Class Action Defense Blog

California Court Reverses Order Denying Class Certification in Employment Law Class Action Because Bases for Trial Court’s Decision Could be Resolved Through Use of Subclasses

Plaintiffs, individuals and the international workers’ union UNITE, filed a putative employment law class action against Cintas for alleged violations of the Los Angeles Living Wage Ordinance (LWO), which “prescrib[es] a minimum level of compensation be paid to employees of private firms who work on service contracts benefiting the City” - as well as sick leave, vacation, etc. - provided that the employees worked on a service contract for at last 20 hours during the month. The LWO does not apply to employees who did not work on a service contract, or who worked on a service contract for less than 20 hours, during the month. Aguiar v. Cintas Corp. No. 2, ___ Cal.App.4th ___, 2006 WL 2744773, *1-*2 (Cal.App. September 27, 2006). The LWO requires employers awarded service contracts to provide the City with “forms listing all subcontractors and employees working on the agreement and notify each current employee, and each new employee at the time of hire, of his or her rights under the LWO.” Id., at *2. Defense attorneys opposed certification of the lawsuit as a class action. The trial court agreed with the defense that class action treatment was inappropriate because the class was not ascertainable, the class lacked community of interest, and class action treatment was not the superior method to resolve the dispute. Id., at *1. The Court of Appeal reversed.

Continue reading "Class Action Defense Cases-Aguiar v. Cintas: Trial Court Erred In Failing To Consider Use Of Subclasses In Labor Law Class Action California Court Holds" »

Posted In: Certification of Class Actions, Class Action Court Decisions

Illinois Appellate Court Reverses Judgment in Favor of Class Action Plaintiff Because Evidence Demonstrated that Plaintiff Suffered no Damages and Because Trial Court’s Calculation of Damages was Flawed

A law firm filed a class action in Illinois state court against suppliers of legal products to law firms alleging Illinois and Minnesota statutory consumer fraud claims based on the allegation the defendants “add[ed], on a pro rata basis, a $6 per CD-ROM shipping-and-handling charge to the monthly billing statements sent to the plaintiff pursuant to a subscription agreement . . . without identifying the added charge and in contravention of the defendants’ previous practice of not charging customers for shipping and handling.” Smith, Allen, Mendenhall, Emons & Selby v. The Thomson Corp., ___ N.E.2d ___, 2006 WL 2947653 (Ill.App. October 26, 2006) [Slip Opn., at 2]. Following a bench trial, the court entered an $8.5 million judgment in favor of plaintiff, but denied prejudgment interest and attorney fees. Plaintiff appealed the limitation on its award; defense attorneys cross-appealed from the underlying judgment. Id., at 1. The Appellate Court reversed the underlying judgment, rendering plaintiff’s appeal moot.

Continue reading "Smith v. The Thomson Corporation-Class Action Defense Cases: Defense Wins Cross-Appeal In Fraud Class Action Based On Overcharges Because Plaintiff Failed To Prove Damages" »

Posted In: Class Action Court Decisions

Plaintiffs Fail to Establish Grounds for Centralization of Lawsuits Under 28 U.S.C. § 1407

In conjunction with two class action lawsuits - one pending in the Eastern District of Louisiana and the other pending in the Western District of Texas - plaintiffs filed a motion with Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 seeking centralization of the actions for pretrial purposes, and defense attorneys opposed the request. In re Insurance Industry Discriminatory Sales Practices Litig., 460 F.Supp.2d 1376, 1377 (Jud.Pan.Mult.Dist.Lit. 2006). The Judicial Panel denied the request because plaintiffs failed to demonstrate “that any common questions of fact and law are sufficiently complex, unresolved and/or numerous to justify Section 1407 transfer in this docket in which the Texas action has been pending for almost five years and is the subject of a pending class action settlement.” Id. The Panel explained that other alternatives exist to minimize the risk of duplicate discovery or inconsistent pretrial rulings. Id.

