Class Action Defense Blog

Denial of Class Action Certification Motion Improper in Class Action Case Against Insurer Alleging Violations of State Unfair Competition Law (UCL) because Equitable Defenses of Fraud and Unclean Hands cannot be used to Defeat UCL Claims so Individual Issues Related to such Defenses will not Predominate over Common Issues California Appellate Court Holds

Plaintiff filed a putative class action complaint against his health insurer, Blue Shield of California, alleging inter alia that Blue Shield violated California’s unfair competition law (UCL) and state insurance code “by failing to attach his application to or endorse it on the insurance policy when issued, and later rescinding the policy on the ground he had made misrepresentations in that application.” Ticconi v. Blue Shield of Cal. Life & Health Ins. Co., 157 Cal.App.4th 707, 68 Cal.Rptr.3d 785, 788-89 (Cal.App. 2007). Plaintiff moved the trial court for class action treatment; defense attorneys opposed the class action certification motion on the ground the individual issues related to Blue Shield’s fraud and unclean hands defenses would predominate over common issues. Id., at 789. The trial court agreed with defense counsel and refused to grant class action status. Id. The Court of Appeal reversed, holding that the trial court abused its discretion in denying the class action certification motion because “[e]quitable defenses cannot be used to defeat a UCL cause of action and Blue Shield Life may not raise the defense of fraud based on statements that insureds made in an application for insurance where the application had been neither attached to nor endorsed on the policy when issued,” id. (citations omitted).

According to the class action complaint, plaintiff applied for a short-term health and accidental death insurance policy from Blue Shield. Ticconi, at 789. The application completed by plaintiff “was neither attached to the policy nor endorsed onto it when the policy was issued.” Id. Blue Shield issued the policy, and plaintiff paid the premiums as required, id. During the policy period, plaintiff’s health care bills exceeded $100,000, but upon receiving the bills Blue Shield refused payment and rescinded the policy on the ground that plaintiff “made material misrepresentations in his application for insurance about the condition of his health.” Id. Plaintiff denied this claim, insisting that he “answered truthfully all health questions posed on the policy application” and that “a reasonable investigation would have shown this.” Id. The class action further alleged that Blue Shield violated California law because it failed to attach or endorse a copy of his application to the policy, and Insurance Code section 10113 forbids incorporation of the application by reference, and that even if his statements were false, plaintiff “not bound by any statement made therein because that document had not been attached to or endorsed on the policy when issued.” Id., at 789-90. Plaintiff filed his lawsuit as a class action alleging that Blue Shield similarly “had rescinded a large number of policies that did not have the applications attached to or endorsed on the policies” in violation of Insurance Code sections 10113 and 10381.5, and that as such the rescissions represented an unlawful business practice under the UCL. Id., at 790.

Continue reading "UCL Class Action Defense Cases-Ticconi v. Blue Shield: California Court Reverses Denial Of Class Action Motion Holding Trial Court Erred In Refusing Class Action Treatment Based on Equitable Defenses To Unfair Competition Law (UCL) Claims Against Insurer" »

Posted In: Certification of Class Actions, Class Action Court Decisions

The Associated Press reports today that U.S. District Court Judge Harry Barnes of Arkansas has denied plaintiffs’ class action certification motion, but has permitted the lawsuit to proceed on an individual basis. According to AP, the class action complaint was filed following the 2005 derailment of a Union Pacific train; the derailment caused an explosion that killed a woman. Judge Barnes ruled that the lawsuit failed to satisfy the requirements for a class action, AP reports, but permitted that the four named plaintiffs may proceed to trial on June 2, 2008, on their individual claims.

The article, entitled “Judge denies class-action for lawsuit over 2005 UP train derailment,” was published by AP on December 31, 2007.

