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

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More Than 60% Of New Class Action Cases Involve Employment-Related Claims In Weekly Class Action Filings In California State And Federal Courts

As a resource to defense attorneys who defend against class action claims in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits 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. This report covers the time period from June 22 – June 28, 2007, and during that time 34 new class action lawsuits were filed in these courts. Labor law class action lawsuits usually lead the list of new class action filings, often by a wide margin, but never before, during the period for which we have been providing these statistics, by as wide a margin as this past week. Out of these 34 new class action lawsuits, 21 involved employment-related claims, representing almost 62% of the total number of new class actions for the relevant time period. Unfair competition law (UCL) class action cases, which include false advertising cases, represented the only other category of class actions to break the 10% threshold, with six (6) new class action filings (18%).

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

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Class Action Defense Cases-In re Motor Fuel: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Lawsuits But Selects District of Kansas As Transferee Court

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Defense Request to Transfer Class Actions to District of New Jersey

Twelve putative class action lawsuits were filed in seven federal district courts (four in Missouri, two in Kansas and Oklahoma, and one in California, Kentucky, New Jersey and Tennessee) against more than 100 oil companies, distributors and retailers “relating to the sale of motor fuel at temperatures greater than 60 degrees Fahrenheit.” In re Motor Fuel Temperature Sales Prac. Litig., 493 F.Supp.2d 1365, 2007 WL 1806043, *1 (Jud.Pan.Mult.Lit. 2007). Defense attorneys for three oil companies 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 District of New Jersey. All plaintiff lawyers agreed that pretrial coordination was appropriate, as did dozens of additional defense attorneys, but they could not agree upon the appropriate transferee court, “variously support[ing] selection of the Northern District of California, the Southern District of Florida, the District of Kansas, the Western District of Missouri, the District of New Jersey, the Western District of Oklahoma or the Middle District of Tennessee as transferee district.” Id. Defense attorneys for two oil companies opposed centralization at all, but alternatively argued that the class actions should be transferred to the District of New Jersey, id.

The Judicial Panel granted the defense motion to centralize the class action lawsuits, rejecting “the arguments of the two opposing defendants that the lack of identity among the defendants in these actions warrants a different result.” In re Motor Fuel, at *1. However, the Panel selected the District of Kansas because “no district stands out as the geographic focal point for this nationwide docket” and, accordingly, the Judicial Panel selected “a transferee judge with the time and experience to steer this litigation on a prudent course and sitting in a district with the capacity to handle this litigation.” Id., at *2.

Download PDF file In re Motor Fuel Transfer Order

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

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Lanham Act Class Action Defense Cases-Phoenix v. McDonald's: District Court Properly Granted Defense Motion To Dismiss Lanham Act Class Action For Lack Of Prudential Standing Eleventh Circuit Holds

As Matter of First Impression in the Circuit, Eleventh Circuit Holds that Fast Food Franchisee Lacked Prudential Standing to Prosecute Lanham Act False Advertising Class Action Against McDonald’s and Affirms Order Granting Defense Motion to Dismiss Class Action Complaint

Plaintiff, a Burger King fast food franchisee, filed a putative class action lawsuit against McDonald’s alleging false advertising in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), arising out of McDonald’s claims in connection with various promotional games (such as Monopoly) that each customer had an equal chance of winning. Phoenix of Broward, Inc. v. McDonald's Corp., 489 F.3d 1156, 2007 WL 1791886, *1 (11th Cir. 2007). Defense attorneys moved to dismiss the class action complaint on the ground that plaintiff lacked prudential standing to prosecute the putative class action; the district court agreed with the defense and dismissed the class action. Id. On appeal to the Eleventh Circuit, the issue on appeal concerned “the proper test for determining whether a party has prudential standing to bring a false advertising claim under § 43(a) of the Lanham Act,” id.; ultimately, the Circuit Court adopted the Third Circuit test set forth in Conte Bros. Automotive, Inc. v. Quaker State-Slick 50, Inc., 165 F.3d 221, 225 (3d Cir. 1998), and affirmed the dismissal of the class action complaint.

The McDonald’s promotional games at issue ran from 1995 through 2001, and generally allowed customers to win the $1 million grand prize “by obtaining one of the rare $1 million, instant-winner game pieces or by collecting and matching a combination of certain other game pieces.” Phoenix of Broward, at *1. McDonald’s represented that each customer had an equal chance of winning, and “also represented the specific odds of winning certain prizes, including the high-value prizes.” Id. Beginning in April 2000, however, the FBI began investigating these promotional games and “informed McDonald's that there were problems with the random distribution of its game pieces,” id. Nonetheless, McDonald's continued to represent that each customer had an equal chance of winning its promotional games, id.

Continue reading "Lanham Act Class Action Defense Cases-Phoenix v. McDonald's: District Court Properly Granted Defense Motion To Dismiss Lanham Act Class Action For Lack Of Prudential Standing Eleventh Circuit Holds" »

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

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Class Action Defense Cases-Bendzak v. Midland: Iowa District Circuit Consolidates Class Action Lawsuits Sua Sponte Finding Class Actions Satisfied Requirements Of FRCP Rule 42

Class Action Complaints Warranted Sua Sponte Consolidation under Rule 42 Iowa Federal Court Holds

Plaintiff filed two putative class action lawsuits in Iowa federal court, one against Midland National Life Insurance and the other against American Equity Investment Life Insurance, alleging violations of RICO (Racketeer Influenced and Corrupt Organizations Act), conspiracy and unjust enrichment in that they “knowingly used licensed agents that engaged in unfair, improper, and unlawful sales practices in connection with the solicitation, offering, and sale of deferred annuity products to senior citizens.” Bendzak v. Midland Nat’l Life Ins. Co., 240 F.R.D. 449, 450 (S.D. Iowa 2007). The district court sua sponte ordered the two class actions consolidated, holding that the requirements of FRCP Rule 42 were satisfied, id., but invited defense and plaintiff’s counsel to advise the court if they believed consolidation “would lead to inefficiency, inconvenience, or unfair prejudice to a party,” id., at 451.

The district court held that consolidation was warranted because the two class actions involved common issues of law and fact, explaining at page 450:

Continue reading "Class Action Defense Cases-Bendzak v. Midland: Iowa District Circuit Consolidates Class Action Lawsuits Sua Sponte Finding Class Actions Satisfied Requirements Of FRCP Rule 42" »

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

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Class Action Defense Cases--Du Bouse v. Bayer: Illinois Appellate Court Dismisses Appeal From Class Action Certification Order For Lack Of Jurisdiction Because Defense Failure To Monitor Court Docket Did Not Expand Jurisdictional Appeal Period

30-Day Time Period for Appealing Court Orders Granting or Denying Class Action Treatment is Jurisdictional and Cannot be Evaded by Trial Court Nunc Pro Tunc Order Deeming Order Entered on a Later Date Illinois State Appellate Court Holds

Plaintiff filed a consumer fraud class action in Illinois state court against Bayer AG and others alleging common law fraud and violations of the Consumer Fraud and Deceptive Business Practices Act. De Bouse v. Bayer AG, ___ N.E.2d __ (June 11, 2007) [Slip Opn., at 1]. After granting plaintiff’s motion to certify the lawsuit as a class action, defense attorneys moved for summary judgment, id. The trial court denied the motion but certified three questions for appellate review, id. Defense attorneys then sought leave to appeal the class certification order, and the appellate court consolidated the two appeals, id., at 1-2. Plaintiffs moved to dismiss the appeal for lack of jurisdiction, id., at 2; the appellate court granted the motion.

