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

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Michigan Court Certifies Class Action Against Carlton Farms Based On Odors Emanating From Landfill

Michigan State Court Concludes that Residents Living Near Landfill Satisfied Requirements for Certification of Class Action Against Landfill Owners

The Class Action Defense Blog has learned that a Michigan court certified a class action lawsuit brought by residents of Monroe and Wayne counties against Carleton Farms because it “consistently releases noxious odors and interferes with their [quiet] use and enjoy[ment] [of] their properties.” While the landfill has been in use for years, residents claim that the odor problem was exacerbated by the decision of Carleton Farms to accept municipal sewage sludge from Toronto. Interestingly, the Michigan Department of Environmental Quality reportedly has issued the necessary permits to Carleton Farms for an expansion of the landfill, despite complaints from local residents that this makes the problem even worse.

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

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New Employment Class Action Lawsuits Again Outnumber Other Class Action Cases Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

In order to assist class action defense attorneys anticipate the cases against which they will have to defend 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 September 21 – September 27, 2007, during which time 44 new class action lawsuits were filed in these California state and federal courts. Labor law class action cases generally lead the list by a wide margin, and this proved true yet again as 25 of the new class action filings (57% of the total number of new class actions) alleged employment claims. Class actions under California's unfair competition law, which includes false advertising claims, and new antitrust class action filings came in a distant second with 5 new class action cases each (11%). No other category cracked the 10% threshold.

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

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FACTA Class Action Defense Cases-In re TJX: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In The District Of Kansas

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Rejects Transferee Court Recommendations of Various Plaintiffs Opting Instead to Transfer Class Actions to District of Kansas as Requested by Defense

Six class action lawsuits (followed by “tag-along” class actions) were filed against The TJX Companies for violations of the Fair and Accurate Credit Transactions Act (FACTA) because TJX allegedly included certain information on customer credit card receipts. In re The TJX Cos., Inc., Fair & Accurate Credit Transactions Act (FACTA) Litig., 505 F.Supp.2d 1379, 1379 (Jud.Pan.Mult.Lit. 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 the District of Kansas. Id. The Kansas class action plaintiffs did not oppose the motion, id. The plaintiffs in the other federal district did not oppose centralization, but argued alternatively for California, Illinois, Massachusetts or Nevada as the transferee court. Id. The Judicial Panel granted the motion to centralize the class action litigation and agreed with defense attorneys that the District of Kansas was the appropriate court Id., at 1380.

Download PSF file of In re TJX Transfer Order

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

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Class Action Defense Cases-CE Design v. Mortgage Exchange: Illinois State Appellate Court Dismisses Petition Seeking Leave To Appeal Denial Of Class Action Treatment Agreeing With Defense That Petition Was Untimely

Petition Seeking Review of Trial Court Order Denying Motion to Certify Class Action was Untimely thus Compelling Dismissal of the Petition for Lack of Jurisdiction

Plaintiffs filed a putative class action lawsuit in Illinois state court against The Mortgage Exchange alleging violations of the federal Telephone Consumer Protection Act of 1991 (TCPA) and the state’s consumer fraud and deceptive business practices arising out of defendant’s transmission of unsolicited advertisements via facsimile. CE Design, Ltd. v. The Mortgage Exchange, Inc., 872 N.E.2d 1056, 1057 (Ill.App. 2007). Plaintiffs moved the trial court for an order certifying the litigation as a class action; defense attorneys opposed the motion on the grounds, inter alia, that “issues such as the specific receipt of and consent to receive a facsimile transmission by each class member were not common issues.” Id., at 1057-58. On October 13, 2006, the trial court agreed with the defense and refused to certify a class action holding, also, that class action treatment was inappropriate because in enacting the TCPA Congress “envisioned individual, small claims litigation, not private class actions with potential recoveries in the millions of dollars.” Id., at 1058. Plaintiffs sought reconsideration of the denial of class certification, which the trial court denied on February 22, 2007. Plaintiffs sought leave to appeal the denial of class action treatment, and defense attorneys moved to dismiss plaintiffs’ petition for lack of jurisdiction. Id. The appellate court granted the defense motion holding that plaintiffs’ petition was untimely.

Under Illinois state court rules, plaintiffs’ petition had to be filed “within 30 days after the entry of the order”; plaintiffs acknowledge that they failed to meet this deadline but argued the time for filing the petition was tolled during the pendency of the motion for reconsideration, or alternatively that the motion for reconsideration was a “new motion” for certification of a class action. CE Design, at 1059. The appellate court rejected each argument. With respect to the tolling argument, the appellate court observed that “[t]here is no provision in the rule that allows a motion to reconsider an interlocutory order to extend the time for filing the petition for leave to appeal,” and that case law holds that the time period is not tolled. Id. (citations omitted). The court was unconvinced that motions to reconsider class certification orders should be an exception to this rule. Id., at1060.

Continue reading "Class Action Defense Cases-CE Design v. Mortgage Exchange: Illinois State Appellate Court Dismisses Petition Seeking Leave To Appeal Denial Of Class Action Treatment Agreeing With Defense That Petition Was Untimely" »

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

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FLSA Class Action Defense Cases-Rubery v. Buth-Na-Bodhaige: New York Federal Court Denies Defense Motion To Dismiss Class Action Alleging Violations Of Fair Labor Standards Act (FLSA) As Premature

Motion to Dismiss Class Action Based on Rule 68 Offer of Judgment to Plaintiff Premature Because Court had not yet Ruled on Plaintiff Motion to Certify Class Action New York District Court Holds

Plaintiff filed a class action against her employer, Buth-Na-Bodhaige, for violations of the federal Fair Labor Standards Act (FLSA) arising out of its alleged failure to pay managers overtime and misclassification of its managers as “exempt” employees. Rubery v. Buth-Na-Bodhaige, Inc., 494 F.Supp.2d 178, 179 (W.D.N.Y. 2007). Plaintiff asked the court to conditionally certify a collective action under FLSA and to certify a class action, but the motions were stayed pending a ruling on certain dispositive motions. Id. Plaintiff then renewed her motions for class action treatment, and defense attorneys responded with a Rule 68 offer of judgment, id. Plaintiff did not accept the offer, and subsequently filed more than 50 consent forms executed by putative class members that authorized plaintiff to proceed on their behalf. Id. The defense argued that the offer of judgment divested the district court of jurisdiction over plaintiff’s FLSA claims and moved to dismiss the class action, id., at 179-80. The district court denied the motion.

The federal court explained that, because its jurisdiction is limited to actual cases and controversies, “[w]hen a defendant offers a plaintiff all of the relief she seeks, the plaintiff's personal stake in the litigation is vitiated, and the issues presented are no longer considered to be ‘live.’” Rubery, at 180 (citing Fox v. Board of Trustees of State University of New York, 42 F.3d 135, 140 (2d Cir.1994)). The complaint is therefore subject to dismissal because “there is no justification for taking the time of the court and the defendant in the pursuit of minuscule individual claims which defendant has more than satisfied.” Rubery, at 180 (quoting Abrams v. Interco Inc., 719 F.2d 23, 32 (2d Cir.1983) and citing Central States Southeast & Southwest Areas Health & Welfare Fund v. Merck, 433 F.3d 181, 197-198 (2d Cir.2005)). In the Second Circuit, district courts have held that a defense offer of judgment to pay damages in full warrants dismissal of the complaint even if the offer has been rejected. Id. However, this rule does not apply if the offer of judgment “fails to satisfy ‘all damages for all plaintiffs,’ such as where the amount owed to plaintiff is in dispute, or where additional plaintiffs have opted in and not been extended offers of judgment.” Id. Additionally, courts are “mindful of the inherent danger that motions to dismiss grounded on a Rule 68 offer may be wielded as a strategic weapon to frustrate the FLSA's very object-ensuring that every employee receives ‘a fair day's pay for a fair day's work.’” Id., at 180-81 (quoting A.H. Phillips v. Walling, 324 U.S. 490, 493 (1945))

In light of the guiding principles set forth in the court’s opinion, the district court concluded that the defense motion to dismiss was premature because it was made prior to the court’s decision on whether to grant class action status to the case. Rubery, at 181. Accordingly, it denied the motion without prejudice. Id.

