Posted On: January 31, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Sonnier v. State Farm: Fifth Circuit Affirms Dismissal Of Class Action Complaint Against Automobile Insurance Company Because Allegations In Class Action Failed To State Claim For Failure To Inspect Seatbelts After Accidents

Class Action Alleging Auto Insurer Breached Insurance Contract by Failing to Pay for Seatbelt Inspections Following Accidents Properly Dismissed Fifth Circuit Holds

Plaintiffs filed a class action lawsuit against their automobile insurance carrier alleging that it was “contractually obligated to provide an extensive seatbelts inspection” following auto accidents. Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F. 3d 673, 2007 WL 4260892, *1 (5th Cir. 2007). The class action complaint does not challenge State Farm’s payment of repair costs as estimated by the body shops that inspect the insured vehicles after accidents; rather, it alleged that the manufacturer and a trade group recommend inspecting seatbelts and their locking mechanisms following any accident. Id. The class action further alleged that if “a body shop deems such an inspection unnecessary and does not list it on the estimate, then State Farm will not cover the cost of the seatbelt inspection.” Id. However, plaintiffs “refused to allege that there is in fact anything wrong with the seatbelt (or even that there seemed to be something wrong).” Id., at *3 n.2. Defense attorneys moved to dismiss the class action for failure to state a claim, noting that plaintiffs “do not allege that their seatbelts were harmed in any way during or after the collisions”; the district court granted the motion because “based on the contractual agreement to repair, if there is no complaint of a failure, there is nothing to repair.” Id., at *1. The Fifth Circuit affirmed.

The Circuit Court summarized plaintiffs’ theory on appeal as “arguing that the term ‘cost of repair’ necessarily includes the cost of the seatbelts inspection because in order to repair something, one must first inspect to determine what is in need of repair.” Sonnier, at *1. The Court disagreed. Interpreting the policy language under Louisiana law, the Fifth Circuit found unambiguous that State Farm’s contractual obligations were limited to loss or damage, and that the cost of repair or replacement was, under the facts of this case, based on “an estimate written based upon the prevailing competitive price.” Id., at *2. The Circuit Court concisely explained its rationale for rejecting plaintiffs’ theory as follows: “State Farm is obligated to pay for loss or damage to [plaintiffs’] vehicles based upon a written estimate. In creating estimates, body shops conduct an inspection, list the items in need of repair, and determine the amount State Farm owes ‘based upon the prevailing competitive price.’ [Plaintiffs’] argument that an estimate must necessarily include an extensive seatbelts inspection finds no support in the policy language. There is no policy language describing State Farm's duty to conduct or pay for automobile inspections. State Farm's duty is to pay for loss or damage to Appellants' vehicles, measured by the cost of repair. That obligation was fulfilled in this case, and [plaintiffs] do not further identify anything broken that needs to be fixed.” Id.

Continue reading "Class Action Defense Cases-Sonnier v. State Farm: Fifth Circuit Affirms Dismissal Of Class Action Complaint Against Automobile Insurance Company Because Allegations In Class Action Failed To State Claim For Failure To Inspect Seatbelts After Accidents" »

Posted On: January 30, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Montgomery v. Bank of America: California Federal Court Dismisses Class Action Complaint Holding National Bank Act (NBA) Preempts Class Action Claims Challenging Nonsufficient Funds/Overdraft Fees

UCL Class Action Against Bank Challenging Overdraft Fees Fails because National Bank Act (NBA) Preempted Class Action Claims Under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) California Federal Court Holds, but Grants Plaintiff 20 Days’ Leave to Amend Class Action Complaint

Plaintiff filed a putative class action in California state court against Bank of America alleging violations of California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) arising out of the Bank’s failure to disclose its Nonsufficient Funds/Overdraft Fees policy (NSF/OD fees policy). Montgomery v. Bank of America Corp., 515 F.Supp.2d 1106, 1108 (C.D. Cal. 2007). The thrust of plaintiff’s class action was that the Bank charged NSF/OD fees “on a sliding scale per overdraft[ that is] overly harsh, unjustified, and bear no relation to the actual damages incurred by the bank and are therefore in breach of California contract law,” and that the Bank’s NSF/OD fee agreements “are contracts of adhesion and unconscionable” due to their failure to accurately disclose the fees that may be assessed. Id., at 1111. Defense attorneys removed the class action to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA), id., at 1108. In the face of a defense motion for judgment on the pleadings, plaintiff filed an amended class action complaint; defense attorneys moved to dismiss the amended complaint. Id. The only ground addressed by the district court was whether the class action claims were “preempted by regulations promulgated by the Office of the Comptroller of the Currency (‘OCC’) pursuant to the National Bank Act (‘NBA’).” Id., at 1109. Because the district court found that the claims were preempted, it granted the defense motion and dismissed the class action complaint.

After noting that Congress did not expressly preempt state laws in this area, Montgomery¸ at 1109, the district court turned to whether “field preemption” existed or whether the court could “imply preemption” to the class action claims, id., at 1109-10. It noted that “The National Bank Act of 1864 was enacted to protect national banks against intrusive regulation by the States.” Id., at 1110 (citations omitted). And under established case law, “state attempts to control the conduct of national banks are void if they conflict with federal law, frustrate the purposes of the [NBA], or impair the efficiency of national banks to discharge their duties.” Id. (citation omitted). Defense attorneys argued that the claims in the class action complaint were preempted by 12 C.F.R. § 7.4002, which expressly authorizes banks to “impose charges and fees” as described therein. Id., at 1111. Under the Bank’s theory, because federal regulations authorize banks to charge fees, federal law occupies the field and “it is up to the OCC, not private plaintiffs, to determine whether a bank has properly weighed the discretionary factors set forth in Section 7.4002 when setting the fee amounts.” Id., at 1112. Plaintiff’s lawyer countered that preemption is disfavored, particularly as it concerns the “historic police powers of the States” to protect consumers. Id., at 1112-13 (quoting Smiley v. Citibank, 11 Cal.4th 138, 148 (Cal. 1995), aff'd, 517 U.S. 735). Plaintiff also argued that the class action’s “failure to disclose” allegations are not preempted by the NBA, id., at 1113.

Continue reading "Class Action Defense Cases-Montgomery v. Bank of America: California Federal Court Dismisses Class Action Complaint Holding National Bank Act (NBA) Preempts Class Action Claims Challenging Nonsufficient Funds/Overdraft Fees" »

Posted On: January 29, 2008 by Michael J. Hassen Email This Post

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ADEA Class Action Defense Cases-Breen v. Peters: District of Columbia Federal Court Denies Motion To Add 20 New Plaintiffs To ADEA Class Action And Denies Former Plaintiff's Motion To Rejoin Class Action

Motion to Intervene in Class Action under Age Discrimination in Employment Act (ADEA) Denied because of Failure to Comply with Statutory Deadline for Filing Notice of Intent to Sue and Former Plaintiff’s Motion to Rejoin Class Action Fails as Time-Barred District of Columbia District Court Holds

Plaintiffs, air traffic controllers, filed a putative class action against their federal employer alleging violations of the Age Discrimination in Employment Act (ADEA), following a February 2005 work force reduction that would, and did, result in their termination in October 2005. Breen v. Peters, 529 F.Supp.2d 24, 2008 WL 62626, *1 (D.D.C. 2008). Plaintiffs bypassed the administrative complaint process, provided the requisite 30-day notice of intent to sue, see 29 U.S.C. § 633a(d), and in March 2005 filed the class action. Id. Plaintiffs subsequently moved to join 20 individuals as named plaintiffs, and the 20 individuals simultaneously moved for leave to intervene; additionally, one plaintiff dismissed from the class action at his request, filed a motion to be reinstated as a party plaintiff. Id. Oddly, the class action complaint defined an 834-person class by name, attaching as an exhibit a list of each of the individuals on whose behalf the putative class action had been filed. Over the course of the litigation, some class members were added and others were dismissed; however, the 20 individuals seeking leave to intervene were never part of the putative class. Id. Defense attorneys opposed each of these motions, id. The district court denied the motions.

With respect to the 20 individuals, defense attorneys argued that they should be denied leave to join the class, either as named plaintiffs or by intervention, because they failed to comply with the statutory filing deadlines for bringing an ADEA claim. Plaintiffs’ conceded this point, but argued, in essence, that since there were more than 800 members of the putative class, what’s another 20? Breen, at *1. The federal court found unpersuasive the argument that the 20 should be permitted to piggy-back on the timely claims filed by or on behalf of the members of the putative class: The ADEA expressly requires that notice of intent to sue be filed with the Equal Employment Opportunity Commission within 180 days of the allegedly unlawful act, see 29 U.S.C. § 633a(d), and while this deadline is not jurisdictional and may, under appropriate circumstances, be deemed tolled, “a court should use its equitable power to toll a statutory deadline only in extraordinary and carefully circumscribed circumstances.” Id., at *2. As the moving parties, the 20 individuals bore the burden of persuaded the district court that the statutory deadline had been equitably tolled, but they failed to meet that burden, id. Indeed, they offered no facts in support of their motion but, rather, “argue[d] that they should be treated as having vicariously met the statutory filing deadline, because several hundred plaintiffs in the case did provide timely notice to the defendants of their intent to sue under the ADEA in compliance with 29 U.S.C. § 633a(d).” Id. They argued defendants would not be prejudiced by adding 20 more class members, but they did not counter the argument that they simply sat on their rights as the statutory deadline passed, id. Accordingly, the district court refused the motions seeking to add the 20 individuals to the class action. Id., at *3.

