We left off last Monday in the middle of something — the Seventh Circuit’s latest proof of its leadership in the law of class actions.
Have class actions — after a steady decline under the Roberts Court — begun a come-back?
I believe they have. And I offer here, and in the next post, three reasons they will continue to rebound.
The outsize influence of Justice Scalia
Justice Antonin Scalia disliked class actions. He advocated putting a spotlight on class cases and then wrote opinions that made class cases harder to certify and more difficult to win. More than any other jurist, he reduced the effectiveness of Rule 23 as a means to deter and remedy wrongs that hurt large numbers of people but didn’t justify an individual lawsuit. He even questioned their legitimacy.
Justice Scalia’s focus on class actions and his ability to deliver majorities opposing them led to existential worries. The ABA Section of Antitrust Law devoted its Spring 2016 issue of Antitrust to the question of “Class Actions on the Precipice?” Verbal strutting by forces opposing class actions prevailed.*
But with Justice Scalia’s death on February 13, 2016, the tide at last turned. And it did so quickly.
The settlement of a large price-fixing class action provided the first evidence of receding water. On February 26, Dow Chemical surrendered hope that the Court would review and then toss a $1.2 billion verdict and judgment. Dow agreed to pay the class $835 million t0 settle.
Another blow fell on March 22. The Court, by a 6-2 margin, upheld the use of “statistical evidence, or so-called representative evidence,” to prove “classwide liability” for overtime pay. Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1046 (2016).
The dissenters cited Justice Scalia’s 5-4 majority opinion in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), in claiming that the Court had grievously erred by “redefining the predominance standard” for class certification under Rule 23(b)(3).
The skeptics of class actions have lost their strongest judicial ally. The disappearance of his outsize influence as a rallying point and the absence of him as a leader weaken the class skeptics’ cause. They also increase the likelihood of a class action rebound.
The Seventh Circuit surge
One court of appeals has steadfastly defended class actions against those who would curtail use of the class action mechanism. The Seventh Circuit’s previously defiant stance may swiftly become the norm.
A decision on August 4, 2016, shows the way forward.
Writing for a unanimous panel, Chief Judge Diane Wood dispatched a series of defense arguments that have given other courts of appeals more trouble.
In Kleen Products LLC v. Int’l Paper Co., No. 15-2385 (7th Cir. Aug. 4, 2016), buyers of “containerboard” accused firms that held 74 percent of the market of conspiring to raise prices. The scheme cut manufacturing capacity, limited inventory, and pushed up the “Pulp & Paper Week” index that “is widely used within the industry as a benchmark.” Id., slip op. at 6.
The district court granted class certification over vigorous objections . It rejected the containerboard makers’ arguments that class plaintiffs hadn’t carried their burden of meeting the “predominance” and “superiority” requirements of Rule 2(b)(3). The Seventh Circuit affirmed the district court in all respects. I will highlight a few of them.
Common impact of conspiracy on class
Chief Judge Wood does such a stellar job with the all-important common impact issue that I will not try to improve on them.
In order to secure class certification, the Purchasers had to demonstrate (not merely allege) that there is proof common to all class members, and that this proof would show that they suffered “injuries that reflect the anticompetitive effect of either the violation or the anticompetitive acts made possible by the violation.” James Cape & Sons Co. v. PCC Const. Co., 453 F.3d 396, 399 (7th Cir. 2006); see Brunswick Corp. v. Pueblo Bowl-O- Mat, Inc., 429 U.S. 477 (1977). Purchasers tendered extensive evidence that, if believed, would be enough to prove the existence of the alleged con- spiracy. Not surprisingly, it is largely circumstantial. But they offered voluminous written materials of various types, which in the aggregate pointed to the existence of both agreement and actions to violate the antitrust laws. Indeed, Defendants do not contest that the existence of the conspiracy could be (perhaps had to be) proven by evidence common to the class.