Posted In: Multidistrict Litigation, Class Action Court Decisions

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. We have already noted that the information that must be contained in registration statements is described in 15 U.S.C. § 77g. In the following section, Congress set forth the effective date of registration statements and amendments to registration statements, and covered incomplete or inaccurate information in registration statements – including untrue statements or omissions – in 15 U.S.C. § 77h, which provides:

§ 77h. Taking effect of registration statements and amendments thereto

(a) Effective date of registration statement

Except as hereinafter provided, the effective date of a registration statement shall be the twentieth day after the filing thereof or such earlier date as the Commission may determine, having due regard to the adequacy of the information respecting the issuer theretofore available to the public, to the facility with which the nature of the securities to be registered, their relationship to the capital structure of the issuer and the rights of holders thereof can be understood, and to the public interest and the protection of investors. If any amendment to any such statement is filed prior to the effective date of such statement, the registration statement shall be deemed to have been filed when such amendment was filed; except that an amendment filed with the consent of the Commission, prior to the effective date of the registration statement, or filed pursuant to an order of the Commission, shall be treated as a part of the registration statement.

Continue reading "15 U.S.C. § 77h--Taking Effect Of Registration Statements And Amendments Thereto Under The Securities Act Of 1933" »

Posted In: Statutes & Rules

To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly an unofficial summary of 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. This report covers the time period from October 20 - October 26, 2006. We include only those categories that boast 10% or more of the class action filings during the relevant timeframe. Approximately 33 class action lawsuits were filed in these California state and federal courts during that time period, of which 16 involved employment law claims (almost 50%). The category with the second highest number of class action filings involved California’s Unfair Competition Law (UCL) - which includes unfair business practices and false advertising claims - with 9 new filings (27%). The third category of class action cases with more than 10% of the new weekly filings concerned alleged violations of California's Consumers Legal Remedies Act (CLRA): class action defense attorneys will face 5 new cases involving that area of law, which represents approximately 15% of the class actions filed this time period.

Posted In: Class Actions In The News

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. While the statutory provisions for the registration of securities is contained in 15 U.S.C. § 77f, Congress set forth the information that must be contained in a registration statement in 15 U.S.C. § 77g. That statute provides:

§ 77g. Information required in registration statement

(a) The registration statement, when relating to a security other than a security issued by a foreign government, or political subdivision thereof, shall contain the information, and be accompanied by the documents, specified in Schedule A of section 77aa of this title, and when relating to a security issued by a foreign government, or political subdivision thereof, shall contain the information, and be accompanied by the documents, specified in Schedule B of section 77aa of this title; except that the Commission may by rules or regulations provide that any such information or document need not be included in respect of any class of issuers or securities if it finds that the requirement of such information or document is inapplicable to such class and that disclosure fully adequate for the protection of investors is otherwise required to be included within the registration statement. If any accountant, engineer, or appraiser, or any person whose profession gives authority to a statement made by him, is named as having prepared or certified any part of the registration statement, or is named as having prepared or certified a report or valuation for use in connection with the registration statement, the written consent of such person shall be filed with the registration statement. If any such person is named as having prepared or certified a report or valuation (other than a public official document or statement) which is used in connection with the registration statement, but is not named as having prepared or certified such report or valuation for use in connection with the registration statement, the written consent of such person shall be filed with the registration statement unless the Commission dispenses with such filing as impracticable or as involving undue hardship on the person filing the registration statement. Any such registration statement shall contain such other information, and be accompanied by such other documents, as the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors.

Continue reading "15 U.S.C. § 77g--Information Required In Registration Statements Under The Securities Act Of 1933" »

Posted In: Statutes & Rules

As a Matter of First Impression, Eleventh Circuit Holds that Jurisdiction Exists to Review District Court Order Based on Finding that Class Action Fairness Act of 2005 (CAFA) does not Apply and Agrees with District Court Decision to Remand Class Action to State Court

Plaintiff filed a putative class action in Alabama state court against health insurer alleging breach of contract. Defense attorneys removed the action to federal court based on the Class Action Fairness Act of 2005 (CAFA). Plaintiffs moved to remand the class action to state court on the grounds that Class Action Fairness Act did not apply because the lawsuit had been filed prior to CAFA’s effective date. Tmesys, Inc. v. Eufaula Drugs, Inc., 462 F.3d 1317, 1318 (11th Cir. 2006). The district court agreed and remanded the matter to state court; defense attorneys appealed. The Eleventh Circuit held, as a matter of first impression, that the Court of Appeals “do[es] have jurisdiction to review a district court’s order to remand [a class action to state court] when that order is based on a determination that CAFA does not apply, at least to the extent of reexamining that jurisdictional issue.” Id., at 1319 (citations omitted).

