Class Action Defense Blog

Class Action Plaintiff Failed to Establish Proximate Cause Underlying Consumer Fraud Claim based on QVC’s “Retail Value” Comparisons of Retail Products, and Trial Court Properly Denied Plaintiff’s Motion for Class Action Certification and Properly Granted QVC’s Motion for Summary Judgment Illinois State Court Holds

Plaintiff filed a class action complaint in Illinois state court against QVC – a retailer of consumer products on television and on an Internet website – alleging violations of the state’s Consumer Fraud and Deceptive business Practices Act. Mulligan v. QVC, Inc., 888 N.E.2d 1190, 1192 (Ill.App. 2008). QVC generally lists a “comparative price” for its products; QVC airs on television “viewer education spots” that advise prospective customers that when it lists a “retail value” for a product, “that figure represents either an actual comparison-shopped price or the price QVC believes that the same or a comparable product would be offered by department stores or other retailers using a customary markup for that product category.” Id., at 1192-93. QVC also explains that the “retail value” listed “does not necessarily represent the prevailing retail price in every community, or the price at which the item was previously sold by QVC.” Id., at 1193. The class action complaint “alleged that QVC’s listed ‘retail value’ overstated the prevailing market price for certain products it sold and falsely created the impression that consumers were receiving a bargain by purchasing at lower QVC prices.” Plaintiff’s lawyer moved the trial court to certify the litigation as a class action, but the court denied the motion because “individual issues of law and fact predominated.” Id., at 1192. Defense attorneys then moved the court for summary judgment as to plaintiff’s individual claims; the trial court granted the defense motion, thereby terminating all individual and class claims in the putative class action. Id. Plaintiff appealed, arguing that the trial court erred in granting summary judgment and further erred in denying her motion for class action treatment. Id. The appellate court affirmed.

An understanding of the facts foretells the appellate court’s holdings. Plaintiff purchased more than 200 items from QVC, and specifies in her class action complaint four products that she purchased for substantially less than QVC’s listed “retail value”; the retail values ranged from $39-$60, and plaintiff paid from $26.75-$38.12. Mulligan, at 1193. Plaintiff’s expert testified that “she determined comparable prices for the products [plaintiff] purchased from QVC by using a cost and a market approach to valuation,” and that in so doing the retail value for some items was actually less than the amount paid by plaintiff, though she “did not factor in ay applicable sales tax, shipping and handling, or other additional costs.” Id., at 1194. The expert also admitted that the “margin of error on her appraisal” could be $5, and that there were “other factors” that QVC properly could have considered but that she did not incorporate into her appraisals. Id. Plaintiff’s purchased these items for many reasons, “including whether the product was appealing, affordable, an impulse purchase, on sale, and whether she was searching for a particular product.” Id., at 1193. She found it convenient to shop from home, and felt like she was part of the QVC “family.” Id. She had seen QVC’s education spots, and admitted that at times she believed the retail value listed by QVC “seemed…awfully high,” but she would make the purchase because she still believed that she was paying a fair price for the item. Id. Additionally, plaintiff purchased items from QVC even if it did not list a retail value, and plaintiff continued to make purchases from QVC even after she filed her class action complaint. Id. As the appellate court explained at page 1193, “[plaintiff] acknowledges that a consumer could not legitimately claim to be actually deceived by QVC’s retail values if the consumer continued to purchase the products after suing QVC.”

Continue reading "QVC Class Action Defense Cases–Mulligan v. QVC: Illinois State Court Affirms Denial Of Class Action Treatment And Summary Judgment In Favor Of Defense In Unfair Business Practice Class Action" »

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

Defense Entitled to Summary Judgment on Class Action Claim Seeking Triple Time for Overtime Hours Worked on Holidays because Employer Only Obligated to Pay Time-and-a-Half for Overtime, including Hours Worked on Holidays, California State Court Holds