The more difficult question (though not too difficult in the end) is whether the common evidence could show the fact of injury on a classwide basis. See Messner, 669 F.3d at 819 (“The ability to use such common evidence and common methodology to prove a class’s claims is sufficient to support a finding of predominance on the issue of antitrust impact for certification under Rule 23(b)(3).”). At base, Defendants argue that it is not enough for Purchasers to prove aggregate injury and one aggregate overcharge, without allocating how much of that overcharge was paid by each individual class member. They urge that Purchasers have the burden of showing that every class member must prove at least some impact from the alleged violation. For that proposition, they rely on In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 311 (3d Cir. 2008), and In re Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d 244, 252 (D.C. Cir. 2013). While we have no quarrel with the proposition that each and every class member would need to make such a showing in order ultimately to recover, we have not insisted on this level of proof at the class certification stage. To the contrary, we said in Suchanek v. Sturm Foods, Inc., 764 F.3d 750 (7th Cir. 2014), that “[i]f the [district] court thought that no class can be certified until proof exists that every member has been harmed, it was wrong.” Id. at 757; see also Parko v. Shell Oil Co., 739 F.3d 1083, 1084–85 (7th Cir. 2014); McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 491 (7th Cir. 2012). There is no evidence to make us think that the class defined by the district court either excludes too many purchasers or contains troublesome internal conflicts, either of which would indicate it should be rejected. We therefore move on to the adequacy of the Purchasers’ showing that the conspiracy had an effect on the prices they paid.
The parties have jousted over the need for some kind of “but-for” analysis, by which Defendants mean an expert con- struction of a hypothetical market free of any anticompetitive restraint, to which the actual market can be compared. See Blades v. Monsanto Co., 400 F.3d 562, 569 (8th Cir. 2005). That might be one way in which a plaintiff could satisfy its burden, but we think that the formulation is too narrow. What is essential is whether the class can point to common proof that will establish antitrust injury (in the form of cartel pricing here) on a classwide basis. Like the district court, we are satisfied that Purchasers have done so.
The Purchasers built up their case with several types of evidence. First, expert Harris’s report showed that the structure of the containerboard market was conducive to successful collusion. He pointed to the concentration of manufacturers; the vertical integration of the market; the capital-intensive manufacturing process (which affected the pace and likelihood of new entry); weak competition from imported containerboard; no good substitutes for the product; a low elasticity of demand; and a standardized, commodity product. These are all well accepted characteristics of a market that is subject to cartelization. See, e.g., In re Text Messaging Antitrust Litig., 782 F.3d 867, 872 (7th Cir. 2015); Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 859–60 (7th Cir. 2012) (en banc); In re High Fructose Corn Syrup Litig., 295 F.3d 651, 657 (7th Cir. 2002); Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 710–11 (7th Cir. 1984).
I have run out of electrons for now and will finish up in the next post.
* The cover note for the issue asserted that “consumers . . . will pay for the litigation process and the settlement recoveries in the form of higher prices”, suggested “the substitution of restitution in place of class actions”, and asked “whether the costs are worth the benefit”.
Since 2007, wanton patent infringers have enjoyed extraordinary legal protection from awards of “enhanced” damages under section 284 of the Patent Act.
Last week, the Supreme Court stripped away three of the protections. The changes will make good patent cases better. But it won’t convert weak ones into strong ones. Continue Reading
Hulk Hogan’s case against Gawker Media made headlines four times — but only twice because of what the jury did.
You’ll recall that a trial in Florida produced a verdict in favor of Mr. Hogan on his claim that Gawker had gone too far with a sex video. Jurors awarded the Hulkster (Terry Gene Bollea) actual damages of $115 million and then — after a second round of deliberations — another $25 million in punitives.
The next round of publicity featured not tawdry sex and vile reporting but news that a vengeful billionaire had provided the Hulk with the means to obtain civil justice. There followed a bankruptcy.
The Chamber of Commerce hyperventilated in print about casino litigation. Oh nos!
Something else caught my eye.
After news of the billionaire’s funding broke, Forbes printed an item about tax treatment of lawsuit funding in contingent-fee cases. That’s where a law firm commits to investing potentially millions of dollars worth of time in return for a share of the upside — usually a percentage of any recovery from a case.
The author of the Forbes piece discloses that he focuses on “taxes and litigation”. He describes a structure in which a third-party funder pays the owner of a civil claim $X up front in return for the claim owner’s promise to convey a share of the claim to the funder at some point in the future. The structure, which he deems a “prepaid forward contract”, allows the funder to invest in an uncertain but potentially valuable claim while providing cash to the owner, who may use the funds to pay counsel on an hourly basis or may stick the money in her bank account.
The author says that the approach may afford big tax advantages. The funder can deduct its expenses and pay tax on any profit at the lower capital-gains rate. The claim owner defers her tax liability until the claim either pays off or goes poof but in the meantime has money at her disposal.
The same, the author says, goes for the lawyers.
Potential tax benefits
In a typical complex commercial case with much at stake, the time from commencement to resolution may run several years, sometimes a decade or longer. The value of the tax deferral can add up.