Continue reading "ADEA Class Action Defense Cases-Breen v. Peters: District of Columbia Federal Court Denies Motion To Add 20 New Plaintiffs To ADEA Class Action And Denies Former Plaintiff's Motion To Rejoin Class Action" »

Posted On: January 28, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Mills v. Foremost: Eleventh Circuit Reverses District Court Dismissal Of Class Action Complaint Alleging Underpayment Of Policy Benefits Holding Plaintiffs Possess Standing And Should Be Allowed To Conduct Discovery

District Court Erred in Holding Plaintiffs Lacked Standing to Prosecute Class Action Complaint and in Ruling on Suitability of Complaint for Class Action Treatment at the Pleading Stage of the Litigation Eleventh Circuit Holds

Plaintiffs filed a class action lawsuit in Florida state court against their mobile home owner’s insurance carrier, Foremost Insurance, for underpayment of damages caused by hurricanes, and defense attorneys removed the class action to federal court. Mills v. Foremost Ins. Co., 511 F.3d 1300, 2008 WL 45806, *1 (11th Cir. 2008). The class action complaint alleged that plaintiffs tendered a claim to Foremost for hurricane damages, but that “Foremost failed to compensate the Millses for contractors' overhead and profit charges, and for state and local sales taxes on materials, incurred by the Millses in having their hurricane-damaged property repaired or replaced.” Id. The Eleventh Circuit referred to these unpaid items as “Withheld Payments,” see id. n.2. Before either side filed a motion concerning class action certification, defense attorneys moved to dismiss the class action on the ground “that class action treatment was inappropriate because common legal or factual questions would not predominate over individual issues.” Id. The district court granted the motion to dismiss on the ground that plaintiffs lacked standing to prosecute the class action claims, id. Plaintiffs appealed dismissal of the class action, and the Eleventh Circuit reversed.

The district court dismissed the class action based on its conclusion that, in order to have standing to prosecute the class action, plaintiffs had to satisfy three “preconditions” set forth in the insurance policy: “(1) they must complete the repairs or replacement of the damaged property; (2) they must actually incur overhead, profit, and sales tax in connection with the repairs or replacement; and (3) they must make a further claim for any ‘additional costs’ (including overhead, profit, and sales tax) incurred in repairing or replacing the damaged property.” Mills, at *1. Because the class action complaint sought damages for Withheld Payments, the district court reasoned that plaintiffs themselves would not be entitled to such damages unless they met these preconditions. Because plaintiffs “failed to allege that they had completed the repairs or replacement and made a claim for such repair or replacement costs,” the district court held that they lacked standing to prosecute the complaint either individually or as a class action. Id. The district court further held that class action treatment would be inappropriate because “the individual inquiry of the facts surrounding the property damage claims of thousands of Foremost policy holders under thousands of separate insurance policies would predominate and overwhelm any common issue.” Id., at *2. Accordingly, it granted the defense 12(b)(6) motion to dismiss the class action complaint, id.

Continue reading "Class Action Defense Cases-Mills v. Foremost: Eleventh Circuit Reverses District Court Dismissal Of Class Action Complaint Alleging Underpayment Of Policy Benefits Holding Plaintiffs Possess Standing And Should Be Allowed To Conduct Discovery" »

Posted On: January 26, 2008 by Michael J. Hassen Email This Post

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New Employment Law Class Action Cases Continue Hold On Top Spot Of Weekly Class Action Filings In California State And Federal Courts

To assist defense attorneys anticipate the types of class actions against which they will have to defend in California state and federal courts, 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 two-week period of January 18 – January 25, 2008, during which time 39 new class action lawsuits were filed. Class actions alleging employment-related claims generally top this list, often by a wide margin, and labor law class actions continued to hold the top spot this past week with 15 new filings (representing 38% of the total number of new class action lawsuits filed). The only other category to break the 10% threshold involved class actions alleging violations of California's unfair competition law (UCL), which include false advertising claims, with 9 new class action filings (23%).

Posted On: January 25, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-In re American Home Mortgage: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Eastern District Of New York

Judicial Panel Grants Defense Request, Over Plaintiffs’ Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees With Defense that Eastern District of New York is Appropriate Transferee Court

Nineteen (19) class action lawsuits - 18 in New York and one in Florida - were filed against American Home Mortgage Investment Corp. and various other defendants, including Citigroup Capital Markets, alleging violations of federal securities laws. In re American Home Mortgage Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 19, 2007) [Slip Opn., at 1]. Defense attorneys for Citigroup Capital 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 New York. Id. Eight individual defendants supported the motion, but plaintiffs opposed pretrial coordination of the class actions, id. The Judicial Panel granted the motion to centralize the class action lawsuits, explaining that “All of these actions share issues regarding the financial condition of American Home Mortgage Investment Corp. (AHM) during the 2006-07 time period, and whether the defendants…misrepresented or failed to disclose material information concerning the company and its financial condition and prospects.” Id. The Panel agreed with defense counsel that the Eastern District of New York was the appropriate transferee court, both because 18 of the class action lawsuits already were pending in that court, and because AHM is headquartered in that district. Id., at 1-2.

Download PDF file of In re American Home Mortgage Transfer Order

Posted On: January 24, 2008 by Michael J. Hassen Email This Post

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Illinois State Court Finally Grants Defense Motion For Summary Judgment In Stock Options Class Action Lawsuit Against CyberSource

After sitting on the motion for more than a year, Madison County Circuit Judge Daniel Stack finally granted summary judgment in favor of CyberSource, ending a class action challenging stock options. The class action complaint was filed five years ago, and defense attorneys had consented to class action treatment. The defense moved for summary judgment on the ground that the plaintiff never exercised the stock options and so never suffered any injury. The class action alleged that the plaintiff tried to exercise his stock options for PaylinX (which subsequently merged into CyberSource) but the company interfered with his efforts, but the court found no evidence to support the allegation. Accordingly, the court granted summary judgment and dismissed the class action.

Posted On: January 24, 2008 by Michael J. Hassen Email This Post

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Veterans Class Action Defense Cases-Cody v. Cox: District of Columbia Circuit Reverses Dismissal Of Class Action Holding Congressional Amendment To Statute Did Not Render Class Action Claims Moot

Class Action Claims Under 24 U.S.C. § 413(b) were not Rendered Moot by 2006 Congressional Amendment to Section 413 District of Columbia Circuit Holds

Plaintiffs, elderly veterans who were full-time residents of the Armed Forces Retirement Home, filed a class action lawsuit against the Secretary of Defense and the Chief Operating Officer of the Armed Forces Retirement Home; the class action sought to compel the Armed Forces Retirement Home to provide “‘high quality’ health care, as required by 24 U.S.C. § 413(b).” Cody v. Cox, 509 F.3d 606, 2007 WL 4354429, *1 (D.C. Cir. 2007). Defense attorneys moved to dismiss the class action; the district court granted the motion, holding that the 2006 Congressional amendment to section 413 rendered the class action claims moot. See Cody v. Rumsfeld, 450 F.Supp.2d 5, 9-11 (D.D.C. 2006). The Circuit Court reversed. The Court concluded that the district court erred in dismissing the class action complaint because the amendment to section 413 did not render the claims moot. Cody v. Cox, at *1. Accordingly, it reversed and remanded.

The opinion of the District of Columbia Circuit contains an interesting discussion of the federal mootness doctrine, and those interested that doctrine are encouraged to review the opinion.

Download PDF file of Cody v. Cox

Posted On: January 23, 2008 by Michael J. Hassen Email This Post

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PSLRA Class Action Defense Cases-Makor v. Tellabs: Seventh Circuit Reaffirms That Class Action Complaint Created “Strong Inference” Of Scienter Required For Securities Class Action To Survive Defense Motion To Dismiss

On Remand from Supreme Court, Seventh Circuit Holds Allegations of Scienter in Securities Class Action Complaint Satisfied Requirements of Private Securities Litigation Reform Act (PSLRA) Warranting Reversal of District Court Order Granting Defense Motion to Dismiss Class Action

Plaintiffs filed a class action against Tellabs and its CEO alleging violations of federal securities laws; defense attorneys moved to dismiss the class action complaint on the grounds that the Private Securities Litigation Reform Act (PSLRA) required plaintiffs to plead facts sufficient to support a “strong inference” of scienter, and that the putative class action failed to do so. The district court granted the defense motion, but the Seventh Circuit reversed and reinstated the class action. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. __, 127 S.Ct. 2499 (2007). The Supreme Court granted certiorari and reversed, and our article discussing that opinion may be found HERE. The High Court remanded the class action to the Seventh Circuit “with directions to consider whether the plaintiffs’ allegations of securities fraud in violation of section 10(b) of the Securities Exchange Act of 1934…and SEC Rule 10b-5…create the ‘strong inference’ of scienter, as defined by the Supreme Court in its opinion, that the [PSLRA] requires for the complaint to survive a motion to dismiss.” Makor Issues & Rights, Ltd. v. Tellabs, Inc., ___ F.3d ___ (7th Cir. January 17, 2008) [Slip Opn., at 1-2]. On remand, the Seventh Circuit adhered to its prior determination and reinstated the class action.