Plaintiff, a security guard, filed a putative class action against her employer, Advanced-Tech Security Services, for failure to pay overtime. Advanced-Tech Security Services, Inc. v. Superior Court, 77 Cal.Rptr.3d 757, 759 (Cal.App. 2008). Defendant’s employee handbook explained the company’s policies for overtime and holiday pay, and provided that all hours worked in excess of 40 hours per week would be paid at 1½ times normal rate and that all hours worked on any of six specified holidays will be paid at the regular rate for employees who do not work on those holidays and at 1½ times normal rate for employees who do work on those holidays. Id. The named class action plaintiff worked 12 hours on Labor Day (a specified holiday) and 60 hours during the week, for which she was paid 40 hours at straight time and 20 hours at time-and-a-half; however, the class action alleged that “the time and one-half she was paid for working on Labor Day was her regular rate of pay pursuant to the Employee's Handbook, and she was entitled to be paid one and one-half times the premium rate for the hours she worked on Labor Day.” Id., at 759-60. Similarly, the class action plaintiff worked 8 hours on Memorial Day (a specified holiday) and 8 hours of overtime during that week; the class action alleged she was entitled to receive 23½ hours at straight time, 8 hours of overtime, and 24 hours (triple time) for the 8 hours worked on Memorial Day. Id., at 760. In essence, then, the issue presented by the class action was whether, under California Labor Code section 520(a), an employee is “entitled to time and one-half of the premium holiday pay as overtime if the employee works more than 8 hours in a day or 40 hours in a week.” Id., at 759. The trial court denied defendant’s motion for summary judgment on this issue, but the Court of Appeal granted interlocutory review and reversed.

Defense attorneys moved for summary judgment on the “failure to pay overtime” cause of action in the class action complaint on the ground that plaintiff “would never be able to prove that she was not paid one and one-half times her regular rate of pay for the days she worked in excess of 8 hours per day and/or in excess of 40 hours in one week.” Advanced-Tech, at 760. Plaintiff countered that she was entitled to triple time for holiday hours that were also overtime hours, id. The trial court denied the motion for summary judgment because it believed defendant had not “address[ed] the issue of the propriety of its practice of crediting a contractual holiday premium payment toward overtime pay for work in excess of 40 hours in the same week.” Id., at 761. Reviewing that holding de novo, id., the appellate court reversed. The appellate court summarized its holding at page 759 as follows: “We hold that the plain language of section 510 does not require an employer to compensate an employee at a rate higher than one and one-half times the regular rate of pay under the circumstances presented here. The employer is entitled to credit the time and one-half premium pay on holidays against otherwise earned overtime.” Accordingly, it reversed the trial court order and directed the lower court to grant defendant’s motion for summary judgment as to the “failure to pay overtime” cause of action, see id., at 765. The court’s analysis may be found at pages 761-65.

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

Class Action Plaintiffs Failed to Establish Likelihood of Success on the Merits of ERISA Violations Alleged in Class Action Complaint so District Court Properly Denied Request for Preliminary Injunction that Sought to Enjoin Employer from Implementing Changes to Benefit Plan Fifth Circuit Holds

Plaintiffs, retired employees of Alcatel USA, filed a putative class action against Alcatel alleging violations of ERISA (Employee Retirement Income Security Act); according to the class action complaint, Alcatel improperly eliminated retirement medical benefits of the putative class members and breached fiduciary duties owed to the class. Nichols v. Alcatel USA, Inc., ___ F.3d ___, 2008 WL 2469407, *1 (5th Cir. June 20, 2008). The class action divided the retirees into two groups – Salaried Retirees and Union Retirees: Alcatel provided Salaried Retires with a Salaried Retirees Benefit program and, under a collective bargaining agreement, agreed to provide medical benefits to Union Retirees. Id. The Fifth Circuit summarized the claims of the class action plaintiffs as follows: “The Salaried Retirees contend that the Benefit program is a pension plan and consequently subject to vesting under [ERISA]…. The Union Retirees contend that [Alcatel] does not have the right to increase the cost of retiree health benefits because they are fixed lifetime benefits which individually vested at the time of each retiree's retirement based upon the agreement and course of action between the parties.” Id. Plaintiffs’ lawyers moved the district court for a preliminary injunction, which the district court denied. Id. Plaintiffs filed an interlocutory appeal and the Fifth Circuit affirmed.

The class action was precipitated by Alcatel’s announcement “that it planned to implement changes to certain of its retiree medical welfare benefit plans, including a gradual reduction over a three-year period in the amount of its contribution to the costs of medical benefits.” Nichols, at *1. Class action plaintiffs challenged the proposed changes to the plan and sought a preliminary injunction to prohibit Alcatel from implementing the changes. Id. We do not here discuss the case in further detail, as the Fifth Circuit opinion focuses on well-settled rules concerning preliminary injunctions. We note that in broad terms the Circuit Court agreed that plaintiffs were not likely to prevail on the merits and that the plan at issue was not a “pension” plan but, rather, a “welfare” plan. The full text of the opinion may be found here.