The facts underlying the removal/remand issue are as follows. Plaintiff filed its class action on February 14, 2005 - four days before CAFA’s effective date of February 18, 2005 - but the summons was not issued until February 28, 2005. Defense attorneys removed the case under CAFA on the ground that the action was “commenced” on the date the summons issued, which was after CAFA’s effective date. Plaintiff argued, and the district court found, that plaintiff intended the complaint be served on the date it filed its complaint and thus, under Alabama law, the class action had been commenced prior to CAFA’s effective date. Tmesys, at 1318. The Circuit Court held (1) as noted above, the federal Courts of Appeals have jurisdiction to review on appeal the foundational jurisdictional issue of whether CAFA applies, and (2) that “the consensus among circuits is that state law determines when an action is commenced for purposes of CAFA.” Id., at 1319. The Eleventh Circuit summarized its holdings at page 1319 as follows:

Accordingly, because the district court’s application of Alabama law established that the action was commenced prior to the effective date of the act and it is clear that the district court properly applied Alabama law to the undisputed underlying facts, both the district court and our court are without jurisdiction under CAFA. Thus, we DENY the petition for permission to appeal.

Posted In: Class Action Fairness Act (CAFA), Removal & Remand, Class Action Court Decisions

Trial Court Erred in Finding that Employees Voluntary Participation in a Capital Accumulation Plan Violated Illinois Wage Act Because of Two-Year Forfeiture Period

Plaintiff filed a class action against Citigroup, Travelers Group, Primerica Financial Services, Salomon Smith Barney Holdings and Salomon Smith Barney alleging that a voluntary capital accumulation plan (CAP), whereby a portion of employee compensation and wages were paid in the form of restricted stock, violated Illinois labor laws because the CAP contained a two-year forfeiture period. Kim v. Citigroup, Inc., ___ N.E.2d ___, 2006 WL 2796362 (Ill.App. September 29, 2006). Plaintiff argued that the forfeiture of a portion of the stock upon termination of employment violated the Illinois Wage Payment and Collection Act (“the Act’), which requires that employees be paid all earned wages upon termination of employment. Defense attorneys argued that the CAP program is for the benefit of employees and does not violate state law. The trial court sided with plaintiff, but the appellate court reversed.

Plaintiff was a financial consultant for Salomon Smith Barney with responsibility for managing $30-$40 million in assets. He voluntarily agreed to participate in the CAP, which he believed to be “an innovative and attractive savings vehicle.” Slip Opn., at 2. Plaintiff elected to have 10% of his compensation paid in the form of restricted stock, which allowed him to receive Citigroup stock at a 25% discount subject to a two-year vesting period. Id., at 2-3. When plaintiff left to join UBS Paine Webber, Salomon Smith Barney kept the unvested shares of his CAP stock, which represented approximately $18,000 in earned wages. Id., at 3.

Continue reading "Kim v. Citigroup-Class Action Defense Cases: Forfeiture Aspect Of Capital Accumulation Plan Did Not Violate State’s Wage Act Illinois Court Holds" »

Posted In: Employment Law Class Actions, Class Action Court Decisions

Defense Attorneys Successfully Defeat Class Action Alleging State Law Breach of Contract Claim Because Contract Set Forth Exclusive Remedies in Event of Breach and Class Action Complaint Sought a Different Remedy

