Posted On: December 31, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

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

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 On: December 30, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

DaimlerChrysler Settles Nationwide Class Action Over Allegedly Defective Brakes for $14.5 Million

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 On: December 30, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

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

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 On: December 29, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

TiVo Defense Attorneys Reach Tentative Settlement Agreement Of Class Action And California State Court Issues Orders Permitting Proposed Settlement To Move Forward

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 On: December 29, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Main Drug v. Aetna-Class Action Defense Cases: Alabama Federal Court Holds That Burden Of Proving Federal Court Jurisdiction Under Class Action Fairness Act (CAFA) Remains With Defense And That Burden Was Met

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.

Download PDF file of Main Drug v. Aetna

Posted On: December 28, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

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

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 On: December 28, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

California Court of Appeal Decision In Miller v. Bank of America - Handing Class Action Defense Attorneys -Becomes Final

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 On: December 27, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-In re Volkswagen/Audi Warranty: Judicial Panel On Multidistrict Litigation (MDL) Grants Joint Defense/Plaintiff Motion To Centralize Class Action Litigation But Selects District Of Massachusetts As Transferee Court

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.

Download PDF file of In re Volkswagen and Audi Warranty Extension Litigation Transfer Order

Posted On: December 26, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-Battaglia v. DirectRevenue: California Federal Court Grants Joint Defense/Plaintiff Motion For Certification Of Class Action And For Final Approval Of Class Action Settlement

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.

Download PDF file of Final Approval Order in Battaglia v. DirectRevenue

Posted On: December 25, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

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

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 On: December 24, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

15 U.S.C. § 77z-3--Commission's General Exemptive Authority Under The Securities Act Of 1933

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 On: December 23, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

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

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 On: December 22, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Antitrust/Unfair Competition Law (UCL) Claims Tie Labor Law Class Action Cases Confronting California Defense Attorneys In Weekly Filings

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 of from December 15 - December 21, 2006. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe. Approximately 41 class action lawsuits were filed in these California state and federal courts during that time period - excluding the 16 antitrust class action cases involving British Airways et al. transferred into California by the Judicial Panel on Multidistrict Litigation (MDL), In re International Air Transp. Surcharge Antitrust Litigation, MDL-1793. Eleven (11) of the weekly class action filings (27%) alleged violations of California's unfair competition law (UCL), many based on antitrust price-fixing claims . An identical number (11) of employment law class action claims were filed. The only other category of cases class action defense attorneys will face that met the 10% threshold consisted of class actions alleging violations of the federal Fair and Accurate Credit Transactions Act (FACTA), with 4 new cases (10%) during this time period.

Posted On: December 22, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Brown v. Bank of America Class Action Defense Case: Defense Entitled To Summary Judgment On Electronic Funds Transfer Act (EFTA) And State Consumer Protection Law Class Action Claims Massachusetts Federal Court Holds

Massachusetts Federal Court Agrees with Defense that Class Action Complaint Failed to Prove Damages under EFTA (Electronic Funds Transfer Act) and State Consumer Protection Law Claims Because ATM Users Expressly Consented to Fee Charged and Because Bank of America did not Always Charge Non-Customers the Fee


Plaintiff filed a putative class action in Massachusetts federal court against Bank of America alleging that notices posted by the bank on its ATM machines in California, Maryland, Massachusetts and Rhode Island violated the federal Electronic Funds Transfer Act, 15 U.S.C. § 1693 (EFTA), as well as certain state consumer protection laws. Brown v. Bank of America, N.A., 457 F.Supp.2d 82, 84-85 (D. Mass. 2006). In part, plaintiffs complained that the Bank advised non-customers that it "may" charge them a fee when, in point of fact, it always charged them a fee (and thus should have disclosed that it "will" charge the fee). Defense attorneys moved for summary judgment on the state law claims and for partial summary judgment on the federal law claim. Id. The district court granted the defense motion as to the state law claims, and also agreed with defense attorneys with respect to the "verb choice" argument under the EFTA claim.


The genesis of the class action complaint is that while Bank of America permits its customers to use its ATMs for free "most, but not all, non-customers seeking to withdraw money from a Bank of America ATM must pay a small fee to the bank for the service." Brown, at 84. The Bank gives notice of the fee in two ways. First, it posts decals on each ATM that states, in part, the Bank "may charge a $1.50 fee for a cash withdrawal from your NON-Bank of America account." Id., at 84-85. Second, as part of the on-screen "click-through" process, the Bank requires users to affirmatively consent to the fee. Id., at 85. The class action complaint alleged that the Bank's notice violated federal law because the regulations governing the EFTA require "notice that a fee will be imposed for providing electronic fund transfer services or a balance inquiry" and disclosure of the amount of the fee. Id., at 86 (quoting 12 C.F.R. § 205.16(b) (2005) (Regulation E)). This "improper notice" also underlies the state consumer protection law violations.

Continue reading "Brown v. Bank of America Class Action Defense Case: Defense Entitled To Summary Judgment On Electronic Funds Transfer Act (EFTA) And State Consumer Protection Law Class Action Claims Massachusetts Federal Court Holds" »

Posted On: December 21, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Williams v. Mohawk Industries Class Action Defense Case: Class Action RICO Claims Cognizable For Allegedly Willful Hiring Of Illegal Workers But That State Law Unjust Enrichment Claims Fail Eleventh Circuit Holds

Eleventh Circuit Joins Sister Circuits in Holding that Knowingly Hiring Illegal Aliens to Lower Labor Costs Satisfies RICO Class Action Claims at Pleading Stage But Agrees with Defense that State Law Unjust Enrichment Claims Must be Dismissed


A class action alleging federal and state RICO (Racketeer Influenced and Corrupt Organizations Act) violations was filed in Georgia federal court by current and former hourly employees against Mohawk Industries - "the second largest carpet and rug manufacturer in the United States . . . [with] over 30,000 employees" - alleging that it knowingly hired and harbored illegal aliens in order to lower labor costs and to discourage workers' compensation claims. Williams v. Mohawk Industries, Inc., 465 F.3d 1277, 1280, 1282 (11th Cir. 2006). The defense filed a 12(b)(6) motion to dismiss, which the federal court granted in part. Id., at 1280-81. Specifically, the district court denied the defense motion to dismiss the federal and state RICO class action claims, as well as the state law unjust enrichment claim based on the payment of lower wages to legal workers because of the availability of illegal workers willing to work for less money. Id., at 1282. But the court granted the defense motion to dismiss the unjust enrichment class action claim that was based on the alleged discouragement of workers' compensation filings. Id. The Eleventh Circuit granted plaintiffs' request for interlocutory review and, after a circuitous route, affirmed in part and reversed in part.


The class action complaint alleged that Mohawk intentionally hired illegal aliens in violation of federal law, transported them to Mohawk's facilities and provided them with living accommodations "in an effort to keep labor costs as low as possible." Williams, at 1281-82. The complaint further alleged that Mohawk engaged in affirmative steps to conceal the illegal workers from law enforcement. Id., at 1282. This practice permitted Mohawk to reduce wages paid to legal workers thereby "sav[ing] substantial sums of money," id. The complaint alleged further, "Mohawk knows that illegal workers are less likely to file worker's-compensation claims, and, therefore, Mohawk is able to save additional monies." Id. Defense attorneys filed a motion to dismiss; as noted above, the district court denied the motion as to the RICO claims, and as to the lower wages-unjust enrichment claim, but granted the motion to dismiss as to the workers' compensation unjust enrichment claim on the grounds that the plaintiffs lacked standing to assert the claim.