The appellate court explained that the class certification hearing was held in July 2005 and taken under submission. On September 1, 2005, the court granted class action status, and the order was filed the following day. Du Bouse, at 2. “There is no indication that the order was served personally or by mail on counsel of record.” Id. The parties appeared in court on September 27 and December 29, 2005, in connection with the summary judgment motion, and on January 11, 2006 for purposes of a status conference, id., at 2-3. It was not until January 25, 2006, that defense attorneys moved “to vacate or amend the class certification order nunc pro tunc on the grounds that they had not received notice of the entry of the order granting class certification, that the circuit court clerk failed to serve a copy of the order on all parties and failed to note any service in the file…, and that they made diligent efforts to monitor the court file once the motion had been taken under advisement by the court.” Id., at 3. Defense attorneys argued that they had been monitoring the court file but first learned of the class certification order on January 11, 2006, and that the failure to serve notice of the order "severely prejudiced" defendants’ right to appeal. Id. The trial court agreed and granted motion, ordering the class certification order be deemed filed as of January 11, 2006, id., at 3-4. Defendants sought leave to appeal the class certification order on February 10, 2006, id., at 4.

Continue reading "Class Action Defense Cases--Du Bouse v. Bayer: Illinois Appellate Court Dismisses Appeal From Class Action Certification Order For Lack Of Jurisdiction Because Defense Failure To Monitor Court Docket Did Not Expand Jurisdictional Appeal Period" »

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

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TILA Class Action Defense Cases-Andrews v. Chevy Chase: Wisconsin Federal Court Certifies Lawsuit As Class Action And Holds Lender Violated TILA And That Class Action Complaint May Seek Rescission And Attorney Fees

Class Action Requirements of FRCP Rule 23 Satisfied in Class Action Complaint Allegation Violations of federal Truth in Lending Act (TILA), Bank’s TILA-Mandated Disclosure Statements Failed Adequately to Inform Borrowers of Loan Payment Schedule and Interest Rate, and Class Action Plaintiffs may seek Rescission and Attorney Fees, but not Statutory Damages, Wisconsin Federal Court Holds

Plaintiffs filed a putative class action against Chevy Chase Bank for violations of the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., in that the Bank allegedly failed to make the requisite disclosures in connection with adjustable rate mortgage loans. Andrews v. Chevy Chase Bank, FSB, 240 F.R.D. 612, 614 (E.D. Wis. 2007). Defense and plaintiffs’ counsel filed cross-motions for summary judgment, and plaintiffs moved the court to certify the litigation as a class action; the district court granted in part and denied in part each of the summary judgment motions, and granted class action status to the TILA complaint.

Plaintiffs secured a loan from Chevy Chase bank in June 2004 to refinance their Wisconsin home. Andrews, at 614. The Bank’s initial disclosures included a handbook on adjustable rate mortgages (ARMs), an ARM disclosure and a preliminary disclosure statement as required by TILA, id., at 615. Additional disclosures were provided at closing, including an Adjustable Rate Note (ARN), a Truth in Lending Disclosure Statement (TILDS) and an Adjustable Rate Rider (ARR), id. The class action complaint alleged that plaintiffs’ believed the interest rate and payments “were fixed for five years and became variable thereafter”; in fact, the payment was fixed but the interest rate was not. Id. As the district court explained at page 615, “The loan carried a discounted or ‘teaser’ interest rate of 1.950 percent, but that rate applied only to the first monthly payment, after which the interest rate increased every month according to a formula. As the interest rate increased, an ever increasing portion of the minimum monthly payment of $701.21 was needed to cover interest, and the minimum payment itself soon became insufficient to cover accrued interest.” The class action complaint alleged that the Bank’s disclosures failed to comply with TILA.

Continue reading "TILA Class Action Defense Cases-Andrews v. Chevy Chase: Wisconsin Federal Court Certifies Lawsuit As Class Action And Holds Lender Violated TILA And That Class Action Complaint May Seek Rescission And Attorney Fees" »

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

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15 U.S.C. § 78aa—Jurisdiction Over Offenses And Suits Under The Federal Private Securities Litigation Reform Act (PSLRA)

As a resource for the class action defense lawyer who defends against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for jurisdiction over offenses and lawsuits of private securities class action litigation in 15 U.S.C. § 78aa, which provides as follows:

§ 78aa. Jurisdiction of offenses and suits

The district courts of the United States and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have exclusive jurisdiction of violations of this chapter or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by this chapter or the rules and regulations thereunder. Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by this chapter or rules and regulations thereunder, or to enjoin any violation of such chapter or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. Judgments and decrees so rendered shall be subject to review as provided in sections 1254, 1291, 1292, and 1294 of title 28. No costs shall be assessed for or against the Commission in any proceeding under this chapter brought by or against it in the Supreme Court or such other courts.

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

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Removal Class Action Defense Cases- Levitanksy v. FIA: Ohio Federal Court Holds That Putative Class Action Stated Breach Of Contract Claim Warranting Remand Of Class Action Complaint To State Court

Class Action Complaint Alleging Fees Charged were in Excess of Contractually Agreed Amount did not Constitute Challenge to Interest Rate and so National Bank Act did not Completely Preempt Claims in Putative Class Action Ohio Federal Court Holds

Plaintiff filed a putative class action in Ohio state court against credit card company FIA Card Services alleging that it collected cash advance fees in excess of the maximum allowed under its cash advance agreements. Levitanksy v. FIA Card Services, N.A., 492 F.Supp.2d 758, 760 (N.D. Ohio 2007). Defense attorneys removed the action to federal court on the basis of National Bank Act, alleging that the class action complaint challenged the interest rate charged to customers and that usury claims are completely preempted under the NBA, id., at 760-61; plaintiff filed a motion to remand the class action to state court on the ground that the class action alleged only state-law breach of contract claims, id., at 759. The district court granted plaintiff’s motion, holding that the National Bank Act did not completely preempt the claims set forth in the class action complaint.

Plaintiff’s class action seeks to represent all individuals who entered into cash advance agreements with FIA, setting forth as common class allegations that FIA “extended one or more promotional offers for balance transfers and cash advance checks where the transaction fees would be limited to 3% of each advance” and that the FIA contracts “stipulated that the maximum allowable transaction fee was $75,” but that FIA charged cash advance fees in excess of that agreed amount. Levitansky, at 760. Defense attorneys removed the class action complaint to federal court under the National Bank Act; plaintiff filed a motion to remand the class action on the ground that the complaint set forth a state-law breach of contract claim. Id.

