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

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Class Action Lawsuits Involving Labor Law Claims Again Lead Weekly California State And Federal Court Class Action Filings

As a resource to California defense attorneys and to assist them 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. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Employment law class action cases generally top the list, and this past week was no exception. This report covers the time period from March 23 – March 29, 2007, during which time approximately 51 class action lawsuits were filed in these California state and federal courts. Labor law class action filings accounted for almost 40% of these cases, with 20 new lawsuits (39%). Next came unfair competition law (UCL) claims, which include false advertising class action cases, with 8 new class actions (16%). A group of categories just barely broke the 10% threshold, including 6 new products liability class actions (12%), and 5 new antitrust and 5 new debt collection practices class actions (10%).

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

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Class Action Defense Cases—In re MERSCORP: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff's Motion Unopposed By Defense Attorneys To Centralize Class Action Litigation

Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Selects Southern District of Texas as Appropriate Transferee Court for Class Actions

Several class action lawsuits were filed against MERSCORP and Mortgage Electronic Registration Systems, Inc. challenging mortgage loan registration fees and alleging that the fees violate the federal Real Estate Settlement Procedures Act (RESPA) Racketeering Influenced Corrupt Organizations Act (RICO). In re MERSCORP Inc., et al., Real Estate Settlement Procedures Act (RESPA) Litig., 473 F.Supp.2d 1379, 1379 (Jud.Pan.Mult.Lit. 2007). Lawyers for all plaintiffs in the separate class action lawsuits filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Eastern District of Texas. Id. Defense attorneys agreed that pretrial coordination was appropriate, and agreed further that the Eastern District of Texas was the appropriate transferee court. Id. The Judicial Panel granted the motion to centralize the class actions, but noted that the Eastern District of Texas “declined the assignment due to its heavy caseload.” Id., at 1379-80. Accordingly, the Panel transferred the cases to the Southern District of Texas for pretrial proceedings. Id., at 1380.

Download PDF file of In re MERSCORP Transfer Order

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

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Vioxx Class Action Defense Cases - Merck Defense Team Wins Vioxx Case In Madison County, Illinois Giving It Ten Victories Against Five Defeats

Defense Victory will aid Merck in Defeating Motions to Certify other Lawsuits as Class Actions in the 265 Pending Class Action Lawsuits Involving Vioxx

Bruce Japsen of the Chicago Tribune reported yesterday that a jury in plaintiff-friendly Madison County has ruled in favor of Merck in a Vioxx case, handing Merck its first win in the Midwest and 10th defense verdict overall. Japsen notes that Merck “has pledged to defend the Vioxx cases one by one, and has so far had only five defeats.” But the fight is far from over: Merck still faces 265 class action lawsuits in addition to 27,000 individual lawsuits. The risks are substantial: in one of its losses, the jury reportedly awarded the plaintiff more than $20 million.

The Madison County victory is important because it supports Merck’s argument that each case is different and so must be tried on a case by case basis. In the Madison County case, for example, the jury found that Vioxx was not the cause of the heart attack that killed a 5’2” tall, 280-pound 52-year-old woman, whose obesity, high blood pressure and diabetes, along with other health problems, likely contributed to her death. The deceased had used Vioxx for 20 months.

In prior articles, we have noted that Merck removed Vioxx from the market in 2004 because of increased risk of heart attacks and strokes.

Bruce Japsen’s article, entitled “10th win for Merck on Vioxx - Madison County jury gives drug giant 1st Midwest victory,” may be found in the Business Section of the March 28, 2007 edition of the Chicago Tribune.

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

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PSLRA Class Action Defense Cases--In re Vivendi Universal: Federal Court Certifies Securities Class Action Against Vivendi

In a lengthy decision issued on March 26, 2007, the United States District Court for the Southern District of New York granted plaintiffs’ motion to certify a class action in In re Vivendi Universal, S.A. Securities Litig., Case No. No. 02 Civ. 5571 (S.D.N.Y. March 26, 2007). The securities class action was filed against the French company Vivendi and two of its former officers, Jean-Marie Messier (former CEO) and Guillaume Hannezo (former CFO) on behalf of securities purchasers. According to the class action complaint, beginning in October 2000 defendants made materially false and misleading statements that caused Vivendi securities to trade at artificially inflated prices and these statements included representations made in connection with the December 2000 three-way merger of Vivendi, Seagram Company Limited and Canal Plus, S.A. The class action alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as Sections 11, 12(a), and 15 of the Securities Act of 1933.

We do not here summarize the court’s lengthy decision. We highlight, however, the district court’s conclusions that while class action treatment was appropriate for Dutch, English and French shareholders, it was not the “superior method” of litigation for the Austrian or German shareholders and so excluded those claimants from the class.

Download PDF file of In re Vivendi Universal

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

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SLUSA Class Action Defense Cases-In re Lord Abbett: Federal Court Grants Defense Motion To Dismiss Class Action Complaint With Prejudice Holding SLUSA Preemption Of One Claim Requires Dismissal Of Entire Class Action

New Jersey Federal Court Holds as Matter of First Impression that Dismissal of One Claim for Relief under Federal Securities Litigation Uniform Standards Act (SLUSA) Requires Dismissal of Entire Complaint

Plaintiffs filed a putative securities class action against various Lord Abbett entities and numerous other defendants as “a federal class action complaint based upon the failure of defendant Lord Abbett ... to disclose excessive fees and commissions they siphoned from Lord Abbett mutual fund investors in order to improperly pay and induce brokers to steer investors into Lord Abbett mutual funds.” In re Lord Abbett Mut. Funds Fee Litig., 463 F.Supp.2d 505, 506-07 (D. N.J. 2006). The class action complaint contained 10 claims for relief under both state and federal law, all premised on the allegation that Lord Abbett “compensated brokers excessively as an incentive to steer new investors into Lord Abbett mutual funds,” id., at 507. Defense attorneys moved to dismiss the class action under Rule 12(b)(6); the district court granted the motion, ruling in part that the state law claims were preempted by the federal Securities Litigation Uniform Standards Act (SLUSA), but granted leave to amend with respect to two of the federal claims in the class action complaint. Id. Relying on Rowinski v. Salomon Smith Barney Inc., 398 F.3d 294 (3d Cir.2005), defense attorneys sought reconsideration on the ground that because the court dismissed Counts 7-10 under SLUSA, the court was required to dismiss the entire class action. Id., at 507-08. Ultimately, the district court vacated its order granting leave to amend and dismissed the class action complaint with prejudice.

The class action complaint advanced claims for relief under the Investment Company Act of 1940 (ICA) (Counts 1-4), the Investment Adviser Act of 1940 (IAA) (Count 5), the New Jersey Consumer Fraud Act (Count 6) which plaintiff later dismissed, and for unjust enrichment and alleged breaches of fiduciary duties and duties of good faith, loyalty, fair dealing, due care, and/or candor (Counts 7-10). In re Lord Abbett, at 507 and n.1. The district court dismissed Counts 1-5 for failure to state a claim, and dismissed Counts 7-10 as preempted by SLUSA. Id., at 507. However, the court also concluded that Counts 3 and 4 under ICA §§ 36(b) and 48(a) failed “because no direct cause of action exists under those statutes,” and granted plaintiffs leave to amend the class action complaint so as to replead them derivatively. Id. The defense moved the district court to dismiss the class action complaint with prejudice on the ground that preemption of one class action claim under SLUSA required dismissal of the entire class action complaint. Id., at 508.

Continue reading "SLUSA Class Action Defense Cases-In re Lord Abbett: Federal Court Grants Defense Motion To Dismiss Class Action Complaint With Prejudice Holding SLUSA Preemption Of One Claim Requires Dismissal Of Entire Class Action" »

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

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Amex Class Action Defense Case-Ross v. American Express: Federal Arbitration Act (FAA) Permits Appellate Review Where District Court Finds Signatory To Written Arbitration Agreement Equitably Estopped From Avoiding Arbitration With Nonsignatory

When District Court Finds Signatory to a Written Arbitration Agreement is Equitably Estopped from Avoiding Arbitration with a Nonsignatory, the Writing Requirement of Section 16 of the FAA (Federal Arbitration Act) is Satisfied Thereby Permitting Court of Appeals to Consider Interlocutory Appeal Second Circuit Holds

