July 18, 2019

Class Action Headaches: The Intersection of Mild Traumatic Brain Injury and Sports Concussion Litigation

Iron Mike Webster

“Iron Mike” Webster played for the Pittsburgh Steelers from 1974-1988 and the Kansas City Chiefs from 1989-1990, and played in 245 games during his career. He died at the age of 50 in 2002 from a heart attack. At his death, Iron Mike was suffering from dementia, self-mutilating, and living out of his pickup truck. A doctor named Bennet Omalu performed his autopsy, which showed chronic traumatic encephalopathy, or CTE. Dr. Omalu examined the remains of several other former NFL players who had similar symptoms to Iron Mike, including Terry Long, Andre Waters, and Justin Strzelczyk. He presented his findings to the NFL Commissioner, Roger Goodell, but was largely ignored until Chris Henry of the Cincinatti Bengals died in 2006 at age 26 due to CTE.

Will Smith and Alec Baldwin starred in a December 2015 movie, “Concussion,” which detailed Dr. Omalu’s findings and his struggle to be taken seriously by the NFL. In April 2015, a federal district court judge approved a class-action settlement of former NFL players for long-term neurological problems associated with repeated concussions. All eligible retired former NFL players will receive a baseline neuropsychological and neurological examination, and additional medical testing, counseling, or treatment if they are diagnosed with moderate cognitive impairment. The settlement also provides for monetary awards, conceivably into the millions of dollars, for diagnoses of certain neurocognitive diseases or impairments, such as ALS, Parkinson’s disease, Alzheimer’s disease, or certain levels of dementia. Fewer than 200 retired NFL players have opted out of the settlement.

Other sports organizations have filed class actions, as well. A number of former college athletes have filed suit against the NCAA, alleging long-term injuries from concussions experienced while playing NCAA sports. The U.S. Soccer Federation, U.S. Water Polo, the NHL, and the World Wrestling Federation have also been the subjects of concussion-related lawsuits. Many states, including Colorado, have passed measures intended to protect young athletes from second-impact syndrome, a rare and potentially fatal consequence of repeated concussions.

Reid Neureiter of Wheeler Trigg O’Donnell has researched concussion litigation extensively. On Thursday, March 9, from noon to 1 p.m., he will present “Concussions in the Courts,” a one-hour lunch program to highlight the continuing litigation between athletes and athletic organizations. Register by calling (303) 860-0608 or by clicking the links below.



CLE Program: Concussions in the Courts

This CLE presentation will occur on March 9, 2017, at the CBA-CLE offices (1900 Grant Street, Third Floor), from 12 p.m. to 1 p.m. Register for the live program here or register for the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here: MP3Video OnDemand.

Colorado Rules of Civil Procedure Amended in Rule Change 2016(01)

On Thursday, February 4, 2016, the Colorado Supreme Court posted Rule Change 2016(01), adopted January 29, 2016. The rule change affects several of the Colorado Rules of Civil Procedure, and there are various effective dates for the changes.

C.R.C.P. 10 was changed to specify that footnotes should be in 12 point font and motions should be double-spaced. The comment to § 1-12 of Rule 121 was changed to include oral discovery in its scope. Rule 121, § 1-15, was revised significantly, changing several of the specifications for word and page limits of motions and addressing when the court should rule on motions. The comment to § 1-15 was also changed to explain some of the revisions. The changes to Rule 10 and §§ 1-12 and 1-15 of Rule 121 apply to motions filed on or after April 1, 2016.

C.R.C.P. 23, “Class Actions,” was amended by the addition of a new subsection (g), dealing with residual funds left after class action settlements. The changes to Rule 23 are effective for all class settlements approved by the court on or after July 1, 2016.

Rules 103 and 403 dealing with garnishments in district and county court were amended to provide that for pro se judgment creditors, indebtedness must be paid into the registry of the court, whereas judgment creditors represented by attorneys and collection agencies may receive funds directly. The Writ of Garnishment form was amended accordingly. These changes are effective March 1, 2016.

