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

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Lead-Tainted Toys Class Action Defense Cases-In re Mattel: Judicial Panel On Multidistrict Litigation (MDL) Grants Joint Defense/Plaintiff Motion To Centralize Class Action Litigation In Central District of California

Judicial Panel Grants Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Class Actions to Central District of California

Eleven (11) class action lawsuits (5 in California, 2 in New York and Pennsylvania, and 1 in Indiana and South Carolina) against various defendants, including Mattel and Fisher-Price, arising out of the “the production of defendants’ toys in China with surface paints that allegedly contain elevated levels of lead and the sale of those toys in the United States.” In re Mattel, Inc., Toy Lead Paint Prods. Liab. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 18, 2007) [Slip Opn., at 1]. Defense attorneys for Mattel and Fisher-Price, together with lawyers for plaintiffs in three of the class actions, filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Central District of California. Id. South Carolina and New York plaintiffs’ lawyers supported the motion, but each argued that the district wherein their action was pending was the appropriate transferee court, id. Pennsylvania plaintiff’s lawyer opposed pretrial coordination, arguing that her action should be treated separately because it seeks only medical monitoring, id. The Judicial Panel granted the motion to centralize the class action lawsuits, noting that other class action complaints also sought medical monitoring (not solely the Pennsylvania class action), and that centralization would “eliminate duplicative discovery; prevent inconsistent pretrial rulings, especially with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary. Id. The Panel also agreed that the Central District of California, where Mattel is headquartered and where the first class action was filed, was the appropriate transferee court. Id., at 2.

Download PDF file of In re Mattel Transfer Order

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

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Arbitration Class Action Defense Cases-Lowden v. T-Mobile: Ninth Circuit Affirms District Court Denial Of Defense Motion To Compel Arbitration Of Class Action Finding Class Action Waiver In Arbitration Agreements Unconscionable And Unenforceable

Class Action Waiver Unconscionable Under Washington State Law and Federal Arbitration Act (FAA) so District Court Properly Denied Defense Motion to Dismiss Class Action Complaint and Order Individual Claims to Arbitration Ninth Circuit Holds

Plaintiffs filed a class action in Washington state court against their cellular telephone service provider, T-Mobile, “alleging that the service provider had improperly charged them for certain fees beyond the advertised price of service, charged them for calls during a billing period other than that in which the calls were made, and charged them for roaming and other services that should have been free.” Lowden v. T-Mobile USA, Inc., 512 F. 3d 1213, 1215 (9th Cir. 2008). The service agreements underlying the class action plaintiffs’ claims contained mandatory arbitration provisions that barred class action litigation, id. Defense attorneys removed the class action to federal court, and then moved the federal court to compel arbitration of the claims on an individual rather than class action basis. Id., at 1214. The district court denied the motion, concluding that the arbitration clauses were unenforceable because the class action waivers and the limitation on punitive damages rendered them substantively unconscionable, id., at 1217. Defense attorneys appealed and the Ninth Circuit affirmed.

The service agreements signed by the class action plaintiffs stated, directly above the signature line, that any disputes would be submitted to mandatory arbitration. Lowden, at 1215-16. The specific language in the two service agreements underlying the class action complaint differed slightly, but the differences did not impact the district court’s decision: each arbitration clause precluded class action litigation. Id. In ruling on T-Mobile’s motion to compel arbitration, the district court concluded that the arbitration provisions were not procedurally unconscionable, but “held that the prohibition on class relief and the limitation on punitive damages, found in both agreements, were each substantively unconscionable.” id., at 1217. The Ninth Circuit defined the issues on appeal as whether T-Mobile’s arbitration provisions “are enforceable under Washington state law and, if not, whether the state law is preempted by the Federal Arbitration Act (‘FAA’), 9 U.S.C. §§ 1-16.” Lowden, at 1214. It concluded that, in light of the Washington State’s Supreme Court opinion in Scott v. Cingular Wireless, 161 P.3d 1000 (Wash. 2007), “T-Mobile's arbitration provision is substantively unconscionable and unenforceable under Washington state law,” and that the FAA did not preempt Washington state law. Lowden, at 1214-15.

Continue reading "Arbitration Class Action Defense Cases-Lowden v. T-Mobile: Ninth Circuit Affirms District Court Denial Of Defense Motion To Compel Arbitration Of Class Action Finding Class Action Waiver In Arbitration Agreements Unconscionable And Unenforceable" »

Posted On: February 27, 2008 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Thorpe v. Abbott Labs: California Federal Court Denies Defense Motion To Dismiss Class Action Finding California State Law Class Action Claims Were Not Incompatible With Illinois FLSA Class Action

Defense Motion to Dismiss California Class Action Alleging Misclassification of Employees and Seeking Damages under California State Law Fails because Class Action was not Incompatible with Illinois Class Action by Same Plaintiff Lawyer Alleging Misclassification of Same Group of Employees and Seeking Damages under Federal Fair Labor Standards Act (FLSA) California Federal Court Holds

Plaintiff filed a putative class action against Abbott Laboratories in California state court on September 25, 2007, and defense attorneys removed the class action complaint to federal court on November 7, 2007, arguing that removal jurisdiction existed under the Class Action Fairness Act of 2005 (CAFA). Thorpe v. Abbott Laboratories, Inc., ___ F.Supp.2d ___ (N.D. Cal. February 12, 2008) [Slip Opn., at 1]. The class action complaint stated that plaintiff formerly had been employed by Abbott as a Pharmaceutical Representative, and alleged that improperly classified him and other Pharmaceutical Representatives as “exempt” employees and that he was required to work more than 8 hours per day or 40 hours per week without overtime, and was denied meal and rest periods. Id., at 2. The class action further alleged that Abbott failed to provide accurate wage statements as required by California law. Id. Defense attorneys moved to dismiss the class action or, in the alternative, to strike the class action allegations, id., at 1-2. The federal court denied the motion.

The defense argued that the class action complaint must be dismissed, or the class action allegations stricken, “because plaintiff's claims for unpaid overtime for Pharmaceutical Representatives at Abbott are based on the same facts and circumstances as those alleged in a parallel federal action, Jirak v. Abbott Laboratories, et al., 07-03636 (‘Jirak action’), filed by plaintiff's counsel and currently pending in the District Court in the Northern District of Illinois.” Thorpe, at 2. Defense attorneys argued that even though Thorpe was not a plaintiff in the Jirak action, “the present complaint is an attempt by plaintiff's counsel to circumvent the requirements for maintaining a class action under the Fair Labor Standards Act (‘FLSA’)… by filing two class actions based on the same circumstances, namely that Abbott mis-classified Pharmaceutical Representatives as exempt employees.” Id., at 2-3. In essence, the defense argued “the opt-out class action that plaintiff seeks to maintain for his claims under California law is incompatible with the FLSA opt-in class action proceeding concurrently in the Northern District of Illinois.” Id., at 3.

