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

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MDL Class Action Defense Cases-In re Internal Revenue Service: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In The District Of Nevada

Judicial Panel Grants Plaintiff’s Request, Over Defense and Other Plaintiff Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Class Action to District of Nevada

Two class actions were filed in California and Nevada against various defendants because individuals who sought to engage in a § 1031 exchange using defendants Southwest Exchange (SWX) and/or Qualified Exchange Services as the facilitator suffered losses due to the alleged misconduct of various defendants. In re Internal Revenue Service § 1031 Tax Deferred Exch. Litig., 528 F.Supp.2d 1343, 2007 WL 3119287, *1 (Jud.Pan.Mult.Lit. 2007). Plaintiff's lawyer in the Nevada 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 the District of Nevada. Defense attorneys for UBS Financial Services and counsel for the California plaintiffs opposed pretrial coordination. Id. The Judicial Panel granted the motion to centralize the class actions because transfer “(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 both actions to the overall benefit of the parties and the judiciary.” Id. The Panel also agreed that the District of Nevada was the appropriate transferee court because SWX is based there, several defendants live there, and the challenged conduct largely occurred there. Id. Accordingly, the Judicial Panel transferred the California class action to Nevada, id., at *2.

Download PDF file of In re Internal Revenue Service Transfer Order

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

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Securities Class Action Defense Cases-Levine v. AtriCure: New York Federal Court Denies Defense Motion In Securities Fraud Class Action To Dismiss Claims Of Class Action Plaintiff On Ground That He Suffered No Loss

Determination of Loss Causation Inappropriate at Pleading Stage and Plaintiffs Satisfied PSLRA (Private Securities Litigation Reform Act of 1995) Standard for Lead Plaintiff New York Federal Court Holds

Plaintiffs filed a putative class action against AtriCure, Inc. alleging violations of the federal securities laws in connection with its initial public offering (IPO) for allegedly failing to disclose material facts in the company’s Registration Statement. Levine v. AtriCure, Inc., 508 F.Supp.2d 268, 270-71 (S.D.N.Y. 2007). Defense attorneys moved to dismiss plaintiff Levine’s claims in the class action complaint, and plaintiffs James Duncan and Jackie Byrd moved to be appointed lead plaintiffs; the district court denied the defense motion and granted the plaintiffs’ motion, id., at 270.

The only relevant facts for purposes of this article’s discussion are (1) Duncan purchased 200 shares of stock in October 2005 for an average of $12.85 and sold the stock in March 2006 when it was trading at $7.36; (2) Byrd purchased 100 shares of stock in August 2005 for $14.19 a share and sold most of her stock in May 2006 when the stock was $7.90, and the rest in December 2006 for $9.28 a share; and Levine purchased 250 shares of stock in August 2005 for $12 a share and sold them in November 2005 at $11.80 a share for a total loss of $50. Levine, at 271 and n.3. The defense motion to dismiss was based on the insignificant loss suffered by Levine and on the fact that he sold his shares prior to the publication of a Wall Street Journal article that purportedly misled class members into purchasing the company’s stock. Id., at 271.

Continue reading "Securities Class Action Defense Cases-Levine v. AtriCure: New York Federal Court Denies Defense Motion In Securities Fraud Class Action To Dismiss Claims Of Class Action Plaintiff On Ground That He Suffered No Loss" »

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

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Class Action Defense Cases-Capitol People v. Dep’t of Developmental Services: California Appellate Court Reverses Court Order Denying Class Action Certification And Affirmatively Holds Class Action Treatment Warranted For Lanterman Act Claims

In Denying Class Action Certification Motion, Trial Court Erred in Examining Commonality from Perspective of Individual Class Member Claims rather than Overarching Conduct of Defendants Applicable to Entire Class California Court Holds

A wide array of plaintiffs filed a putative class action for injunctive and declaratory relief against various State of California defendants for failure to provide community living arrangements under California’s Lanterman Developmental Disabilities Services Act and alleging a “systemic failure of the state agencies and regional centers to provide proper oversight and enforce constitutional, statutory and regulatory mandates to place individuals in less restrictive community settings when appropriate.” Capitol People First v. Dep’t of Developmental Services, 155 Cal.App.4th 676, 66 Cal.Rptr.3d 300, 304-05 (Cal.App. 2007). Plaintiffs sought class action certification; defense attorneys opposed class action treatment on the ground that commonality did not exist, that plaintiffs were not adequate class representatives, and that a class action was not the superior means of resolving the issues in dispute. Id., at 305. The trial court agreed with defense counsel and denied class action certification; the Court of Appeal reversed and affirmatively instructed the trial court to grant plaintiffs’ motion for class action treatment.

California’s Lanterman Act, enacted in 1977, “establishes a comprehensive scheme for providing services to people with developmental disabilities” and provides that “[t]o the maximum extent feasible, services and supports should be available throughout the state to prevent the dislocation of persons with developmental disabilities from their home communities.” Capitol People, at 305 (citation omitted). The theme underlying the class action was that individuals were being institutionalized in violation of the Lanterman Act, and sought to enforce the right of developmentally disabled individuals “to live, with appropriate supports, in [their local] neighborhoods.” Id., at 308. The class action complaint challenged the State’s pattern and practice of “under-funding” of community services so as to require institutionalization, id., at 308-09. Importantly, ten institutionalized individuals and two organizations sought leave to intervene on the ground that the named plaintiffs’ interests were “hostile” to their own, and that “the relief they sought would impair the rights of those persons whose needs are best met in a developmental center.” Id., at 310. The trial court granted limited intervention, id.

In response to plaintiffs’ motion for class action certification, the trial court held that (1) commonality did not exist, (2) plaintiffs were not adequate class representatives, and (3) class action treatment was not the superior means of redress; rather, the fair hearing procedure provided under the Lanterman Act adequately redresses individual grievances. Capitol People, at 310. With respect to commonality, the appellate court held that the trial court failed to appreciate the difference between the “system relief” sought by the class action complaint and the “individual solutions to individual problems” that were at the heart of the interveners’ objections. Id., at 311-12. The trial court focused in “discrete wrongs,” and concluded that “common issues of fact would not predominate because the deficiencies, variables and pertinent lines of inquiry would be individualized.” Id., at 312. The Court of Appeal recognized that legal authority existed in support of the trial court’s holding, see id., at 312-13 and J.B. ex rel. Hart v. Valdez, 186 F.3d 1280 (10th Cir. 1999), but held that under California law “courts can take an aggregate approach to plaintiffs' claims,” id., at 313. Thus viewed, the question was not whether differences existed among the various claims of putative class members but rather whether the defendants utilized “common policies and practices generally applicable to all putative class members.” Id. The Court of Appeal held that commonality did exist, explaining at page 315: “The overarching theme is that there is a pattern and practice of failure to meet constitutional, statutory and regulatory mandates to provide services and place class members in less restrictive settings, and the systemic effect of this failure is to impinge plaintiffs' rights under state and federal law.” Such “systemic relief” could not be sought or obtained on a case-by-case basis. Id.