Download PDF file of Rubery v. Buth-Na-Bodhaige

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

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UCL Class Action Defense Cases-Alvarado v. Selma Convalescent Hospital: California Court Holds That Class Action Alleging Violations Of Unfair Competition Law (UCL) Properly Dismissed Under Doctrine Of Judicial Abstention

Trial Court Properly Abstained from Resolving Class Action Claims that would Require it to “Assume General Regulatory Powers over the Health Care Industry through the Guise of Enforcing the UCL” California Court Holds

Plaintiff (now deceased) filed a putative class action in California state court against numerous skilled nursing and intermediate care facilities alleging violations of the state’s unfair competition law (UCL) for failing to comply with the nursing hour requirements set forth in Health and Safety Code § 1276.5(a). Alvarado v. Selma Convalescent Hosp., 153 Cal.App.4th 1292, 64 Cal.Rptr.3d 250, 251-52 (Cal.App. 2007). Defense attorneys demurred to the class action complaint, arguing that the court “should abstain from adjudicating the action or defer to the primary jurisdiction of the [Department of Health Services (DHS)]” and arguing further that no private right of action exists under § 1276.5(a). Id., at 253. Plaintiff disputed these arguments, and argued that the doctrine of “primary jurisdiction” did not apply, id. The trial court granted the defense motion and dismissed the class action with prejudice, holding that even assuming plaintiff could pursue a private action under § 1276.5, it nevertheless had discretion to abstain from hearing the case. Id. The appellate court affirmed the dismissal of the class action complaint, explaining at page 252: “Adjudicating the alleged controversy would have required the trial court to become involved in complex health care matters concerning the staffing of skilled nursing and intermediate care facilities and assume regulatory functions of the [DHS]. In addition, granting and enforcing the requested relief would place an unnecessary burden on the trial court given the power of the DHS to monitor and enforce compliance with section 1275.6.”

Noting that the question before it was whether the trial court abused its discretion by abstaining from adjudicating the alleged controversy,” Alvarado, at 253, the Court of Appeal began by observing that the UCL claims in the class action complaint sought equitable relief, and that “[b]ecause these remedies are equitable in nature, under the doctrine of judicial abstention, courts have the discretion to abstain from employing them,” id., at253-54 (citation omitted). In broad terms, the judicial abstention doctrine may be invoked “when the lawsuit involves determining complex economic policy which is best handled by the legislature or an administrative agency” or “where granting injunctive relief would be unnecessarily burdensome for the trial court to monitor and enforce given the availability of more effective means of redress.” Id., at 254 (citations omitted). Thus, a court should abstain if “granting the requested relief would require a trial court to assume the functions of an administrative agency, or to interfere with the functions of an administrative agency.” Id. (citations omitted).

Continue reading "UCL Class Action Defense Cases-Alvarado v. Selma Convalescent Hospital: California Court Holds That Class Action Alleging Violations Of Unfair Competition Law (UCL) Properly Dismissed Under Doctrine Of Judicial Abstention" »

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

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Class Action Defense Cases-Blackwell v. SkyWest: California Federal Court Refuses To Certify Labor Law Class Action Against Airline

Class Action Treatment of Labor Law Violation Claims not Warranted because Individual Issues Predominate over Common Issues thus Failing to Meet the Requirements of Rule 23(b)(3) California Federal Court Holds

Plaintiff filed a putative class action in California state court against her employer, SkyWest Airlines alleging violations of various state labor laws including failure to pay overtime and failure to provide and/or compensate for meal breaks. Blackwell v. SkyWest Airlines, Inc., ___ F.Supp.2d ___, Slip Opn., at 2 (S.D. Cal. August 30, 2007). Defense attorneys removed the action to federal court on the basis of the Class Action Fairness Act of 2005 (CAFA), id. Plaintiff filed a motion with the district court to certify the litigation as a class action, id., at 1, seeking to represent five classes, id., at 4; the district court agreed with defense attorneys that class action treatment would be inappropriate and denied the motion.

The district court readily concluded that the proposed classes, consisting of an estimated 2600 members, satisfied the numerosity requirement of Rule 23(a)(1), Blackwell, at 5-6, and that plaintiff had established the commonality requirement of Rule 23(a)(2) for each proposed class, id., at 6-9. The federal court additionally found that plaintiff would adequately represent the proposed classes within the meaning of Rule 23(a)(4), id., at 13-14. However, the typicality test of Rule 23(a)(3) proved more problematic. The district court agreed with defense attorneys that plaintiff lacked standing to pursue the class action claim alleging inaccurate wage statements under Labor Code § 226(a) because she failed to file her class action complaint within one year of her last wage statement. Id., at 10-11. The court further found that plaintiff failed to provide sufficient evidence to support her class action allegation based on voluntary shift trades, id., at 11-12.

Turning to the requirements of Rule 23(b), the district court noted that “[t]he Ninth Circuit has adopted an ‘extremely conservative view’ [with respect to Rule 23(b)(1)], requiring a finding that either ‘(1) rulings in separate actions would subject defendant to incompatible judgments requiting inconsistent conduct to comply with the judgment; or (2) a ruling in the first of a series of separate actions will “inescapably alter the substance of the rights of others having similar claims.”’” Blackwell, at 15 (citation omitted). The court agreed with defense attorneys that plaintiff failed to establish that either test had been met, id., at 15-16. The federal court next held that a Rule 23(b)(2) class action would be inappropriate because the monetary relief sought by the class action complaint was not “merely incidental to the injunctive relief sought.” Id., at 16.

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

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Class Action Filings Rise But Labor Law Class Action Cases Continue To Lead List Among New Class Action Lawsuits In California State And Federal Courts

As a resource for 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 report covers the time period from September 14 – September 20, 2007, during which time 48 new class action lawsuits were filed in these California state and federal courts. As is generally the case, employment law class action cases once again led the list of class action filings with 15 new lawsuits, representing 31% of the total number of new class actions, but that percentage is down significantly from its lasgt week, when 62% of the total number of new class actions filed involved labor law claims. Class actions under California's unfair competition law, which includes false advertising claims, came in a distant second with 7 new filings (15%), followed by five (5) new antitrust class action filings (10%).

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

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Class Action Plaintiff Lawyer Melvin Weiss Indicted Only Days After William Lerach Pleads Guilty To Criminal Conspiracy Charges

Molly Selvin of the Los Angeles Times reports today that class action plaintiff lawyer Melvin Weiss has been indicted “on charges that he participated in a kickback scheme that allegedly netted millions of dollars in illicit legal fees.” The federal indictment comes on the heels of a guilty plea by class action plaintiff lawyer William Lerach, who was once a partner at Milberg Weiss, to charges of criminal conspiracy. The recent indictment added to the criminal charges filed against the law firm of Milberg Weiss and two of its named partners, Steve Schulman and David Bershad, last year. The amended federal indictment also comes on the heels of Schulman’s guilty plea to federal racketeering and conspiracy charges, Ms. Selvin reports. According to the amended indictment, Milberg Weiss paid illegal kickbacks in 225 shareholder class action lawsuits (up from the 150 class actions alleged in the original indictment) and illegally earned $250 million in attorney fees (up from $200 million).

Ms. Selvin’s article, entitled “Law firm founder indicted: Melvyn Weiss is alleged to have participated in a scheme to make secret payment to plaintiffs in class-action cases,” may be found in the Business Section of the September 21, 2007 edition of the Los Angeles Times.