Continue reading "Removal Class Action Defense Cases- Levitanksy v. FIA: Ohio Federal Court Holds That Putative Class Action Stated Breach Of Contract Claim Warranting Remand Of Class Action Complaint To State Court" »

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

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Labor Law Class Action Cases Regain Top Spot In New Class Action Filings In California State And Federal Courts

In order to assist California class action defense attorneys anticipate the claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits 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. This report covers the time period from June 15 – June 21, 2007, and during that time 36 new class action lawsuits were filed in these courts. Class actions alleging employment law claims typically lead the list of new filings, and this past week was no exception. In all, sixteen (16) new labor law class action cases were filed in these state and federal courts, representing approximately 44% of the total number of new class actions for the relevant time period. Unfair competition law (UCL) class action cases, which include false advertising cases, dropped from the first-place ranking it had last week to second, with 6 new class action filings (17%). The only other category to meet the 10% threshold involved new securities laws claims, with 4 new cases (11%).

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

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Class Action Defense Cases-Payday v. Findwhat.Com: New York Federal Court Grants Defense Motion In Click-Fraud Class Action To Dismiss Unjust Enrichment, Negligence And Civil Conspiracy Claims But Denies Motion As To Breach Of Contract Claim

Click-Fraud Class Action Stated Claim for Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing, but Under New York Law Remaining Claims in Class Action Complaint Fail

Plaintiff, an advertising customer, filed a putative class action against Findwhat.com, an Internet search engine operator, and Advertising.com, an Internet advertising provider, alleging that defendants “engaged in ‘click fraud’ by employing individuals and ‘robot’ computer programs (commonly called ‘bots’) to click on Payday's hyperlinked advertisements and thereby caused Payday to incur inflated charges under its agreement with Findwhat.” Payday Advance Plus, Inc. v. Findwhat.Com, Inc., 478 F.Supp.,2d 496, 499 (S.D.N.Y. 2007). The class action complaint alleged causes of action for breach of contract, unjust enrichment, negligence and conspiracy, as well as two claims based on an alleged joint venture. Id. The defense moved to dismiss the class action complaint for failure to state a claim, id. The district court granted the defense motion as to most of the claims in the complaint, but refused to dismiss the class action claims alleging breach of contract.

Plaintiff contracted with Findwhat to provide Internet advertising services. Findwhat offers advertising services in connection with its Internet search engine, and utilizes a “pay-per-click” formula for charging its customers: “Under this formula, an advertising customer bids on one or more keywords which, when entered into Findwhat's search engine by Internet users, will return a hyperlink . . . to the advertising customer's web site alongside the search results returned by the search engine.” Payday, at 500. Each time an Internet user clicks on a customer’s link, a fee is charged ranging from 50 cents per click to more than $100 per click for “the most sought-after keywords.” Id. Defendant Advertising developed “ClickTracker,” a software program that tracks and measures Internet sales. Id., at 501. According to the class action complaint, Findwhat and Advertising entered into a business relationship to split revenue from their Internet advertising activities, and then conspired to artificially inflate the price of popular keywords. Id. Additionally, plaintiff alleged that Findwhat hired people to click on advertising links in order to increase revenue at the cost of the customer, and that Advertising used computer programs to “click continuously and systematically” on customer links in order to increase revenue. Id.

The class action complaint named only Findwhat as a defendant on the breach of contract claim, and alleged that the Findwhat contract only permitted a charge for “the actual click through advertising from actual consumers” but that Findwhat charged for “advertising and/or services that were not generated from potential consumers, but from individuals, ‘robot’ programs and other software employed by the Defendants solely designed to increase traffic to Plaintiff's website and drive up revenue.” Payday, at 502. Defense attorneys disagreed, arguing that the terms of the contract are not as restrictive as plaintiff claims, id. Under New York law, the court resolved the contract interpretation issue as a matter of law, id. However, plaintiff never signed the contract relied upon by Findwhat and refused to acknowledge that the terms of the unsigned agreement proffered by Findwhat was the “actual agreement of the parties”: “Because there has been no agreement on the language that reflects the contract terms, and because there is a reasonable dispute as to the meaning of the terms relating to the ‘clicks’ for which Payday owed payments, the Court cannot find as a matter of law that the contract is unambiguous.” Id.

Continue reading "Class Action Defense Cases-Payday v. Findwhat.Com: New York Federal Court Grants Defense Motion In Click-Fraud Class Action To Dismiss Unjust Enrichment, Negligence And Civil Conspiracy Claims But Denies Motion As To Breach Of Contract Claim" »

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

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Class Action Defense Cases-Day v. Check Brokerage: Illinois Federal Court Holds That Class Action Rule 23(a)(1) Numerosity Test Does Not Require Exact Number And Debt Collection Letters Presented Common Questions Of Fact And Law

FDCPA Class Action Certified Over Defense Objection that Range of 100-500 Class Members does not Satisfy Numerosity and that Allegation that Debt Collection Letters Violate Federal Fair Debt Collection Practices Act (FDCPA) Presented Common Questions of Law and Fact Illinois Federal Court Holds

Plaintiff filed a putative class action against Check Brokerage Corp. alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) based on debt collection letters sent by the company. Day v. Check Brokerage Corp., 240 F.R.D. 414, 415 (N.D. Ill. 2007). The class action alleged that defendant’s letters violate the FDCPA in that they are “false, deceptive, or misleading as determined by the unsophisticated consumer standard and therefore in violation of 15 U.S.C. § 1692(e), (e)(2)(A), (e)(5), and (e)(10).” Id., at 416. The class action complaint also alleged that defendant “used unfair or unconscionable means to collect or attempt to collect a debt in violation of 15 U.S.C. § 1692(f) and (f)(1)” and that the notice concerning a consumer's right to dispute a debt failed to comply with 15 U.S.C. § 1692(g)(a), id. Plaintiff moved the court to certify the litigation as a class action; defense attorneys argued that class action treatment was inappropriate because neither numerosity nor commonality had been met. Id., at 415. The district court disagreed.

The class action complaint was premised upon four debt collection letters defendant sent to plaintiff concerning a $20 debt. Day, at 416. The first letter advised Day that his $20 check had not cleared, that he now owed $65 (which included a “return check charge” of $25 and a “bank charge to merchant” of $20), and that additional fees may be imposed if payment is not made promptly and it was in his "‘best interests to clear this check immediately,’ despite the notification at the end of the letter that Day had thirty days to dispute the validity of the debt.” Id. The second letter “suggest[ed] you give this matter your immediate attention" and quoted Illinois Commercial Code § 3-806 about liability for dishonored checks. Id. The third letter “demand[ed] the $65.40 and stat[ed], ‘WE MUST HAVE YOUR PAYMENT NOW!!’” The letter also warned plaintiff that he could be liable for additional amounts. Id. Finally, the fourth letter stated, "THIS CHECK REMAINS UNPAID! WE ARE, THEREFORE, GOING TO SHOW YOU HOW MUCH IT COULD COST SHOULD IT GO TO LITIGATION." This letter included reference to warrants for arrest and adverse credit reports, and ended, "Common sense would dictate that this check be paid at this point. THE AMOUNT DUE, INCLUDING THE CHECK AND SERVICE CHARGES TO THIS POINT, IS $65.40." Id.

