Class Action Defense Blog

$2.5 Billion Punitive Damage Award in Class Action Against Exxon Arising out of Valdez Oil Spill Excessive because Considerations of Predictability Warranted 1:1 Ratio Cap on Punitive Damages Awarded under Federal Maritime Law Supreme Court Holds, Resulting in Reduction of Class Action Punitive Damage Award to $500 Million and, as Modified, Class Action Judgment Affirmed Bringing end to 20-year Lawsuit

Almost 20 years ago, in March 1989, Exxon’s supertanker, the Valdez, ran aground off the coast of Alaska and spilled millions of gallons of crude oil into Prince William Sound. Plaintiffs, commercial fishermen and Native Alaskans, filed a class action against Exxon seeking compensatory and punitive damages. Exxon Shipping Co. v. Baker, 554 U.S. ___ (June 25, 2008) [Slip Opn., at 1-2]. (More accurately, various individual civil cases were consolidated into one lawsuit against Exxon and others, and at Exxon’s request the federal court “certified a mandatory class of all plaintiffs seeking punitive damages, whose number topped 32,000.” Id., at 5.) Exxon stipulated to its negligence and a jury trial was held to determine compensatory damages and fix punitive damages, id. The jury awarded plaintiffs $5 billion in punitive damages against Exxon. Id., at 7. The Ninth Circuit affirmed the judgment but reduced the punitive damage award to $2.5 billion, id. The Supreme Court granted certiorari to address three questions of maritime law: “whether a shipowner may be liable for punitive damages without acquiescence in the actions causing harm, whether punitive damages have been barred implicitly by federal statutory law making no provision for them, and whether the award of $2.5 billion in this case is greater than maritime law should allow in the circumstances.” Id., at 1. The High Court held that federal law did not preclude an award of punitive damages against Exxon, but that the award “should be limited to an amount equal to compensatory damages.” Id. The Supreme Court vacated the judgment and remanded the class action. Id., at 7. The Court held that the punitive damages awarded in the class action should not have exceeded the compensatory damage award and, accordingly, must be reduced to $500 million.

We do not here recount the factual history of the Valdez oil spill, or the evidence presented concerning Exxon’s culpability in allowing its employee, Captain Joseph Hazelwood, to serve as captain of the Valdez on the fateful night. That history may be found at pages 2 to 4 of the Court’s opinion. Exxon spent approximately $2.1 billion to clean up the oil spill. Exxon Shipping, at 4. The federal government brought criminal charges against Exxon for violating several federal laws; Exxon pleaded guilty to violating various federal laws and ultimately paid a $25 million fine and $100 million in restitution. Id., at 4-5. The federal government also filed a civil action against Exxon, along with the State of Alaska, and obtained a consent decree requiring Exxon to pay another $900 million toward restoring natural resources. Id., at 5. Exxon additionally paid approximately $300 million to settle claims with fishermen, property owners and others. Id.

Continue reading "Punitive Damages Class Action Defense Cases–Exxon v. Baker: Supreme Court Reduces Class Action Punitive Award In Exxon Valdez Case Holding Punitive Damages Under Federal Maritime Law Should Be Limited To Amount Of Compensatory Damages" »

Posted In: Class Action Court Decisions

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 June 20 - 26, 2008, during which time 47 new class action lawsuits were filed. With rare exception, labor law class action lawsuits generally top the list of new class action cases by a wide margin. This past week was no exception, as employment-related class actions lawsuits accounted for fully 28 of the new class actions filed during this reporting period (60% of the total number of new class action lawsuits during the past week). Only one other category met the 10% threshold -- class action lawsuits alleging unfair business practice claims, which include false advertising claims, with five (5) new class actions (11%).

Posted In: Class Actions In The News

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

Two class actions – one in New Jersey and one in Pennsylvania – were filed against Orleans Homebuilders and OHB Homes alleging violations of the federal Fair Labor Standards Act; specifically, the class action complaints allege “that defendants avoided paying overtime to employees classified as ‘community sales managers,’ ‘sales assistants,’ or ‘sales associates.’” In re Orleans Homebuilders, Inc., Fair Labor Standards Act Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2008) [Slip Opn., at 1]. Defense attorneys filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Eastern District of Pennsylvania; plaintiffs in both class actions supported the motion. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed that the Eastern District of Pennsylvania was the appropriate transferee court, particularly as it was “supported by all parties.” Id.