Posted In: Class Actions In The News

In Class Action Lawsuit Alleging Fraud, Trial Court Abused its Discretion in Decertifying Class Action because Subsequent Discovery did not Amount to “Changed Circumstances” Necessary to Support Decertification of Class Action, but Summary Judgment in Favor of Defense Properly Granted because Class Action Representative could not Establish Reliance thus Requiring Appointment of New Class Representative Illinois Appellate Court Holds

Plaintiff filed a class action lawsuit against her insurer, Health Care Service Corporation (dba BlueCross BlueShield of Illinois), alleging common law fraud and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act arising out of the company’s allegedly fraudulent business practices in the setting and revising of its policyholders’ premium rates. Wernikoff v. Health Care Serv. Corp., 877 N.E.2d 11, 13-14 (Ill.App. 2007). Specifically, the class action complaint alleged that defendant “failed to disclose to policyholders the option of reapplying as a new policyholder and, if approved, paying the new business rate premium.” Id., at 14. Plaintiff filed a class action certification motion in 2003, which the trial court granted, id., at 13. In 2006, after the case had been reassigned to a new judge, defense attorneys moved to decertify the class action and for summary judgment; the trial court granted both motions. Id., at 14. The appellate court reversed the order decertifying the class action, but affirmed the order granting summary judgment.

Addressing the order decertifying the class action, the appellate court explained that “an order setting aside an earlier determination of class certification would be proper if clearly changed circumstances or more complete discovery warranted it, rather than mere feelings of error regarding the original certification order.” Wernikoff, at 14 (citing Barliant v. Follett Corp., 74 Ill.2d 226, 231 (Ill. 1978)). An order decertifying a class action is reviewed for abuse of discretion. Id., at 14-15 (citation omitted). Plaintiff argued that the trial court abused its discretion because there were no “changed circumstances” and because the additional discovery did not warrant decertification; defense attorneys countered that more than 24 additional depositions had been taken and that the circumstances had changed. Id., at 15. “Specifically, defendant points to plaintiff's second deposition, which occurred after the class was certified, in which plaintiff admitted that he knew about the option to reapply to receive the new business rate but chose not to do so for several years. Defendant also points to the fact that the depositions of many policyholders revealed that not all policyholders relied on the ‘standard written materials’ but relied on the statements made in oral communications with defendant's customer service representatives.” Id.

Continue reading "Class Action Defense Cases-Wernikoff v. Health Care Service: Illinois Appellate Court Reverses Order Decertifying Class Action But Affirms Summary Judgment As To Plaintiff's Claims Thus Requiring Appointment Of New Class Representative" »

Posted In: Certification of Class Actions, Class Action Court Decisions

As frequent visitors to this site know, each Saturday 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. However, in light of the limited number of court days this past week and this upcoming week, we have decided to delay today's class action filing report. Next Saturday, the class action report shall include the cases filed over a two-week period.

Posted In: Class Actions In The News

Judicial Panel Grants Defense Request, Over Objection of Certain Plaintiffs, for Pretrial Coordination of ERISA Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Concurs with Defense Request to Transfer Class Actions to Northern District of Texas

Four class action lawsuits - there in the Northern District of Texas and one in the Eastern District of Texas - were filed against RadioShack and other defendants alleging breach of fiduciary duties under the federal Employee Retirement Income Security Act (ERISA). In re RadioShack Corp. “ERISA” Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. October 22, 2007) [Slip Opn., at 1]. 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 Texas, id. Plaintiff lawyers for the Northern District of Texas class action did not oppose pretrial coordination but argued that the Eastern District of Texas was the appropriate transferee court; plaintiff lawyers for the Eastern District of Texas class action opposed pretrial coordination but argued alternatively for transfer to the Eastern District of Texas. Id. The Judicial Panel granted the defense motion to centralize the class action lawsuits, finding that the various class action complaints present “common factual questions [that] clearly predominate over any unique questions of fact” and that centralization “will eliminate duplicative discovery; prevent inconsistent rulings on pretrial motions, especially with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also agreed with defense attorneys that the Northern District of Texas was the appropriate transferee court because three of the four class actions are pending there and RadioShack is headquartered in that district. Id., at 2.

