Posted On: January 31, 2007 by Michael J. Hassen Email This Post

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Rent-A-Center Class Action Defense Case-Karraker v. Rent-A-Center: Illinois Federal Court Denies Plaintiff Lawyer's Request For Attorney Fees Finding Relief Obtained In ADA Class Action To Be De Minimis

Injunctive Relief Obtained Against Defense in ADA Class Action Inadequate to Support Attorney Fee Award Illinois Court Holds


Plaintiffs filed a class action against their employer, Rent-A-Center, alleging violations of the federal Americans with Disabilities Act (ADA) arising out of the employer's requirement that applicants take a psychological test in order to obtain management positions. Karraker v. Rent-A-Center, Inc., 431 F.Supp.2d 883, 885 (C.D. Ill. 2006). Specifically, the class action complaint alleged, "[Rent-A-Center] required all employees or outside applicants seeking management positions to submit to a battery of nine separate written tests. This battery of tests was commonly referred to as the Management Test. One of the individual exams included in the Management Test was the Minnesota Multiphasic Personality Inventory (MMPI). The MMPI is a psychological test used by psychologists to diagnose and treat individuals with abnormal psychological symptoms and personality traits." Id. The district court ultimately certified a class defined as "All past and present employees of Defendant RAC in Illinois who took the APT Management Test." Id. Defense attorneys prevailed on a motion for summary judgment as to all but a single wrongful termination claim. Id., at 886. On appeal, the Seventh Circuit generally affirmed the judgment in favor of the defense, but remanded the matter "so summary judgment could be entered in favor of Plaintiffs on their claim that the MMPI is a medical examination under the ADA." Karraker, at 886. The district court entered that order and, pursuant to plaintiffs' request, the defense agreed to destroy all test results obtained through the APT Management Test. Id. Defense attorneys then moved for summary judgment on the wrongful termination claim. The district court granted the defense motion, thereby resolving the balance of the class action lawsuit. Id.


Plaintiffs' lawyer then filed a petition seeking an award of $267,000 in attorney fees. Karraker, at 886. The district court recognized that the ADA permits a court to award reasonable attorney fees to the prevailing party, see 42 U.S.C. § 12205, but held that plaintiffs did not qualify as the prevailing party under the following definition set forth at page 886:

\

Continue reading "Rent-A-Center Class Action Defense Case-Karraker v. Rent-A-Center: Illinois Federal Court Denies Plaintiff Lawyer's Request For Attorney Fees Finding Relief Obtained In ADA Class Action To Be De Minimis" »

Posted On: January 30, 2007 by Michael J. Hassen Email This Post

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Costco Class Action Defense Case-Ellis v. Costco: California Federal Court Rejects Defense Arguments And Certifies Class Action Alleging Sex Discrimination

California Federal Court Holds that Plaintiffs Satisfied Rule 23 Requirements for Certification of Class Action Alleging Gender Discrimination in Promotion and Management Practices by Costco


Plaintiff filed a class action against their employer for violations of Title VII of the Civil Rights Act of 1964 and California's Fair Employment and Housing Act alleging "that Costco’s promotion system has a disparate impact on female employees, that Costco’s management discriminates against women in promotions, and that defendant has retaliated against persons seeking redress for discrimination." Ellis v. Costco Wholesale Corp., ___ F.Supp.2d ___, 2007 WL 127800-, *1 (N.D. Cal. January 11, 2007). Plaintiffs' lawyer moved the federal court to certify a nationwide class action on behalf of at least 700 women; defense attorneys opposed the motion and moved to strike the declarations of plaintiffs' experts in support of the motion. Id., at *4, *7. The defense also argued against class action treatment on the grounds that plaintiffs failed to exhaust administrative remedies, id., at *5, and lacked standing, id., at *6. The district court rejected defense arguments and certified a nationwide class action as requested by plaintiffs.


Plaintiffs sought certification of a nationwide class action on behalf of "current and former female employees who have been denied promotion to GM [General Manager] or AGM [Assistant General Manager] or denied Senior Staff jobs important to AGM promotion since January 3, 2002." Ellis, at *5. The district court first addressed the procedural objections raised by defense attorneys . The administrative remedies defense was premised on the argument that plaintiffs' EEOC claim was limited to discriminatory practices in promotion to general manager positions. Id.. Plaintiffs disagreed, and argued that even if it had been limited to GM claims that their other claims were "reasonably related to the allegations in the EEOC charge." Id. The district court agreed, noting that Ninth Circuit case law instructs courts "to construe the EEOC charge 'with utmost liberality.'" Id. (citation omitted). Plaintiffs' EEOC claim provided adequate notice to Costco of the claims asserted in the class action complaint. Id. With respect to Costco's standing arguments, the district court held (1) that former employees may seek injunctive relief on behalf of current employees, because "[t]o hold that employees must continue to work in jobs where they face discrimination in order to challenge discrimination would pervert Article III's injury-in-fact requirement," Ellis, at *6, and (2) that a current AGM may seek injunctive relief on behalf of women denied promotion to AGM and that it would not "delve into the merits" of the discrimination claims at the class certification stage, id.

Continue reading "Costco Class Action Defense Case-Ellis v. Costco: California Federal Court Rejects Defense Arguments And Certifies Class Action Alleging Sex Discrimination" »

Posted On: January 29, 2007 by Michael J. Hassen Email This Post

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Pioneer Electronics Class Action Case-California Supreme Court Holds Consumers Who Have Complained Of Product Defects Need Not Affirmatively Consent To Release Of Contact Information To Plaintiff's Attorney Prosecuting Class Action Based On Those Defects

California Supreme Court Rejects Privacy Rights Arguments of Pioneer Electronics' Defense Attorneys that Consumers Who Contacted Company and Complained about Product Defects Must Thereafter Affirmatively Consent to Release of Contact Information to Attorney Prosecuting Putative Class Action Involving the Same Product Defects In Consumers' Complaints

Plaintiff filed a putative class action against Pioneer Electronics alleging defects in DVD player, seeking to represent "persons who purchased the same model of allegedly defective DVD player." Pioneer Electronics v. Superior Court, 40 Cal.4th 360 (Cal. 2007) [Slip Opn., at 2]. During discovery, Pioneer revealed that it had received 700 - 800 consumer complaints concerning the same DVD player. Id. Plaintiff demanded the addresses and telephone numbers of the consumers who had complained; Pioneer objected asserting the right to privacy protected by the California Constitution. Id. (citing Cal. Const., Art. I, § 1). Ultimately the trial court ordered that a letter be sent to the complaining consumers advising them that their contact information would be disclosed to plaintiff's attorney unless they affirmatively objected to such disclosure. Id., at 4. The California Court of Appeal reversed, granting Pioneer's petition for writ of mandate to compel the trial court to vacate its order and require that consumers affirmatively consent to the release of their contact information. Id., at 4-5. The California Supreme Court reversed the decision of the appellate court, reinstating the trial court's order.

The Supreme Court framed the issue as follows: "Does a complaining purchaser possess a right to privacy protecting him or her from unsolicited contact by a class action plaintiff seeking relief from the vendor to whom the purchaser's complaint was sent?" Slip Opn., at 4. The Court noted that the decision of the Court of Appeal "would place the burden on the discovery proponent to obtain written authorization from each person whose privacy was to be invaded." Id., at 9. In contrast, plaintiff's attorney argued that "consumers who initially contacted Pioneer to express dissatisfaction with its product have a reduced expectation of privacy or confidentiality in the contact information they freely offered to Pioneer for the purpose, presumably, of allowing further communication regarding their complaints." Id., at 6. The Supreme Court agreed, holding that "[r]evealing names, addresses and contact information on persons who have already complained about their Pioneer DVD players would not be particularly sensitive or intrusive." Id., at 13.

Continue reading "Pioneer Electronics Class Action Case-California Supreme Court Holds Consumers Who Have Complained Of Product Defects Need Not Affirmatively Consent To Release Of Contact Information To Plaintiff's Attorney Prosecuting Class Action Based On Those Defects" »

Posted On: January 28, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2614—Jurisdiction Of Courts And Statutes Of Limitation Under The Real Estate Settlement Procedures Act (RESPA)

As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of RESPA. Congress provided for the jurisdiction of courts and for statutes of limitation for private rights of action under RESPA in 12 U.S.C. § 2614, which provides:

§ 2614. Jurisdiction of courts; limitations

Any action pursuant to the provisions of section 2605, 2607, or 2608 of this title may be brought in the United States district court or in any other court of competent jurisdiction, for the district in which the property involved is located, or where the violation is alleged to have occurred, within 3 years in the case of a violation of section 2605 of this title and 1 year in the case of a violation of section 2607 or 2608 of this title from the date of the occurrence of the violation, except that actions brought by the Secretary, the Attorney General of any State, or the insurance commissioner of any State may be brought within 3 years from the date of the occurrence of the violation.

NOTE: Sections 2611, 2612 and 2613 were repealed in 1996.

Posted On: January 27, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2610–Prohibition Of Fees For Preparation Of Truth-In-Lending, Uniform Settlement, And Escrow Account Statements The Real Estate Settlement Procedures Act (RESPA)

For those class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide here the text of the statute as a resource. RESPA prohibits lenders from charging borrowers certain fees in 12 U.S.C. § 2610, which provides as follows:

§ 2610. Prohibition of fees for preparation of truth-in-lending, uniform settlement, and escrow account statements

No fee shall be imposed or charge made upon any other person (as a part of settlement costs or otherwise) by a lender in connection with a federally related mortgage loan made by it (or a loan for the purchase of a mobile home), or by a servicer (as the term is defined under section 2605(i) of this title), for or on account of the preparation and submission by such lender or servicer of the statement or statements required (in connection with such loan) by sections 2603 and 2609(c) of this title or by the Truth in Lending Act.