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

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Wall Street Journal Reports On Federal Indictment Of Class Action Plaintiff Lawyer Melvyn Weiss On Illegal Kickback Charges

Nathan Koppel of the Wall Street Journal reports today on the long-anticipated criminal charges leveled against well known class action plaintiff lawyer Melvyn Weiss. The criminal charges are contained in an amendment to the federal indictment handed down last year against the plaintiff class action law firm of Milberg Weiss and two of its named partners, Steven Schulman and David Bershad. The criminal charges against Weiss comes just days after former Milberg Weiss attorney William Lerach, himself a well-known class action plaintiff lawyer, pleaded guilty to federal conspiracy charges, and to the guilty plea of Steve Schulman to federal racketeering and conspiracy charges.

Mr. Koppel’s article, entitled “In Role Reversal, Melvyn Weiss is Indicted: High-Profile Lawyer is Accused of Kickbacks to Class-action Clients,” may be found on page A11 of the September 21, 2007 edition of the wall Street Journal.

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

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GM-OnStar Class Action Defense Case-In re General Motors OnStar: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Eastern District of Michigan

Judicial Panel Grants Defense Request, Opposed by Certain Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Concurs with Defense Recommendation to Transfer Class Actions to Eastern District of Michigan

Four putative class action lawsuits (three in Michigan and one in California) were filed against General Motors “relating to (1) the impact of the conversion of the cellular network from an analog/digital network to a digital-only network on December 31, 2007, and (2) the availability of OnStar service in certain vehicles thereafter.” In re General Motors OnStar Contract Litig., 502 F.Supp.2d 1357, 2007 WL 2386412, *1 (Jud.Pan.Mult.Lit. 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 the Eastern District of Michigan, where three of the class actions were pending. The Michigan plaintiffs supported this defense request; the California plaintiffs opposed centralization. Id. The Judicial Panel granted the motion to centralize the class actions and agreed with the defense transferee court recommendation “because (1) three actions and a potential tag-along action are currently pending in this district, and (2) relevant documents and witnesses are likely located in or near defendants’ facilities in Michigan.” Id.

Download PDF file of In re General Motors OnStar Transfer Order

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

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Securities Fraud Class Action Defense Cases-In re JDS Uniphase: California Federal Court Holds Certain Claims In Securities Fraud Class Action May Proceed To Trial But Grants Defense Summary Judgment Motion As To Most Claims

Defense Motion for Summary Judgment in Securities Fraud Class Action Warranted as to 28 Statements Challenged by Class Action Complaint but Triable Issues Existed as to Remaining Class Action Claims California Federal Court Holds

Plaintiffs filed a securities fraud class action in California federal court against JDS Uniphase and certain officers alleging violations of Sections 11 and 15 of the federal Securities Act of 1933, and Sections 10(b), 14, 20(a) and 20A of the Securities Exchange Act of 1934 and Rules 10b-5 and 14a-9 promulgated under the Exchange Act. In re JDS Uniphase Corp. Sec. Litig., Slip Opn., at 1-2 and 6-7 (N.D. Cal. August 24, 2007). JDS Uniphase manufactures and supplies components of fiber-optic networks. Id., at 2. The class action alleges that the company and its officers falsely represented the company’s financial condition in order to artificially inflate the stock price, in part so JDS could purchase other companies “for less than their worth.” Id., at 3. After the court certified the litigation as a class action, defense and plaintiff attorneys filed cross-motions for summary judgment, id., at 1-2. The district court granted the defense motions in part and deferred ruling on plaintiffs’ motion; in so ruling, the federal court held that certain disputes could be resolved only at trial.

At the time the defense filed its summary judgment motion, plaintiffs were challenging 56 separate statements. JDS, at 10. The defense argued that it was entitled to judgment as to 24 of these statements either because plaintiffs failed to include them in the class action complaint or because plaintiffs abandoned them, id., at 9-10. The district court concluded: (1) plaintiffs did not abandon any claims raised in the class action complaint, id., at 10; (2) despite the holding in Kaplan v. Rose, 49 F.3d 1363 (9th Cir. 1994), plaintiffs were entitled to leave to amend to add 16 of the challenged statements to the class action complaint, id., at 10-12; and (3) plaintiffs failed to properly place at issue three of the statements challenged by the defense, and so the motion for summary judgment was granted as to those statements, id., at 13.

Continue reading "Securities Fraud Class Action Defense Cases-In re JDS Uniphase: California Federal Court Holds Certain Claims In Securities Fraud Class Action May Proceed To Trial But Grants Defense Summary Judgment Motion As To Most Claims" »

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

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Wall Street Journal Reports On Criminal Conspiracy Guilty Plea By Class Action Plaintiff Lawyer William Lerach

Nathan Koppel of the Wall Street Journal reports today on the guilty plea by leading class action plaintiff lawyer William Lerach to criminal conspiracy charges arising out of illegal kickbacks to plaintiffs in class action shareholder lawsuits. The plea arises from the criminal indictment filed last year against the well known plaintiff class action law firm Milberg Weiss and two of its named partners, Steven Schulman and David Bershad. The guilty plea was announced just days after Lerach resigned from his law firm to reportedly focus on his defense against the as-then uncharged allegations of criminal wrongdoing.

Mr. Koppel’s article, entitled “Investigation of Milberg Lands a Pivotal Figure: Lerach Agrees to plea, Could Go to Prison; gains Forfeited to U.S.,” may be found on page B4 of the September 19, 2007 edition of the wall Street Journal.

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

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Vioxx Class Action Defense Cases-Int’l Union v. Merck: New Jersey Supreme Court Reverses Certification Of Nationwide Vioxx Class Action Holding That Common Questions Of Fact Or Law Do Not Predominate And Class Action Not Superior Means For Redress

Trial Court Erred in Certifying Nationwide Class Action Against Merck Arising out of Sale of Vioxx because Class Action Treatment is not Superior to Other Avenues of Redress and because Defense Correctly Argued that Common Questions of Fact or Law do not Predominate New Jersey Supreme Court Holds

Plaintiff - “a joint union-employer Taft-Hartley trust fund” that “acts as a party to benefit contracts, a policy issuer, and a sponsor of health benefit plans that provide prescription drug coverage for its members and beneficiaries” and “is therefore a third-party payor, meaning that it makes payments to pharmaceutical companies for prescription medications for those for whom its benefit plans afford coverage” - filed a putative class action in New Jersey state court against Merck arising out of its manufacture and sale of Vioxx. Int’l Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., Inc., ___ A.2d __, Slip Opn., at 6 (N.J. Sept. 6, 2007). Specifically, the class action complaint alleged that Merck engaged in a “wide-ranging fraudulent marketing scheme” to sell Vioxx, with the class action alleging that Merck “marketed its product as a safer and more effective alternative to other traditional pain medications, thus driving the price of its product substantially higher than the price charged for similar medications.” Id., at 6-7. The class action further alleged that Merck continued to make these marketing representations “through an aggressive marketing campaign” after it knew that Vioxx “was neither more effective nor safer than other available products.” Id., at 7. Plaintiff filed a motion seeking certification of a nationwide class action against Merck; the trial court rejected defense attorney arguments against class action treatment and granted plaintiff’s motion. Id., at 4-5. The New Jersey Supreme Court reversed.

The interest plaintiff had in pursuing a putative nationwide class action is summarized below (see Note). “Central to plaintiff’s class action assertions is its argument that defendant engaged in a fraudulent marketing campaign that induced, or was intended to induce, all third-party payors to accord Vioxx preferred status in their formularies.” Merck, at 12-13. Defense attorneys argued that this “amounts to nothing more than a ‘fraud on the market’ theory that cannot be sustained in accordance with [New Jersey] law.” Id., at 13. The trial court order certifying a nationwide class action was affirmed by the New Jersey Appellate Division, id., at 4-5, but the Supreme Court reversed.