The amendment to Rule 359, “New Trials; Amendment of Judgments,” changed the deadline for appeal from 21 days to 14 days. The change is effective April 1, 2016.

Finally, Form 35.1, “Mandatory Disclosure,” was changed significantly. Most of the changes clarified required disclosures when a decree has been filed, specifying that only documents filed or prepared since the entry of the decree need be disclosed. These changes are effective April 1, 2016.

For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Tenth Circuit: Joinder of Plaintiffs Not Required or Allowed Under Class Action Fairness Act

The Tenth Circuit Court of Appeals issued its opinion in Teague v. Johnson & Johnson on Friday, April 11, 2014.

In the Class Action Fairness Act of 2005 (CAFA), Congress authorized the removal of certain class actions from state to federal court. CAFA also provides for the removal of “mass actions” that do not qualify as traditional class actions but which otherwise meet the Act’s criteria.

CAFA defines a mass action as “any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law and fact.” The Act excludes from the term “mass action” any civil action in which either “the claims are joined upon motion of a defendant,” or “the claims have been consolidated or coordinated solely for pretrial proceedings.”

The controversy began when 702 plaintiffs from 26 different states and the Commonwealth of Puerto Rico filed twelve nearly identical product liability actions against the defendants in the District Court of Pottawatomie County, Oklahoma. The defendants are manufacturers of transvaginal mesh medical devices. The plaintiffs are women who were implanted with the devices and their husbands, who assert loss-of-consortium claims.

None of the individual actions contained 100 or more plaintiffs. Each of the actions included at least one New Jersey resident plaintiff. Each complaint specifically disclaimed federal question and federal diversity jurisdiction, and included provisions that admitted the claims had been joined for the purpose of pretrial discovery and proceedings but disclaimed joinder for trial purposes. All twelve actions were assigned to the same state court judge.

The defendants, corporate residents of New Jersey, removed the actions to the United States District Court for the Western District of Oklahoma, relying on both diversity jurisdiction and CAFA removal jurisdiction. They argued that complete diversity existed between the parties because in each action, the New Jersey citizen plaintiff had been fraudulently joined and should therefore be disregarded for diversity purposes. They further contended that jurisdiction was available under CAFA’s “mass action” provision because, by filing all of the suits in the same court before the same judge, plaintiffs had proposed a joint trial of claims involving more than 100 plaintiffs.

Plaintiffs moved to remand eleven of the actions, involving 650 plaintiffs, to state court. The district court granted their motion. It declined to adopt the procedural misjoinder doctrine advocated by the defendants, and concluded that plaintiffs had not in fact proposed a joint trial of their claims, as required for CAFA removal jurisdiction. The Tenth Circuit affirmed the judgment of the district court.

Colorado Court of Appeals: No Abuse of Discretion in Denial of Class Certification Regarding Purchase of UM/UIM Coverage for Additional Vehicles

The Colorado Court of Appeals issued its opinion in Maxwell v. United Services Automobile Association on Thursday, January 2, 2014.

Class Action—Uninsured/Underinsured Motorist (UM/UIM)—Fraudulent Concealment—Reliance—Circumstantial Evidence—Damages—Filed Rate Doctrine.

In this putative class action, plaintiffs James and Janet Maxwell and Leon Hill, individually and on behalf of all others similarly situated, asserted that defendants United Services Automobile Association and USAA Casualty Insurance Company (collectively, USAA) fraudulently concealed information necessary for plaintiffs to make informed decisions about purchasing UM/UIM coverage on their additional vehicles. They pleaded claims for fraudulent concealment, insurer bad faith, and violation of the Colorado Consumer Protection Act (CCPA). The trial court denied class certification.