Take for instance a claim that produces, through settlement or enforcement of a judgment, a lump-sum payment of $50 million after five years. Assuming an up-front payment by the funder to the law firm of $7.5 million for half of its 40 percent contingent fee — fairly standard in commercial cases — the partners in the law firm will pay no tax on the $7.5 million for a five-year period. At the highest marginal tax rate — currently 39.6 percent — the partners will hold onto the $2.97 million ($7.5 million x .396) that they would otherwise pay in income taxes for several years.
If the structure holds up — a big if that I don’t have the expertise to opine on — adopting it could make the interests of claim owners and their contingent-fee lawyers more valuable and could therefore enhance the attractiveness of entering into a lawsuit-funding arrangement.
The time value of having $2.97 million tax-free for four years or so conceivably could make enough difference that people who’d normally shun third-party funding would give it a second look. It might even become mainstream.
Not my area
Let me stress that you’ll have to get your own advice about whether the approach would satisfy tax laws. The lawyer whose article in Fortune prompted this post himself takes a cautious view of the approach, noting several caveats. Proceed at your own risk.
After a trip to the Supreme Court and back, a massive case against 16 of the world’s largest banks for rigging the London inter-bank offer rate (LIBOR) — “the world’s most important number” — will return to the district court in Manhattan scarier than ever for the defendants. Gelboim v. Bank of Am. Corp., No. 13-3565-cv, slip op. at 5 (2d Cir. May 23, 2016)
The first civil LIBOR case began in 2011, on the heels of disclosures regarding evidence that government investigations had uncovered. Many others followed. They alleged, under federal antitrust and state-law theories, that the 16 banks that served on the LIBOR-setting panel had conspired to suppress LIBOR. They wanted to keep it low both to reduce the amount of interest they paid on their commercial paper and other borrowings and to make themselves seem in better shape than the facts in the wake of the 2007-08 financial crisis warranted.
In August 2011, the Judicial Panel on Multidistrict Litigation centralized all of the lawsuits in the Southern District of New York, before U.S. District Judge Naomi Reice Buchwald.
Judge Buchwald dismissed the antitrust claims on the ground that the plaintiffs had failed to allege “antitrust injury”. Because the setting of LIBOR involved a “collaborative” rather than “competitive” process, she held, the harm to plaintiffs did not result from anticompetitive conduct and therefore did not count as antitrust injury.
Judge Buchwald also later ruled that the plaintiffs could not allege a plausible conspiracy among the banks.
In 2013, the Second Circuit kicked an appeal from Judge Buchwald’s dismissal of the antitrust claims in a case that alleged only antitrust claims. But the Supreme Court granted review of the court of appeals’ action. On January 21, 2015, the Court held 9-0 that the appeal could go forward even though the dismissal resolved just one case and not the entire multi-district litigation. Gelboim v. Bank of Am. Corp., 135 S. Ct. 897, 902 (2015).
The Second Circuit rules
Today a panel of the Second Circuit vacated the district court’s dismissal of the antitrust claims against the banks. Circuit Judge Dennis Jacobs wrote the opinion for the largely 3-0 panel. As Judge Jacobs summarized:
We vacate the judgment on the ground that: (1) horizontal price‐fixing constitutes a per se antitrust violation; (2) a plaintiff alleging a per se antitrust violation need not separately plead harm to competition; and (3) a consumer who pays a higher price on account of horizontal price‐fixing suffers antitrust injury. Since the district court did not reach the second component of antitrust standing ‐‐ a finding that appellants are efficient enforcers of the antitrust laws ‐‐ we remand for further proceedings on the question of antitrust standing. The Banks urge affirmance on the alternative ground that no conspiracy has been adequately alleged; we reject this alternative.
Judge Jacobs stressed one of the concerns that prompted the remand:
Requiring the Banks to pay treble damages to every plaintiff who ended up on the wrong side of an independent LIBOR‐denominated derivative swap would, if appellants’ allegations were proved at trial, not only bankrupt 16 of the world’s most important financial institutions, but also vastly extend the potential scope of antitrust liability in myriad markets where derivative instruments have proliferated.
Id. at 40.
The Second Circuit’s revival of the antitrust claims will have practical effects beyond the potential for treble damages. The district court had dismissed the remaining state-law and other claims against several bank defendants, but they will now return to, and embiggen, an already large fray.
Lead counsel for class plaintiffs have asked for a status conference to discuss extending the current pre-trial schedule in light of the court of appeals decision.
