2016 Annual Review
2016 Annual Review

Lowering risks in an evolving US class action litigation arena

US class action lawsuits continue to be a significant litigation risk for both US-based and international companies, whether the claims involve securities, antitrust, consumer or labor laws.

The US Supreme Court is expected to continue to be active in this area, including on the issues of arbitration, standing, class certification, statutory penalties and damages. The Court, for example, will be considering the enforceability of class action waivers in employer/employee arbitration agreements. Also, a US circuit court split has developed on whether to impose an administrative feasibility requirement for class certification. And court observers will continue to see how lower courts interpret Article III standing after the Court's 2016 Spokeo decision, which held that a plaintiff lacks Article III standing to sue in federal court under the Fair Credit Reporting Act (FCRA) and other federal statutes without a sufficient allegation of concrete injury to the plaintiff.

Perhaps most importantly, changes to Rule 23, which sets out federal requirements for certifying a class action, may be coming in the next few years, but the groundwork on potential changes is being done now. A subcommittee to the Advisory Committee on Rules of Civil Procedure is considering changes that may affect the certification of issues classes, offers of judgment, class notice and cy pres funds, among other class certification issues. The Supreme Court has considered several issues that affect class actions in recent years and changes to Rule 23 could significantly affect the impact of recent decisions.

In the meantime, the threat of class certification and the resulting significant damages exposure make it essential that companies take proactive action to minimize this litigation threat. Companies should consider enacting and following appropriate policies, including inclusion of arbitration and class waiver clauses, limits on statutes of limitations and liability waivers in relevant agreements.


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