Continue reading "Class Action Defense Cases-Capitol People v. Dep’t of Developmental Services: California Appellate Court Reverses Court Order Denying Class Action Certification And Affirmatively Holds Class Action Treatment Warranted For Lanterman Act Claims" »

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

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JDSU Class Action Defense Attorneys Secure Jury Verdict In Federal Securities Class Action Lawsuit

Class Action Defense Attorneys Obtain California Federal Court Jury Verdict in Favor of JDSU in Securities Fraud Case

News media report today that JDSU obtained a jury verdict in the securities class action filed in the United States District Court for the Northern District of California. While JDSU welcomed the verdict, the company continues to defend itself against other securities class action lawsuits.

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

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Class Action Defense Cases-Azizian v. Federated: Ninth Circuit Holds Attorney Fees Under Clayton Act Not Awardable Against Objector To Class Action Settlement Of Antitrust Class Action

As Matter of First Impression, Rule 7 Bond Covering “Costs on Appeal” Includes Attorney Fees Awardable Under Fee-Shifting Statute but not Attorney Fees Awardable Under Rule 38 for Frivolous Appeals Ninth Circuit Holds

Plaintiffs filed a class action lawsuit against Federated Department Stores alleging federal antitrust violations in connection with the sale of cosmetics. Azizian v. Federated Dep’t Stores, Inc., 499 F. 3d 950, 954 (9th Cir. 2007). Almost two years later, the district court approved a class action settlement of all class claims on behalf of a nationwide class, id. One member of the class, Kamela Wilkson, objected to the class action settlement and appealed the order approving the settlement; in response, class action plaintiffs requested an appeal bond under FRAP Rule 7 in the amount of $12.8 million, including appellate attorney fees. Id. The district court ordered the objector to post a $42,000 bond - $2,000 for costs and $40,000 for attorney fees, id. While noting a split in authority, the district court required the objector to post bond for attorney fees because (1) the Clayton Act’s fee-shifting provision defines attorney's fees as recoverable costs, and (2) "the Court of Appeals [was] likely to find that the instant appeal[ ] [was] frivolous." Id. The objector posted only the $2,000 to cover costs on appeal; plaintiff’s asked the Ninth Circuit’s motions panel to dismiss the appeal for failure to post the requisite bond, but the motion was denied without prejudice. Id. As permitted by the motions panel, plaintiffs renewed this motion in conjunction with their brief on the merits of the class action settlement.

The Ninth Circuit noted that the appeal from the class action settlement presented two issues: (1) as a matter of first impression, “whether, or under what circumstances, appellate attorney's fees are ‘costs on appeal’ that a district court may require an appellant to secure in a bond” under Rule 7, Azizian, at 953; and (2) whether the appeal should be dismissed for failure to post bond as ordered by the district court, id., at 954. With respect to the first issue, after a lengthy examination of sister circuit cases, see id., at 955-958, the Circuit Court held that “costs on appeal” under Rule 7 “includes all expenses defined as ‘costs’ by an applicable fee-shifting statute, including attorney's fees,” id., at 958. But while the Ninth Circuit held that attorney fees recoverable under Section 4 of the Clayton Act fell within this test, it further held that attorney fees could not be recovered from an objector to a class action settlement because “unlike some other fee-shifting provisions, Section 4 is asymmetrical.” Id., at 959. Put simply, “Ordering one class member to pay other class members' appellate attorney's fees because of a disagreement about the propriety of settlement would not serve the purpose of Section 4 to penalize and deter those who have violated the antitrust laws.” Id., at 960.

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

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Class Action Defense Cases-Howard v. Gutierrez: District Of Columbia Federal Court Denies Motion To Reconsider Ruling Striking Class Action Allegations Holding Delay In Seeking Class Action Certification Was Not Excusable

Local Rule Requiring Class Action Certification Motion be Filed Within 90 days of Class Action Complaint runs from Filing of First Class Action Complaint not from any Subsequent Amended Class Action Complaint and District of Columbia Federal Court Holds Contrary Interpretation to be “Untenable” and “Unreasonable”

Plaintiffs filed a putative class action against the Department of Commerce (DOC) and its Secretary for violations of Title VII alleging that the performance-review system resulted in systemic racial discrimination. Defense attorneys moved to dismiss the individual claims and to strike the class action allegations. The district court granted the motion in part, striking the class action claims. See Howard v. Gutierrez, 474 F.Supp.2d 41 (D.D.C. 2007). Plaintiffs sought reconsideration and certification of an interlocutory appeal. Howard v. Gutierrez, 503 F.Supp.2d 392, 393-94 (D.D.C. 2007). The district court denied the motion for reconsideration and refused to certify an interlocutory appeal.

With respect to the motion for reconsideration, the district court noted that the Federal Rules of Civil Procedure do not expressly authorize such motions and that they are “typically treat[ed]…as motions to alter or amend a judgment” under Rule 59(e). Howard, at 394. Reconsideration motions are addressed to the sound discretion of the court, are not “lightly” granted, and are not to be used to present arguments “that could have been advanced earlier.” Id. (citations omitted). With that background, the district court first rejected plaintiffs’ attempt to “rehash” arguments made previously with respect to their failure to file a motion for class action certification within 90 days of the filing of the class action complaint, and held that any new arguments in support of this old theme could have been raised earlier. Id. The district court concluded at page 394, “There has been no intervening change in controlling law, nor have plaintiffs advanced new evidence not previously available to them. Finding nothing in plaintiffs' motion that warrants revisiting its prior holding, the Court now reaffirms that the ninety-day period in Local Rule 23.1(b) applies from the date of the filing of the first complaint to assert class claims.”