The Supreme Court explained that the PSLRA “requires plaintiffs to state with particularity both the facts constituting the alleged violation, and the facts evidencing scienter, i.e., the defendant's intention ‘to deceive, manipulate, or defraud.’” 127 S.Ct. at 2504 (citations omitted). Specifically, the PSLRA requires that the complaint “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind,” 15 U.S.C. § 78u-4(b)(2), and the Supreme Court held at pages 2504 and 2505: “It does not suffice that a reasonable factfinder plausibly could infer from the complaint's allegations the requisite state of mind. Rather, … a court governed by § 21D(b)(2)…must consider, not only inferences urged by the plaintiff, as the Seventh Circuit did, but also competing inferences rationally drawn from the facts alleged. An inference of fraudulent intent may be plausible, yet less cogent than other, nonculpable explanations for the defendant's conduct. To qualify as ‘strong’ within the intendment of § 21D(b)(2), we hold, an inference of scienter must be more than merely plausible or reasonable - it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent. (Italics added.) The newly-enunciated test requires a court “take into account plausible opposing inferences,” something the Seventh Circuit expressly refused to do. Id., at 2509. Accordingly, the High Court remanded the class action to the Seventh Circuit to consider these opposing inferences and answer, “would a reasonable person deem the inference of scienter at least as strong as any opposing inference?” Id., at 2511. Our summary of the Supreme Court opinion may be found here .

Continue reading "PSLRA Class Action Defense Cases-Makor v. Tellabs: Seventh Circuit Reaffirms That Class Action Complaint Created “Strong Inference” Of Scienter Required For Securities Class Action To Survive Defense Motion To Dismiss" »

Posted On: January 22, 2008 by Michael J. Hassen Email This Post

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Supreme Court Refuses To Hear Appeal In Enron Investor Class Action Lawsuit Against Wall Street Firms

Mark Anderson of The Wall Street Journal reports today that the United Supreme Court has agreed to hear an appeal of a decision by the United States Court of Appeals for the Fifth Circuit in a class action by Enron investors against numerous Wall Street firms, “striking a fatal blow against the class-action investor lawsuit.” Mr. Anderson notes that the High Court’s refusal to hear the class action appeal comes one week after the Court’s seminal decision in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., ___ U.S. ___, 2008 WL 123801 (January 15, 2008), a summary of which may be found here. Mr. Anderson further notes that the ruling “is an indication that the High Court doesn’t believe the Enron suit met the standards set in the Stoneridge ruling for securities class-action lawsuits to proceed.”

Mark Anderson’s article, entitled “Supreme Court Declines Suit Brought by Enron Investors,” may be found online and was posted January 22, 2008 on The Wall Street Journal.Online.

Posted On: January 22, 2008 by Michael J. Hassen Email This Post

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FLSA Class Action Defense Cases-Roe-Midgett v. CC Services: Seventh Circuit Affirms Summary Judgment In Favor Of Defense In FLSA Class Action Holding Employees Covered By Class Action Complaint Were Exempt

District Court Properly Granted Defense Motion for Summary Judgment as to Class Action Claims on Behalf of Insurance Claims Adjusters because Undisputed Facts Established that Class of Employees Covered by Action Fell Within FLSA’s Administrative Exemption Seventh Circuit Holds

Plaintiffs filed a class action lawsuit against their employer, CC Services, alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that defendant misclassified the class of employees on whose behalf the action was brought (four classes of insurance claims adjusters) in order to avoid paying them overtime. Roe-Midgett v. CC Services, Inc., ___ F.3d ___ (7th Cir. January 4, 2008) [Slip Opn., at 1-2]. Defense attorneys moved for summary judgment as to all of the class action claims, id., at 6. The district court granted the defense motion, id. In ruling against plaintiffs’ class action claims, the federal court applied “the Department of Labor’s so-called ‘short test’ for determining whether employees fall within the FLSA’s administrative exemption,” and “concluded that the primary duties of all four claims-processing positions involved matters (1) ‘directly related to management policies or general business operations’ and (2) ‘requiring the exercise of discretion and independent judgment.’” Id., at 2. Plaintiffs appealed, and the Seventh Circuit affirmed.

CC Services processes insurance claims for auto, home, commercial and farm insurers. Slip Opn., at 3. It operates out of 37 field offices, and in 2004 settled $600 million in claims, id. Each field office is staffed with Property Specialists, Field Claims Representatives, and Material Damage Appraisers (MDAs). Id. The Seventh Circuit noted that plaintiffs presented only limited arguments on appeal with respect to the district court’s summary judgment order concerning Property Specialists and Field Claims Representatives (II and III), id., at 2; as to those three classes, plaintiffs argued that material issues of disputed fact precluded summary judgment on the class action claims, “[b]ut they failed to identify any real factual dispute specific to these employees,” id. The Circuit Court focused, therefore, on the claim that the duties of MDAs failed to meet the requirements for exemption under the short test. Id. The Seventh Circuit summarized the jobs performed by MDAs and its conclusion at pages 2 and 3 as follows:

Continue reading "FLSA Class Action Defense Cases-Roe-Midgett v. CC Services: Seventh Circuit Affirms Summary Judgment In Favor Of Defense In FLSA Class Action Holding Employees Covered By Class Action Complaint Were Exempt" »

Posted On: January 21, 2008 by Michael J. Hassen Email This Post

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ERISA Class Action Defense Cases-Nelson v. Hodowal: Seventh Circuit Affirms Defense Judgment In ERISA Class Action Holding Plan Fiduciaries Not Required To Disclose "Facts That May Lead To Idiosyncratic Reactions"

Employee Retirement Income Security Act (ERISA) does not Impose Legal Duty on Fiduciaries to Disclose to Participants that they are Selling Most of Their Own Stock in Company Seventh Circuit Holds

Plaintiffs, participants in the defined-contribution supplemental pension plan of their employer Indianapolis Power & Light Company (the Thrift Plan), filed a class action against the Plan’s fiduciaries alleging breach of duties under ERISA (Employee Retirement Income Security Act) based on defendants’ failure to disclose to Plan participants that they had sold most of their own stock in the company. Nelson v. Hodowal, ___ F.3d ___, 2008 WL 90057, *1 (7th Cir. January 2, 2008). The district court certified the litigation as a class action and the class action proceeded to trial. Id., at *2. The district court found in favor of defendants and plaintiffs appealed, id. The Seventh Circuit affirmed.

The Seventh Circuit summarized the factual underpinnings of the class action as follows. The Thrift Plan “initially limited employees to holding stock of IPALCO Enterprises, Inc., the employer's parent corporation, or bonds issued by the United States,” but was subsequently amended to permit participants “to diversity their investments” and, ultimately, nine (9) options ranging “from very conservative (a money-market fund) to risky (IPALCO stock and nothing else).” Nelson, at *1. “The Plan hired Merrill Lynch, Pierce, Fenner & Smith, Inc., to advise the participants about appropriate investments; Merrill Lynch stressed the benefits of diversification. The Plan allows participants to change investments among the nine options daily, with no need for advance notice.” Id. However, “all of the employer's matching contributions were allocated to IPALCO stock; the Plan's terms made this mandatory.” Id. IPALCO merged with global energy company AES Corporation in 2001, and “AES offered a premium of 16% relative to the price at which IPALCO's stock had traded the day before the announcement.” IPALCO stock climbed following the announcement, and by the time the merger closed “about 64% of investments in the Thrift Plan were held as IPALCO stock ($145.4 million of the Plan's total assets of $228.1 million).” Id. Because AES is significantly larger than IPALCO, IPALCO’s performance does not significantly impact the market value of AES stock. Nelson, at *1. “When the merger closed, AES was trading for $49.60 a share,” but it began a rapid descent and on February 21, 2002 it “reached a low of $4.11.” Id. The record does not reflect the reasons for the stock’s decline but does confirm that “it continues to be a substantial enterprise” with $6.7 billion in revenues in 2000 and “a profit of roughly $1.40 a share” and $12.3 billion in revenues in 2006. Id. “The stock closed on December 18, 2007, at $21.58.” Id.

Plaintiffs filed a class action against the Plan’s fiduciaries alleging ERISA violations. Nelson, at *2. “The principal contention was that the fiduciaries (all of whom were executives at Indianapolis Power & Light) should have seen the decline coming, or at least should have understood that AES is too volatile to be a suitable investment for pension holdings, and therefore had to compel all of the participants to exchange their IPALCO stock for the Plan's other investment options before the merger closed.” Id. The class action proceeded to a bench trial, and the district court “found essentially every disputed fact in defendants' favor.” Id. (citing 480 F.Supp.2d 1061 (S.D. Ind. 2007)). Specifically, the district court “concluded that the defendants had no reason to foresee any decline in the price of AES's stock (had, indeed, no inside information about AES) and that reasonable fiduciaries would have deemed AES a suitable stock.” Id. Further, the judge “concluded that an ERISA fiduciary is not obliged to strip participants of the ability to make their own decisions, for good or ill” and that “the fiduciaries [were not] obliged (or even allowed) to disregard the Plan's provision requiring all of the employer's contributions to be held as IPALCO (and then AES) stock.” Id.