After more than twenty class action lawsuits were filed against VISA, MasterCard and their member banks alleging a conspiracy to fix fees for conversion of foreign currencies in violation of the Sherman Act, the Judicial Panel on Multidistrict Litigation consolidated the actions in the Southern District of New York for pretrial purposes (“the MDL Litigation”), see In re Currency Conversion Fee Antitrust Litig., 265 F.Supp.2d 385 (S.D.N.Y. 2003). Defense attorneys moved to compel arbitration; the district court granted the motion in part, holding (1) cardholders with cardholder agreements containing arbitration clauses were bound to arbitrate their disputes, and (2) the equitable estoppel doctrine also required those cardholders to arbitrate their disputes “against non-signatory banks”; the district court rejected a claim that the illegal conspiracy allegation rendered the arbitration clauses unenforceable, see In re Currency Conversion Fee Antitrust Litig., 361 F.Supp.2d 237 (S.D.N.Y. 2005). Thereafter, a class action was filed against American Express Company, American Express Travel Related Services Company and American Express Centurion Bank (collectively “Amex”) asserting the same claims as those raised in the MDL Litigation and alleging that Amex conspired with the defendants in the MDL Litigation “to ‘impose compulsory arbitration clauses on [their] cardholders and the cardholders of [their] co-conspirators’ in order ‘to suppress competition and deprive their cardholders of a meaningful choice concerning the arbitration of disputes.’” Ross v. American Express Co., 478 F.3d 96, 98 (2d Cir. 2007). Though not a signatory to an arbitration agreement, Amex defense attorneys moved to dismiss the class action and compel arbitration under the equitable estoppel doctrine, and to stay the class action: “[Amex] argued that the arbitration clauses contained in the cardholder agreements with the MDL Defendants bound [the class action plaintiffs] to arbitrate their dispute with [Amex].” Id. The district court agreed that the doctrine of equitable estoppel applied because the claims in the class action complaint against Amex were “inextricably intertwined” with the claims in the MDL Litigation, but it refused to compel arbitration or stay the class action against Amex pending the arbitration of the MDL Litigation; the court believed that the antitrust allegations necessitated a jury trial on the issue of enforceability of the arbitration clauses in the cardholder agreements. Id. American Express appealed, asserting appellate jurisdiction under section 16 of the Federal Arbitration Act (FAA). Plaintiffs moved to dismiss the appeal for lack of jurisdiction, and the Second Circuit denied the motion. Id., at 98-99.

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

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Class Action Defense Cases-Teachers’ Retirement v. Hunter: Fourth Circuit Affirms Dismissal of Securities Class Action Based On Heightened Pleadings Requirements Under Federal Private Securities Litigation Reform Act (PSLRA)

Securities Class Action Complaint Properly Dismissed for Failure to Meet Pleading Requirements Under Private Securities Litigation Reform Act (PSLRA) and for Failure to Adequately Allege Loss Causation Fourth Circuit Holds

Plaintiffs filed a putative securities class action against Cree, Inc., a high-technology business in Durham, North Carolina, for violations of Section 10(b) of the Securities Exchange Act of 1924 and Rule 10b-5 alleging it made misleading statements about its business transactions and that these misstatements were discovered when a former officer sued the company. Teachers' Retirement Sys. of La. v. Hunter, 477 F.3d 162, 167 (4th Cir. February 20, 2007). Defense attorneys moved to dismiss the class action under Rule 12(b)(6) on the ground that the allegations in the class action complaint failed to satisfy the heightened pleadings requirements imposed by the Private Securities Litigation Reform Act of 1995 (PSLRA), id. The district court dismissed the class action, holding that “the complaint failed to allege facts sufficient to support the plaintiffs' claims that Cree's statements were misleading” and that “plaintiffs did not sufficiently allege that the statements were made with the requisite scienter or that plaintiffs' losses were caused by the misrepresentations and omissions of which they complained.” Id. (italics in original). The Fourth Circuit affirmed, “concluding that plaintiffs are complaining only about market risks, not particularized securities fraud.” Id., at 168.

In June 2003, Cree’s co-founder Eric Hunter filed suit against Cree and various officers and directors, including his brother and co-founder F. Neal Hunter, for violations of state and federal securities laws, defamation and intentional infliction of emotional distress; the complaint additionally sought “a preliminary injunction against Cree and Neal Hunter to prevent alleged personal harassment that appeared to have attended an ongoing family fight.” Hunter, at 168. Eric had served as Cree’s CEO from 1987 to 1994, and news of his lawsuit caused Cree's stock price to drop from $22.21 to $18.10 in a single day. Id. Eric’s lawsuit was resolved only two months later, but “the allegations in his complaint quickly spawned numerous class actions by purchasers of Cree stock who alleged securities fraud during a period beginning on August 12, 1999, when Cree filed an annual report on SEC Form 10-K, and ending on June 13, 2003, the day after Eric Hunter filed his suit, purportedly revealing the truth of Cree's fraud during the previous years.” Id. Eventually the cases were consolidated in the Middle District of North Carolina, and the court named Teachers' Retirement System of Louisiana as lead plaintiff. The first amended class action complaint alleged violations of § 10(b) and Rule 10b-5 (prohibiting false or misleading statements), § 20(a) (control person liability), § 18 (personal liability for making misleading statements), and Sarbanes-Oxley Act § 304 (reimbursement of accounting restatement costs due to misconduct). Id., at 168-69. The specific allegations of the complaint are set forth at page 169.

The Fourth Circuit summarized the district court order granting defendants’ Rule 12(b)(6) motion as follows: “The court concluded first that ‘plaintiffs adequately identif[ied] the statements [of Cree] they believe[d] to be false and the reasons why they believe[d] them to be false, but fail[ed] to state with particularity facts supporting a strong inference of fraud.’ Second, the district court concluded that plaintiffs did not adequately plead that the defendants acted with the requisite scienter because the complaint neither identified misleading statements or omissions nor alleged sufficient circumstantial evidence of scienter. Finally, the court found that ‘plaintiffs ... failed to demonstrate a direct relationship between their losses and the alleged misrepresentations and have failed, therefore, to establish the required element of loss causation.’ [¶] Having dismissed the first count alleging a claim under § 10(b) and Rule 10b-5, the court also dismissed plaintiffs' claims under §§ 20(a) and 20A . . . because these claims depended upon the liability alleged in the first count. Similarly, the court dismissed plaintiffs' claim pursuant to § 18 . . . because plaintiffs failed to plead facts showing that Cree made false statements. Finally, the court dismissed plaintiffs' claim under § 304 . . . because plaintiffs did not allege that Cree was required to issue any restatement of its financial reports.” Hunter, at 169-70.

Continue reading "Class Action Defense Cases-Teachers’ Retirement v. Hunter: Fourth Circuit Affirms Dismissal of Securities Class Action Based On Heightened Pleadings Requirements Under Federal Private Securities Litigation Reform Act (PSLRA)" »

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

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Vioxx Class Action Defense Case-Sinclair v. Merck: New Jersey Appellate Court Reinstates Vioxx Class Action Against Merck For Development Of Evidence Regarding Availability Of Medical Monitoring As Relief

Whether Medical Monitoring of Persons who Ingested Vioxx is Available cannot be Determined on “Bare Pleadings” but Requires Development of Evidence, as does Impact on Viability of Class Action due to Absence of Physical Injuries Caused by Vioxx, New Jersey State Court Holds

Plaintiffs filed a putative products liability class action against Merck in New Jersey state court purporting to represent individuals “who had taken the drug Vioxx in any dose for at least six consecutive weeks at any time between May 20, 1999 and September 30, 2004” and alleging damages arising from the use of Vioxx. Sinclair v. Merck & Co., Inc., 913 A.2d 832, 833-34 (N.J.App.Div. 2007). Though plaintiffs did not claim to have suffered any physical injuries from using Vioxx, the class action complaint prayed for the formation of “a court-administered medical screening program, funded by Merck, ‘to provide for and/or reimburse medical and diagnostic tests for each member of the Class to detect [UMIs] and other latent or unrecognized injuries and, if such injuries are detected and diagnosed, to educate Plaintiffs about available treatment strategies.’” Id., at 834. Plaintiffs argued that “the cost of diagnostic testing represented an ascertainable economic loss for which they were entitled to compensation.” Id. Defense attorneys moved to dismiss the class action on the ground that a cause of action for medical monitoring cannot stand; the trial court agreed and granted the motion. Id. The Superior Court of New Jersey, Appellate Division, reversed, holding that the dismissal of the class action complaint “prematurely terminated plaintiffs' opportunity to establish the existence of a legally cognizable claim.” Id.

The sole issue on appeal concerned the viability of plaintiffs' medical monitoring claim. Sinclair, at 834. The trial court had relied upon two opinions: Mauro v. Owens-Corning Fiberglas Corp., 542 A.2d 16 (N.J.App.Div. 1988), aff'd sub. nom., Mauro v. Raymark Indus., Inc., 561 A.2d 257 (N.J. 1989) and Theer v. Philip Carey Co., 611 A.2d 148 (N.J.App.Div. 1992), rev'd, 628 A.2d 724 (N.J. 1993). It concluded that “pure” products liability cases were different from toxic tort claims, and opined that the New Jersey Supreme Court would not extend the availability of medical monitoring as a remedy to the Vioxx class action claims; accordingly, it dismissed the class action complaint in its entirety. Id.

Continue reading "Vioxx Class Action Defense Case-Sinclair v. Merck: New Jersey Appellate Court Reinstates Vioxx Class Action Against Merck For Development Of Evidence Regarding Availability Of Medical Monitoring As Relief" »

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

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24 CFR § 3500.14— Prohibition Against Kickbacks And Unearned Fees Under Regulation X (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 Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations prohibiting kickbacks and unearned fees are set forth in § 3500.14, which provides:

§ 3500.14. Prohibition against kickbacks and unearned fees

(a) Section 8 violation. Any violation of this section is a violation of section 8 of RESPA (12 U.S.C. 2607) and is subject to enforcement as such under § 3500.19.