After summarizing New Jersey law on class actions, see Merck, at 14-18, and the findings of the trial court and appellate court on the topics of predominance and superiority, including choice of law, id., at 18-21, the Supreme Court turned to the defense arguments that predominance and superiority were not met, id., at 22. With respect to predominance, the defense conceded that there were “some common questions” in that “[Merck’s] marketing plan and withholding of adverse information did not vary as among potential consumers” and the “facts as they relate to the FDA warning letters or the drug’s eventual withdrawal from the market” were the same. Id., at 22. The Supreme Court explained, however, that in New Jersey the consumer fraud statute does not require a showing of reliance but does require a showing of an “ascertainable loss.” Id., at 23-24. While plaintiff urged the Court to consider generally that Merck’s marketing scheme was the same for all class members, the Supreme Court rejected this limited view of predominance, explaining at pages 26 and 27:

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

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State and City of New York File Lawsuit Against Merck Seeking Restitution of Medicaid and Prescription-Drug Payments Made for Vioxx

Heather Won Tesoriero of the Wall Street Journal reports today that the State of New York and New York City have filed a lawsuit against Merck seeking tens of millions of dollars for payments made from 1999 through 2004 on Vioxx through Medicaid and a prescription-drug assistance program for the elderly. According to the lawsuit, “Merck tried to distort each negative disclosure about Vioxx. Merck cherry-picked outcomes from its own research, omitting material information that would have communicated Vioxx’s real cardiovascular dangers.” The lawsuit comes on the heels of a significant victory for Merck’s class action defense team, as the New Jersey Supreme Court reversed an order certifying a Vioxx class action against Merck.

Ms. Tesoriero’s article, entitled “New York Sues Merck Over Vioxx,” may be found on page D7 of the September 18, 2007 edition of the Wall Street Journal.

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

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Leading Class Action Plaintiff Lawyer William Lerach To Plead Guilty To Conspiracy In Illegal Kickback Scheme

Securities Fraud Class Action Plaintiff Lawyer William Lerach Reportedly Agrees to Plead Guilty to Conspiracy in Paying Kickbacks to Class Representative

On the heels of our report that William Lerach announced his resignation in order to focus his energies on defending himself against the as-then unannounced criminal charges leveled against him in the wake of the federal court indictment of Milberg Weiss and two of its named partners, Molly Selvin reports today that Lerach that agreed to plead guilty to one count of conspiracy. According to Ms. Selvin’s sources, Lerach faces up to two years in prison and “will pay a fine of several million dollars under the terms of the deal.” However, Lerach reportedly “refused to cooperate with the government in its case against Milberg Weiss.” Barry Meier of the New York Times reports that neither Lerach nor his defense attorney, John Keker, returned telephone calls, and that the U.S. Attorney’s Offices declined to comment on the purported guilty plea.

Molly Selvin’s article entitled, “Top class-action lawyer may plead guilty in kickbacks,” may be found in the Business Section of the September 18, 2007 edition of the Los Angeles Times.

Mr. Meier’s article entitled, “Guilty Plea Is Expected In Kickbacks At Law Firm,” may be found in Section C. of the September 18, 2007 edition of the New York Times.

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

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Class Action Defense Cases-Catalyst v. Kaiser: California Court Upholds Dismissal Of Class Action Because Established Business Relationship Exception Precluded Class Action Complaint Claims Alleging Violations Of The Telephone Consumer Protection Act

While the Telephone Consumer Protection Act Prohibits Sending Unsolicited Advertisements via Facsimile, Trial Court Properly Dismissed Class Action Complaint because “Established Business Relationship” Exception Applied California Appellate Court Holds

Plaintiff Catalyst Strategic Design filed a putative class action in California state court against its insurer, Kaiser Foundation Health, alleging violations of the Telephone Consumer Protection Act of 1991 (TCPA) and California’s Unfair Competition Law (UCL) arising out of the insurer faxing an unsolicited advertisement to the company. Catalyst Strategic Design, Inc. v. Kaiser Found. Health Plan, Inc., 153 Cal.App.4th 1328, 1330-31 (Cal.App. 2007). Defense attorneys moved for summary judgment on the ground that it had an “established business relationship” with Catalyst based on their numerous discussions about insurance coverage and, thus, Catalyst is deemed under federal regulations to have consented to receiving the faxed advertisement, id., at 1331. The district court agreed and dismissed the class action. The California Court of Appeal affirmed.

In August 2001, Catalyst Strategic Design contacted Kaiser regarding health insurance for its employees, and provided Kaiser with its fax number so that it could receive written information on Kaiser's health plans; however, Catalyst did not sign up for insurance coverage with Kaiser at that time. Catalyst, at 1330. “Over the next year and a half, Kaiser contacted Catalyst about a dozen times by phone and in writing, including faxes, to discuss Kaiser's on-going individual coverage of Catalyst's president and in the hope of selling coverage to the company's employees”; in January 2003, Catalyst told Kaiser it no longer intended to buy insurance coverage for its employees, but it did not tell Kaiser to stop contacting it about insurance. Id., at 1331. In May 2004, Kaiser faxed a one-page ad to Catalyst about various health plans: in response, Catalyst filed a class action lawsuit alleging violations of the TCPA, which generally prohibits faxing unsolicited advertisements. Id. The class action complaint also alleged violations of California’s UCL, id.. Based on these facts, defense attorneys argued that Kaiser was entitled to send the fax to Catalyst because they had an “established business relationship” within the meaning of the federal regulations governing the TCPA, id. The district court agreed and dismissed the class action complaint. Id.

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

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CAFA Class Action Defense Cases-Lott v. Pfizer: Seventh Circuit Holds Defense Basis For Erroneous Removal Of Class Action Pursuant To CAFA (Class Action Fairness Act of 2005) Was Objectively Reasonable So Sanction Award Was Improper

District Court Erred in Awarding Attorney Fees Against Defendant for Removing Class Action Under CAFA (Class Action Fairness Act of 2005) Because even though Basis for Removal was Flawed - that Class Action was “Commenced” when Removed rather than when Filed - Defense had Objectively Reasonable Grounds for its Interpretation of the Statute Seventh Circuit Holds

In an effort to avoid removal to federal court, plaintiffs filed a putative class action in Illinois state court on February 17, 2005: the class action alleged violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act in that defendant Pfizer misrepresented the health risks of using Celebrex and Bextra, and charged more than fair market value for these drugs. Lott v. Pfizer, Inc., 492 F.3d 789, 790-91 (7th Cir. 2007). Defense attorneys removed the class action to federal court on the basis of CAFA, id., at 790, arguing that the action “commenced” when defense attorneys removed the class action to federal court, id., at 791. The district court remanded the class action to state court on the ground that CAFA applied only to class actions filed after CAFA’s effective date, and awarded attorney fees and costs against Pfizer. Id. The defense appealed the award of fees and the Seventh Circuit reversed.

We do not here discuss the unsuccessful arguments made by the defense in support of removal, both under CAFA and under traditional diversity jurisdiction: suffice it to say that the district court remanded the class action to state court based on its conclusion that it lacked subject matter jurisdiction and that the requirements for diversity jurisdiction had not been met - a decision affirmed by the Seventh Circuit in Pfizer, Inc. v. Lott, 417 F.3d 725, 727 (7th Cir.2005), which held that for purposes of CAFA jurisdiction a class action was “commenced” when it was “filed” not when it was “removed,” and that Pfizer had not established diversity jurisdiction. We address here the defense appeal from the award of attorney fees against Pfizer.

