Trial Magazine

The U.S. Supreme Court opened its October 2018 Term with a series of cases on several issues important to the plaintiff bar. Here’s how they may affect your practice and your clients’ rights.¹

Foreseeability and Duty to Warn

The Court will decide an important issue involving negligence and duty to warn in Air and Liquid Systems Corp. v. DeVries.² In this maritime law case, defendant manufacturers sold “bare-metal­” ship components that were installed on U.S. Navy ships. The equipment required asbestos insulation to operate correctly, and this asbestos component later injured the plaintiff sailors.

The Third Circuit held that “at least in the context of a negligence claim,” manufacturers can be liable for injuries caused by asbestos exposure from materials later added to their products if the injuries were a “reasonably ­foreseeable result of the . . . failure to provide a reasonable and adequate warning.”³ The defendants are asking the Court to adopt a bright-line bare-metal rule shielding manufacturers from liability for harm caused by asbestos that they did not make, sell, or distribute.⁴ The plaintiffs argue that manufacturers should be held responsible for the ­foreseeable consequences of asbestos use, at least when the asbestos is an essential component of their products.⁵

Oral arguments, held on Oct. 10, focused on the feasibility of determining a standard for when bare-metal manufacturers have a duty to warn. The Court’s decision will determine whether plaintiffs will be able to obtain redress under maritime law for injuries caused by negligent equipment manufacturers and also impact plaintiffs in asbestos cases throughout the country who face the bare-metal defense.

Forced Arbitration

Much like previous Terms, the Court has agreed to hear cases involving aspects of forced arbitration and class action bans. In New Prime, Inc. v. Oliveira, the defendant, a national trucking company, argues that the plaintiff’s putative class action alleging violations of the Fair Labor Standards Act and a state minimum wage statute must be arbitrated under the Federal Arbitration Act (FAA) because its worker contracts include a forced arbitration provision that contains a class action waiver ban.⁶ Although the FAA states that the statute does not apply to transportation workers’ “contracts of employment,” the defendant claims that the First Circuit, which affirmed denial of the motion to compel arbitration,⁷ should be ­overturned because this exception does not apply when the plaintiff is an independent contractor.⁸

During oral arguments, held Oct. 3, the Court noted several times that the FAA exemption refers to workers—not employees—and questioned defense counsel on how their position conflicts with the more expansive understanding of “contracts of employment” when the statute was enacted in 1925. The Court’s decision could prevent transportation workers, the majority of whom are independent contractors, from accessing the courts when they attempt to sue for the wages they are owed.

Henry Schein, Inc. v. Archer and White Sales, Inc. asks whether the FAA permits a court to decline to enforce an agreement that delegates questions of arbitrability to an arbitrator if the court concludes that the arbitrability claim is “wholly groundless.”⁹ In this case, after the plaintiff sued in federal court alleging antitrust violations and seeking damages and injunctive relief, the defendant moved to compel arbitration pursuant to a forced arbitration clause in a contract.¹⁰ The district court held that it, not the arbitrator, had authority to rule on arbitrability and that the claims were not arbitrable because the clause in question expressly excluded suits involving requests for injunctive relief, making the arbitration claim wholly groundless.¹¹

In oral arguments on Oct. 29, the justices rigorously questioned both sides but expressed doubts about the plaintiff respondent’s argument, asking several times how evaluating groundlessness was not a merits determination that had been delegated to the arbitrator. Should the Court agree with the defendant that arbitrators should determine arbitrability in this context, the plaintiffs would be prevented from having baseless arbitration demands dealt with expeditiously by the courts.

Lamps Plus, Inc. v. Varela deals with both arbitration and class actions.¹² Plaintiffs filed a class action against Lamps Plus for a data breach that allowed access to the tax information of approximately 1,300 employees. The company moved to compel individual arbitration under its employment agreement. The lower courts, however, held that the plaintiffs could pursue class arbitration, with the Ninth Circuit finding that the contract terms taken together “can be reasonably read to allow for class arbitration.”¹³ The Court will decide whether the FAA prevents a state law (here, California) interpretation that an ambiguous agreement, which should be construed against the drafter, can authorize class arbitration based solely on general language commonly used in arbitration agreements.

During oral arguments on Oct. 29, the justices analyzed the language in question and how to apply the FAA and federal law when interpreting it. The Court’s decision could define what language arbitration agreements must contain to allow class arbitration. And if the lower court is upheld, it could make it easier for plaintiffs to pursue class arbitration in cases that would not be economical to pursue individually.

Class Actions

Although New Prime and Lamps Plus involve class action and class arbitration questions, the Court also heard a case focusing on cy pres settlements in class actions. Frank v. Gaos involves a challenge to a class action settlement approved by a district court and affirmed by the Ninth Circuit¹⁴ that required Google to pay cy pres awards to six nonprofits rather than distributing extremely small monetary awards to class members.¹⁵ The petitioners contend that because money is not being distributed to class members, the settlement class should not be certified.¹⁶ The U.S. Department of Justice also filed an amicus brief presenting a jurisdictional issue on whether the named plaintiffs had Article III standing.¹⁷ The justices heard oral arguments on Oct. 31, and although they addressed the merits and the underlying rationales supporting cy pres settlements, they spent a large amount of time exploring the standing question and requested supplemental briefing on this issue.