(b) No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in § 3500.14(g)(1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.

(c) No split of charges except for actual services performed. 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 settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section. The source of the payment does not determine whether or not a service is compensable. Nor may the prohibitions of this Part be avoided by creating an arrangement wherein the purchaser of services splits the fee.

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

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Surge In Labor Law Class Action Lawsuits In Weekly California State And Federal Court Class Action Filings As Employment Class Action Cases Account For Nearly Half Of New Class Actions

To aid defense attorneys in anticipating the claims against which they may have to defend in California, 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. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Employment law class action cases generally top the list, often by a wide margin, and during the past that was particularly true. This report covers the time period from March 16 – March 22, 2007, during which time approximately 59 class action lawsuits were filed in these California state and federal courts. Labor law class action filings accounted for nearly half, with 27 new lawsuits (46%). The only other categories of cases to break the 10% threshold involved unfair competition law (UCL) claims, which include false advertising class action cases, and securities law claims, each of which had 7 new class action filings (12%).

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

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24 CFR § 3500.13—Questions Or Suggestions From Public And Copies Of Public Guidance Documents Under Regulation X (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 Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning questions or suggestions from public and copies of public guidance documents are set forth in § 3500.13, which provides:

§ 3500.13. Relation to State laws

(a) State laws that are inconsistent with RESPA or this part are preempted to the extent of the inconsistency. However, RESPA and these regulations do not annul, alter, affect, or exempt any person subject to their provisions from complying with the laws of any State with respect to settlement practices, except to the extent of the inconsistency.

(b) Upon request by any person, the Secretary is authorized to determine if inconsistencies with State law exist; in doing so, the Secretary shall consult with appropriate Federal agencies.

(1) The Secretary may not determine that a State law or regulation is inconsistent with any provision of RESPA or this part, if the Secretary determines that such law or regulation gives greater protection to the consumer.

(2) In determining whether provisions of State law or regulations concerning affiliated business arrangements are inconsistent with RESPA or this part, the Secretary may not construe those provisions that impose more stringent limitations on affiliated business arrangements as inconsistent with RESPA so long as they give more protection to consumers and/or competition.

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

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State Farm/Hurricane Katrina Class Action Defense Cases—Guice v. State Farm: Mississippi Federal Court Rejects Effort To Certify “Slab Case” Class Action Against State Farm Due To Lack Of Typicality

Class Action Certification of Slab Case Insurance Claims Against Homeowners’ Insurer Inappropriate Because Individual Proof Issues Exist in Each Case so the Claims Fail to Satisfy the Typicality Requirement for Class Actions Under Rule 23 Mississippi Federal Court Holds

Plaintiff filed a class action against her homeowners insurance carrier, State Farm, alleging that after Hurricane Katrina totally destroyed her home, State Farm had improperly denied coverage “on the grounds that the destruction of the insured property was caused solely by water in the form of storm surge flooding, a peril excluded under the terms of the policy at issue.” Guice v. State Farm Fire & Cas. Co., Civil Action No.1:06CV001 LTS-RHW (S.D. Miss. March 22, 2007) [Slip Opn., at 1]. Plaintiff moved the court to certify a class action against State Farm on behalf of homeowners whose properties fall within the category of “slab cases” – viz., homes where Hurricane Katrina left only the foundation. Id. The district court denied plaintiff’s motion, id., at 2, and plaintiff requested reconsideration of the class action certification issue, id., at 1. The district court denied plaintiff’s motion, reaffirming that the slab cases against State Farm are not appropriate for class action treatment.

The federal court began its analysis by noting that the practical effect of granting plaintiff’s motion would be “entry of judgment as a matter of law for the liability limits application to the ‘slab cases’ under the State Farm homeowners policies that applied to those properties.” Slip Opn., at 1. However, while at the time of the first class action certification motion none of the individual “slab case” lawsuits against State Farm had been tried, the federal court now had the benefit of having presided over three such cases, explaining at page 2:

Continue reading "State Farm/Hurricane Katrina Class Action Defense Cases—Guice v. State Farm: Mississippi Federal Court Rejects Effort To Certify “Slab Case” Class Action Against State Farm Due To Lack Of Typicality" »

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

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Enron Class Action Defense Case-Regents v. Credit Suisse: Certification Of Securities Class Action Seeking $40 Billion Overturned By Fifth Circuit Because Classwide Presumption Of Reliance Did Not Apply

Fifth Circuit Holds that District Court’s Erroneous Definition of “Deceptive Acts” Resulted in Mistaken Application of Presumption of Reliance in Certifying Class Action Against Banks, Necessitating Reversal of Class Certification Order

After Enron’s collapse in 2001, dozens of class action and individual lawsuits were filed against numerous defendants for violations of Section 10(b) of the Securities Exchange Act of 1924 and Rule 10b-5; more than 30 of these actions were consolidated in the district court for the Southern District of Texas and Regents of the University of California was named lead plaintiff. Regents of the Univ. of Cal. v. Credit Suisse First Boston (USA), Inc., 482 F.3d 372 (5th Cir. 2007) [Slip Opn., at 3]. “Years of discovery have ensued, and tens of millions of documents have been produced.” Id. In 2006, the district court granted plaintiff’s motion to certify the litigation as a class action, id., at 3-4. Defense attorneys sought and received permission from the Fifth Circuit to file an interlocutory appeal, id., at 2; the Circuit Court reversed.

As the Circuit Court admitted, the facts of this case are “difficult to detail” so we simply quote the Court’s broad summary: “Plaintiffs allege that defendants Credit Suisse First Boston (“Credit Suisse”), Merrill Lynch & Company, Inc. (“Merrill Lynch”), and Barclays Bank PLC (“Barclays Bank”) (collectively “the banks”) entered into partnerships and transactions that allowed Enron Corporation (“Enron”) to take liabilities off of its books temporarily and to book revenue from the transactions when it was actually incurring debt. The common feature of these transactions is that they allowed Enron to misstate its financial condition; there is no allegation that the banks were fiduciaries of the plaintiffs, that they improperly filed financial reports on Enron’s behalf, or that they engaged in wash sales or other manipulative activities directly in the market for Enron securities.” Slip Opn., at 2. In essence, the class actions alleged that the banks knew Enron executives were manipulating financial information to inflate the company’s stock price to maximize their personal compensation. Id.

In certifying the class action, the district court concluded that a “deceptive act” under Rule 10b-5(c)3 includes participation in a “transaction whose principal purpose and effect is to create a false appearance of revenues,” and that Rule 10b-5(a)’s prohibition of any “scheme . . . to defraud” creates joint and several liability for individuals who commit deceptive acts in furtherance of such a scheme. Slip Opn., at 3. At the Fifth Circuit explained, “The court’s theory of scheme liability considerably simplified finding commonality among the plaintiffs with respect to loss causation. The court stated that ‘a reasonable argument can be made that where a defendant knowingly engaged in a primary violation of the federal securities laws that was in furtherance of a larger scheme, it should be jointly and severally liable for the loss caused by the entire overarching scheme, including conduct of other scheme participants about which it knew nothing.’” Id., at 3-4. The district court also concluded that plaintiffs could rely on “classwide presumptions of reliance for omissions and fraud on the market” because it believed the banks breached a “duty not to engage in a fraudulent ‘scheme,’” and concluded that plaintiffs need not demonstrate market efficiency or reliance to invoke the fraud-on-the market presumption of reliance under Rule 10-5(a) or (c), believing this to be required only for claims under Rule 10-5(b). Id.

Continue reading "Enron Class Action Defense Case-Regents v. Credit Suisse: Certification Of Securities Class Action Seeking $40 Billion Overturned By Fifth Circuit Because Classwide Presumption Of Reliance Did Not Apply" »

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

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Microsoft Class Action Defense Case-In re Microsoft I-V Cases: California Appellate Court Affirms Cy Près Provision Of $1 Billion Class Action Settlement

California State Court Holds that Provision in Class Action Settlement for Cy Près Distribution of Unclaimed and Unredeemed Vouchers to Public Schools did not Violate State Law

In February 1999, plaintiffs filed a putative class action against Microsoft in state court alleging violations of California’s Cartwright Act and Unfair Competition Law based on “‘exclusionary and restrictive practices’ that resulted in software overcharges [for Windows and MS-DOS] passed on to the class members.” In re Microsoft I-V Cases, 135 Cal.App.4th 706, 710 (Cal.App. 2006). Because we focus here on the cy près distribution of unclaimed settlement proceeds, we note only that following a 1999 federal court trial of state and federal antitrust actions, the district court found against Microsoft, see United States v. Microsoft Corp., (D. D.C. 1999) 84 F.Supp.2d 9), and a wave of class action lawsuits against the company followed. Other California class action cases against Microsoft were coordinated with plaintiffs’ class action, and the coordinated cases became the Microsoft I-V Cases. After the court certified the coordinated litigation as a class action, the parties reached a $1.1 billion settlement and presented it to the court for approval. In re Microsoft I-V Cases, at 711. In approving the class action settlement, the trial court rejected the arguments by an objector to the cy près distribution of unclaimed settlement proceeds, and the objector appealed. The Court of Appeal affirmed.

