Class Action Defense Blog

For class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide here the text of the statute. Congress defined the relevant terms used in the Real Estate Settlement Procedures Act in 12 U.S.C. § 2602, which provides:

§ 2602. Definitions

For purposes of this chapter--

(1) the term "federally related mortgage loan" includes any loan (other than temporary financing such as a construction loan) which--

(A) is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, including any such secured loan, the proceeds of which are used to prepay or pay off an existing loan secured by the same property; and

(B)(i) is made in whole or in part by any lender the deposits or accounts of which are insured by any agency of the Federal Government, or is made in whole or in part by any lender which is regulated by any agency of the Federal Government, or

(ii) is made in whole or in part, or insured, guaranteed, supplemented, or assisted in any way, by the Secretary or any other officer or agency of the Federal Government or under or in connection with a housing or urban development program administered by the Secretary or a housing or related program administered by any other such officer or agency; or

(iii) is intended to be sold by the originating lender to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or a financial institution from which it is to be purchased by the Federal Home Loan Mortgage Corporation; or

(iv) is made in whole or in part by any "creditor", as defined in section 1602(f) of Title 15, who makes or invests in residential real estate loans aggregating more than $1,000,000 per year, except that for the purpose of this chapter, the term "creditor" does not include any agency or instrumentality of any State;

Continue reading "12 U.S.C. § 2602—Definitions Of Terms Used In The Real Estate Settlement Procedures Act (RESPA)" »

Posted In: Statutes & Rules

DaimlerChrysler ushered in the new year by settling for $14.5 million a class action filed in New Jersey state court. The settlement of the nationwide class action reportedly won court approval on December 26, 2006, bringing to a close Lubitz v. DaimlerChrysler Corp. The class action settlement covers the more than one million people who bought or leased a Jeep Grand Cherokee between 1999 and 2004. The class action complaint alleged that the brakes on Jeep Grand Cherokees were defective, causing them to sustain uneven wear and occasionally fail. In approving the settlement, the court noted that plaintiffs' counsel would have had to overcome substantial obstacles if the case proceeded to trial, particularly with respect to damages as the cause of any problems associated with a vehicle's brakes may be attributable to the individual driving habits of the class members.

The terms of the settlement reportedly call for DaimlerChrysler to repair or replace the brakes on Jeep Grand Cherokees that were purchased or leased between 1999 and 2002, and to inspect the brakes on Jeep Grand Cherokees manufactured in 2003 and 2004. Plaintiffs' counsel requested almost $3 million in attorney fees, but the judge found the request excessive and awarded approximately $2.1 million. Even so, this worked out to a 50% lodestar factor based on hours actually worked.

Several news reports provide greater details on the settlement. One such report, entitled "N.J. Judge OKs $14.5M Settlement in Class Action Over Bad Jeep Brakes," by Mary P. Gallagher of the New Jersey Law Journal, may be found in a December 29, 2006 posting on Law.com.

Posted In: Class Actions In The News

As a resource for the class action defense lawyer who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of RESPA. Congress set forth its findings and purpose for RESPA in 12 U.S.C. § 2601, which provides as follows:

§ 2601. Congressional findings and purpose

(a) The Congress finds that significant reforms in the real estate settlement process are needed to insure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country. The Congress also finds that it has been over two years since the Secretary of Housing and Urban Development and the Administrator of Veterans' Affairs submitted their joint report to the Congress on "Mortgage Settlement Costs" and that the time has come for the recommendations for Federal legislative action made in that report to be implemented.

Continue reading "12 U.S.C. § 2601--Congressional Findings And Purpose For The Real Estate Settlement Procedures Act (RESPA)" »

Posted In: Statutes & Rules

On December 5, 2006, a California state court provisionally certified a nationwide class action against TiVo for purposes of settlement in Nolz v. TiVo, Inc., San Francisco Superior Court Case No. CGC-05-447918. Members of the class action consist of all persons "who purchased or held a Gift Subscription for TiVo services," Order, at 2; the class action complaint alleged, in part, that TiVo sold gift subscriptions that contained expiration dates, in violation of California state law. The trial court gave preliminary approval to the proposed settlement, and set March 16, 2007, as the date for the Fairness Hearing.