The over-the-counter (OTC) class of plaintiffs reached a pre-decision settlement for $120 million with Barclays and has moved for preliminary approval.
Note: My firm serves as interim co-lead counsel for the OTC class in the LIBOR litigation. Any opinions in this post reflect my views only.
On May 11, 2016, the Defend Trade Secrets Act of 2016 took effect. The effect of its effectiveness? Almost all new trade secrets cases will either start in federal court, or they will wind up there once the defendant removes it from state court. Key parts of the new law include these:
Cause of action. “An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” DTSA, 18 U.S.C. 1836(b)(1).
Seizure orders. The court may issue seizure orders and may act ex parte in some cases. DTSA 1836(b)(2).
Relief. Injunctions; actual damages, disgorgement, or reasonable royalty; and in some cases exemplary damages and attorneys’ fees. DTSA 1836(b)(3).
Federal jurisdiction. U.S. district courts “shall have original jurisdiction of civil actions brought under this section.” DTSA 1836(c).
Limitations period. Three years after discovery of the misappropriation. DTSA 1836(d). Some cases will stay in state court — mainly ones that don’t involve “interstate or foreign commerce” and ones in which a defendant raises a state law trade secrets counterclaim.
Last October, the Consumer Financial Protection Bureau published a study on how banks and other lenders use bans on class actions to save money.
The study resulted from a mandate in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
As I noted when the study came out:
In 2016, despite contracts that mandate one-on-one arbitrations, consumers will likely gain the right to bring claims against banks, credit card issuers, and other lenders in class actions. The new rule, which the Consumer Financial Protection Bureau announced on October 7, 2015 it will probably issue next year, will partially reverse a string of recent Supreme Court decisions that made class-banning arbitration clauses broadly enforceable.
The action by the Bureau will vastly raise the stakes for disputes involving practices affecting large numbers of consumer finance customers.
On May 5, 2016, the CFPB took the next step. It asked for comment on rule language.
The text appears below.
* * * *
PART 1040—ARBITRATION AGREEMENTS
1040.1 Authority, purpose, and enforcement.
1040.4 Limitations on the use of pre-dispute arbitration agreements. 1040.5 Compliance date and temporary exception.
Supplement I to Part 1040—Official Interpretations.
1. The authority citation for part 1040 reads as follows:
Authority: 12 U.S.C. 5512(b) and (c) and 5518(b). § 1040.1 Authority, purpose, and enforcement.
(a) Authority. The regulation in this part is issued by the Bureau of Consumer Financial Protection (Bureau) pursuant to sections 1022(b)(1) and (c) and 1028(b) of the Dodd-Frank Act (12 U.S.C. 5512(b) and (c) and 5518(b)).
(b) Purpose. The purpose of this part is the furtherance of the public interest and the protection of consumers regarding the use of agreements for consumer financial products and services providing for arbitration of any future dispute.
§ 1040.2 Definitions.
(a) Class action means a lawsuit in which one or more parties seek class treatment pursuant to Federal Rule of Civil Procedure 23 or any State process analogous to Federal Rule of Civil Procedure 23.
(b) Consumer means an individual or an agent, trustee, or representative acting on behalf of an individual.
(c) Provider means:
(1) A person as defined by 12 U.S.C. 5481(19) that engages in offering or providing any of the consumer financial products or services covered by § 1040.3(a) to the extent that the person is not excluded under § 1040.3(b); or
(2) An affiliate of a provider as defined in paragraph (c)(1) of this section when that affiliate is acting as a service provider to the provider as defined in paragraph (c)(1) of this section with which the service provider is affiliated consistent with 12 U.S.C. 5481(6)(B).
(d) Pre-dispute arbitration agreement means an agreement between a provider and a consumer providing for arbitration of any future dispute between the parties.
§ 1040.3 Coverage.
