Class Action Defense Blog

As a service to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. Our hope is that the class action defense lawyer may better anticipate claims against which they must defend. This report covers the time period from July 21 - July 27, 2006. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 48 class action lawsuits were filed in these California state and federal courts during that time period, of which 16 involved employment law claims (33%) - again claiming the dubious honor of "first place." Antitrust class action filings were a distant second with 6 new lawsuits (13%) four of which were nothing more than new filings against British Airways et al. Five (5) new class action lawsuits (10%) alleged violations of the Auto Sales Finance Act.

Posted In: Class Actions In The News, Class Actions In The News

The Los Angeles Times reports that yesterday an Arkansas judge approved the $90 million settlement of the click-fraud class action lawsuit against Google. While more than 70 objections to the proposed settlement had been filed, Google's class action defense attorneys noted that all but one of Google's 20 largest advertisers approved of the settlement. The court reportedly downplayed the concerns of small advertisers, and concluded that the terms of the settlement were "fair, reasonable and adequate." The article, entitled "Judge OKs Google's Click-Fraud Settlement," may be found in the Business Section of the July 28, 2006 edition of the Los Angeles Times.

Posted In: Class Actions In The News, Class Actions In The News

California Court Dismisses Class Action Agreeing With Defense Attorneys that Federal Fair Credit Report Act (FCRA) Does Not Require Terms of Equity Line Offer in Mailer to be a Specific Dollar Figure or Interest Rate, and that No Private Right of Action Exists for Alleged Violations of § 1681m's Disclosure Requirements

A putative class action was filed against a lender for allegedly violating the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., by sending out unsolicited mailers offering equity lines of credit in broad amounts (in plaintiff's case, $15,000 - $300,000) at a range of interest rates (in plaintiff's case, 5.65% - 16.9%), and by failing to include the disclosures required by § 1681m(d). Putkowski v. Irwin Home Equity Corp., 423 F.Supp.2d 1053, 1055-56 (N.D. Cal. 2006). Defense attorneys moved to dismiss the class action; plaintiff's lawyer argued that the mailer was nothing more than a "sales pitch" and that it did not constitute a "firm offer" under the FCRA because it "failed to state the rate of interest to be charged or the amount of credit to be extended." Id., at 1057. The class action defense team also argued that no private right of action exists for alleged violations of § 1681m. The district court agreed with the defense.

Defense attorneys argued that "firm offers of credit" under the FCRA may be "conditional" - that it need not specify the amount of the loan offered or the interest rate, and that "the offeror may later withdraw the offer if the consumer does not meet the creditworthiness criteria." Putkowski, at 1058. The district court distinguished Cole v. U.S. Capital, Inc., 389 F.3d 719 (7th Cir. 2004) [holding mailer failed to comply with FCRA], and found that the terms of the "offer" set forth in the mailer sent to plaintiff were sufficient "firm" to satisfy FCRA. Id., at 1059-60.

Continue reading "Putkowski v. Irwin Home Equity-FCRA Class Action Defense Cases: Mailer Offering Pre-Approved Equity Line From $15,000-$300,000 At Interest From 5.65%-16.9% Is "Firm Offer Of Credit" Under Federal FCRA (Fair Credit Reporting Act) California Court Holds" »

Posted In: FCRA Class Actions, Class Action Court Decisions

Federal Court Also Holds that Liability for Violations of Fair Credit Reporting Act (FCRA), and that "Willful" Noncompliance Under FCRA's Punitive Damage Provision Includes Reckless Disregard

In two class action lawsuits filed against insurance companies for alleged violations of the federal Fair Credit Reporting Act separate statement motion to compel responses, 15 U.S.C. §§ 1681 et seq., (1) class action defense attorneys representing Hartford moved for summary judgment on the grounds that the initial rate set for a new policy holder cannot constitute an "adverse action" because there is no "increase" in the rate charged; and (2) class action defense attorneys representing GEICO sought summary judgment claiming the class representative lacked standing, that it did not contract to issue the plaintiff a policy, and that the premium charged would have been the same even if it had not considered plaintiff's credit history. In each case, the district court granted summary judgment in favor of the insurers; the Ninth Circuit consolidated the cases for purposes of its opinion.