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

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, but Refuses Request to Transfer to District of Columbia and Selects Instead Western District of Washington as Appropriate Transferee Court

Two class action lawsuits were filed against the United States Postal Service (USPS) – one in Washington and one in Illinois. Each class action complaint purported to be brought on behalf of a nationwide class. In re United States Postal Service Privacy Act Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. April 9, 2008) [Slip Opn., at 1]. The Judicial Panel explained at page 1 that the class actions each “involve allegations that USPS violated the Privacy Act, 5 U.S.C. § 552a, and was otherwise unjustly enriched when it disclosed employees’ personal information (such as their home addresses) to companies which it authorized to disseminate the targeted solicitations without obtaining prior authorization from each affected employee.” Defense attorneys 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 District of Columbia; plaintiffs in the class actions did not oppose the motion, but each requested transfer to the district in which their own class action already was pending. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, finding that centralization “will eliminate duplicative discovery; prevent inconsistent pretrial rulings (particularly with respect to the issue of class certification); and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel disagreed, however, that the District of Columbia would be the appropriate transferee court, selecting instead the Western District of Washington, which is where the first class action was filed, id. Accordingly, the Judicial Panel transferred the Illinois class action to Washington, id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

United States Supreme Court Sets 1:1 Ratio for Punitive Damage Awards under Federal Maritime Law and Reduces $2.5 Billion Award in Exxon Valdez Class Action to $500 Million, Ending 20-year Class Action Fight

The United States Supreme Court issued a stunning ruling yesterday, holding that a punitive damage to compensatory damage ratio of 1:1 is a "fair upper limit" in federal maritime cases. The opinion brings an end to the class action lawsuit filed in the aftermath of the Exxon Valdez oil spill in Alaska nearly 20 years ago. That class action eventually resulted in a $5 billion punitive damage award, which the Ninth Circuit reduced to $2.5 billion. The Supreme Court reduced that award further, setting it at $500 million in light of the $507 million compensatory damage award. The Class Action Defense Blog will post a summary of the Supreme Court opinion on Monday, June 30. The opinion may be downloaded below.

Posted In: Class Actions In The News

Securities Fraud Class Action Complaint Failed to Plead Fraud or Scienter with Specificity Required under the Private Securities Litigation Reform Act (PSRLA) thus Supporting Defense Motion to Dismiss Class Action Florida Federal Court Holds

Plaintiff filed a putative class action against Micrus Endovascular and two of its officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act). The class action was consolidated with a second class action, and the parties filed a consolidated class action complaint. Abrams v. Micrus Endovascular Corp., ___ F.Supp.2d ___ (S.D. Fla. May 20, 2008) [Slip Opn., at 1]. In essence, the class action plaintiffs alleged that the defendants “overstated the Company’s future prospects and failed to disclose material facts about the Company’s financial condition in violation of Sections 10(b) and 20(a) of the Exchange Act, resulting in artificial inflation of the Company’s stock price.” Id., at 2. Defense attorneys moved to dismiss the class action on the grounds that it failed to plead facts with the specificity required by the Private Securities Litigation Reform Act (PSLRA), and that the challenged statements were “forward-looking” within the meaning of the PSLRA’s “safe harbor” provision. Id., at 4-5. The district court granted the motion.

With respect to the class action’s Section 10(b) claim, the federal court outlined the heightened pleading requirements under the PSRLA, see Abrams, at 5-6, and concluded that the class action complaint failed to meet those requirements. In the district court’s view, the statements challenged by the class action “represent the type of ‘corporate optimism’ or ‘mere puffing’ which is not covered by the Exchange Act.” Id., at 6. This is true because “‘no reasonable investor would make an investment decision based on [such] statement[s].’” Id. (citation omitted). In the court’s view, “none of the challenged statements in this case are material statements of verifiable fact,” id., at 7 n.3. And under the facts of the case, the court also rejected plaintiffs’ suggestion that defendants were under an affirmative duty to disclose the internal challenges the Company was facing, id., at 7.