Continue reading "Williams v. Mohawk Industries Class Action Defense Case: Class Action RICO Claims Cognizable For Allegedly Willful Hiring Of Illegal Workers But That State Law Unjust Enrichment Claims Fail Eleventh Circuit Holds" »

Posted On: December 20, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-In re African-American Slave Descendants: Seventh Circuit Affirms Dismissal Of Class Action Alleging Corporate Complicity With Slavery But Reinstates Consumer Protection State Law Class Action Claims

Circuit Court of Appeal Agrees Federal District Court Lacked Jurisdiction Over Section 1982 Class Action Claims But Holds it Should Have Dismissed Claims Without Prejudice and Further Holds that Consumer Protection Class Action Claims Based on State Law - Over Which the Court had Supplemental Jurisdiction - Were Adequately Pleaded for Purposes of Motion to Dismiss


A total of ten (10) class action lawsuits were filed against various corporations "seeking monetary relief under both federal and state law for harms stemming from the enslavement of black people in America." In re African-American Slave Descendants Litig., ___ F.3d ___, 2006 WL 3615027 (7th Cir. December 13, 2006) [Slip Opn., at 1]. The Judicial Panel for Multidistrict Litigation (MDL) transferred the actions to the Northern District of Illinois for pretrial purposes pursuant to 28 U.S.C. § 1407, , where all plaintiffs but one filed a consolidated class action complaint. Id., at 1-2. Defense attorneys moved to dismiss the class action complaints; the district court granted the motion to dismiss based on the political-question doctrine, lack of standing and thus lack of federal jurisdiction, the expiration of the statutes of limitation, and failure to state a claim. Id., at 5. Surprisingly, the Seventh Circuit reversed.


The Seventh Circuit summarized that "[t]he suits are a series of mostly identical class actions on behalf of all Americans descended from slaves with whom one or more of the defendants or their corporate predecessors may have been directly or indirectly involved." Slip Opn., at 3. The Circuit Court further summarized the class action allegations as follows: "The defendants are companies or the successors to companies that provided services, such as transportation, finance, and insurance, to slaveowners. At least two of the defendants were slaveowners; the predecessor of one of the bank defendants once accepted 13,000 slaves as collateral on loans and ended up owning ,1250 of them when the borrowers defaulted, and the predecessor of another defendant ended up owning 346 slaves, also as a consequence of a borrower's default. Even before the Thirteenth Amendment, slavery was illegal in the northern states, and the complaint charges that the defendants were violating the laws of those states in transacting with slaveowners. It also claims there were occasional enslavements long after the passage of the Thirteenth Amendment and that some of the defendants were complicit in those too. By way of relief, the complaint seeks disgorgement to the class members of the profits that the defendants obtained from their dealings with slaveowners." Id., at 4.

Continue reading "Class Action Defense Cases-In re African-American Slave Descendants: Seventh Circuit Affirms Dismissal Of Class Action Alleging Corporate Complicity With Slavery But Reinstates Consumer Protection State Law Class Action Claims" »

Posted On: December 19, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Edwards v. City of Long Beach Class Action Defense Case: California Federal Court Denies Defense Motion To Certify Class Action But Grants Collective Action Status Under § 216(b) of the Federal Fair Labor Standards Act (FLSA)

California Court Rejects Defense Arguments Against Collective Action for Alleged Violations of FLSA (Fair Labor Standards Act) but Agrees with Defense that Class Action is not Superior Device for Litigating State Employment Law Claims and Denies Class Action Status to Claims Based on California Labor Code, Over Which it had Supplemental Jurisdiction, as Inconsistent with "Opt-In" Requirements for FLSA Collective Action


Plaintiff, former Long Beach police officer, filed a putative class action against the City of Long Beach for alleged violations of the federal Fair Labor Standards Act (FLSA) and of California's Labor Code sections 226.7, 512 and 2802 based on the allegations that he was denied meal and rest breaks and was not properly reimbursed for business expenses while a police officer. Edwards v. City of Long Beach, ___ F.R.D. ___ (C.D. Cal. December 15, 2006) [Slip Opn., at 2-3.] The thrust of the class action complaint asserted that while police officers kept track of, and received pay for, overtime hours worked, no policy or procedure existed for officers to record or report missed meal and rest periods. Id., at 2-3. Further, while officers were required to have clean and functional uniforms and equipment, the City did not reimburse class members for the costs incurred in maintaining those items. Id., at 3. Plaintiff filed two motions in the district court: one requested certification of the lawsuit as a class action under Rule 23, id., at 7, which defense attorneys opposed on the grounds that the numerosity, commonality and typicality requirements are not met, a class action will not benefit the class, and other alternatives exist rather than class action litigation, id., at 8; the second sought certification of a collective action under 29 U.S.C. § 216(b), id., at 1, which defense attorneys opposed by focusing on the differences in job duties between the plaintiff and other class members, id., at 6. The district court refused to certify a class action under Rule 23, but granted the motion to certify a collective "opt-in" action under § 216(b), id., at 1.


In granting the motion to certify a collective action (in essence an "opt-in" class action) under § 216(b) of the FLSA, the federal court explained that "employees wishing to join the suit must 'opt-in' by filing a written consent with the court" or else they are not bound by any judgment or settlement. Edwards, at 4. In a majority of jurisdictions, certifying such a collective action requires a two-step process: "the first step is for the court to decide, 'based primarily on the pleadings and any affidavits submitted by the parties, whether the potential class should be given notice of the action,'" id., at 5 (citations omitted); the court found that the "lenient standard" required to overcome this hurdle had been met. Id., at 5-7. The second step in the process is a motion by defense attorneys to decertify the class action, id., at 7; but the district court explained that it does not address that issue until after the opt-in time period has passed, id. The court rejected defense arguments that a collective action was inappropriate because of the differences in job duties between the plaintiff and other class members, id., at 6, explaining that - even though the defense had presented a "detailed analysis" of those differences, together with a "detailed discussion" of the differences in claims that potential class members may assert - the defense arguments were "better suited for motion to decertify the § 216(b) collective action," id., at 7.

Continue reading "Edwards v. City of Long Beach Class Action Defense Case: California Federal Court Denies Defense Motion To Certify Class Action But Grants Collective Action Status Under § 216(b) of the Federal Fair Labor Standards Act (FLSA)" »

Posted On: December 18, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

California Defense Attorneys Confront Spike In Class Action Antitrust/Unfair Competition Law (UCL) Claims As New Employment Law Class Action Cases Fall To Second Place In Weekly Filings

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 of from December 8 - December 14, 2006. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe. Approximately 43 class action lawsuits were filed in these California state and federal courts during that time period - excluding the dozen antitrust class action cases involving British Airways et al. transferred into California by the Judicial Panel on Multidistrict Litigation (MDL). Sixteen (16) of the weekly class action filings (37%) alleged antitrust price-fixing claims, many of which were filed as violations of California's unfair competition law (UCL). Labor law class action claims, which typically lead the list of new filings, came in second during this time period with 9 new class actions (21%). The only other category of cases to break the 10% threshold consisted of alleged violations of California's Song-Beverly Consumer Protection Act: class action defense attorneys will face 5 new cases involving that area of law, which represents approximately 12% of the class actions filed during this time period.

Posted On: December 18, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-Smith v. Illinois Central Railroad: Illinois Supreme Court Agrees With Defense That Class Action Status Should Not Have Granted In Lawsuit Arising From Train Derailment

Factual and Legal Issues Arising from Train Derailment Would Require Individual Minitrials Thereby Rendering Class Action Treatment Inappropriate Illinois Supreme Court Holds


Plaintiffs filed a class action in Illinois state court against Illinois Central Railroad seeking damages allegedly caused by the derailment of a train in Tamaroa, Illinois. Smith v. Illinois Central RR Co., ___ N.E.2d ___, 2006 WL 3491683 (Ill. November 30, 2006) [Slip Opn., at 1.]. The trial court granted plaintiffs' request to certify the lawsuit as a class action; the appellate court rejected defense arguments and affirmed. Id. The Illinois Supreme Court, however, granted the defense leave to appeal and reversed the lower courts. Id., at 1-2. The High Court agreed with defense attorneys that common issues of law and fact do not predominate, thus rendering the lawsuit unsuitable for class action treatment. "Proof of proximate causation and damages will be highly individualized and will consume the bulk of the time at trial." Id., at 14.