Continue reading "Class Action Defense Cases-Day v. Check Brokerage: Illinois Federal Court Holds That Class Action Rule 23(a)(1) Numerosity Test Does Not Require Exact Number And Debt Collection Letters Presented Common Questions Of Fact And Law" »

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

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Credit Suisse Class Action Defense Case-Credit Suisse v. Billing: Supreme Court Holds Antitrust Class Action Based On Syndicate Conduct In Sale Of IPOs Barred Because "Clearly Incompatible" With Securities Laws

Federal Securities laws Barred Class Action Complaints Alleging Antitrust Violations Because, under Facts of the Case, Securities Laws “Implicitly Precluded” Enforcement of Antitrust Laws United States Supreme Court Holds

Purchasers of initial public offerings (IPOs) filed a class action against various underwriting firms that market and distribute IPOs for antitrust violations alleging that defendants “unlawfully agreed with one another that they would not sell shares of a popular new issue to a buyer unless that buyer committed (1) to buy additional shares of that security later at escalating prices (a practice called ‘laddering’), (2) to pay unusually high commissions on subsequent security purchases from the underwriters, or (3) to purchase from the underwriters other less desirable securities (a practice called ‘tying’).” Credit Suisse Securities (USA) LLC v. Billing, 551 U.S. __ (June 18, 2007) [Slip Opn., at 1]. Defense attorneys argued that the antitrust violations underlying the class action complaint were precluded by the federal securities laws, id., at 4. The district court agreed with the defense arguments and dismissed the class actions, but the Second Circuit reversed and reinstated the class action complaints, id. The U.S. Supreme Court granted certiorari and reversed the Second Circuit, id., at 4; the Supreme Court held that “we must interpret the securities laws as implicitly precluding the application of the antitrust laws to the conduct alleged in this case,” id., at 1.

The antitrust class action lawsuits arose from the following facts. As part of an IPO, underwriters “will typically form a syndicate to help market the shares,” which in turn estimates market demand and recommends offering price and number of shares for the offering. Credit Suisse, at 2. The syndicate then commits to purchase from the company all of the newly issued shares on a date certain for a fixed price; the price reflects “[the] price the syndicate will charge investors when it resells the shares,” but the syndicate’s actual purchase price reflects a discount that “amounts to the syndicate’s commission.” Id. In other words, the syndicate purchases the shares at a discounted price, and then resells them at the agreed upon fixed price, id., at 3. From this, class actions were filed alleging that defendant underwriters “abused” the syndication practice “by agreeing among themselves to impose harmful conditions upon potential investors,” id.; the Supreme Court added that these were “conditions that the investors apparently were willing to accept in order to obtain an allocation of new shares that were in high demand,” id. These conditions included entering into laddering agreements, tying agreements and paying excessive commissions, thereby “artificially inflat[ing] the share prices of the securities in question,” id., at 4.

Continue reading "Credit Suisse Class Action Defense Case-Credit Suisse v. Billing: Supreme Court Holds Antitrust Class Action Based On Syndicate Conduct In Sale Of IPOs Barred Because "Clearly Incompatible" With Securities Laws" »

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

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FACTA Class Action Defense Cases-Spikings v. Cost Plus: Certification Of Class Action Rejected For Technical Violation Of Fair And Accurate Credit Transactions Act Because Class Action Treatment Would Subject Defendant To Disproportionate Liability

Rule 23(b)(3) Superiority Class Action Requirement not met Where Financial Impact on Defendant for Technical Violation of FACTA (Fair and Accurate Credit Transactions Act) would be Disproportionate to any Harm to the Class California Federal Court Holds

Within hours of purchasing an item at Cost Plus with her credit card, plaintiff filed a putative class action alleging a technical violation of the federal Fair and Accurate Credit Transactions Act (FACTA) in that her receipt truncated her credit card number but failed to omit the expiration date of the card. Spikings v. Cost Plus, Inc., Case No. CV-06-8125-JFW (C.D. Cal. May 25, 2007) [Slip Opn., at 1-2]. Plaintiff filed a motion for certification of class action treatment; defense attorneys objected arguing in part that the prerequisite Rule 23(b)(3) finding of superiority did not exist thus barring class action certification. Id., at 2. The district court agreed with the defense and refused to certify the litigation as a class action.

FACTA requires that no more than the last 5 digits of a credit card number be shown on customer receipts, and that the expiration date of the credit card not be disclosed on the receipt. 15 U.S.C. § 1681c(g). Plaintiff purchased an item at Cost Plus on December 19, 2006, and within four (4) business hours filed her putative class action complaint. Spikings, at 2. Plaintiff served the class action complaint on December 26, 2006, defendant deleted the expiration date from credit card receipts in all but three of its stores by January 11, 2007, and completed the process of deleting the expiration date from all customer credit card receipts by January 29, 2007. Id. Nonetheless, plaintiff pursued the class action, alleging that defendant’s violation of FACTA was “willful” within the meaning of 15 U.S.C. § 1681n, thus entitling the class to statutory damages of $100-$1000 per violation, as well as punitive damages and attorney fees. Id. Plaintiff also moved the court to certify the litigation as a class action, id., at 1.

Continue reading "FACTA Class Action Defense Cases-Spikings v. Cost Plus: Certification Of Class Action Rejected For Technical Violation Of Fair And Accurate Credit Transactions Act Because Class Action Treatment Would Subject Defendant To Disproportionate Liability" »

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

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FACTA Class Action Defense Cases-Soualian v. International Coffee & Tea: California Federal Court Denies Plaintiff’s Motion To Certify Class Action In Fair And Accurate Credit Transactions Act (FACTA) Suit

Putative Class Action Alleging FACTA Violation for Inclusion of Credit Card Expiration Date on Customer Receipts did not Warrant Class Action Treatment Because Rule 23(b)(3) Superiority Requirement not Satisfied California Federal Court Holds, Particularly as Defendant’s Act in Correcting the Violation Immediately on Receipt of Plaintiff’s Complaint Established its Good Faith and “Nullified Any Deterrence Benefit”

Plaintiff filed a putative class action against International Coffee & Tea alleging that it violated the Fair and Accurate Credit Transactions Act (FACTA) because it provided customers with credit card receipts that included the last five digits of the credit card and the card’s expiration date. Soualian v. International Coffee & Tea, LLC, Slip Opn., at 1 (C.D. Cal. June 11, 2007). Plaintiff filed a motion to certify the litigation as a class action; defense attorneys objected that Rule 23(b)(3)’ superiority test had not been met. Id. The district court agreed and refused to permit the litigation to proceed as a class action.

FACTA provides that “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last five digits of the card number of the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1). Plaintiff’s putative class action sought to represent “the class of individuals who made purchases at Defendant’s stores…and who received receipts on which Defendant printed more than the last five digits of the person’s credit card or debit card number, or on which Defendant printed the expiration date of the person’s credit or debit card.” Soualian, at 1. The district court outlined the elements required for class certification under Rule 23(a), but focused its analysis on whether Rule 23(b)(3) had been satisfied, id.