Continue reading "Class Action Defense Cases-Howard v. Gutierrez: District Of Columbia Federal Court Denies Motion To Reconsider Ruling Striking Class Action Allegations Holding Delay In Seeking Class Action Certification Was Not Excusable" »

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

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FACTA Class Action Defense Cases-In re Boscov's Department Store: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Selects District of New Jersey As Transferee Court

Judicial Panel Grants Defense Request, Over Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Agrees With Plaintiff's Request to Transfer Class Actions to District of New Jersey

Three class action lawsuits were filed against Boscov’s Department Store alleging violation of the federal Fair and Accurate Credit Transactions Act (FACTA). In re Boscov’s Dep’t Store, LLC, Fair & Accurate Credit Transactions Act (FACTA) Litig., ___ F.Supp.2d ___, 2007 WL 3119372, *1 (Jud.Pan.Mult.Lit. October 17, 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 Maryland. Maryland plaintiffs supported the motion; Pennsylvania plaintiffs agreed pretrial coordination was appropriate but argued that the Western District of Pennsylvania was the appropriate transferee court; and New Jersey plaintiffs opposed centralization but alternatively argued that the District of New Jersey was the appropriate transferee court. Id. The Judicial Panel granted the motion to centralize the class actions but rejected defendant’s request for transfer to Maryland and Pennsylvania plaintiff’s request for transfer there even though Boscov was headquartered in Pennsylvania, id. Rather, the Panel stated that all three forums would be appropriate, and selected New Jersey Illinois because it has “the capacity to handle this litigation and a transferee judge with time and experience to steer this litigation on a prudent course." Id.

NOTE: This case highlights the risk a defendant runs in assuming that they will be successful in choosing a forum by way of MDL centralization.

Download PDF file of In re Boscov's Department Store Transfer Order

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

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HAPPY THANKSGIVING FROM THE CLASS ACTION DEFENSE BLOG

The author of the Class Action Defense Blog wishes all of you a very Happy Thanksgiving, and urges class action defense counsel to take the day off! A new class action article will be published tomorrow.

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

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Class Action Defense Cases-Pisciotta v. Old National Bancorp: Seventh Circuit Upholds District Court Dismissal Of Class Action Seeking Monitoring Of Credit Reports For Failure To Seek Damages Compensable Under Indiana Law

District Court Properly Granted Defense Motion for Judgment in Class Action Alleging Theft of Personal Information and Seeking Damages for Cost of Monitoring Credit Reports Because Class Action Complaint Failed to Allege Compensable Damages under Indiana Law Seventh Circuit Holds

Plaintiffs filed a putative class action against Old National Bancorp, which operates a website that permits people to complete applications online for loans and other banking services, alleging that the Bank had obtained personal information from consumers through its website but “failed to secure it adequately” thus permitting a hacker “to obtain access to the confidential information of tens of thousands of [Bank] site users.” Pisciotta v. Old National Bancorp, 499 F.3d 629, 631 (7th Cir. 2007). According to the class action allegations, the online application forms “differ depending on the service requested, but some forms require the customer or potential customer's name, address, social security number, driver's license number, date of birth, mother's maiden name and credit card or other financial account numbers.” Id. The class action complaint sought relief in the form of “compensation for past and future credit monitoring services that they have obtained in response to the compromise of their personal data,” id. Notably, the class action did not allege that any class member had suffered “direct financial loss…as a result of the breach” or that any putative class member had suffered identity theft as a result of the breach, id., at 632. Defense attorneys attacked the class action with a motion for judgment on the pleadings, arguing that under Indiana law plaintiffs had failed to allege any cognizable injury, id. The district court agreed with the defense and dismissed the class action, id., at 631. The Seventh Circuit affirmed.

The class action complaint alleged that plaintiffs had entered personal information on the Bank’s website, and that in 2005 NCR, a website host, informed the Bank of a security breach that, in the words of the Seventh Circuit, “was sophisticated, intentional and malicious.” Pisciotta, at 631-32. Nonetheless, in granting the defense motion for judgment on the class action complaint, the district court held that plaintiffs failed to allege that the security breach “caused them cognizable injury” because “under Indiana law, damages must be more than speculative” so “plaintiffs' allegations that they had suffered ‘substantial potential economic damages’ did not state a claim.” Id., at 632 (italics added). The Circuit Court affirmed.

Continue reading "Class Action Defense Cases-Pisciotta v. Old National Bancorp: Seventh Circuit Upholds District Court Dismissal Of Class Action Seeking Monitoring Of Credit Reports For Failure To Seek Damages Compensable Under Indiana Law" »

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

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Precertification Discovery Class Action Defense Cases-Putnam v. Eli Lilly: Prior To Certification Of Class Action California Federal Court Compels Defense To Produce Names And Addresses Of Absent Class Members In Labor Law Class Action Case

Labor Law Class Action Plaintiff’s need for Contact Information of Potential Class Members to Discover Evidence in Support of Class Action Certification Motion Outweighed Privacy Rights of Absent Class Members thus Warranting an Order Compelling Disclosure of such Information California Federal Court Holds

Plaintiff, a pharmaceutical representative, filed a class action complaint against employer Eli Lilly alleging misclassification and failure to pay overtime, and failure to provide meal breaks, in violation of California’s state labor laws. Putnam v. Eli Lilly & Co., 508 F.Supp.2d 812, 812 (C.D. Cal. 2007). During precertification discovery, plaintiff moved the district court for an order compelling defendant to disclose the contact information of putative members of the class action, or alternatively for “the issuance of a pre-certification notice to potential class members,” id. The district court granted the motion.

As part of the discovery propounded by plaintiff in advance of seeking class action certification, defendant was requested to produce the “names, addresses and telephone numbers” of all 348 pharmaceutical representatives that had worked for Eli Lilly during the class period. Putnam, at 812-13. The defense agreed to serve notice of the class action to 24 class members, but refused to provide contact information for the employees, id., at 813. Plaintiff moved for an order compelling production, arguing that the information sought was necessary to “fully investigate the case and gather evidence for presentation at the certification hearing,” id. Defense attorneys countered that (1) the “overwhelming majority” of the employees at issue were irrelevant for class action certification purposes because they “worked outside of plaintiff’s sales division and in different positions than plaintiff.” Id. The district court recognized disagreement among federal courts on this issue, but concluded that the information should be produced because it may lead to evidence of value to plaintiff’s class action certification motion. Id., at 813-14.

With respect to defense arguments concerning the privacy rights of the employees at issue, the district court held that plaintiff’s need for the information sought outweighed the privacy rights of the individuals. Putnam, at 814. The district court expressed a willingness to enter a protective order covering the contact information, but only upon a showing of good cause. Id., at 814-15.