Continue reading "Class Action Defense Cases-Thorpe v. Abbott Labs: California Federal Court Denies Defense Motion To Dismiss Class Action Finding California State Law Class Action Claims Were Not Incompatible With Illinois FLSA Class Action" »

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

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Class Action Defense Cases-In re Motor Fuel: Kansas Federal Court Denies Defense Motion To Dismiss Class Action Challenging Practice Of Selling Gasoline Based On Volume Regardless Of Temperature

Defense Motion to Dismiss Class Action Alleging Gasoline Retailers Overcharged Consumers by Failing to Account for Differences Based on Temperature of Gasoline Sold Denied because Class Action Allegations Adequately Pleaded Claims for Breach of Contract, Violation of Consumer Protection Statutes, and Various Other Claims Kansas Federal Court Holds

Several putative class action lawsuits were filed against various motor fuel retailers in 26 states, the District of Columbia and Guam (“the Region”); the class actions were consolidated in the District of Kansas for pretrial purposes by the Judicial Panel on Multidistrict Litigation (a summary of the Judicial Panel’s order may be found here). Though it alleged numerous causes of action, in essence the consolidated class action complaint alleged that defendants’ sale of gasoline “for a specified price per gallon without disclosing or adjusting for temperature expansion” subjects them to liability “under various state law theories including breach of contract, breach of warranty, fraud and consumer protection.” In re Motor Fuel Temperature Sales Prac. Litig., 534 F.Supp.2d 1214 (D. Kan. 2008) [Slip Opn., at 1]. Defense attorneys moved to dismiss the class action on ten (10) different grounds, see id., at 13-14, but framed the arguments “in general terms” that did not “identify the elements of each cause of action or discuss whether the laws of each jurisdiction are the same,” id., at 14. The district court denied the motion.

In broad terms, the consolidated class action complaint alleged that gasoline expands when heated and so a given volume has less mass at warmer temperatures than the same fuel would have at cooler temperatures. In re Motor Fuel, at 3. Because of this, the industry has standardized the sale of gasoline based on temperature, defining a “gallon” as 231 cubic inches at 60 degrees Fahrenheit, and this standard - known as D-1250 - is used “at every state of the process except at retail.” Id. Retail gasoline is sold “based solely on volume (i.e. 231 cubic inches) without regard to temperature,” and is advertised without defining for the term “gallon” for the consumer, id. Further, the industry has fought selling gasoline at the D-1250 standard, so “Plaintiffs pay billions of extra dollars every year because retailers deliver fuel which is - on average - at least 10 degrees higher than the industry standard without making any correction in price and/or volume.” Id., at 4. This practice also “generate[s] hidden profits in the form of excess reimbursement for taxes paid on wholesale purchases,” because defendants pay federal and state taxes on the D-1250 standard, but collects reimbursement of those taxes from consumers on the additional gallons sold at higher temperatures, id. Finally, the class action alleges that equipment is available (and in use in Canada) to adjust the retail sale of gasoline to the D-1250 standard, but defendants have opposed putting the equipment into use by falsely claiming the average temperature of gasoline sold in the U.S. is 56 F, while the American Petroleum Institute now concedes that it is higher than 60 F, and that it would cost more than $6 billion to put the equipment to use, while the industry now estimates that cost to be $2.2 billion. Id., at 4-5. The nine (9) separate claims alleged in the class action complaint are discussed at pages 6 through 13 of the opinion.

Continue reading "Class Action Defense Cases-In re Motor Fuel: Kansas Federal Court Denies Defense Motion To Dismiss Class Action Challenging Practice Of Selling Gasoline Based On Volume Regardless Of Temperature" »

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

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Microsoft Vista Class Action Defense Cases-Kelley v. Microsoft: Washington Federal Court Certifies Nationwide Class Action Against Microsoft For Class Action Complaint Challenging OEM Marketing Of Vista Operating System

Class Action Challenging Labeling PCs as “Windows Vista Capable” even if PCs could not Run Premium Vista Properly Certified as Nationwide Class Action and Washington State Law may be Applied to Claims of All Members of Class Action Washington Federal Court Holds

Plaintiffs filed a putative class action lawsuit against Microsoft challenging the marketing of its new “Windows Vista Capable” and “Express Upgrade” programs; specifically, the class action complaint alleged that almost a year before its release of the new Vista operating system, Microsoft “authorized original equipment manufacturers…to place a sticker on personal computers… indicating that the PCs had been certified by Microsoft as ‘Windows Vista Capable.’” Kelley v. Microsoft Corp., ___ F.Supp.2d ___ (W.D. Wash. February 22, 2008) [Slip Opn., at 1]. The class action alleged further that a substantial number of PCs that were advertised as “Windows Vista Capable” were limited to “Vista Home Basic” which, according to the complaint, “does not include any of the enhanced features unique to Vista and which make Vista attractive to customers.” Id., at 2. Some PCs were labeled as “Premium Ready” rather than “Windows Vista Capable,” id., but at that time consumers were unaware of the various Vista operating systems that would be available or the differences between them. The class action also alleged that Microsoft offered an “Express Upgrade Guarantee Program” to PC customers that would allow purchasers to “Windows Vista Capable” PCs to upgrade to Vista for little or no cost, but failed to disclose that the upgrade generally would be limited to Vista Home Basic. Id. Plaintiffs moved for the district court to certify the litigation as a nationwide class action and to apply Washington law to the class action. Id., at 1. Defense attorneys opposed both motions. The district court granted class action certification and agreed that Washington law governs the lawsuits.

The gravamen of the class action complaint was that “Microsoft eventually released four versions of Vista - Basic, Premium, Business, and Ultimate” - but that “the Premium version that is the ‘real’ Vista.” Kelley, at 2. Computers were advertised as “Windows Vista Capable,” the class action alleged, in order to “boost holiday sales of personal computers after delaying the release of Vista from March 2006 to early 2007” because Microsoft was “concerned that consumers looking to buy a new computer would delay their purchases until the release of Vista (and therefore after the holiday season).” Id. Thus, Microsoft allegedly engaged in the false and deceptive business practice of advertising PCs as “Windows Vista Capable” even if they could only run the Basic version “because Microsoft was concerned that few PCs on the market at the time could run the more premium versions of Vista” and so it “endeavored to assure consumers that their new computers would run the soon-to-be released Vista operating system.” Id. Microsoft countered that while Vista Home Basic “lack[ed] some of the capabilities of the premium versions of Vista, [it] still provides material improvements over Microsoft’s earlier operating system, Windows XP,” id., and pointed to various “marketing materials, sales aids, and training materials that described what features the different Windows Vista editions would provide and explained that not every ‘Windows Vista Capable’ computer would be able to provide every advanced feature available in every edition of Windows Vista,” id., at 3.

At the time plaintiffs sought class action treatment, the complaint sought relief for unjust enrichment and for violation of Washington’s Consumer Protection Act (CPA) or other state consumer protection acts. Kelley, at 4. Plaintiffs sought to certify a nationwide class action, and argued that Washington law applied to the claims of all class members. Id. The district court began its analysis by addressing the choice of law question, id. Defense attorneys argued that “the laws of all 50 states are relevant to Plaintiffs’ claims,” id., at 5. The federal court explained that it must first determine whether applying Washington law would be unconstitutional, and if not, whether applying Washington law would be “appropriate under Washington’s choice of law rules.” Id. (citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)). The district court easily concluded that applying Washington law would not violate the Constitution because “[a]lthough the injury to Plaintiffs and the potential class members may have occurred outside of Washington, application of Washington law is not arbitrary, unfair, or unforeseeable.” Id., at 5-6 (citation omitted). The court’s analysis of Washington’s choice of law rules was much more extensive, see id., at 6-11. Washington law requires a determination first of whether an actual conflict exists between the laws of Washington and other states, and if so, “the forum or fora that have the ‘most significant relationship’ to the action to determine the applicable law.” Id., at 6 (citation omitted).