Continue reading "FACTA Class Action Defense Cases-Soualian v. International Coffee & Tea: California Federal Court Denies Plaintiff’s Motion To Certify Class Action In Fair And Accurate Credit Transactions Act (FACTA) Suit" »

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

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15 U.S.C. § 78z--Congressional Provisions Regarding Unlawful Representations Under The Private Securities Litigation Reform Act (PSLRA)

As a reference for class action defense attorneys who defend against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for unlawful representations in 15 U.S.C. § 78z of the PSLRA, which provides:

§ 78z. Unlawful representations

No action or failure to act by the Commission or the Board of Governors of the Federal Reserve System, in the administration of this chapter shall be construed to mean that the particular authority has in any way passed upon the merits of, or given approval to, any security or any transaction or transactions therein, nor shall such action or failure to act with regard to any statement or report filed with or examined by such authority pursuant to this chapter or rules and regulations thereunder, be deemed a finding by such authority that such statement or report is true and accurate on its face or that it is not false or misleading. It shall be unlawful to make, or cause to be made, to any prospective purchaser or seller of a security any representation that any such action or failure to act by any such authority is to be so construed or has such effect.

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

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Surge in Unfair Competition Law Class Action Cases Drop Labor Law Cases To Second Spot Among New Class Action Filings In California State And Federal Courts

To assist defense attorneys who defend class actions in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits 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. This report covers the time period from June 8 – June 14, 2007, during which time 39 new class action cases were filed in these courts. Unfair competition law (UCL) class action cases, which include false advertising cases, seized the top spot of new weekly class action filings with 14 new cases, representing 36% of the class action cases filed during the week. Employment law claims ran a close second with 13 new class action filings (33%). No other category cracked the 10% threshold.

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

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Class Action Defense Cases-Hollins v. Debt Relief: Nebraska Federal Court Denies Defense Motion To Compel Arbitration Of RICO Class Action Holding Arbitration Clause Unenforceable

Class Action Defense Effort to Compel Arbitration Based on Provision in Contract Executed by Plaintiff Rejected by District Court because Arbitration Clause Held to be Unconscionable

Plaintiffs filed a putative class action against Debt Relief of America (DRA) in Nebraska federal court alleging that DRA - a company that offers “to help consumers eliminate their debt by negotiating reduced payoffs in settlement of the debts” - engaged in acts of fraud and charged excessive and undisclosed fees in violation of Racketeer Influenced and Corrupt Organizations Act (RICO) and Nebraska’s Consumer Protection Act and Deceptive Trade Practices Act. Hollins v. Debt Relief of Am., 479 F.Supp.2d 1099, 1103 (D. Neb. 2007). Defense attorneys moved to compel arbitration under a Client Negotiation Agreement executed by plaintiff in Nebraska; the Agreement includes an arbitration clause and a Texas choice-of-law provision. Id. The district court denied the defense motion, holding that the arbitration clause was procedurally and substantively unconscionable.

Plaintiff responded to an advertisement by DRA to assist in reducing debt; he admits signing the Agreement but claims that he did not notice the arbitration clause, that it was “buried in the fine print of an illegible fax,” and that DRA did not point out the arbitration provision before he executed the Agreement. Hollins, at 1103. The class action complaint alleged that plaintiff paid DRA almost $5000 based on its “promise[] to manage his debts,” but that the company “never took any action to assist [him] or contact his creditors.” Id. The complaint further alleged DRA advised him to “ignore[] his creditors,” that his accounts were sent to collection, and that “he filed bankruptcy because of DRA's alleged misrepresentations.” Id. Plaintiff’s purported class action seeks to represent “all Nebraska residents who paid any amount for DRA's debt relief services,” id.

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

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Class Action Defense Cases-Doiron v. Conseco Health: Louisiana Federal Court Agrees With Defense That Rule 23(b)(1) and (b)(2) Class Action Could Not Be Certified But Certifies Class Action Against Health Insurer Under Rule 23(b)(3)

Allegedly Wrongful Denial of Insurance Policy Benefits Satisfies Commonality and Typicality Requirements for Class Action Treatment, and While Rule 23(b)(1) and (b)(2) Classes Would not be Certified, Louisiana Federal Court Holds that Rule 23(b)(3) Class Action Treatment was Warranted

Plaintiff filed a breach of contract class action against her health insurer arising out of the denial of insurance benefits allegedly due and owing under a cancer insurance policy. Doiron v. Conseco Health Ins. Co., 240 F.R.D. 247, 249 (M.D. La. 2007). The class action complaint alleged that the cancer policy required the insurer to pay benefits directly to the insured if certain terms and conditions of the policy were met. Id. Plaintiff’s husband was diagnosed with cancer in March 2001 and underwent treatment, but he died in December 2001. Plaintiff submitted documentation to the insurer, but it only paid a portion of the insured’s claim. Id. Plaintiff filed as a putative class action on the grounds that "she, and the members of the Sub-Classes she seeks to represent, were and will continue to be denied claims for benefits for certain charges they commonly and typically incurr(ed), and which claims Conseco consistently deny(ied), for their radiation treatment and/or chemotherapy treatment." Id. Plaintiff moved the court to certify the lawsuit as a class action; defense attorneys objected to class action treatment insisting that case-by-case inquiries would be required, thus defeating commonality and typicality, and that none of the subparts of Rule 23(b) could be satisfied. The district court concluded that Rule 23(a) had been satisfied, and that a Rule 23(b)(3) class could be certified.

With respect to numerosity, defense conceded that the class consisted of at least 200 members, and the district court observed that in the Fifth Circuit a class of 100-150 members is generally deemed sufficient to satisfy the numerosity requirement; accordingly, the court found that Rule 239(a)(1) had been satisfied. Doiron, at 251.

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

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Watson v. Philip Morris-Class Action Defense Issues: U.S. Supreme Court Rejects Tobacco Company Argument That Heavily Regulated Industry Falls Within Scope of Federal Officer Removal Statute

In Decision with Significant Impact on Defense of Class Action Lawsuits, U.S. Supreme Court Holds that Private Party cannot Remove Lawsuit to Federal Court under Federal Officer Removal Statute Merely because it Complies with Federal Laws

Plaintiffs filed a suit in Arkansas state court against Philip Morris alleging violations of the state’s unfair and deceptive business practices statutes arising out of its marketing of “light” cigarettes, which plaintiffs argued suggested that they were “safer” - i.e., lower in tar and nicotine - than regular cigarettes. Watson v. Philip Morris Cos., Inc., 551 U.S. __, 127 S.Ct. 2301 [Slip Opn., at 1-2] (2007). Defense attorneys removed the action to federal court on the basis of the federal officer removal statute, which the district court agreed authorized removal, id., at 2. The Supreme Court explained that the district court reasoned the lawsuit “attacked Philip Morris’ use of the Government’s method of testing cigarettes” and that plaintiffs “had sued Philip Morris for ‘act[s]’ taken ‘under’ the Federal Trade Commission, a federal agency (staffed by federal ‘officer[s]’).” Id. The district court certified the question for interlocutory review, and the Eighth Circuit affirmed “emphasiz[ing] the FTC’s detailed supervision of the cigarette testing process” and relying upon cases authorizing removal “by heavily supervised Government contractors.” Id., at 2-3. The Eighth Circuit held that Philip Morris was “acting under” the FTC with respect to its marketing of “light” cigarettes, thus authorizing removal. Id., at 3. The Supreme Court granted certiorari and reversed.