The availability of cy pres awards is vital to litigants’ ability to bring class actions with low-value individual claims and to settle these claims. If the Court addresses the standing issue, it could also create a new hurdle by requiring plaintiffs to offer even more evidence before they can enter court.

Preemption

In Merck Sharp & Dohme Corp. v. Albrecht, the question presented is whether a state law failure-to-warn claim is preempted by the Federal Food, Drug, and Cosmetic Act when the FDA rejected the drug manufacturer’s proposal to warn about a risk or whether that question should go to a jury to determine why the warning was rejected.¹⁸ People who took Fosamax, an osteoporosis drug, allege that the defendant’s FDA-approved label did not include an adequate warning about the risk of atypical femur fractures. The Third Circuit held that such failure-to-warn claims are preempted only if a jury finds it “highly probable” that the FDA would have rejected the warning sought by the plaintiffs, explaining that the test under Wyeth v. Levine (555 U.S. 555 (2009)) requires “the factfinder to speculate about hypothetical scenarios using inferences drawn from historical facts.”¹⁹

A decision in favor of the Big Pharma defendants could make it easier for them to successfully pursue summary judgment on preemption grounds, blocking plaintiffs from having their cases heard by a jury. Oral argument is scheduled for Jan. 7.

Each case will impact access to justice and shed light on how the retirement of Justice Anthony Kennedy and the confirmation of Justice Brett Kavanaugh will shape the Court’s future.

Amy Brogioli is a staff attorney in AAJ’s legal affairs department. She can be reached at amy.brogioli@justice.org.

Notes

1. AAJ filed amicus briefs in the cases discussed here, and those filed since January 2014 are available at www.justice.org/amicusbriefs. 
2. Air & Liquid Sys. Corp. v. DeVries, No. 17-1104 (U.S. cert. granted May 14, 2018). 
3. In re Asbestos Prods. Liab. Litig. (No. VI), 873 F. 3d 232, 234, 240 (3d Cir. 2017).
4. Brief for Petitioners, Air & Liquid Sys. Corp. v. DeVries, (U.S. July 9, 2018) (No. 17-1104); Air & Liquid Sys. Corp., No. 17-1104 (U.S. oral arg. Oct. 10, 2018).
5. Brief for Respondents, Air & Liquid Sys. Corp. v. DeVries (U.S. Aug. 20, 2018) (No. 17-1104); Air & Liquid Sys. Corp., No. 17-1104 (U.S. oral arg. Oct. 10, 2018). 
6. New Prime, Inc. v. Oliveira, No. 17-340 (U.S. cert. granted Feb. 26, 2018). This case follows Epic Systems Corp. v. Lewis (138 S. Ct. 1612 (2018)), in which the Court held that employers may require employees to waive their right to class actions or class arbitration as a condition of employment. 
7. Oliveira v. New Prime, Inc., 857 F.3d 7 (1st Cir. 2017). 
8. Brief for Petitioner, Oliveira v. New Prime, Inc. (U.S. May 14, 2018) (No. 17-340); New Prime, Inc., No. 17-340 (U.S. oral arg. Oct. 3, 2018). 
9. Henry Schein, Inc. v. Archer & White Sales, Inc., No. 17-1272 (U.S. cert. granted June 25, 2018).
10. Archer & White Sales, Inc. v. Henry Schein, Inc., 2016 WL 7157421 (E.D. Tex. Dec. 7, 2016).
11. Archer & White Sales, Inc., 2016 WL 7157421, at *6–9, aff’d, 878 F.3d 488 (5th Cir. 2017).
12. Lamps Plus, Inc., v. Varela, No. 17-988 (U.S. cert. granted Apr. 30, 2018). 
13. Varela v. Lamps Plus, Inc., 2016 WL 9211655 (C.D. Cal. Dec. 27, 2016), aff’d, 701 Fed. App’x 670, 672 (9th Cir. 2017). 
14. In re Google Referrer Header Privacy Litig., 87 F. Supp. 3d 1122 (N.D. Cal. 2015), aff’d, 869 F.3d 737 (9th Cir. 2017).
15. Frank v. Gaos, No. 17-961 (U.S. Apr. 30, 2018). 
16. Brief for Petitioners, Frank v. Gaos (U.S. July 9, 2018) (No. 17-961). 
17. Brief for the United States as Amicus Curiae Supporting Neither Party at 11–15, Frank v. Gaos (U.S. July 16, 2018) (No. 17-961).
18. Merck Sharp & Dohme Corp. v. Albrecht, No. 17-290 (U.S. cert. granted June 28, 2018). 
19. In re Fosamax (Alendronate Sodium) Prods. Liab. Litig., 852 F.3d 268, 293, 299 (3d Cir. 2017).