Continue reading "ERISA Class Action Defense Cases-Nelson v. Hodowal: Seventh Circuit Affirms Defense Judgment In ERISA Class Action Holding Plan Fiduciaries Not Required To Disclose "Facts That May Lead To Idiosyncratic Reactions"" »

Posted On: January 19, 2008 by Michael J. Hassen Email This Post

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Supreme Court Agrees To Hear Appeal In Class Action Alleging Deceptive Advertising Of Light Cigarettes And Decision Will Impact Numerous Class Action Lawsuits Based On Identical Challenges

Mark Anderson of The Wall Street Journal reports today that the United Supreme Court has agreed to hear an appeal of a decision by the United States Court of Appeals for the First Circuit in a class action against Phillip Morris involving advertising of light cigarettes. The class action is but one of numerous class action lawsuits in state and federal courts alleging, in essence, that Phillip Morris and other tobacco companies falsely advertised “light” cigarettes as being safer than regular cigarettes. In part, tobacco companies have urged that “the Federal Trade Commission’s regulation of cigarette advertising bars claims under a state law.” A federal district court agreed with Phillip Morris, but the First Circuit reversed. In so doing, the First Circuit created a circuit conflict with a decision out of the Fifth Circuit that barred a similar class action lawsuit. Mr. Anderson quotes a Phillip Morris representative as stating, “A definitive answer to this question will significantly impact the outcome of dozens of pending lawsuits in which the plaintiffs are alleging billions of dollars in potential liability.” The author agrees that the impact on state and federal class action lawsuits against the tobacco industry will be substantial.

Mark Anderson’s article, entitled “Justices to Hear Cigarette Case,” may be found on page A6 of the January 19, 2008 edition of The Wall Street Journal.

Posted On: January 19, 2008 by Michael J. Hassen Email This Post

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Labor Law Class Action Cases Retain Top Spot But New Truth-In-Lending Act (TILA) Class Action Lawsuits Run A Close Second In New Class Action Filings In California State And Federal Courts

As a resource for California defense attorneys so that they may anticipate the types of class action lawsuits 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 preceding week. This report covers the two-week period of January 11 – January 17, 2008, during which time 57 new class action lawsuits were filed. While labor law class actions generally top this list by a wide margin, this past week a new category joined the list of top class action lawsuits -- federal Trust in Lending Act (TILA) lawsuits. Fourteen (14) employment-related class action lawsuits were filed during the past week, representing only 25% of the total number of new class action filings (compared with almost 60% of the class action filings during the preceding week). TILA class action cases came in second with 12 new filings (21%). Two other categories cracked the 10% threshold: those alleging violations of federal antitrust law violations with 9 new filings (16%), and those alleging violations of California's unfair competition law (UCL), which include false advertising claims, with 6 new class action filings (11%).

Posted On: January 18, 2008 by Michael J. Hassen Email This Post

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MARK YOUR CALENDARS -- Hotel Development Conference Coming To Las Vegas March 11-13, 2008

Jim Butler, head of Jeffer Mangels Butler & Marmaro's Global Hospitality Group, the premier hospitality practice in a full service law firm is proud to announce that the UNLV/JMBM Hotel Developers Conference will be held March 11-13, 2008 at the Green Valley Ranch Resort & Spa in Las Vegas. Seventy (70) speakers, all focused on "green" hotel development, will address a wide range of topics. The Conference promises to be worthwhile for all those involved in development or the financing of development.

Note: Jim Butler is the leading condo hotel lawyer in the United States and has worked on more than 100 condo hotel or hotel condo projects all over the world. Anyone developing or financing a hotel mixed-use project--whether ground up construction or conversion--should contact Jim Butler to discuss the project. The Global Hospitality Group chaired by Jim Butler has assisted clients with more than $50 billion of hotel transactions involving more than 1,000 properties around the globe. Jim can be reached at 310-201-3526 or jbutler@jmbm.com. Jim's hotel law blog may be accessed here.

Posted On: January 18, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-In re Refco: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District of New York

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

Ten individual and class action lawsuits, nine (9) in New York and one (1) in Illinois, were filed against various defendants alleging federal securities laws violations arising out of the collapse of Refco, Inc. In re Refco Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 28, 2007) [Slip Opn., at 1]. Defense attorneys for Credit Suisse Securities, Banc of America Securities, Grant Thornton, Mayer Brown and PricewaterhouseCoopers 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 New York. Id. Two other defendants supported the motion; lawyers for the Illinois plaintiffs opposed pretrial coordination. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed with the defense that the Southern District of New York was the appropriate transferee court. Id., at 1-2.

Download PDF file of In re Refco Transfer Order

Posted On: January 17, 2008 by Michael J. Hassen Email This Post

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FCRA Class Action Defense Cases-Killingsworth v. HSBC: Seventh Circuit Reverses District Court Orders Dismissing Of FCRA Class Action Lawsuits Holding FCRA Amendment Barring Private Rights Of Action Not Retroactive

Class Action Complaints Alleging FCRA Violations Erroneously Dismissed because FACTA Amendments Eliminating Private Rights of Action for FCRA § 1681m Violations cannot be Applied Retroactively to Class Action Claims Premised on Violations that Occurred Prior to FACTA’s Effective Date Seventh Circuit Holds

Plaintiff Linda Killingsworth filed a class action against Household Bank (now HSBC Bank Nevada) alleging that the prescreened credit card offer extended to her by the Bank prior to August 20, 2004 violated the federal Fair Credit Reporting Act (FCRA), and plaintiff Erick Sawyer separately filed a class action against his auto insurance carrier, Ensurance Insurance Services, alleging that in connection with issuing him an auto policy in October 2004 it “violated the FCRA by charging him a higher rate based on negative information in his credit report without giving him notice of that adverse action, and also by using his initial credit information for subsequent renewals of his policy when corrected credit information would have qualified him for a lower rate.” Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 616 (7th Cir. 2007). The class action complaints were filed in the Northern District of Illinois, and defense attorneys in each class action moved to dismiss the complaint based on Section 311 of the federal Fair and Accurate Credit Transactions Act (FACTA), which amended the FCRA to eliminate certain private rights of action under the FCRA. Id., at 617 (citing 15 U.S.C. § 1681m(h)(8)). In each case, the district court agreed and dismissed the class action complaint, id. Both plaintiffs appealed and the Seventh Circuit consolidated the appeals and issued a single opinion address the question of whether Section 311, which became effective on December 1, 2004, “impairs rights [plaintiffs] possessed prior to the new statute's effective date and therefore has an impermissible retroactive effect if applied to them.” Id. The Seventh Circuit reversed the dismissal of Killingsworth’s class action, concluding that the retroactive application of Section 311 was improper as to her claims, but the Circuit Court remanded for further proceedings as to Sawyer’s class action complaint, concluding that “the retroactivity question cannot be decided at the pleading stage because the conduct alleged in his [class action] complaint straddles FACTA's effective date.” Id.

The issue before the Seventh Circuit was “whether an amendment to the [FCRA] eliminating private rights of action has an impermissible retroactive effect when applied to FCRA claims that accrued prior to the amendment's effective date.” Killingsworth, at 616. Section 311 of FACTA added subsection (h) to FCRA § 1681m so as to eliminate private rights of action for violations of § 1681m. Killingsworth received an offer of credit prior to August 20, 2004, but did not file her class action lawsuit until October 2005. Id., at 617. Her class action alleged a violation of § 1681m(d), and defense attorneys moved to dismiss the class action on the ground that no private right of action existed based on Section 311’s amendment to the FCRA. Id., at 617-18. The district court agreed and dismissed Killingsworth’s class action, id., at 618. For his part, Sawyer applied for auto insurance in October 2004, his auto policy took effect on December 20, 2004, and it was renewed twice at six-month intervals. Id., at 618. Sawyer also filed his class action lawsuit after the effective date of Section 311; his class action alleged a violation of § 1681m(a). Id. However, the class action alleged further that “Ensurance failed to consider interim changes to his credit rating and instead relied on his initial credit score when subsequently renewing his policy,” thus implicating acts taken after Section 311’s effective date. Id. As in Killingsworth, defense attorneys moved to dismiss Sawyer’s class action on the ground that no private right of action existed; the federal court agreed and dismissed Sawyer’s class action. Id.

Continue reading "FCRA Class Action Defense Cases-Killingsworth v. HSBC: Seventh Circuit Reverses District Court Orders Dismissing Of FCRA Class Action Lawsuits Holding FCRA Amendment Barring Private Rights Of Action Not Retroactive" »

Posted On: January 16, 2008 by Michael J. Hassen Email This Post

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Securities Class Action Defense Cases-Stoneridge Investment v. Scientific-Atlanta: Supreme Court Affirms Dismissal Of Securities Class Action Claims Against Third Parties Finding No Reliance By Investors On Third Party Statements

Class Action Claims Alleging Securities Exchange Act of 1934 § 10(b) and Rule 10b-5 Violations Against Customers and Suppliers of Charter Communication for Allegedly Aiding Charter’s Scheme to Publish Misleading Financial Statements Properly Dismissed because Class Action Plaintiffs-Investors did not Rely on any Representations by Customers/Suppliers U.S. Supreme Court Holds

Plaintiffs filed a class action lawsuit against Charter Communications and others, including Scientific-Atlanta and Motorola as customers and suppliers of Charter Communications, alleging securities violations under § 10(b) of the Securities Exchange Act of 1934 (the Act) and SEC Rule 10b-5; specifically, the class action alleged that the customers/suppliers “agreed to arrangements that allowed the investors’ company [Charter Communications] to mislead its auditor and issue a misleading financial statement affecting the stock price.” Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., ___ U.S. ___, 128 S.Ct. 761, 2008 WL 123801, * 2 (January 15, 2008). Defense attorneys for Scientific-Atlanta and Motorola moved the district court to dismiss the class action complaint against them for failure to state a claim, and the court granted the defense motion. Id., * 4. Plaintiffs’ appealed, and the Eighth Circuit affirmed concluding, “the allegations did not show that [Scientific-Atlanta and Motorola] made misstatements relied upon by the public or that they violated a duty to disclose,” id. The Supreme Court granted review of this issue, critical to numerous class actions pending throughout the country, to “consider the reach of the private right of action…implied in § 10(b) [of the Act]…and SEC Rule 10b-5.” Id., at *2. The High Court affirmed the Eighth Circuit’s decision.