In broad terms, the class action settlement provides for vouchers as direct compensation to members of the class, In re Microsoft I-V Cases, at 711-13. In the event that less than $1.1 billion was claimed, then the agreement provided for cy près distribution of the balance of the settlement proceeds such that Microsoft retained one-third of the unclaimed settlement funds, and two-thirds would be distributed to eligible schools. Id., at 713-14. Similarly, if consumers obtained vouchers but failed to redeem them, then Microsoft would retain one-third of the unused settlement funds, and two-thirds would be distributed to schools. Id., at 714. If schools failed to redeem the vouchers within six years, then they would be given to “other needy organizations in California” upon court approval. Id., at 715.

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

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CAFA Class Action Defense Cases-Progressive West v. Preciado: Class Action Fairness Act Of 2005 (CAFA) Does Not Permit Cross-Defendant To Remove Class Action Cross-Complaint Ninth Circuit Holds

Ninth Circuit Holds that Amendment of Class Action Cross-Complaint did not “Commence” New Action for Purposes of Removal under CAFA (Class Action Fairness Act of 2005), and that CAFA would not Avail a Plaintiff/Cross-Defendant Because CAFA Permits only a “Defendant” to Remove a Class Action to Federal Court

In December 2004, Progressive West Insurance Company filed a breach of contract lawsuit against its insured in California state court; on February 17, 2005 – the day before the effective date of the Class Action Fairness Act of 2005 (CAFA) – the insured filed a cross-complaint alleging violations of California’s Unfair Competition Law (UCL) and seeking to prosecute the cross-complaint as a class action. Progressive West Ins. Co. v. Preciado, 479 F.3d 1014 (9th Cir. March 6, 2007) [Slip Opn., 2]. The initial class action allegations were deficient, and in August 2006 the trial court granted plaintiff leave to amend the cross-complaint to assert the necessary allegations for a class action. Id. Progressive responded by removing the class action to federal court on the basis of CAFA, id.; the federal court remanded the class action to state court and the Ninth Circuit granted Progressive’s request for leave to appeal, id., at 3. The Court of Appeals affirmed the district court order, holding that CAFA did not confer federal court jurisdiction over the putative class action.

Urging the Ninth Circuit to follow the Seventh Circuit opinion in Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805 (7th Cir. 2005), Progressive argued that CAFA governed the class action complaint because under California’s “relation back” doctrine the “amended cross-complaint commenced a new action because it substantially changed the nature of the action from an individual action to a representative [class] action.” Slip Opn., at 4-5. The Ninth Circuit declined the invitation. The appellate court reaffirmed that a class action is “commenced” for purposes of removal under CAFA “when a suit becomes ‘a cognizable legal action in state court’ under ‘[a] state’s own laws and rules of procedure.’” Id., at 4 (citation omitted). California law deems an action “commenced” as of the date the complaint, or cross-complaint, is filed with the court, id. (citations omitted). Under California law, then, the class action complaint against Progressive “commenced” for purposes of CAFA on February 15, 2005 – the date the initial cross-complaint was filed. Id.

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

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CAFA Class Action Defense Cases-McAtee v. Capital One: Ninth Circuit Holds That Naming Doe Defendant Does Not Commence New Action For Purposes Of Class Action Fairness Act Of 2005 (CAFA)

Under California Law, Class Action is not “Commenced” under Class Action Fairness Act of 2005 (CAFA) by Amending Complaint to Name Doe Defendant Ninth Circuit Holds

In August 2004, plaintiff Ball filed a class action in California state court against various Capital One entities alleging that certain provisions of defendants’ credit card contracts constituted unlawful business practices. McAtee v. Capital One, F.S.B., ___ F.3d ___ (9th Cir. March 16, 2007) [Slip Opn., 2-3]. Three months later, California voters passed Proposition 64 which necessitated that a plaintiff must have suffered actual injury in order to have standing to bring a claim under California’s Unfair Competition Law (UCL), and this new requirement applied to cases pending at the time of its passage. Id., at 3. In May 2005, the trial court precluded Ball from pursuing her claims against the named Capital One defendants; an amended complaint was filed naming McAtee as the new party-plaintiff. Id. Defense attorneys removed the class action to federal court on the basis of the Class Action Fairness Act of 2005 (CAFA), which became effective February 18, 2005, arguing that the substitution of plaintiffs constituted the commencement of a “new action” within the meaning of CAFA, id., at 3-4. The federal court remanded the action, holding that the class action had been commenced in August 2004 when Ball filed the original class action complaint, id., at 4. Following remand, McAtee amended the complaint to add Capital One Bank as a party-defendant and dismissing the original Capital One entities as defendants; defense attorneys again removed the class action to federal court under CAFA, and the federal court again granted plaintiff’s motion for remand. Id. The Ninth Circuit granted defendant’s petition for appeal and affirmed the remand order.

As a matter of first impression in the Ninth Circuit, the Court of Appeals addressed “whether substitution of a named defendant for a Doe defendant in a California state court action commences a civil action against the new named defendant within the meaning of CAFA.” Slip Opn., at 4-5. The question of when an action is “commenced” for purposes of removal under CAFA turns on state law, id., at 7-8. In this regard, the Ninth Circuit rejected the approach taken by some other federal courts that relies, at least in part, on state-law relation back doctrine. Id., at 8-9. The appellate court explained that “[w]hen the ultimate question before the court is whether to dismiss an action for lack of timeliness, it makes sense to apply the relationship back doctrine, for in such cases the very survival of the action is at issue.” Id., at 9. But the consequences are far less severe when the issue is commencement for purposes of jurisdiction only: “The case will be allowed to go forward, in some forum, whether CAFA applies or not. If CAFA applies, the action may go forward in federal court if a defendant files a timely motion for removal. If CAFA does not apply, the action must go forward in state court unless there is some other basis for removal to federal court.” Id., at 10. For this reason, the relation back doctrine simply does not apply to a determination of whether a class action filed in state court may be removed under CAFA: the Ninth Circuit “simply look[s] to the date on which the original complaint in the action was filed.” Id., at 11.

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

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24 CFR § 3500.12—Regulations Restricting Fees Charged By Lenders In Connection With Federally-Related Mortgage Loans Under Regulation X (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 Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations restricting fees charged by lenders in connection with federally-related mortgage loans are set forth in § 3500.12, which provides:

§ 3500.12. No fee

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 manufactured home), or by a servicer (as that term is defined under 12 U.S.C. 2605(i)(2)) for or on account of the preparation and distribution of the HUD-1 or HUD-1A settlement statement, escrow account statements required pursuant to section 10 of RESPA (12 U.S.C. 2609), or statements required by the Truth in Lending Act, 15 U.S.C. 1601 et seq.

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

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Employment Law Class Action Lawsuits Regain Top Spot In Weekly California State And Federal Court Class Action Filings

In order to assist California 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. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Typically, labor law class action cases lead the list of new filings by a wide margin, and this past week is no exception. This report covers the time period from March 9 – March 15, 2007. Approximately 45 class action lawsuits were filed in these California state and federal courts during that time period, 17 of which involve labor law claims (38%). Unfair competition law (UCL) claims, which include false advertising class action cases, came in second with 8 new filings (18%). The only other category of cases to break the 10% threshold involved antitrust class action lawsuits with 7 new filings (16%).

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

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24 CFR § 3500.11—Mailing Of Documents Under Regulation X (Real Estate Settlement Procedures Act-RESPA)

For class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning the mailing of documents are set forth in § 3500.11, which provides:


§ 3500.11. Mailing


The provisions of this part requiring or permitting mailing of documents shall be deemed to be satisfied by placing the document in the mail (whether or not received by the addressee) addressed to the addresses stated in the loan application or in other information submitted to or obtained by the lender at the time of loan application or submitted or obtained by the lender or settlement agent, except that a revised address shall be used where the lender or settlement agent has been expressly informed in writing of a change in address.

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

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Class Action Defense Cases—In re CitiFinancial: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff's Motion Supported By Defense To Centralize Class Action Litigation In Northern District of Illinois

Judicial Panel Agrees with Plaintiffs and Defense that Class Action Cases Warranted Pretrial Coordination Pursuant to 28 U.S.C. § 1407, Rejecting Arguments of Sole Plaintiff's Lawyer in Opposition to Request

Five class action lawsuits (Connecticut, Illinois, Massachusetts, Missouri and Wisconsin) were filed against CitiFinancial Services and others alleging that certain prescreened mailings from Citifinancial violated the federal Fair Credit Reporting Act (FCRA) because defendants improperly used consumer reports for purposes of mailing prescreened offers of credit for loans to plaintiffs and potential class members. In re CitiFinancial Servs. Inc. Prescreened Offer Litig., ___ F.Supp.2d ___, 2007 WL 549358, *1 (Jud.Pan.Mult.Lit. February 15, 2007). Plaintiffs’ lawyers in the Connecticut and Illinois class actions moved the Judicial Panel filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the five class action lawsuits pursuant to 28 U.S.C. § 1407 in the Northern District of Illinois. Defense attorneys for the common defendant (CitiFinancial) and plaintiff’s lawyer in the Massachusetts class action supported the motion; the Wisconsin plaintiff opposed centralization. Id. The Judicial Panel granted the motion to centralize the class actions and agreed that the Northern District of Illinois was the appropriate transferee court. Id., at *2.