Posted On: January 26, 2007 by Michael J. Hassen Email This Post

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Labor Law Class Action Lawsuits Again Hold Top Spot In Weekly Class Action Filings In California State And Federal Courts But Class Actions Alleging Violations Of Federal Fair And Accurate Credit Transactions Act Come In A Close Second

Defense attorneys in California faced the familiar wave of employment law class action cases last week, but FACTA (Fair and Accurate Credit Transaction Act) cases ran a close second. 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 and usually do so by a wide margin, but this past week class action lawsuits alleging FACTA violations gave labor law class actions a run for their money. This report covers the time period from January 19 – January 25, 2007. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 52 class action lawsuits were filed in these California state and federal courts during that time period, 13 of which (25%) involved employment law claims. The area of law with the second most class action filings during that time period involved Fair Credit Reporting Act/Fair And Accurate Credit Transactions Act cases with 12 new filings (23%). Public accommodation/ADA class action lawsuits came in third with 9 new filings (17%). In a surprisingly balanced week for California class action filings, two other groups of class action claims passed the 10% threshold. Six new price fixing/antitrust class actions were filed (12%), as well as 5 new unfair competition (UCL) class actions (10%).

Posted On: January 26, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-In re Wachovia: Judicial Panel On Multidistrict Litigation (MDL) Grants Motion To Centralize Class Action Litigation And Selects Central District of California As Transferee Court

Judicial Panel Rejects Defense Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 in the Southern District of New York and Agrees with Plaintiffs that Central District of California is Appropriate Court

Several class action lawsuits were filed in New York, Florida, Illinois, Minnesota and Pennsylvania against Wachovia Corp., Wachovia Securities, First Union Securities and/or Prudential Equity Group alleging violations of the federal Fair Labor Standards Act (FLSA) and/or state labor laws for failure to pay overtime to securities brokers. In re Wachovia Securities, LLC, Wage & Hour Litig., 469 F.Supp.2d 1346, 1347 (Jud.Pan.Mult.Lit. 2006). Pursuant to 28 U.S.C. § 1407, plaintiffs filed a motion with the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Northern District of Illinois; defense attorneys agreed that pretrial coordination was warranted under 28 U.S.C. § 1407 but requested transfer to the Southern District of New York. Id. Eleven (11) potentially related "tag-along" actions were filed, including six in the Central District of California, id. n.1, and all plaintiffs concurred that the Central District of California would be an appropriate forum for the litigation, id. The Panel agreed with the parties that centralization was warranted but rejected the forum requested by defense attorneys, selecting the Central District of California as the appropriate transferee court. Id.

Download PDF file of In re Wachovia Securities Transfer Order

Posted On: January 26, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-In re Long-Distance Telephone: Over Defense Objection Judicial Panel On Multidistrict Litigation (MDL) Grants Motion To Centralize Class Action Litigation In The District of the District of Columbia

Judicial Panel Rejects Defense Opposition to Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Grants Motion for Centralization of Three Class Action Lawsuits

Class action lawsuits were filed in California, Wisconsin and the District of Columbia, in addition to an action filed in the Court of Federal Claims, against the federal government and others seeking "reimbursement of the communications excise tax on long-distance telephone service, where the charge for such service was not based on the distance of the telephone call." In re Long-Distance Telephone Serv. Fed. Excise Tax Refund Litig., 469 F.Supp.2d 1348, 1349 (Jud.Pan.Mult.Lit. 2006). The Wisconsin plaintiff moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407, to centralize the lawsuits for pretrial purposes in the Easter District of Wisconsin; the California plaintiffs supported centralization but argued for transfer to the District of the District of Columbia or the Central District of California. Id. Plaintiffs in the District of Columbia and in the Federal Claims court opposed the motion, as did the United States. The Panel concluded that, save for a "single California state law claim brought against [a] telecommunication provider," centralization was warranted. Id. The Panel further concluded that the District of the District of Columbia was the appropriate transferee court. Id.

NOTE: As noted above, the motion for centralization implicated an action pending in the Court of Federal Claims. The Panel noted that previously it "has never reached the issue of whether Section 1407 authorizes transfer of a Court of Federal Claims action," but concluded that it "sees no need to resolve that issue here." In re Long-Distance Telephone, at 1349. Instead, the Panel encouraged "voluntary cooperation between the Court of Federal Claims and the transferee court" but "[left] the degree and manner of such cooperation to the joint discretion of the respective judges." Id.

Download PDF file of In re Long-Distance Telephone Transfer Order

Posted On: January 25, 2007 by Michael J. Hassen Email This Post

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Cavin v. Home Loan Class Action Defense Case: Illinois Federal Court Grants Defense Motion For Summary Judgment In Class Action Alleging Violations Of Federal Fair Credit Reporting Act (FCRA)

Mortgage-Offer Mailer Constituted a "Firm Offer of Credit" Under the FCRA (Fair Credit Reporting Act) Warranting Summary Judgment in Favor of Defense Illinois Federal Court Holds

Plaintiffs filed a class action against Home Loan Center for alleged violations of the federal Fair Credit Reporting Act (FCRA) alleging that impermissibly accessed credit reports for purposes of mailing out "pre-approval" mortgage flyers, three of which were mailed to plaintiffs. Cavin v. Home Loan Center Inc., 469 F.Supp.2d 561, 2007 WL 92509, *1 (N.D. Ill. 2007). Plaintiffs did not respond to the loan offers. Id., at *2. Defense and plaintiffs attorneys filed cross-motions for summary judgment; defense attorneys argued that the mailers constituted "firm offers of credit" under the FCRA thus entitling Home Loan Center to obtain the credit reports; plaintiffs argued that mailers did not constitute firm offers because they are too vague. Id., at *3. The district court granted the defense motion, denied the plaintiffs' motion, and entered judgment in favor of Home Loan Center on the class action complaint.

We do not summarize here all of the language contained in the mailers or the details of the loan program at issue. Class action defense attorneys facing FCRA claims should review the opinion in its entirety in order to understand its full scope. Briefly, the mailers advertised a "SmartLoan" program and stated "This 'prescreened' offer of credit is based on information in your credit report indicating that you meet certain criteria." Cavin, at *1. The mailers set forth "sample loan payments for loans ranging from $100,000 to $600,000." Id. The reverse side of the mailers stated, "This offer may not be extended if, after responding to this offer, you do not meet the criteria used in the selection process. Further, HomeLoanCenter.com will verify income and employment, review credit, and analyze debt and your equity position in the subject property prior to final loan approval." Id. Additionally, the mailers stated, "This advertisement does not constitute an offer to enter into an interest rate and/or discount prior agreement." Id. The mailers were not firm commitments to make a loan, expressly stating "Not all applicants will be approved."

Id., at *2.

In ruling on the cross-motions for summary judgment, the federal court observed that the parties did not dispute whether Home Loan Center had "express permission to access [plaintiffs'] credit reports," Cavin, at *2. The class action turned "on whether the SmartLoan mailers constituted a 'firm offer of credit'" under the FCRA. Id. Plaintiffs urged that the mailers were "vague and totally lacking in terms," failed to "inform the consumer what is being offered," and failed to disclose that the mortgage is a negative amortization loan. Id., at *2-*3. The defense countered that the mailers "offered a valuable and popular home mortgage loan worth hundreds of thousands of dollars" and that any missing terms were because mortgage loans "have features and terms that cannot be fixed in advance based solely upon data obtained from prescreening programs." Id., at *3. Defense attorneys also argued that plaintiffs could not prove actual damages because they never sought or obtained a loan based on the mailers.Id.

Continue reading "Cavin v. Home Loan Class Action Defense Case: Illinois Federal Court Grants Defense Motion For Summary Judgment In Class Action Alleging Violations Of Federal Fair Credit Reporting Act (FCRA)" »

Posted On: January 24, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Taylor v. Quall: California Federal Court Grants Defense Motion To Dismiss Class Action Holding That Debt Collection Practices During Lawsuit Are Insulated By Litigation Privilege

California's Litigation Privilege Bars Claims of Unfair Debt Collection Practices California Federal Court Holds

Plaintiff filed a putative class action in California state court alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) and California's equivalent statute, the Rosenthal Fair Debt Collection Practices Act (RFDCPA), and for violations of California's unfair competition law (UCL), California Business & Professions Code section 17200 et seq. The lawsuit was premised on acts committed by defendants' efforts to collect a debt Defense attorneys removed the class action to federal court, and filed a motion to dismiss two claims for relief. Taylor v. Quall, 458 F.Supp.2d 1065, 1065-66 (C.D. Cal. 2006). Defendants argued that their conduct was absolutely privileged because it was part of the lawsuit aimed at collecting the debt. Id., at 1066. The district court agreed with the defense and granted the motion.

Plaintiff's class action complaint alleged the following. After plaintiff lost his job, he received several calls from people attempting to collect monies owed on his Citibank credit card account. Plaintiff advised these people that he was unemployed and would not pay the debt. Eventually, these collection efforts ended. However, defendants thereafter acquired the Citibank debt and filed a lawsuit against plaintiff seeking to collect the amounts owed. Plaintiff claims the lawsuit was time-barred and that defendants lacked standing. Plaintiffs further alleges that "Defendants improperly sought attorney's fees and costs, and made multiple misrepresentations to Plaintiff until he ultimately settled the action." Taylor, at 1066. As noted above, defense attorneys argued that any statements made during the course of the lawsuit fell within the scope of the litigation privilege, thus warranting dismissal under Rule 12(b)(6). The district court agreed.