Plaintiff filed a one-count nationwide class action in state court against FedEx alleging that it breached the terms of its shipping contract with customers because it charged higher rates for express delivery service but failed to deliver the packages on time. Moody v. Federal Express Corp., ___ N.E.2d ___, 2006 WL 3012854 (Ill.App. October 19, 2006) [Slip Opn., at 2]. Plaintiff paid $41.31 to send a package on January 22, 2002 by “FedEx Priority Overnight, Next Business Morning” expecting the package to be delivered by 8:00 a.m. the following morning; instead, the package was delivered two days later at 9:00 a.m. Id. Defense attorneys moved for summary judgment on the grounds that the relief sought in the class action violated the federal Airline Deregulation Act, 49 U.S.C. § 41713(b)(1), “because it sought a remedy outside the four corners of the contract.” Id. The trial court agreed that the claims were preempted and dismissed the class action; the Illinois Appellate Court affirmed on straight contract grounds without reaching the federal preemption issue.

Continue reading "FedEx Class Action Defense Case-Moody v. Federal Express: Illinois Appellate Court Affirms Judgment In Favor Of Defense Against Class Action Alleging Breach Of Contract Because Class Action Complaint Sought Remedy Outside Scope Of Contract" »

Posted In: Class Action Court Decisions

California Appellate Court Split Opinion Rejects Defense Federal Preemption Arguments and Reverses Order Dismissing Class Action

Plaintiffs filed a putative class action in California state court against a bank alleging conversion, and violations of California’s Consumers Legal Remedies Act (CLRA), Unfair Competition Law (UCL), Fair Debt Collection Practices Act (FDCPA) based on the bank’s “wrongful” release of tax refund monies to a third party creditor bank. Hood v. Santa Barbara Bank & Trust, 143 Cal.App.4th 526, 49 Cal.Rptr.3d 369, 373 (Cal.App. 2006). Defense attorneys cross-complained against several other banks, and the banks filed motions for judgment on the pleadings on the ground of federal preemption. Id., at 375. The trial court granted the motions, concluding that the “visitorial powers” regulation, the deposit-taking regulation and the non-real estate lending regulation adopted by the Office of the Comptroller of the Currency (OCC) expressly preempted plaintiffs’ class action claims. Id., at 375-76. By a 2-1 vote, the California Court of Appeal reversed.

Continue reading "Hood v. Santa Barbara Bank-Class Action Defense Cases: Trial Court Improperly Granted Defense Motion To Dismiss Class Action Alleging CLRA, UCL And FDCPA Violations Because Class Action Claims Were Not Preempted By Federal Law California Court Holds" »

Posted In: Class Action Court Decisions

Federal Court Rejects Class Action Claim that Offer to Settle Debt for 50% of Current Balance Due Violates Fair Debt Collection Practices Act (FDCPA)

Plaintiffs filed a consolidated class action complaint against Midland Credit Management, a debt collector that purchases debts from third-party creditors, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq. Midland sent letters attempting to collect outstanding debts; the class action complaint alleged that the letters violated the FDCPA because they contain false and misleading information. Defense attorneys filed a motion for summary, and plaintiffs followed with a cross-motion for summary judgment. The federal district court agreed with defense attorneys that the collection letters did not violate the FDCPA and granted summary judgment in favor of Midland and against the class action plaintiffs. Jackson v. Midland Credit Management, Inc., 445 F.Supp.2d 1015, 1017 (N.D. Ill. 2006).

Preliminarily, the district court noted that the Seventh Circuit “evaluates FDCPA claims through the eyes of an ‘unsophisticated debtor’” – it does not employ the “least sophisticated debtor” test adopted by some sister circuits. Jackson, at 1018-19. The court explained at page 1018 that, under this test,

“The unsophisticated debtor is regarded as ‘uninformed, naive, or trusting,’ but nonetheless is considered to have a ‘rudimentary knowledge about the financial world and is capable of making basic logical deductions and inferences.’” (Citations omitted.)

Because the court’s analysis requires an understanding of the specific language used in Midland’s letters, we provide the quoted language, including the emphasis in the original letters, as set forth by the district court at page 1017:

Continue reading "Jackson v. Midland Credit-Class Action Defense Cases: Illinois Federal Court Grants Defense Motion For Summary Judgment Holding Debt Collection Letter Did Not Violate Federal Fair Debt Collection Practices Act (FDCPA)" »

Posted In: FDCPA Class Actions, Class Action Court Decisions