The class action complaint alleged that Charter Communications, a cable operator, “engaged in a variety of fraudulent practices so its quarterly reports would meet Wall Street expectations for cable subscriber growth and operating cash flow.” Stoneridge, at *3. As the Supreme Court explained at page *3; “The fraud included misclassification of its customer base; delayed reporting of terminated customers; improper capitalization of costs that should have been shown as expenses; and manipulation of the company’s billing cutoff dates to inflate reported revenues.” The theory underlying the class action claims against Scientific-Atlanta and Motorola was that in 2000, after Charter realized that it would miss cash flow estimates by $15-$20 million despite the fraud described above, Charter altered its arrangements with Scientific-Atlanta and Motorola in an effort to mislead Arthur Andersen: specifically, “Respondents [Scientific-Atlanta and Motorola] supplied Charter with the digital cable converter (set top) boxes that Charter furnished to its customers. Charter arranged to overpay respondents $20 for each set top box it purchased until the end of the year, with the understanding that respondents would return the overpayment by purchasing advertising from Charter. The transactions, it is alleged, had no economic substance; but, because Charter would then record the advertising purchases as revenue and capitalize its purchase of the set top boxes, in violation of generally accepted accounting principles, the transactions would enable Charter to fool its auditor into approving a financial statement showing it met projected revenue and operating cash flow numbers.” Id. Scientific-Atlanta and Motorola allegedly agreed to this arrangement, and participated in drafting documentation “to make it appear the transactions were unrelated and conducted in the ordinary course of business.” Id. Neither Scientific-Atlanta nor Motorola played any role “in preparing or disseminating Charter’s financial statements,” and both of them “booked the transactions as a wash, under generally accepted accounting principles.” Id., at *4.

Continue reading "Securities Class Action Defense Cases-Stoneridge Investment v. Scientific-Atlanta: Supreme Court Affirms Dismissal Of Securities Class Action Claims Against Third Parties Finding No Reliance By Investors On Third Party Statements" »

Posted On: January 15, 2008 by Michael J. Hassen Email This Post

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Securities Class Action Defense Cases--U.S. Supreme Court Affirms Judgment In Securities Class Action Seeking To Hold Customers And Suppliers Of Charter Communication Liable For Misleading Financial Statements

In a case of considerable importance to numerous securities class action lawsuits presently pending throughout the country, the United States Supreme Court today issued its opinion in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., and affirmed the decision of the Eighth Circuit Court of Appeals. The underlying class action alleged securities fraud claims under, inter alia, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 based on misleading financial statements concerning Charter Communications. The class action complaint alleged that defendants Scientific-Atlanta and Motorola, who were customers and suppliers of Charter Communication, participated in a scheme to mislead Charter's auditor, Arthur Andersen LLP, in order to support false financial statements. The Eighth Circuit had affirmed judgment in favor of the customers/suppliers, and the U.S. Supreme Court today affirmed on the ground that investors did not rely on any statements or representations made by the customers/suppliers. A summary of the opinion will be posted tomorrow morning.

Posted On: January 15, 2008 by Michael J. Hassen Email This Post

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FEMA Class Action Defense Cases-Ridgely v. FEMA: Fifth Circuit Reverses District Court Order Granting Preliminary Injunction Against FEMA Regarding Rental Assistance Benefits To Hurricane Victims

District Court Erred in Granting Preliminary Injunction in Class Action Against FEMA Alleging Arbitrary Denial of Continuing Rental Assistance Benefits for Individuals Displaced from Homes Following Hurricanes because Recipients did not have Property Interest in Those Benefits Fifth Circuit Holds

Plaintiffs filed a class action lawsuit against the Federal Emergency Management Agency (FEMA) arising out of FEMA’s administration of, and termination of benefits under, a rental assistance program instituted for individuals displaced from their homes by Hurricane Katrina and Hurricane Rita: specifically, the class action was brought “a class of individuals who received rental assistance payments from the federal government after Hurricanes Katrina and Rita, [and] alleg[ed] various constitutional and statutory deficiencies in the process by which the rental assistance program is administered.” Ridgely v. Federal Emergency Management Agency, 512 F.3d 727, 2008 WL 54799, *1 (5th Cir. 2008). The class action complaint alleged that FEMA could not terminate benefits under the program “until certain notice, hearing, and appeal procedures have been provided,” and plaintiffs’ lawyer moved for a preliminary injunction in order to require FEMA to continue making payments under the program until a decision on the merits of the class action claims. Id. Defense attorneys opposed the motion, arguing that recipients of benefits under the rental assistance program did not have a due process property interest in continued benefits thereunder, id. The district court issued the preliminary injunction requested by plaintiffs. Id. Defense attorneys filed an interlocutory appeal only from the issuance of the injunction, not from the granting of class action status, and the Fifth Circuit reversed.

Following Hurricanes Katrina and Rita, FEMA provided rental assistance “to individuals displaced from their homes on account of either storm” that was to be used by recipients “to rent alternate housing.” Ridgely, at *1. This program is governed by the Stafford Act, 42 U.S.C. § 5121 et seq. and FEMA’s implementing regulations, id. FEMA's practice is to provide benefits in three-month blocks - that is, FEMA gives recipients “a single payment designed to cover rent for three months”; if assistance is needed beyond the three-month benefit provided, an application may be made for continued rental assistance which, if granted, are again made in three-month blocks. Id. After FEMA denied plaintiffs’ applications for continued rental assistance, id., at *2, they filed a class action “alleg[ing] due process violations in the process by which FEMA makes eligibility determinations for these additional awards.” Id., at *1.

We do not here discuss the provisions of the Stafford Act or FEMA’s regulations, or the process by which individuals qualify for assistance under the rental assistance program. See Ridgely, at *1. For present purposes, it is sufficient to note that FEMA has been “flexible” in its administration of the program, at times requiring minimal or even no documentation from applicants, and at other times requiring more detailed documentation in order to receive benefits or continued benefits. Id. The class action alleged that FEMA’s administration of the program is “arbitrary” and violates the Due Process clause, id., at *2. Specifically, the class action complaint “charged that FEMA: (1) denies applications for continued rent assistance by issuing notices containing only confusing codes, instead of understandable explanations; (2) operates an unresponsive system that precludes effective challenges to FEMA decisionmaking before the loss of assistance; and (3) fails to publish eligibility standards.” Id.

Continue reading "FEMA Class Action Defense Cases-Ridgely v. FEMA: Fifth Circuit Reverses District Court Order Granting Preliminary Injunction Against FEMA Regarding Rental Assistance Benefits To Hurricane Victims" »

Posted On: January 14, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Grife v. Allstate: Eleventh Circuit Affirms Dismissal Of Class Action Complaint Against Insurer Holding Class Action Claims Fell Within Scope Of Exclusion To Coverage

District Court did not Err in Granting Defense Motion for Judgment on the Pleadings in Class Action Alleging Breach of Contract Claims Against Insurer Eleventh Circuit Holds

Plaintiff filed a class action lawsuit against his condominium owner’s insurer, Allstate, for breach of contract Grife v. Allstate Floridian Ins. Co., 512 F.3d 1302, 2008 WL 89948, *1 (11th Cir. 2008). The class action complaint alleged his insurance policy obligated Allstate to “pay [plaintiff’s] share of any special assessments charged against the condominium owners by the association” as a result of damage to property collectively owned by the condominium association. Id. The class action alleged that plaintiff’s condominium complex in North Miami Beach, Florida, suffered damage caused by Hurricane Wilma in October 2005, that the condominium association’s master policy covered the damage to the commonly owned property but, because of the substantial deductible of the master policy, plaintiff’s unit was assessed about $1200, that plaintiff tendered a claim to Allstate, and that Allstate denied coverage under an exclusion in the policy. Id. Defense attorneys moved for judgment on the pleadings, which the district court granted, id. Plaintiff appealed the dismissal of his class action and the Eleventh Circuit affirmed.

The insurance policies implicated by the class action contained the following exclusion from coverage: “Any reduction or elimination of payments for losses because of any deductible applying to the insurance coverage of the association of building owners collectively is not covered under this protection.” Grife, at *1. In moving for judgment on the class action claims under FRCP Rule 12(c), defense attorneys argued that this exclusion applied; the district court agreed with the defense, characterizing the exclusion as the “Master Deductible” clause. Id. (citing Grife v. Allstate Floridian Ins. Co., 493 F.Supp.2d 1249 (S.D.Fla. 2007)). Based on its de novo review of the dismissal of the class action, see id. n.1 (citing Hardy v. Regions Mortgage, Inc., 449 F.3d 1357, 1359 (11th Cir.2006)), the Eleventh Circuit agreed with the “well-reasoned published decision” of the district court, id., at *1. Accordingly, the Circuit Court affirmed the district court order granting judgment on the pleadings. Id., at *2.