The federal officer removal statute, 28 U.S.C. § 1442(a)(1), permits removal of suits brought against the “United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, sued in an official or individual capacity for any act under color of such office” (italics added). The Supreme Court recognized that the phrase “acting under” are “broad” and that “the statute must be ‘liberally construed,’” but added that “broad language is not limitless.” Watson, at 3 (citations omitted). The High Court’s analysis of the legislative history led it to conclude that the Congressional intent was to cover persons “aiding or assisting” federal officers in the performance of their duties, or acting directly “under or by authority of any such officer.” Id., at 3-7. So viewed, the Supreme Court held that the words “acting under” in the federal officer removal statute must be a reference to “a relationship that involves ‘acting in a certain capacity, considered in relation to one holding a superior position or office.’” Id., at 7. “In our view, the help or assistance necessary to bring a private person within the scope of the statute does not include simply complying with the law.” Id., at 8 (italics in original).

Continue reading "Watson v. Philip Morris-Class Action Defense Issues: U.S. Supreme Court Rejects Tobacco Company Argument That Heavily Regulated Industry Falls Within Scope of Federal Officer Removal Statute" »

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

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Class Action Defense Cases-Belaire-West v. Superior Court: California Appellate Court Subordinates Employees' Privacy Rights To Class Action Plaintiff's Request For Their Personal Contact Information

Court Expands Holding in Pioneer Electronics to Employer-Employee Relationship and Essentially Grants Class Action Plaintiffs Unrestricted Access to Personal Contact Information of Putative Class Members Prior to Certification of Class Action and Without any Showing of Likelihood that Class Action will be Certified

Plaintiffs filed a labor law class action against their former employer, Belaire-West Landscaping, alleging wage and hour violations. Belaire-West Landscape, Inc. v. Superior Court, __ Cal.App.4th __, 57 Cal.Rptr.3d 197, 198 (Cal.App. 2007). Prior to certification of the litigation as a class action, plaintiffs moved to compel Belaire to produce the names and addresses of all current and former employees; defense attorneys objected on the grounds of the absent class members’ right to privacy under the California Constitution. Id. The trial court granted the motion, and approved a proposed notice to putative class members that required them to affirmatively object in writing to the production of their contact information to plaintiffs, id. The defense sought a writ of mandate, and the Court of Appeal issued an order to show cause why the letter to absent class members should not require an “opt-in privacy notice procedure,” id., at 199-200. Ultimately, the appellate court denied the writ, holding that “the opt-out notice adequately protects the privacy rights of the current and former employees involved.” Id., at 199.

We have previously reported on the recent opinion by the California Supreme Court in Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360 (Cal. 2007) - that summary, and the text of the Court’s opinion, may be found here. In brief, Pioneer approved of the type of notice at issue in Belaire-West because the class members already had taken the step of affirmatively contacting the defendant and providing their contact information for the express purpose of having someone contact them to redress their concerns. The Court of Appeal summarized the Pioneer decision as holding that “under the circumstances presented, an opt-out notice was sufficient to protect the privacy rights of the DVD purchasers.” Belaire-West, at 200 (citation omitted). The question is whether the facts of Belaire-West are similar to “the circumstances presented” in Pioneer.

The appellate court recognized the significant differences between the cases. For example, the Court of Appeal stated that the Supreme Court “focused on the fact that the consumers in question had voluntarily disclosed their contact information to Pioneer in seeking redress of their grievances concerning a Pioneer DVD player,” Belaire-West, at 200-01, and at page 201 quoted the Supreme Court’s reasoning as follows:

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

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Class Action Defense Cases-Berenson v. National Financial: First Circuit Dismisses Interlocutory Appeal In Class Action For Lack Of Jurisdiction

Federal Arbitration Act (FAA) Provision Allowing Appeals from Orders Denying Petitions to Compel Arbitration Inapplicable Where District Court Granted Defense Motions Dismissing Class Action Allegations in Putative Class Action Complaint and then Granted Defense Motion Compelling Arbitration

Plaintiffs filed a putative class action in the District of Columbia federal court against their broker, National Financial Services and Fidelity Brokerage Services (both subsidiaries of Fidelity Investments), alleging violations of the federal Electronic Funds Transfer Act (EFTA) and various state laws arising out of Fidelity’s failure to pay customers interest on the “float” of their funds from date they requested electronic transfer of funds to the date the funds were in fact transferred. Berenson v. National Fin. Servs. LLC, 485 F.3d 35, 36 (1st Cir. 2007). The class action complaint alleged that plaintiffs opened an account with Fidelity in the 1980s, id. The Fidelity account agreement contained an arbitration clause requiring arbitration of “all controversies” but forbidding either party in a putative class action from seeking to compel arbitration unless (1) class action treatment is denied, (2) the class action is decertified, or (3) the court excludes the customer from participating in the class action, id., at 37-38. After the class action complaint was transferred to the Massachusetts federal court, id., at 37 n.3, defense attorneys filed a series of motions attacking the pleadings and the class action allegations but “reserved the right to compel arbitration if class certification is denied,” id., at 38. Ultimately defense attorneys succeeded in defeating the class action allegations and moved to compel arbitration of the plaintiffs’ non-class claims. After the district court compelled arbitration, Fidelity sought appellate review of the court’s order granting summary judgment; the First Circuit dismissed the interlocutory appeal for lack of jurisdiction.

Plaintiffs began using the company’s electronic bill payment service in the mid-1980s, but after a period of time Fidelity contracted out this service and in 2000 entered into an agreement with CheckFree to handle the bill payment service using the “good funds” method, which the First Circuit summarized at page 37 as follows:

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

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15 U.S.C. § 78y--Congressional Provisions Regarding Court Review Of Orders and Rules Pursuant To The Private Securities Litigation Reform Act (PSLRA)

To assist class action defense lawyers who defends against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for court review of orders and rules under the PSLRA in 15 U.S.C. § 78y, which provides as follows:

§ 78y. Court review of orders and rules

(a) Final Commission orders; persons aggrieved; petition; record; findings; affirmance, modification, enforcement, or setting aside of orders; remand to adduce additional evidence

(1) A person aggrieved by a final order of the Commission entered pursuant to this chapter may obtain review of the order in the United States Court of Appeals for the circuit in which he resides or has his principal place of business, or for the District of Columbia Circuit, by filing in such court, within sixty days after the entry of the order, a written petition requesting that the order be modified or set aside in whole or in part.

(2) A copy of the petition shall be transmitted forthwith by the clerk of the court to a member of the Commission or an officer designated by the Commission for that purpose. Thereupon the Commission shall file in the court the record on which the order complained of is entered, as provided in section 2112 of title 28 and the Federal Rules of Appellate Procedure.

(3) On the filing of the petition, the court has jurisdiction, which becomes exclusive on the filing of the record, to affirm or modify and enforce or to set aside the order in whole or in part.

(4) The findings of the Commission as to the facts, if supported by substantial evidence, are conclusive.