(a) Covered consumer financial products and services. This part generally applies to pre-dispute arbitration agreements for the following products or services when they are consumer financial products or services as defined by 12 U.S.C. 5481(5):
(1)(i) Providing an “extension of credit” that is “consumer credit” as defined in Regulation B, 12 CFR 1002.2;
(5) Providing accounts subject to the Truth in Savings Act, 12 U.S.C. 4301 et seq., as implemented by 12 CFR part 707, and Regulation DD, 12 CFR part 1030;
(6) Providing accounts or remittance transfers subject to the Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq., as implemented by Regulation E, 12 CFR part 1005;
(7) Transmitting or exchanging funds as defined by 15 U.S.C. 5481(29) except when integral to another product or service that is not covered by section 1040.3;
(8) Accepting financial or banking data or providing a product or service to accept such data directly from a consumer for the purpose of initiating a payment by a consumer via any payment instrument as defined by 15 U.S.C. 5481(18) or initiating a credit card or charge card transaction for the consumer, except when the person accepting the data or providing the product or service to accept the data also is selling or marketing the nonfinancial good or service for which the payment or credit card or charge card transaction is being made;
(9) Check cashing, check collection, or check guaranty services; or
(10) Collecting debt arising from any of the consumer financial products or services described in paragraphs (1) through (9) of this section by:
(i) A person offering or providing the product or service giving rise to the debt being collected, an affiliate of such person, or, a person acting on behalf of such person or affiliate;
(ii) A person purchasing or acquiring an extension of consumer credit covered by paragraph (a)(1)(i) of this section, an affiliate of such person, or, a person acting on behalf of such person or affiliate; or
(iii) A debt collector as defined by 15 U.S.C. 1692a(6).
(b) Excluded persons. This part does not apply to the following persons to the extent they are offering or providing any of the following products and services:
(1) Broker dealers to the extent that they are providing products or services described in paragraph (a) of this section that are subject to rules promulgated or authorized by the U.S. Securities and Exchange Commission prohibiting the use of pre-dispute arbitration agreements in class action litigation and providing for making arbitral awards public;
(2) (i) The federal government and any affiliate of the Federal government providing any product or service described in paragraph (a) of this section directly to a consumer; or
(ii) A State, local, or tribal government, and any affiliate of a State, local, or tribal government, to the extent it is providing any product or service described in paragraph (a) of this section directly to a consumer who resides in the government’s territorial jurisdiction;
(3) Any person when providing a product or service described in paragraph (a) of this section that the person and any of its affiliates collectively provide to no more than 25 consumers in the current calendar year and to no more than 25 consumers in the preceding calendar year;
(4) Merchants, retailers, or other sellers of nonfinancial goods or services to the extent they:
(i) Provide an extension of consumer credit covered by paragraph (a)(1)(i) of this section that is of the type described in 12 U.S.C. 5517(a)(2)(A)(i) and they would be subject to the Bureau’s authority only under 12 U.S.C. 5517(a)(2)(B)(i) but not 12 U.S.C. 5517(a)(2)(B)(ii) or (iii); or
(ii) Purchase or acquire an extension of consumer credit excluded by paragraph (b)(4)(i) of this section; or
(5) Any person to the extent the limitations in 12 U.S.C. 5517 or 5519 apply to the person or a product or service described in paragraph (a) of this section that is offered or provided by the person.
§ 1040.4 Limitations on the use of pre-dispute arbitration agreements.
(a) Use of pre-dispute arbitration agreements in class actions.
(1) General rule. A provider shall not seek to rely in any way on a pre-dispute arbitration agreement entered into after the date set forth in § 1040.5(a) with respect to any aspect of a class action that is related to any of the consumer financial products or services covered by § 1040.3 including to seek a stay or dismissal of particular claims or the entire action, unless and until the presiding court has ruled that the case may not proceed as a class action and, if that ruling may be subject to appellate review on an interlocutory basis, the time to seek such review has elapsed or the review has been resolved.
(2) Provision required in covered pre-dispute arbitration agreements. Upon entering into a pre-dispute arbitration agreement for a product or service covered by § 1040.3 after the date set forth in § 1040.5(a):
(i) Except as provided in paragraphs (a)(2)(ii) or (iii) of this section or in § 1040.5(a), a provider shall ensure that the agreement contains the following provision: “We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it.”
(ii) When the pre-dispute arbitration agreement is for multiple products or services, only some of which are covered by § 1040.3, the provider may include the following alternative provision in place of the one otherwise required by paragraph 4(a)(2)(i) of this section: “We are providing you with more than one product or service, only some of which are covered by the Arbitration Agreements Rule issued by the Consumer Financial Protection Bureau. We agree that neither we nor anyone else will use this agreement to stop you from being part of a class
action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it. This provision applies only to class action claims concerning the products or services covered by that Rule.”
(iii) When the pre-dispute arbitration agreement existed previously between other parties and does not contain either the provision required by paragraph (a)(2)(i) of this section or the alternative permitted by paragraph (a)(2)(ii) of this section, the provider shall either ensure the agreement is amended to contain the provision specified in paragraph (a)(2)(iii)(A) of this section or provide any consumer to whom the agreement applies with the written notice specified in paragraph (a)(2)(iii)(B) of this section. The provider shall ensure the agreement is amended or provide the notice to consumers within 60 days of entering into the pre-dispute arbitration agreement.