In February 2003, the derailment in Southern Illinois of a train carrying various chemicals led to the mandatory evacuation of at least 1000 people. Slip Opn., at 2. Shortly thereafter, the railroad instituted a claims process through which it compensated individuals and businesses for alleged losses caused by the derailment and evacuation; in return, the railroad received written releases of liability from all known claims. Id. In June 2003, plaintiffs initiated a class action seeking (as detailed in the Note below) damages for injuries resulting from the derailment and evacuation. Id., at 2-3. The circuit court rejected defense arguments against certification of the lawsuit as a class action, and granted plaintiffs' motion. Id., at 3. Before the appellate court, defense attorneys advanced several arguments including, (a) mass tort actions are not proper for class action treatment "because such actions would trigger an unworkable array of fact-intensive, claimant-specific questions that would inevitably result in numerous minitrials that defy class treatment"; (b) commonality does not exist as common questions of fact and law do not predominate; (c) the class definition was overly broad and would require individualized analyses to determine membership. Id., at 4-5. The appellate court, over a dissent, rejected each argument and affirmed the judgment authorizing class certification.

Continue reading "Class Action Defense Cases-Smith v. Illinois Central Railroad: Illinois Supreme Court Agrees With Defense That Class Action Status Should Not Have Granted In Lawsuit Arising From Train Derailment" »

Posted On: December 17, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Alabama State Court Jury Finds For Defense As Merck Wins Another Vioxx Lawsuit

The New York Times reports that Merck's defense team has won another Vioxx case, this time in Alabama state court. The lawsuit, filed by a 57-yearold man, blamed Vioxx for a mild heart attack the man suffered. The defense argued that plaintiff was a high risk for a heart attack because he suffered from "diabetes, high blood pressure, high cholesterol and was overweight." Jurors attributed the defense victory to the fact that the plaintiff "had too many health problems before his heart attack to blame Vioxx." Merck still faces more than 27,000 individual lawsuits involving Vioxx, and hundreds of putative class action lawsuits.


The article, entitled "Merck Wins Suit In Alabama Over The Painkiller Vioxx," may be found in Section C. of the December 16, 2006, edition of the New York Times.

Posted On: December 17, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

15 U.S.C. § 77z-1--Private Securities Litigation Under The Securities Act Of 1933

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 statutory provisions for private securities litigation in 15 U.S.C. § 77z-1, which provides:

§ 77z-1. Private securities litigation

(a) Private class actions

(1) In general

The provisions of this subsection shall apply to each private action arising under this subchapter that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure.

(2) Certification filed with complaint

(A) In general

Each plaintiff seeking to serve as a representative party on behalf of a class shall provide a sworn certification, which shall be personally signed by such plaintiff and filed with the complaint, that--

(i) states that the plaintiff has reviewed the complaint and authorized its filing;

(ii) states that the plaintiff did not purchase the security that is the subject of the complaint at the direction of plaintiff's counsel or in order to participate in any private action arising under this subchapter;

(iii) states that the plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at deposition and trial, if necessary;

(iv) sets forth all of the transactions of the plaintiff in the security that is the subject of the complaint during the class period specified in the complaint;

(v) identifies any other action under this subchapter, filed during the 3-year period preceding the date on which the certification is signed by the plaintiff, in which the plaintiff has sought to serve, or served, as a representative party on behalf of a class; and

(vi) states that the plaintiff will not accept any payment for serving as a representative party on behalf of a class beyond the plaintiff's pro rata share of any recovery, except as ordered or approved by the court in accordance with paragraph (4).

Continue reading "15 U.S.C. § 77z-1--Private Securities Litigation Under The Securities Act Of 1933" »

Posted On: December 16, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Farmers Insurance Agrees To Settle California Class Action

John O'Dell of the Los Angeles Times reports that Farmers Insurance has settled a class action lawsuit filed in Southern California that alleged the company required the use of substandard metal replacement parts to repair vehicles damaged in a crash. The settlement reportedly requires Farmers Insurance to pay class members between $20 and $40 for each substandard part used in a vehicle repair, together with $17 million in legal fees.


Mr. O'Dell's article, entitled "Farmers Insurance To Settle Suit Over Repairs," may be found in the Business section of the December 16, 2006, edition of the Los Angeles Times.

Posted On: December 16, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

15 U.S.C. § 77y and 77z--Jurisdiction Of Other Government Agencies Over Securities And Separability Under The Securities Act Of 1933

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 provided for the jurisdiction of other governmental agencies over securities and for the severability of the provisions of the Act in 15 U.S.C. § 77y and § 77z, respectively, which provide:

§ 77y. Jurisdiction of other Government agencies over securities

Nothing in this subchapter shall relieve any person from submitting to the respective supervisory units of the Government of the United States information, reports, or other documents that may be required by any provision of law.

§ 77z. Separability

If any provision of this chapter, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this chapter, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

Posted On: December 15, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-In re Fosamax: Over Defense Objection Judicial Panel On Multidistrict Litigation (MDL) Grants Motion To Centralize Class Action Litigation In The Southern District of New York

Judicial Panel Rejects Defense Opposition to Motion for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Grants Motion for Centralization of Class Action Lawsuits in the Southern District of New York


After 19 products liability lawsuits - many of them class action proceedings - were filed against various pharmaceutical companies arising out of the use of Fosamax, a prescription drug manufactured by Merck and used in the treatment of osteoporosis, several plaintiffs' lawyers (apparently supported by plaintiffs in all pending actions) moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407, to centralize the lawsuits for pretrial purposes in either the Southern District of New York or the Middle District of Tennessee. In re Fosamax Products Liab. Litig., 444 F.Supp.2d 1347, 1348 (Jud. Pan.Mult.Lit. 2006). Defense attorneys opposed the motion. Merck's defense team argued that the lawsuits were pending "in a limited number of federal districts, which are capable of managing the litigation without multidistrict proceedings" and that "voluntary alternative coordinating efforts are preferable to Section 1407 transfer." Id., at 1349. The Judicial Panel rejected these arguments, as it routinely has in the past, explaining that centralization "will offer the benefit of placing all actions in this docket before a single judge who can structure pretrial proceedings to consider all parties' legitimate discovery needs, in addition to ensuring that common parties and witnesses are not subjected to discovery demands that duplicate activity that will occur or has already occurred in other actions." Id.


With respect to the merits of the motion, the Judicial Panel found that the litigation presented "complex common factual questions concerning, among other things, 1) the development, testing, manufacturing and marketing of Fosamax, and 2) Merck's knowledge concerning the drug's alleged adverse effects, in particular, osteonecrosis of the jaw." In re Fosamax, at 1349. However, the Panel also held that "claims involving prescription drugs other than Fosamax do not share sufficient questions of fact with claims relating to Fosamax to warrant inclusion of the former claims in MDL-1789 proceedings." Id. The Judicial Panel concluded that the Southern District of New York would be the appropriate transferee court, id., at 1349-50, but excluded therefrom prescription drugs (such as Actonel) other than Fosamax.


NOTE: Based on its conclusion that Actonel should be treated separately from Fosamax, the Judicial Panel ordered that "this docket, originally named MDL-1789--In re Fosamax and Actonel Products Liability Litigation, is renamed as follows: MDL-1789--In re Fosamax Products Liability Litigation." Id., at 1350.

Download PDF file of In re Fosamax Products Liability Litigation Transfer Order

Posted On: December 14, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Sutter Health Defense Against California Class Action Challenging Pricing And Collection Practices For Uninsured Patients Ends With Settlement

On December 12, 2006, the Sacramento Superior Court gave final approval to a proposed class action settlement, bringing to a close the defense of a statewide class action against Sutter Health. The class action, reportedly covering hundreds of thousands of uninsured patients over a six-year period, alleged that Sutter Health and its affiliated California hospitals charged excessive prices to uninsured patients – allegations that the defense vehemently denied. Under the settlement, uninsured patients may be entitled to receive 25% to 45% discounts off of their Sutter Health-affiliated hospital bills. The complete terms of the settlement are wide-ranging, covering items such as future discount billing through modified debt collection practices.