Continue reading "Class Action Defense Cases-Taylor v. Quall: California Federal Court Grants Defense Motion To Dismiss Class Action Holding That Debt Collection Practices During Lawsuit Are Insulated By Litigation Privilege" »

Posted On: January 23, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Morgan v. Gay: Third Circuit Holds As Matter Of First Impression That Under CAFA (Class Action Fairness Act Of 2005) Defense Still Bears Burden Of Establishing Amount-In-Controversy

Federal Class Action Fairness Act of 2005 (CAFA) did not Shift Burden of Proving $5 Million Amount in Controversy to Plaintiff and Plaintiff's "Damages-Limitation Provision" could be used to Avoid Federal Court Provided Plaintiff did not Thereafter Seek to Recover More than $5 Million Third Circuit Holds

Plaintiff filed a putative class action in New Jersey state court based on false advertising claims in the sale of the skin cream StriVectim-SD and asserting various state law claims. Morgan v. Gay, 471 F.3d 469, 471 (3d Cir. 2006). Defense attorneys removed the class action to federal court under the federal Class Action Fairness Act of 2005 (CAFA), and plaintiff moved to remand the class action to state court. Id. The district court granted the motion, concluding that defense attorneys had failed to establish CAFA's $5,000,000 amount-in-controversy requirement, and the Third Circuit granted the defense leave to appeal. Id., at 471-72. As a matter of first impression in the Third Circuit, the Court of Appeals held that CAFA did not shift to plaintiff the burden of proving the amount in controversy for removal purposes, and affirmed the district court order remanding the class action to state court.

With respect to the amount in controversy, plaintiff's class action complaint expressly stated that the damages sought in the action, including treble damages and punitive damages, "'shall not [in total] exceed $5 million in sum or value.'" Morgan, at 471. The district court granted the motion to remand because the defense had not established that the amount in controversy met the $5 million threshold. Id. On appeal, the Third Circuit first addressed whether CAFA shifted the burden of establishing federal court jurisdiction from the defense to the plaintiff. Id., at 472. The Circuit Court agreed with defense attorneys that the legislative history evidenced a willingness to "switch the burden of proof from the party seeking removal to the party seeking remand," id., but ultimately concluded - as a matter of first impression in the Third Circuit - that CAFA did not alter the time-honored burden of proof and held that "the party seeking to remove the case to federal court bears the burden to establish that the amount in controversy requirement is satisfied," id., at 473.

Continue reading "Class Action Defense Cases-Morgan v. Gay: Third Circuit Holds As Matter Of First Impression That Under CAFA (Class Action Fairness Act Of 2005) Defense Still Bears Burden Of Establishing Amount-In-Controversy" »

Posted On: January 22, 2007 by Michael J. Hassen Email This Post

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In re Edward Jones Class Action Defense Case: California Federal Court Denies Motion To Remand Securities Class Action And Grants Defense Motion To Dismiss Finding Class Action Complaint Preempted By SLUSA

California Court Holds that Plaintiffs' Procedural Objections to Removal are Waived as Untimely and that Federal Securities Litigation Uniform Standards Act (SLUSA) Preempted Class Action Claims Requiring Dismissal of Complaint

In 2004, plaintiffs filed a putative class action against Edward D. Jones & Co., one of the largest brokerages in the United States, for violations of California’s unfair competition laws (UCL) and breach of fiduciary duties alleging that it "entered into agreements with certain mutual fund companies whereby Defendant placed the companies on an internal 'Preferred Funds' list and received retention 'kickbacks' based on the amount of money held by Plaintiff and the Class members in those funds." In re Edward Jones Holders Litig., 453 F.Supp.2d 1210, 1211 (C.D. Cal. 2006). Defense attorneys removed the action to federal court on the ground that the state law claims were preempted by the federal Securities Litigation Uniform Standards Act (SLUSA), but the district court granted plaintiffs' motion to remand finding that SLUSA did not apply "because the alleged wrongdoing . . . was not 'in connection with the purchase or sale of covered securities.'" Id., at 1212. Two years later, after the Supreme Court issued its opinion in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 548 U.S. ----, 126 S.Ct. 1503 (2006), defense attorneys removed the class action to federal court anew on the ground that Dabit "compels a finding that Plaintiffs' claims are in fact preempted by SLUSA." Id. Plaintiffs again moved to remand the complaint to state court, but the district court denied the motion.

First, the district court held that plaintiffs' procedural objections to removal were waived because the motion to remand the class action to state court was untimely under 28 U.S.C. § 1447(c). In re Edward Jones, at 1212-13. Plaintiffs had argued that the removal was defective in two ways: (1) as untimely under 28 U.S.C. § 1446(b), and (2) as an improper "successive" notice predicated on the identical legal ground previously raised and rejected by the district court. Id., at 1212. An untimely notice of removal is a procedural defect, not a jurisdictional defect, id., at 1213 n.3 (citation omitted), and Rule 6(e) does not extend the time for filing a motion to remand so the motion - filed 32 days after removal - was untimely, id., at 1213.

Continue reading "In re Edward Jones Class Action Defense Case: California Federal Court Denies Motion To Remand Securities Class Action And Grants Defense Motion To Dismiss Finding Class Action Complaint Preempted By SLUSA" »

Posted On: January 21, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2609-- Limitation On Requirement Of Advance Deposits In Escrow Accounts Under 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 detailed limitations on lender requirements for advance deposits in escrow accounts under RESPA in 12 U.S.C. § 2609, which provides:

§ 2609. Limitation on requirement of advance deposits in escrow accounts

(a) In general

A lender, in connection with a federally related mortgage loan, may not require the borrower or prospective borrower--

(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes, insurance premiums, or other charges with respect to the property, in connection with the settlement, an aggregate sum (for such purpose) in excess of a sum that will be sufficient to pay such taxes, insurance premiums and other charges attributable to the period beginning on the last date on which each such charge would have been paid under the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period; or

(2) to deposit in any such escrow account in any month beginning with the first full installment payment under the mortgage a sum (for the purpose of assuring payment of taxes, insurance premiums and other charges with respect to the property) in excess of the sum of (A) one-twelfth of the total amount of the estimated taxes, insurance premiums and other charges which are reasonably anticipated to be paid on dates during the ensuing twelve months which dates are in accordance with the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, plus (B) such amount as is necessary to maintain an additional balance in such escrow account not to exceed one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period: Provided, however, That in the event the lender determines there will be or is a deficiency he shall not be prohibited from requiring additional monthly deposits in such escrow account to avoid or eliminate such deficiency.

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Posted On: January 20, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2608—Title Insurance And Liability Of Sellers Under The Real Estate Settlement Procedures Act (RESPA) For Requiring Use Particular Title Companies

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 prohibited sellers from requiring that buyers use a “particular title company” and provided for liability for any such conduct in 12 U.S.C. § 2608, which states:

§ 2608. Title companies; liability of seller

(a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.

(b) Any seller who violates the provisions of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.

Posted On: January 19, 2007 by Michael J. Hassen Email This Post

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Merck's Vioxx Defense Team Suffers Setback As New Jersey Appellate Court Holds Trial Court "Prematurely Terminated" Class Action Complaint

Peter Loftus of The Wall Street Journal reports today that a New Jersey state appellate court has reversed a lower court ruling dismissing a putative class action against Merck on behalf of people who used Vioxx for at least six (6) weeks but who have not evidenced any medical problems. While the opinion is a setback for the Vioxx defense team, it does not appear to be a "tremendous decision" as viewed by plaintiffs' counsel. The New Jersey appellate court appears to be based on the decision that the trial court dismissed the class action claims "prematurely"; it held only that plaintiffs were entitled to additional discovery in an effort to prove whether they have a valid claim. Merck is reportedly considering whether to seek review in the New Jersey Supreme Court. Alternatively, defense attorneys may decide to let the plaintiffs conduct additional discovery and then renew the motion in the trial court, as there appears to be no medical evidence proving that people who stopped taking Vioxx more than two years ago remain at risk today.

Peter Loftus' article, entitled "New Jersey Appeals Court Revives Proposed Vioxx Class-Action Suit," may be found on page C15 of the January 17, 2007 edition of The Wall Street Journal. A more complete analysis of the case may be found in a separate article posted on this site on January 18, 2007.

Posted On: January 19, 2007 by Michael J. Hassen Email This Post

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Labor Law Class Action Cases Again Claim Top Spot In New Class Action Cases Facing Defense Attorneys In California

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 January 11 - January 18, 2007. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe. Approximately 37 class action lawsuits were filed in these California state and federal courts during that time period - excluding the four (4) antitrust class action cases involving transferred into California by the Judicial Panel on Multidistrict Litigation (MDL). Thirteen (13) of the weekly class action filings (35%) alleged employment law violations. Seven (7) of the new class action cases (19%) alleged unfair business practices or violations of California's unfair competition law (UCL). The only other category of cases to break the 10% threshold consisted of alleged violations of the federal Fair and Accurate Credit Transactions Act (FACTA); California class action defense attorneys will face 6 new cases involving that area of law, which represents approximately 16% of the class actions filed during this time period.