On appeal, plaintiffs contended that the trial court erred in admitting data compiled by State Farm Mutual Insurance Company (State Farm) about its insureds’ retention of UM/UIM coverage on additional vehicles after these insureds were notified of the Colorado Supreme Court’s decision relating to this issue [DeHerrera v. Sentry Ins. Co., 30 P.3d 167 (Colo. 2001)]. The Court of Appeals disagreed, holding that none of the grounds on which the trial court ruled to admit the data constituted an abuse of discretion.

Plaintiffs also contended that the trial court abused its discretion by concluding that plaintiffs failed to satisfy the predominance requirement of CRCP 23(b)(3). Plaintiffs were required to prove reliance, which is an element of fraudulent concealment. Further, while uniform concealment of material information creates an inference of reliance, that inference may be rebutted by evidence that a reasonable consumer would have made the same decision, even if the information had been disclosed. Here, the trial court properly considered USAA’s circumstantial evidence in concluding that the inference on which plaintiffs relied to show commonality did not obviate the need for individualized inquiry, which would be inconsistent with the class action mechanism. Accordingly, the court did not abuse its discretion in denying class certification.

Plaintiffs further contended that the trial court erred in holding that the filed rate doctrine applies to the insurance industry, barring plaintiffs from obtaining a refund of UM/UIM premiums as damages. The Court held that the filed rate doctrine applies to Colorado’s insurance industry, including consumer fraud claims, and that this doctrine prohibits plaintiffs’ damages theory because it involves judicial second-guessing of the approved insurance rates. Accordingly, the trial court did not err in holding that a refund of UM/UIM premiums for additional vehicles was not a permissible theory of damages on the fraudulent inducement claim.

Summary and full case available here.

Tenth Circuit: Plaintiffs Bear Burden of Showing Class Complies with F.R.C.P. 23

The Tenth Circuit Court of Appeals published its opinion in Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc. on Thursday, July 11, 2013.

Defendant-Appellant XTO Energy Inc. (XTO) appealed from the district court’s order certifying a class of Kansas royalty owners, represented by Plaintiff-Appellee Wallace B. Roderick Revocable Living Trust (the Trust), who seek recovery for XTO’s alleged underpayment of royalties. Specifically, the Trust claims XTO violated Kansas law by improperly deducting costs associated with placing the gas into “marketable condition.” The district court certified the class under F.R.C.P. 23(b)(3).

The Tenth Circuit found that the district court improperly shifted the burden of proof by requiring XTO to disprove commonality and this was an abuse of discretion. The court also instructed the district court to conduct a more rigorous Rule 23(b) predominance analysis on remand.

The court rejected the Trust’s argument that XTO should be estopped from litigating class certification issues here based on XTO’s previous settlement in another royalty class action. The Trust had not met its burden of showing the issues were identical in both cases.

The court vacated class certification and remanded.

Paul Karlsgodt: Tenth Circuit Holds that Mere Allegation by Plaintiff of Intent Not to Seek More than $4,999,999.99 in Damages Is Not Dispositive of CAFA Jurisdiction

Yesterday, the Tenth Circuit joined the majority of Circuit Courts of Appeals in holding that a plaintiff cannot conclusively avoid federal removal jurisdiction under the Class Action Fairness Act of 2005 (CAFA) by including in the complaint a statement of intention not to seek more than $4,999,999.99 in damages on behalf of the putative class.  In Frederick v. Hartford Underwriters Insurance Company, No. 12-1161 (10th Cir. June 28, 2012) the Tenth Circuit followed decisions from the First, Second, Fourth, Sixth, Seventh, Eighth, and Eleventh Circuits in holding that a Defendant may support jurisdiction by showing by a preponderance of the evidence that the amount in controversy exceeds $5 million, even if the plaintiff expressly pleads a lesser amount.  It rejected a more stringent “legal certainty” standard, which has been applied by the Ninth and Third Circuits.