Posted In: Class Actions In The News

CAFA (Class Action Fairness Act) did not Shift Burden of Proving Federal Jurisdiction to Plaintiff but Defense Established Requisite Amount In Controversy so Alabama Federal Court Denies Motion to Remand Class Action to State Court

Plaintiff, a pharmacy, filed a putative class action against insurance/pharmacy benefit management companies for misrepresentation, breach of contract, unjust enrichment and conspiracy, alleging that defendants failed to reimburse pharmacies "according to an agreed-upon formula for brand name prescriptions dispensed to Defendants' insureds." Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F.Supp.2d 1323, 1324 (M.D. Ala. 2006). Defense attorneys removed the action to federal court asserting, inter alia, federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id. The district court held that even under CAFA the defense bears the burden of establishing removal jurisdiction, but concluded that the defense had satisfied the amount in controversy requirement.

The federal court began its discussion by addressing the issue of whether under CAFA the removal-requesting defendant bore the burden of establishing federal court jurisdiction or whether the remand-requesting plaintiff must demonstrate that such jurisdiction does not exist. Main Drug, at 1326-27. The district court's analysis led it to "apply the traditional burden" that requires the defense "to show by a preponderance of the evidence that the amount in controversy has been met." Id., at 1327. The court also concluded that the defense had met its burden of proof in showing that the amount in controversy exceeds $5 million, id., at 1327-28.

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

Second Circuit Holds that CAFA (Class Action Fairness Act) did not Shift Burden of Proving Federal Jurisdiction to Plaintiff and Remands Class Action Case to District Court for Further Proceedings

Plaintiffs filed a putative class action against Blockbuster in New York state court challenging the company's "No Late Fee" program as a deceptive business practice on the grounds that Blockbuster did not adequately inform customers that in order to avoid the late fees the transaction was converted from a video rental to a video sale. Blockbuster, Inc. v. Galeno, 472 F.3d 53, 2006 WL 3775326, *1 (2d Cir. 2006). Defense attorneys removed the action to federal court asserting both general diversity jurisdiction under 28 U.S.C. § 1332(a) and federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id., at *2. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id.; defense attorneys countered that "CAFA had reversed the traditional rule that the party seeking removal to federal court bears the burden of establishing federal jurisdiction," id. The district court agreed with the defense, but its order denying the motion to remand the class action stated not only that "the defendant has met its burden" but also that "the plaintiff has not met [its] burden," id. The Second Circuit held that the district court should not have assigned any burden to the plaintiff, and remanded the action for further proceedings in light of the ambiguity in the lower court's order.

After summarizing CAFA and the appropriate standard of review of an order denying a motion to remand, Galeno, at *3, the Circuit Court addressed whether CAFA "shifted the burden of proof to the remand-requesting plaintiff to show that federal jurisdiction does not exist," id., at *4. The Second Circuit's analysis led it to the same conclusions reached by "[e]very other circuit court that has considered this issue," id., at *5 - viz., that CAFA had not affected the defense burden of establishing federal court removal jurisdiction, id.

Continue reading "Blockbuster v. Galeno-Class Action Defense Cases: Defense Bears Burden Of Establishing Federal Court Jurisdiction Under Class Action Fairness Act (CAFA) Second Circuit Holds" »

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

California Court of Appeal Reports that Decision Reversing in Full Trial Court Judgment Against Bank in Class Action Case has Become Final

The California Court of Appeal for the First Appellate District reported on December 26, 2006 that its decision in Miller v. Bank of America, 144 Cal.App.4th 1301 (Cal.App. 2006), has become final. Miller reversed a billion dollar class action judgment against Bank of America, holding that banks may apply funds from government benefit deposits to cover overdraft fees connected with the same bank account. The Miller decision is summarized in a separate article, and the full text of the opinion may be downloaded from that article.