Download PDF file of Putnam v. Eli Lilly

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

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Class Action Defense Cases-Hall v. Sprint: Illinois State Court Upholds Class Action Treatment Of Class Action Challenging Early Termination Fees Charged Cellular Phone Customers

Class Action Certification of 48-State Class Proper because Sprint-Drafted Choice-of-Law Provision Selected Kansas Law to be Applied to Class Action Claims Illinois State Court Holds

Plaintiff filed a putative class action in Illinois state court against her wireless communications provider, Sprint, alleging various state law claims for relief each premised on the theory that early termination fees are unlawful penalties. Hall v. Sprint Spectrum L.P., 876 N.E.2d 1036 [Slip Opn., at 1-2 (Ill.App. 2007). The class action complaint alleged in part violations of Illinois's Consumer Fraud and Deceptive Business Practices Act and sought to prosecute a state-wide class action under the statute, but alleged further violations of other state consumer protection statutes and sought to prosecute a nation-wide class action as to those claims. Id., at 2. Defense attorneys opposed plaintiff’s motion for class action certification, but the trial court granted the motion. Id., at 1. The defense appealed, and the Illinois appellate court affirmed the order granting the lawsuit class action treatment.

The class action complaint alleged that plaintiff had entered into a one-year contract with Sprint for two separate lines and agreed to pay a $150 early termination fee if she canceled service within that year: Within the one-year period, Sprint canceled plaintiff’s service because of nonpayment but refused her request to cancel her contract unless she paid the amounts owed, including the early termination fee. Hall, at 1-2. Plaintiff paid the entire amount demanded by Sprint on one of her lines, including the $150 early termination fee, but she could not afford to pay the termination fee on the second line and “Sprint refused to cancel the account and stop the accrual of charges unless [she] paid the early termination fee for the second cell phone number.” Id., at 2. This amount was never paid, id. Instead, plaintiff filed her class action lawsuit challenging the early termination fees as “unlawful penalties.” Id. Ultimately, the trial court granted plaintiff’s request for class action certification of a 48-state class action, id.

Continue reading "Class Action Defense Cases-Hall v. Sprint: Illinois State Court Upholds Class Action Treatment Of Class Action Challenging Early Termination Fees Charged Cellular Phone Customers" »

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

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New Labor Law Class Action Lawsuits Filings Decrease But Employment Claims Continue To Lead Categories Of Class Action Cases Filed In California State And Federal Courts This Past Week

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 preceding week. This report covers the time period of November 9 – November 15, 2007, during which time 46 new class action lawsuits were filed in these courts. As a general rule, more labor law class action lawsuits are filed than any other category of cases, often by a wide margin. This again proved to be true, with 15 new class actions alleging employment law claims -- only 33% of the total number of new class action filings this past week, but substantially more than the second closest group of cases. Antitrust class action lawsuits came in second with 7 new lawsuits (only 15% of the total number of new class actions filed), followed closely by unfair competition law (UCL) claims (which include false advertising claims) with 6 new filings (13%) and 5 new securities fraud class actions (11% of the new filings).

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

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FLSA Class Action Defense Cases—In re Wayne Farms: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District of Mississippi

Unopposed Defense Request for Pretrial Coordination of Class Action Lawsuits Alleging Violations of Fair Labor Standards Act (FLSA) Pursuant to 28 U.S.C. § 1407 Granted by Judicial Panel

A dozen class action lawsuits were filed against Wayne Farms LLC alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the various class action complaints claimed that defendant failed to pay employees compensation due under the FLSA. In re Wayne Farms LLC Fair Labor Standards Act Litig., ___ F.Supp.2d ___, 2007 WL 3307545, *1 (Jud.Pan.Mult.Lit. November 2, 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 Southern District of Mississippi. Id. Plaintiffs in each of the class action lawsuits supported the motion, and the Judicial Panel agreed that pretrial coordination would “eliminate duplicative discovery; prevent inconsistent rulings on pretrial motions…; and conserve the resources of the parties, their counsel and the judiciary. Id. Accordingly, the Panel granted the defense motion and centralized the FLSA class action lawsuits in the Mississippi district court, id.

Download PDF file of In re Wayne Farms Transfer Order

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

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Class Action Defense Cases-Borochoff v. Glaxosmithkline: New York Federal Court Refuses To Appoint German Institutional Investor Group As Lead Plaintiff and Counsel In Class Action Due To Uncertainty In German Law

Uncertainty as to Validity of Foreign Judgment under German Procedural Law Raises Serious Concerns of Party’s Ability to Serve as Lead Plaintiff in Securities Fraud Class Action New York Federal Court Holds

Plaintiffs filed a securities fraud class action against Glaxosmithkline based on statements made about diabetes drug Avandia that failed to disclose the increased risk of heart attack. Borochoff v. Glaxosmithkline PLC, ___ F.Supp.2d ___, 2007 WL 2907812, *1 (S.D.N.Y. October 5, 2007). Eventually, three separate motions were filed seeking appointment as lead plaintiff in the class action, including one by a “German Institutional Investor Group” that had lost more than $28 million - more than any other putative member of the class action. Id. As the class action was governed by the Private Securities Litigation Reform Act (PSLRA), the district court examined which movant was the “most adequate plaintiff” within the meaning of the PSLRA and concluded that the German group failed to so qualify because of uncertainty in the manner in which a judgment from an American court will be enforced, if at all, in Germany.

In class action litigation governed by the PSLRA, the “most adequate plaintiff” is, inter alia, that “person or group” with “the largest financial interest in the relief sought by the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii). The presumption under the PSLRA that a particular class action plaintiff is the most adequate representative may be rebutted if the proposed lead plaintiff “is subject to unique defenses that render such plaintiff incapable of adequately representing the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(bb). In this case, the German Institutional Investor Group was entitled to a presumption that it was the most adequate plaintiff for the class action because it had “suffered a loss of over $28 million” and “has the largest financial interest in the relief sought by the class.” Borochoff, at *1. However, competing movants argued that “all those who purchased in Germany may have to be excluded from the class, because any judgment in this [class] action (whether favoring plaintiffs or defendants) may be refused enforcement by a German court. Id.

Based on the district court’s analysis, there is considerable uncertainty “as to whether a judgment in a U.S. class action would be recognized” by a German court. Borochoff, at *2 (quoting In re Vivendi Universal, S.A., 242 F.R.D. 76, 104 (S.D.N.Y. 2007). At least one court refused to appoint a foreign corporation as lead plaintiff in a class action because of the risk that “[f]oreign courts might not recognize or enforce such a decision from an American court, which would allow foreign plaintiffs in the class to file suit against the defendant again in those foreign courts.” Id., at *3 (quoting In re Royal Ahold N.V. Securities & ERISA Litig., 219 F.R.D. 343, 352-53). The district court in the Borochoff class action found it unnecessary to determine at this stage of the proceeding whether the German group would be excluded from the class, but it concluded that “prudence cautions that the arguments for its exclusion are substantial, and in light of that risk it would be improvident to appoint the German Institutional Investor Group as lead plaintiff at this point.” Id. (footnote omitted).