Download PDF file of Sutter Health Settlement Agreement

Posted On: December 14, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-In re Digital Music: Judicial Panel On Multidistrict Litigation (MDL) Grants Joint Plaintiff/Defense Motion To Centralize Class Action Litigation In The Southern District of New York

Judicial Panel Finds Good Cause for Centralization of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 as Requested by Defense and Plaintiffs


Nine class action lawsuits were filed against Sony BMG Music Entertainment, Sony Corporation of America, Bertelsmann Music Group, Inc., Bertelsmann, Inc., Universal Music Group, Inc., Time Warner Inc., Warner Music Group Corp. and EMI Music North America (defendants), alleging "on behalf of purported classes of indirect purchasers, that the various defendants illegally conspired to artificially fix or maintain the prices of digitally formatted music offered for sale on the internet in violation of 1) Section 1 of the Sherman Act, 15 U.S.C. § 1, 2) various states' antitrust and consumer protection statutes, and/or 3) state common law such as unjust enrichment." In re Digital Music Antitrust Litig., 444 F.Supp.2d 1351, 1352 (Jud. Pan.Mult.Lit. 2006). Pursuant to 28 U.S.C. § 1407, defense and plaintiff lawyers moved the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in either the Southern District of New York or the Northern District of California. The motion was unopposed. Id., at 1351-52. The Judicial Panel granted the motion, agreeing that the class action complaints involved common factual allegations and that centralization for pretrial purposes would "eliminate duplicative discovery; prevent inconsistent pretrial rulings; and conserve the resources of the parties, their counsel and the judiciary." Id., at 1352. The Panel also concluded that the Southern District of New York would be the appropriate transferee court, and noted that this choice was supported by the defense as well as by some of the plaintiffs. Id.

Download PDF file of In re Digital Music Transfer Order

Posted On: December 13, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-In re Series 7: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense and Plaintiff Motions To Centralize Class Action Litigation In The District of the District of Columbia

Judicial Panel Agrees With Defense and Plaintiff Lawyers that Class Action Lawsuits Warranted Centralization for Pretrial Coordination Pursuant to 28 U.S.C. § 1407


Nine class action lawsuits were filed across the United States against the National Association of Securities Dealers (NASD) and Electronic Data Systems Corp., among others, alleging "breach of contract, negligence, negligent misrepresentation, defamation, and tortious interference with contract and/or business relationships" arising out of "errors in scoring the Series 7 Broker Qualification Exam, a computerized qualifying test required for anyone employed by a securities firm that wishes to register individuals as general securities representatives dealing with the public." These errors alleged caused 1900 people who passed the test to receive failing grades. In re Series 7 Broker Qualification Exam Scoring Litig., 444 F.Supp.2d 1330, 1331 (Jud. Pan.Mult.Lit. 2006). Defense attorneys and plaintiffs' lawyers in two of the actions moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 to centralize the lawsuits for pretrial purposes; no party opposed centralization, though several venues were proposed as the appropriate transferee court. Id. The Judicial Panel agreed that class action complaints contained sufficient common questions of fact to warrant pretrial coordination under 28 U.S.C. § 1407, and that centralization "will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation." Id.


Of the various courts recommended by the defense and plaintiffs, the Judicial Panel selected the District of District of Columbia as the appropriate transferee court. Id. The Panel explained at page 1331, "The largest number of actions are pending in the District of District of Columbia (including potential tag-along actions), and relevant documents and witnesses may be found at NASD's District of Columbia headquarters or its testing and continuing education division, which is located nearby in the District of Columbia suburbs."

Download PDF file of In re Series 7 Broker Qualification Exam Scoring Litigation Transfer Order

Posted On: December 12, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Alexander v. JBC-Class Action Defense Cases: Montana Court Rejects Defense Objections To Certification Of Class Action Alleging Violations Of Federal Fair Debt Collection Practices Act (FDCPA)

Class Action Alleging FDCPA (Fair Debt Collection Practices Act) Violations Based on Form Letters Sent to Debtors Warranted Class Certification Montana Federal Court Holds, Rejecting Defense Argument that Plaintiff's Statute of Limitations Defense to Debt Collection Defeated Predominance Requirement of Rule 23(b)(3)


Plaintiff filed a putative class action against a debt collector seeking to collect on dishonored checks for alleged violations of the Fair Debt Collection Practices Act (FDCPA) based on letters sent to debtors that demanded fees not authorized by state or federal law. Alexander v. JBC Legal Group, P.C., 237 F.R.D. 628, 629 (D. Mont. 2006). Plaintiff's lawyer moved for certification of the class action; defense attorneys opposed the motion arguing that the numerosity requirement of Rule 23(a) is not met and that plaintiff's statute of limitations defense defeats certification under Rule 23(b)(3).


In 2004, defendant JBC Legal Group sent a letter to plaintiff seeking to collect $6.07 for a dishonored check that had been written more then 12 years earlier. Alexander, at 629. "The letter demanded that Alexander remit to Defendants $46.07 and stated that he would be subject to a penalty of triple the amount of the check, or $100.00, whichever was greater, if he failed to make payment within thirty days." Id. A month later, defendant sent plaintiff a letter demanding $146.07. Id. Several months later, defendant sent plaintiff another letter demanding $146.07. Id.

Continue reading "Alexander v. JBC-Class Action Defense Cases: Montana Court Rejects Defense Objections To Certification Of Class Action Alleging Violations Of Federal Fair Debt Collection Practices Act (FDCPA)" »

Posted On: December 11, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-In re Initial Public Offering: Significant Defense Victory As Second Circuit Holds Federal Court Erred In Certifying Securities Class Action Against Wall Street Banks Arising Out Of Internet IPOs

Second Circuit Clarifies Standard of Proof for Certification of Class Action Under Rule 23 and Holds that IPOs are not "Efficient Markets" in Handing Defense Victory on Appeal


Beginning in 2001, hundreds of class action lawsuits were filed against Wall Street banks alleging violations of federal securities laws in connection with the initial public offerings of certain Internet companies. In re Initial Public Offering Securities Litig., 471 F.3d 24, 2006 WL 3499937, *1 (2nd Cir. December 5, 2006). Following the consolidation of 310 of the class action lawsuits, plaintiffs' lawyers moved for class certification in six "focus cases." Id., at *3. Defense attorneys objected to certification of a class action arguing primarily that individual issues predominate over common ones; the district court granted the motion finding that plaintiffs had made "some showing" of the elements required under Rule 23 to warrant certification, id., at *3-*5. The Second Circuit reversed, agreeing with defense attorneys that plaintiffs had not satisfied the requirements of Rule 23 and further that they could not satisfy those requirements.


The class action complaints alleged that underwriters, issuers and individual officers of the issuing companies defrauded investors through "tie-in arrangements, undisclosed compensation, and analyst manipulation" in connection with the IPOs of certain Internet companies, id., at *2. In certifying a class action, the district court perceived conflicting guidance in Supreme Court authority concerning the proper standard of proof required to warrant class action certification. Specifically, Supreme Court authority requires a "rigorous analysis" that may require the court to "probe behind the pleadings," but a court may not "conduct a preliminary inquiry into the merits of a suit." Id., at *4 (citations omitted). The district court rejected Fourth Circuit and Seventh Circuit authority requiring plaintiffs to "establish the requirements of Rule 23 by a preponderance of the evidence, even if resolving those issues requires a 'preliminary inquiry into the merits . . ., or 'overlap with issues on the merits.'" Id. (citations omitted). The court instead crafted an amorphous "some showing" test and, applying that new standard, concluded that plaintiffs had met their burden of proof. Id., at *4-*5.