Posted In: Employment Law Class Actions, Multidistrict Litigation, Class Action Court Decisions

Order Granting Intervention to New Party Plaintiffs did not “Commence” Class Action for Purposes of Removal Jurisdiction under CAFA (Class Action Fairness Act of 2005) Tenth Circuit Holds

Plaintiffs, owners of royalty interests filed a class action lawsuit in Oklahoma state court against Mobil Oil and Mobil Exploration & Producing, North America: The class action complaint, filed in May 2001, “sought damages for breach of contract, breach of plan unitization, conversion, fraud, breach of fiduciary duties, and for a violation of the Oklahoma Production Revenue Standards Act.” Weber v. Mobil Oil Corp., 506 F.3d 1311, 1312 (10th Cir. 2007). The class action complaint was amended in December 2004 to add Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. as party-defendants, id., at 1313. In September 2005, defense attorneys removed the putative class action to federal court under the Class Action Fairness Act of 2005 (CAFA ). Id. The federal court remanded the class action to state court, and defense attorneys sought leave to appeal the remand order. Id. The Tenth Circuit denied the request, concluding that the class action did not fall within the scope of CAFA and, accordingly, that it lacked jurisdiction to consider the appeal.

As a preliminary matter, the Tenth Circuit noted that the parties agreed that the class action was properly removed to federal court if the Class Action Fairness Act applied. Weber, at 1314 n.4. The original complaint was filed in 2001, but in October 2004 other members of the putative class filed a “similar, though not identical, class action in federal district court against the same two defendants.” Id., at 1313. The federal court class action defined the class more broadly than the state court class action, and it additionally sought certain damages not requested in the state court complaint. Id. In December 2004, the state court class action complaint was amended to add Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. as defendants, neither of which was ever named in the federal court class action. Id. In September 2005, plaintiffs in the federal and state court actions agreed that the class action pending in federal court would be voluntarily dismissed and a petition for leave to intervene filed in the state court class action, id. As part of the intervention motion, the plaintiff-intervenors “sought to assert class claims under its expanded class definition and to assert the additional claims for damages and equitable relief it raised in its federal petition.” Id. The state court granted the motion for intervention, but restricted the intervenors to the claims and class definition asserted in the then-pending state court complaint, id. Based on the granting of the motion for intervention, defense attorneys for Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. removed the class action to federal court, arguing that CAFA provided removal jurisdiction; plaintiffs moved to remand the class action to state court on the ground that CAFA did not apply, and the district court ordered remand. Id.

Continue reading "CAFA Class Action Defense Cases-Weber v. Mobil Oil: Tenth Circuit Dismisses Appeal Of Order Remanding Class Action To State Court Holding Class Action Fairness Act (CAFA) Did Not Afford Jurisdiction To Consider Appeal" »

Posted In: Class Action Fairness Act (CAFA), Removal & Remand, Class Action Court Decisions

District Court Abused Discretion by Requiring Any Objector to Class Action Settlement Post $150,000 Bond in Order to Appeal Approval of Class Action Settlement Fifth Circuit Holds

Plaintiffs filed a class action against American Honda Motor alleging that the odometers in certain vehicles overstated the actual mileage. Vaughn v. American Honda Motor Co., Inc., 507 F.3d 295, 297 (5th Cir. 2007). Eventually the parties agreed upon a proposed settlement of the class action, including certification of a settlement class: “The proposed settlement provides some class members various forms of relief, including warranty extensions, lease extensions, lease refunds, and repair reimbursements.” Id. The class action settlement was estimated to cost Honda $115 million, but “[the] value on the open market would be approximately $244 million.” Id. Among the terms of the class action settlement was the requirement that Honda pay $10 million in lease refunds, but did not provide any compensation to class members who had sold or traded their vehicle, id., at 297-98. Various class members objected to the proposed settlement, including one individual (Hawthorn) who had sold his vehicle; the district court overruled the objection and required any objector post a $150,000 bond as part of any appeal. Id., at 297. The objector asked the Circuit Court to reduce the amount of the bond to $1,000.00, and the Fifth Circuit agreed.

In opposing the class action settlement, “Hawthorn specifically objected that the settlement provides no compensation to him or other class members who sold or traded their vehicles. He contends that the settlement should include amounts for ‘diminution in value,’ or value lost on a sale or trade-in due to inflated odometer readings.” Vaughn, at 298. The federal court disagreed and overruled the objection, id. Apparently reflecting the frustration experienced by many class action plaintiff lawyers to the role played by professional objectors, class counsel asked the district court to require an appeal bond under FRAP 7 be posted by any objector who filed a notice of appeal. Id. Based on the “detrimental impact of an appeal as to the entire class,” and the court’s “opinion” that any objector’s appeal will carry with it the “significant possibility” that any appeal will be subject to summary denial and an award of attorney fees and costs under FRAP 38, the district court granted the motion and set the appeal bond at $150,000. Id.