Posted On: January 19, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-In re PolyMedica: Massachusetts Federal Court Refuses To Certify Securities Fraud Class Action For Contested Period Because Plaintiff Failed To Establish "Cause And Effect" And "Market Efficiency"

Defense Defeats Class Action Certification for Contested Time Period Because Plaintiff's Evidence Failed to Demonstrate "Cause and Effect" and Only "Weakly" Showed Market Efficiency Massachusetts Court Holds

Plaintiff investors filed a putative class action against PolyMedica and others alleging securities fraud, relying on the "fraud on the market" doctrine to establish the reliance element of their securities fraud claim. In re PolyMedica Corp. Securities Litig., 453 F.Supp.2d 260, 264-65 (D. Mass. 2006). A Massachusetts federal court certified a class action for the time period of October 26, 1998 to August 21, 2001; the First Circuit reversed with respect to the time period of January 1, 2001 to August 21, 2001, and remanded the case for further proceedings. Id., at 264. The new district court explained at page 264, "The sole issue for further adjudication here is whether Rule 23(b)(3) can be satisfied in the circumstances of this case." (Broadly, Rule 23(b)(3) requires that common questions of law or fact predominate over individual issues and that the class action device be the superior method for resolving the dispute.) The court agreed with defense attorneys that it could not, and refused to certify a class for the 2001 time period.

The federal court began by noting the special problem created by securities fraud class actions, explaining at page 264: "In the context of securities fraud allegations, the nature of Rule 23(b)(3) analysis is quite particularized. Securities frauds, like all frauds, entail proof of reliance. . . . While reliance is typically demonstrated on an individual basis, the Supreme Court has noted that such a rule would effectively foreclose securities fraud class actions because individual questions of reliance would inevitably overwhelm the common ones under Rule 23(b)(3). . . . To avoid this result, the Supreme Court has recognized the fraud-on-the-market theory, which relieves the plaintiff of the burden of proving individualized reliance on a defendant's misstatement, by permitting a rebuttable presumption that the plaintiff relied on the 'integrity of the market price' which reflected that misstatement." (Citations omitted.) The fraud on the market doctrine requires that the market be "efficient" - that is, "'one in which the market price of the stock fully reflects all publicly available information,'" id., at 265 (quoting In re PolyMedica Corp. Securities Litig., 432 F.3d 1, 14 (1st Cir. 2005)).

Continue reading "Class Action Defense Cases-In re PolyMedica: Massachusetts Federal Court Refuses To Certify Securities Fraud Class Action For Contested Period Because Plaintiff Failed To Establish "Cause And Effect" And "Market Efficiency"" »

Posted On: January 18, 2007 by Michael J. Hassen Email This Post

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Sinclair v. Merck-Class Action Defense Case: New Jersey Appellate Court Holds Class Action Ruling In Favor Of Defense In Vioxx Case Was Premature

New Jersey Court Holds that Whether Trial Court should Order Medical Monitoring of Vioxx Patients who Show no Signs of Illness, and Whether such Patients have a "Presently Cognizable Injury," Requires Additional Evidence

Plaintiffs filed a putative class action against Merck in New Jersey state court for negligence, products liability, fraud and breach of warranty because they had used Vioxx for at least six consecutive weeks before the drug was removed from the market. The plaintiffs had not yet suffered any medical problems but alleged that "as a result of their direct and prolonged exposure to Vioxx, they have an enhanced risk of sustaining serious, undiagnosed and unrecognized myocardial infarctions," and prayed for "the establishment of a court-administered medical screening program, funded by Merck." Sinclair v. Merck & Co., Inc., --- A.2d ----, 2007 WL 91446, *1 (N.J.Super.A.D. January 16, 2007). Defense attorneys moved to dismiss the class action complaint on the ground that New Jersey law did not afford the remedy of medical screening in products liability cases; the trial court agreed and granted the motion to dismiss. Id. The appellate division reversed, holding that the trial court "prematurely terminated plaintiffs' opportunity to establish the existence of a legally cognizable claim." Id., at *2.

In reinstating the class action complaint, the appellate division noted the "difficulty" created by "the relative paucity of New Jersey precedent." Sinclair, at *2. The opinion discusses at length the three controlling decisions on the issue of medical monitoring, id., at *2-*6, and concluded that those cases required an analysis of "scientific and other evidence relevant to plaintiffs' claims" in order for the trial court to properly determine "that a medical monitoring remedy should not be recognized in connection with Vioxx exposure," id., at *6. The appellate division explicitly noted that it was "express[ing] no opinion as to the ultimate viability of plaintiffs' action," id., at *2, and recognized that "evidence may prove the judge to be correct" in dismissing the class action, id., at *6.

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Posted On: January 18, 2007 by Michael J. Hassen Email This Post

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Dale v. Comcast Class Action Defense Case: Georgia Federal Court Grants Defense Motion To Compel Arbitration Under Agreement Barring Class Action Lawsuits Holding Arbitration Clause Unconscionable And Dismisses Class Action Complaint

Arbitration Clause Barring Class Action Lawsuits in Contract Governed by Federal Arbitration Act (FAA) Valid and Enforceable Georgia Federal Court Holds, Agreeing with Defense that Arbitration Agreement was not Unconscionable

Plaintiffs filed a putative class action in Georgia state court against their cable television company alleging that it overcharged them for cable television services in violation of the federal Cable Communications Policy Act, 47 U.S.C. § 522 et seq. Dale v. Comcast Corp., 453 F.Supp.2d 1367, 1370 (N.D. Ga. 2006). Defense attorneys removed the action to federal court and moved to compel arbitration under a clause governed by the Federal Arbitration Act (FAA) that arbitration clause required customers to bring claims only in an individual capacity, thereby precluding participation in class action lawsuits, id., at 1374. Specifically, the arbitration clause provided, " ALL PARTIES TO THE ARBITRATION MUST BE INDIVIDUALLY NAMED, THERE SHALL BE NO RIGHT OR AUTHORITY FOR ANY CLAIMS TO BE ARBITRATED OR LITIGATED ON A CLASS ACTION OR CONSOLIDATED BASIS OR ON BASIS INVOLVING CLAIMS BROUGHT IN PURPORTED REPRESENTATIVE CAPACITY ON BEHALF OF THE GENERAL PUBLIC (SUCH AS A PRIVATE ATTORNEY GENERAL), OTHER SUBSCRIBERS, OR OTHER PERSONS SIMILARLY SITUATED." Id. The district court granted the defense motion.

Comcast provides its customers with a "subscriber agreement" at the time it installs service, and "on an annual basis, [it] disseminates notices of its policies and practices to its subscribers by including them in the subscribers' monthly bills." Dale, at 1371. Notice of the arbitration clause was provided to customers in December 2004 via "a billing stuffer entitled 'Important Notices to Our Customers: Your Local Cable Company's Policies & Practices,'" id., and noted that this complied with federal law, id., at 1372 n.2. For new customers, Comcast provided notice of the arbitration agreement at the time service was installed, and new Comcast customers signed forms agreeing to be bound to the terms of the subscriber agreement. Id., at 1371. The district court found that "plaintiffs were given copies of the Subscriber Agreement containing the arbitration provisions at the time of installation of their service" and that "when defendant amended the Subscriber Agreement, it notified plaintiffs that the changes would not take effect for thirty days and that plaintiffs could cancel their service if they objected to the changes." Id., at 1377 n.4. Defense attorneys moved to compel arbitration and to dismiss the class action allegations.

In analyzing the defense motion, the federal court held that while it was obligated to determine the validity of the arbitration clause under state contract laws, Dale, at 1371-72, "as the FAA is 'preemptive of state laws hostile to arbitration,' the court should take into consideration the federal policy favoring arbitration," id., at 1372 (citing Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367-68 (11th Cir.2005)). The district court first rejected plaintiffs' claim that they never entered into an arbitration agreement with Comcast. Id. Comcast established that it sent the notices in the regular course of business, and that plaintiffs' paid their December 2004 bills evidencing that they received the billing statements. Based on the evidence presented, the federal court concluded "that plaintiffs' denials and/or conclusory declarations that they do not recall receiving copies of the arbitration provisions are insufficient to defeat defendant's motion to compel." Id.

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Posted On: January 17, 2007 by Michael J. Hassen Email This Post

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Davis v. Chase Bank Class Action Defense Case: California Court Holds Defense Properly Removed Class Action To Federal Court Under Class Action Fairness Act Of 2005 (CAFA) Because Securities Exception Did Not Apply

Class Action Alleging Improper Credit Card Charges does not Implicate "Securities Exception" to Federal Court Jurisdiction under CAFA (Class Action Fairness Act) so Defense Removal of Class Action was Proper California Court Holds

Plaintiff filed a putative class action against Chase Bank alleging improper finance charges in connection with retail purchases made with a "rewards" credit card arising out of a no-interest promotional offer Chase extended to cardholders. Davis v. Chase Bank U.S.A., N.A, 453 F.Supp.2d 1205, 1207 (C.D. Cal. 2006). Defense attorneys removed the action to federal court under the Class Action Fairness Act (CAFA), and the district court sua sponte issued an order to show cause why the case should not be remanded to state court. Id., at 1206. Following briefing, the district court concluded that the defense properly removed the class action.

Plaintiff made a $2000 purchase at Circuit City using his Chase "Rewards Card," taking advantage of a no-interest promotional offer whereby no finance charges would be assessed if the balance was paid in full prior to January 2008. Davis, at 1207. At the time of the purchase, plaintiff had an outstanding balance on his credit card account, and the billing statement he received following his Circuit City purchase included a finance charge which, he alleges, included interest on the $2,000 "no-interest" amount as well as his otherwise outstanding balance. Id. Plaintiff filed a class action lawsuit in California state court, and the defense removed the action asserting that it involved more than $5,000,000 and thus fell within the scope of CAFA. Id. In response to the federal court's OSC on the issue of whether the class action indeed involved more than $5 million, plaintiff's lawyer argued that even if it did the class action complaint fell within the securities exception to CAFA and therefore remand was appropriate. Id. The district court disagreed.