Continue reading "Class Action Defense Cases-In re Initial Public Offering: Significant Defense Victory As Second Circuit Holds Federal Court Erred In Certifying Securities Class Action Against Wall Street Banks Arising Out Of Internet IPOs" »

Posted On: December 11, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Morales-Arcadio v. Shannon Produce Class Action Defense Case: Defense Rule 68 Offer Of Judgment Served Prior To Opt-In Deadline For Class Action Under Fair Labor Standards Act (FLSA) Is Invalid Georgia Federal Court Holds

Georgia Federal District Court Holds that Offers of Judgment in FLSA (Fair Labor Standards Act) Class Action Cannot be made Prior to Expiration of Opt-In Period Because Rule 68 Requires that Offer be made on Adverse Parties and Class Members are not "Fully Identifiable" Until Opt-In Period Ends


Plaintiffs filed a putative class action on behalf of migrant farm workers against Shannon Produce Farms in July 2005 alleging violations of the Fair Labor Standards Act (FLSA), and in November 2005 they filed a motion for certification of a FLSA collective action pursuant to 29 U.S.C. § 216(b), which the district court granted. Morales-Arcadio v. Shannon Produce Farms, 237 F.R.D 700, 701 (S.D. Ga. 2006). Prior to the "opt-in" deadline for class members to join the class action, defense attorneys served an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. Id. Plaintiffs' lawyer moved to invalidate the offer of judgment. The district court summarized the competing arguments at page 701 as follows:


Plaintiffs contend that defendants' offer of judgment is improper since defendants served it during the time period provided by the Court for other similarly-situated plaintiffs to join the instant FLSA collective action. . . . Plaintiffs argue, inter alia, that the offer short-circuits the collective action process, has no legal effect since it purports to extend to workers who are not parties to the action, and moots the certified collective action and court-authorized notice. . . . Defendants have filed an opposition to the motion contending that plaintiffs' motion is premature since a motion to strike an offer of judgment is only proper at the conclusion of a case. . . . Defendants also contend that their offer of judgment is proper since it specifically contemplates and provides a recovery for additional opt-in plaintiffs who join the action by the opt-in deadline. . . . (Footnote omitted)

Continue reading "Morales-Arcadio v. Shannon Produce Class Action Defense Case: Defense Rule 68 Offer Of Judgment Served Prior To Opt-In Deadline For Class Action Under Fair Labor Standards Act (FLSA) Is Invalid Georgia Federal Court Holds" »

Posted On: December 10, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Cigna Defense Against Shareholder Class Action Reportedly Will End With $93 Million Settlement

A proposed settlement has been reached in a class action lawsuit against Cigna Corp., filed in 2002 and scheduled to go to trial in March 2007 in the United States District Court in Philadelphia. The lawsuit arose from a computer problem that allegedly cost the company one-third of its customers as a result of major problems in the handling of insurance claims. Cigna allegedly hid the problems from investors, and the stock plunged when word of the computer problems hit the street. Defense attorneys and lawyers for the lead plaintiffs – Pennsylvania State Employees’ Retirement System, the Public Employees’ Retirement System of Mississippi, and the City of Miami General Employees’ and Sanitation Employees’ Retirement Trust – agreed to settle the case for payment of $93 million. The proposed class action settlement requires court approval, and a hearing date has been set for next April before United States District Judge Michael Baylson.

Posted On: December 10, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Indicted Class Action Plaintiff Law Firm Milberg Weiss Loses Named Partner Schulman To "New Ventures" And To Preparation Of Criminal Defense

After 20 Years of Class Action Securities Litigation at Milberg Weiss, Indicted Named Partner Steve Schulman Resigns to Focus on Defense of Criminal Charges


Julie Creswell of the New York Times reported yesterday that class action plaintiff law firm Milberg Weiss Bershad & Schulman suffered a devastating blow last Friday: Steven G. Schulman, indicted in May 2006 for his part in the alleged payment of $11 million to three individuals who served as plaintiffs in more than 150 lawsuits, resigned from the law firm after 20 years of class action securities litigation. Ms. Creswell reports that the firm name now shall be Milberg Weiss & Bershad. David J. Bershad also was indicted in May 2006. A January 2008 trial date has been set.


According to Ms. Creswell, Schulman will continue to represent class action plaintiffs but will be seeking out "new ventures." Schulman reportedly has for some time considered leaving the firm - he has been on a leave of absence since his indictment - and that he plans to "devote time to defending himself against criminal charges."


Julie Creswell's article, entitled "Partner at Law Firm Resigns to Focus on Criminal Charges Against Him," may be round in Section C. of the December 9, 2006, edition of the New York Times.

Posted On: December 10, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

15 U.S.C. § 77w and 77x--Unlawful Representations And Penalties Under The Securities Act Of 1933

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 provided for unlawful representations and for penalties under the Act in 15 U.S.C. § 77w and § 77x, respectively, which provide:

§ 77w. Unlawful representations

Neither the fact that the registration statement for a security has been filed or is in effect nor the fact that a stop order is not in effect with respect thereto shall be deemed a finding by the Commission that the registration statement is true and accurate on its face or that it does not contain an untrue statement of fact or omit to state a material fact, or be held to mean that the Commission has in any way passed upon the merits of, or given approval to, such security. It shall be unlawful to make, or cause to be made to any prospective purchaser any representation contrary to the foregoing provisions of this section.

§ 77x. Penalties

Any person who willfully violates any of the provisions of this subchapter, or the rules and regulations promulgated by the Commission under authority thereof, or any person who willfully, in a registration statement filed under this subchapter, makes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, shall upon conviction be fined not more than $10,000 or imprisoned not more than five years, or both.

Posted On: December 9, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

15 U.S.C. § 77u and 77v--Hearings By Commission And Jurisdiction Of Offenses And Suits Under The Securities Act Of 1933

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 provided that all hearings by the Commission shall be public in 15 U.S.C. § 77u, and provided for jurisdiction over offenses and suits in 15 U.S.C. § 77v. Those statutes provide in full:

§ 77u. Hearings by Commission

All hearings shall be public and may be held before the Commission or an officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.

§ 77v. Jurisdiction of offenses and suits

(a) Federal and State courts; venue; service of process; review; removal; costs

The district courts of the United States and the United States courts of any Territory shall have jurisdiction of offenses and violations under this subchapter and under the rules and regulations promulgated by the Commission in respect thereto, and, concurrent with State and Territorial courts, except as provided in section 77p of this title with respect to covered class actions, of all suits in equity and actions at law brought to enforce any liability or duty created by this subchapter. Any such suit or action may be brought in the district wherein the defendant is found or is an inhabitant or transacts business, or in the district where the offer or sale took place, if the defendant participated therein, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. Judgments and decrees so rendered shall be subject to review as provided in sections 1254, 1291, 1292, and 1294 of Title 28. Except as provided in section 77p(c) of this title, no case arising under this subchapter and brought in any State court of competent jurisdiction shall be removed to any court of the United States. No costs shall be assessed for or against the Commission in any proceeding under this subchapter brought by or against it in the Supreme Court or such other courts.

Continue reading "15 U.S.C. § 77u and 77v--Hearings By Commission And Jurisdiction Of Offenses And Suits Under The Securities Act Of 1933" »

Posted On: December 9, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

United States Supreme Court Grants Defense Petitions For Writs Of Certiorari In Antitrust Class Action And Sherman Act Cases

Supreme Court to Address Investment Bank and Institutional Investor Liability in Underwriting IPOs, and Per Se Rule that Resale Price Maintenance Violates Sherman Act


Linda Greenhouse of the New York Times reports that the United States Supreme Court had accepted defense petitions for writs of certiorari in "two important antitrust cases" and that the opinions should clarify areas of law "that have increasingly become unsettled." One of the antitrust cases, Credit Suisse First Boston v. Billing, is closely watched on Wall Street: the class action named more than a dozen banks and investors that participated in underwriting Internet company IPOs in the 1990s. The district court had dismissed the class action on the grounds that the SEC expressly permitted the conduct objected to in the complaint. The Second Circuit Court of Appeals, however, reinstated the class action.


The second class action, Leegin Creative Leather Products v. PSKS, directly challenges a 1911 case that held manufacturers may not require retailers to charge minimum prices for their products without violating the Sherman Act. As Ms. Greenhouse reports, "The case asks the justices to re-evaluate the precedent in light of modern economic theory, and instead to make these arrangements subject to case-by-case analysis under which is known as the rule of reason." In seeking review of the Fifth Circuit Leegin opinion, defense attorneys argued that "the per se rule against resale price maintenance squarely conflicts with this court's modern antitrust jurisprudence" and "[has] no foundation in economic theory."