Download PDF file of Borochoff v. Glaxosmithkline

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

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Class Action Defense Cases-Employers-Teamsters v. Anchor Capital: Ninth Circuit Dismisses Appeal By Non-Party That Sought Lead Plaintiff Status In Class Action Holding It Lacked Standing To Appeal

Party that Sought to Serve as Lead Plaintiff in Securities Class Action but was not Selected and did not File its own Lawsuit or Motion to Intervene Lacked Standing to Appeal District Court Order Denying it Lead Plaintiff Status or Granting Motion to Dismiss Uncertified Class Action Complaints with Prejudice Ninth Circuit Holds

In 2003, plaintiff Anchor Capital filed four putative class action lawsuits against Watson Pharmaceuticals alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934; the district court consolidated the class actions and granted the motion of Anchor Capital to be appointed lead plaintiff in accordance with the PSLRA (Private Securities Litigation Reform Act), which governed the class action litigation. Employers-Teamsters Local Nos. 175 & 505 Pension Trust Fund v. Anchor Capital Advisors, 498 F.3d 920, 922 (9th Cir. 2007). Employers-Teamsters Local Nos. 175 & 505 Pension Trust Fund (“Appellants”) did not move to intervene in the class action, and did not file its own individual or class action complaint, id. Appellants did file a motion to serve as lead plaintiff, but the district court selected Anchor Capital instead. But after Anchor Capital moved and obtained court permission to dismiss the class action complaints with prejudice, Appellants filed an appeal to challenge that dismissal and contended that under the PSLRA it was the proper lead plaintiff to control the class action. Id. The Ninth Circuit dismissed the appeal on the ground that Appellant lacked standing.

Anchor Capital filed the securities fraud class action because its investors had lost $3.2 million; the district court granted its motion to serve as lead plaintiff because it had “the largest financial stake in the outcome of the litigation.” Anchor Capital, at 922. Defense attorneys moved to dismiss the class action against Watson Pharmaceuticals on the ground that it failed to plead fraud with the specificity required under the PSLRA; the district court granted the motion. Id. In the face of a district court order granting leave to amend but expressing considerable doubt that an amended class action complaint would survive a Rule 12(b)(6) motion, Anchor Capital told the court that it would not file an amended complaint and asked the court to dismiss with prejudice the uncertified class actions. Id., at 923. The district court granted the motion, id. “Appellants now challenge the lead plaintiff ruling.” Id.

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

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Antitrust Class Action Defense Cases-Cordes v. A.G. Edwards: Second Circuit Reverses Denial Of Class Action Certification In Antitrust Class Action Holding Assignees Could Serve As Class Representatives And Predominance Existed

District Court Erred in Denying Class Action Motion because Plaintiffs were Assignees of Original Plaintiffs, who were Members of the Class, and in Determining that Common Issues as to Damages did not Predominate Second Circuit Holds

Plaintiffs filed an antitrust class action lawsuit against certain initial public offering (IPO) underwriters alleging violations of the Sherman Act “by agreeing to charge all corporations conducting mid-size IPOs who used their services a fee equal to seven percent of the proceeds of the offering.” Cordes & Co. Fin. Services, Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 94-95 (2d Cir. 2007). Plaintiffs’ assignees (Cordes) assumed control of the class action litigation and sought class certification, id.; defense attorneys opposed class action treatment arguing, inter alia, that Cordes were not adequate class representatives because they were not members of the class and that common issues did not predominate, id., at 95. Cordes presented an expert opinion that the class action was susceptible to common proof because a formula, “common to all class members,” could be utilized to determine “the difference between the fee actually paid and the ‘but-for fee’ - the fee that would have been charged to the putative class members in connection with the IPO in the absence of the alleged conspiracy.” Id., at 97. The defense expert countered that a preliminary inquiry must be made - viz., “the fee that the underwriter would have charged but for the conspiracy” - and that this would require “an individualized, plaintiff-by-plaintiff analysis of ten factors, including underwriter costs, price stabilization, and the risk of the offering.” Id. The district court agreed with defense counsel and denied the motion for class action certification, id., at 95. The Second Circuit reversed.

The issues on appeal were whether the district court properly determined the adequacy of representation issue and whether it properly analyzed the predominance requirement. Cordes, at 98. With respect to the Rule 23(a)(4) adequacy of representation test, the district court held that the putative class representatives did not fall within the scope of the class defined in the complaint, id., at 99. The Second Circuit noted, however, that the original class representatives “were indisputably members of the class they sought to represent,” and concluded that they could subsequently assign their “claims and interests in this litigation” to other parties who then could prosecute the class action. Id., at 99-100. Put simply, “By virtue of the assignments, [plaintiffs-assignees] do…possess the same interest [as the assignors] and thus may continue to assert a claim for the same injury shared by all members of the class.” Id., at 101. The bottom line is that Cordes were not precluded from acting as class representative solely because they are assignees. Id., at 103.

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

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Class Action Defense Cases-In re Elevator Antitrust: Second Circuit Affirms Defense Judgment In Antitrust Class Action Holding That Class Action Complaint Failed To Adequately Allege Facts In Support Of Conspiracy Or Monopoly

District Court Properly Granted Defense Motion to Dismiss Antitrust Class Action and did not Abuse its Discretion in Denying Leave to File an Amended Class Action Complaint Second Circuit Holds

Plaintiffs filed a putative antitrust class action lawsuit against various elevator companies alleging that defendants conspired to fix the prices of elevators and monopolized the market for the maintenance of elevators. In re Elevator Antitrust Litig., 502 F.3d 47, 48-49 (2d Cir. 2007). Defense attorneys moved to dismiss the class action complaint for failure to plead sufficient facts of the requisite agreement; the district court granted the defense motion, and denied plaintiffs’ leave to amend the class action complaint. Id., at 49-50. Plaintiffs appealed; the Second Circuit affirmed the dismissal of the class action, holding that “[t]he conspiracy claims provide no plausible ground to support the inference of an unlawful agreement, and the allegations of unilateral monopolization fail to allege a prior course of dealing.” Id., at 48-49.