The Frederick decision means that plaintiffs cannot foreclose federal jurisdiction in class actions through creative pleading in the Tenth Circuit.  However, the burden is still on the defendant to prove as a matter of fact that the amount at stake in the case exceeds $5 million.  Therefore, it also highlights the need for defense counsel to gather, plead, and be prepared to prove specific facts showing the amount at stake in the case.

It is always important to remember that proving the amount in controversy does not require the defendant to prove the damages that are likely to be awarded against it in the case (of course most defendants would say that this amount is zero).  Instead, it requires the defendant to establish the highest amount that the plaintiff class could conceivably win based on the legal claims presented, the relief sought (both damages and other relief sought expressly and damages that could legally flow from the claims presented), and the maximum potential value that the plaintiff could reasonably put on that relief.  The preponderance standard requires the defendant to prove facts that would cause more than $5 million to be awarded if the plaintiff proves the claims and potential theories of damages that flow from those claims.

Paul Karlsgodt is a partner at Baker Hostetler who focuses his practice on class action defense and other complex commercial litigation. He is editor and primary contributor to www.ClassActionBlawg.com, where this post originally appeared on June 28, 2012.

Tenth Circuit: Proposed Class of Defective Car Owners Denied as Prudentially Moot

The Tenth Circuit Court of Appeals published its opinion in Winzler v. Toyota Motor Sales U.S.A., Inc. on Monday, June 18, 2012.

The Tenth Circuit vacated the district court’s decision. Petitioner “brought state law claims against Toyota on behalf of a proposed nationwide class of 2006 Toyota Corolla and Toyota Corolla Matrix owners and lessees. She alleged that the cars harbored defective ‘Engine Control Modules’ (“ECMs”), making them prone to stall without warning. As relief, she asked for an order requiring Toyota to notify all relevant owners of the defect and then to create and coordinate an equitable fund to pay for repairs. . . . “Before addressing whether [Petitioner]’s class should be certified, the district court held her complaint failed to state a claim and dismissed it. . . . And then, just as [Petitioner] began her appeal, Toyota announced a nationwide recall of 2005-2008 Toyota Corolla and Corolla Matrix cars to fix their ECMs. The ongoing recall is taking place under the auspices of the National Traffic and Motor Vehicle Safety Act. That statute obliges Toyota to notify owners of the defect and repair or replace any faulty parts at no cost. And the whole process is overseen by the National Highway Transportation Safety Administration (“NHTSA”), an agency of the Department of Transportation that can issue stiff fines if the company fails to carry out the recall to its satisfaction. Arguing that these statutory and regulatory processes promise [Petitioner] exactly the relief sought in her complaint, Toyota has asked this court to find that events have overtaken her suit and rendered it moot.”

“Because prudential mootness is arguably the narrowest of the many bases Toyota has suggested for dismissal, and because it is sufficient to that task, . . . [the Court granted] the motion to supplement the record and . . . following [the] general practice when finding a case moot (prudentially or otherwise) on appeal,” the Court vacated the district court’s judgment and remanded with instructions to dismiss the case as moot.

Colorado Court of Appeals: District Court Erred in Denying Class Certification Where Homeowners’ Damages Were Different but Nexus Existed Between Claims

The Colorado Court of Appeals issued its decision in Devora v. Strodtman on May 24, 2012.

Class Action—Homeowners—Notice of Appeal—Typicality—Adequacy—CRCP 23(a)—Damages.

In this case involving allegations of deceptive trade practices, civil theft, and racketeering, plaintiffs Jesus Devora, Julian Martinez, and Manuel Moreno (collectively, homeowners) appealed the district court’s order denying their motion to certify the case as a class action lawsuit against defendants J. Mark Strodtman and JS Real Estate LLC. The judgment was vacated and the case was remanded.

Defendants built homes in Weld County that were purchased by homeowners. Homeowners alleged in their complaint that defendants induced them to buy homes under prices and terms they could not afford, misrepresented and failed to disclose loan financing terms, engaged in a pattern of racketeering, and intended to permanently deprive mortgage lenders of the proceeds defendants had received from the loans.