Linda Greenhouse's article, entitled "Antitrust Policy Ambiguity To Be On Justices' Docket," may be found in Section C. of the December 8, 2006, edition of the New York Times.

Posted On: December 8, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Lawyers Again Confront More Labor Law Claims In California Weekly Class Action Filings But Significant Number Of Antitrust And Unfair Business Practice Class Action Lawsuits Also Filed

To allow class action defense lawyers anticipate claims against which they may have to defend, 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. This report covers the time period from December 1 – December 7, 2006. Employment law class action cases yet again hold the top spot on the list. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 44 class action lawsuits were filed in these California state and federal courts during that time period, of which 16 involved labor law claims (36%). Antitrust class action filings came in a strong second, with 10 new lawsuits (23%). Class action lawsuits alleging unfair competition, including unfair business practices and false advertising claims, came in third with 9 new class action filings (20%).

Posted On: December 8, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases-In re Seroquel: Judicial Panel On Multidistrict Litigation (MDL) Rejects Defense Opposition To Centralization Of Class Action Suits Involving Seroquel But Grants Co-Defense Request To Limit Order To AstraZeneca

Judicial Panel Grants Request for Pretrial Coordination of Products Liability Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 Over AstraZeneca Defense Objection but Grants Johnson & Johnson/Eli Lilly Defense Request to Separate and Remand Class Action Claims Against Them for Lack of Common Questions of Fact


More than 120 federal court lawsuits, many of them class actions, against various pharmaceutical companies alleging that AstraZeneca's Seroquel, an atypical antipsychotic medication, can cause diabetes and related disorders. Pursuant to 28 U.S.C. § 1407, plaintiffs in Louisiana moved the Judicial Panel on Multidistrict Litigation (MDL) to centralize the litigation in Louisiana, while plaintiff in an Illinois action moved for centralization to Illinois; defense attorneys for AstraZeneca opposed the motions. Defense attorneys for the other pharmaceutical companies (Johnson & Johnson and Eli Lilly) requested that if centralization is granted, then the claims against them be separated and remanded. In re Seroquel Products Liab. Litig., 447 F.Supp.2d 1376, 1377-78 (Jud.Pan.Mult.Lit. 2006). The Judicial Panel rejected defense opposition to centralization, and held pretrial coordination was warranted because common factual questions existed as to "i) the development, testing, manufacturing and marketing of Seroquel, and ii) the defendants' knowledge concerning the drug's possible adverse effects." Id., at 1378. However, the Panel also held that "claims involving prescription drugs other than Seroquel do not share sufficient questions of fact with claims relating to Seroquel," id.


In the end, the Judicial Panel made several rulings. One, it granted the motion to centralize the lawsuits pursuant to 28 U.S.C. § 1407, and selected the Middle District of Florida as the appropriate transferee court. Two, it granted the Johnson & Johnson/Eli Lilly defense request to separate and remand the claims against them. Three, it denied the motion as to lawsuits in which AstraZeneca was no longer a party "leaving claims brought solely against other pharmaceutical companies relating to prescription medications other than Seroquel." In re Seroquel, at 1379.

Download PDF file of In re Seroquel Transfer Order

Posted On: December 7, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Mitchell-Tracey v. United General: Class Action Defense Case--Maryland Federal Court Rejects Defense Opposition And Certifies Class Action By Mortgagors Against Title Insurers For Alleged Overcharging

District Court Certifies Class Action Against Title Insurers for Allegedly Charging Premiums in Excess of State-Approved Rates


Plaintiffs filed a class action against First American Title and United General Title in Maryland state court alleging that, in connection with refinances, the insurers charged higher premiums than permitted by law. Defense attorneys removed the class action to federal court, and plaintiffs moved for class certification of two classes, one involving First American customers and one involving United General customers. Mitchell-Tracey v. United General Title Ins. Co., 237 F.R.D. 551, 553-55 (D. Md. 2006). The defense vigorously opposed class certification on four grounds, which the district court summarized as follows: (1) records do not exist by which plaintiffs could prove class membership, liability or damages; (2) specific fact questions present in each affected transaction will predominate over individual issues; (3) the calculation of monetary damages for class members will be "highly individualized and is neither typical nor common among all class members"; and (4) the parties will be unable to identify class members because the necessary records are "in the possession of hundreds of independent title insurance agents and the task of compiling such information to adequately determine class membership is virtually impossible." Id., at 555. The court disagreed with defense arguments and certified the matter to proceed as a class action, concluding that "Application of the principles embodied in Rule 23 to the circumstances of this case compels the conclusion that the class action device is wholly appropriate." Id., at 556.


As is common, Maryland law requires title insurers to file with the state information concerning rates and premiums to be charged in connection with the issuance of title insurance policies, and to charge only those rates approved by the state. Mitchell-Tracey, at 553 (citations omitted). Though not required by Maryland law, First American and United General also filed with the state discounted "reissue rates," applicable if borrowers meet certain conditions. Id., at 554. The class action complaint alleged that defendants charged fees in excess of the reissue rates filed with and approved by the state, and sought declaratory relief and monetary damages. Id.

Continue reading "Mitchell-Tracey v. United General: Class Action Defense Case--Maryland Federal Court Rejects Defense Opposition And Certifies Class Action By Mortgagors Against Title Insurers For Alleged Overcharging" »

Posted On: December 6, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Huge Class Action Defense Victory As Second Circuit Court Of Appeals Reverses Federal District Court Order Certifying Class Action Against Wall Street Banks In Largest Securities Class Action Ever

Julie Creswell of the New York Times reports today on the decision of the United States Court of Appeals for the Second Circuit reversing a district court order certifying a class action against hundreds of Wall Street banks. The 51-page decision concerned a district court order in In re Initial Public Offering Securities Litig., ___ F.3d ___ (2nd Cir. December 6, 2006), granting a motion to certify a class action in "six focus cases out of 310 consolidated class actions, which themselves were consolidations of thousands of separate class actions alleging securities law violations in connection with public offerings." Slip Opn., at 2. Ms. Creswell reports that the class action had been described as "the largest consolidated securities class-action ever" and that "[n]early all firms on Wall Street were touched by the lawsuit." The lawsuit alleged that during the late 1990s, Wall Street banks artificially inflated the share prices of IPOs, realizing huge profits. Ms. Creswell notes that J.P. Morgan Chase recently agreed to pay $425 million to settle the claims against it, and that a proposed settlement awaiting court approval "guaranteed the plaintiffs at least $1 billion in recovery from all of the defendants in the case." Such settlements are generally conditioned on class certification, at least for purposes of settlement, so yesterday's decision could affect that billion-dollar proposal, as well as the J.P. Morgan Chase settlement.


Julie Creswell's article, entitled "Court Rejects Class Action Against Banks," may be found in Section C. of the December 6, 2006 edition of the New York Times. The Second Circuit opinion will be summarized in a separate article.

Posted On: December 6, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

New Class Action-Kraft Mounts Defense Against California Class Action Alleging Fraud Based On Sale Of Guacamole Containing Small Percentage Of Avocado

Class Action Alleges Product is "Fake Guacamole" Because it Contains Less than 2% Avocado


Exactly what is "guacamole"? That question lies at the center of a new class action lawsuit filed in California last week against Kraft Foods. The lawsuit alleges that Kraft defrauded customers by marketing a dip as "guacamole" when it contained less than 2% avocado. The author predicts an uphill battle for plaintiff's lawyer, however, in obtaining certification of the lawsuit as a class action. In many ways, the putative class action is similar to the action against tobacco manufacturers for the sale of "light" cigarettes - particularly with respect to the individual questions of fact that will exist, such as whether people buy Kraft guacamole because they liked the way it tastes, not because they believe it contains some undefined "higher" amount of avocado. In a significant difference, the label on Kraft's product apparently discloses the fact at issue in the lawsuit, whereas the labels on "light" cigarettes did not, thereby creating a substantial hurdle as to reliance. According to Los Angeles Times reporter Jerry Hirsch, plaintiff admits that she read the label after tasting the dip "and found there was almost no avocado"; she does not explain why she did not read the label before purchasing the product. Another significant difference is that the lawsuit was filed in state court, and the requirements for class action certification under California law differ from those set forth in Rule 23 of the Federal Rules of Civil Procedure.