Continue reading "Honda Class Action Defense Cases-Vaughn v. American Honda: Fifth Circuit Rejects Arguments By Parties To Class Action And Reduces Rule 7 Bond Required To Appeal Class Action Settlement From $150,000 To $1,000" »

Posted In: Class Action Court Decisions

The author of the Class Action Defense Blog wishes all of you a very happy holiday season. A new class action article will be published tomorrow.

Posted In: Class Actions In The News

Judicial Panel Grants Plaintiffs’ Request, Unopposed by Defense, for Pretrial Coordination of 25 Antitrust Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, and Transfers Class Actions to Central District of California

Twenty-five class action lawsuits were filed in six (6) federal district courts (10 in the Northern District and 2 in the Central District of California, 10 in the Western District of Washington, and 1 each in Massachusetts, Nevada and the Eastern District of New York) against Korean Air Lines and Asiana Airlines alleging that they “conspired to fix prices of passenger airfares between the United States and Korea in violation of the Sherman Antitrust Act.” In re Korean Air Lines Co., Ltd., Antitrust Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 19, 2007) [Slip Opn., at 1]. Plaintiff lawyers in three of the actions moved the Judicial Panel for Multidistrict Litigation (MDL) for centralization of the class action litigation pursuant to 28 U.S.C. § 1407, each requesting transfer to the court in which their respective action was pending - viz., the Western District of Washington, the Northern District of California, or the Central District of California. Id. All responding parties supported pretrial coordination but they could not agree on an appropriate transferee court and, in fact, added requests for transfer to Massachusetts and New York into the mix. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and selected the Central District of California because, in addition to the two actions already pending in that district, 16 potential tag-along class actions also had been filed in that district. Id. Additionally, the Panel selected the Central District of California for the consolidated class action litigation to proceed because each defendant “maintain[s] their primary domestic office in Los Angeles, where discovery may be found.” Id. Accordingly, all class actions pending outside the Central District of California were ordered transferred there, id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

The Wall Street Journal reports today that U.S. District Court Judge Robert Lasnik of Seattle, Washington, has dismissed a putative class action against lawyer-rating website Avvo. The class action complaint challenged Avvo’s method of rating lawyers, and was filed by two lawyers who objected to the ratings they had received. According to The Wall Street Journal, the district court “ruled that there was no basis for cracking down on a lawyer-rating Web site merely because some of its rates didn’t like how they were portrayed.”

The article, entitled “Judging Lawyers,” may be found in the “Review & Outlook” section on page A10 of the December 24, 2007 edition of The Wall Street Journal.

Posted In: Class Actions In The News

Judicial Panel Grants Plaintiffs’ Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Rejects Defense Attorney Request to Transfer Class Actions to Southern District of New York

Seven class action lawsuits were filed against various defendants alleging violations of federal securities laws based on allegations that Sterling Financial “issued materially false and misleading statements relating to its wholly-owned subsidiary, EFI, which artificially inflated Sterling’s stock price.” In re Sterling Financial Corp. Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. October 26, 2007) [Slip Opn., at 1]. Plaintiff lawyers in the Pennsylvania 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 Eastern District of Pennsylvania; plaintiff lawyers in the other class actions supported the motion, and defense attorneys did not oppose pretrial coordination of the class action litigation but argued that the Southern District of New York was a more appropriate transferee court. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed with plaintiff that the Eastern District of Pennsylvania was the appropriate transferee court because “(1) defendants maintain business operations within this district; (2) the conduct at issue allegedly took place in Pennsylvania; and (3) accordingly, relevant documents and witnesses will likely be located there.” Id. Accordingly, the Panel ordered all class actions pending outside that district transferred to the Eastern District of Pennsylvania. Id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions, PSLRA/SLUSA Class Actions