Posted In: Class Actions In The News

Judicial Panel Agrees Pretrial Coordination Pursuant to 28 U.S.C. § 1407 is Warranted for Class Actions But Rejects Defense and Plaintiff Recommendations for Request for and Grants Defense Motion for Centralization of Three Class Action Lawsuits

After four class action lawsuits concerning vehicle extended warranties were filed against Volkswagen in California, Florida, Illinois, and Pennsylvania, defense and plaintiffs' attorneys filed a joint motion with the Judicial Panel for Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407, to centralize the lawsuits for pretrial purposes in either the Eastern District of Pennsylvania (defense choice) or the Southern District of Illinois (plaintiffs' choice). In re Volkswagen & Audi Warranty Extension Litig., 452 F.Supp.2d 1354, 1355 (Jud.Pan.Mult.Lit. 2006). Based on the briefing and oral argument, the Judicial Panel agreed that pretrial coordination under 28 U.S.C. § 1407, but rejected both of the transferee locations recommended by the parties. With respect to centralization, the Judicial Panel explained that the putative statewide class actions "share factual questions concerning the propriety of Volkswagen's August 2004 warranty extension/reimbursement program regarding the 1.8 liter turbocharged engines installed on approximately 462,000 Volkswagen and Audi brand vehicles," id., and that centralization "is necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings, and conserve the resources of the parties, their counsel and the judiciary," id., at 1356. But the Judicial Panel's transfer order fails to explain why it selected the District of Massachusetts as the appropriate transferee court over the courts proposed by the parties, other than noting that "Judge Joseph Tauro . . . [is] a jurist who has both the time and experience to steer this litigation on a prudent course." Id.

Posted In: Multidistrict Litigation, Class Action Court Decisions

California Court Holds that Proposed Class Action Settlement Warranted Court Approval and Grants Defense/Plaintiff Request to Certify Class Action for Purposes of Settlement

Plaintiffs filed a putative class action against DirectRevenue and The Best Offers Network (formerly BetterInternet) arising out of targeted advertising software downloaded onto computers through ActiveX installations that did not require the affirmative consent of computer users. Battaglia v. DirectRevenue, LLC, ___ F.Supp.2d ___, 2006 WL 3654095 (E.D. Cal. December 12, 2006). Defense and plaintiff attorneys moved the federal court to certify the litigation as a class action for purposes of settlement, and to give final approval to a settlement agreement that would result in dismissal of the class action complaint. Id., at *1-*2. Among the many terms of the class action settlement, defendants agreed not to collect personal information about computer users (such as bank account and social security numbers), and to require that users affirmatively state that they had "read and approved" the terms of the End User License Agreement (EULA) under which software would be downloaded by defendants onto computers. Separately, computer users will be advised of the type of pop-up advertisements that may be displayed on their computer, and will be required to separately accept the terms of such ads. Moreover, the "accept" option would not be set as the default for these disclosures. Id., at *2. The district court found that the terms of the proposed class action settlement were fair, reasonable and adequate, and were in the best interests of the class. The court found further that the class representatives and class counsel had "fairly and adequately" represented the interests of the class. Id., at *1.

A complete summary of the terms of the settlement agreement may be found in the district court opinion.