Download PDF file of Grife v. Allstate

Posted On: January 12, 2008 by Michael J. Hassen Email This Post

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Employment Law Class Action Lawsuits Record More Than Six (6) Times New Cases As Any Other Category Of Class Actions In "Slow" Week For New Class Action Filings In California State And Federal Courts

In order to assist California defense attorneys anticipate the types of class action lawsuits 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 preceding week. This report covers the two-week period of January 4 – January 10, 2008, during which time only 32 new class action lawsuits were filed. While employment law class actions generally top this list by a wide margin, this was particularly true this past week as more than six (6) times as many labor law class action cases were filed as any other category of cases. Nineteen (19) employment-related class action lawsuits were filed during the past week, representing 59% of the total number of new class action filings. No other category of class actions cracked the 10% threshold. The nearest groups were new class actions alleging violations of California's unfair competition law (UCL), which include false advertising claims, and alleging violations of federal antitrust laws, each with 3 new class action filings (9%).

Posted On: January 11, 2008 by Michael J. Hassen Email This Post

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Best Buy Class Action Defense Cases-In re Best Buy: Judicial Panel On Multidistrict Litigation (MDL) Denies Plaintiff Motion To Centralize Class Action Litigation Agreeing With Defense That Class Actions May Proceed Separately

Judicial Panel Denies Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 because Only Two Class Actions were Pending, Issues were not “Sufficiently Complex and/or Numerous” to Warrant Centralization, and Alternatives Existed to Minimize Risk of Duplicative Discovery or Inconsistent Pretrial Rulings

Two class action lawsuits were filed against Best Buy Stores and Best Buy Co. (one in Florida and one in Illinois) arising out of defendants’ business practices in charging restocking fees; Illinois plaintiff’s lawyer 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 Florida. In re Best Buy Co., Inc., Restocking Fee Sales Practices Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 14, 2007) [Slip Opn., at 1]. Defense attorneys opposed pretrial coordination of the class action lawsuits, and the Judicial Panel agreed with the defense that “Section 1407 centralization would not necessarily serve the convenience of the parties and witnesses or further the just and efficient conduct of this litigation.” Id. The MDL Panel found that the moving party had failed to demonstrate that “any common questions of fact are sufficiently complex and/or numerous to justify Section 1407 transfer in this docket at this time,” and observed that “[a]lternatives to transfer exist that can minimize whatever possibilities there might be of duplicative discovery and/or inconsistent pretrial rulings.” Id. Accordingly, the Panel refused to centralization the class actions. Id., at 1-2.

NOTE: The fact that this motion involved only two class action lawsuits was not dispositive: We have summarized opinions where the MDL Judicial Panel had centralized litigation involving only two or three pending lawsuits.

Download PDF file of In re Best Buy Order Denying Transfer

Posted On: January 10, 2008 by Michael J. Hassen Email This Post

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Insurance Class Action Defense Cases-Record-A-Hit v. National Fire Insurance: Illinois Court Reverses Dismissal Of Third-Party Complaint Against Insurance Companies Seeking Defense Of Class Action Complaint Against Insured

Third-Party Complaint Against Insurers Seeking Declaratory Relief as to Duty to Defend and Indemnify Class Action Defendant Adequately Stated a Claim under State Law Illinois Court Holds

Plaintiff filed suit in Illinois state court against various insurance companies alleging they owed a duty to defend and indemnify their insured, Tri-State Hose and Fitting, against the class action plaintiff had filed against Tri-State. Record-A-Hit, Inc. v. National Fire Ins. Co. of Hartford, 880 N.E.2d 205, 2007 WL 3377263, *1 (Ill.App. 2007). The class action complaint against Tri-State, also filed in Illinois state court, alleged violations of the federal Telephone Consumer Protection Act (TCPA) and the state’s Consumer Fraud and Deceptive Practices Act, as well as conversion. Id. Defense attorneys moved to dismiss the lawsuit, arguing that plaintiff’s effort to secure defense of the class action “constitutes an impermissible direct action against liability insurance carriers” (a claim abandoned on appeal, see id., at *2), and that the complaint fails to adequately plead a claim for declaratory relief, id., at *1. The defense also argued that the lawsuit should be dismissed because there was “another action pending between the same parties for the same cause” and because plaintiff lacked standing to bring a third party action seeking defense of the class action on behalf of Tri-State. Id. The trial court granted the motion on the ground that it failed to state a claim, id. The Appellate Court reversed.

The gravamen of the underlying class action was that Tri-State sent junk faxes in violation of the TCPA, and the class action complaint alleged that Tri-State’s conduct caused “property damage.” Record-A-Hit, at *1. Plaintiff’s lawsuit against the insurers alleged that that had insured Tri-State against claims for property damage and advertising injury, but that they had wrongly refused to defend or indemnify Tri-State against plaintiff’s class action. Id. Tri-State had not filed suit against its insurers, and plaintiff was not a party to any other action seeking to establish Tri-State’s rights against its insurers with respect to the class action complaint. Id. The only issue before the court of appeal was whether the complaint against the insurers stated a claim for declaratory relief. Id. The Appellate Court held that under Illinois state law a claim for declaratory relief adequately had been pleaded.

Continue reading "Insurance Class Action Defense Cases-Record-A-Hit v. National Fire Insurance: Illinois Court Reverses Dismissal Of Third-Party Complaint Against Insurance Companies Seeking Defense Of Class Action Complaint Against Insured" »

Posted On: January 9, 2008 by Michael J. Hassen Email This Post

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Discovery Class Action Defense Issues-Qualcomm v. Broadcom: California Federal Court Sanctions Plaintiffs' Lawyers And Refers Six Lawyers To California State Bar For Disciplinary Proceedings For Withholding Electronic Discovery

Following Trial in Patent Infringement (Not Class Action) Lawsuit, California Federal Court Grants Defense Post-Trial Motion for Sanctions because of Plaintiff's Misconduct in Intentionally Withholding Relevant Documents and Affirmative Misrepresentations to the Court and Opposing Party

In a decision important in class action and non-class action cases alike, a California federal court imposed sanctions yesterday on plaintiff and 6 of plaintiffs' lawyers for failing to provide discovery and referred plaintiffs' lawyers to the California State Bar. Qualcomm Inc. v. Broadcom Corp., ___ F.Supp.2d ___ (S.D.Cal. January 7, 2007) [Slip Opn., at 1-3]. The underlying lawsuit was not a class action but a patent infringement case filed by Qualcomm against Broadcom in October 2005; Broadcom filed a counterclaim in December 2006 and pleaded as an affirmative defense that the patents were not enforceable "due to waiver" and predicated its waiver claim "on Qualcomm's participation in the Joint Video Team ('JVT') in 2002 and early 2003." Id., at 3. Defense attorneys sought discovery concerning the JVT, id., but at trial testimony from a Qualcomm witness revealed that certain emails had not been produced as requested, id., at 1. At the conclusion of the trial, defense attorneys moved to sanction Qualcomm and its counsel for "fail[ing] to produce tens of thousands of documents that Broadcom had requested in discovery." Id. The district court granted the motion in part, sanctioning Qualcomm and 6 of its lawyers and referring those 6 attorneys to the California State Bar for disciplinary proceedings.

While this case does not involve a class action lawsuit, the lessons to be learned from it are applicable equally to class action and non-class action lawsuits. In summarizing the factual background underlying the motion, the federal court noted that defense attorneys had used "a variety of discovery devices" to obtain information on Qualcomm's participation in the JVT, including requests for production, interrogatories, and "multiple Rule 30(b)(6) deposition notices." Slip Opn., at 3-4. The court observed at page 4 that "[o]n their face, Qualcomm's written discovery responses did not appear unusual," and provided examples thereof, see id., at 4-5. Qualcomm's responses to the deposition notices, however, "were more troubling." Id., at 5. For example, Qualcomm's "most knowledgeable person" about the JVT was prepared for her deposition by plaintiff's lawyers, but "Qualcomm did not search her computer for any relevant documents or emails or provide her with any information to review," and she "testified falsely that Qualcomm had never been involved in the JVT." Id., at 6 (italics added). After defense attorneys impeached the witness with documents showing Qualcomm's involvement in the JVT, plaintiff's lawyers "agreed to provide another Rule 30(b)(6) witness." Id. Once again, however, Qualcomm failed to search the deponent's computer for relevant documents and failed to "take any other action to prepare him," id., and like the first witness, the new deponent "testified falsely that Qualcomm only began participating in the JVT in late 2003," id. (italics added).

