Moore & Lee is pleased to announce a decisive victory for client Dometic Corp. Dometic is a leading manufacturer and distributor of outdoor living products, operating 25 manufacturing and assembly sites in 11 countries and conducting sales in approximately 100 countries. Among the products Dometic makes and sells are gas absorption refrigerators, which are uniquely suited for use in recreational vehicles. Over six years ago, multiple putative class actions were filed against Dometic alleging that all Dometic-branded gas absorption refrigerators sold in the United States since 1997 contain a common latent defect that causes them to fail and cause fires. The allegations encompassed millions of refrigerators and sought as much as $2 billion in damages. Led by partner Erica Rutner and associates Rachel Bauer and Zack Rogers, the firm took Dometic to a decisive victory that resulted in all plaintiffs voluntarily dismissing their claims with prejudice. The cases were litigated in trial and appellate courts around the country, including in the Northern and Central Districts of California, the Southern District of Florida, the Eleventh Circuit Court of Appeals, and the Judicial Panel for Multidistrict Litigation. Throughout the course of the litigation, Dometic prevailed at nearly every turn. These victories included entry of summary judgment in one of the first-filed actions, the denial of the plaintiffs’ request for a multidistrict litigation in an unfavorable forum, the granting of Dometic’s motions to transfer and consolidate all remaining cases in Florida, the denial of class certification, and finally the complete exclusion of the plaintiffs’ damages and liability experts. On the heels of the favorable rulings excluding plaintiffs’ experts, all remaining plaintiffs agreed to voluntarily dismiss their claims with prejudice. The final dismissal order came on November 14, 2022. The case is illustrative of the firm’s growing practice and expertise in consumer class actions.
Beginning January 1, 2023, “Pay-if-Paid” clauses will no longer be enforceable in public and private construction contracts in Virginia. “Pay-if-paid” provisions in construction contracts have long been enforceable under Virginia law. These conditional payment provisions are intended to protect general contractors from the risk of nonpayment by the owner by making the duty to make payment to subcontractors or downstream parties expressly conditioned on receipt of payment from the owner. Enacted on April 27, 2022, Senate Bill 550 is a bill that prohibits contractors on both private and public construction projects in Virginia from including provision in subcontracts that condition payment on the receipt of funds from the owner or high-tier contractor. SB 550 does not, however, prohibit a general contractor from issuing a back charge to a subcontractor for noncompliance with the terms of the subcontract as long as it notifies the subcontractor in writing of the intent to withhold and the reason for withholding payment. This new law is scheduled to take effect January 1, 2023.
In an opinion issued in July 2022, the Eleventh Circuit Court of Appeals vacated an order certifying a class and approving a class settlement after deciding, sua sponte, that the class lacked Article III standing. See Drazen v. Pinto, 41 F.4th 1354 (11th Cir. 2022).
The district court had approved a $35 million dollar class settlement between GoDaddy.com LLC and a putative nationwide class of consumers. GoDaddy sought to resolve allegations that it violated the Telephone Consumer Protection Act of 1991 by sending “robocalls”—automatic, unsolicited calls and texts—to market its services. The putative class was defined to include all persons in the United States who received a call or text message to their cell phone from GoDaddy from November 4, 2014 through December 31, 2016.
A relatively small number of absent class members—approximately 7%—fit within that definition but had received only one unsolicited text message during the class period. Under Eleventh Circuit precedent, however, receipt of a single unwanted text message was not a sufficiently concrete injury to give rise to Article III standing. See Salcedo v. Hanna, 936 F.3d 1162, 1168 (11th Cir. 2019). After ordering further briefing on this issue, the district court, relying on Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1273 (11th Cir. 2019), determined that only the named plaintiffs were required to have standing. The district court ruled that GoDaddy was, therefore, entitled to settle with the prospective plaintiffs, even if they lacked standing under Eleventh Circuit precedent, because they may have had viable claims under the law of their respective circuits (due to a circuit split). (In dicta, the Eleventh Circuit rejected this line of reasoning outright).
The Eleventh Circuit, citing TransUnion LLC v. Ramirez, __ U.S. __, 141 S. Ct. 2190 (2021), determined that it lacked jurisdiction because the class, as certified, was defined to include members who lacked Article III standing. Therefore, the court could not affirm the district court’s decision to certify the class or approve the proposed settlement. Acknowledging that Cordoba contemplates the possible certification of a class with putative class members who lack standing, the court pointed out that Cordoba also recognizes standing may, in some cases, be “exceedingly relevant” to the certification analysis and, in any event, must be established before relief is granted. Of course, in TransUnion, the Supreme Court ruled, inter alia, that class members must have Article III standing to recover individual damages. Reading those cases together, the Eleventh Circuit found that “[a]ny class definition that includes members who would never have standing under our precedent is a class definition that cannot stand.”
Drazen underscores the importance of analyzing whether the named plaintiffs and every absent class member has Article III standing at every stage of the litigation. This decision could have broad implications for not only TCPA class actions but any class action where Article III standing is in question.