Posted In: 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. Congress set forth the schedule of information required to be contained in registration statements in 15 U.S.C. § 77aa, which provides as follows:

§ 77aa. Schedule of information required in registration statement

SCHEDULE A

(1) The name under which the issuer is doing or intends to do business;

(2) the name of the State or other sovereign power under which the issuer is organized;

(3) the location of the issuer's principal business office, and if the issuer is a foreign or territorial person, the name and address of its agent in the United States authorized to receive notice;

(4) the names and addresses of the directors or persons performing similar functions, and the chief executive, financial and accounting officers, chosen or to be chosen if the issuer be a corporation, association, trust, or other entity; of all partners, if the issuer be a partnership; and of the issuer, if the issuer be an individual; and of the promoters in the case of a business to be formed, or formed within two years prior to the filing of the registration statement;

(5) the names and addresses of the underwriters;

(6) the names and addresses of all persons, if any, owning of record or beneficially, if known, more than 10 per centum of any class of stock of the issuer, or more than 10 per centum in the aggregate of the outstanding stock of the issuer as of a date within twenty days prior to the filing of the registration statement;

(7) the amount of securities of the issuer held by any person specified in paragraphs (4), (5), and (6) of this schedule, as of a date within twenty days prior to the filing of the registration statement, and, if possible, as of one year prior thereto, and the amount of the securities, for which the registration statement is filed, to which such persons have indicated their intention to subscribe;

(8) the general character of the business actually transacted or to be transacted by the issuer;

(9) a statement of the capitalization of the issuer, including the authorized and outstanding amounts of its capital stock and the proportion thereof paid up, the number and classes of shares in which such capital stock is divided, par value thereof, or if it has no par value, the stated or assigned value thereof, a description of the respective voting rights, preferences, conversion and exchange rights, rights to dividends, profits, or capital of each class, with respect to each other class, including the retirement and liquidation rights or values thereof;

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

Posted In: Statutes & Rules

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. Congress described the general exemptive authority of the Commission in 15 U.S.C. § 77z-3, which provides:

§ 77z-3. General exemptive authority

The Commission, by rule or regulation, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this subchapter or of any rule or regulation issued under subchapter, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

Posted In: Statutes & Rules

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. Congress described the application of safe harbor for forward-looking statements in 15 U.S.C. § 77z-2, which provides:

§ 77z-2. Application of safe harbor for forward-looking statements

(a) Applicability

This section shall apply only to a forward-looking statement made by--

(1) an issuer that, at the time that the statement is made, is subject to the reporting requirements of section 78m(a) or 78o(d) of this title;

(2) a person acting on behalf of such issuer;

(3) an outside reviewer retained by such issuer making a statement on behalf of such issuer; or

(4) an underwriter, with respect to information provided by such issuer or information derived from information provided by the issuer.

(b) Exclusions

Except to the extent otherwise specifically provided by rule, regulation, or order of the Commission, this section shall not apply to a forward-looking statement--

(1) that is made with respect to the business or operations of the issuer, if the issuer--

(A) during the 3-year period preceding the date on which the statement was first made--

(i) was convicted of any felony or misdemeanor described in clauses (i) through (iv) of section 78o(b)(4)(B) of this title; or

(ii) has been made the subject of a judicial or administrative decree or order arising out of a governmental action that--

(I) prohibits future violations of the antifraud provisions of the securities laws;

(II) requires that the issuer cease and desist from violating the antifraud provisions of the securities laws; or

(III) determines that the issuer violated the antifraud provisions of the securities laws;

(B) makes the forward-looking statement in connection with an offering of securities by a blank check company;

(C) issues penny stock;

(D) makes the forward-looking statement in connection with a rollup transaction; or

(E) makes the forward-looking statement in connection with a going private transaction; or

(2) that is--

(A) included in a financial statement prepared in accordance with generally accepted accounting principles;

(B) contained in a registration statement of, or otherwise issued by, an investment company;

(C) made in connection with a tender offer;

(D) made in connection with an initial public offering;

(E) made in connection with an offering by, or relating to the operations of, a partnership, limited liability company, or a direct participation investment program; or

(F) made in a disclosure of beneficial ownership in a report required to be filed with the Commission pursuant to section 78m(d) of this title.

Continue reading "15 U.S.C. § 77z-2--Application Of Safe Harbor For Forward-Looking Statements Under The Securities Act Of 1933" »

Posted In: Statutes & Rules