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

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Number Of Class Action Lawsuits Drop During Past Week But Class Action Cases Involving Employment Law Claims Continue To Lead Weekly Class Action Filings In California State And Federal Courts

To assist class action defense attorneys anticipate the types of lawsuits against which they will have to defend in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers February 15 – 21, 2008, during which time 22 new class action lawsuits were filed. Class actions implicating labor law claims generally top this list, and once again this was the case. During the past week, 13 new labor law class action filings (59% of the total number of new class action lawsuits). The only other category of class action complaints to break the 10% threshold were antitrust class actions, which had only three (3) new class action filings (14%).

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

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Toy Lead Class Action Defense Cases-In re RC2 Corp.: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Northern District of Illinois

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 in Northern District of Illinois, Rejecting Motion of California Class Action Plaintiff to Centralize Litigation in the Central District of California

Fourteen (14) class action lawsuits (9 in Illinois, and 1 in Arkansas, California, Indiana, New Jersey and New York) were filed against various defendants, including RC2 Corp. and Learning Curve Brands, “stem[ming] from certain toys that were manufactured and/or distributed by defendants and recalled due to the presence of elevated levels of lead in surface paints. In re RC2 Corp. Toy Lead Paint Products Liab. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 19, 2007) [Slip Opn., at 1]. Defense attorneys for RC2 and Learning Curve filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class action litigation pursuant to 28 U.S.C. § 1407 in the Northern District of Illinois; California plaintiff’s lawyer for one of the class actions filed a competing motion for centralization in the Central District of California; no other party responded to the motion. Id. All responding parties supported pretrial coordination and concurred with defense attorneys that the Northern District of Illinois was the appropriate transferee court. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed with the defense that the Northern District of Illinois was the appropriate forum as “[t]he majority of the actions are pending there, defendant RC2 is headquartered there, and, therefore, discovery will likely be found there. Id. Accordingly, the Panel transferred the class action lawsuits to Illinois, id., at 1-2.

Download PDF file of In re RC2 Transfer Order

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

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BP CAFA Removal Class Action Defense Cases-Eatinger v. BP: Kansas Federal Court Refuses To Remand Class Action To State Court Holding Removal Jurisdiction Exists Under Class Action Fairness Act (CAFA)

Amount in Controversy Required for Removal Jurisdiction under CAFA (Class Action Fairness Act) not Defeated by Plaintiff’s Statement in Class Action Complaint that Damages “May” not Exceed $5 Million Kansas Federal Court Holds

Plaintiff filed a class action lawsuit in Kansas state court against BP America on behalf of royalty owners alleging that BP engaged in self-dealing and “failed to properly account and pay royalties to the plaintiff and the class”; defense attorneys removed the class action to federal court arguing that removal jurisdiction existed under the Class Action Fairness Act (CAFA). Eatinger v. BP America Prod. Co., 524 F.Supp.2d 1342, 2007 WL 4395068, *1 (D. Kan. 2007). Plaintiff’s lawyer moved to remand the class action to state court on the ground that the amount in controversy failed under either test because the class action complaint specifically pleads amounts in controversy below the jurisdictional requirements. Id. The district court denied the motion to remand.

The district court noted plaintiff did not dispute diversity,” Eatinger, at *5; accordingly, the jurisdictional issue is whether the amount in controversy requirement is met. Accordingly, “the single matter in dispute” is whether “the requisite amount in controversy” had been shown, id., at *1. Defense attorneys submitted that, based on the definition of the proposed class, “the minimum amount of total royalty payments alleged to be in controversy to be at least $693,000,000” so unless the alleged underpayment is less than .7215009% the amount in controversy exceeds $5,000,000. Id. Moreover, the defense argued that plaintiff’s individual claim places in excess of $440,000 at issue, so unless he claims less than a 16% underpayment his amount in will exceed $75,000. Id. Plaintiff’s lawyer responded that central to BP’s arguments is the claim that plaintiff has “refused to stipulate to an amount of damages at stake,” and advanced various objections to this reasoning, id., at *2. Defense attorneys countered that requiring more than its percentage-based calculations of damages “would create a virtually impossible standard of proof,” id. Additionally, plaintiff’s “vague statement in the initial complaint that the amount in controversy ‘may’ exceed $5 million,” combined with his refusal to stipulate otherwise, “is sufficient to establish jurisdiction in federal court.” Id.

Continue reading "BP CAFA Removal Class Action Defense Cases-Eatinger v. BP: Kansas Federal Court Refuses To Remand Class Action To State Court Holding Removal Jurisdiction Exists Under Class Action Fairness Act (CAFA)" »

Posted On: February 20, 2008 by Michael J. Hassen Email This Post

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PSLRA Class Action Defense Cases-In re H&R Block: Missouri Federal Court Dismisses Securities Class Action Against H&R Block Concluding Class Action Allegations Failed To Satisfy PSLRA's Heightened Pleading Requirements

Defense Motion to Dismiss Securities Class Action Against H&R Block and Individual Defendants Granted because Class Action Complaint Failed to Meet Heightened Pleading Requirements Mandated by the Private Securities Litigation Reform Act of 1995 (PSLRA) Missouri Federal Court Holds

Plaintiffs filed a class action against H&R Block and various individual defendants alleging violations of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities Exchange Commission, and seeking derivative “controlling persons” liability under section 20(a) of the 1934 Act. In re H&R Block Securities Litig., ___ F.Supp.2d ___ (W.D. Mo. February 19, 2008) [Slip Opn., at 1]. The class action alleged that H&R Block failed to attribute its financial success to “deceptive consumer practices” which “thereby artificially inflating its reported earnings,” failed to properly account for its effective income tax rate thereby “requiring a restatement of reported financial results,” and failed to implement “a system of safeguards and procedural controls” to ensure that financial statements and reports were reliable rather than “materially overstated.” Id., at 2. Defense attorneys moved to dismiss the class action complaint; the district court granted the motion but granted leave to amend as to the restatement of financials claim if plaintiffs could plead with specificity “that the Company knew, not just that it had internal control weaknesses, but that it was releasing materially false financial information as a result.” Id., at 2-3. Plaintiffs filed an amended class action complaint, id., at 3, alleging that defendants “misled the Company’s public investors by disseminating a series of materially false and misleading statements concerning the Company’s revenues, earnings, profitability, and financial condition,” and defense attorneys again moved to dismiss the class action. Id., at 1-2. The district court granted the motion and dismissed the securities class action complaint.

Analyzing the allegations of the class action complaint under the heightened pleading requirements dictated by the Private Securities Litigation Reform Act of 1995 (PSLRA), In re H&R Block, at 4, the federal court turned first to the Section 10(b) claim. Defense attorneys claimed that the amended class action complaint failed to cure the deficiencies in the original class action complaint; specifically, it failed to “plead facts giving rise to a strong inference that the Defendants acted with scienter when accounting errors caused inaccurate financial statements to be released.” Id., at 4-5. Relying on the test enunciated by the Supreme Court in Tellabs, Inc. v. Makor Issues & Rights, Ltd., ___ U.S. ___, 127 S.Ct. 2499 (2007), a summary of which may be found here, the district court held that plaintiff’s “four confidential sources” were insufficient -- not because the sources were unnamed, but because plaintiffs had failed to establish that the information from these sources was reliable, id., at 6 (citation omitted). The federal court also concluded that even if the information from the unnamed sources was reliable, the allegations failed to satisfy the PSLRA’s heightened pleading requirements because the company had issued warnings of possible problems with its financial statements and had conducted an investigation in conjunction with an independent auditor, thus undermining a claimed intent to deceive. Id., at 7-8. As the court summarized at page 9, “[T]he Court is left with statements by confidential informants suggesting that Defendants knew they had problems involving corporate tax accounting controls. The Company repeatedly disclosed the problems to investors beginning in July 2004. The Company continued to evaluate and work towards remedying the problems, including by hiring the help of an independent third-party. The culmination of the investigation led to a Restatement. Thus, Plaintiff has still not pled facts giving rise to a strong inference that Defendants acted with an intent to deceive the investing public by releasing incorrect financial statements.”