The Judicial Panel rejected the objection that the classes and issues of fact in the five class actions did not overlap, explaining at page *1:

Regardless of any differences among the actions, they raise common factual questions regarding Citifinancial's prescreening practices. Transfer under Section 1407 has the salutary effect of placing all actions in this docket before a single judge who can formulate a pretrial program that: 1) allows discovery with respect to any non-common issues to proceed concurrently with discovery on common issues, In re Joseph F. Smith Patent Litigation, 407 F.Supp. 1403, 1404 (J.P.M.L. 1976); and 2) ensures that pretrial proceedings will be conducted in a streamlined manner leading to the just and expeditious resolution of all actions to the overall benefit of the parties and the judiciary.
Download PDF file of In re CitiFinancial Transfer Order

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

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Class Action Defense Cases-In re Lycoming Crankshaft: Judicial Panel On Multidistrict Litigation (MDL) Denies Defense Request To Centralize Class Action Litigation In The Eastern District of Pennsylvania

Class Action Lawsuits did not Warrant Pretrial Coordination Pursuant to 28 U.S.C. § 1407 Judicial Panel on Multidistrict Litigation (MDL) Holds

Three class action lawsuits were filed in California and Pennsylvania against various defendants involving crankshaft products liability. Defense attorneys for some of the defendants moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 to centralize the lawsuits for pretrial purposes in the Eastern District of Pennsylvania; plaintiffs in all class actions opposed pretrial coordination. In re Lycoming Crankshaft Prods. Liab. Litig., 473 F.Supp.2d 1380, 1380-81 (Jud. Pan.Mult.Lit. 2007). The Panel denied the defense motion, concluding that centralization of the class action cases was not warranted. The Panel explained, "This docket contains only three actions (two of which have been consolidated before the same judge) pending in two districts, and no overlap exists between the putative classes in the Pennsylvania actions and the California action. The proponents of centralization have failed to persuade us that any common questions of fact and law are sufficiently complex and/or numerous to justify Section 1407 transfer in this docket at this time. Alternatives to transfer exist that can minimize whatever possibilities there might be of duplicative discovery and/or inconsistent pretrial rulings." Id., at 1381 (citations omitted).

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

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CertainTeed Class Action Defense Case—In re CertainTeed: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff's Motion To Centralize Class Action Litigation But Selects Northern District of Illinois As Transferee Court

Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 in the Easter District of Pennsylvania

Eight class action lawsuits were filed against CertainTeed Corp. and other defendants advancing negligence and products liability based on alleged defects in roofing shingles manufactured, warranted, and distributed by CertainTeed. In re CertainTeed Corp. Roofing Shingle Prods. Liab. Litig., ___ F.Supp.2d ___, 2007 WL 549356, *1 (Jud.Pan.Mult.Lit. February 15, 2007). Plaintiff's lawyer in one of the Pennsylvania class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Eastern District of Pennsylvania; defense attorneys for the common defendant (CertainTeed) supported the motion. Id. The Judicial Panel reasoned that “Centralization under Section 1407 is necessary in order to eliminate duplicative discovery; prevent inconsistent pretrial rulings, particularly with respect to issues of class certification; and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also found that the Eastern District of Pennsylvania “stands out as an appropriate transferee forum” in light of the “agreement of all moving and responding parties to transfer,” id. Additionally, CertainTeed is headquartered in that district, as is its business unit responsible for the roofing shingles in question. Id.

Download PDF file of In re CertainTeed Transfer Order

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

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Milberg Weiss Class Action Defense Case-In re New Motor Vehicles: Federal Court Removes Milberg Weiss As Lead Counsel In Multimillion Dollar Antitrust Class Action Litigation

Indictment of Milberg Weiss Warranted Removal of Firm as Vice-Chair of Plaintiffs’ Executive Committee in Antitrust Class Action Maine Federal Court Holds

Several state and federal antitrust class action lawsuits were filed against most of the major automobile manufacturers and distributors. In June 2003, the class actions were transferred to federal district court for the District of Maine by the Judicial Panel on Multidistrict Litigation. To assist in managing the complex class action litigation, in November 2003 the district court approved a Plaintiffs’ Executive Committee consisting of nine law firms, and appointed Milberg Weiss Bershad & Schulman as vice-chair. In re New Motor Vehicles Canadian Export Antitrust Litig., 466 F.Supp.2d 364, 366 (D. Me. 2006). Extensive law and motion practice followed, leading to the court certifying a class action as to one of the claims and to two proposed settlements (one for $35 million and one for $700,000), id., at 365-66. In May 2006, a Los Angeles federal grand jury indicted Milberg Weiss and two of its named partners (David Bershad and Steven Schulman) charging that the class action law firm “has engaged in a kickback scheme, illegally paying millions of dollars to certain individuals to represent them as named plaintiffs and thereby achieve the role of lead counsel in class action lawsuits” and seeking criminal forfeiture of hundreds of millions of dollars, id., at 365. Due to the fiduciary duties owed to class members, the district court sua sponte raised the issue of whether Milberg Weiss should continue to serve in a “leadership role,” id., at 365-66. Defense attorneys thereafter moved to disqualify Milberg Weiss from serving on the Executive Committee and from further participation in the class action litigation; the district court removed Milberg Weiss from the Executive Committee “even though the Indictment does not refer to activity in this civil litigation and neither of the two partners actively participating in this litigation has been accused of any misconduct,” but did not grant the request to exclude the firm entirely id., at 366.

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

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Class Action Defense Cases-Sperry v. Crompton: New York Law Precludes Class Action Lawsuits That Seek To Collect Penalties Unless Expressly Allowed By Statute

CPLR 901(b) Precludes Antitrust Class Action Lawsuits Because Treble Damages Award Under the Donnelly Act is a Penalty New York Court of Appeals Holds

Plaintiff filed a putative class action against various defendants seeking damages under New York’s antitrust statute (the Donnelly Act) and deceptive practices statute, and an unjust enrichment theory, alleging that defendants overcharged tire manufacturers for chemicals used in the processing of rubber for tires. Based on the Donnelly Act, the class action complaint prayed for treble damages, costs and attorney fees. Sperry v. Crompton Corp., ___ N.E.2d ___, 2007 WL 527726 (N.Y. February 22, 2007) [Slip Opn., at 2-3.]. Defense attorneys moved to dismiss the class action. The trial court granted the motion, holding that “CPLR 901(b), which precludes a class action to collect a penalty unless specifically authorized by statute, barred the Donnelly Act claim.” Id., at 3. The lower court dismissed the remaining counts on grounds not relevant here. The New York Court of Appeals affirmed.

Plaintiff argued that a treble damages award under the Donnelly Act did not constitute a penalty within the meaning of CPLR 901(b), citing both New York law and federal case law that treble damages in antitrust actions “are primarily remedial in nature.” Sperry, at 3-4. The Court of Appeals disagreed. The High Court found it “evident” that the Legislature intended the penalty exception in CPLR 901(b) to preclude class action relief “where individual plaintiffs were afforded sufficient economic encouragement to institute actions (through statutory provisions awarding something beyond or unrelated to actual damages), unless a statute expressly authorized the option of class action status.” Id., at 9. The Court explained at page 9, “This means sense, given that class actions are designed in large part to incentivize plaintiffs to sue when the economic benefit would otherwise be too small, particularly when taking into account the court costs and attorneys’ fees typically incurred.”

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

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Class Action Defense Cases-Hall v. County of Los Angeles: Defense Properly Granted Summary Judgment In Sex Discrimination Labor Law Class Action Against County California Court Holds

California Appellate Court Affirms Summary Judgment in Favor of Defense Because no Evidence Supported Class Action Allegations that County Program Discriminated Against Women or Affected Women Disproportionately to Men

Plaintiff filed a putative class action against the County of Los Angeles alleging that it violated the federal Equal Pay Act because it paid female lawyers employed under the County’s “Auxiliary Legal Services” program (ALS) less than it paid male lawyers serving as County Counsel. Hall v. County of Los Angeles, ___ Cal.App..4th ___, 2007 WL 529963, *1 (Cal.App. February 22, 2007). Defense attorneys moved for summary judgment; the trial court granted the defense motion and the California Court of Appeal affirmed. The appellate court held that “the wage disparity between ALS and County Counsel was based on an acceptable business reason, which is a recognized ‘factor other than sex.’” Id., at *4 (citation omitted).