Continue reading "PSLRA Class Action Defense Cases–Abrams v. Micrus Endovascular: Florida Federal Court Grants Defense Motion To Dismiss Securities Fraud Class Action Complaint For Failure To Plead Specificity Required By PSLRA" »

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

In Connection with Labor Law Class Action Alleging Failure to Pay Managers and Assistant Managers Overtime, Trial Court did not Abuse its Discretion to Manage Class Action Certification when it Granted Defense Motion to Strike Class Action Allegations from Complaint California State Court Holds

Plaintiffs filed a putative class action against AZ3, Inc., doing business as BCBG Maxazria (BCBG), alleging that it had failed to pay its managers and assistant managers for overtime. In re BCBG Overtime Cases, ___ Cal.App.4th ___, 78 Cal.Rptr.3d 257 (Cal.App. June 13, 2008) [Slip Opn., at 2]. A separate class action was filed by a single plaintiff, and then the three plaintiffs filed a coordinated class action complaint against BCBG, id. Defense attorneys moved to strike the class action allegations pursuant to Rule 1857(a)(3) of the California Rules of Court. Id., at 3. The motion was supported by declarations from 25 current or former managers and assistant managers explaining that “managers are not assigned uniform duties and spend more than 50 percent of their time on non-managerial work,” and that each store is different, targeting different customers, and requiring that managers exercise independent judgment in designing and laying out the store. Id. Plaintiffs’ lawyer opposed the motion on the ground that it was improperly sought to circumvent the class action certification process. Id., at 4. At oral argument, after the trial court issued a tentative ruling to grant the motion, plaintiffs asked for leave to depose some of the declarants, and for leave to file an amended class action complaint. The trial court denied plaintiffs’ requests and granted the motion finding that it was “properly before it because ‘class certification issues may be determined at any time during the litigation.’” Id. As the appellate court explained at page 4, “It found that BCBG had met its burden to show that the action is not suitable for class certification by producing ‘substantial evidence which establishes that Plaintiffs cannot prove the elements of typicality or commonality necessary for class certification.’” The Court of Appeal affirmed.

On appeal, plaintiff argued that the trial court should not have considered evidence outside the pleadings in ruling on the defense motion to strike the class action allegations, and that she should have been granted leave to amend. BCBG, at 1-2. In the alternative, plaintiff argued that she should have been allowed to conduct discovery before the court ruled on the motion, id., at 2. With respect to the first issue, the appellate court held that trial courts have considerable “flexibility” in addressing the certification of class actions and, indeed, have been encouraged by the California Supreme Court to be “procedurally innovative” in connection with “determining whether to allow the maintenance of a particular class suit.” Id., at 5 (quoting City of San Jose v. Superior Court, 12 Cal.3d 447, 453 (Cal. 1974)). California law permits either party to file a motion to certify a class action, and provides that “the pleadings be amended to eliminate allegations as to representation of absent persons, and that the action proceed accordingly.” Cal. Rule of Court, Rule 3.767(a)(3).

Continue reading "BCBG Class Action Defense Cases–In re BCBG: California State Court Upholds Court Order Granting Defense Motion To Strike Class Action Allegations In Labor Law Class Action" »

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

Trial Court did not Err in Granting Class Action Treatment to Nationwide Product Defect Class Action Against General Motors because Choice-of-Law Analysis Irrelevant to Class Action Certification Determination Arkansas Supreme Court Holds

In September 2006, plaintiff filed a class action against General Motors in Arkansas state court. The first amended class action complaint alleged that GM sold 4,000,000 pickup trucks and SUVs with defectively designed parking brakes; specifically, the class action alleged that GM discovered the defect in 2000, redesigned the defective part in October 2001, but “withheld from dealers admission of responsibility for the defect until January 28, 2003.” General Motors Corp. d/b/a/ Chevrolet, GMC, Cadillac, Buick, and Oldsmobile v. Bryant, ___ S.W.3d ___ (Ark. June 19, 2008) [Slip Opn., at 1-2]. According to the class action, this scheme permitted GM “to avoid paying millions of dollars in warranty claims.” Id., at 2. Plaintiff alleged further that GM’s 2005 recall involved only about 60,000 of the 4 million vehicles affected, id. Plaintiff filed a motion for class action certification; the trial court granted the motion in a 51-page order. Id., at 2-3. GM sought interlocutory review of the class action certification order, challenging predominance, superiority, and the definition of the class, id., at 3. The Arkansas Supreme Court affirmed.