(5) If either party applies to the court for leave to adduce additional evidence and shows to the satisfaction of the court that the additional evidence is material and that there was reasonable ground for failure to adduce it before the Commission, the court may remand the case to the Commission for further proceedings, in whatever manner and on whatever conditions the court considers appropriate. If the case is remanded to the Commission, it shall file in the court a supplemental record containing any new evidence, any further or modified findings, and any new order.

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

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Labor Law Class Action Cases Reclaim Top Spot Among New Class Action Filings In California State And Federal Courts

As a resource to California defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits 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. This past week, 43 new class action cases were filed in these courts, and after a one-week break labor law class action lawsuits returned to its familiar spot atop the list of new weekly class action filings. This report covers the time period from June 1 – June 7, 2007, during which time 19 new employment-related class action cases (44%) were filed in the California state and federal courts listed above. Surprisingly, no other category cracked the 10% threshold.

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

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Class Action Defense Cases-In re Pilgrim’s Pride: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation And Selects Western District of Arkansas As Transferee Court

Judicial Panel Grants Defense Request, Unopposed by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Elects to Transfer Class Actions to Western District of Arkansas

Five class action lawsuits (two in Alabama, and one in Arkansas, Tennessee and Texas) were filed against Pilgrim’s Pride by current and former employees alleging violations of the federal Fair Labor Standards Act (FLSA). In re Pilgrim’s Pride Fair Labor Standards Act Litig., 489 F.Supp.2d 1381, 1381 (Jud.Pan.Mult.Lit. May 10, 2007). Defense attorneys 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 either the Eastern District of Texas or the Western District of Arkansas; plaintiffs agreed that pretrial coordination was appropriate, but disagreed with the defense and with each other as to the appropriate transferee court. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, finding that “[t]he actions share questions of fact arising out of similar allegations that certain employees of pilgrim’s Pride are entitled to compensation under the [FLSA].” Id. The Panel selected the Western District of Arkansas as the transferee court because it did not have any other MDL cases pending and its docket permits it to bring to bear the resources necessary to manage the class action litigation, and because the Arkansas court enjoyed wide, if not unanimous, support of the parties. Id., at 1381-82.

Download PDF file of In re Pilgrim's Pride Transfer Order

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

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Class Action Defense Case-Brieger v. Tellabs: Illinois Federal Court Denies Defense Motion For Summary Judgment In ERISA Class Action

General Release Executed by Employees at Termination was Valid Under ERISA but Class Action Claims Fell Within Carve-Out Provision in Release, and Former Plan Participants have Standing to Prosecute Class Action Alleging Breach of Fiduciary Duty Against Plan Administrators Illinois Federal Court Holds

Plaintiffs filed a putative ERISA class action lawsuit against Tellabs alleging breach of fiduciary duty “by permitting investments in Tellabs securities when it was imprudent to do so and by disseminating misleading information to Plan participants about the prudence of investing in Tellabs securities.” Brieger v. Tellabs, 473 F.Supp.2d 878, 880 (N.D. Ill. 2007). Defense attorneys moved for summary judgment on two grounds: (1) the putative members of the class action had executed general releases which barred them from prosecuting the class action complaint, and (2) plaintiffs lacked standing to prosecute the class action because they had cashed out of the Plan. Id., at 883. The district court denied the motion.

Briefly, in December 2000, Tellabs announced a $100 million sales agreement with Sprint, and in January 2001 announced increased sales and expressed optimism about the future. For purposes of the period covered by the class action complaint, in February 2001 Tellabs common stock hit a high of $67 per share. However, the following month Tellabs lowered its revenue and earnings expectations for 2001, and in April 2001 it announced that it would not meet its lowered expectations. “By April 16, 2001, Tellabs stock had declined to $35.50 per share.” Brieger, at 881. The stock recovered to $42 per share in May 2001, but fell to $16 by June 2001 and plunged to under $1 by April 2003. Id., at 881-82. Tellabs implemented workforce reductions, and in exchange for severance benefits each employee executed a general release which provided that the employee released Tellabs – including its “officers, directors, agents, employees, employee benefit plans (and their plan fiduciaries and administrators)” – “from any and all claims of any kind relating to or arising out of Employee's employment or the termination of that employment with Tellabs, Inc. or any of its subsidiaries or affiliates.” Id., at 882.

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

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FCRA Class Action Defense Cases-Safeco Insurance v. Burr: U.S. Supreme Court Holds Willful Misconduct Under Fair Credit Reporting Act Includes Reckless Disregard But Insurers Did Not Violate FCRA

In Seminal FCRA (Fair Credit Reporting Act) Class Action Cases, Supreme Court Holds (1) “Willful” Failures Under FCRA § 1681n(a) Include Acts of “Reckless Disregard,” (2) “Adverse Action” in Determining Insurance Premiums Includes Setting First-Time Insurance Rates, (3) Review of Credit Report must have Impacted Rate Charged Consumer, and (4) Insurers did not Violate FCRA

Plaintiffs filed two separate putative class action lawsuits against GEICO and Safeco Insurance, respectively, alleging willful failure to give notice of adverse actions under the federal Fair Credit Reporting Act (FCRA) in violation of § 1681m(a). Safeco Ins. Co. of America v. Burr, __ U.S. __, 2007 WL 1582951 (June 4, 2007) [Slip Opn., at 4]. The questions before the United States Supreme Court in the consolidated cases were “whether willful failure covers a violation [of the FCRA] committed in reckless disregard of the notice obligation, and, if so, whether … Safeco and GEICO committed reckless violations.” Id., at 1. The Supreme Court held that a “willful” violation of the FCRA included “reckless disregard,” but that neither GEICO nor Safeco recklessly violated the FCRA, id., at 1-2.

The class action complaints were filed by individuals who purchased car insurance from GEICO and Safeco, each of which rely upon credit reports in setting insurance premiums. Safeco, at 4-5. In these consolidated class actions, defendants allegedly offered plaintiffs auto insurance at rates that were higher than the most favorable rates offered by the companies. Id., at 4. However, the insurers did not send plaintiffs notices of adverse action, id., at 4-5. The FCRA requires that “any person [who] takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report” must provide notice to the consumer. 15 U.S.C. § 1681m(a). For these purposes, an “adverse action” includes “a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for.” § 1681a(k)(1)(B)(i). The Supreme Court explained that these notices “must point out the adverse action, explain how to reach the agency that reported on the consumer’s credit, and tell the consumer that he can get a free copy of the report and dispute its accuracy with the agency.” Safeco, at did not allege actual damages; rather, it sought statutory and punitive damages under § 1681n(a). Id.

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

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FCRA Class Action Defense Cases-Gillespie v. Equifax: Seventh Circuit Reverses Summary Judgment In Favor Of Defense In FCRA Class Action Holding Disclosures Were Accurate But Not Clear

As Matter of First Impression, Seventh Circuit Holds that FCRA (Fair Credit Reporting Act) Requires Consumer Reporting Agency to do More than Make Accurate Disclosures because Statute Requires that Disclosures also be “Clear”

Plaintiffs filed a putative class action against credit reporting agency Equifax Information Services alleging violations of the federal Fair Credit Reporting Act (FCRA). Gillespie v. Equifax Information Services, LLC, 484 F.3d 938, 939 (7th Cir. 2007). The class action complaint asserted that Equifax’s disclosures failed to comply with the FCRA; specifically, the class action complaint alleged that consumers could not properly calculate the date by which negative credit information must be removed from their reports. Id. Defense attorneys moved for summary judgment on the grounds that the information it provided to consumers was clear and accurate. The district court agreed and granted summary judgment in favor of the defense; based on this ruling, the court found it unnecessary to address plaintiffs’ motion to certify the lawsuit as a class action. The Seventh Circuit reversed.