In 1984, in order to address a dramatic increase in juvenile court cases, the County formed ALS to supplement the legal services provided by County Counsel. The ALS attorneys were independent contractors, and by the express terms of their contracts they were employees of ALS, not the County. Hall, at *1. ALS was intended to allow the County to realize cost savings by hiring additional attorneys on “as needed” basis “without increasing the number of permanent classified County employees.” Id. “Similarly situated male and female lawyers at ALS were treated the same in terms of salary and benefits, and similarly situated male and female lawyers at County Counsel were treated the same in terms of salary and benefits.” Id., at *2. The class action complaint alleged, however, that there were more female lawyers at ALS than at County Counsel, and that female lawyers at ALS were not paid comparably with male lawyers at County Counsel. Id.

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

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TILA Class Action Defense Cases-McKenna v. First Horizon: First Circuit Holds As Matter Of First Impression That Rescission Relief Under Federal Truth In Lending Act (TILA) Not Appropriate For Class Action Treatment

As Matter of First Impression, Class Action Treatment for Rescission Claims Under TILA (Truth in Lending Act) is not Proper First Circuit Holds

Plaintiffs filed a putative class action in Massachusetts federal court against First Horizon Home Loan alleging that it violated the federal Truth in Lending Act (TILA) and its state law equivalent, the Massachusetts Consumer Credit Cost Disclosure Act (MCCCDA) by failing to accurately disclose to borrowers their statutory rescission rights. McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 420 (1st Cir. 2007). Plaintiffs moved for class certification; defense attorneys objected that class action treatment was inappropriate. Id. The district court certified a class that included borrowers who had refinanced or paid off their loan with First Horizon, id., at 420-21. The First Circuit granted a defense request for interlocutory review of “an appeal that requires us to explore, for the first time, the crossroads at which class-action rules intersect with the rescission provisions of [TILA] and [MCCCDA].” Id., at 420. The Circuit Court concluded that “the district court lacked the authority to certify a class of residential borrowers who might potentially be eligible for rescissionary relief.” Id.

The First Circuit began by summarizing TILA’s and the MCCCDA’s statutory scheme, McKenna, at 421-22, and noted that while the class action complaint sought rescissionary relief under the MCCCDA, the parties agreed that “TILA supplies the applicable rules of decision,” id., at 422. The Circuit Court then addressed the “flagship claim” of defense attorneys that “as a matter of law, class actions for rescission are unavailable under the TILA,” id. The Court noted that central issue before it – “whether TILA claims focused on rescission are maintainable in a class-action format” – is a matter of first impression in the First Circuit. Id., at 423. The Fifth Circuit, however, has held that “rescission class actions are not maintainable under the TILA.” Id. (citing James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727, 731 (5th Cir. 1980)). The theory behind this line of cases is that “rescission claims, unlike damages claims, are not subject to any aggregate statutory cap and, therefore, rescission class actions, if permitted, could easily render a creditor insolvent.” Id. (citation omitted). The First Circuit recognized that some district courts have certified TILA class actions seeking rescission, but followed James based on its conclusion that “Congress did not intend rescission suits to receive class-action treatment.” Id. The Circuit Court’s statutory intent analysis is well worth reading. See id., at 423-27.

Download PDF file of McKenna v. First Horizon Home Loan

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

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Antitrust Class Action Lawsuits Wrest Top Spot From Labor Law Class Action Cases In Weekly California State And Federal Court Class Action Filings

To assist California 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. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Generally, more employment law class action cases are filed than any other category of cases, often leading other class action filings by a wide margin. This week, however, antitrust class action cases seized the top spot, while new labor law class actions fell to second.

This report covers the time period from March 1 – March 8, 2007. Approximately 58 class action lawsuits were filed in these California state and federal courts during that time period, of which 17 (29%) involved federal antitrust claims. There were 14 new employment law class action filings (24%). Claims under the federal Fair Credit Reporting Act (FCRA) came in third with 9 new filings (16%), almost all of which involved claims under the Fair and Accurate Credit Transactions Act (FACTA). The only other category of cases to break the 10% threshold involved unfair competition claims, which include claims for false advertising, with 8 new filings (14%).

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

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24 CFR § 3500.10— One-Day Advance Inspection Of HUD-1 Or HUD-1A Settlement Statement; Delivery; Recordkeeping Under Regulation X (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 Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning advance inspection of HUD-1 or HUD-1A settlement statements are set forth in § 3500.10, which provides:


§ 3500.10. One-day advance inspection of HUD-1 or HUD-1A settlement statement; delivery; recordkeeping


(a) Inspection one day prior to settlement upon request by the borrower. The settlement agent shall permit the borrower to inspect the HUD-1 or HUD-1A settlement statement, completed to set forth those items that are known to the settlement agent at the time of inspection, during the business day immediately preceding settlement. Items related only to the seller's transaction may be omitted from the HUD-1.


(b) Delivery. The settlement agent shall provide a completed HUD-1 or HUD-1A to the borrower, the seller (if there is one), the lender (if the lender is not the settlement agent), and/or their agents. When the borrower's and seller's copies of the HUD-1 or HUD-1A differ as permitted by the instructions in Appendix A to this part, both copies shall be provided to the lender (if the lender is not the settlement agent). The settlement agent shall deliver the completed HUD-1 or HUD-1A at or before the settlement, except as provided in paragraphs (c) and (d) of this section.

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

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Defense Attorneys Successfully Stave Off Labor Law Class Action Against Wal-Mart Alleging Failure To Provide Employees Breaks And Pay Overtime In Illinois State Court Case

Trial Court Denies Class Action Certification Motion In Illinois State Court Employment Law Class Action Case Holding that Plaintiffs’ Attorneys Failed to Provide a “Reasonable and Accurate Method of Calculating Damages on a Classwide Basis”

Only a month after the Ninth Circuit upheld certification of a sex discrimination class action against Wal-Mart involving upwards of 2 million class members, see Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. 2007), an Illinois state court has sided with Wal-Mart’s defense attorneys and refused to grant class action status in a labor law cases alleging failure to pay overtime and failing to provide employee breaks. The Chicago Tribune reports that Rock Island County Judge Mark VandeWiele issued a 34-page opinion last Friday, March 9, 2007, denying plaintiff’s motion for class certification. The article quotes the opinion as holding that the plaintiffs “filed to demonstrate the existence of a reasonable and accurate method of calculating damages on a classwide basis.” The ruling is significant for Wal-Mart, particularly in light of substantial adverse jury verdicts in similar cases. In October 2006, a Pennsylvania jury awarded almost $80 million in damages in a rest breaks/overtime class action against Wal-Mart, and in 2005, a California jury awarded more than $170 million in a meal breaks class action against the company.

The news article, entitled “Judge denies Illinois Wal-Mart workers’ class action,” may be found in the Business Section of the March 10, 2007 edition of the Chicago Tribune.

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

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24 CFR § 3500.9—Reproduction of Settlement Statements Under Regulation X (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 Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning the reproduction of settlement statements are set forth in § 3500.9, which provides:


§ 3500.9. Reproduction of settlement statements


(a) Permissible changes--HUD-1. The following changes and insertions are permitted when the HUD-1 settlement statement is reproduced:


(1) The person reproducing the HUD-1 may insert its business name and logotype in Section A and may rearrange, but not delete, the other information that appears in Section A.


(2) The name, address, and other information regarding the lender and settlement agent may be printed in Sections F and H, respectively.


(3) Reproduction of the HUD-1 must conform to the terminology, sequence, and numbering of line items as presented in lines 100-1400. However, blank lines or items listed in lines 100-1400 that are not used locally or in connection with mortgages by the lender may be deleted, except for the following: Lines 100, 120, 200, 220, 300, 301, 302, 303, 400, 420, 500, 520, 600, 601, 602, 603, 700, 800, 900, 1000, 1100, 1200, 1300, and 1400. The form may be shortened correspondingly. The number of a deleted item shall not be used for a substitute or new item, but the number of a blank space on the HUD-1 may be used for a substitute or new item.


(4) Charges not listed on the HUD-1, but that are customary locally or pursuant to the lender's practice, may be inserted in blank spaces. Where existing blank spaces on the HUD-1 are insufficient, additional lines and spaces may be added and numbered in sequence with spaces on the HUD-1.

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

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Class Action Defense Cases-In re New Century Mortgage: Judicial Panel On Multidistrict Litigation (MDL) Denies Defense Request To Centralize Class Action Litigation In The Central District of California

Class Action Lawsuits did not Warrant Pretrial Coordination Pursuant to 28 U.S.C. § 1407 Judicial Panel on Multidistrict Litigation (MDL) Holds

Three class action lawsuits were filed in Indiana and California against New Century Financial, New Century Mortgage and Home123; Indiana plaintiffs' lawyer moved the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Northern District of Indiana, but then moved to withdraw the request "asserting that they have reached an agreement with plaintiff in [one of] the Central District of California [cases] . . . that negates their need for transfer." In re New Century Mortgage Corp. Prescreening Litig., 473 F.Supp.2d 1383, 1383 (Jud. Pan.Mult.Lit. 2007). Defense attorneys opposed withdrawal of the motion and requested that the cases transferred to Indiana; plaintiffs in both Central District of California cases opposed centralization. Id. The Panel denied the motion, concluding that centralization was not warranted. The Panel explained, "In this docket containing just three actions pending in two districts, which were originally filed over a year ago, the proponents of centralization have failed to persuade us that any common questions of fact and law are sufficiently complex and/or numerous to justify Section 1407 transfer in this docket at this time. Alternatives to transfer exist that can minimize whatever possibilities there might be of duplicative discovery and/or inconsistent pretrial rulings." Id., at 1384 (citations omitted).