The Court of Appeals first determined whether plaintiffs’ notice of appeal was timely filed. Where a named plaintiff chooses not to file an interlocutory appeal of an order denying class certification under CRS § 13-20-901(1), the plaintiff does notwaive the right to appeal that order by requesting and obtaining a CRCP 54(b) certification of final judgment, or on a final judgment on the merits. Because homeowners chose not to appeal the district court’s order under CRS § 13-20-901(1), they had the option of awaiting a final judgment on the merits of their individual claims or requesting a CRCP 54(b) order. Homeowners obtained a Rule 54(b) order and filed a timely notice of appeal. Therefore, this Court had jurisdiction to consider plaintiffs’ appeal.

Homeowners contended that the district court erred in finding they did not meet the typicality and adequacy requirements of CRCP 23(a) because the class members had differing damages from one another. The class representatives, however, need to establish only “a nexus between the class representatives’ claims or defenses and the common questions of fact or law which unite the class” to meet the typicality requirement. The typicality requirement may be satisfied even though there is disparity in the damages claimed by the class representatives and the putative class members. Here, the district court erred as a matter of law in finding that homeowners had failed to prove the typicality element of CRCP 23(a), because their damages might or would be different from those of the potential class members. The district court did not make specific findings regarding the remaining requirements of CRCP 23(a) and (b)(3). Thus, it is unknown whether homeowners established those requirements. Therefore, the case was remanded to the district court for further findings of fact and a determination whether homeowners’ class action lawsuit should be certified.

Summary and full case available here.

Colorado Court of Appeals: Trial Court Erred in Awarding State Farm Costs and Fees as Prevailing Party Based on Purely Procedural Victory on Class Certification

The Colorado Court of Appeals issued its opinion in Reyher v. State Farm Mut. Automobile Ins. Co. on April 12, 2012.

Jurisdiction—Final Order—Class Action—Prevailing Party—Costs.

Plaintiffs Pauline Reyher and Dr. Wallace Brucker appealed the trial court’s order awarding costs and attorney fees to defendant State Farm Mutual Automobile Insurance Company (State Farm), following the trial court’s dismissal of Reyher’s claims and denial of plaintiffs’ class certification motion. The order was reversed and the case was remanded with directions. During the briefing of this appeal, Reyher II was announced, reversing the dismissal of Reyher’s claims. At the time of this appeal, there were no class action claims pending in the trial court; however, the individual claims of Reyher and Dr. Brucker remained pending and unresolved.

State Farm argued that the Court of Appeals lacked jurisdiction over this appeal because the order awarding costs and fees was not a final, appealable order. The cost and fee order was related solely to the class certification claims and Reyher’s claims, which were both resolved by final orders pursuant to C.R.C.P. 54(b); the order was not based on any other claims pending in the trial court. Therefore, the cost and fee order was itself a final, appealable judgment.

Plaintiffs argued that the trial court prematurely determined that State Farm was the prevailing party under C.R.C.P. 54(d) based on its successful defense of class certification but before termination of the underlying litigation. The trial court erred to the extent that it awarded costs based on its misconception that it was required to do so and had no discretion in the matter. Additionally, whether a party has derived some of the benefits sought by the litigation requires an assessment in the context of the overall litigation. Therefore, because plaintiffs may yet obtain a judgment against State Farm on their individual claims, it was premature for the trial court to determine that State Farm was the prevailing party. Accordingly, the trial court erred in awarding State Farm its costs and fees as the prevailing party at this stage in the proceedings based on its purely procedural victory on the class certification. Plaintiffs also argued, State Farm conceded, and the Court of Appeals agreed that because the judgment dismissing Reyher’s claims was reversed in Reyher II, the costs and fees related to that dismissal also must be reversed.

Summary and full case available here.