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Posted On: January 16, 2007 by Michael J. Hassen Email This Post

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Merck's Vioxx Defense Team Suffers Setback As New Jersey Appellate Court Holds Trial Court "Prematurely Terminated" Class Action Complaint

A state appellate court has ruled that a lower court prematurely dismissed a putative class action against Merck on behalf of people who used Vioxx for at least six (6) weeks but who have not evidenced any medical problems. While the opinion is a setback for the Vioxx defense team, the New Jersey appellate court held only that plaintiffs were entitled to additional discovery in an effort to prove whether they have a valid claim. Merck is reportedly considering whether to seek review in the New Jersey Supreme Court. Alternatively, defense attorneys may decide to let the plaintiffs conduct additional discovery and then renew the motion in the trial court, as there appears to be no medical evidence proving that people who stopped taking Vioxx more than two years ago remain at risk today.

Posted On: January 16, 2007 by Michael J. Hassen Email This Post

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Robinson v. Fountainhead Title-Class Action Defense Cases: Federal Court Holds Class Action Complaint Did Not Toll RESPA (Real Estate Settlement Procedures Act) Statute Of Limitations Against New Defendants

Maryland Court Holds that Federal Real Estate Settlement Procedures Act (RESPA) Claims were not Tolled by Filing of Class Action Complaint Where Defendants were not Named and had No Notice of RESPA Claims Until After Limitations Period Expired

In October 2003 plaintiff filed a putative class action in Maryland federal court against four entitles for violations of RESPA (Real Estate Settlement Procedures Act) and various state laws, arising out of her May 2003 purchase of a home, alleging sham business arrangements and the charging of fees in violation of RESPA. Robinson v. Fountainhead Title Group Corp., 447 F.Supp.2d 478, 481 (D. Md. 2006). In January 2006, plaintiff filed a Third Amended Complaint naming three new defendants which were served on January 20. 2006; prior to being served, none of these defendants had notice of any of the prior class action complaints. Id., at 482. Defense attorneys moved to dismiss the action; the federal court agreed with defense arguments that RESPA's one year statute of limitations period had run and granted the motion.

Plaintiff purchased a home in May 2003 and financed the purchase. Robinson, at 482. The district court explained that "RESPA claims brought under [12 U.S.C.] § 2607 must be brought within '1 year . . . from the date of the occurrence of the violation.'" Id., at 483 (quoting 12 U.S.C. § 2614). The defense argued that the limitations period began to run on the date that escrow closed on the home purchase, and that the new defendants had not been added as party-defendants until after the one-year period expired. Id. Plaintiff's lawyer, relying on American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), countered that the filing of the original complaint tolled the statute of limitations period on the RESPA claims. Id. The district court disagreed, concluding that American Pipe did not support plaintiff's theory.

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Posted On: January 15, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Dare v. Knox County: Maine Federal Court Rejects Plaintiff/Defense Motion For Approval Of Class Action Settlement Requiring Class Members Be Afforded A Second Chance To Opt Out

Changed Circumstances Surrounding Proposed Class Action Settlement Requires Class Members Receive Another Opportunity to Request Exclusion from Settlement Maine Federal Court Holds

Plaintiff filed a class action against Knox County challenging the jail's policy to strip search arrestees at the Knox County Jail; after the district court certified the lawsuit as a class action, defense and plaintiff attorneys reached a proposed settlement and requested court approval. Dare v. Knox County, 457 F.Supp.2d 52, 52-53 (D. Me. 2006). Ironically, the parties could not agree on the terms of the proposed settlement, and the terms submitted by the defense attorneys differed from the terms submitted by the plaintiff's lawyer. Once the parties agreed upon the language of the proposed settlement, the district court rejected the proposal.

The federal court found that, given the circumstances of the case, class members must be afforded an additional opportunity to opt out as provided by Rule 23(e)(3) of the Federal Rules of Civil Procedure. Dare, at 53. Rule 23(e) gives the district court discretion to give class members a "second opportunity to opt out," and the Advisory Committee's Note identifies "changes in the information available to class members since expiration of the first opportunity to request exclusion" as a basis for exercising that discretion. Id. The district court found this to be an appropriate case for a second chance based on several factors, explaining at page 53:

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Posted On: January 14, 2007 by Michael J. Hassen Email This Post

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Defense Loses Labor Law Class Action Against Chinese Daily News As Federal Jury Awards Employees $2.5 Million In Damages

Molly Selvin of the Los Angeles Times reports that a jury sitting in Los Angeles federal court awarded $2,500,000 to current and former employees of the Chinese Daily News, the largest Chinese-language newspaper in the United States, for violations of state and federal labor laws. The jury reportedly found that the newspaper failed to pay its employees overtime, or to allow meal and rest periods. Ms. Selvin notes that the class action lawsuit is "part of a wave of litigation that has produced multimillion-dollar settlements and verdicts in recent years." These class action suits typically allege that the employer has misclassified employees "giving them professional or managerial-like job titles to avoid paying overtime."

Molly Selvin's article, entitled "Newspaper Staff Wins Labor Suit," may be found in the Business Section of the January 13, 2007 edition of the Los Angeles Times.

Posted On: January 14, 2007 by Michael J. Hassen Email This Post

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Defense Loses Labor Law Class Action Against Chinese Daily News As Federal Jury Awards Employees $2.5 Million In Damages

Molly Selvin of the Los Angeles Times reports that a jury sitting in Los Angeles federal court awarded $2,500,000 to current and former employees of the Chinese Daily News, the largest Chinese-language newspaper in the United States, for violations of state and federal labor laws. The jury reportedly found that the newspaper failed to pay its employees overtime, or to allow meal and rest periods. Ms. Selvin notes that the class action lawsuit is "part of a wave of litigation that has produced multimillion-dollar settlements and verdicts in recent years." These class action suits typically allege that the employer has misclassified employees "giving them professional or managerial-like job titles to avoid paying overtime."

Molly Selvin's article, entitled "Newspaper Staff Wins Labor Suit," may be found in the Business Section of the January 13, 2007 edition of the Los Angeles Times.

Posted On: January 14, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2607—Prohibition Against Kickbacks And Unearned Fees Under 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 prohibited kickbacks and unearned fees purpose in 12 U.S.C. § 2607, which provides as follows:


§ 2607. Prohibition against kickbacks and unearned fees


(a) Business referrals


No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.


(b) Splitting charges


No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.


(c) Fees, salaries, compensation, or other payments


Nothing in this section shall be construed as prohibiting (1) the payment of a fee (A) to attorneys at law for services actually rendered or (B) by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance or (C) by a lender to its duly appointed agent for services actually performed in the making of a loan, (2) the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed, (3) payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers, (4) affiliated business arrangements so long as (A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred (i) in the case of a face-to-face referral or a referral made in writing or by electronic media, at or before the time of the referral (and compliance with this requirement in such case may be evidenced by a notation in a written, electronic, or similar system of records maintained in the regular course of business); (ii) in the case of a referral made by telephone, within 3 business days after the referral by telephone, (and in such case an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within 3 business days shall be made to the person being referred during the telephone referral); or (iii) in the case of a referral by a lender (including a referral by a lender to an affiliated lender), at the time the estimates required under section 2604(c) of this title are provided (notwithstanding clause (i) or (ii)); and any required written receipt of such disclosure (without regard to the manner of the disclosure under clause (i), (ii), or (iii)) may be obtained at the closing or settlement (except that a person making a face-to-face referral who provides the written disclosure at or before the time of the referral shall attempt to obtain any required written receipt of such disclosure at such time and if the person being referred chooses not to acknowledge the receipt of the disclosure at that time, that fact shall be noted in the written, electronic, or similar system of records maintained in the regular course of business by the person making the referral), (B) such person is not required to use any particular provider of settlement services, and (C) the only thing of value that is received from the arrangement, other than the payments permitted under this subsection, is a return on the ownership interest or franchise relationship, or (5) such other payments or classes of payments or other transfers as are specified in regulations prescribed by the Secretary, after consultation with the Attorney General, the Secretary of Veterans Affairs, the Federal Home Loan Bank Board, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Secretary of Agriculture. For purposes of the preceding sentence, the following shall not be considered a violation of clause (4)(B): (i) any arrangement that requires a buyer, borrower, or seller to pay for the services of an attorney, credit reporting agency, or real estate appraiser chosen by the lender to represent the lender's interest in a real estate transaction, or (ii) any arrangement where an attorney or law firm represents a client in a real estate transaction and issues or arranges for the issuance of a policy of title insurance in the transaction directly as agent or through a separate corporate title insurance agency that may be established by that attorney or law firm and operated as an adjunct to his or its law practice.

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Posted On: January 13, 2007 by Michael J. Hassen Email This Post

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Employment Class Action Filings Again Top List But Surge In Federal Fair And Accurate Credit Reporting Act (FACTA) Class Action Cases Run A Close Second In Weekly Class Action Filings In California State And Federal Courts

Class action defense attorneys in California will again confront more labor law class action cases than any other category, but the number of class action lawsuits alleging violations of the federal Fair and Accurate Credit Reporting Act (FACTA) have surged. 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 class action cases routinely lead the list and usually do so by a wide margin, but this past week class actions alleging violations of FACTA ran a close second. This report covers the time period from January 4 – January 11, 2007. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 59 class action lawsuits were filed in these California state and federal courts during that time period, of which 19 (32%) involved employment-related claims. New FACTA class action lawsuits came in second with 18 new filings (31%). The third place category consists of 9 new unfair competition claims (15%), most of which involved alleged price fixing/antitrust violations.