Mr. Hirsch reports that plaintiff's lawyer intends to soon file similar class actions against other makers of guacamole. Mr. Hirsch also reports that Kraft states customers knew that the dip is "guacamole-flavored." Jerry Hirsch's article, entitled "Lawsuit stirs up guacamole labeling controversy," may be found in the Business Section of the November 30, 2006 Los Angeles Times.

Posted On: December 6, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases- In re Educational Testing: Attorney Fees Awardable To Class Counsel Following Settlement Of Class Action Should Be Determined From A "Benchmark Percentage" Rather Than Lodestar Louisiana Federal Court Holds

Louisiana Federal District Court Rejects Fifth Circuit Lodestar Approach to Determining Attorney Fee Award for Class Action Counsel and Utilizes Percentage Method Instead


Plaintiffs filed putative class action lawsuits against Educational Testing Service (ETS) seeking damages caused by its errors in grading state-required tests for teacher's licenses; ETS erroneously reported more than 4000 "false failures" (reports that a person failed the licensing exam when in fact, upon re-scoring of the exam, they had passed) and 23,000 "low" pass scores (reports that a person passed but with a lower test score than, upon re-scoring, they had actually been entitled to receive). In re Educational Testing Serv. Praxis Principles of Learning & Teaching: Grades 7-12 Litig., 447 F.Supp.2d 612, 613-14 (E.D. La. 2006). After the Judicial Panel on Multidistrict Litigation centralized the various lawsuits in the federal court for the Eastern District of Louisiana, id., at 614-15, defense attorneys and class counsel reached a proposed $11.1 million settlement and sought certification of a class for purposes of settlement, id., at 615. Class counsel sought an attorney fee award of 40% of the settlement fund, id., at 618; the district court concluded that the amount sought was unreasonable and held that a "benchmark percentage" should be the starting point for attorney fee awards following the settlement of a class action rather than a lodestar.


In analyzing the attorney fee request, the district court recognized that it "must independently analyze the reasonableness of the attorneys' fees proposed in the settlement agreement." In re Educational Testing, at 628 (citations omitted). It also recognized the inherent conflict of interest when the attorney fees are paid from a common fund: "In a common fund settlement, in which the plaintiffs' attorneys are paid out of the settlement proceeds, the interests of the attorneys conflict with those of the class. Put simply, the more money the attorneys get, the less the class gets." Id. In the Fifth Circuit, district courts are instructed to consider 12 factors, essentially based on a "lodestar" approach, but the Louisiana district court refused to do so. It concluded that such an approach should no longer be followed due to "increasing criticism because of the practical difficulties in applying it" and the "'inherent incentive to prolong the litigation until sufficient hours have been expended.'" Id., at 628-29 (citations omitted). The court also noted that "the vast majority" of sister circuits have rejected the lodestar method in favor of "the use of the percentage method." Id., at 629 (citing cases from the First, Second, Third, Sixth, Ninth, Tenth, Eleventh and District of Columbia Circuits).

Continue reading "Class Action Defense Cases- In re Educational Testing: Attorney Fees Awardable To Class Counsel Following Settlement Of Class Action Should Be Determined From A "Benchmark Percentage" Rather Than Lodestar Louisiana Federal Court Holds " »

Posted On: December 5, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

UPS Class Action Defense Case-Bates v. UPS: Ninth Circuit Upholds Refusal To Decertify Class Action And Affirms Class Action Judgment Against UPS Based On ADA Claim, But Agrees With Defense That Unruh Act Violation Must Be Reversed

District Court did not Clearly Err in Finding UPS Violated Federal Americans with Disabilities Act (ADA) by Refusing to Hire Deaf Drivers, But Defense was Correct that Class Action Judgment Based on Violation of California's Unruh Act Must be Reversed Ninth Circuit Holds


Plaintiff filed a putative class action in California federal court against United Parcel Service alleging violations of the federal Americans with Disabilities Act (ADA), and California's Fair Employment and Housing Act (FEHA) and Unruh Civil Rights Act (Unruh Act) because it "categorically exclude[s] individuals from employment positions as 'package-car drivers' because they cannot pass a United States Department of Transportation (DOT) hearing standard that does not apply to the vehicles in question." Bates v. United Parcel Serv., Inc., 465 F.3d 1069, 1073 (9th Cir. 2006). The district court certified the lawsuit as a class action. After a bifurcated trial, the district court ruled against the defense and found that UPS violated the ADA, the FEHA and the Unruh Act. On appeal, defense attorneys argued that "(1) Bates did not establish that any class members are 'qualified'; (2) UPS satisfied its burden under the business necessity defense of the ADA; (3) the plaintiff class should be decertified; (4) the court's injunction was an abuse of discretion; and (5) UPS did not violate the FEHA or the Unruh Act." Id. The Ninth Circuit affirmed the judgment as to the ADA claim, reversed the judgment as to the Unruh Act, and refused to reach the FEHA claim finding it unnecessary in light of the fact that affirmance of the ADA claim "is sufficient grounds for affirming the injunction." Id., at 1093 n.25.


Applicants for positions as UPS package drivers must, inter alia, pass the same physical exam that the United States Department of Transportation requires of prospective drivers of commercial vehicles, which includes a "forced whisper" test of the applicants' hearing. Bates, at 1074. However, the DOT only requires a physical exam of those who will be driving vehicles with a gross weight in excess of 10,000 pounds. UPS, on the other hand, required the exam of all applicants, including the thousands of drivers operating vehicles weighing from 7100 to 9300 pounds. Id., at 1075. The class conceded that UPS may require the physical exam of who drive DOT-regulated vehicles, but argued that its blanket exclusion of deaf applicants violated state and federal laws. Id. The district court ruled in favor of the class, holding in part that UPS had failed to establish a business necessity defense to its actions. Id.

Continue reading "UPS Class Action Defense Case-Bates v. UPS: Ninth Circuit Upholds Refusal To Decertify Class Action And Affirms Class Action Judgment Against UPS Based On ADA Claim, But Agrees With Defense That Unruh Act Violation Must Be Reversed" »

Posted On: December 4, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Yet Again Labor Law Class Action Filings Again Top Weekly Class Action Filings List But Public Accommodation/ADA Class Action Lawsuits Run Close Second In California State And Federal Courts

As has been a pattern, class action defense attorneys in California will continue to confront more labor law class action cases than any other category. However, the class action filings have seen another spike in public accommodation/ADA (Americans with Disabilities Act) cases these past two weeks. In an effort to assist class action defense attorneys in anticipating the claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for new 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. Employment law cases routinely lead the list by a wide margin, but class action cases alleging public accommodation/Americans with Disabilities Act (ADA) claims have, with increased frequency, come in at a close second and even occasionally in first.


In light of the Thanksgiving holiday and court holidays, this report covers the time period from November 17 – November 30, 2006. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 91 class action lawsuits were filed in these California state and federal courts during that time period, of which 36 (40%) involved employment-related claims. New public accommodation/ADA class action lawsuits came in second with 31 new filings (34%). The third place category consists of 12 new unfair competition claims, which include unfair business practices and false advertising claims (13%).