In a case of first impression, the Ninth Circuit Court of Appeals held that if the rate initially set by an insurance company would have been lower but for its reliance on a consumer's credit report, then a notice of adverse action must be provided under the FCRA. Reynolds v. Hartford Fin. Serv. Group, Inc., 435 F.3d 1081 (9th Cir. 2006). Congress enacted the FCRA to ensure fair and accurate reporting of credit information affecting consumers. The statutory scheme has been characterized by courts as both comprehensive and complex. One aspect of the FCRA requires that consumers be informed of "adverse actions" taken in reliance on credit reports so that they can dispute or explain any negative information contained in such reports. "Adverse action notices advise consumers that an adverse action has been taken against them, and the nature of that action, and alerts them that they may view a copy of the consumer report that triggered the adverse action free of charge and correct any errors affecting their economic well-being." Id., at 1085.

Continue reading "Reynolds v. Hartford-Class Action Defense Cases: "Adverse Action" Under Federal FCRA (Fair Credit Reporting Act) Applies To Initial Premium Set By Insurer Ninth Circuit Holds In Case Of First Impression" »

Posted In: FCRA Class Actions, Class Action Court Decisions

28 U.S.C. § 1447(d) Bars Review of Class Action Defense Appeal of Order Remanding Case to State Court on Grounds that Federal Court Lacked Subject Matter Jurisdiction Over Action

Roberts v. BJC Health System, 452 F.3d 737 (8th Cir. 2006), concerned a putative class action filed in Missouri state court alleging that certain medical procedures were systematically "miscoded" so that patients were overcharged for the procedures. The defense removed the action to federal court on the grounds of federal question subject matter jurisdiction, asserting that ERISA completely preempted the class action claims. In response to plaintiffs' motion for remand, the district court concluded that it lacked subject matter jurisdiction over the putative class action because the plaintiffs had not suffered any injury in fact, and therefore lacked standing. Id., at 738. Because plaintiffs lacked standing, the court never reached the issue of whether ERISA preempted plaintiffs' putative class action. Defense attorneys appealed, arguing that the case should have been dismissed; plaintiffs responded that the remand order was not appealable because it was based on lack of jurisdiction. Id.

On June 21, 2006, the Eighth Circuit agreed and dismissed the appeal. The Court reaffirmed well-settled law that "[w]hen a district court remands a case based on a lack of subject matter jurisdiction under [28 U.S.C. § 1447(c)], 'a court of appeals lacks jurisdiction to entertain an appeal of the remand order.'" Roberts, at 739 (citation omitted). The Circuit Court recognized that its decision "creates a potential Catch-22 for the parties" in that "the state court might dismiss the action for lack of jurisdiction because of ERISA preemption." Id. The Court's solution was to suggest that plaintiffs find a class member that had suffered an injury in fact. Id.

Posted In: Removal & Remand, Class Action Court Decisions

On July 21st, we posted an article concerning Hepting v. AT&T Corp., ___ F.Supp.2d ___ (N.D. Cal. July 20, 2006), where a San Francisco federal district court refused to dismiss a putative class action against AT&T for its participation in the government's warrantless surveillance program. In part, the California federal court rejected a defense argument by AT&T and the federal government (which had intervened in the putative class action) that the claims were barred by the state secrets privilege. Adam Liptak of the New York Times reports today that on July 25th a Chicago federal court dismissed similar claim against AT&T believing that the two decisions were not necessarily inconsistent. Liptak summarizes the Illinois decision as explaining that "The Chicago case concerns records of phone calls, including when they are placed, how long they lasted and the phone numbers involved. The San Francisco case, by contrast, mainly concerns an N.S.A. program aimed not at a vast sweep of customers' records but at the contents of a more limited number of communications."