Continue reading "Discovery Class Action Defense Issues-Qualcomm v. Broadcom: California Federal Court Sanctions Plaintiffs' Lawyers And Refers Six Lawyers To California State Bar For Disciplinary Proceedings For Withholding Electronic Discovery" »

Posted On: January 8, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-McCoy v. Superior Court: California Court Holds Class Action Labor Law Claims For Waiting Time Penalties Governed By One-Year Limitations Period And Grants Defense Motion To Strike Certain Class Action Claims

California Appellate Court Holds that Class Action Claims Seeking not Wages but Rather Waiting Time Penalties for Late Payment of Wages are Governed by One-Year Statute of Limitations Thus Supporting Defense Motion to Strike Portions of Class Action Complaint

Plaintiff filed a class action against his employer, Kimco Staffing Services, which places temporary employees; the class action complaint alleged that Kimco “fail[ed] to timely pay final wages on completion of temporary work assignments in violation of [California] Labor Code sections 201 and 202.” McCoy v. Superior Court, 157 Cal.App.4th 225, 68 Cal.Rptr.3d 483, 484 (Cal.App. 2007). The class action complaint alleged further that “instead of paying plaintiffs upon discharge or within 72 hours of resignation,” Kimco paid its employees “on the next scheduled pay day.” Id. The class action did not seek wages, as plaintiff admitted that Kimco paid all wages due; rather, the complaint sought only “waiting time” penalties for late payment of wages under California Labor Code section 203. Id. Defense attorneys moved to strike those portions of the class action complaint seeking waiting time penalties for four years, arguing that the general one-year statute of limitations in Labor Code section 340(a) applied. Id. Plaintiff disagreed, urging that “when an action seeks waiting time penalties only, the statute of limitations is the same as when a plaintiff sues for both back wages and penalties” and so is governed by a four-year statute. Id. The trial court agreed with the defense and struck those portions of the class action complaint that sought waiting time penalties for late payment of wages outside the one-year limitations period. Id. Plaintiff petitioned the appellate court for a writ of mandate, but the Court of Appeal affirmed.

The class action complaint sought waiting time penalties for late payment of wages under Section 203, which provides: "If an employer willfully fails to pay ... any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.... [¶] Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.” The Court of Appeal explained that “The issue in this petition revolves around the meaning of the last sentence.” McCoy, at 485. Defense attorneys argued that if a complaint seeks only penalties, then the usual one-year statute of limitations for statutory penalties found in section 340(a) applies; plaintiff’s lawyer argued that “the statute of limitations in section 203 applies to any action for penalties, regardless of whether there is also a claim ‘for the wages from which the penalties arise.’” Id. The Court of Appeal held that the four-year limitations period would “applies to actions for waiting time penalties sought in conjunction with back wages”; however, this class action complaint sought penalties only and, based on the appellate court’s analysis, “the objective of section 203, the legislative intent, and the common sense meaning of the section's language persuade us defendant's interpretation is correct” and the one-year limitations period applies. Id. We do not here discuss further the court’s legal analysis of its interpretation of California Labor Code section 203; interested readers may find that discussion at pages 485 through 489.

Because the appellate court agreed with defense attorneys that the one-year statute of limitations period governed the class action complaint, it affirmed the trial court’s order and denied plaintiff’s request for mandate. McCoy, at 489.

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Posted On: January 7, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Wyly v. Milberg Weiss: New York Court Holds Members Of Class Action Are Not "Clients" Entitled To Class Action Plaintiff Counsel's Files Because Absent Class Members Play Limited Role In Class Action Litigation

Absent Class Members Play Limited Role in Class Action Lawsuits and do not Enjoy Traditional Attorney-Client Relationship with Class Action Counsel, so Absent Class Members must Establish Right to Review Files Maintained by Law Firm Representing Plaintiffs in Class Action on a Case-by-Case Basis New York Court Holds

In connection with a motion seeking court approval of a proposed class action settlement, Sam Wyly, an absent class member in the consolidated class action lawsuits, petitioned the trial court for discovery of the law firms representing the plaintiffs in the class actions. Wyly v. Milberg Weiss Bershad & Schulman, LLP, 2007 N.Y. Slip Opn 10506, *1-*2 (N.Y.App. December 27, 2007). The class action complaints had been filed against Computer Associates International (CA) alleging violations of federal securities laws; after numerous class actions had been filed, the law firms of Milberg Weiss Bershad & Schulman, Stull Stull & Brody, and Schiffrin Barroway Topaz & Kessler were appointed as co-lead counsel for plaintiffs and the various class action lawsuits were consolidated for settlement. Id., at *2. A federal court approved the class action settlement in December 2003, id. In October 2004, Wyly advised Milberg Weiss that he believed the class action settlement had been obtained fraudulently by CA based, in part, on “a report in The Wall Street Journal which stated that CA’s outside counsel had in its possession 23 boxes of undisclosed documents demonstrating that CA’s employees, including its general counsel, had engaged in securities fraud.” Id. Milberg Weiss responded that it would not move to reopen the judgment so Wyly filed such a motion himself, id. As part of his motion, Wyly sought the class action plaintiff law firms’ “discovery materials and work product related to the CA actions based upon the attorney-client relationship that existed between himself, as a class member, and [the law firms] as co-lead counsel.” Id., at *2-*3. The trial court granted the discovery request, but the appellate court reversed.

Wyly purchased almost 1,000,000 shares of CA stock, Wyly, at *2, so he held a significant interest in the class action litigation even though he was not a named plaintiff. As part of his motion to reopen the class action lawsuits, Wyly sought access to class counsel’s files “pursuant to their attorney-client relationship.” Id., at *3. (Wyly also sought and obtained discovery of the 23 boxes referenced in The Wall Street Journal, but that is not part of this discussion.) The class counsel law firms refused to permit discovery, and Wyly initiated special proceedings to obtain access to the files on the grounds that he “‘enjoys all privileges and rights pursuant to the attorney-client relationship between [the law firms] and Settlement Class members,’ including the right to access ‘attorney work product that was received, created, or maintained for the benefit of the entire Settlement Class.’” Id. The trial court agreed, relying on Matter of Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn, 91 N.Y.2d (N.Y. 1997). Id., at *4.

Continue reading "Class Action Defense Cases-Wyly v. Milberg Weiss: New York Court Holds Members Of Class Action Are Not "Clients" Entitled To Class Action Plaintiff Counsel's Files Because Absent Class Members Play Limited Role In Class Action Litigation" »

Posted On: January 5, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases—California Court Of Appeal Grants Defense Request For Rehearing In Ticconi v. Blue Shield Class Action

Following its Original Panel Opinion Reversing Trial Court Denial of Plaintiff’s Class Action Certification Motion, California Court of Appeal Grants Defense Petition for Rehearing in Ticconi v. Blue Shield Class Action

The Los Angeles Times reports today that the California Court of Appeal has agreed to reconsider its opinion in Ticconi v. Blue Shield of Cal. Life & Health Ins. Co., 157 Cal.App.4th 707, 68 Cal.Rptr.3d 785 (Cal.App. 2007), which reversed a trial court order denying class action status to a lawsuit against Blue Shield. Our summary of the original appellate opinion in that putative class action, as well as the opinion itself, may be found here. As Times Staff Writer Lisa Girion explains, the prior decision “opened the door to class-action lawsuits by policyholders who had been dropped after they filed claims for medical care.” The underlying class action complaint alleged that Blue Shield wrongfully rescinded insurance coverage based on fraudulent statements in insurance policy applications, and the trial court denied class action status to the lawsuit on the grounds the individual issues related to Blue Shield’s fraud and unclean hands defenses would predominate over common issues. Ticconi, at 789. The Court of Appeal, in an decision handed down on December 4, 2007, had reversed, holding that the trial court erred in denying class action treatment 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.” Ticconi, at 789 (citations omitted). Accordingly, “the diverse facts making up Blue Shield Life's fraud and unclean hands defenses [were] not to be factored in when determining whether the community of interest requirement is met.” Id., at 798.

Ms. Girion’s article, entitled “Insurer wins a reprieve on class actions,” may be found in the Business Section of the January 5, 2008 edition of the Los Angeles Times. The order granting rehearing was entered by the Court of Appeal on January 3, 2008.

Posted On: January 5, 2008 by Michael J. Hassen Email This Post

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Labor Law Class Action Lawsuits Dominate Weekly Class Action Filings In California State And Federal Courts

As a resource to 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. In light of the holidays, this report covers the two-week period of December 21, 2007 – January 3, 2008, during which time 57 new class action lawsuits were filed. Labor law class action cases generally top this list, often by a wide margin, but new employment law actions completed dominated the class action filings during this time period. Thirty-three (33) employment-related class action lawsuits were filed during the past two weeks, representing 58% of the total number of new class action filings. The only other category of class actions to crack the 10% threshold alleged violations of California's unfair competition law (UCL), which include false advertising claims, with 9 new class action filings (16%).

Posted On: January 4, 2008 by Michael J. Hassen Email This Post

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Circuit City Class Action Defense Cases-In re Circuit City: Judicial Panel On Multidistrict Litigation (MDL) Denies Plaintiff Motion To Centralize Class Action Lawsuits And Permits Class Action Litigation To Proceed Separately

Judicial Panel Denies Plaintiff Request, Objected to by Defense Attorneys and Other Plaintiff’s Counsel, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 because Only Three Class Actions were Pending, Issues were not “Sufficiently Complex and/or Numerous” to Warrant Centralization, and Alternatives Existed to Minimize Risk of Duplicative Discovery or Inconsistent Pretrial Rulings

Three class action lawsuits were filed against Circuit City (one in California, one in Florida and one in New York) arising out of defendants’ business practices in charging restocking fees; California plaintiff’s lawyer 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 Middle District of Florida, or alternatively in California or New York. In re Circuit City Stores, Inc., Restocking Fee Sales Practices Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 14, 2007) [Slip Opn., at 1]. Defense attorneys opposed pretrial coordination of the class action lawsuits, and New York plaintiff’s lawyer opposed the motion (alternatively requesting centralization in New York). Id. The Judicial Panel denied the motion, stating that “Section 1407 centralization would not necessarily serve the convenience of the parties and witnesses or further the just and efficient conduct of this litigation,” and finding that California plaintiff’s lawyer had failed to demonstrate that “any common questions of fact are sufficiently complex and/or numerous to justify Section 1407 transfer in this docket at this time.” Id. The Panel additionally observed that “[a]lternatives to transfer exist that can minimize whatever possibilities there might be of duplicative discovery and/or inconsistent pretrial rulings.” Id. Accordingly, the Panel refused to centralization the class actions. Id., at 1-2.