The primary issue on appeal concerned GM’s challenge to the applicable choice of law. Defense attorneys argued that “the significant variations among the fifty-one motor-vehicles product-defect laws defeat predominance,” and that the trial court was required to perform a choice-of-law analysis before granting class action treatment to the lawsuit. Bryant, at 4. Plaintiff argued that Arkansas law does not require such an analysis prior to class action certification, id. The Arkansas Supreme Court agreed with plaintiff: because if found that a “predominating questions” exists – specifically, “[w]hether or not the class vehicles contain a defectively designed parking-brake system and whether or not General Motors concealed that defect,” id., at 6 – it found that the trial court did not err. In the Court’s words, “That various states’ laws may be required in determining the allegations of breach of express warranty, breach of implied warranty, a violation of Magnuson-Moss Warranty Act, unjust enrichment, fraudulent concealment, damages, and restitution does not defeat predominance in the instant case.” Id., at 7. (The author confesses that he finds this reasoning difficult to follow: legal claims do not exist in a vacuum, and it does not seem “judicially efficient” to try a case on a class-wide basis simply to determine one or two common facts, regardless of how important those facts may be, and then decertifying the case for apparently millions of trials to be held on a case-by-case basis focusing on the various claims of individual class members based on the particular state laws governing those claims.) The Arkansas Supreme Court recognized that other courts have held that choice-of-law “is crucial in making a class-certification decision,” id., at 8 (citation omitted), and indeed cited cases from California, New Jersey and Texas to that effect, see id., at 8-9. Nonetheless, it rejected this approach in favor of the “certify now, decertify later” approach followed in Arkansas, id., at 9-10.

Continue reading "GM Class Action Defense Cases–General Motors v. Bryant: Arkansas Supreme Court Affirms Class Action Certification Of Nationwide Class Action Alleging Product Defect Holding Variations In State Laws May Be Addressed By Decertification of Class Action" »

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

Defense Post-Trial Motion to Decertify FLSA Collective Action Granted because Evidence Revealed Lack of Similarity Among Class Members thereby Precluding Defense from Presenting a Uniform Defense to FLSA Claims Louisiana Federal Court Holds

Plaintiffs filed a labor law class action against Big Lots Stores for violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Big Lots had misclassified employees and failed to pay them overtime. Johnson v. Big Lots Stores, Inc., ___ F.Supp.2d ___ (E.D. La. June 20, 2008) [Slip Opn., at 1]. The gravamen of the class action was that Big Lots failed to pay its store managers and assistant store managers for overtime, id., at 3. Over defendant’s objection, the district court certified the litigation as an FLSA collective action and approximately 1,000 people elected to opt-in to the lawsuit, id., at 4-5. Following a one-week bench trial, the federal court decertified the nationwide class, dismissed without prejudice the claims of the individuals who had opted in to the action, and held that plaintiffs could proceed with their individual actions. Id., at 1.

Big Lots is a nationwide retailer with approximately 1,400 stores in 46 states. Johnson, at 2. Typically, each store has store manager and at least one assistant store manager, but the physical size, products available for sale, sales volume, sales history and number of employees all affected the number and nature of managers and assistant managers at any given store. Id. “Significant variations” existed as to the duties performed by assistant store managers, but each one was expected to work at least five 9-hour shifts per week. Id., at 3. All managers and assistant managers were salaried employees, but they were classified as “executive employees” under the FLSA and therefore exempt from overtime pay. Id., at 2. The job description of an assistant store manager supported this classification, see id., at 2-3. The class action complaint, however, filed as a collective action under the FLSA, alleged that Big Lots misclassified its assistant store managers as exempt employees because, in the words of one plaintiff, “a Big Lots ASM is nothing more than a ‘glorified stocker.’” Id., at 3-4.

Continue reading "FLSA Class Action Defense Cases–Johnson v. Big Lots: Louisiana Federal Court Decertifies FLSA Collective Action After Week-Long Bench Trial Because Evidence Revealed Class Members Were Not Similarly Situated" »

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

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 June 13 - 19, 2008, during which time 38 new class action lawsuits were filed. Employment related class action lawsuits generally top the list of new class action cases, often by a wide margin. Last week, however, unfair business practice class actions topped the list. But this variance was short-lived: employment-related class actions lawsuits regained the top spot this week. During the time period covered by this post, 17 new class actions were filed alleging various labor law violations (45% of the total number of new class action lawsuits during the past week). Only one other category met the 10% threshold -- class action lawsuits alleging unfair business practice claims, which include false advertising claims, with five (5) new class actions (13%).

Posted In: Class Actions In The News