Continue reading "PSLRA Class Action Defense Cases-In re H&R Block: Missouri Federal Court Dismisses Securities Class Action Against H&R Block Concluding Class Action Allegations Failed To Satisfy PSLRA's Heightened Pleading Requirements" »

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

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Class Action Defense Cases-In re Tyco: New Hampshire Federal Court Approves Class Action Settlement And Awards Class Counsel Record $464 Million For Prosecuting Securities Fraud Class Action Lawsuit

Proposed $3.2 Billion Settlement Of Securities Fraud Class Action Fair, Reasonable and Adequate, and Request By Class Action Plaintiffs’ Counsel for $464 Million Fee Award Reasonable New Hampshire Federal Court Holds

Plaintiffs filed a securities fraud class action lawsuit against Tyco International, its former auditor, PricewaterhouseCoopers, and five individual defendants; the gravamen of the class action was that defendants “misrepresented the value of multiple companies that Tyco acquired and misreported Tyco's own financial condition in ways that artificially inflated the value of Tyco stock,” thereby permitting the individual defendants “to reap enormous profits by looting the company through a combination of unreported bonuses, forgiven loans, excessive fees, and insider trading.” In re Tyco Int’l, Ltd., ___ F.Supp.2d ___, 2007 WL 4462593, *1 (D. N.H. December 19, 2007). The district court granted plaintiffs’ motion for class action treatment, and the parties eventually negotiated and sought district court approval of a proposed $3.2 billion settlement of the class action. Id. Specifically, the terms of the class action settlement requires that Tyco pay $2.975 billion in cash, plus interest, and that PricewaterhouseCoopers pay $225 million in cash, plus interest, id., at *5. The district court stated at page *5: “Tyco's payment will be the largest cash payment ever made by a corporate defendant in the history of securities litigation. [PricewaterhouseCoopers’] payment will be the second-largest auditor settlement in securities class action history. In all, the proposed settlement is the third largest securities class action recovery in history, behind only Enron and WorldCom.” As part of the motion for approval of the class action settlement, plaintiffs’ lawyers sought an attorney fee award of 14.5% of the $3.2 billion settlement, id., at *1, together with almost $29 million in costs, id., at *14. The district court approved the class action settlement and awarded the attorney fees requested.

We do not here discuss the district court’s analysis of the proposed settlement, or its conclusion that the terms of the class action settlement were fair, reasonable and adequate. See Tyco, at *7-*11. We do note, however, that the court stated it would be “difficult to overstate the complexity of this case,” id., at *8, and that the case was “risky…for both sides,” id., at *9. The court further highlighted the expense involved, noting that more than 488,000 hours of attorney time had been devoted to prosecution of the class action, id., at *10. The court’s analysis and rejection of the various objections to the proposed settlement may be found at pages *11-*14. The attorney fee award bears mention because it represents the single largest attorney fee award in class action history.

Continue reading "Class Action Defense Cases-In re Tyco: New Hampshire Federal Court Approves Class Action Settlement And Awards Class Counsel Record $464 Million For Prosecuting Securities Fraud Class Action Lawsuit" »

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

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Class Action Defense Cases-In re Dynamic Random Access Memory: California Federal Court Grants Motion To Dismiss Certain Antitrust Class Action Claims Finding Plaintiffs Lack Antitrust Standing

Antitrust Class Action Complaint Failed to Adequately Establish Antitrust Injury thus Warranting Dismissal of Certain Antitrust Claims in Class Action Complaint for Lack of Standing California Federal Holds

Plaintiffs filed a class action lawsuit against various defendants for allegedly conspiring to artificially inflate and fix the prices of dynamic random access memory (DRAM) in the market: plaintiffs are indirect purchasers of DRAM, and filed the class action on behalf of other indirect purchasers; the class action named as defendants foreign corporations, or U.S. subsidiaries of foreign corporations, that manufacture and sell DRAM in the U.S. In re Dynamic Random Access Memory (DRAM) Antitrust Litig., ___ F.Supp.2d ___ (N.D. Cal. January 29, 2008) [Slip Opn., at 1-2]. Defense challenges to the class action led to the filing of a second amended class action complaint, and defense attorneys moved to dismiss certain claims therein. Id. The district court granted the motion in part and denied the motion in part.

By way of background, the district court explained at page 2 that in August 2006, defense attorneys moved for judgment on the pleadings with respect to the original class action complaint, and in June 2007, the court granted the motion in part in an order that enunciated “two overarching conclusions”: (1) that “under the standing test enunciated in Assoc. Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983)(‘AGC’), plaintiffs lacked antitrust standing to assert their claims under both the California Cartwright Act and 13 state antitrust statutes, for all claims based on purchases of products in which DRAM is a component,” and “further granted defendants’ motion for lack of standing with respect to 3 more state antitrust statutes, regardless whether those claims were based on purchases of non-component DRAM, or products in which DRAM is a component”; and (2) that the class action claims “under various states’ consumer protection statutes failed, on grounds that the claims were untimely, had procedural deficiencies, or else failed to state a valid claim for relief.” The district court granted plaintiffs’ leave to amend, “but only as to three specific state laws - South Dakota, New York, and Rhode Island.” In re DRAM, at 2. Plaintiffs did so, but then sought leave to further amend the class action complaint believing they could overcome the concerns expressed by the court in its June 2007 order; defense attorneys opposed the motion on the ground of futility, but the court granted leave to amend and a second amended class action complaint was filed. Id., at 2-3. Defense attorneys moved to dismiss certain claims therein, id., at 3.

Continue reading "Class Action Defense Cases-In re Dynamic Random Access Memory: California Federal Court Grants Motion To Dismiss Certain Antitrust Class Action Claims Finding Plaintiffs Lack Antitrust Standing" »

Posted On: February 16, 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 California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers February 8 – 14, 2008, during which time 40 new class action lawsuits were filed. Labor law class actions generally top this list by a wide margin, and this yet again proved true with 21 new labor law class action filings (53% of the total number of new class action lawsuits). The only other category of class action complaints to break the 10% threshold were securities class actions with only four (4) new class action filings (10%).

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

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Class Action Defense Cases-In re Peregrine Systems: Judicial Panel On Multidistrict Litigation (MDL) Grants Joint Defense/Plaintiff Motion To Centralize Class Action Litigation In Southern District of California

Judicial Panel Grants Defense Request for Pretrial Coordination of 35 Class Action and Individual Lawsuits Pursuant to 28 U.S.C. § 1407, Joined by Sole Plaintiff Outside California, and Transfers Actions to Southern District of California

Thirty-five (35) individual and class action lawsuits (34 in California and 1 in New Jersey) were filed against various defendants, including Arthur Andersen, “arising out of alleged misrepresentations or omissions relating to improper accounting practices at Peregrine Systems, Inc. In re Peregrine Systems, Inc. Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. January 2, 2008) [Slip Opn., at 1]. Defense attorneys for Arthur Andersen and New Jersey plaintiff’s lawyer filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the litigation pursuant to 28 U.S.C. § 1407 in the Southern District of California; no other party responded to the motion. Id. The Judicial Panel granted the motion to centralize the individual and class action lawsuits, and agreed that the Southern District of California was the appropriate transferee court. Id. Accordingly, the Panel transferred the New Jersey action to California, id., at 2.