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

Defense Summary Judgment in ERISA Class Action Complaint Erroneously Attacked Class Action Claims as Separate and Distinct, but when Defendants’ Conduct was Considered as a Whole, Genuine Issues of Material Fact Existed Sufficient to Defeat Summary Judgment Illinois Federal Holds

Plaintiffs filed a class action lawsuit against their former employer, Abbott Laboratories, and their new employer, Hospira, a newly-created corporate entity, after Abbott spun off its Hospital Products Division (HPD) to Hospira. The class action complaint alleged that the manner in which defendants spun off HPD violated sections 510 and 404 of ERISA. Nauman v. Abbott Labs., ___ F.Supp.2d ___ (N.D.Ill. July 10, 2008) [Slip Opn., at 1]. The four-count class action alleged that, in order to save money associated with the costs of its pension and retiree medical benefits plans for older workers, (1) Abbott terminated HPD employees with the specific intent of denying them retirement benefits, (2) as part of that scheme, Abbott refused to rehire employees transferred to Hospira within two years of the transfer, (3) as part of that scheme, Hospira refused to hire Abbott employees who retired and collected benefits from Abbott, and (4) Abbott breached fiduciary duties owed under § 404 “by making deliberate misrepresentations about the benefits that post-spin-off employees could expect at Hospira.” Id., at 1-2. Defense attorneys moved for summary judgment on the class action claims on the grounds that Abbott argued that it had legitimate business reasons for spinning off HPD. Id., at 2, 16. The district court held that while the claims may be subject to attack if viewed individually, when the course of conduct are viewed as whole the class action adequately presented genuine issues of material fact as to whether defendants acted with a specific intent to deny benefits to retirees in violation of ERISA.

After providing a lengthy discussion of the material facts, see Nauman, at 5-12, and the legal standard governing § 510 claims under ERISA, see id., at 12-15, and § 404 claims under ERISA, see id., at 16, the district court turned to the merits of the defense motion. The federal court admitted that by “dissecting” the claims in the class action and “examining each in isolation,” the summary judgment motions were “generally persuasive” and “convincing[],” id., at 16. But the district court explained that the motions were “premised on the assumption that the several counts of plaintiffs’ complaint arise out of independent and unrelated events,” id., at 17. The defense motions thus overlook the thrust of the class action – viz., “that the termination alleged in Count I, coupled with the policies challenged in Counts II and III, constitute a ‘scheme’ that Abbott conceived, and that the defendants jointly adopted, with the specific intent of avoiding the payment of projected benefits.” Id., at 18. The court considered defendants’ conduct “as a whole,” id., at 20, and concluded that genuine issues of material fact existed sufficient to warrant a trial on the § 510 class action claims, id., at 21-22.

Continue reading "ERISA Class Action Defense Cases–Nauman v. Abbott Laboratories: Illinois Federal Court Denies Defense Motion For Summary Judgment On ERISA Class Action Complaint Holding Conduct “As A Whole” Warranted Trial" »

Posted In: Class Action Court Decisions

In order to assist class action defense attorneys anticipate the types of class action lawsuits against which they will have to defend in California state and federal courts, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers July 18 - 24, 2008, during which time 46 new class action lawsuits were filed. Labor law class action lawsuits generally top the list of new class action filings in California state and federal courts, and this past week was not an exception. Twenty (20) new class actions asserting employment-related claims were filed during the past week, representing 43% of the total number of new class action lawsuits filed during this reporting period. (We note that while this figure far outnumbers the nearest category, it is well below the level that labor law class actions often hit.) The only other category that satisfied the 10% threshold involved class action lawsuits alleging unfair business practice claims, which include false advertising claims, with 6 new filings (13%).