Posted On: January 13, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2606—Transactions Exempted By Congress From 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 identified those transactions that are exempt from RESPA in 12 U.S.C. § 2606, which provides as follows:


§ 2606. Exempted transactions


(a) In general


This chapter does not apply to credit transactions involving extensions of credit--


(1) primarily for business, commercial, or agricultural purposes; or


(2) to government or governmental agencies or instrumentalities.


(b) Interpretation


In prescribing regulations under section 2617(a) of this title, the Secretary shall ensure that, with respect to subsection (a) of this section, the exemption for credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes, as provided in subsection (a)(1) of this section shall be the same as the exemption for such credit transactions under 1603(1) of Title 15.

Posted On: January 12, 2007 by Michael J. Hassen Email This Post

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San Francisco Federal Court Certifies Class Action Against Costco In Lawsuit Alleging Gender Discrimination In The Promotion Of Female Employees

On January 11, 2007, federal district court judge Marilyn Hall Patel granted class action status to a lawsuit brought against Costco Wholesale on behalf of female employees. The lawsuit alleges that Costco discriminates against women in its promotion practices, and alleges that less than 16% of Costco's general managers are women. The class representatives include two women who worked for Costco more than 20 years, one becoming a warehouse receiving manager and one an assistant manager, and who claim they were passed over for promotion to general manager because of their gender. The lawsuit, Ellis v. Costco Wholesale Corp., N.D. Cal. Case No. C04-3341, was filed in 2004.

Posted On: January 12, 2007 by Michael J. Hassen Email This Post

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Konig v. U-Haul Class Action Defense Case: California Court Denies Defense Motion To Compel Arbitration Under Agreement Barring Class Action Lawsuits Holding Arbitration Clause Unconscionable

California Court Holds that Arbitration Clause Barring Class Action Lawsuits in Contract Governed by Federal Arbitration Act (FAA) is Enforceable Because Not Substantively Unconscionable


Plaintiff filed a putative class action against his former employer in California state court for unfair business practices and violations of the state labor laws alleging that U-Haul misclassifies employees, fails to pay them overtime, and fails to provide meal and rest breaks. Konig v. U-Haul Co. of California, ___ Cal.App.4th ___, 52 Cal.Rptr.3d 244, 246 (Cal.App. December 19, 2006). Defense attorneys moved to compel arbitration and to dismiss the class action allegations based on an arbitration clause governed by the Federal Arbitration Act (FAA) under which employees "waive any right to join or consolidate claims in arbitration with others or to make claims in arbitration as a representative or as a member of a class or in a private attorney general capacity," id., at 247. (The arbitration policy and its class-action waiver provision are quoted in pertinent part in the Note below.) The trial court granted the defense motions, finding that the class action waiver was not substantively unconscionable because plaintiff had not demonstrated that the litigation governed by the arbitration clause involved "predictably . . . small amounts."


The procedural posture of the case is interesting. In November 2005, the defense moved to compel arbitration and to dismiss the class action claims. Konig, at 247. At oral argument, "the trial court requested supplemental briefing on class action waivers in the employment context," id., at 248. In January 2006, the Court of Appeal issued its opinion in Gentry v. Superior Court, 135 Cal.App.4th 944 (Cal.App. 2006), affirming a trial court order that enforced an arbitration clause containing a class action waiver. In March 2006, the trial court relied on Gentry in finding U-Haul's arbitration clause enforceable, unaware that the California Supreme Court would grant review of Gentry the following month, rendering the case noncitable under California law. Id. As the Court of Appeal explained at page 248, "the trial court ruled that plaintiff did not prove that there were predictably [small] amounts of damages plus a negative impact on his ability to pursue his statutory claims such that the arbitration agreement was substantively unconscionable." In so ruling, the trial court relied on the fact that plaintiff admitted his personal damage claim exceeded $25,000, id., at 246-47. The trial court dismissed the class action claims and compelled arbitration as to the balance of the complaint.

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Posted On: January 11, 2007 by Michael J. Hassen Email This Post

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Jimenez v. Domino's Pizza-Class Action Defense Cases: California Federal Court Agrees With Defense That Putative Labor Law Class Action Fails To Satisfy Requirements Of Rule 23 And Denies Plaintiffs' Motion For Class Certification

California Federal Court Holds that Evidence Presented in Connection with Plaintiffs' Motion for Certification of Class Action Established that Individual Questions as to Whether Employees were Misclassified Predominate over Common Questions of Fact, Thus Rendering Litigation Unsuitable for Class Action Treatment


Plaintiffs filed a putative class action in California state court against their former employer, Domino's Pizza, for violations of California's labor laws and unfair competition laws alleging failure to pay overtime and to provide rest and meal periods to its general managers by misclassifying them as exempt employees. Plaintiffs assert they were not exempt because most of their work consisted of making pizzas and cleaning stores, and that only about 20% of their workday was spent "performing their actual general manager duties." Jimenez v. Domino's Pizza, Inc., 238 F.R.D. 241, 245-46 (C.D. Cal. 2006). The defense removed the action to federal court, id., at 246, and plaintiffs moved the court to certify the lawsuit as a class action. The district court first addressed the requirements of Rule 23(a). Id., at 247. The court found that each of Rule 23(a)'s prerequisites - numerosity, commonality, typicality, and adequacy of representation - had been satisfied. Id., at 247-49. However, the district court agreed with defense attorneys that plaintiffs had not established the elements required by Rule 23(b), and so denied the motion.


Plaintiffs asserted that the putative class action satisfied each prong of Rule 23(b), so the court addressed each in turn., Jimenez, at 249. With respect to Rule 23(b)(1), the district court agreed with defense attorneys that plaintiffs misperceived the statute's purpose. Rule 23(b)(1) authorizing class action treatment when separate lawsuits "create a risk of imposing incompatible standards of conduct on the defendant," id. In this case, while it is possible that different courts may reach different conclusions in separate lawsuits as to whether a particular general manager is exempt or non-exempt, the fact remained that Domino's "would not be incapable of fulfilling various judgments," so certification under Rule 23(b)(1). Id., at 250.

Continue reading "Jimenez v. Domino's Pizza-Class Action Defense Cases: California Federal Court Agrees With Defense That Putative Labor Law Class Action Fails To Satisfy Requirements Of Rule 23 And Denies Plaintiffs' Motion For Class Certification" »

Posted On: January 10, 2007 by Michael J. Hassen Email This Post

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MARK YOUR CALENDARS - CLASS ACTION DEFENSE CONFERENCE COMING TO SAN FRANCISCO

The American Conference Institute is sponsoring a two-day seminar on defending consumer fraud litigation. The conference will be held in San Francisco on May 21 and 22, 2007, and several class action topics will be on the agenda. The details are still being finalized so information on the conference is not yet available at ACI's website. We will periodically post reminders and updates on the conference, as it promises to be well worthwhile.


More information about the American Conference Institute may be found at its website: www.americanconference.com.

Posted On: January 10, 2007 by Michael J. Hassen Email This Post

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Ward v. Bank of New York Class Action Defense Case: Offer Of Judgment Rendered Moot Plaintiff's Fair Labor Standards Act (FLSA) Collective Action Claim New York Federal Court Holds

New York Federal Court Agrees with Defense that FRCP Rule 68 Offer of Judgment Required Dismissal of Plaintiff's FLSA (Fair Labor Standards Act) Claim and Court Refuses to Exercise Supplemental Jurisdiction Over State Labor Law Class Action Claims


A former hourly employee, Ward, filed a putative class action against her former employer, Bank of New York, alleging violations of the federal Fair Labor Standards Act (FLSA) (as a collective action) and New York labor laws (as a class action) for failure to pay overtime. Ward v. Bank of New York, 455 F.Supp.2d 262, 264 (S.D.N.Y. 2006). An amended complaint named a former assistant manager, Smalls, who alleged additionally that the Bank improperly classified her and others as exempt employees. Id., at 265. The defense made an offer of judgment to Ward for $1000 under FRCP Rule 68, which she rejected. Id. Defense attorneys then moved to dismiss Ward's claims because the Rule 68 offer rendered her action moot and because no other " plaintiffs had opted in to the FLSA collective action. Id. The federal court granted the defense motion Ward's FLSA claim and dismissed her state law class action claims because it refused to exercise jurisdiction over them.


Defense attorneys argued that "Ward's FLSA claims should be dismissed on the ground that [the Bank's] Rule 68 offer of judgment moots those claims, and therefore the Court lacks subject matter jurisdiction." Ward, at 265. The district court agreed. The court held that "[w]hen a defendant offers the maximum recovery available to a plaintiff, the Second Circuit has held that the case is moot and 'there is no justification for taking the time of the court and the defendant in the pursuit of miniscule individual claims which defendant has more than satisfied.'" Id., at 267 (citations omitted). The same rule applies in FLSA collective actions: unless other plaintiffs opt in to the collective action, the plaintiff "advances only her own individual claims," which the Rule 68 offer rendered moot Id. The federal court held at page 267 that this was true "even where plaintiff rejects the offer of judgment" (citations omitted). Moreover, "Rule 68 also applies in class actions, where prior to class certification defendant offers plaintiff the maximum amount that plaintiff could recover at trial." Id., at 268 (citations omitted).