Posted On: December 4, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense News-Class Action Law Firm Lerach Ordered To Pay Defense Attorney Fees For Maintaining Frivolous Lawsuit

Judge Grants Defense Motion for Attorney Fees Against Plaintiffs' Law Firm Following Successful Defense of Class Action Lawsuit


Floyd Norris of the New York Times reports that federal district court judge Melinda Harmon awarded the defense in an Enron-related class action attorney fees against plaintiff class-action law firm Lerach, Coughlin, Stoia, Geller, Rudman & Robbins for maintaining class action claims against Alliance Capital, a money management firm, after it was apparent that the claims had no merit. The district court awarded the attorney fees under Section 11(e) of the Securities Act of 1933, despite acknowledging the existence of Second Circuit authority that Section 11(e) "was not intended to authorize an award against the parties' attorney." Mr. Norris summarizes the court's reasoning as placing financial responsibility for the sanctions on the class action attorneys because "non-attorney clients more likely than not would not have the ability to determine at what point, based on what evidence, an action becomes legally 'frivolous,' while its licensed counsel should be and is held to such a standard." Defense attorneys are quoted as stating that the court's ruling punishes class action plaintiff lawyers for continuing to pursue "what was clearly an innocent party." The amount of the fees have not yet been set, and Lerach promises to appeal the ruling.


Floyd Norris' article, entitled "In Unusual Ruling, Law Firm is Told to Pay Opponent's Legal Fees in Enron Case,” may be found in Section C. of the December 2, 2006 edition of the New York Times.

Posted On: December 4, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

CAFA Class Action Defense CAFA Case-Morgan v. Gay: Class Action Fairness Act (CAFA) Must Be Read As Intended Rather Than Literally Third Circuit Holds

Third Circuit Joins 11th and 9th Circuits in Holding that "Not Less Than 7 Days" in § 1453(c) of CAFA (Class Action Fairness Act of 2005) Must be Read as "Not More Than 7 Days"


Plaintiffs filed a putative class action in New Jersey state court. Defense attorneys removed the action to federal court under the Class Action Fairness Act of 2005 (CAFA), but the district court granted plaintiffs' remand motion on the ground that it lacked removal jurisdiction. Seven days later defense attorneys filed a petition with the Third Circuit for leave to appeal pursuant to 28 U.S.C. § 1453(c), which provides that the circuit court may accept such appeals "if application is made to the court of appeals not less than 7 days after entry of the order." Morgan v. Gay, 466 F.3d 276, 277 (3rd Cir. 2006) (quoting § 1453(c)(1)). As a matter of first impression, the Third Circuit considered whether § 1453(c)(1) "should be interpreted by this Court to mean 'not more than 7 days after entry of the order.'" Id. Like sister circuits, the Court of Appeals held that the statute should be read as Congress intended rather than honoring the strict language of a plainly typographical error. The Circuit Court summarized at page 277: "Because the uncontested legislative intent behind § 1453(c) was to impose a seven-day deadline for appeals, we conclude that the statute as written contains a typographical error and should be read to mean 'not more than 7 days.'"

Continue reading "CAFA Class Action Defense CAFA Case-Morgan v. Gay: Class Action Fairness Act (CAFA) Must Be Read As Intended Rather Than Literally Third Circuit Holds" »

Posted On: December 3, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

15 U.S.C. § 77t--Injunctions And Prosecution Of Offenses Under The Securities Act Of 1933

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 provided for injunctions and prosecution of violations of the Act in 15 U.S.C. § 77t, which provides:

§ 77t. Injunctions and prosecution of offenses

(a) Investigation of violations

Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, have been or are about to be violated, it may, in its discretion, either require or permit such person to file with it a statement in writing, under oath, or otherwise, as to all the facts and circumstances concerning the subject matter which it believes to be in the public interest to investigate, and may investigate such facts.

(b) Action for injunction or criminal prosecution in district court

Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, the Commission may, in its discretion, bring an action in any district court of the United States, or United States court of any Territory, to enjoin such acts or practices, and upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General who may, in his discretion, institute the necessary criminal proceedings under this subchapter. Any such criminal proceeding may be brought either in the district wherein the transmittal of the prospectus or security complained of begins, or in the district wherein such prospectus or security is received.

Continue reading "15 U.S.C. § 77t--Injunctions And Prosecution Of Offenses Under The Securities Act Of 1933" »

Posted On: December 2, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

15 U.S.C. § 77s--Special Powers Of Commission Under The Securities Act Of 1933

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 special powers afforded to the Commission in 15 U.S.C. § 77s, which provides:

§ 77s. Special powers of Commission

(a) The Commission shall have authority from time to time to make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this subchapter, including rules and regulations governing registration statements and prospectuses for various classes of securities and issuers, and defining accounting, technical, and trade terms used in this subchapter. Among other things, the Commission shall have authority, for the purposes of this subchapter, to prescribe the form or forms in which required information shall be set forth, the items or details to be shown in the balance sheet and earning statement, and the methods to be followed in the preparation of accounts, in the appraisal or valuation of assets and liabilities, in the determination of depreciation and depletion, in the differentiation of recurring and nonrecurring income, in the differentiation of investment and operating income, and in the preparation, where the Commission deems it necessary or desirable, of consolidated balance sheets or income accounts of any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer. The rules and regulations of the Commission shall be effective upon publication in the manner which the Commission shall prescribe. No provision of this subchapter imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the Commission, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

Continue reading "15 U.S.C. § 77s--Special Powers Of Commission Under The Securities Act Of 1933" »

Posted On: December 1, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Issues--Fair and Accurate Credit Transactions Act

Class Action Defense Attorneys Urged to Advise Clients about FACTA Requirements

The Fair and Accurate Credit Transactions Act (FACTA), enacted by Congress to amend the Fair Credit Reporting Act, will become effective in only a matter of days. FACTA requires that credit card receipts provided to customers be modified so that the credit card number shown on the receipt is truncated and so that the expiration date is omitted. Defense attorneys and in-house counsel are encouraged to ensure compliance with FACTA; the author predicts class action lawsuits will be filed alleging FACTA violations within months of its effective date.

Posted On: December 1, 2006 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases- In re Electrical Carbon: Class Members Who Opt Out Of Class Action Settlement May Rejoin Class With Court Approval New Jersey Federal Court Holds

In Case of First Impression New Jersey Federal Court Permits Class Members Who Opted Out of Initial Proposed Class Action Settlement to Rejoin Class for Amended Class Action Settlement Finding it in the Best Interests of the Class


Plaintiffs filed putative class action lawsuits against several defendants alleging a conspiracy to fix prices of electrical carbon products in violation of the Sherman Act following the investigation and criminal prosecution of various entities by the United States Department of Justice. In re Electrical Carbon Products Antitrust Litig., 447 F.Supp.2d 389, 391-92 (D. N.J. 2006). After the Judicial Panel on Multidistrict Litigation centralized the various lawsuits in the federal court for the District of New Jersey, defense attorneys and class counsel reached proposed settlements and sought certification of a class for purposes of settlement, id., at 392. Thirteen entities elected to opt-out of the proposed class action, 12 of which (referred to herein as the "12 Opt-Outs") had made purchases totaling several hundred million dollars out of the $600 million in purchases at issue in the lawsuit, triggering a defense right to back out of the proposed agreements. Id., at 393. Defense and plaintiff lawyers negotiated new settlements and again sought court approval, id., at 394. The 12 Opt-Outs sought court permission to rejoin the class and participate in the new settlements, id., at 396. The federal court held that opt-out plaintiffs may rejoin a class action, and found that it would be in the best interests of the class to permit the 12 Opt-Outs to do so in this case.


In analyzing this issue, the district court noted that the question before it appeared to be one of first impression: "Where a putative class member has timely filed an opt-out notice, the rules are silent on the procedure to be followed when the party seeks to rejoin the class." In re Electrical Carbon, at 396-97. By analogy to Federal Rules of Civil Procedure Rule 23(e)(4)(B) - which requires court approval for an objector to withdraw an objection to a proposed settlement - the court concluded that opt-out plaintiffs may be permitted to rejoin the class so long as they receive court approval, but stressed that "the Court must scrutinize the decision to assure that no special benefit is conferred upon them at the expense of the other class members, and that the resulting settlements are in the best interests of those class members." Id., at 397. The district court concluded that permitting "re-joinder" would benefit the class because it would prevent the settling defendants from again exercising their right to back out of the proposed settlements based upon the dollar value exposure to the opt-out claimants. Id. The court further found that the class members were "actually better off" with the 12 Opt-Outs in the class. Id., at 397-98.

Download PDF file of In re Electrical Carbon