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

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Employment Law Class Action Cases Only Category To Break 10% Threshold Of New Class Action Filings In California State And Federal Courts

In order to assist class action defense attorneys anticipate the type of cases against which they will 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 September 7 – September 13, 2007, during which time 39 new class action lawsuits were filed in these California state and federal courts. Labor law class action cases generally lead the list by a wide margin, and this past week was no exception with almost 2 out of every 3 new class actions falling into this category. In fact, employment class action cases proved to be the only category of cases to meet the 10% threshold. New labor class action cases led the list with 24 new lawsuits, representing 62% of the total number of new class actions filed.

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

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FACTA Class Action Defense Cases-In re Charlotte Russe: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Central District of California

Judicial Panel Grants Defense Request, Opposed by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees to Transfer Class Actions to Central District of California as Requested by Defense

Two class action lawsuits were filed against Charlotte Russe alleging violations of the federal Fair and Accurate Credit Transactions Act (FACTA) by failing to block certain credit and debit card information from customer receipts. In re Charlotte Russe, Inc., Fair & Accurate Credit Trans. Act (FACTA) Litig., 505 F.Supp.2d 1377, 1378 (Jud.Pan.Mult.Lit. 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 the Central District of California, id., at 1377.. Plaintiffs’ lawyers in both the California and the Pennsylvania class actions opposed centralization, particularly because the Central District of California had refused to certify FACTA class actions in several cases including in the California plaintiffs’ action. Id., at 1378. The Judicial Panel granted the motion to centralize the class actions (recognizing that technically only one of them remained a class action) because the statutory requirements have been met: “Each action involves allegations that Charlotte Russe’s printing of certain credit and debit card information on customer receipts violated [FACTA]. Centralization…will eliminate duplicate discovery; prevent inconsistent pretrial rulings, especially with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also agreed that the Central District of California is the appropriate transferee court because the first class action was filed there and because defendant’s headquarters are in California. Id., at *2.

Download PDF file of In re Charlotte Russe Transfer Order

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

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SLUSA Class Action Defense Cases-Disher v. Citigroup: Illinois Federal Court Holds Securities Class Action Must Remanded To State Court But Holds Further That SLUSA Bars Prosecution Of Class Action Claims

While Defense Failed to Timely Remove Class Action to Federal Court Thereby Necessitating Remand of the Class Action Complaint to State Court, the Class Action Claims are Precluded by SLUSA (Securities Litigation Uniform Standards Act) thus Entitling Defense to Judgment in State Court Illinois District Court Holds

Plaintiff filed a putative class action in Illinois state court against securities brokerage firm Citigroup, as successor in interest to Salomon Smith Barney, seeking damages because it allegedly “disseminated misleading research concerning the value of shares in certain Internet and telecommunications companies, thereby inducing Smith Barney customers like [plaintiff] to hold the shares.” Disher v. Citigroup Global Markets, Inc., 487 F.Supp.2d 1009, 1012 (S.D. Ill. 2007). Defense attorneys removed the class action federal court under the Securities Litigation Uniform Standards Act (SLUSA), but the district court remanded the matter to state court, id. On appeal, the Seventh Circuit reversed, holding that SLUSA applied and required dismissal of the class action complaint, id., at 1012-13 (see Disher v. Citigroup Global Markets, Inc., 419 F.3d 649 (7th Cir. 2005)). The Supreme Court granted certiorari and reversed, holding that district court remand orders of class actions removed under SLUSA are not reviewable on appeal, see Disher v. Citigroup Global Markets, Inc., ___ U.S. ___, 126 S.Ct. 2964 (2006), causing the class action to wind its way back to state court, id., at 1013. Once there, defense attorneys again removed the class action to federal court, and the plaintiff again sought remand, id. The district court granted the motion finding “procedural defects in removal,” id., at 1012, but essentially hands defense victory on the merits by holding that the class action claims are barred by SLUSA and declaring that holding to be law of the case.

After discussing the general rules governing removal, including the burden placed on the party seeking removal to establish federal jurisdiction and the general rule that removal must be sought within 30 days of service of the initial pleading, see Disher, at 1014-15, the district court turned to whether an amended pleading created a basis to support defense removal of the class action, id., at 1015. Defense attorneys “point[ed] to numerous purported orders or other papers supposedly authorizing removal of the claims” in the class action complaint, id., but the district court found each pleading insufficient to support the delayed filing of the notice of removal including (1) that the motions and orders filed in state court authorized removal, see id., at 1015-17; (2) that plaintiff’s amended class action complaint did not trigger a right of removal because even though “the claims alleged in both [plaintiff’s] original complaint and his amended complaint are precluded by SLUSA,” id., at 1018, the fact remained that the defense failed to timely file its notice of removal and the amended class action complaint did not revive the right to remove because it did not alter the basic nature of the allegations, id., at 1019-22; and (3) that the appellate proceedings did not authorize removal of the action to federal court, id., at 1022. Accordingly, the federal court remanded the putative class action to state court, id., at 1023-24.

But while the district court denied the defense effort to maintain the class action federal court, it nonetheless handed the defense a victory on the merits. The federal court concluded at pages 1022 and 1023,

Continue reading "SLUSA Class Action Defense Cases-Disher v. Citigroup: Illinois Federal Court Holds Securities Class Action Must Remanded To State Court But Holds Further That SLUSA Bars Prosecution Of Class Action Claims" »

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

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FLSA Class Action Defense Cases-De Leon-Granados v. Eller & Sons: Eleventh Circuit Holds That Agricultural Worker Protection Act (AWPA) Class Action May Be Certified Independent Of FLSA Class Action Claims

Where Class Action Asserted Claims Under Both Agricultural Worker Protection Act (AWPA) and Fair Labor Standards Act (FLSA), District Court did not Abuse its Discretion in Certifying AWPA “Opt-Out” Class Action After Conditionally Certifying FLSA “Opt-In” Class Action Eleventh Circuit Holds

Plaintiffs, migrant workers hired under the H2-B non-immigrant visa program, filed a class action in Georgia federal court against Eller & Sons Trees alleging violations of the Migrant and Seasonal Agricultural Worker Protection Act (AWPA) and the Fair Labor Standards Act (FLSA). De Leon-Granados v. Eller & Sons Trees, Inc., ___ F.3d ___, 2007 WL 2456206, *1 (11th Cir. August 31, 2007). Plaintiffs sought class action treatment of their AWPA claims, but the district court denied the motion without prejudice; plaintiffs also sought preliminary certification of a class action under the FLSA, which the district court granted. Id. After conducting additional discovery, and after receiving only 5 “opt-in” requests from among the 1800 notices sent under the FLSA class action, plaintiffs again sought certification of a class action for the AWPA claims. Id. The district court granted the motion and certified a Rule 23(b)(3) “opt out” class action under the AWPA, id. Specifically, the district court certified a class action on behalf of more than 1,500 migrant workers admitted to the United States under the H-2B temporary foreign worker visa program, and sub-class of migrant workers who pledged collateral with Eller & Sons' agents in order to obtain employment. Id., at *2. Defense attorneys filed an interlocutory appeal but the Eleventh Circuit affirmed, holding that the district court did not abuse its discretion in granting plaintiffs’ motion for class action treatment.

Eller & Sons is a small Georgia company that provides reforestation and forestry services; most of its employees plant trees throughout the southern U.S. from December through February. Eller hires people from Guatemala, Honduras and Mexico under the H2-B non-immigrant visa program, and is required to pay hourly wages as determined by the State Workforce Agency (SWA). De Leon-Granados, at *1. The class action complaint alleges that Eller was to pay an average hourly rate of $8.32, well above the federal minimum wage rate, but that it failed to do so. Id. The defense objected to class action treatment, arguing that a collective action under the FLSA would be a superior method of addressing the AWPA claims, but the district court disagreed. Id., at *2. The district court further found that plaintiffs had satisfied the requirements for class actions under Rule 23, id. The appellate court reviewed that ruling for abuse of discretion, id.