Mr. Liptak's article, entitled "Judge Rejects Customer Suit Over Records From AT&T," may be found in the July 26, 2006 edition of the New York Times.

Posted In: Class Actions In The News

California Court Rejects Putative Class Action by Shareholder Whose Stock Escheated to the State Against Corporation Confirming Absolute Immunity Defense to UPL Claims

In a class action defense case of first impression, on July 19, 2006, a California appellate court upheld a court order sustaining a demurrer to a putative class action complaint against a corporation for alleged violations of California’s Unclaimed Property law (UPL), California Code Civ. Proc., §§1500-1582. Harris v. Verizon Communications, ___ Cal.App.4th ___, 2006 WL 20008884 (Cal.App. July 19, 2006). The putative class action was premised on the corporation’s alleged failure to provide notice required by the UPL. Specifically, plaintiff Gene Harris worked for GTE Corporation in the 1970s and 1980s, receiving shares in the corporation as a “fringe benefit.” Slip Opn., at 3. In 1990, without notice to Harris and without his knowledge, GTE transferred his shares to the State Controller. In accordance with California law, the Controller sold the shares and held the proceeds; eventually Harris submitted a claim and was 1999 the Controller sent him the funds held on his behalf. Id.

Despite receiving the funds, Harris filed two class actions. In September 2001, Harris filed a putative class action lawsuit against the State Controller for failure to provide notice to shareholders before selling stock that had escheated to the State. Slip Opn., at 3. That case was resolved in favor of the defense in 2004, when a California appellate court held that the UPL “do[es] not require the Controller to provide notice to apparent owners of escheated stock before the Controller sells the stock.” Harris v. Westly, 116 Cal.App.4thh 214, 224 (Cal.App. 2004). In October 2001, Harris filed a putative class action against GTE for delivering his shares of stock to the Controller without notice. Slip Opn., at 4. The defense demurred; the trial court dismissed the class action against GTE, agreeing that GTE had an absolute immunity defense under the UPL. Id.

Continue reading "Verizon Class Action Defense Case-Harris v. Verizon: Corporations That Comply With California Unclaimed Property Law (UPL) By Delivering Duplicate Stock Certificates To State Controller Have Absolute Immunity Against Suit From Shareholders" »

Posted In: Class Action Court Decisions

Federal District Court Grants Motion to Strike Third-Party Complaint for Indemnity/Contribution Against Parent

Plaintiffs Kristen and William McSherry Jr. ("William Jr.") filed suit against Capital One FSB and others alleging violations of the federal Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and Truth in Lending Act (TILA), together with Washington state law claims for defamation and invasion of privacy. McSherry v. Capital One FSB, ___ F.R.D. ___, 2006 WL 1420839 (W.D. Wash. 2006). Capital One filed a third-party complaint against plaintiff's father, William McSherry Sr., ("William Sr.") for indemnity and contribution because "[a]ccording to several documents in the record, including Plaintiffs' complaint, it appears that the debt allegedly incurred by [William Jr.], may have been incurred by [William Sr.]." Slip Opn., at 2. The district court granted plaintiffs' motion to strike, finding that "[w]hile it does appear that Capital One's allegedly tortuous actions or omissions would not have occurred but for [William Sr.'s] alleged actions, this is not enough." Id., at 1 and 12.

The federal court began with a summary of federal law on impleader actions, noting that it must be based on "an assertion of the third-party defendant's derivative liability to the third-party plaintiff" and that it "cannot be used to assert any . . . rights to recovery arising from the same transaction or occurrence as the underlying action." Slip Opn., at 3-4 (citation omitted). Here, the plaintiffs' complaint was carefully drafted to seek damages solely based on Capital One's acts or omissions in response to communications from plaintiffs concerning the debt:

Continue reading "McSherry v. Capital One-Class Action Defense Issues: No Right Of Indemnity Under FCRA (Fair Credit Reporting Act) Or TILA (Truth In Lending Act) Federal Court Holds" »

Posted In: FCRA Class Actions, Class Action Court Decisions, RESPA/TILA Class Actions