With respect to the class action’s conspiracy claims, the Second Circuit held at page 50 that the complaint alleged mere conclusions, but under Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1965 (2007), more is required: “To survive a motion to dismiss under Twombly, it is not enough to make allegations of an antitrust conspiracy that are consistent with an unlawful agreement; to be viable, a complaint must contain ‘enough factual matter (taken as true) to suggest that an agreement [to engage in anticompetitive conduct] was made.’” The complaint must allege sufficient facts to “‘nudge [plaintiffs'] claims across the line from conceivable to plausible.’” In re Elevator, at 50 (quoting Twombly, at 1974). The Circuit Court analyzed and rejected each of plaintiffs’ arguments, see id., at 50-52, and concluded that “plaintiffs are unable to allege facts that would provide ‘plausible grounds to infer an agreement,’” id., at 50 (citation omitted).

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

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New Class Action Lawsuits Alleging Labor Law Violations Retain Top Spot Among Class Action Cases Filed This Past Week In California State And Federal Courts

To assist class action defense attorneys anticipate the cases against which they may 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 preceding week. This report covers the time period of November 2 – November 8, 2007, during which time 42 new class action lawsuits were filed. Consistent with the general pattern, more employment law class action lawsuits were filed than any other category. Specifically, 19 new labor law class actions were filed during the past week, representing 45% of the total number of new class action filings. The only other category that satisfied the 10% threshold consisted of unfair competition law (UCL) claims, which include false advertising claims. Seven (7) new UCL class actions were filed, representing 17% of the new filings.

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

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Class Action Defense Cases-In re Allianz Life: Judicial Panel On Multidistrict Litigation (MDL) Denies Plaintiff's Motion To Centralize Class Action Litigation Agreeing With Defense That Class Actions Need Not Be Coordinated

Judicial Panel Denies Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 Because Class Action Certification Motions had been Granted in Four of the Five Cases and Fact Discovery Completed in Three of the Class Actions

Five class action lawsuits were filed against Allianz Life Insurance of North America challenging its deferred annuity marketing and sales practices. In re Allianz Life Ins. Co. of N. Am. Deferred Annuity Marketing & Sales Practices Litig., ___ F.Supp.2d ___, 2007 WL 1853954, *1 (Jud.Pan.Mult.Lit. Oct. 10, 2007). Plaintiff's lawyer in the two Central District of California class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in that district. Defense attorneys opposed pretrial coordination, but alternatively argued that the District of Minnesota was the appropriate transferee court, id. The plaintiffs in the other three class actions also opposed centralization, though the Minnesota plaintiffs joined defense counsel in requesting transfer to Minnesota if the Judicial Panel granted the motion. Id. The Judicial Panel denied the motion to centralize the class actions because it was “not persuaded that Section 1407 centralization would serve the convenience of the parties and witnesses or further the just and efficient conduct of this litigation.” Id. A significant factor in the Panel’s determination was the “significantly advanced stage” of four of the class actions - “Classes have been certified in those four actions, and fact discovery has been completed (or is nearing completion) in three of them.” Id. Accordingly, the Panel denied the motion.

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

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Class Action Defense Cases-Central States v. Merck-Medco: Second Circuit Reverses Approval Of Class Action Settlement Because Conflict Of Interests Exists Between Class Representatives And Certain Members Of Class

Class Action Certification should have Included Subclass to Protect the Interests of Class Members that Objected to Distribution of Settlement Proceeds under Terms of Class Action Settlement Second Circuit Holds

Plaintiffs, beneficiaries and trustees of employee welfare benefit plans, filed a class action lawsuit against a pharmaceutical benefits manager (PBM) and its former parent company under ERISA (Employee Retirement Income Security Act) for breach of fiduciary duty; the class action complaint alleged that the PBM “fail[ed] to act in their best interest in its capacity as a pharmaceutical benefits manager for the plans.” Central States S.E. & S.W. Areas Health & Welf. Fund v. Merck-Medco Managed Care, L.L.C., ___ F. 3d ___, 2007 WL 3033489, *1 (2d Cir. October 4, 2007). Plaintiff and defense attorneys negotiated a class action settlement that was approved by the district court, id. As part of that process, the district court denied a motion by CareFirst, a third-party administrator (TPA), to intervene in the class action lawsuit. Following approval of the settlement, CareFirst and other objectors appealed challenging the district court orders “(i) certifying the instant action as a class action pursuant to Fed.R.Civ.P. 23(a) and (b)(3); (ii) approving the amended Settlement Agreement as fair, reasonable, and adequate; (iii) awarding legal fees and disbursements; and (iv) severing cases in which the ERISA plans opted out of the settlement.” Id. The Second Circuit remanded the matter for a district court determination of whether the class representatives had standing to prosecute the ERISA claims in the class action and to enter into the class action settlement; the lower court found that standing did exist. Id. The Second Circuit then reassumed jurisdiction over the appeal and, inter alia, affirmed the district court finding that the TPA had standing but held the lower court erred in failing to certify a subclass or consider arguments directed at protecting the interests of that subclass. As the Circuit Court summarized, “we conclude that the court erred both in certifying the class without properly considering the conflicts of interest among members of the class and in approving the Settlement Agreement.” Id.

In broad terms, the class representatives are trustees and beneficiaries of employee welfare benefit plans contracted directly or indirectly with Medco, a PBM, for pharmacy benefit management services. Merck-Medco, at *2. The PBM had authority, in its discretion, to “manage certain aspects of the Plans for the primary purpose of containing pharmaceutical costs.” According to the class action complaint, the PBM breached fiduciary duties to the plans under ERISA by favoring products manufactured by its parent company, Merck, by “interchanging lower cost competing drugs with relatively higher cost Merck drugs,” and by entering into agreements with pharmaceutical manufacturers, including Merck, that were financially beneficial to Medco but more expensive for the Plans. Id. The Second Circuit described the differences in the relationship of various plans to the PBM at page *2 as follows:

By way of an indirect contract, insured Plans paid set premiums to their insurance companies in exchange for full payment of their beneficiaries' prescription drugs, and the insurance companies in turn contracted with Medco for plan management services. By contrast, capitated Plans paid set premiums directly to Medco in exchange for full payment of their beneficiaries' drugs. In the case of both the insured and capitated Plans, respectively, the insurer or Medco bore the risk of higher drug cost in paying each beneficiary's claims for prescription medications. Plans that were self-funded, however, did not pay set premiums to either an insurer or to Medco and instead paid the entire cost of the prescription drugs directly to Medco as PBM or through a third-party administrator for a fee. Accordingly, self-funded Plans alone carried the direct risk of higher drug cost.
(Italics added.)

