Class Actions 2024 Fourth Quarter Update
Client Alert | February 21, 2025
This update provides an overview of key class action-related developments from the fourth quarter of 2024 (October through December).
Table of Contents
- Part I summarizes decisions from the Ninth and Fourth Circuits reversing class certification under Rule 23’s commonality and predominance requirements; and
- Part II highlights decisions from two courts of appeals analyzing the enforcement of arbitration agreements.
I. The Ninth and Fourth Circuits Reverse Class Certification for Want of Commonality
and Predominance Under Rule 23
Two appellate decisions from this past quarter illustrate the vital role of appellate courts in ensuring compliance with Rule 23’s stringent requirements.
One argument frequently advanced by plaintiffs seeking class certification is that certification is proper because they have alleged that a defendant engaged in a uniform legal violation across the putative class. But the Ninth Circuit’s decision in Small v. Allianz Life Insurance Co., 122 F.4th 1182 (9th Cir. 2024)—a closely watched case involving issues relevant to many pending class actions against life insurers—shows that an asserted uniform legal violation isn’t always enough.
In Small, the district court had certified a class of life-insurance beneficiaries who claimed that their insurer failed to comply with statutory notice requirements before terminating policies for non-payment of premium. The Ninth Circuit reversed. It acknowledged that the question whether the insurer “had a corporate policy to terminate life insurance policies for non-payment of premiums without first complying with” the statutory notice requirements may indeed have been a common question. 122 F.4th at 1198. But it further held that this question would not predominate because class members would still need to show that the insurer’s failure to provide the required notice caused the policies to lapse and thus the policyholders to lose their coverage. Id. at 1198-99. In light of evidence that many policyholders knowingly or intentionally let their policies lapse due to nonpayment, the Ninth Circuit ruled that determining whether the lapse was caused by the insurer’s failure to notify (rather than by a policyholder’s intentional nonpayment) could not be determined on a classwide basis. Id. at 1199-200. (Gibson Dunn filed an amicus brief on behalf of Hancock Life Insurance in support of the insurer.)
Another notable decision from this quarter, Stafford v. Bojangles’ Restaurants, Inc, 123 F.4th 671 (4th Cir. 2024), underscores that class certification is particularly inappropriate where there’s no uniform unlawful conduct in the first place. In this case, shift managers at Bojangles asserted claims under the Fair Labor Standards Act, alleging unpaid off-the-clock work and unauthorized edits to employee time records. Id. at 676-77. The district court certified classes defined as “all persons who worked as a shift manager at Bojangles” in North Carolina and South Carolina, relying “heavily on the fact that 80% of prospective class members worked opening shifts” and were thus subject to Bojangles’ Opening Checklist “policy.” Id. at 677.
The Fourth Circuit held that the district court made two errors. First, the district court granted certification based on “a vague and overly general ‘policy’ by which Bojangles allegedly mandated shift managers’ off-the-clock work and time-record edits,” without actual evidence of across-the-board company policies to that effect. 123 F.4th at 679-80. Because the plaintiffs hadn’t shown uniform conduct on the defendant’s part, the Fourth Circuit ruled they could satisfy neither commonality nor predominance. Id. at 679-80. Second, the district court defined the class too broadly, with “[n]o reference . . . to the type of off-the-clock work class members performed or whether a class member even performed off-the-clock work at all.” Id. at 681. The Fourth Circuit emphasized that “[t]he sheer breadth of the class definitions” can reveal the “underlying flaws with the classes’ commonality, predominance, and typicality.” Id.
II. The Courts of Appeals Continue to Address Issues Relating to Arbitration
Arbitration continues to be an important issue affecting many putative class actions, and two recent decisions from the courts of appeals show the variety of issues that arise when it comes to enforcing arbitration agreements.
In New Heights Farm I, LLC v. Great American Insurance Co., 119 F.4th 455 (6th Cir. 2024), the Sixth Circuit affirmed an order compelling arbitration and held that the parties had validly delegated threshold arbitrability questions to the arbitrator. Although the parties’ contract itself did not include an express delegation clause, the court nonetheless observed that the parties’ contract referred disputes to “arbitration in accordance with the rules of the American Arbitration Association.” Id. at 461. And because the American Arbitration Association’s rules in turn include a rule that the arbitrator may “rule on his or her own jurisdiction,” the court found this delegation rule to be incorporated into the parties’ contract. Id. New Heights represents the latest in a long line of decisions recognizing that incorporation of arbitration rules that themselves give arbitrators the power to resolve threshold disputes will satisfy the “clear and unmistakable” standard for delegation of arbitrability. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 69 n.1 (2010).
And in Young v. Experian Information Solutions, Inc., 119 F.4th 314 (3d Cir. 2024), the Third Circuit clarified the proper standard for discovery when a party moves to compel arbitration. Because the plaintiff’s complaint didn’t mention the arbitration agreement, the district court ruled that the defendant’s motion to compel arbitration should be decided under a summary judgment standard and permitted “discovery on the narrow issue of whether an arbitration agreement exist[ed].” Id. at 317-18. But on appeal, the Third Circuit held that the district court erred in granting discovery on the issue of arbitrability, clarifying that even when a motion to compel arbitration is decided under the summary-judgment standard, “discovery addressing a motion to compel arbitration is unnecessary when no factual dispute exists as to the existence or scope of the arbitration agreement.” Id. at 319-20.
Gibson Dunn attorneys are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Class Actions, Litigation, or Appellate and Constitutional Law practice groups, or any of the following lawyers:
Theodore J. Boutrous, Jr. – Los Angeles (+1 213.229.7000, tboutrous@gibsondunn.com)
Christopher Chorba – Co-Chair, Class Actions Practice Group, Los Angeles
(+1 213.229.7396, cchorba@gibsondunn.com)
Theane Evangelis – Co-Chair, Litigation Practice Group, Los Angeles
(+1 213.229.7726, tevangelis@gibsondunn.com)
Lauren R. Goldman – Co-Chair, Technology Litigation Practice Group, New York
(+1 212.351.2375, lgoldman@gibsondunn.com)
Kahn A. Scolnick – Co-Chair, Class Actions Practice Group, Los Angeles
(+1 213.229.7656, kscolnick@gibsondunn.com)
Bradley J. Hamburger – Los Angeles (+1 213.229.7658, bhamburger@gibsondunn.com)
Michael Holecek – Los Angeles (+1 213.229.7018, mholecek@gibsondunn.com)
Lauren M. Blas – Los Angeles (+1 213.229.7503, lblas@gibsondunn.com)
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