NOTE: The fact that this motion involved only three class action lawsuits was not dispositive: We have summarized opinions where the MDL Judicial Panel has centralized litigation involving only two or three pending lawsuits.

Download PDF file of In re Circuit City Order Denying Transfer

Posted On: January 3, 2008 by Michael J. Hassen Email This Post

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FDCPA Class Action Defense Cases-Kalish v. Karp: New York Federal Court Grants Class Action Treatment To Fair Debt Collection Practices Act (FDCPA) Class Action Against Law Firm Despite De Minimis Recovery And Class Counsel's Limited Success

Plaintiff's Motion for Class Action Certification of FDCPA (Fair Debt Collection Practices Act) Class Action Against Law Firm Granted by New York Federal Court because the "Win-Loss" Record of Plaintiff's Counsel did not Defeat his Adequacy to Serve as Class Counsel and because a De Minimis Recovery of $2.50 per Class Member did not Defeat Superiority

Plaintiff filed a class action lawsuit against the law firm of Karp & Kalamotousakis, LLP alleging that it violated the federal Fair Debt Collection Practices Act (FDCPA). Kalish v. Karp & Kalamotousakis, LLP, ___ F.R.D. ___, 2007 WL 4048559, *1 (S.D.N.Y. November 13, 2007). The class action complaint alleged that the law firm violated the FDCPA “by sending a form letter that incorrectly informed her that she could only dispute a debt owed to Defendant in writing.” Id. Plaintiff’s counsel sought class action certification; defense attorneys did not dispute liability on the FDCPA claim but challenged both the adequacy of counsel and the superiority of class action treatment. Id. The district court rejected the defense arguments and certified the litigation as a class action.

With respect to the adequacy of plaintiff’s lawyer to serve as class counsel, the district court explained that while prior Second Circuit authority directed district courts to consider whether proposed class counsel was “qualified, experienced and generally able” to handle the class action, Kalish, at *1, under the 2003 Amendments to Rule 23, and specifically Rule 23(g), “the court must consider: (a) the work counsel has done in identifying or investigating potential claims in the action, (b) counsel's experience in handling class actions, other complex litigation, and claims of the type asserted in the action, (c) counsel's knowledge of the applicable law, and (d) the resources counsel will commit to representing the class,” and may consider as well “any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class,” id. n.4. So viewed, the federal court found the defense argument against plaintiff’s counsel wanting because it “mistakenly conflates ‘qualified’ with ‘successful’ and thereupon undertakes a detailed description of some of [counsel’s] losses in court.” Id., at *2. The court found counsel’s “win-loss” record immaterial to a determination of his qualifications because “Rule 23 requires only that class counsel have experience in the particular type of law at issue or that she have demonstrated her competence in other ways, such as through the quality of her submissions to the court.” Id. (citation omitted). The court concluded that counsel was adequate to represent the class, id.

Continue reading "FDCPA Class Action Defense Cases-Kalish v. Karp: New York Federal Court Grants Class Action Treatment To Fair Debt Collection Practices Act (FDCPA) Class Action Against Law Firm Despite De Minimis Recovery And Class Counsel's Limited Success" »

Posted On: January 2, 2008 by Michael J. Hassen Email This Post

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Record Class Action Attorney Fee Award As Plaintiff Lawyers in Class Action Against Tyco Awarded $464 Million in Attorney Fees

District Court Awards Class Action Counsel Record $464 Million following $3.2 Billion Settlement in Class Action Against Tyco and its Auditors

Characterizing the case as “enormously complex,” United States District Court Judge Barbadoro awarded counsel for class action plaintiffs $464 million in legal fees and $29 million in costs arising out of the securities fraud class action lawsuit against Tyco and its auditors. The underlying class action settled for $3.2 billion, so the fee award to class action counsel represented 14.5% of the settlement. The attorney fee awarded eclipsed the previously record award of $366 (plus $10 million in costs) awarded to class action counsel following the $6.1 billion settlement in the WorldCom class action.

Posted On: January 2, 2008 by Michael J. Hassen Email This Post

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Travelers Settles Class Action Lawsuit And State Investigations Concerning Contingent Commission Payments To Brokers

The Wall Street Journal reports today that Travelers Cos. Has reached a tentative class action settlement of a shareholder class action, and that the company has separately agreed to “pay $6 million to settle several state investigations over how it paid brokers.” The amount to be paid to settle the class action has not yet been disclosed. The settlement follows a failed attempt by defense attorneys to obtain dismissal of the class action complaint. According to The Wall Street Journal, the lawsuit and state investigations arose out of allegations “that Travelers conspired with brokers to submit fake bids [for insurance policies] even though the brokers had already determined which insurer would get business from a policyholder.” Travelers allegedly paid “contingent commissions” to the brokers that were not disclosed to policyholders.

The article, entitled “Travelers Cos. Settles Shareholder Lawsuit,” may be found on page A8 of the January 2, 2008 edition of The Wall Street Journal.

Posted On: January 2, 2008 by Michael J. Hassen Email This Post

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UPS Class Action Defense Case-Bates v. UPS: Ninth Circuit En Banc Reverses Panel Opinion Refusal To Decertify Class Action And Affirms Class Action Judgment Against UPS Based On ADA Claim, But Reaffirms That Unruh Act Violation Must Be Reversed

Following Panel Opinion Holding that District Court did not Clearly Err in Finding UPS Violated Federal Americans with Disabilities Act (ADA) by Refusing to Hire Deaf Drivers but that Defense was Correct that Class Action Judgment Based on Violation of California's Unruh Act Must be Reversed, Ninth Circuit En Banc Overrules Prior Ninth Circuit Authority and Remands Class Action for Further Proceedings on ADA Claim

Plaintiff filed a putative class action in California federal court against United Parcel Service alleging violations of the federal Americans with Disabilities Act (ADA), and California's Fair Employment and Housing Act (FEHA) and Unruh Civil Rights Act (Unruh Act) because it "categorically exclude[s] individuals from employment positions as 'package-car drivers' because they cannot pass a United States Department of Transportation (DOT) hearing standard that does not apply to the vehicles in question." Bates v. United Parcel Serv., Inc., 465 F.3d 1069, 1073 (9th Cir. 2007) (Bates I). The district court certified the lawsuit as a class action. After a bifurcated trial, the district court ruled against the defense and found that UPS violated the ADA, the FEHA and the Unruh Act. On appeal, defense attorneys argued that "(1) Bates did not establish that any class members are 'qualified'; (2) UPS satisfied its burden under the business necessity defense of the ADA; (3) the plaintiff class should be decertified; (4) the court's injunction was an abuse of discretion; and (5) UPS did not violate the FEHA or the Unruh Act." Id. The Ninth Circuit originally affirmed the judgment as to the ADA claim, reversed the judgment as to the Unruh Act, and refused to reach the FEHA claim finding it unnecessary in light of the fact that affirmance of the ADA claim "is sufficient grounds for affirming the injunction." Id., at 1093 n.25. Defense attorneys sought and obtained rehearing en banc “to consider the contours of a claim that an employer’s safety qualification standard discriminates against otherwise ‘qualified’ persons with disabilities…, and the showing required of an employer to successfully assert the business necessity defense to use of such qualification under 42 U.S.C. § 12113(a),” Bates v. United Parcel Serv., Inc., ___ F.3d ___ (9th Cir. December 28, 2007) Bates II [Slip Opn., at 16891], and the Ninth Circuit reversed the Panel opinion.

The gravamen of the class action complaint was summarized in our article discussing the original Ninth Circuit opinion, which may be found here . In brief, applicants for positions as UPS package drivers must, inter alia, pass the same physical exam that the United States Department of Transportation requires of prospective drivers of commercial vehicles, which includes a "forced whisper" test of the applicants' hearing. Bates II, at 16892-93. However, the DOT only requires a physical exam of those who will be driving vehicles with a gross weight in excess of 10,000 pounds. UPS, on the other hand, required the exam of all applicants, including the thousands of drivers operating vehicles weighing from 7100 to 9300 pounds. Id., at 16893. The class conceded that UPS may require the physical exam of who drive DOT-regulated vehicles, but argued that its blanket exclusion of deaf applicants violated state and federal laws. Bates I, at 1075. The district court ruled in favor of the class, holding in part that UPS had failed to establish a business necessity defense to its actions. Id.

Continue reading "UPS Class Action Defense Case-Bates v. UPS: Ninth Circuit En Banc Reverses Panel Opinion Refusal To Decertify Class Action And Affirms Class Action Judgment Against UPS Based On ADA Claim, But Reaffirms That Unruh Act Violation Must Be Reversed" »

Posted On: January 1, 2008 by Michael J. Hassen Email This Post

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HAPPY NEW YEAR FROM THE CLASS ACTION DEFENSE BLOG

The author of the Class Action Defense Blog wishes all of you a very Happy New Year. A new class action article will be published tomorrow.