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

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Class Action Defense Cases-In re Vioxx: Louisiana Federal Court Examines E-Discovery Attorney-Client Privilege Issues Arising In Class Action And Other Complex Case Litigation

Class Action Discovery Disputes Require Creative Approaches to Resolve and Use of Special Master to Resolve Class Action Discovery Issues for Louisiana Federal Court

Numerous class action and individual lawsuits have been filed against Merck arising out of its manufacture and sale of Vioxx, and the Judicial Panel on Multidistrict Litigation coordinated the federal cases for pretrial purposes under 28 U.S.C. § 1407 in the Eastern District of Louisiana. In re Vioxx Products Liab. Litig., 501 F.Supp.2d 789, 790 (E.D. La. 2007). The district court “appointed committees of counsel to represent the parties” and discovery proceeded “on two parallel tracks” - one by the plaintiff and defense Steering Committees, “charged with initiating, conducting, and coordinating all non-case-specific discovery,” and one that focused on the on “case-specific discovery in thousands of individual cases” in which “every plaintiff who alleges a cardiovascular injury” must provide Merck with certain information, following which Merck is required to disclose case-specific information concerning contacts it had with plaintiffs' doctors “and any other relevant information Merck may have about individual plaintiffs.” Id., at 790-91. Defense attorneys refused to produce certain information based on the attorney-client privilege, leading to the court’s in camera review of 81 boxes containing 30,000 documents totaling 500,000 pages. Id., at 791. The court opinion we summarize in this article involves a discovery dispute over those documents. In the words of the district court, “This discovery dispute has dragged on for over a year and at times has seemed hopelessly endless. Although Merck has produced over two million documents in this MDL, the company has also asserted attorney-client privilege as to approximately 30,000 documents which it contends need not be produced. ” Id., at 789.

We do not here summarize the extensive details of the discovery process, see In re Vioxx, at 790 et seq., or the district court’s extensive discussion of the attorney-client privilege, id., at 795 et seq. We summarize the following. “The majority of the withheld documents are print-outs of electronic communications, primarily internal company e-mails and attachments.” Id., at 789. Merck sought appellate review of a discovery order, and while the Fifth Circuit denied review it instructed the district court to devise a better way of dealing with discovery disputes, id., at 791. In an effort to implement the Fifth Circuit's recommendation, Merck gave the court 10 boxes containing roughly 2,000 documents that were “representative of all the documents in question.” Id. In response, the court appointed a special master/expert to review the sampling of the documents in question and provide a recommendation as to the privilege asserted by defense counsel.

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

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Microsoft Class Action Defense Cases- Shersher v. Superior Court: California Court Holds Plaintiffs May Seek Restitution In False Representation UCL Class Action Against Microsoft Even Without Direct Contract With Company

In Class Action/Representative Action Against Microsoft, Claim for Restitution under California’s Unfair Competition Law (UCL) is Available even Where Plaintiff did not Purchase Falsely-Advertised Product Directly from Microsoft California Court Holds

Plaintiff filed a putative class action in California state court against Microsoft for violations of California’ unfair competition law (UCL) alleging that “wireless routers, adapters, and other similar products manufactured by Microsoft” were advertised as capable of delivering transfer speeds of “11Mbps” and “54 Mbps” but that “these numbers were ‘not based on the actual transmission rates of these wireless products and therefore are ... false, deceptive and misleading.’” Shersher v. Superior Court, 154 Cal.App.4th 1491, 1494-95 (Cal.App. 2007). The class action complaint also alleged claims brought in a representative capacity, and contained causes of action for breach of express warranty, violation of the state’s Consumer Legal Remedies Act (CLRA), violation of the UCL, and false advertising, and sought inter alia restitution. Id., at 1495. Defense attorneys moved to strike from the class action complaint the prayer for restitution and any reference to restitution: “The motion was predicated on a single sentence from [Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149]: ‘Any award that plaintiff would recover from defendants would not be restitutionary as it would not replace any money or property that defendants took directly from plaintiff.’” Id. Defense attorneys argued that the word “directly” precluded a claim for restitution because neither plaintiff nor other members of the putative class action purchased products “directly” from Microsoft, id., at 1495-96. The trial court granted the defense motion, but the Court of Appeal granted plaintiff’s petition for writ of mandate and reversed.

The California appellate court explained that relief under the UCL is limited to injunction and restitution, which in this context means “the return of money to those persons from whom it was taken or who had an ownership interest in it.” Shersher, at 1497, quoting Madrid v. Perot Systems Corp., 130 Cal.App.4th 440, 455 (Cal.App. 2005).

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

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TILA/Venue Class Action Defense Cases-Kay v. National Security: Ohio Federal Court Grants Defense Motion To Transfer Venue Of Truth-In-Lending-Act (TILA) Class Action To South Carolina

Class Action Complaint Focused on Defense Conduct in South Carolina and Implicates South Carolina Residents and Substantive Law thus Supporting Defense Motion to Change Venue of Class Action Ohio Federal Court Holds

Plaintiff filed in Ohio federal court a class action lawsuit against his lender, National City Mortgage, alleging that it violated the federal Truth in Lending Act (TILA) because it “charged broker fees and/or points on his loans, as well as on those of other putative class members, without treating such fees as prepaid finance charges as required by the TILA.” Kay v. National City Mortgage Co., 494 F.Supp.2d 845, 848 (S.D. Ohio 2007). Plaintiff was a resident of South Carolina, and his loan was secured by real property in South Carolina, and focused on broker fees paid to The Kelly Mortgage Group, a mortgage broker based in South Carolina. Id. Defense attorneys counterclaimed against plaintiff for breach of contract (failure to pay his loan) and for judicial foreclosure, id., at 848-49. The defense moved to change venue to South Carolina not because venue was improper in Ohio, where defendant was headquartered, but because it “is not the most convenient forum for resolution of this matter,” id., at 849. The district court granted the defense motion and transferred the class action to South Carolina.

The federal court first noted that South Carolina had subject matter jurisdiction over the dispute, and that venue would be proper in South Carolina because “all of the loan contracts in the case sub judice were negotiated in South Carolina and are secured by South Carolina property.” Kay, at 849. Further, by bringing the motion to change venue the defendant “appears to concede that it would be subject to process issuing out of the court in South Carolina.” Id. The question, then, is whether transfer is warranted for “the convenience of parties and witnesses” and “in the interest of justice,” id., for which the defense bears the burden of proof, id., at 849-50.