Download PDF file of In re Peregrine Systems Transfer Order

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

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UCL Class Action Defense Cases-Hall v. Time: California State Court Affirms Dismissal Of Class Action Complaint Concluding Plaintiff Lacked Standing Under Unfair Competition Law (UCL) To Prosecute Class Action Claims

Class Action Plaintiff must Suffer Loss of Money or Property to have Standing to Prosecute UCL (Unfair Competition Law) Class Action and must Establish Causal Connection Between Alleged Loss and Defendants Conduct California State Court Holds

Plaintiff filed a putative action lawsuit against various Time Inc. entities for violations of Californias unfair competition law (UCL) by allegedly tricking people into buying books as part of a free trial period program. Hall v. Time Inc., 158 Cal.App.4th 847, 70 Cal.Rptr.3d 466, 467 (Cal.App. January 28, 2008). The gravamen of the class action was that Time engaged in a scheme by which it induced consumers to purchase books by offering a free preview period during which the consumer had 21 days in which to review the book and return it to Time with no obligation to buy. Id. The class action complaint alleged that after the consumer reviews the book pursuant to an ostensible no obligation free trial basis, Time employs a scheme to obtain immediate payment from the consumer throughmisleading and deceitful tactics. Id. Defense attorneys moved to dismiss the class action on the ground that plaintiff did not suffer an injury in fact and thus lacked standing to prosecute the class action; the trial court agreed and dismissed the class action complaint. Id. The Court of Appeal affirmed.

Plaintiff alleged that he ordered a book from Time. Hall, at 468. The class action alleged that Time sent a bill with the book that encouraged him to pay for the book immediately but made clear that he was under no obligation to do so and that he had 21 days to return the book at Times expense, id., at 467-68. Plaintiff admits he kept the book and did not pay for it. Id., at 468. According to the allegations in the class action complaint, after the trial period ended Time began sending bills to plaintiff demanding payment; when plaintiff failed to pay, the matter was referred to collection. Id. Ultimately, plaintiff paid for the book and then filed the class action complaint alleging that Time had engaged in an ongoing, unfair and/or fraudulent and/or unlawful business practice by sending invoices before the expiration of the free trial period to obtain immediate payment for the book requested. Id. The trial court granted Times motion to dismiss the class action for lack of standing, finding that plaintiff got the book that he asked for, at the price he asked for it, and the payment schedule he wanted. Id.

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Posted On: February 13, 2008 by Michael J. Hassen Email This Post

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CAFA Class Action Defense Cases-Toller v. Sagamore: Arkansas Federal Court Delays Ruling On Motion To Remand Class Action Against Insurer Pending Additional Evidence Of Amount In Controversy For Removal Under Class Action Fairness Act (CAFA)

In Motion for Remand of Class Action Against Insurer for Failure to Provide No-Fault Insurance, both Plaintiff and Defense Failed to Present Admissible Evidence of Amount in Controversy so Court had Insufficient Evidence to Determine Whether Removal Jurisdiction Existed Under CAFA (Class Action Fairness Act) Arkansas Federal Court Holds

Plaintiff filed a putative class action in Arkansas state court against her automobile insurance carrier, Sagamore Insurance, alleging various breaches of the terms of the auto policy. Toller v. Sagamore Ins. Co., 514 F.Supp.2d 1111, 1113-14 (E.D. Ark. 2007). The class action complaint alleged that Sagamore “has consistently issued automobile liability insurance policies without providing no-fault coverages or obtaining waivers of such coverage as required by Arkansas law.” Id., at 1114. Defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA); plaintiff’s lawyer moved to remand the class action on the ground that removal jurisdiction did not exist under CAFA because the requisite amount in controversy had not been established. Id. The district court found that it lacked sufficient evidence from either side to rule on the remand motion and, accordingly, held the motion in abeyance pending receipt of such evidence.

Plaintiff’s class action alleged that Sagamore issued her an automobile insurance policy without providing her no-fault coverage and without obtaining from her a waiver of such coverage in writing. Toller, at 1114. Following a car accident in which she suffered $48,000 in medical costs, Toller filed her lawsuit alleging that Sagamore wrongly denied her claim. The class action complaint provided no further information regarding alleged damages, and plaintiff did not limit her damages to an amount under $75,000. Id. The relief sought in the complaint includes attorney fees, penalties for breach of contract, and declaratory and injunctive relief, but the class action provides that “the amount in controversy will not exceed the sum or value of $4,999,999, and she specifically waives any amount of compensatory damages, restitution, interest, costs, and attorneys' fees above that amount.” Id. Defense attorneys removed the class action to federal court alleging both diversity jurisdiction and CAFA removal jurisdiction: we do not discuss here the district court’s conclusion that the requirements for diversity jurisdiction had not been met, see id., at 1116-18; rather, we discuss here solely removal jurisdiction under CAFA, and Sagamore’s argument “that this case is a class action, that the class has more than 100 members, that the amount in controversy exceeds $5,000,000, and that minimal diversity exists, so this Court has jurisdiction pursuant to the Class Action Fairness Act, codified at 28 U.S.C. § 1332(d),” id., at 1114.

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

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Subprime Securities Law Class Action Defense Cases-Gold v. Morrice: California Federal Court Grants Motion To Dismiss Class Action Claims But Gives Plaintiffs Leave To File Amended Class Action Complaint

Securities Class Action Complaint Failed to Adequately Articulate Factual Bases for Claims Necessitating Dismissal but with Leave to Amend California Federal Court Holds

Various plaintiffs filed a class action lawsuit against New Century. and various officers and directors aris[ing] from the collapse of New Century Financial Corporation in the wake of the subprime mortgage crisis, and allegations of securities law violations that drastically reduced the value of stocked owned by shareholders. Gold v. Morrice, ___ F.Supp.2d ___ (C.D. Cal. January 31, 2008) [Slip Opn., at 1]. In September 2007, lead plaintiff (New York Teachers Retirement System) filed a consolidated class action complaint; defense attorneys moved to dismiss various class action claims, id. The class action was filed after New Centurys stock dropped 97% following several disclosures regarding errors in its previously reported financial statements, id., at 2. Specifically, the class action complaint alleged violations of Section 11 and Section 12(a) of the Securities Act, as well as securities fraud claims under Section 10(b) and Section 20(a) of the Exchange Act against the individually-named defendants, id. The district court granted the motion to dismiss but with leave to file an amended class action complaint.

In granting the defense Rule 12(b)(6) motion as to the class actions Securities Act claims, the district court concluded that the complaint lacks clarity in articulating the grounds for its claims and attributes this failure to a lack of organization and somewhat unclear presentation of the allegations. Gold, at 6. The court noted, for example, that despite many detailed factual allegations and underlined statements from stock offering documents, press releases, or other communications, the court ha[d] difficulty in determining whether Plaintiffs have stated a claim because the class action complaint either lacks facts to support that the statements are false or misleading or provides those facts in a different paragraph without guidance for cross-reference. Id. For guidance, recommended that the class action complaint be clear and concise in identifying false statements and articulating the factual allegations supporting an inference that the statement is false or misleading and directed plaintiffs to attach a chart to the complaint set[ting] forth for each claim ([i]) the alleged false or misleading statements, including the source of the statement in a registration statement where a required element of the claim; (ii) the supporting factual allegations; and (iii) the ultimate conclusion. Id., at 7.