Defense attorneys first argued that the AWPA claims were premised on violations of the FLSA and “must therefore be adjudicated as an opt-in collective action under 29 U.S.C. § 216(b) instead of an opt-out Rule 23(b)(3) class action.” De Leon-Granados, at *2-*3. Under the FLSA, class members must affirmatively elect to “opt in” to the class action, but under Rule 23(b)(3) “all qualifying class members become party-plaintiffs unless they opt out of the action.” Id., at *3 (citations omitted). After rejecting defense claims that “the workers' AWPA claims are truly FLSA claims in disguise,” the Eleventh Court concluded that the statutory language of the AWPA indicates Congressional intent to allow such claims to be brought as Rule 23 class actions. Id. The Circuit Court concluded at page *3, “If Congress intended § 216(b) to be the exclusive remedy for violations of the AWPA's wage payment provisions, it would have also said so.” It therefore held that the district court did not abuse its discretion in certifying an AWPA class action, id. (The author notes that there is case law holding that it is improper to certify “opt in” and “opt out” classes as part of the same action, but it does not appear that defense attorneys asserted this objection.)

Continue reading "FLSA Class Action Defense Cases-De Leon-Granados v. Eller & Sons: Eleventh Circuit Holds That Agricultural Worker Protection Act (AWPA) Class Action May Be Certified Independent Of FLSA Class Action Claims" »

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

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Arbitration Class Action Defense Cases-Dale v. Comcast: Eleventh Circuit Distinguishes Prior Cases Upholding Class Action Waivers And Holds Class Action Waiver And Arbitration Clause Unconscionable

Absence of Ability to Recover Attorney Fees Rendered Class Action Waiver and Arbitration Clause Unconscionable Because it would Effectively Insulate Company from Liability for Small-Value Claims Eleventh Circuit Holds

Plaintiffs filed a class action lawsuit in Georgia federal court against their cable television provider, Comcast, alleging violations of the federal Cable Communications Policy Act of 1984 (Cable Act), 47 U.S.C. § 521 et seq., by miscalculating the “pass-through” franchise fees charged customers. Dale v. Comcast Corp., 498 F.3d 1216, 2007 WL 2471222, *1 (11th Cir. 2007). Defense attorneys moved to dismiss the class the action and compel arbitration based on the arbitration clause contained in the subscriber agreements; the district court granted the motion and dismissed the class action. Id. The Eleventh Circuit reversed, concluding the arbitration agreement and class action waiver provision to be unenforceable.

Defense attorneys argued that the class action had to be dismissed because in 2004, either in the “welcome kit” given new subscribers or with the December invoice of existing subscribers, each customer received a “Policies and Procedures” notice that contained a mandatory arbitration clause. Dale, at *1. The arbitration clause contained a class action waiver provision, id., and “Comcast argued the subscribers accepted the Arbitration Provision, including the class action waiver, by their continued subscription to Comcast’s services after receiving the notices,” id., at *2. Plaintiffs argued that the damages suffered by the class in this case were $0.66 every three months, or a total of $10.56 over the four-year class period, and so the class action waiver was substantively unconscionable because “if Comcast’s class action waiver is held valid, they will effectively be denied any remedy.” Id., at *3. Plaintiffs also challenged the arbitration fee structure imposed under the subscriber agreement, which placed on subscribers the financial burden of attorney fees and all costs incurred in the arbitration other than the filing fee and arbitrator’s costs. Id. The district court rejected plaintiffs’ argument that the class action waiver was unconscionable, dismissed the class action, and compelled arbitration of the dispute. Id., at *2.

Continue reading "Arbitration Class Action Defense Cases-Dale v. Comcast: Eleventh Circuit Distinguishes Prior Cases Upholding Class Action Waivers And Holds Class Action Waiver And Arbitration Clause Unconscionable" »

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

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Kansas Federal Court Gives Final Approval to $57 Million Class Action Settlement In Labor Law Class Action Against Sprint Alleging Discriminatory Firing Of Employees Over Age 40

The Kansas City Business Journal reports that federal judge John Lungstrum has given final approval to a $57 million settlement of an employment discrimination class action against Sprint. The class action, filed in Kansas federal court, alleged that Sprint unlawfully fired nearly 1,700 employees because of their age. The Business Journal reports that the class action plaintiffs charged Sprint with using a computerized performance management system that unfairly singled out employees over 40 for termination. The settlement purportedly allocates approximately $20 million to class counsel.

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

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Tobacco Class Action Defense Cases-Good v. Altria Group: First Circuit Holds That Class Action Claims Challenging "Light" And "Low Tar" Labels Not Preempted By Federal Law And Reverses Dismissal Of Class Action

District Court Erred in Granting Defense Motion to Dismiss Class Action Challenging Advertising of “Light” and “Low Tar” as Expressly Preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA) First Circuit Holds

Plaintiffs filed a class action against Philip Morris and others violations of the state’s unfair and deceptive business practices statutes arising out of its design, marketing and sale of “light” and “low tar” cigarettes, which plaintiffs argued suggested that they were “safer” - i.e., lower in tar and nicotine - than regular cigarettes. Good v. Altria Group, Inc., ___ F.3d ___, Slip Opn., at 2-3 (1st Cir. August 31, 2007). Defense attorneys moved the federal court for summary judgment on the ground that the claims in the class action complaint were preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA), id., at 2. The district court agreed the dismissed the class action, but the First Circuit reversed, concluding that the class action claims were not preempted.

Plaintiffs alleged that they had smoked for 15 years. Good, at 2. The class action apparently did not contest that under the “Cambridge Filter Method” test conducted using a machine that “smoked” cigarettes and collected tar and nicotine for weighing, less tar and nicotine was drawn into the filter using “light” or “low tar” cigarettes. Id., at 3. Rather, plaintiffs alleged that a smoker “engages in unconscious behavior that essentially negate” the benefits sought to be achieved by the cigarette filter design, id. The class action claimed that defendants knew of this “compensation” effect yet marketed “light” cigarettes with an intent to deceive smokers into believing that the cigarettes were less harmful, id., at 4. Defense attorneys argued that the FCLAA expressly preempted the class action claims, id., at 5. Alternatively, the defense argued that the class action claims were implicitly preempted by “the efforts of Congress and the [Federal Trade Commission] for 40 years to implement to a national, uniform policy of informing the public about the health risks of smoking,” id. Finally, the defense argued that the state law claims in the class action complaint, brought under the Maine Unfair Trade Practices Act, id. The thrust of Philip Morris’ argument was the FTC’s “comprehensive, nationwide program regulating the disclosure of tar and nicotine yields,” id., at 5, and that tobacco companies have been complying with FTC pronouncements concerning tar and nicotine content of cigarettes, id., at 5-8. Accordingly, the class action constituted, in effect, “a challenge to the FTC’s regulatory scheme,” id., at 8. The district court agreed and dismissed the class action finding that it was expressly preempted by the FCLAA, id., at 8-9.

Continue reading "Tobacco Class Action Defense Cases-Good v. Altria Group: First Circuit Holds That Class Action Claims Challenging "Light" And "Low Tar" Labels Not Preempted By Federal Law And Reverses Dismissal Of Class Action" »

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

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Labor Law Class Actions Continue To Lead List Of New Class Action Filings In California State And Federal Courts

As a resource to California class action 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 report covers the time period from August 31 – September 6, 2007, during which time 44 new class action lawsuits were filed in these California state and federal courts. Employment law class action cases generally lead the list by a substantial margin, and this proved true once again. New labor class action cases led the list with 19 new lawsuits (6 of which involved claims under the Hotel Service Charge Reform Ordinance, representing 43% of the total number of new class actions filed. While there was a three-way tie for second place, no other category of class action filings came close. Six (6) new class action lawsuits, representing 14% of the new class action cases, were filed alleging violations of (a) California's unfair competition laws, which include false advertising claims, (b) federal securities laws, and (c) federal Truth in Lending Act (TILA).