(A) Agreement provision. “We agree that neither we nor anyone else who later becomes a party to this pre-dispute arbitration agreement will use it to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it.”
(B) Notice. “We agree not to use any pre-dispute arbitration agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it.”
(b) Submission of arbitral records. For any pre-dispute arbitration agreement entered into after the date set forth in § 1040.5(a), a provider shall comply with the requirements set forth below.
(1) Records to be submitted. A provider shall submit a copy of the following records to
the Bureau, in the form and manner specified by the Bureau:
(i) In connection with any claim filed in arbitration by or against the provider concerning any of the consumer financial products or services covered by § 1040.3;
(A) The initial claim and any counterclaim;
(B) The pre-dispute arbitration agreement filed with the arbitrator or arbitration administrator;
(C) The judgment or award, if any, issued by the arbitrator or arbitration administrator; and
(D) If an arbitrator or arbitration administrator refuses to administer or dismisses a claim due to the provider’s failure to pay required filing or administrative fees, any communication the provider receives from the arbitrator or an arbitration administrator related to such a refusal; and
(ii) Any communication the provider receives from an arbitrator or an arbitration administrator related to a determination that a pre-dispute arbitration agreement for a consumer financial product or service covered by § 1040.3 does not comply with the administrator’s fairness principles, rules, or similar requirements, if such a determination occurs.
(2) Deadline for submission. A provider shall submit any record required pursuant to paragraph (b)(1) of this section within 60 days of filing by the provider of any such record with the arbitrator or arbitration administrator and within 60 days of receipt by the provider of any such record filed or sent by someone other than the provider, such as the arbitration administrator or the consumer.
(3) Redaction. Prior to submission of any records pursuant to paragraph (b)(1) of this section, a provider shall redact the following information:
(i) Names of individuals, except for the name of the provider or the arbitrator where either is an individual;
(ii) Addresses of individuals, excluding city, State, and zip code; (iii) Email addresses of individuals;
(iv) Telephone numbers of individuals;
(v) Photographs of individuals;
(vi) Account numbers;
(vii) Social Security and tax identification numbers;
(viii) Driver’s license and other government identification numbers; and (ix) Passport numbers.
§ 1040.5 Compliance date and temporary exception.
(a) Compliance date. Compliance with this part is required for any pre-dispute arbitration agreement entered into after [INSERT DATE THAT IS 211 DAYS AFTER PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER].
(b) Exception for pre-packaged general-purpose reloadable prepaid card agreements. Section 1040.4(a)(2) shall not apply to a provider that enters into a pre-dispute arbitration agreement for a general-purpose reloadable prepaid card if the requirements set forth in either paragraphs (b)(1) or (2) of this section are satisfied.
(1) For a provider that does not have the ability to contact the consumer in writing:
(i) The consumer acquires a general-purpose reloadable prepaid card in person at a retail store;
(ii) The pre-dispute arbitration agreement was inside of packaging material when the general-purpose reloadable prepaid card was acquired; and
(iii) The pre-dispute arbitration agreement was packaged prior to the compliance date of the rule
(2) For a provider that has the ability to contact the consumer in writing:
(i) The provider meets the requirements set forth in paragraphs (1)(i) through (iii) of this section; and
(ii) Within 30 days of obtaining the consumer’s contact information, the provider notifies the consumer in writing that the pre-dispute arbitration agreement complies with the requirements of § 1040.4(a)(2) by providing an amended pre-dispute arbitration agreement to the consumer.
The Contingency will return to regular Monday posts on May 9.
The trial that has kept me busy getting ready for during the last several weeks settled last night.
A great deal has happened in other corners of the world of high stakes business disputes during the hiatus, and I look forward to jumping back in now that 18-hour work days have ended — for now.
Thank you for your patience.
In Henry IV, Glenmore brags that he can “call spirits from the vasty deep.” Hotspur replies:
Why, so can I, or so can any man;
But will they come when you do call for them?
In Blue Calypso, LLC v. Groupon Inc., No. 15-1396 (Fed. Cir. Mar. 1, 2016), Groupon tried to summon a prior art reference from the Internet. But it wouldn’t come. The Internet proved too vasty. Continue Reading
How will lower federal courts react to the loss of a 5-4 pro-business majority on the U.S. Supreme Court?