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

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CAFA Class Action Defense Cases-Main Drug v. Aetna: Eleventh Circuit Dismisses For Lack Of Jurisdiction Appeal From District Court Refusing To Remand Class Action Removed Under Class Action Fairness Act (CAFA)

Failure to Timely Seek Permission to Appeal Denial of Motion to Remand Class Action Complaints Removed to Federal Court under CAFA (Class Action Fairness Act) Required Dismissal of Appeals for Lack of Jurisdiction Eleventh Circuit Holds

Plaintiff, a pharmacy, filed a putative class action against insurance/pharmacy benefit management companies for misrepresentation, breach of contract, unjust enrichment and conspiracy, alleging that defendants failed to reimburse pharmacies “according to an agreed-upon formula for brand name prescriptions dispensed to Defendants' insureds.” Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F.Supp.2d 1323, 1324 (M.D. Ala. 2006). Defense attorneys removed the action to federal court asserting, inter alia, federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id. The district court held that even under CAFA the defense bears the burden of establishing removal jurisdiction, but concluded that the defense had satisfied the amount in controversy requirement. Our summary of that district court order may be found here. Plaintiffs filed notices of appeal with the Eleventh Circuit; the Circuit Court dismissed the appeals for lack of jurisdiction. Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 475 F.3d 1228 (11th Cir. 2007).

The Eleventh Circuit noted the two consolidated class action lawsuits had been filed prior to CAFA’s effective date but the clerk of the court did not issue the summons until after CAFA’s effective date. Defense attorneys removed the class actions to federal court, and plaintiffs’ lawyers filed motions to remand arguing that the class action complaints had been filed before CAFA went into effect. The district court denied the motion. Main Drug, at 1229. Plaintiffs appealed the denial of the motion to remand within seven (7) days of the district court order, but never sought permission to appeal pursuant to Rule 5. Id. The Circuit Court explained at pages 1229 and 1230,

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

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FLSA Class Action Defense Cases-Spoerle v. Kraft Foods: Wisconsin Federal Court Denies Defense Summary Judgment Motion In FLSA Class Action Seeking Compensation For Donning And Doffing Protective Equipment

Defense Motion for Summary Judgment Arguing that Class Action Claims Seeking Compensation under Federal Fair Labor Standards Act (FLSA) for Time Spent Donning and Doffing Safety Gear Required by Employer Denied for Failure to Establish as a Matter of Law that Class Action Claims Fell Within Exception to FLSA Compensation Requirement Wisconsin Federal Court Holds

Plaintiffs filed a class action lawsuit against their employer, Kraft Foods, alleging violations of the federal Fair Labor Standards Act (FLSA) and state law for time spent in donning and doffing safety and sanitation equipment as part of their jobs at a meat processing plant. Spoerle v. Kraft Foods Global, Inc., 527 F.Supp.2d 860, 2007 WL 4564094, *1 (W.D. Wis. 2007). Defense attorneys moved for summary judgment arguing that the class action claims fell within the Portal-to-Portal Act exception, that the allegations in the class action complaint did not constitute “changing clothes” within the meaning of the FLSA, and that in any event the class action claims fell within the FLSA’s “de minimis” exception. Id. (While such dispositive motions are generally inappropriate prior to the court’s ruling on a class action certification motion, plaintiffs stipulated that they would not seek class action treatment until the court ruled on the summary judgment motion, id.) Except as explained in the Note, below, the district court denied the defense motion because it could not find as a matter of law “that the donning and doffing of the equipment at issue in this case is excluded from the protections of the FLSA,” id.

The district court stated at page 1, “This case presents a straightforward question: does the Fair Labor Standards Act, 29 U.S.C. §§ 201-219, require defendant Kraft Foods Global, Inc., to pay its employees for time they spend putting on and taking off items of safety and sanitation equipment that defendant's policies and federal law require the employees to wear?” Kraft operates a meat processing plant in Wisconsin and requires employees to use time clocks “typically [located] right outside the ‘production area’” to track their time. Spoerle, at *1. Federal law, as well as company policy, requires employees wear safety and sanitation equipment in the production area, which “includes a hard hat or bump cap, steel-toed shoes or sanitation boots, ear plugs, hairnet and beard net, safety glasses, a freezer coat (if necessary), gloves, plastic gloves, paper frock or plastic apron, sleeves, slickers (for employees that work in wet areas) or a cotton frock (employees may choose to wear cotton pants and a shirt instead, which the parties refer to as ‘career clothes’).” Id. Failure to wear the required equipment may lead to discipline, id. The gravamen of the class action is that some of these items - all of which are owned by the employer and stored at the plant - must be put on before clocking in, id., at *2. The court noted that “The current collective bargaining agreement between plaintiffs and defendant does not guarantee compensation for the time spent donning and doffing personal protective equipment,” id., and noted further that Kraft did not dispute that such conduct was “work,” id., at *3; rather, the defense argued that the conduct falls within an exception.

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

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Class Action Lawsuits Alleging Employment-Related Claims Retain Hold On Top Spot Of Weekly Class Action Filings In California State And Federal Courts

To assist class action defense attorneys anticipate the types of class actions against which they will have to defend in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers February 1 – 7, 2008, during which time 35 new class action lawsuits were filed. New class action cases alleging various labor law claims generally top this list, often by a wide margin, and this proved especially true this past week 23 new labor law class actions were filed (66% of the total number of new class action lawsuits). New class action complaints alleging violations of California's unfair competition law (UCL), which include false advertising claims, and shareholder derivative suit class actions were the only other categories to meet the 10% threshold, with four (4) new class action filings each (11%).

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

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FLSA Class Action Defense Cases-In re KFC: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Fair Labor Standards Act Class Action Litigation In District Of Minnesota

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

Twenty-eight class action lawsuits were filed in 27 districts against various defendants, including KFC Corp. alleging violations of the federal Fair Labor Standards Act (FLSA) for failure to pay assistant managers overtime pay. In re KFC Corp. Fair Labor Standards Act Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. January 3, 2008) [Slip Opn., at 1]. Defense attorneys for KFC filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the District of Minnesota; plaintiffs in each of the class actions opposed pretrial coordination. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, rejecting plaintiffs’ central argument that most discovery already had been completed, id. The Panel explained at page 1, “Discovery and motion practice with respect to the common factual questions regarding the propriety of KFC’s employment practices and compliance with the FLSA and related state laws remains. Centralization under Section 1407 has the salutary effect of placing all actions in this docket before a single judge who can formulate a pretrial program that ensures streamlined resolution of all actions to the benefit of the parties and the judiciary.” Id. The Judicial Panel also agreed with the defense that the District of Minnesota was the appropriate transferee court because “[a]ll actions now before the Panel arise from the decertification of a conditionally certified nationwide collective action filed in the District of Minnesota…, which has been pending for over two years.” Id., at 1-2. Accordingly, the Panel ordered that all actions pending outside Minnesota be transferred there, id., at 2.