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

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Bluetooth Class Action Defense Case—In re Bluetooth Headset: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion Joined In By Defense Attorneys To Centralize Class Action Litigation In The Central District Of California

Judicial Panel Agrees Pretrial Coordination Pursuant to 28 U.S.C. § 1407 is Warranted for Class Actions Involving Bluetooth Headsets and Grants Request, Supported by Defense and Plaintiffs in Other Class Actions, to Centralize Litigation in Central District of California

Numerous class action lawsuits – seeking both statewide and nationwide class certification – were filed in several states against Motorola, Plantronics, GN Jabra North America and GN Netcom, “seek[ing] relief under various theories of liability, such as unjust enrichment, breach of express and/or implied warranties, and strict products liability” based on the central allegation that use of Bluetooth headsets may cause hearing loss. In re Bluetooth Headset Prods. Liab. Litig., ___ F.Supp.2d ___, 2007 WL 603063, *1 (Jud. Pan.Mult.Lit. February 20, 2007). Plaintiffs in a California class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Central District of California, where four of the class action cases already were pending and where Plantronics is headquartered; defense attorneys and plaintiffs’ lawyers supported the request. Id. The Judicial Panel agreed that pretrial coordination under 28 U.S.C. § 1407, and further agreed to the transferee location recommended by the moving plaintiffs.

Download PDF file of In re Bluetooth Headset Transfer Order

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

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Carnival Class Action Defense Case-Borcea v. Carnival: Florida Federal Court Approves Settlement Of Employment Law Class Action

Terms of Proposed Class Action Settlement of Employee Claims Against Carnival Found to be Fair, Adequate and Reasonable by Florida Court

Putative class actions were filed against Carnival by former employees on behalf of several thousand workers alleging that Carnival manipulated employee time records and deprived employees of wages due; the class actions sought unpaid wages, attorney fees and costs, penalty wages, and injunctive relief. Borcea v. Carnival Corp., 238 F.R.D. 664, 667-68 (S.D. Fla. 2006). After extensive motion practice, and while one of the class actions was on appeal following a district court order dismissing the class action with prejudice, the parties agreed upon terms for a settlement and presented the proposal to the district court for approval. Id., at 668. The district court approved the proposed settlement, finding the terms to be fair, adequate and reasonable. The terms of the class action settlement are extensive and detailed. We summarize here only the district court's legal conclusions in approving the resolution of the class actions; the reader is encouraged to review the opinion itself for details of the settlement. See id., at 668-72.

In considering the motion, the district court observed that while any proposed class action settlement requires court approval, see FRCP Rule 23(e), there is "a strong judicial policy in favor of settlement" and in the Eleventh Circuit a settlement "should be approved as long as it is 'fair, adequate and reasonable and it is not the product of collusion between the parties.'" Borcea, at 672 (quoting Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir. 1984)). The district court summarized the factors it considers in determining whether the proposed class action settlement is fair, adequate and reasonable as follows: "(1) the likelihood of success at trial; (2) the range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount of opposition to the settlement; and (6) the stage of proceedings at which the settlement was achieved. Id., at 672-73 (citation omitted).

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

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FDCPA Class Action Defense Cases-Rivera v. Amalgamated Debt Collection Services: Florida Federal Court Holds Debt Collector Violated § 1692g Of Fair Debt Collection Practices Act But Issues Of Fact Exist As To § 1692e Claims

Debtor need not Pay Debt to have Standing to Prosecute Federal Fair Debt Collection Practices Class Action and Debtor Entitled to Summary Judgment on § 1692g Claim because Collection Letter did not Track Statute but Triable Issues of Fact Existed as to Alleged Violations of § 1692e(5) and (10) as the Language in Collection Letters was Subject to Reasonable and Different Interpretations Florida Court Holds

Plaintiff filed a putative class action against a debt collector, Amalgamated Debt Collection Services, for violations of the federal Fair Debt Collection Practices Act (FDCPA) and various state laws arising out of its efforts to collect $39.32. Rivera v. Amalgamated Debt Collection Services, Inc., 462 F.Supp.2d 1223, 1225-26 (S.D. Fla. 2006). Plaintiff moved for partial summary judgment as to defendant's liability for violating the FDCPA, id., at 1225; defense attorneys argued that triable issues of fact exist, and that plaintiff lacked standing, id., at 1227. The district court granted the motion in part, but agreed with defense attorneys that triable issues of fact existed as to interpretation of certain language in debt collection letters.

The facts are straight-forward: In an effort to collect a debt, Amalgamated sent plaintiff two letters, each of which stated in pertinent part, "unless this matter can be resolved within 30 days of the above date, it will be necessary to consider the institution of legal procedures against you" and that she had 30 days from the date of the letters to dispute the validity of the debt, Rivera, at 1225-26; it was undisputed, however, that Amalgamated had never commenced legal proceedings in an effort to collect a debt, id., at 1226. Amalgamated also sent plaintiff a letter stating "that her failure to remit payment within 15 days would result in the 'nationwide reporting' of her debt as a 'bad debt.'" Id. Plaintiff moved for partial summary judgment.

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

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Class Action Defense Cases-Bishop's v. Protective Life: Georgia Federal Court Denies Defense Motion To Dismiss Class Action Based On Defense Tender Of Damage Check To Class Representative

Post-Class Action Complaint Tender of Amount Sought by Class Action Plaintiff does not Render Claim Moot or Deprive Federal Court of Subject Matter Jurisdiction Georgia Court Holds

Plaintiff filed a putative class action against his credit insurance coverage carrier, Protective Life, alleging that it refused to refund unearned premiums for early termination of insurance coverage. Bishop's Prop. & Investments, LLC v. Protective Life Ins. Co., 463 F.Supp.2d 1375, 1376 (M.D. Ga. 2006). The credit insurance in question involved vehicle loans: in return for a single premium, Protective Life promised to make the loan payments in the event of the insured's death or disability. In plaintiff's case, he purchased a vehicle with a 72-month loan term, but he paid off the loan in only 11 months. Id. Because the loan had been paid in full, the insurance policy terminated. The class action alleged that insureds who paid off their loans early were entitled to refunds of the "unearned premiums." Id., at 1376-77. After the filing of the class action complaint, defendant tendered a refund to plaintiff, which he refused to accept. Id., at 1376. Defense attorneys then moved for summary judgment arguing that, despite his refusal to accept the check, the tender mooted plaintiff's claim thereby depriving the court of subject matter jurisdiction over the class action. Id. Under the defense theory, Protective Life "issued a check for the total amount of unearned premiums owed to Plaintiff under its credit insurance policy," and that tender divested the federal court of jurisdiction because "Plaintiff's personal claims became moot the moment [Protective Life] 'refunded in full the unearned premiums that [Plaintiff] claims are due.'" Id., at 1377. The district court denied the motion.

The district court phrased the issue at page 1377 as follows: "Under what circumstances does a legal controversy for Article III purposes continue to exist in a class action after the named plaintiff's individual claims become moot?" The court recognized that generally the claims of the class representative must be "live" not only at the time the class action is filed but at the time of class certification as well; if it is not, then "the court lacks a justiciable controversy" and the class action must be dismissed. Id. (citation omitted). The district court provided a concise explanation behind the purpose of the rule at pages 1377 and 1378:

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

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American Express Class Action Defense Case—Berry v. American Express: As Matter Of First Impression California Court Holds Issuance Of Credit Card Falls Outside Scope Of Consumer Legal Remedies Act (CLRA)

Act of Extending Credit “Separate and Apart from any Sale or Lease of Goods or Services” Falls Outside the Scope of California’s Consumer Legal Remedies Act (CLRA) California Court Holds

Plaintiff filed a putative class action against various American Express entities seeking injunctive relief under California’s Consumer Legal Remedies Act (CLRA) in connection with arbitration clause contained in his American Express cardholder agreement. Berry v. American Express Publishing, Inc., 147 Cal.App.4th 224, 54 Cal.Rptr.3d 91, 92 (Cal.App. 2007). Defense attorneys demurred to the complaint, arguing that issuing a credit card does not fall within the scope of the CLRA. The trial court agreed with the defense arguments and sustained the demurrer to the class action complaint without leave to amend. The appellate court affirmed, concluding that “the extension of credit, such as issuing a credit card, separate and apart from the sale or lease of any specific goods or services, does not fall within the scope of the act.” Id.

After plaintiff began receiving an Amex publication called “Travel + Leisure” and noticed a $43 charge on his credit card statement for the magazine, he telephoned American Express Centurion Bank and American Express Publishing, the subscription was canceled, and the charge was reversed. Berry, at 93. Plaintiff then filed a putative class action against various American Express entities alleging that defendants charged customers for magazines that they never ordered. Id. Ultimately, the class action complaint was amended to contain but a single cause of action for declaratory relief “which alleged the arbitration clause and class action waiver in the cardholder agreement violated CLRA.” Id. Thus, the complaint sought solely to prohibit enforcement of the arbitration clause in the cardholder agreement. Defense attorneys demurred and the trial court sustained the demurrer without leave to amend, dismissing the class action complaint with prejudice. Id.

