On August 18, 2023, the Fourth Circuit decertified approximately 20 million putative class action claims arising out of a 2018 data breach involving Marriott Hotels. See here. The Fourth Circuit reversed the district court’s certification and required it to consider in the first instance whether all of the putative plaintiffs waived their claims by signing class action waivers when they registered to be part of the Starwood Preferred Guest Program (“SPG”). The SPG waiver specifically stated that “Any disputes arising out of or related to the SPG Program or the[] SPG Program Terms will be handled individually without any class action ….”

The Fourth Circuit made clear that trial courts must consider the import of class-action waivers signed by putative class members before certifying class actions against a Defendant. According to the Fourth Circuit, this “error affect[ed] the whole of the certification order.” This important decision speaks not only to the process the court should follow, but contains practical advice for businesses seeking to avoid costly litigation: The use of class waiver provisions is alive and well in the Fourth Circuit.

While this lawsuit arose as a result of a data breach, all companies transacting business on the internet are potentially liable to class action claims. If you have specific questions about how we can assist with avoiding these claims, including by configuring your website to require a user’s affirmative assent to your Terms of Use (including but not limited to a class action waiver and/or arbitration provision), please reach out to the Reed Smith attorneys below.