Class Action News

Cobra Sexual Energy Suit Taken Up by SCOTUS (1)

June 25, 2018, 1:35 PMUpdated: June 25, 2018, 8:21 PM

A suit alleging Cobra Sexual Energy doesn’t have the advertised aphrodisiac effects will give the U.S. Supreme Court a chance to consider the decidedly less sexy issue of the timing of class action appeals.

The federal appeals courts are split on whether Federal Rule of Civil Procedure 23(f)'s deadline for appellate review of class certification orders is paused by a motion for reconsideration.

“The Supreme Court has taken an acute interest in classifying deadlines and their attendant effects in recent years,” Scott Dodson, a professor at the University of California Hastings College of Law, San Francisco, who specializes in civil procedure, told Bloomberg Law.

Circuit Split

Troy Lambert alleged that Nutraceutical Corp. violated California law by making claims on the labels of its supplements that weren’t evaluated by the Food and Drug Administration.

The lower court initially granted class certification based on a damages model that provided full refunds to consumers because the product is worthless. A new judge assigned to the case decertified the case because the damages model was based on the suggested retail price, not the actual retail price.

The Ninth Circuit held that the suggested retail price in conjunction with other evidence would allow a trier of fact to sufficiently approximate the retail price to calculate classwide damages.

It also ruled, for the first time in the circuit, that Rule 23(f)'s deadline for appellate review of class certification orders is tolled by a motion for reconsideration.

Lambert’s 23(f) petition was timely because his motion for reconsideration tolled the Rule 23(f) deadline, the court concluded.

The court acknowledged other circuit courts would likely come out differently.

Uncertainty on Timing

Defense attorney Donald R. Frederico of Pierce Atwood LLP in Boston told Bloomberg Law the Ninth Circuit’s decision “injects considerable uncertainty into the timing for seeking interlocutory review of class certification decisions.”

It even creates uncertainty within the Ninth Circuit because of the “flexibility of the equitable tolling standard that the court applied,” he said.

The Supreme Court’s ultimate decision could establish a “uniform, nationwide rule or standards for the timing of Rule23(f) petitions to prevent confusion and unnecessary litigation in future cases,” Frederico said.

But filing a motion for reconsideration “is a sensible prelude before filing a notice of appeal,” Dodson said. Class certification decisions are almost always contested, so this is a question that should come up routinely, he said.

Wider Context

The wider context of the case is the distinction between “jurisdictional rules, which can’t be forfeited, and claim-processing rules, which can,” plaintiffs’ attorney Benjamin Gould of Keller Rohrback LLP in Seattle, told Bloomberg Law.

“The question here is whether claim-processing rules also admit of equitable exceptions,” Gould said.

“Rules and statutes are replete with nonjurisdictional deadlines, yet the court has not provided much guidance on when a nonjurisdictional deadline is subject to tolling or other equitable exceptions,” Dodson said.

This case could give the court the chance “to provide more general guidance that would apply to other nonjurisdictional deadlines,” he said.

The Supreme Court cases distinguishing jurisdictional and claims-processing rules “have all been unanimous or nearly so,” Gould said. The one notable exception, Bowles v. Russell, split the court 5–4.

“We know from the Bowles dissent that at least two of the current justices"—Justices Ruth Bader Ginsburg and Stephen G. Breyer—"believe that at least some claim-processing rules admit of equitable exceptions,” he said. “What the other justices think remains to be seen.”

A narrower ruling that applies only to Rule 23(f) could command more than five votes, Gould said.

“Whatever the outcome, this case is a good reminder to class-action attorneys to consult appellate practitioners early on in their cases,” Gould said.

Ronald A. Marron in San Diego represents the consumers.

Hueston Hennigan LLP represents Nutraceutical.

The case is Nutraceutical Corp. v. Lambert, U.S., No. 17-1094, review granted 6/25/18.

(Updated with additional reporting.)

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bloomberglaw.com

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