Tenth Circuit: Although Corporation Made False or Misleading Statements to the Market, It Did Not Act with Scienter

The Tenth Circuit Court of Appeals published its opinion in In re Level 3 Communications Inc. Securities Litigation on Monday, February 6, 2012.

The Tenth Circuit affirmed the district court’s decision. This case arises from allegations that certain officers of Level 3 Communications, Inc. engaged in securities fraud. The lead plaintiff filed a class action complaint on behalf of all purchasers or acquirers of Level 3 securities between October 17, 2006, and October 23, 2007. Plaintiff alleges that Defendants made false or misleading statements of material fact to the market during the class period regarding Level 3’s progress in integrating several entities it had acquired.

Under Section 10(b) of the Securities Exchange Act of 1934, it is unlawful to “use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe.” Additionally, 17 C.F.R. § 240.10b-5 prohibits “mak[ing] any untrue statement of a material fact.” On appeal, Plaintiff “argues that the district court should be reversed because the amended complaint adequately pleaded false statements of material fact made by [D]efendants, as well as facts sufficient to raise a strong inference of scienter. Although [the Court agreed] with [P]laintiff that at least a few of the complaint’s 237 paragraphs include materially false statements, [it affirmed] the district court’s dismissal of the complaint based on [the] conclusion that it fails adequately to plead scienter.”

According to the Court, “[t]he importance of integration to Level 3 and its investors does not mean that everything [D]efendants said on the topic was material. Many of the statements in [P]laintiff’s complaint are, as a matter of law, nothing more than puffery. . . . [B]road claims by [D]efendants regarding integration efforts and the customer experience overall are likewise non-actionable.” However, “on occasion [D]efendants’ comments regarding Level 3’s integration progress did cross the line from corporate optimism and puffery to objectively verifiable matters of fact” that could be actionable. Three of the statements were found to be false or misleading when made. However, “it is not enough for [P]laintiff to point out misleading statements of material fact. Under the heightened pleading standards of the PSLRA, [P]laintiff must state with particularity facts ‘giving rise to a strong inference’ that the [D]efendants acted with scienter, which we define as ‘a mental state embracing intent to deceive, manipulate, or defraud, or recklessness.'” The Court concluded that no cogent inference of scienter could be drawn from the complaint.

Colorado Supreme Court: Predominance of Individual Issues Precluded Class Certification

The Colorado Supreme Court issued its opinion in State Farm Mut. Ins. Co. v. Reyher on October 31, 2011.

Class Actions—Class Certification—Burden of Proof—Colorado Automobile Accident Reparations Act.

Applying the standards enunciated in Jackson v. Unocal Corp. (Oct. 31, 2011, No. 09SC668), the Supreme Court affirmed the trial court’s decision to deny class certification, thereby reversing the court of appeals’ judgment. The Court concluded that the trial court rigorously analyzed plaintiffs’ class-wide theories of liability, as well as the evidence offered by defendant to refute those theories in determining that the predominance of individual issues precluded class certification.

Summary and full case available here.

Colorado Supreme Court: Defendant May Introduce Individual Evidence to Rebut Class-Wide Inference of Fraudulent Concealment

The Colorado Supreme Court issued its opinion in BP America Production Co. v. Patterson on October 31, 2011.

Class Actions—Burden of Proof—Circumstantial Evidence—Inference or Presumption—Fraudulent Concealment.

Applying the standards enunciated in Jackson v. Unocal Corp. (Oct. 31, 2011, No. 09SC668), the Supreme Court affirmed the trial court’s decision to grant class certification. The Court held that the ignorance and reliance elements of fraudulent concealment may be inferred from circumstantial evidence, enabling plaintiffs to establish a theory of fraudulent concealment on a class-wide basis with evidence common to the class. The Court also held that a defendant may introduce individual evidence to rebut such a class-wide inference. The Court concluded that the trial court rigorously analyzed all the evidence presented in support of and in opposition to class certification, as required by Jackson.

Summary and full case available here.