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Posted On: January 9, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Masters v. Wilhelmina Model Agency: In Approving Class Action Settlement District Court Should Have Considered Whether To Award Class Members Treble Damages And Based Attorneys Fee Award On Total Funds Second Circuit Holds

Second Circuit Holds that District Court Erred in Failing to Exercise Discretion to Award Class Members Treble Damages in Sherman Act Class Action Settlement and Erred in Calculating Attorneys Fee Award on Percentage of Settlement Funds Claimed by Class Members Rather than on Total Amount of Settlement Proceeds Negotiated by Counsel


Plaintiffs filed a class action against several modeling agencies alleging violations of the federal Sherman Act and of New York state laws for conspiring to "uniformly charge models a commission of 20%" rather than 10% based on a "collusive scheme" to characterize themselves as "managers" and therefore exempt from the 10% cap imposed on "employment agencies" under New York state law. Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 2007 WL 28983, *1 (2d Cir. 2007). After extensive litigation, the district court certified the lawsuit as a class action and, eventually, the parties reached a settlement, id., at *1-*5. The district court approved the proposed settlement, but refused to exercise discretion to award class members treble damages under the Sherman Act based on its belief that under the terms of the settlement it did not have the discretion to do so, id., at *5-*6. The court also awarded attorney fees, but based the award on a percentage of the total funds claimed by class members rather than on the total amount of funds negotiated by plaintiffs' counsel, id., at *7-*8.. The Second Circuit affirmed in part and reversed in part. We discuss below only those parts of the opinion that reversed the district court.


Plaintiffs argued that it was error for the district court "to award single, rather than treble, damages" and not "to award prejudgment interest" to class members. Masters, at *9. The district court refused plaintiffs' request for these awards based on its belief "that the unambiguous terms of the Settlement Agreement made no provision for the distributions sought and that it was bound under the circumstances to approve or disapprove the Settlement negotiated by the parties." Id. In fact, in denying reconsideration, the district court explained that the "four corners" of the 30-page settlement agreement were silent on treble damages or prejudgment interest, and that it refused to award them because "it would have been wrong to do so." Id., at *11-*12. The Second Circuit disagreed, concluding that the "the District Court was not aware of its discretion, failing to recognize that it was empowered to allocate funds to the members of the class as treble damages." Id., at *11. The Circuit Court agreed that prejudgment interest could not be awarded because such an award required a finding under the Clayton Act of "bad faith . . . causing a material delay," id., at *12, but it could have awarded treble damages because of the existence of a cy pres fund and the requirement that such funds be placed to the "next best compensation use," id. The Court therefore remanded the action to the district court to consider whether to award Excess Funds to class members as treble damages. Id., at *11.

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Posted On: January 8, 2007 by Michael J. Hassen Email This Post

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Saab v. Home Depot-Class Action Defense Cases: Class Action Fairness Act (CAFA) Does Not Permit Appellate Review Of Federal Court Order Denying Motion To Remand Action Removed On Grounds Of Diversity Jurisdiction Eighth Circuit Holds

Eighth Circuit Holds that CAFA (Class Action Fairness Act) Authorizes Appellate Review of Remand Orders Only Where Removal was Based on CAFA so Circuit Court could not Review Denial of Motion to Remand Class Action Removed on Grounds of Diversity Jurisdiction


Plaintiff filed a putative class action against Home Depot in Missouri state court, and defense attorneys removed the action to federal court on the grounds of diversity jurisdiction under 28 U.S.C. § 1332(a). Plaintiff filed a motion to remand the class action to state court, but the motion was denied. Plaintiff then asked the Eighth Circuit to accept an appeal of the district court's order, arguing that CAFA (Class Action Fairness Act) authorizes appellate review of remand orders in all class action cases. Saab v. Home Depot U.S.A., Inc., 469 F.3d 758, 759 (8th Cir. 2006). Defense attorneys had not sought to remove the class action under CAFA, and "made no assertion of jurisdiction under CAFA," id., at 759 n.2. Nonetheless, plaintiff argued that CAFA should be read "expansively" so as "to give federal courts of appeal the jurisdiction to review the grant or denial of a motion to remand any class action." Id. The Eighth Circuit disagreed.

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Posted On: January 7, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2605--Servicing Of Mortgage Loans And Administration Of Escrow Accounts Under The Real Estate Settlement Procedures Act (RESPA)

For those class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide here the text of that statute. The most detailed provision of RESPA is 12 U.S.C. § 2605, which provides for the servicing of mortgage loans and the administration of escrow accounts. Section 2605 provides as follows:


§ 2605. Servicing of mortgage loans and administration of escrow accounts


(a) Disclosure to applicant relating to assignment, sale, or transfer of loan servicing


Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.


(b) Notice by transferor of loan servicing at time of transfer


(1) Notice requirement


Each servicer of any federally related mortgage loan shall notify the borrower in writing of any assignment, sale, or transfer of the servicing of the loan to any other person.


(2) Time of notice


(A) In general


Except as provided under subparagraphs (B) and (C), the notice required under paragraph (1) shall be made to the borrower not less than 15 days before the effective date of transfer of the servicing of the mortgage loan (with respect to which such notice is made).


(B) Exception for certain proceedings


The notice required under paragraph (1) shall be made to the borrower not more than 30 days after the effective date of assignment, sale, or transfer of the servicing of the mortgage loan (with respect to which such notice is made) in any case in which the assignment, sale, or transfer of the servicing of the mortgage loan is preceded by--


(i) termination of the contract for servicing the loan for cause;


(ii) commencement of proceedings for bankruptcy of the servicer; or


(iii) commencement of proceedings by the Federal Deposit Insurance Corporation or the Resolution Trust Corporation for conservatorship or receivership of the servicer (or an entity by which the servicer is owned or controlled).

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Posted On: January 6, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2604--Preparation And Distribution Of Special Information Booklets Under The Real Estate Settlement Procedures Act (RESPA)

As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of the statute. Congress provided for the preparation and distribution of special information booklets in 12 U.S.C. § 2604, which provides as follows:


§ 2604. Special information booklets


(a) Distribution by Secretary to lenders to help borrowers


The Secretary shall prepare and distribute booklets to help persons borrowing money to finance the purchase of residential real estate better to understand the nature and costs of real estate settlement services. The Secretary shall distribute such booklets to all lenders which make federally related mortgage loans.


(b) Form and detail; cost elements, standard settlement form, escrow accounts, selection of persons for settlement services; consideration of differences in settlement procedures


Each booklet shall be in such form and detail as the Secretary shall prescribe and, in addition to such other information as the Secretary may provide, shall include in clear and concise language--


(1) a description and explanation of the nature and purpose of each cost incident to a real estate settlement;


(2) an explanation and sample of the standard real estate settlement form developed and prescribed under section 2603 of this title;


(3) a description and explanation of the nature and purpose of escrow accounts when used in connection with loans secured by residential real estate;


(4) an explanation of the choices available to buyers of residential real estate in selecting persons to provide necessary services incident to a real estate settlement; and


(5) an explanation of the unfair practices and unreasonable or unnecessary charges to be avoided by the prospective buyer with respect to a real estate settlement.

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Posted On: January 5, 2007 by Michael J. Hassen Email This Post

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Employment Law Class Action Cases Regain Top Spot In Weekly Class Actions Facing California Defense Attorneys

To aid California class action defense attorneys in anticipating claims against which they may have to defend, each week we provide 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 28, 2006 - January 4, 2007. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe. Approximately 39 class action lawsuits were filed in these California state and federal courts during that time period - excluding the eleven (11) antitrust class action cases involving British Airways et al. transferred into California by the Judicial Panel on Multidistrict Litigation (MDL). Eleven (11) of the weekly class action filings (28%) alleged violations of state and/or federal labor laws. Class action cases alleging violations of California's unfair competition law (UCL) came in second with 6 new class actions (15%). The only other category of cases to break the 10% threshold consisted of alleged violations of the federal Fair and Accurate Credit Transactions Act (FACTA) - class action defense attorneys will face 5 new cases involving that area of law, which represents approximately 13% of the class actions filed during this time period.

Posted On: January 5, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Lao v. Wickes: California Federal Court Holds As Matter Of First Impression That Defense Must Establish Removal Under CAFA (Class Action Fairness Act) And Must Disprove CAFA Exceptions To Jurisdiction

As Matter of First Impression in Ninth Circuit, California District Court Holds that Defense must not only Establish Prima Facie Case for Removal Under Federal Class Action Fairness Act (CAFA) but must Establish Further that CAFA's Local Controversy and Home-State Rule Exceptions to Removal Jurisdiction do not Apply


Plaintiffs filed a putative class action against their former employer, Wickes Furniture Company, for violations of California's state labor code, and defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA). Lao v. Wickes Furniture Co., Inc., 455 F.Supp.2d 1045, 1048 (C.D. Cal. 2006). Plaintiffs filed a motion to remand the class action to state court on the ground that it fell within CAFA's "local controversy" exception or home-state rule provision to federal court jurisdiction. Id. The federal court agreed with the defense that once it established a prima facie case for removal under CAFA, the burden shifted to plaintiffs to demonstrate the applicability of the local controversy or home-state rule. Id., at 1050 et seq. The district court concluded that plaintiffs had met their burden, and remanded the class action to state court.


