in brief: Dukes v. Wal-Mart Stores already set for en banc hearing

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Ninth Circuit SealOn February 13, 2009, the Ninth Circuit granted a request for en banc review of Dukes v. Wal-Mart Stores (9th Cir. 2007) 509 F.3d 1168. On March 11, 2009, the Court issued a Corrected Notice of hearing, listing March 24, 2009, at 2:00 p.m., as the date and time for that en banc hearing in the San Francisco Courthouse of the Ninth Circuit. I don't know what a "normal" lag time is from granting en banc review to setting the hearing, but in appellate court years, that seems like nanoseconds to me. The UCL Practitioner has some detailed coverage of Dukes in this post collection.

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Class action news of note: Tobacco II arguments leaves everyone guessing, and more

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This past week, the California Supreme Court heard oral argument in the Tobacco II cases.  Extensive coverage of the oral argument is available from the UCL Practitioner in this post.  The obligatory reading of tea leaves has, in this instance, revealed little.  For examle, Mike McKee, writing for The Records, said, "Just a few weeks ago, the California Supreme Court ruled that lawsuits under the Consumer Legal Remedies Act can only be filed by individuals who suffer real damage from unlawful business practices. But during oral arguments on Tuesday it wasn't clear where the court stood on applying that same rule to every participant of class actions filed under the state's Unfair Competition Law."  (Mike McKee, Calif. Justices Air Standing for UCL Class Actions Against Tobacco Industry (March 4, 2009) www.law.com.)  Having watched the argument myself, I agree that it was hard to discern much from the Justices.  The cynic in me always assumes that the creep of Proposition 64 will keep on spreading its tendrils, but the argument itself gives me little actual evidence to support that guess.

Meanwhile, the significance of the Ninth Circuit's decision in Davis v. HSBC Bank Nevada, N.A., et al. (February 26, 2009) reached the legal media:  "In a blow to plaintiffs class action lawyers, the 9th U.S. Circuit Court of Appeals has made it tougher to hold that a national company is a 'citizen' of California merely based on the disproportionate size of the state's population."  (Pamela A. MacLean, 9th Circuit Deals a Blow to Plaintiffs Lawyers in 'Principal Place of Business' Test (March 9, 2009) www.law.com.)  Not that Tosco actually held that a state's population size governed corporate citizenship, but the remainder of the article is accurate.  This blog noted the decision in this short post.

Finally, while a bit late to the party, another ISP and the defunct Adzilla were sued for deep packet inspection for the purposes of obtaining the advertising holy grail: complete knowledge of each consumer's behaviors and preferences.  (Ryan Singel, Another ISP Ad Snooper Hit With Lawsuit (March 3, 2009) www.wired.com.)  I've already expressed my contempt for this behavior by ISPs.  Luckily, these projects appear dead in the United States.  But don't count on them staying down forever.

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Gorman v. Wolpoff & Abramson examines creditor obligations under Fair Credit Reporting Act (FCRA)

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Ninth Circuit SealWhat must a creditor do when notified of a dispute by a Credit Reporting Agency (CRA)? Under the Fair Credit Reporting Act (FCRA), the creditor is obligated to conduct “an investigation with respect to the disputed information.” 15 U.S.C. § 1681s-2(b)(1)(A). But does that investigation have to be “reasonable?” In a case involving a complicated dispute about credit card charges, the Ninth Circuit, in Gorman v. Wolpoff & Abramson, said that such investigations must be reasonable, following the Fourth Circuit.

Dismissing the contention that the absence of the word “reasonable” authorizes unreasonable investigations, the Court said:

“ This court has not addressed MBNA’s contention about the FCRA’s investigation requirement. But, MBNA made — and lost — the same argument before the Fourth Circuit. Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 429-31 (4th Cir. 2004). Concluding that the statute includes a requirement that a furnisher’s investigation not be unreasonable, the Fourth Circuit first noted that the plain meaning of the term “investigation” is a “ ‘detailed inquiry or systematic examination,’ ” which necessarily “requires some degree of careful inquiry.” Id. at 430 (quoting Am. Heritage Dictionary 920 (4th ed. 2000)). Second, the Fourth Circuit reasoned that because the purpose of the provision is “to give consumers a means to dispute — and, ultimately, correct — inaccurate information on their credit reports,” id. at 430-31, a “superficial, unreasonable inquir[y]” would hardly satisfy Congress’ objective. Id. at 431. The Seventh Circuit, without discussing the issue, has also found an implicit reasonableness requirement. See Westra v. Credit Control of Pinellas, 409 F.3d 825, 827 (7th Cir. 2005) (“Whether a defendant’s investigation [pursuant to § 1681s-2(b)(1)(A)] is reasonable is a factual question normally reserved for trial.”); see also Johnson, 357 F.3d at 430 n.2 (“[D]istrict courts that have considered the issue have consistently recognized that the creditor’s investigation must be a reasonable one.” (citing cases)).

(Slip op., at pp. 277-278.) The Ninth Circuit found this reasoning more than sufficient. The Court went on to evaluate the reasonableness of a number of investigations by the creditor, finding them to be reasonable on the offered facts.

The Court then flirted with a pre-emption issue related to state law claims arising out of credit reporting: “The preemption question presents a difficult issue of first impression.” (Slip op., at p. 296.) But after building the suspense with a discussion of district courts in "disarray" on the issue, the Court concluded that an insufficiency of evidence would preclude a libel claim by the debtor, rendering a decision on the pre-emption claim unnecessary. The wind-up was good; the Court had me ready to learn how they were going to untangle the statutory interpretation issue that confounded district courts on the pre-emption question.

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