Posted In: Class Actions In The News

Judicial Panel Grants Plaintiffs’ Requests for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by other Class Action Plaintiffs and Unopposed by any Class Action Defendants, but Among Various Options Selects Eastern District of Michigan as Transferee Court

Thirty-seven (37) class actions – twelve actions in the Eastern District of Michigan, ten actions in the District of Minnesota, seven actions in the Northern District of Texas, four actions in the Northern District of Ohio, and one action each in the Northern District of California, the Southern District of California, the District of Kansas and the Southern District of Ohio – were filed against various defendants, including Reddy Ice Holdings, Reddy Ice, Arctic Glacier Income Fund, Arctic Glacier, Inc., Arctic Glacier International, and Home City Ice, alleging antitrust violations. In re Packaged Ice Antitrust Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2008) [Slip Opn., at 1]. Specifically, the 37 class actions, and 28 related class actions that were treated as tag-along cases, see id. n.3, “conspired to allocate markets and to fix, raise, maintain and/or stabilize the price of packaged ice in the United States, in violation of state and federal antitrust laws.” Id., at 1-2. Plaintiffs in 9 of the class actions separately filed 5 motions with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407, but the moving parties did not agree among themselves on the proper venue for transfer. Id., at 1. The Judicial Panel explained at page 1, “Moving and responding plaintiffs variously support centralization in the following districts: the Southern District of California, the Eastern District of Michigan, the District of Minnesota, the Northern District of Ohio, or the Northern District of Texas. Responding defendants support centralization in the District of Minnesota.” (Footnote omitted.)

The Judicial Panel granted the motion to centralize the class action lawsuits, finding that they involved common questions of act and that centralization “will eliminate duplicative discovery, prevent inconsistent pretrial rulings (especially with respect to the issue of class certification), and conserve the resources of the parties, their counsel and the judiciary.” Id., at 1-2. With respect to selecting the proper transferee court, the Panel recognized that “any number of the proposed transferee forums would be acceptable,” but it selected the Eastern District of Michigan because it “offers a relatively geographically central district with favorable caseload conditions” and because more of the pending and tag-along class action cases had been filed in that district than in any other. Id., at 2. Moreover, “the grand jury investigating the packaged ice industry is based in this district.” Id.

Posted In: Multidistrict Litigation, Class Action Court Decisions

This morning we posted an article on yesterday's California Court of Appeal opinion in Brinker Restaurant Corp. v. Superior Court, ___Cal.App.4th ___ (Cal.App. July 22, 2008). We failed to mention that yesterday California's Governor, Arnold Schwarzenegger, issued a press release on the opinion, and on the topic of employee meal and rest breaks. The Governor's press release states:

We are pleased that the California Court of Appeal issued today a decision squarely addressing many of the central issues in dispute concerning meal and rest periods. The confusing and conflicting interpretations of the meal and rest period requirements have harmed both employees and employers. Today's decision promotes the public interest by providing employers, employees, the courts and the labor commissioner the clarity and precedent needed to apply meal and rest period requirements consistently.

The official press release may be found here.

Posted In: Class Actions In The News

Trial Court Erred in Granting Class Action Treatment to Complaint Alleging Labor Law Violations because Employer need only “Provide” Meal and Rest Periods to Employees but need not “Ensure” that Meal and Rest Breaks are Taken California State Court Holds

Plaintiffs filed a class action in California state court against Brinker Restaurant, Brinker International and Brinker International Payroll alleging labor law violations; specifically, the class action complaint alleged that Brinker failed to provide its employees with meal and rest breaks. Brinker Restaurant Corp. v. Superior Court, ___Cal.App.4th ___ (Cal.App. July 22, 2008) [Slip Opn., at 3]. Plaintiffs moved the trial court to certify the litigation as a class action, and the court granted the motion. Id. The central issue in the class action was whether an employer must ensure that employees take meal and rest breaks in order to comply with California law, or whether it is sufficient to make available meal and rest breaks; the Court of Appeal held that an employer is not responsible for ensuring that employees take meal and rest breaks to which they are entitled. Id., at 3-4. Accordingly, the appellate court granted defendants’ petition for writ of mandate and reversed the trial court’s class action certification order.

