.

In Sosa, the plaintiff had alleged that Mexican citizens had arbitrarily detained him and transported him across the border to the United States, where he was arrested by the DEA.  Plaintiff pointed to the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights, as well as other sources, to support his claim that this violated clear and accepted standards under the law of nations.  The Supreme Court concluded that these documents -- while expressing aspirations of avoiding such detention -- did not create legal obligations on individuals as a matter of international law.  Id. at 734-38.

It would be ironic, to say the least, if a person who forcibly abducts another person cannot be sued under the ATS for lack of clear and accepted standards, but a company responding to a meningitis outbreak by providing medicines as part of a clinical trial actually could be sued under the ATS.  What, exactly, are the clear and accepted standards under international law for addressing language and cultural barriers in obtaining informed consent?  And in the case of minors, must consents be obtained from both parents?  Where the parents are unavailable and the State is the guardian, what obligation does international law impose then?  Other than repeating the mantra that "informed consent" is necessary, the majority opinion in Abdullahi does not say.  It does acknowledge in footnote 15 that "disagreements" exist over how to secure consent in illiterate populations and whether informed consent is even possible in double-blind experiments, but it dismisses these as "fringe" concerns.  The problem, of course, is that the trial court is being asked to create the elements of a common law cause of action based on universally recognized international standards, but none actually exist.

Judge Wesley, in his dissent, agreed with the majority that three criteria must be satisfied before a violation of international law can be actionable under the ATS:  "the norm is (1) specific and definable, (2) universally adhered to out of a sense of legal obligation, and (3) a matter of mutual concern, namely a matter 'involving States' actions performed towards or with regard to the other.'"  Abdullahi, slip op. at 52 (citing Flores v. Southern Peru Copper Corp., 414 F.3d 233 (2d Cir. 2003)).  But his analysis reached very different conclusions.

To begin with, Judge Wesley scrutinized the plaintiffs' sources of customary international law.  One had been described by the U.S. Supreme Court as having little utility in defining international obligations, despite its "moral authority."  The second had been promulgated after the conduct at issue in the litigation and was a European regional convention that had not been ratified by France, Germany, Italy, the United Kingdom, Russia or the Netherlands, and thus could hardly be deemed "universal."  Using it as evidence also would amount to an international ex post facto definition of legal obligations.  Two more statements from international organizations post-dated the relevant timeframe by several years.  Two more guidelines were from private entities, and one merely purported to express the "asserted aspirations and demands of some countries," but not "statements of universally-recognized legal obligations."  Plaintiffs also cited states' domestic laws, but Judge Wesley -- relying on Flores -- reasoned that these are irrelevant for the purpose of defining international law.  Finally, plaintiff's citation to the Nuremberg Code -- which is a statement of principles accompanying a criminal verdict -- possessed "at best 'subsidiary' value as a judicial decision."  Abdullahi, slip op. at 52-53.  Thus, Judge Wesley concluded, "this evidence falls short of charting the existence of a universal and obligatory international norm actionable against non-governmental actors under the ATS."  Id.

One of the fundamental flaws in the majority's analysis was that it analyzed so-called obligations without regard for who was bound by them:  state actors, or private actors.  As Judge Wesley pointed out, the majority provided no evidence for the imposition of liability on private actors as a matter of customary international law.

Judge Wesley also looked to the Restatement (Third) of Foreign Relations Law, section 404, for an analogy.  Although section 404 does not purport to state what is actionable under the ATS, it does identify certain offenses for which there is universal criminal jurisdiction over non-state entities:  "piracy, slave trade, attacks on or hijacking of aircraft, genocide, war crimes, and perhaps certain acts of terrorism.'"  Slip op. at 71.  The crimes are listed there not because they are "particularly reprehensible," but rather because they "occur in locations where, or during times when, sovereignty, and a fortiori criminal jurisdiction, are incapable of being exercised."  Id.  That, of course, is not the case for the conduct of medical studies.

Judge Wesley also took issue with the majority's conclusion that the matter was one of mutual concern among nations.  In reaching its conclusion, the majority cited no international accords.  Rather, it posited that conducting studies without informed consent would make people less likely to seek medical treatment in the future.  Judge Wesley conceded that the majority might be quite right, but that this did not establish a problem among nations:

In fact, the majority's theory would be no different when evaluating the medical malpractice of [the defendant's] research physicians or the strict products liability for its allegedly defective drug, but malpractice and products liability are among the quintessential subjects of domestic law.

Id. at 80; see also Flores, 414 F.3d at 249 (murder is not a violation of the ATS because "'nations of the world' have not demonstrated that this wrong is 'of mutual, and not merely several, concern'").  Indeed, as Judge Wesley noted, the three original offenses covered by the ATS (infringing rights of ambassadors, violating safe conducts, and piracy) all "threatened serious consequences in international affairs because the norms were, and still are, the foundation for states' formal relationships with one another."  Abdullahi, slip op. at 81.  