Plaintiff Heather Gillespie opened a credit account with Direct Merchants Bank in 1999 and defaulted on the account in 2001; plaintiff Angela Cinson opened an account with Sears in 1993 and defaulted on the account in 1996 or 1997. Gillespie, at 939. The delinquent accounts were sold to a collection agency, and information on the delinquencies made it to the Equifax credit files of each plaintiff, id. In 2004, each plaintiff requested their credit file from Equifax and Equifax complied. Gillespie, at 939. Plaintiffs objected to the “Date of Last Activity” entry in their credit files. Id. The court explained at page 939 the manner in which the field is completed:

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

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Class Action Defense Cases-Sanford v. MemberWorks: Ninth Circuit Holds District Court Erred In Failing To Determine Existence of Membership Contract Prior To Compelling Arbitration But Correctly Dismissed Class Action Complaint Against Co-Defendants

District Court must Resolve Issues Regarding Existence of Contract before Compelling Arbitration and Dismissing Class Action Allegations, but Class Action Complaint Against Co-Defendant Properly Dismissed Ninth Circuit Holds

Plaintiff filed a putative class action in federal court against MemberWorks and West Telemarketing alleging she was charged a membership fee for joining the “Essentials program” - a service that, for an annual fee, offers members a 20% discount at certain retailers - in violation of 39 U.S.C. § 3009 (prohibiting mailing unordered merchandise) and various state laws because she had not heard of, and did not join, the program. Sanford v. MemberWorks, 483 F.3d 956, 958-59 (9th Cir. 2007). Defense attorneys for MemberWorks moved to compel arbitration based on a clause in the membership agreement and to strike the class action allegations; defense attorneys for West joined in the motion to compel arbitration. Id., at 959. Plaintiff objected to the arbitration demand on the ground that she never enrolled in the Essentials program, id. The district court granted the motion to compel arbitration as to MemberWorks, holding that a determination as to the enforceability of the contract as a whole must be made by the arbitrator; but the court denied the motion as to West because it was not in privity with plaintiff, and instead dismissed the class action complaint as to West because West had not mailed plaintiff any merchandise that she had not ordered and because the court refused to exercise supplemental jurisdiction over the state law class action claims - namely, conversion, unjust enrichment and fraud - against West. Id. The Ninth Circuit affirmed the dismissal of the class action complaint as against West, but reversed the district court order compelling arbitration and reinstated the class action allegations as against MemberWorks.

Plaintiff purchased by telephone Tae-Bo fitness tapes through West Telemarketing. Sanford, at 958. Sales agents were instructed to read purchasers a script at the conclusion of the transaction stating that, with the purchaser’s consent, they would be sent a “risk-free 30-day membership” in the Essentials program, and that the $72 annual fee would be billed to their credit card if membership was not canceled within 30 days. Id. Plaintiff denied hearing the script or agreeing to the trial membership; MemberWorks’ records showed that plaintiff enrolled in the program and received a membership kit that included a membership agreement containing an arbitration clause. Id., at 958-59. Plaintiff did not cancel the membership so a $72 fee was charged to her card, and the next year a renewal fee of $84 was billed to her card. Id., at 959. Plaintiff disputed the renewal fee and MemberWorks reversed the charge, id. Plaintiff then filed her putative class action against MemberWorks and West.

Continue reading "Class Action Defense Cases-Sanford v. MemberWorks: Ninth Circuit Holds District Court Erred In Failing To Determine Existence of Membership Contract Prior To Compelling Arbitration But Correctly Dismissed Class Action Complaint Against Co-Defendants" »

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

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15 U.S.C. § 78x—Public Availability Of Information Pursuant To The Private Securities Litigation Reform Act (PSLRA)

In order to assist class action defense attorneys who defends against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for public availability of information in 15 U.S.C. § 78x, which provides as follows:

§ 78x. Public availability of information

(a) “Records” defined

For purposes of section 552 of title 5 the term “records” includes all applications, statements, reports, contracts, correspondence, notices, and other documents filed with or otherwise obtained by the Commission pursuant to this chapter or otherwise.

(b) Disclosure or personal use

It shall be unlawful for any member, officer, or employee of the Commission to disclose to any person other than a member, officer, or employee of the Commission, or to use for personal benefit, any information contained in any application, statement, report, contract, correspondence, notice, or other document filed with or otherwise obtained by the Commission

(1) in contravention of the rules and regulations of the Commission under section 552 of title 5, or

(2) in circumstances where the Commission has determined pursuant to such rules to accord confidential treatment to such information.

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

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Class Action ADA Claims Supplant Labor Law Class Action Cases In California Weekly Filings

California class action defense attorneys will face a substantial number of new class action claims based the latest court filings this past week. To allow the class action defense lawyer to anticipate claims against which she or he 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 May 25 – May 31, 2007, and while labor law class action cases have been logging an impressive streak of heading up the list of new class action filings, this past week ADA (Americans with Disabilities Act) class actions claimed the top spot. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 50 class action lawsuits were filed in these California state and federal courts during that time period, of which 17 (34%) new class action suits involve ADA claims. Employment law class action lawsuits came in a close second, with 16 new filings (32%). The third place category consists of six (6) new unfair business practice class action lawsuits, which include claims of false advertising.

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

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Class Action Defense Cases-In re Imagitas: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Selects Middle District Of Florida As Transferee Court

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Agrees with Plaintiffs’ Request to Transfer Class Actions to Middle District of Florida

Eight nationwide and statewide class action lawsuits were filed against Imagitas arising out of “the propriety of Imagitas’s performance of certain contracts involving the departments of motor vehicles of six states” alleging that the company violated the federal Drivers’ Privacy Protection Act, 18 U.S.C. §§ 2721 et seq. In re Imagitas, Inc., Drivers’ Privacy Protection Act Litig., 486 F.Supp.2d 1371 (Jud.Pan.Mult.Lit. May 8, 2007) [Slip Opn., at 1-2]. Defense attorneys 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 Northern District of Ohio; while some class action plaintiffs favored centralization and others opposed it, all responding plaintiffs argued that if the motion was granted then the class action should be transferred to the Middle District of Florida. Id., at 1. The Judicial Panel rejected objections to coordination of the class actions, explaining that the lawsuits involve “competing class allegations and involve allegations that could spawn challenging procedural questions and pose the risk of inconsistent and/or conflicting rulings.” Id., at 2. Accordingly, the Judicial Panel granted the defense motion to centralize the class actions, but rejected the proposed transferee court; rather, the Panel agreed with the class action plaintiffs that the Middle District of Florida was the appropriate court because “it “was the first action filed, [and] is relatively more procedurally advanced than the other actions." Id.

Download PDF file of In re Imagitas Transfer Order