Download PDF file of In re KFC Transfer Order

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

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Class Action Defense Cases-Hubbard v. Potter: Federal Magistrate Grants Defense Motion To End Pre-Certification Discovery In Labor Law Class Action But Denies As Untimely Defense Motion To Designate Rebuttal Expert

Plaintiffs in Labor Law Class Action Failed to Establish that Defense Failed to Properly Respond to Pre-Certification Discovery and Defense failed to Establish Good Cause for Untimely Designation of Rebuttal Expert District of Columbia Federal Magistrate Holds

Plaintiffs, five deaf employees of the United States Postal Service (USPS), filed a putative class action alleging that they were “denied a qualified sign language interpreter at safety meetings and mandatory work meetings” and that this “prevented from performing their duties safely, which they contend is an essential function of their job.” Hubbard v. Potter, 247 F.R.D 27, 2008 WL 43867, *1 (D.D.C. 2008). Plaintiffs alleged that a class action could be certified under either Rule 23(b)(2) or (b)(3), and sought pre-certification discovery to support a motion for class action certification. Id. Defense attorneys moved to terminate pre-certification discovery and for leave to designate a rebuttal expert witness, id. The federal magistrate granted the first motion but denied the second.

With respect to their first motion, defense attorneys argued that plaintiffs had been given sufficient time to conduct the discovery necessary to file for class action certification, and that further discovery was inappropriate pre-certification because “Plaintiffs either (a) have the evidence they need for class certification and are attempting to collect that which they need for trial on the merits, or (b) have failed in their attempts to meet the class certification requirements following this Court's dismissal of their first class complaint and are trying to squeeze every last document out of the Postal Service in a vain attempt to piece together a plausible class certification theory for their second amended complaint.” Hubbard, at *1. Plaintiffs’ opposition “raised legitimate concerns regarding the discovery that has been thus far produced by defendant,” characterizing USPS’s discovery responses as “grossly insufficient and manifestly incomplete.” Id.

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Posted On: February 6, 2008 by Michael J. Hassen Email This Post

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State Farm Class Action Defense Cases-Kartman v. State Farm: Indiana Federal Court Grants Defense Motion To Compel Production Of Documents Plaintiff's Counsel Believes Relevant To Class Action Claims

Documents Plaintiff's Counsel Found on Internet and Intends to Use in Prosecuting Class Action Against State Farm not Protected by Work Product Doctrine Indiana Federal Court Holds

Plaintiff filed a class action lawsuit against State Farm Mutual Automobile Insurance Company; prior to the filing the class action, plaintiff’s lawyer “undertook a comprehensive factual investigation relevant to the claims being asserted,” gathering “numerous documents from publicly available sources, including from Defendant State Farm's own web sites.” Kartman v. State Farm Mut. Auto. Ins. Co., ___ F.Supp.2d ___, 2007 WL 4561607, *1 (S.D. Ind. December 21, 2007). In order to prepare its defense against the class action claims, defense attorneys requested production of all documents plaintiff obtained from “publicly available sources” prior to filing suit, id., at *3. Plaintiff’s lawyer admitted that he “plan[ned] to use these documents ‘for the purpose of cross-examining and impeaching State Farm representatives,’” but refused to produce them on the ground that the documents were protected by the work product doctrine. Id., at *1. Defense attorneys filed a motion to compel, id., and the district court granted motion.

The federal court explained that plaintiff bore the burden of proving that the documents sought were “prepared in anticipation of litigation.” Kartman, at *1. Plaintiff argued the documents “would necessarily reveal counsel's mental impressions and litigation strategy”; defense attorneys countered that “Plaintiffs intend to withhold clearly responsive documents from State Farm based upon a temporary invocation of work product protection that Plaintiffs will waive at tactically opportune times.” Id. The district court explained that in order for the work product doctrine to apply, “the material must be documents or other tangible things, must be prepared in anticipation of litigation, and must be prepared by or for a party or his counsel.” Id., at *2. Here, however, the documents were “secured from other sources” and “were not prepared in anticipation of this particular litigation” or “by or for Plaintiff or his counsel in this litigation.” Id. In fact, the district court noted, the documents from State Farm’s web site “were prepared by State Farm with absolutely no thought whatsoever of this particular litigation.” Id., at *3. And while it is true that plaintiff’s lawyer assembled the documents from various public sources, the district court found persuasive the defense argument that “Merely gathering documents from third parties does not gloss the documents with an attorney's mental impressions any more that simply sharing documents with an attorney stamps the documents with the imprimatur of attorney-client privilege.” Id.

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

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Fidelity Class Action Defense Cases-Randleman v. Fidelity National Title: Ohio Federal Court Grants Class Action Treatment Against Title Insurer Alleging Class Action Claims Based On Failure To Give Homeowners Discounted Rates

Class Action Alleging Fidelity Failed to Disclose and Provide Discounted Title Insurance Rates to Homeowners as Part of Refinance Transactions Entitled to Class Action Treatment Ohio Federal Court Holds

Plaintiffs filed a class action lawsuit against their title insurance carrier, Fidelity National Title, alleging that the cost it charged insureds for insurance issued in connection with refinance transactions; specifically, the class action alleged that plaintiffs “have been injured and wronged by defendant’s failure to charge them a lower premium,” as required by Ohio law, “even though they were not named insureds under the title insurance policy.” Randleman v. Fidelity National Title Ins. Co., ___ F.Supp.2d ___ (N.D. Ohio January 31, 2008) [Slip Opn., at 1]. Of course, homeowners typically pay for title insurance, both for themselves and for their lenders, id., at 2. Defense attorneys filed a motion to dismiss the class action to the extent it asserted claims for breach of implied-in-fact contract and unjust enrichment, which the district court denied. See Randleman v. Fidelity National Title Ins. Co., 465 F.Supp.2d 812, 827 (N.D. Ohio 2007). Plaintiffs then filed a motion to certify the litigation as a class action, id. The trial court concluded that the matter may proceed as a class action.

Like all other title insurers doing business in Ohio, Fidelity belongs to the Ohio Title Insurance Rating Bureau (OTIRB) and files its insurance rates with the Ohio Superintendent of Insurance. Randleman, at 2. “The OTIRB files a manual of rates with the Ohio Department of Insurance (ODI), setting forth the rates title insurers will charge for policies.” Id. The rates in the manual are binding on title insurers, and the listed rates are mandatory though Ohio law provides for certain discounted rates, id., at 2-3. The class action complaint alleged that plaintiffs refinanced their Ohio home and paid a non-discounted rate for a title policy for their lender, id., at 3. The class action further alleged that plaintiffs had refinanced within the time period that would have qualified them to receive a discounted reissue rate, and that “they were overcharged $213.57.” Id., at 4. Plaintiffs’ class action certification motion argued that Fidelity systematically failed to provide discounts “despite knowledge that particular consumers are entitled to the discounted rate.” Id., at 5. Defense attorneys opposed class action treatment on the ground that “the issue of knowledge of the discount on the part of each individual class member would be determinative, and would require individualized adjudication of ‘as to the knowledge and practices of the particular lender, mortgage broker, agent, and borrower involved in the transaction’…, and thus, individual adjudication of each class member’s claim.” Id. Plaintiffs countered that Fidelity’s non-disclosure or a homeowner’s lack of knowledge is not an element of the causes of action underlying the class certification motion, so individual trials would not be required. Id., at 5-6.