Ultimately, it is Judge Wesley's dissent -- rather than the majority's opinion -- that reflects the caution mandated by the Supreme Court in Sosa, recognizing the institutional reluctance of the federal courts to make new substantive common law rather than deferring to the legislative and executive branches for making such policy choices, particularly in the international arena.

One final matter merits mention.  The complaint pled causes of action under Connecticut's Unfair Trade Practices Act and its Products Liability Act.  The District Court concluded that under Connecticut's choice of law principles, Nigerian law would apply, since Nigeria is the place of the injury, plaintiffs' residence, and where the conduct giving rise to the action occurred.  The Second Circuit vacated that determination, urging the District Court to apply all of the factors in Section 6(2) of the Restatement (Second) of Conflicts of Law.  Specifically, it criticized the District Court for not analyzing the relevant policies of the forum and other interested states, as well as the parties' expectations.  The dissent fails to address this part of the opinion.

The majority's opinion implies that the District Court got it wrong, and that Connecticut's UTPA and PLA should apply to transactions occurring in Nigeria, where injury occurred in Nigeria to Nigerian citizens.  As a practical matter, there is no way Connecticut law would prevail over Nigerian law in such a governmental interest or most significant relationship analysis.  To the extent the majority is advocating the use of the law of the manufacturer's residence, courts that have conducted such analyses in putative US class actions generally have rejected the conclusion that the law of the manufacturer's residence controls.  See, e.g., Barbara's Sales, Inc. v. Intel Corp., 879 N.E.2d 910 (Ill. 2007). 

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There has been lots of commentary -- academic and not-so-scholarly -- about the enforceability of class action waivers.  Particularly in California, the law seems to be that such waivers typically are held unenforceable as against public policy.

On Friday, the Ninth Circuit issued an opinion in a consumer class action interpreting a forum selection clause.  The contract at issue did not contain a class action waiver, and the defendant was not arguing that class actions were barred under the agreement; it simply wanted the benefit of its Virginia forum.  Thus, class action waiver law should not come up in the opinion, right? Ah, if only the law were that easy.

In Doe1 v. AOL LLC, 2009 WL 103657 (9th Cir. Jan. 16, 2009), plaintiffs were members of an on-line service provider that was alleged to have made roughly 658,000 members' personal data (including addresses, phone numbers, credit card numbers, and internet search terms) available to the public.  Plaintiffs sued for violation of the federal Electronic Communications Privacy Act, federal common law unjust enrichment, and a subclass of California residents sued for violations of California's Consumer Legal Remedies Act, False Advertising Act, Unfair Competition Law, Customer Records Act, and for the California common law tort of public disclosure of private facts.

The Members Agreement governing the class members' claims did not seek to bar class actions.  Rather, it provided that Virginia law governed members' claims, and it had a forum selection clause providing that "exclusive jurisdiction resides in the courts of Virginia."  The defendant moved to dismiss for improper venue under Fed. R. Civ. P. 12(b)(3), and the trial court granted the motion.

The Ninth Circuit, however, chose to parse prepositions.  The forum selection clause says "courts of Virginia," not "courts in Virginia."  Accordingly, the Ninth Circuit concluded, despite the protestations of the defendant that presumably authored the Members Agreement, the forum selection clause only allows for actions to be brought in the state courts of Virginia, not those federal courts that exist within Virginia's borders.

This presents a problem, the Ninth Circuit concluded, because Virginia state courts do not allow for consumer class actions.  The court then used the test set forth in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) to determine whether the forum selection clause is unenforceable:  "'if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision.'"

The analysis was hardly difficult.  The California Court of Appeal already had concluded that the exact same forum selection clause was unenforceable because it violated public policy favoring class actions, and it amounted to a disfavored waiver of rights under the Consumer Legal Remedies Act.  See America Online, Inc. v. Superior Ct. of Alameda County, 108 Cal. Rptr. 2d 699 (Cal. App. 2001).

Thus, the Ninth Circuit concluded that the Bremen test had been met, and the "forum selection clause in the instant member agreement is unenforceable as to California resident plaintiffs bringing class action claims under California consumer law."  Accordingly, it reversed and remanded the trial court's decision.

Judge Bea filed a concurrence arguing that on remand, the plaintiff class representatives should have to plead and prove that they "really are California consumers by stating facts which make California substantive law applicable to them, pursuant to the well-known rules of federal choice of law, set forth in the Restatement."  According to Judge Bea, "it doesn't really require one to be 'imaginative and creative' to suspect the class representatives may not have become California residents for reasons other than class action litigation and are not really California consumers entitled to California protection."

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