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

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Class Action Defense Cases-In re Vonage: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff's Motion To Centralize Class Action Litigation In District of New Jersey

Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Rejecting Objection by one Group of Plaintiffs, and Concurs with Request to Transfer Class Actions to District of New Jersey

Four putative class action lawsuits were filed (two in California, one in New Jersey and one in Washington) against various Vonage entities challenging defendants’ marketing and sales practices with respect to its internet telephone services, including its “one free month” trial period. In re Vonage Marketing & Sales Practices Litig., 505 F.Supp.2d 1375, 1376 (Jud.Pan.Mult.Lit. 2007). Plaintiff's lawyer in the New Jersey class action 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 that district, and defense attorneys for the common defendants supported the motion, id. Plaintiff’s lawyer in the Southern District of California class action voiced the sole opposition to the motion, arguing that centralization was unnecessary and inappropriate because the class actions “do not present significant overlapping issues of fact.” Id. The Judicial Panel disagreed, explaining irrespective of any differences between the class actions, “they raise common factual questions concerning Vonage's marketing and sales practices with respect to its internet telephone services” and pretrial coordination “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 [citation]; 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.” Id. Accordingly, the Panel granted the motion to centralize the class actions.

The Judicial Panel further agreed that the District of New Jersey was the appropriate transferee court because Vonage is headquartered there and because the federal judge “already presides over another MDL docket involving Vonage.” In re Vonage, at *1. Accordingly, the Judicial Panel transferred the class actions to the District of New Jersey, id., at *2.

Download PDF file of In re Vonage Marketing Transfer Order

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

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Merrill Lynch Defense Team Settles Class Action Lawsuits For $133 Million

Chad Bray of the Wall Street Journal reports today that a federal court has given final approval to settlement of a class action against Merrill Lynch. The lawsuit alleged that Merrill Lynch and its former top technology-stock analyst, Henry Blodget, issued false or misleading research reports regarding Internet-based companies. The settlement reportedly covers 20 separate class action lawsuits filed against Merrill Lynch in federal court.

Mr. Bray’s article, entitled “Merrill Settlement is Approved,” may be found on page C7 of the September 6, 2007 edition of the Wall Street Journal.

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

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Arbitration Class Action Defense Cases-Gatton v. T-Mobile: California Court Holds Class Action Waiver Renders Arbitration Clause Unconscionable And Unenforceable Despite Consumer Alternatives To Services From Defendant

Class Action Waiver Rendered Arbitration Clause Unconscionable “Notwithstanding the Availability of Market Alternatives” and Federal Arbitration Act (FAA) does not Preempt California State Court Holding that Class Action Waivers are Unconscionable under California Law

Plaintiffs filed a putative class action in California state court against T-Mobile alleging violations of the state’s unfair business practices statute arising out of the early termination fees charged cellular telephone service customers and the sale of “locked” cellular phones that customers cannot use if they switch to another carrier. Gatton v. T-Mobile USA, Inc., 152 Cal.App.4th 571, 61 Cal.Rptr.3d 344, 346 (Cal.App. 2007). The trial court denied a defense motion to compel arbitration pursuant to the service agreement’s arbitration clause, which included a class action waiver, id., at 346-47. The California Court of Appeal affirmed, holding that “the class action waiver rendered the arbitration provision unenforceable” and that the Federal Arbitration Act (FAA) did not “preempt[] any rule that class action waivers are unconscionable under California law.” Id., at 347. The appellate court therefore affirmed the trial court order, which permitted plaintiffs to prosecute the putative class action in state court. The appellate court’s discussion of the FAA’s impact on class action waivers is contained in a portion of the court’s opinion that, pursuant to California Rules of Court, is not published and therefore many not cited; accordingly, we summarize here only that part of the opinion holding that the class action waiver rendered the arbitration clause unenforceable.

Plaintiffs signed cellular telephone service agreements with T-Mobile, acknowledging that they had “received and reviewed the T-Mobile Terms and Conditions” and that “ All disputes are subject to mandatory arbitration in accordance with paragraph 3 of the Terms and Conditions." Gatton, at 347. The introductory paragraph of the Terms and Conditions advised people to “carefully read these Terms and Conditions” and to “NOT USE THIS SERVICE OR YOUR UNIT” if they are unwilling to agree to be bound by the provisions contained therein. Id. Section 3 of the Terms and Conditions, entitled “Mandatory Arbitration; Dispute Resolution,” precluded customers from seeking class action relief, id., and the appellate court summarized at pages 347 and 348 that “The terms and conditions incorporated into each of the plaintiff's agreements included a mandatory arbitration clause including a class action waiver.” The contract required each party to pay for their own attorney fees, and for customers to pay $25 toward the arbitrator’s fee (save for claims of less than $25, in which case T-Mobile would pay for the arbitrator’s fee). Id., at 348, n.3.

With respect to the early termination fees underlying the class action allegations of certain plaintiffs, the class action complaint alleged that customers who terminate service prior to the expiration of the service contract are required to pay approximately $200 per telephone, and that this fee is also charged if T-Mobile cancels the contract for nonpayment or other reasons. Gatton, at 348. According to the class action complaint, the early termination fee is the same “whether the contract has been in effect for several weeks or several months,” and this “flat-fee early termination penalty constitutes an unlawful penalty under Civil Code section 1671, subdivision (d), is unlawful under the unfair competition law [(UCL)] (Bus. & Prof. Code, § 17200 et seq.), and is unconscionable under the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.).” Id., at 348-49 (footnote omitted). With respect to the class action’s claims concerning handset, the complaint charges that it is unlawful require prevent customers to purchase a new phone if they switch service providers. Id., at 349. The class action alleged that T-Mobile locked the SIM card so that the phone could not be programmed to operate on the service network of a competitor, and that the SIM can be unlocked simply by entering a numerical code, id. The class action complaint alleges that T-Mobile falsely represents that its phones “are not compatible with and will not work with other wireless networks” in violation of the UCL and the CLRA. Id. The complaint further alleges that locking the SIM “makes it impossible or impracticable for subscribers to switch cell phone service providers without purchasing a new handset.” Id.

Continue reading "Arbitration Class Action Defense Cases-Gatton v. T-Mobile: California Court Holds Class Action Waiver Renders Arbitration Clause Unconscionable And Unenforceable Despite Consumer Alternatives To Services From Defendant" »

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

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FLSA Class Action Defense Cases-Parker v. Rowland: Minnesota District Court Adopts Eleventh Circuit Holding That Conditional Class Action Certification Of FLSA Class Action Requires Proof That Other Class Members Want To Opt In

As Matter of First Impression in Eighth Circuit, Plaintiff in FLSA Class Action must Establish that Other “Similarly Situated” Putative Class Members Desire to “Opt In” to the Lawsuit as a Prerequisite to Conditional Class Certification Minnesota District Court Holds

Two former truck drivers filed suit against regional package delivery company Rowland Express for violations of the federal Fair Labor Standards Act (FLSA), the Employee Retirement Income Security Act of 1974 (ERISA) and Minnesota and Iowa state law, alleging that Rowland improperly classified its drivers as independent contractors instead of employees, thereby denying them overtime pay. Parker v. Rowland Express, Inc., 492 F.Supp.2d 1159, 1162-63 and n.1 (D.Minn. 2007). Plaintiffs filed a motion requesting that the court conditionally certify a class action under FLSA (technically a “collective action”) so that other Rowland employees may be provided an opportunity to “opt in” to the putative class action. Id., at 1162. Defense attorneys opposed class action treatment, arguing Eleventh Circuit precedent that conditional class certification requires a showing that other class members desire to “opt in” to the lawsuit. The district court denied the motion, holding as a matter of first impression in the Eighth Circuit that conditional class action certification and notice to putative class members is not warranted absent evidence that other similarly situated class members wish to join the action.