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

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24 CFR § 3500.8—Use Of HUD-1 Or HUD-1A Settlement Statements Under Regulation X (Real Estate Settlement Procedures Act-RESPA)

For class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations provide for the use of HUD-1 or HUD-1A settlement statements in § 3500.8, which provides:


§ 3500.8. Use of HUD-1 or HUD-1A settlement statements


(a) Use by settlement agent. The settlement agent shall use the HUD-1 settlement statement in every settlement involving a federally related mortgage loan in which there is a borrower and a seller. For transactions in which there is a borrower and no seller, such as refinancing loans or subordinate lien loans, the HUD-1 may be utilized by using the borrower's side of the HUD-1 statement. Alternatively, the form HUD-1A may be used for these transactions. Either the HUD-1 or the HUD-1A, as appropriate, shall be used for every RESPA- covered transaction, unless its use is specifically exempted, but the HUD-1 or HUD-1A may be modified as permitted under this part. The use of the HUD-1 or HUD-1A is exempted for open-end lines of credit (home-equity plans) covered by the Truth in Lending Act and Regulation Z.


(b) Charges to be stated. The settlement agent shall complete the HUD-1 or HUD-1A in accordance with the instructions set forth in Appendix A to this part.

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

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Labor Law Class Action Filings Top New Class Action Cases Filed In California State And Federal Courts With Antitrust Class Action Lawsuits Coming In Second

To allow class action defense lawyers anticipate claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. This report covers the time period from February 23 – February 28, 2007, and employment law class action cases held their familiar grip on the top spot in weekly class action filings.

As in the past, we include only those categories that include 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, of which 12 (31%) involved employment-related claims. New antitrust class action cases came in second with 9 new filings (23%). The only other categories to break the 10% threshold consisted of 5 new unfair competition claims (13%), and 4 new securities laws class action cases (10%)

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

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24 CFR § 3500.7—Good Faith Estimates Required By Regulation X (Real Estate Settlement Procedures Act-RESPA)

For the class action defense attorney who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations provide for good faith estimates to be provided to borrowers in § 3500.7, which provides:


§ 3500.7. Good faith estimate


(a) Lender to provide. Except as provided in this paragraph (a) or paragraph (f) of this section, the lender shall provide all applicants for a federally related mortgage loan with a good faith estimate of the amount of or range of charges for the specific settlement services the borrower is likely to incur in connection with the settlement. The lender shall provide the good faith estimate required under this section (a suggested format is set forth in Appendix C of this part) either by delivering the good faith estimate or by placing it in the mail to the loan applicant, not later than three business days after the application is received or prepared.


(1) If the lender denies the application for a federally related mortgage loan before the end of the three-business-day period, the lender need not provide the denied borrower with a good faith estimate.


(2) For "no cost" or "no point" loans, the charges to be shown on the good faith estimate include any payments to be made to affiliated or independent settlement service providers. These payments should be shown as P.O.C. (Paid Outside of Closing) on the Good Faith Estimate and the HUD-1 or HUD-1A.


(3) In the case of dealer loans, the lender is responsible for provision of the good faith estimate, either directly or by the dealer.


(4) If a mortgage broker is the exclusive agent of the lender, either the lender or the mortgage broker shall provide the good faith estimate within three business days after the mortgage broker receives or prepares the application.

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

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Class Action Defense Cases-In re Movie Artwork: Judicial Panel On Multidistrict Litigation (MDL) Denies Defense Motion To Centralize Class Action Litigation In The Central District of California

Class Action Lawsuits Involving Copyright and Trademark Infringement Claims did not Warrant Pretrial Coordination Pursuant to 28 U.S.C. § 1407 Judicial Panel on Multidistrict Litigation (MDL) Holds

Four class action lawsuits were filed against several defendants alleging various copyright and trademark infringement claims involving "different copyrights and trademarks owned by different entities and covering different movie and cartoon characters." In re Movie Artwork Copyright Litig., 473 F.Supp.2d 1381, 1382 (Jud. Pan.Mult.Lit. February 7, 2007). Defense lawyers for certain defendants in the class actions moved the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Central District of California. Id. Plaintiffs in all four class action lawsuits opposed centralization. The Panel denied the defense motion, concluding that centralization was not warranted. Id. The Panel explained, "No common intellectual property is at issue. The asserted common factual questions identified by defendants appear to be either simply a generic listing of elements found in virtually every copyright and trademark infringement action, or issues that arise in any situation involving multiple actions brought against a common defendant or defendants." Id. At bottom, the Judicial Panel held that "movants have failed to persuade us that any common questions of fact and law are sufficiently complex and/or numerous to justify Section 1407 transfer under the current circumstances." Id.

NOTE: The Judicial Panel apparently was influenced by the fact that the class action pending in the Central District of California was set for trial in April 2007 and that centralization would likely result in postponement of the trial date. In re Movie Artwork, at 1382. Thus, the Panel opined that "[c]entralization would also likely delay the progress of one or more of the four actions," id.

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

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Class Action Defense Cases—In re Static Random Access: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In The Northern District of California

Judicial Panel Grants Plaintiff Request, Unopposed by Defense and Supported by Plaintiffs in Other Cases, for Pretrial Coordination Pursuant to 28 U.S.C. § 1407

Numerous class action lawsuits were filed against several defendants alleging "[a] conspiracy to fix the price of Static Random Access Memory." In re Static Random Access (SRAM) Antitrust Litig., 473 F.Supp.2d 1384, 1384-85 (Jud. Pan.Mult.Lit. February 9, 2007). Plaintiff’s lawyer in one of the class actions moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 to centralize the lawsuits for pretrial purposes in the Northern District of California. Id., at 1385. "All responding parties support centralization, and the majority concur in movant's suggestion of the Northern District of California as transferee forum." The Panel agreed that centralization was warranted, and agreed further that the Northern District of California was the appropriate transferee court. Id.

Download PDF file of In re Static Random Access Transfer Order

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

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State Farm Katrina Class Action Defense Case-Roby v. State Farm: Louisiana Federal Court Grants Motion To Remand Class Action To State Court Holding Hurricane Is Not An Accident Under Federal MMTJA

A Hurricane is not an "Accident" under the Federal Multiparty, Multiforum Trial Jurisdiction Act (MMTJA) and Defense Failed to Prove that Individual was Fraudulently Joined for Purposes of Defeating Diversity Jurisdiction over Class Action Louisiana Federal Court Holds

Plaintiffs filed a putative class action in Louisiana state court against their homeowners insurance carrier, State Farm, alleging that it wrongfully denied insurance benefits for damage caused by Hurricane Katrina. Roby v. State Farm Fire & Cas. Co., 464 F.Supp.2d 572, 574 (E.D. La. 2006). Specifically, after plaintiffs provided State Farm evidence that Hurricane Katrina caused them to suffer more than $400,000 in damages, State Farm tendered a $23,000 check to plaintiffs representing its "estimated damages for their claim for damages to their home" and ultimately refused to pay plaintiffs' claim in full or to pay policy limits because it concluded that "[plaintiffs'] home sustained flood damage from Hurricane Katrina and that flood damages are excluded from the policy." Id. State Farm also denied personal contents benefits on the ground that flood damage excluded coverage, id., at 574 n.5. Plaintiffs countered that their home had sustained damage caused by rain that entered through holes in the roof caused by the hurricane, and filed a class action complaint for a declaratory judgment that the exclusion relied upon by State Farm did not apply and, alternatively, that their State Farm agent should have informed them to obtain flood insurance. Id., at 574-75. Defense attorneys removed the class action to federal court, asserting both federal question and diversity jurisdiction. Id., at 575 and n.6. As to diversity, defense attorneys argued that plaintiffs had named the State Farm agent solely to defeat diversity. Id. Plaintiffs filed a motion for remand. The district court granted plaintiffs' motion and remanded the class action to state court.

After noting that State Farm bore the burden of proof as the party invoking federal court jurisdiction, Roby, at 575, the district court addressed State Farm's argument that federal jurisdiction exists under the Multiparty, Multiforum Trial Jurisdiction Act (MMTJA) - "specifically 28 U.S.C. § 1369 . . . and its corresponding removal statute, 28 U.S.C. § 1441(e)," id. As the district court explained at pages 575 and 576, "Section 1369 is a federal statute that establishes subject matter jurisdiction in federal court over a single accident in which at least 75 persons died. Section 1441 allows a defendant to remove a § 1369 case to federal court. Congress enacted the MMTJA to allow full consolidation of state and federal cases related to a common disaster in order to eliminate multiple or inconsistent awards arising from multiforum litigation." (Footnote and citations omitted.) The district court held that MMTJA did not apply because a hurricane is not an "accident" within the meaning of the Act, id., at 576.

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