Plaintiffs worked as commissioned salespersons for Wickes, and filed a state law employment class action on the grounds that they allegedly "regularly performed non-sales (and, hence uncompensated) work, such as attending meetings . . ., cleaning the stores, and researching the prices charged by Wickes' competitors" Lao, at 1048. The class action complaint alleged further that Wickes improperly stripped salespersons of earned commissions, id. Defendants removed the action to federal court on the basis of CAFA jurisdiction, and plaintiffs' lawyers filed a motion to remand the action to state court. Id., at 1048-49. Preliminarily, the federal court concluded that defendant had adequately established the requisite $5 million amount in controversy. Id., at 1049-50. Defendants argued that the amount in controversy was $6,000,000, id., and while the district court was "not unsympathetic" to plaintiffs' claim that this sum was inflated, it found that "some of the blame lies with how plaintiffs drafted their complaint," id., at 1050.

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Posted On: January 4, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Eakins v. Pella: North Carolina Federal Court Holds Once Defense Establishes Prima Facie Case For Removal Under Class Action Fairness Act (CAFA) Burden Shifts To Plaintiff To Prove Exception To Removal Jurisdiction

District Court Holds as Matter of First Impression in Fourth Circuit that CAFA Shifts Burden of Proof to Establish Local Controversy Exception to Removal Jurisdiction and Denies Motion to Remand


Plaintiff filed a putative class action in North Carolina state court against Pella Corporation, a window manufacturer, for unfair business practices and products liability based on the allegation that the blazing system utilized on defendants' windows was defective, leading to water damage following rain. The defense removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA). Eakins v. Pella Corp., 455 F.Supp.2d 450, 451 (E.D. N.C. 2006). Plaintiffs filed a motion to remand the class action to state court on the ground that it fell within CAFA's "local controversy" to federal court jurisdiction. Id. The district court agreed with defense attorneys that plaintiff bore the burden of establishing the applicability of the local controversy exception, and denied the motion for remand.


The federal court found the law clear that "the party requesting removal to federal court has the burden of proving that such removal is warranted," but in cases of class actions removed to federal court under the Class Action Fairness Act of 2005, "[l]ess clear is which party bears the burden of proving an exception to CAFA requires remand." Eakins, at 452. Because this was a matter of first impression in the Fourth Circuit, the district court relied on decisions out of the Fifth, Seventh and Eleventh Circuits which "have held that once the removing party proves the prima facie case for removal, the burden shifts to the plaintiff to prove that the local controversy exception should apply." Id. (citations omitted). The district court found "no reason to depart" from those cases, and held that plaintiff had the burden of establishing that the class action should be remanded to state court by virtue of the local controversy exception. Id.

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Posted On: January 3, 2007 by Michael J. Hassen Email This Post

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Class Action Defense Cases-DiTolla v. Doral Dental: Second Circuit Holds Class Action Fairness Act (CAFA) 60-Day Deadline For Issuing Opinion Runs From Grant Of Permission To Appeal And That Removing Party Bears Burden Of Proving Jurisdiction

Court Holds as Matter of First Impression in Second Circuit that CAFA does not Modify Burden of Proof to Establish Removal Jurisdiction, and Affirms Remand of Class Action to State Court because Defense Failed to Establish Requisite Amount in Controversy


Plaintiff filed a putative class action against the third party administrator of a pool funded by Medicaid and Medicare, seeking '"an accounting of all amounts by which the Pool has been funded and reduced"; defense attorneys estimated this amount to be $40 million (though the complaint was silent as to the amount), and argued that plaintiff had placed that entire amount at issue. The defense removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA), but the district court remanded the action to state court. DiTolla v. Doral Dental IPA of New York, LLC, 469 F.3d 271, 272-73 (2d Cir. 2006). On appeal, defense attorneys argued that the $5 million "amount in controversy" test was satisfied. Id., at 273. The Second Circuit disagreed.


Preliminarily, the Second Circuit considered the statutory requirement that, absent an extension of time under 28 U.S.C. § 1453(c)(3), the appellate court issue an opinion within 60 days of the granting of an appeal from an order granting or denying remand. DiTolla, at 274. Under 28 U.S.C. § 1453(c)(4), the appeal is deemed denied if a final judgment is not issued within that 60-day window. In DiTolla, defense attorneys sought permission to appeal in May 2006, and permission was granted in July 2006. The defense team filed their brief on August 17, 2006, and a month later, on September 21, 2006, the parties stipulated to extend time for issuance of a opinion. Id. Plaintiff argued that the appeal was "filed" in May, and that the Circuit Court therefore lacked authority to grant permission to appeal because that order came 66 days after the "filing" of the appeal. Id. The Second Circuit disagreed, holding at page 274: "We reject this interpretation . . . and hold that the 'filing' of the appeal for CAFA purposes occurs on the date in which this Court issues an order granting permission to appeal." The Court observed at page 275 that its interpretation is consistent with case law out of the Fifth, Seventh, Ninth and Eleventh Circuits.

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Posted On: January 2, 2007 by Michael J. Hassen Email This Post

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Parks v. General Motors Class Action Defense Case: South Carolina Federal Court Agrees With GM Defense Team That Class Action Should Not Be Certified Because Car Dealership Failed To Meet Commonality And Predominance Requirements

Court Holds that Affirmative Defenses Preclude Finding of Commonality and Alternatively Finds that Determination of Liability and Damages would Involve Individual Issues of Fact and Law Thereby Defeating Commonality and Predominance Requirements of Rule 23


Plaintiff car dealership filed a putative class action against General Motors seeking injunctive relief and damages arising out of the allegation that GM cleaned a shipment of 2500 vehicles that arrived in the U.S. "covered in a foreign substance" resulting in damage to parts of the vehicles, and then sought to "conceal the extent of the damages from its dealers and the public by making cosmetic repairs and by disposing of the more severely damaged vehicles by auction in Florida." Parks Auto. Group, Inc. v. General Motors Corp., 237 F.R.D. 567, 569 (D. S.C. 2006). Dealers were not permitted to unilaterally refuse shipment of the repaired vehicles. Moreover, "It is uncontested that GM did not provide a uniform, total repurchasing program for these vehicles. Dealerships were told that any such repurchasing requests would be directed to the regional level on a case by case basis." Id. Defense attorneys argued that the lawsuit should not be certified as a class action because the complaint did not present common questions of law or fact as required by Rule 23(a)(2). Id., at 570. The district court agreed and denied plaintiff's motion for class certification. Id., at 573.


The federal court noted that the plaintiff bears the burden of establishing each of the required elements for certification of a class action under Rule 23. Parks, at 570. Plaintiff argued that GM had engaged in a pattern of conduct that was applicable to all class members, id.; but even though the district court recognized that there need only be a single common question of law or fact, id., the court found this argument insufficient to establish commonality. First, the court agreed that GM's affirmative defenses of accord and satisfaction peculiar to plaintiff defeats commonality, as does its affirmative defenses of release, waiver and comparative negligence as to the remaining putative class members, as the defenses "would require individualized inquiry for each class member." Id., at 570. As the district court observed, Fourth Circuit case law holds that "where individual affirmative defenses may be asserted against one plaintiff, but not the entire class, class certification is precluded." Id. As the court explained at page 570, "Although it is difficult to determine with any precision, the court finds that GM's affirmative defenses are not without merit and would require individualized inquiry in at least some cases. Accordingly, the court finds that class certification would be erroneous."

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Posted On: January 1, 2007 by Michael J. Hassen Email This Post

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Public Accommodation/ADA Class Action Lawsuits Surge To Top Spot In Weekly Class Action Filings In California State And Federal Courts As Labor Law Class Action Claims Take Christmas Break

Defense attorneys in California will face a new wave of public accommodation/ADA (Americans with Disabilities Act) class action cases, as employment law class actions – the usual frontrunner in weekly filings – fall to a distant third. 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 and usually do so by a wide margin, but this past week class actions alleging public accommodation/Americans with Disabilities Act (ADA) claims easily claimed the top spot. This report covers the time period from December 21 – December 27, 2006. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 69 class action lawsuits were filed in these California state and federal courts during that time period, of which 25 (36%) involved public accommodation/ADA class action lawsuits. The area of law with the second most class action filings during that time period involved Fair Credit Reporting Act/Fair And Accurate Credit Transactions Act cases with nine (9) new filings (13%). Employment-related class action claims fell to a distant third, with only eight (8) new lawsuits during that time period (12%).

Posted On: January 1, 2007 by Michael J. Hassen Email This Post

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12 U.S.C. § 2603--Uniform Settlement Statements Under 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 here the text of RESPA. Congress provided for the development of a uniform settlement statement in 12 U.S.C. § 2603, which provides as follows:


§ 2603. Uniform settlement statement


(a) The Secretary, in consultation with the Administrator of Veteran's Affairs, the Federal Deposit Insurance Corporation, and the Director of the Office of Thrift Supervision, shall develop and prescribe a standard form for the statement of settlement costs which shall be used (with such variations as may be necessary to reflect differences in legal and administrative requirements or practices in different areas of the country) as the standard real estate settlement form in all transactions in the United States which involve federally related mortgage loans. Such form shall conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement and shall indicate whether any title insurance premium included in such charges covers or insures the lender's interest in the property, the borrower's interest, or both. The Secretary may, by regulation, permit the deletion from the form prescribed under this section of items which are not, under local laws or customs, applicable in any locality, except that such regulation shall require that the numerical code prescribed by the Secretary be retained in forms to be used in all localities. Nothing in this section may be construed to require that that part of the standard form which relates to the borrower's transaction be furnished to the seller, or to require that that part of the standard form which relates to the seller be furnished to the borrower.

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