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

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False Advertising Lawsuit Against Sears, Roebuck Granted Class Action Status by District of Columbia Federal Court

District of Columbia Federal Court Grants Class Action Certification in Class Action Alleging Sears Misrepresented that its Kenmore-Brand Clothes Dryers had Stainless Steel Drums

Bloomberg News reports today that District of Columbia District Court Judge Harry Leinenweber has granted plaintiff’s motion for class action treatment in a lawsuit against Sears, Roebuck. The class action complaint alleges that Sears falsely advertised that its Kenmore clothes dryers were made with stainless steel drums. Bloomberg quotes the federal court’s order as stating, “The case comes down to whether or not Sears improperly represented that the dryer drum was stainless steel when it was a combination of stainless steel and corrodible mild steel.” The district court certified a class action covering purchasers in 28 states and the District of Columbia.

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

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Labor Law Class Action Filings Decline But New Employment Law Class Actions Still Hold Top Spot Among New Class Action Lawsuits Filed In California State And Federal Courts This Past Week

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. During the time period covered by this report (October 26 – November 1, 2007), there were 45 new class action lawsuits filed in these California state and federal courts, and once again new labor law class action lawsuits easily headed the list with 17 new class action complaints alleging employment law claims, or 38% of the new class action filings for the week. Only two other categories managed to break the 10% threshold for this weekly class action report; there were eight (8) new unfair competition law claims, which include false advertising claims (18%), and there were five (5) new securities fraud class action lawsuits (11%).

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

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Class Action Defense Cases-In re Schering-Plough: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff's Unopposed Motion To Centralize Class Action Litigation And Selects District of New Jersey As Transferee Court

Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Plaintiff's Request to Transfer Class Actions to District of Delaware

Five class action lawsuits were filed in three federal district courts (two in Massachusetts and New Jersey, and one in Florida) against Schering-Plough alleging that it “improperly engaged in the promotion of certain prescription medications for off-label purposes.” In re Schering Marketing & Sales Prac. Litig. (No. II), 502 F.Supp.2d 1353, 1353-54 (Jud.Pan.Mult.Lit. 2007). Plaintiff's lawyer in one of the New Jersey class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class action lawsuits pursuant to 28 U.S.C. § 1407 in the District of Arizona or Massachusetts, id., at 1353. All responding parties agreed that pretrial coordination was appropriate but could not agree on the appropriate transferee court, arguing alternatively for centralization in Florida, Massachusetts or New Jersey. Id. The Judicial Panel granted the motion to centralize the class actions and selected the District of New Jersey because "(1) two related actions have been originally filed there and three other related actions (originally filed in the District of Arizona or the Eastern District of Pennsylvania) have been transferred there under 28 U.S.C. § 1404(a), and (2) pretrial proceedings in the actions now pending in the District of New Jersey are already underway before Judge Stanley R. Chester." Id., at 1354 (footnote omitted).

Download PDF file of In re Schering Transfer Order

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

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Comcast Class Action Defense Cases-Anderson v. Comcast: First Circuit Upholds Comcast Arbitration Clause But Severs Class Action Waiver and Holds Severability of Class Action Waiver Saves Arbitration Agreement from Unconscionability Claim

First Circuit Leaves Validity of Class Action Waiver in Arbitration Clause to Arbitrator, Holds Bar on Multiple Damages Invalid and Severs from Arbitration Agreement, Holds Bar on Recovery of Attorney Fees Invalid and Severs from Agreement, and Invalidates One-Year Limitations Period on Claims Against Comcast and Severs from Agreement

Plaintiff filed a putative class action lawsuit in Massachusetts state court against his telecommunications provider, Comcast, for violations of the state’s unfair business practices statute and other tort claims based on the allegation that it charged customers a monthly to lease a cable converter box and remote control for television service even if the customer already owned a cable-ready television. Anderson v. Comcast Corp., 500 F.3d 66, 68(1st Cir. 2007). Defense attorneys removed the class action to federal court based on diversity jurisdiction, and then moved to compel arbitration under an arbitration clause the prohibited class actions as well as “multiple or punitive damages,” id., at 69. Among the arbitration provisions central to the appeal were the following: (1) a class action waiver provision, (2) a requirement that any claims against Comcast be brought within one year, (3) a requirement that consumers pay their own costs of arbitration, including attorney's fees, (4) a bar on any award in arbitration of multiple or punitive damages, and (5) a severance clause. Id. The district court agreed with defense attorneys that plaintiff must arbitrate his claims but held that he could pursue a class action in arbitration, and while the district court granted the motion to compel arbitration and dismissed the class action complaint, id., at 69-70, it severed several other portions of the arbitration agreement, such as the requirement that each side bear its own costs - including attorney and expert fees, id., at 69 n.5. The First Circuit largely upheld the district court’s order, holding in part that the validity of the class action waiver provision must be addressed first by the arbitrator.

Plaintiff’s class action complaint alleged that Comcast violated the Massachusetts Consumer Protection Act and various common law torts. Anderson, at 68. The class action also sought treble damages, punitive damages and attorney fees, id., at 69. Defense attorneys moved to compel arbitration under provisions of its standard agreement with subscribers entitled, "Notice to Customers Regarding Policies, Complaint Procedures & Dispute Resolution." Id., at 68 n.1. The district court applied the First Circuit’s recent decision in Kristian v. Comcast, Corp., 446 F.3d 25 (1st Cir. 2006) - summarized<a href="http://classactiondefense.jmbm.com/2006/06/class_action_defense_cases_kri.html">here</a> - and granted the motion to compel, but “only after severing provisions in the arbitration agreement prohibiting attorney's fees, double or treble damages and a class action remedy in the arbitral forum.” Anderson, at 68. The district court also ruled that "the arbitrator will have the power to determine the validity and applicability of the agreement's one-year statute of limitations." Id. Both plaintiff and defense appealed the district court’s ruling.

The First Circuit began its analysis by observing that it considered the appeal “against the backdrop of a strong pro-arbitration policy expressed by Congress and repeatedly upheld by the courts.” Anderson, at 70. With respect to the class action bar, the Circuit Court held that there was no conflict between Massachusetts state law and the class action waiver provision, id., at 71. The First Circuit distinguished its holding in Kristian, which invalidated a Comcast class action wavier in an arbitration clause, because it found a conflict between such a waiver and the “nature and purposes of antitrust law”; here, by contrast, the class action bar, by its terms, applies “unless your state's laws provide otherwise,” and the consumer law statute in question expressly permits class action lawsuits be filed to enforce it. Id., at 72. The Court did not hold that the exception to class action litigation applied, however, concluding that the question of arbitrability must be addressed first by the arbitrator, id.

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