The class action complaint alleged that Rowland previously classified its drivers as “employees” and paid them overtime, but that after it became affiliated with DHL it changed the classification of its drivers to “independent contractors” and ceased paying overtime. Parker, at 1162-63. After conducting limited discovery, plaintiffs moved for an order conditionally certifying a FLSA class action on the grounds that plaintiffs “are ‘informed and believe’ that other drivers worked in excess of 40 hours per week and did not receive overtime compensation.” Id., at 1163. Defense attorneys opposed class action treatment, arguing in part that plaintiffs “failed to show that other ‘similarly situated’ individuals desire to opt in to this litigation,” id.

After discussing FLSA class actions and the FLSA’s requirement that the other employees be “similarly situated” to the plaintiffs but failure to define that term, see Parker, at 1163-64, the district court described the two-stage process generally followed in determining whether the plaintiffs are “similarly situated” to other putative class members: the first stage, known as the “notice stage,” involves a preliminarily determination “usually based only on the pleadings and any affidavits which have been submitted” as to whether notice of the class action should be provided in order to give putative class members an opportunity to “opt in”; the second stage involves a more in-depth analysis by the court into whether the plaintiffs are in fact similarly situated to the putative class, id., at 1164. At the first stage, the plaintiffs’ burden “is not onerous” but neither is it “invisible,” id.

Continue reading "FLSA Class Action Defense Cases-Parker v. Rowland: Minnesota District Court Adopts Eleventh Circuit Holding That Conditional Class Action Certification Of FLSA Class Action Requires Proof That Other Class Members Want To Opt In" »

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

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Circuit City Class Action Defense Case-Gentry v. Superior Court: California Supreme Court Invalidates Class Action Waiver In Arbitration Clause As Against Public Policy And Concludes Arbitration Clause Procedurally Unconscionable Despite Right To Opt Out

Class Action Lawsuits are More Effective in Redressing Employee Labor Law Claims thus Rendering Class Action Waiver in Arbitration Clause Unenforceable, and Arbitration Clause was Procedurally Unconscionable Despite 30-Day Window to Opt Out of Entirely Voluntary Dispute Resolution Program California Supreme Court Holds

Plaintiff filed a putative class action in California state court against Circuit City alleging violations of the state’s unfair and deceptive business practices statutes and labor code arising out of its misclassifying employees as exempt in order to deny them overtime pay. Gentry v. Superior Court, ___ Cal.4th ___, 64 Cal.Rptr.3d 773, Slip Opn., at 2-3 (Cal. August 30, 2007). Defense attorneys moved to dismiss the class action and compel arbitration pursuant to an arbitration clause with a class action waiver. The trial court found the arbitration clause and the class action waiver to be fully enforceable, and granted the defense motion. The Court of Appeal agreed with the trial court’s reasoning, but the California Supreme Court reversed.

At the time Circuit City hired plaintiff, he was provided with written materials that included the company’s “Dispute Resolution Rules and Procedures”; the program gave employees “various options, including arbitration, for resolving employment-related disputes” and provided that if the employee elected arbitration - a choice that was subject to a class action arbitration waiver - then the company could compel the employee to dismiss any civil action in favor of arbitration. Gentry, at 3. As the Supreme Court explained, “The packet included a form that gave the employee 30 days to opt out of the arbitration agreement. [Plaintiff] Gentry did not do so.” Id. Both the trial court and the appellate court were influenced by the fact that plaintiff failed to opt out of the arbitration program within the 30-day window, despite the fact that there would have been no adverse employment ramifications had he done so. Id., at 3-4. The Supreme Court, however, disagreed.

In a strangely vague and sharply split opinion, the Supreme Court held that class action arbitration waiver provisions in overtime cases “may be contrary to public policy,” Gentry, at 5 (italics added). But despite all of its hedging, the Court seems to be clear that anything short of an attorney-supervised waiver would not withstand scrutiny, explaining at page 12:

Continue reading "Circuit City Class Action Defense Case-Gentry v. Superior Court: California Supreme Court Invalidates Class Action Waiver In Arbitration Clause As Against Public Policy And Concludes Arbitration Clause Procedurally Unconscionable Despite Right To Opt Out" »

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

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

Judicial Panel Grants Defense Request, Opposed by Virtually All Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Defense Request to Transfer Class Actions to Alabama

Eighteen (18) putative class action lawsuits were filed in ten federal courts against Tyson Foods, Tyson Chicken and Tyson Farms (collectively “Tyson”) alleging, inter alia, violations of the federal Fair Labor Standards Act Litigation (FLSA). In re Tyson Foods, Inc., 502 F.Supp.2d 1358, 2007 WL 2386422, *1 (Jud.Pan.Mult.Lit. 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 the Northern District of Alabama, where four of the class actions were pending. The Georgia plaintiffs supported centralization but urged the Judicial Panel to coordinate the class actions in either Arkansas or Georgia, but lawyers for plaintiffs in the remaining 17 class action lawsuits opposed centralization. Id. The Judicial Panel granted the motion to centralize the class actions, explaining that the 18 class actions “involve common questions of fact” that “aris[e] out of similar allegations that certain Tyson employees are entitled to compensation under the Fair Labor Standards Act” such that “[c]entralization under Section 1407 will eliminate duplicative discovery; prevent inconsistent rulings on pretrial motions, including those with respect to certification of collective actions; and conserve the resources of the parties, their counsel and the judiciary.” Id. In rejecting plaintiff objections that centralization was not necessary because the class action did not involve “significant overlapping issues of fact” because “the actions will likely depend on facts unique to each Tyson plant at which plaintiffs worked,” id., the Panel explained its reasons for disagreement as follows:

Transfer under Section 1407 does not require a complete identity or even a majority of common factual or legal issues as a prerequisite to transfer. Regardless of any differences among the actions, they raise common factual questions regarding Tyson's employment practices and compliance with the FLSA. Centralization 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…; 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. (Citation omitted.)

The Panel further explained that while certain actions “may be ready for trial in advance of the remaining actions,” this does not preclude pretrial coordination because “nothing in the nature of Section 1407 centralization will impede the transferee court, whenever it deems appropriate, from recommending Section 1407 remand.” In re Tyson Foods, at *2 (citations omitted).

Though it granted the defense motion for centralization, the Judicial Panel did not concur in the defense request to transfer the class actions to Alabama, selecting instead the Middle District of Georgia as the appropriate transferee court because it “has general docket conditions permitting us to effect the Section 1407 assignment to a court with the resources available to manage this litigation.” In re Tyson Foods, at *2.

Download PDF file of In re Tyson Foods Transfer Order

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

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15 U.S.C. § 78gg—Separability Of Statutory Provisions Of The Federal Private Securities Litigation Reform Act (PSLRA)

As a resource to class action defense lawyers who defend securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for the separability of the provisions of the PSLRA in 15 U.S.C. § 78gg, which states:

§ 78gg. Separability

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

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

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Yet Again Employment Law Class Actions Lead List Of New Class Action Filings In California State And Federal Courts

To assist class action defense attorneys anticipate the claims against which they will have to defend 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 August 24 – August 30, 2007, during which time 38 new class action lawsuits were filed in these California state and federal courts. New labor law class action cases typically lead the list by a wide margin, and in that regard the new class action filings over the past week are not a surprise. New employment law class action cases again headed the list with 15 new lawsuits, representing 39% of the total number of new class actions filed. No other category came close. New class actions alleging violations of California's unfair competition laws, which include false advertising claims, came in second with 5 new class action complaints (13%), with new antitrust class action lawsuits right behind with 4 new filings (11%).