Welcome to Critical Mass, Law.com's weekly briefing for class action and mass tort attorneys. Here's what's happening: The Ninth Circuit's en banc ruling in In re Hyundai restored nationwide class action settlements…so why is the defense bar cautiously optimistic? Plaintiffs lawyers suing opioid companies remain confident despite Insys' bankruptcy filing. And find out why children are suing Amazon over Alexa.

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Judge Sandra Segal Ikuta, of the U.S. Court of Appeals for the Ninth Circuit.

 

In re Hyundai in Reverse

A Ninth Circuit en banc panel reversed a 2018 decision that sent shockwaves throughout the class action bar for threatening the viability of nationwide settlements. The case involved such a settlement with Hyundai over fuel efficiency estimates made to consumers. Last week's split decision found the district judge did not have to analyze the consumers laws of several states before approving a settlement—even though such an analysis is required at the class certification stage under Rule 23.

Interesting side note: Writing for the majority was Circuit Judge Jacqueline Nguyen, who wrote the dissent in the original 2-1 opinion for dealing “a major blow to multistate class actions.” Circuit Judge Sandra Ikuta, author of the original opinion, wrote a dissent in the en banc decision.

Lawyers on both sides saw the ruling as restoring some order, but defendants were cautiously optimistic. Bethany Gayle Lutitsch (McGuireWoods), co-author of this post on her firm's blog Class Action Countermeasures, told me the Ninth Circuit will “continue to be a dangerous place for companies litigating consumer class actions.” She said:

“As the court cautioned, representations made as part of a nationwide marketing effort, which are often easily alleged and sometimes difficult to factually distinguish, will continue to weigh heavily in this circuit in favor of certification of a litigation class. To defeat class certification of a nationwide class then, companies should continue to focus on ways to distinguish reliance under the various states' laws and vigorously defend against characterizations of common, nationwide marketing plans when the facts present differences in the way the alleged misrepresentations are communicated to consumers across different states.”

Insys in Bankruptcy

Five days after reaching a $225 million settlement with the DOJ, opioid maker Insys Therapeutics filed for Chapter 11 bankruptcy.

It's clear that the company's legal troubles played a key role in the bankruptcy. In a statement, Insys CEO Andrew Long said the bankruptcy would “address our legacy legal challenges in a fair and transparent manner.”

Last week's settlement resolved all civil and criminal actions brought by the federal government. But what does that mean for states, cities, counties and others that still have pending suits against Insys, among other opioid manufacturers, distributors and pharmacies? About 1,800 of those lawsuits are in multidistrict litigation, where lead plaintiffs' counsel⁠—Paul Farrell (Greene Ketchum), Paul Hanly (Simmons Hanly Conroy) and Joe Rice (Motley Rice)⁠—provided this statement:

“We will actively pursue full financial disclosure for Insys and any other defendant that files for bankruptcy. Bankruptcy and restructuring does not necessarily mean that a company is insolvent. Additionally, the goal of the litigation is not to bankrupt these opioid companies, but to abate the current opioid epidemic and seek long-term, sustainable solutions.”

Christopher Keller, Labaton Sucharow

 

No Green Light in State Street Deal – Yet

Labaton Sucharow agreed to pay $4.8 million to resolve a special master's investigation that uncovered an undisclosed payment made to a Texas attorneyfor work in a securities case against State Street—but the firm still has to convinceU.S. District Judge Mark Wolf, who has more questions before signing off on the deal. He's scheduled a June 24 hearing.

And it's not just Labaton's deal on his mind. In reviewing a $74.5 million fee request, special master Gerald Rosen also found $4.1 million in overbilling and insisted that two other plaintiffs' firms in the case, Lieff Cabraser and Thornton Law Firm, should have listed contract attorneys as expenses and not part of their billable hours. Wolf wants to hear more about that, too.

Why does that matter? “This inequitable practice creates a windfall and is of benefit only to the firms and should cease,” Rosen wrote in court documents. Lieff Cabraser, which stood to get $15 million of the fees, had some particularly heated responses to Rosen's “idiosyncratic personal views”:

“The master's desire to forge new ground here has led him to make a mountain out of a mole-hill.”

Here's what else is happening: 

Alexa Attack: A pair of class actions filed on Tuesday alleged that Amazon's Alexa-enabled devices, like Echo and Echo Dot, illegally record conversations of children without their consent. The suits were filed by Keller Lenkner and Quinn Emanuel on behalf of classes of children in nine states where it's illegal to record a conversation without the consent of both parties.

Kicked Out: As the World Cup kicked off in France this month, the U.S. women's soccer team continues to fight over unequal pay – a move that the Australian team has now joined. But the U.S. team, and former goalkeeper Hope Solo, also have pending lawsuits against the U.S. Soccer Federation. Jeffrey Kessler (Winston & Strawn) lost a bid to coordinate the cases into multidistrict litigation this month. In fact, the MDL panel only granted one request from last month's hearing: Lawsuits over Hill's Pet Nutrition Inc.'s recalled Prescription Diet and Science Diet canned dog food.

Google Fizzle: Google lost its bid to get a class action tossed that alleged the Silicon Valley-based search engine discriminates against politically conservativewhite and Asian job applicants. Santa Clara County Judge Brian C. Walsh said Google failed to show there is “no reasonable possibility” to identify a class made up of people with shared political ideologies.

Just Peachy: Shook, Hardy & Bacon has opened an Atlanta office with three product liability lawyers from Alston & Bird. Colin Kelly will head the office, joined by Josh Becker and Anna Sumner Pieschel. It's the 14th office for St. Louis-based Shook, which opened a Los Angeles location in April. Shook partners John Lewis and Leonard Searcy also are joining the Atlanta office.

That's all for now. Thanks for reading Critical Mass! And see you next week.