Jenner & Block

Class Action Litigation Update Resource Center

As a service to Jenner & Block's clients and the greater legal community, the Firm's Complex Commercial Litigation and Class Action practices maintain online resource centers that offer the latest case law and other developments in class action litigation.

Jenner & Block will update this web page with new developments and items of interest as they become available.  For further information, please contact Partner Michael T. Brody.

Objectors’ Appeal Bond Reduced: May Only Cover Costs Recoverable Per FRAP 7.

In Tennille v. Western Union Co., 774 F.3d 1249 (10th Cir. 2014) (No. 13-1378), the parties settled a class action.  Two objectors appealed the order approving the settlement, and the district court directed them to post a bond in excess of $1 million as a condition of pursuing the appeal.  The district court determined this amount would provide security for the costs of notifying the class of the appeal and the delay in settlement administration.  On review, the Tenth Circuit held that an appeal bond entered pursuant to Federal Rule of Appellate Procedure 7 may only cover appellate costs provided for by rule or statute.  The cost of notifying class members of the objectors’ appeal, and the cost of maintaining the settlement pending appeal, were not recoverable.  While these costs may be addressed in a supersedeas bond entered to stay execution of a judgment, which was not at issue here, a bond entered under Appellate Rule 7 may not address such issues.  The court affirmed the district court’s decision to impose a bond for the costs of printing, copying, and preparing the appellate record.  It reduced that bond from $25,000 to $5,000, based on the expected costs of such tasks.

Eighth Circuit Announces Rules Limiting Cy Pres Of Unclaimed Settlement Amounts.

In In re BankAmerica Corp. Securities Litigation, 775 F.3d 1060 (8th Cir. 2015) (No. 13-2620), the Eighth Circuit addressed the use of cy pres to allocate undistributed funds from a class action settlement.  The parties agreed to, and the court approved, a $490 million settlement.  After two distribution efforts, approximately $2.5 million remained undistributed.  The parties requested the court to distribute the surplus funds by a cy pres award, and the court dispersed the funds to a local legal services charity.  The Eighth Circuit reversed the cy pres distribution, and established five principles to govern cy pres distributions:  (1) a cy pres distribution of unclaimed funds is permissible only when it is not feasible to make further distributions to class members, except where the distribution would provide a windfall to class members whose liquidated damages claims have already been 100% satisfied; (2) a cy pres distribution is not supported by a court declaring that all claims have been paid in full; (3) in considering a further distribution, the district court is not bound by language in a settlement agreement authorizing a cy pres distribution; (4) unless the amount of funds to be distributed is de minimus, the district court should make its cy pres proposal publicly available and allow class members to suggest alternatives; and (5) when a cy pres distribution is made, it should be for the next best use for indirect class benefit.  In this case, further distributions were feasible, it was speculative to conclude that the claims of class members had been fully satisfied by the settlement, and the legal services charity selected by the court was not the next best recipient of settlement funds in a nationwide class action concerning violations of securities laws.

Supreme Court Holds Evidence Not Required In Petition For Removal.

In Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S. Ct. 547 (2014) (No. 13-719), the United States Supreme Court addressed the pleading requirements for removal of a class action.  Plaintiffs’ state court action did not allege the amount in controversy.  Defendant removed the action to federal court, alleging the amount in controversy exceeded the jurisdictional amount.  The district court remanded the action to state court, relying on Tenth Circuit decisions requiring a removing party to present evidence supporting the amount in controversy.  The Tenth Circuit declined review.  The Supreme Court reversed, holding that a defendant need only allege plausibly the amount in controversy, it is not required to submit evidence supporting jurisdiction.  As in the case of a plaintiff’s allegation of jurisdiction, the amount alleged in the notice of removal is accepted if made in good faith.  If a party opposes an allegation of the amount in controversy alleged by the plaintiff in the complaint or a defendant in a removal petition, the court will consider the evidence submitted by the parties and decide jurisdiction by a preponderance of the evidence.  The party asserting jurisdiction need not prove to a legal certainty the amount in controversy.

Third Circuit Clarifies Standards For Challenging Removal.

In Judon v. Travelers Property Casualty Co. of America, 773 F.3d 495 (3d Cir. 2014) (No. 14-3406), the defendant removed a state court putative class action to federal court.  The district court remanded the case to state court, and defendant appealed.  The Third Circuit analyzed the standards applicable to jurisdictional disputes and held that where a challenge to jurisdiction has been raised but no evidence or findings in the trial court addressed the issue, the party alleging jurisdiction, such as with respect to the amount in controversy, must support jurisdiction by a preponderance of the evidence.  Where the jurisdictional facts are not contested, and jurisdiction is determined in whole or in part by applicable law, the court must determine whether it is clear to a legal certainty that jurisdiction is improper.  The court applied this standard to the determination of the number of class members.  The complaint alleged that the class contained hundreds of members.  There was no contesting evidence, and the Third Circuit found that it had not been shown to a legal certainty that jurisdiction was lacking.