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

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Dow Class Action Defense Cases-Henry v. Dow Chemical: Divided Michigan Appellate Court Affirms Class Action Certification Of Toxic Tort Class Action Complaint Arising From Release Of Dioxin At Dow Chemical Plant

On Appeal from Order Granting Class Action Treatment Against Dow Chemical for Damages Allegedly Caused by Dioxin from Dow Plant, Defense Failure to Request or Seek to Introduce Evidence in Opposition to Motion to Certify Class Action Undermines Claim that Trial Court Erred in Failing to Hold Evidentiary Hearing Split Michigan State Court Holds

Plaintiffs filed a class action lawsuit against Dow Chemical alleging toxic tort claims based on the alleged release of dioxin at Dow’s Midland, Michigan, plant. Henry v. Dow Chemical Co., Mich. Ct. App. Case No. 266433 (unpublished) (Mich.App. January 24, 2008) [Slip Opn., at 1]. In part, the class action complaint “presented an issue of first impression” in that plaintiffs sought certification of a class action to create a medical monitoring program funded by Dow, id. In 2003, plaintiffs moved for class action certification, and defense attorneys moved for summary disposition of the medical monitoring claim, id., at 2. The trial court denied the defense motion, but the Michigan Supreme Court reversed reasoning that “[b]ecause plaintiffs do not allege a present injury, plaintiffs do not present a viable negligence claim under Michigan’s common law.” Henry v. The Dow Chemical Co., 701 N.W.2d 684, 473 Mich. 63, 68 (Mich. 2005). On remand, the trial court considered class action treatment of the remaining claims for nuisance, negligence, and public nuisance, Slip Opn., at 3, and granted the motion, id., at 6-7. Defense attorneys appealed and, in an unpublished and divided opinion, the Michigan Court of Appeals affirmed.

The Court of Appeals noted that the sole issue before it was whether the trial court’s order granting class action treatment was “clearly erroneous.” Henry, at 7 (citation omitted). Defense attorneys argued on appeal that individual questions of law or fact will predominate over common questions, and that the trial court erred in concluding otherwise without first holding an evidentiary hearing. Id., at 8. The lead opinion, by Judge Hood, states at page 7 that “in my view, the trial court’s decision with regard to certification of the class was not clearly erroneous.” With respect to the lack of an evidentiary hearing, the court noted that the parties made the strategic decision not to introduce evidence but, rather, to rely on case law in support of, and opposition to, the class action certification motion, id., at 8. Of course, “[w]ithout an evidentiary hearing, there are no factual findings to review,” id., and having made the tactical decision not to request an evidentiary hearing or seek to present testimony in opposition to class certification, the defense could not now be heard to complaint. And with respect to Dow’s arguments that “the properties and the dioxin levels vary,” thus creating predominantly individual questions of fact, the appellate court concluded that (1) under Michigan law, “the trial court is not required to accept the defendant’s assertions and proofs, but looks to the allegations in the complaint,” and (2) the investigation and report of the Michigan Department of Environmental Quality (MDEQ) concluded that certain areas contained excessive amounts of dioxin and that Dow’s Midland facility was the source of the contamination. Id., at 11-12. While Dow argued that another sources of contamination existed, the MDEQ had concluded that the alternate source was not a factor so the trial court’s decision was not clearly erroneous. Id., at 12.

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

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Labor Law Class Action Cases Extend Hold On Top Spot Of Weekly Class Action Filings In California State And Federal Courts

As a resource to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers the two-week period of January 25 – January 31, 2008, during which time 46 new class action lawsuits were filed. New class action cases alleging employment-related claims generally top this list, and this past week was no exception as 22 new labor law class actions were filed during this time period (48% of the total number of new class action lawsuits filed). New antitrust class action complaints came in a distant second with 7 new filings (15%), closely followed by class actions alleging violations of California's unfair competition law (UCL), which include false advertising claims, and class actions alleging violations of federal securities laws, each with 5 new class action filings (11%).

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

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Katrina Class Action Defense Cases-In re Katrina: Louisiana Federal Court Dismisses Class Action Complaint Against Government Finding Class Action Claims Based On Levee System Failure During Hurricane Katrina Barred By Governmental Immunity

Class Action Claims Against Federal Government Arising out of Failed Levee System Fell Within Immunity Afforded by Flood Control Act thus Warranting Dismissal of Class Action Complaint as to Government Louisiana Federal Court Holds

Plaintiffs filed a class action complaint against various defendants, including the U.S. Army Corps of Engineers, arising out of the “catastrophic failures of the levee system surrounding New Orleans and its vicinity” as a result of Hurricane Katrina, centering on the “breaches and failures that occurred at the three ‘outfall canals’ and the floodwalls constructed thereon.” In re Katrina Canal Breaches Consolidated Litig., ___ F.Supp.2d ___ (E.D. La. January 30, 2008) [Slip Opn., at 1-2]. The canals at issue in the class action “serve as conduits for the drainage of excess water from the streets of New Orleans during rain events, [but] these same canals become channels for incoming storm surge creating increased risk of flooding caused by Lake Pontchartrain hurricane driven water.” Id., at 2. Defense attorneys for the federal government moved to dismiss the class action claims against it, id., at 1, and in ruling on the motion the district court relied on an “exhaustive report” prepared by the U.S. Army Corps of Engineers that, in the court’s words, “provides detailed time lines and discussions concerning what proved to be a fifty-year exercise in ineptitude and gross economic and technological mismanagement,” id., at 3 n.2.

As to the U.S. Army Corps of Engineers, plaintiffs’ 73-page class action complaint, brought under the Federal Tort Claims Act, alleged that the Corps “had the legal responsibility and duty to these plaintiffs to cause, allow, and/or conduct the aforesaid dredging activity in a manner that would not compromise the safety of the canal's levee/flood wall system" but that the Corps “(1) negligently failed to follow federal regulations and its own engineering standards and procedures , in regard to the issuance of a permit to dredge the 17th Street Canal…; (2) violated federal law to the extent [that] the River & Harbors Act prohibits the granting of a dredging permit that is contrary to the public interest…; (3) violated of federal regulations…for failing to properly balance the benefits of the requested dredging against the reasonably foreseeable harm, including possible harm related to detrimental effects on flood Control…; [and] (4) negligently issued a dredging permit which cased and allowed changes to occur in the 17th Street Canal Bottom, leading to subsurface and soil destabilization of the canal levee….” In re Katrina, at 19-20. Defense attorneys moved to dismiss the class action claims against the U.S. “based on § 702c immunity granted under the Flood Control Act of 1928 [(FCA)] and the discretionary function exception with respect to allegations of the negligent granting of the dredging permit of the 17th St. Canal.” Id., at 21.

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

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GM Class Action Defense Cases-In re General Motors: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Western District of Washington

Judicial Panel Grants Defense Request, Ultimately Joined by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Class Actions to Western District of Washington

Three products liability class action lawsuits were filed in California, Oregon and Washington against various defendants, including General Motors Corp., arising out of the allegation that the speedometers in certain GM pick-ups and sport utility vehicles registered inaccurately and that GM “failed to disclose and/or fraudulently concealed this alleged defect.” In re General Motors Corp. Speedometer Prods. Liab. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. January 8, 2008) [Slip Opn., at 1]. Defense attorneys for common defendant General Motors 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 Western District of Washington; responding plaintiffs initially supported pretrial coordination provided the Panel select the Northern District of California as the appropriate transferee court, but at the hearing on the motion they consented to transfer to the Western District of Washington. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed with the defense, and plaintiffs, that the Western District of Washington was the appropriate transferee court. Id. Accordingly, the Panel granted the defense motion, id., at 2.

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