Defendants have a written policy, on a form signed by each employee, that sets forth the statutory meal and rest periods and acknowledging that the employee may be disciplined or terminated for failing to take those breaks. Brinker, at 5. Employees also are required to clock in and out so that defendants may maintain accurate records for payroll purposes, id., at 5-6. Plaintiffs’ class action complaint alleged that defendants failed to provide meal and rest breaks, id., at 7-8. The class action alleged further that defendants required employees to take “early lunches” and then required that they work upwards of 9 hours without any additional meal period, id., at 8. Finally, the class action alleged that defendants required employees to work “off the clock,” id., at 8-9. Plaintiffs argued that employers “must ‘ensure’ that the employee takes meal periods,” id., at 9. The trial court an employer must give employees a meal break “before [an] employee’s work period exceeds five hours,” and that the purpose of the statute is “to provide employees with break periods and meal periods toward the middle of an employee[']s work period in order to break up that employee’s ‘shift.’” Id., at 10.

Continue reading "Labor Law Class Action Defense Cases–Brinker v. Superior Court: California Appellate Court Reverses Trial Court Order Certifying Labor Law Class Action Holding Employers Need Not “Ensure” Employees Take Meal And Rest Breaks" »

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

Class Action Complaint Adequately Pleaded Claims Against T-Mobile because Claims were not Premised on Fraud, so Rule 9(b) did not Apply, and because Claims Sufficiently Pleaded Breach of Contract, Unjust Enrichment and Violation of Consumer Protection Act Washington Federal Court Holds

Plaintiff filed a class action complaint T-Mobile USA alleging unfair business practices in connection with cellular telephone text messaging; specifically, the class action alleged that “T-Mobile charges customers for the receipt of unsolicited text messages, and does not adequately disclose the practice in its contract with customers.” Zaldivar v. T-Mobile USA, Inc., ___ F.Supp.2d ___ (W.D. Wash. July 15, 2008) [Slip Opn., at 1]. The class action complaint alleged breach of contract, unjust enrichment, and violations of Washington’s Consumer Protection Act. Id., at 2. Defense attorneys moved to dismiss the class action complaint under Rule 9(b) for failure to plead fraud with specificity. Id., at 1-2. They argued that the gravamen of the class action was the allegation that T-Mobile defrauded its customers, and therefore Rule 9(b)’s heightened pleading requirements for fraud should apply, id., at 2. The district court disagreed and denied the motion to dismiss the class action.

The federal court distinguished Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003), which held that a plaintiff who “‘rel[ies] entirely’ on a ‘unified course of fraudulent conduct’ to support a claim in which fraud is not a necessary element must nonetheless satisfy Rule 9(b) in ‘pleading the claim as a whole.’” Zaldivar, at 2 (quoting Vess, at 1103-04). Here, the class action does not “‘rely entirely’ on a uniform course of fraudulent conduct”; on the contrary, even if the court assumed that the allegations against T-Mobile were “grounded in fraud” and stripped them from the complaint, the complaint would still state claims for relief against T-Mobile. Id., at 3. For example, the breach of contract claim relies on the allegation the T-Mobile failed to charges customers only for charges ‘contractually agreed upon,” and the Consumer Protection Act class action claim was premised on T-Mobile’s failure to “properly notify or advise” customers that “they were not contractually liable to pay certain fees for text messaging.” Id. Accordingly, the district court denied T-Mobile’s motion to dismiss the class action complaint, id., at 5.

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

Defense Motion to Dismiss Truth in Lending Act (TILA) Class Action Granted because Failure to Specify Date by which Right to Cancel must be Exercised was merely a Technical TILA Violation and, Viewed Objectively, a Reasonably Alert Borrower would have Understood her Rights Massachusetts Federal Holds

Plaintiffs filed a putative class action against IndyMac for violations of the federal Truth in Lending Act (TILA); the class action complaint alleged that IndyMac failed to provide the requisite notice of a borrower’s three-day right to cancel because the disclosure “[left] blank the specific date by which the notice of cancellation had to be sent.” Megitt v. IndyMac Bank, F.S.B., 547 F.Supp.2d 56, 56 (D.Mass. 2008). More specifically, the class action complaint revealed that IndyMac provided plaintiffs with a Notice of Right to Cancel, which stated in part that the borrower had “a legal right under federal law to cancel this transaction, without cost, within three (3) business days from whichever of the following events occurs last: (1) the date of the transaction, which is: June 16, 2006; or (2) the date you received your Truth in Lending disclosures; or (3) the date you received this notice of your right to cancel.” Id., at 57-58. However, the class action further alleged that IndyMac’s notices provided, “If you cancel by mail or telegram, you must send notice no later than midnight of, __________, (or midnight of the third business day following the latest of the three events listed above).” Id., at 58. Thus, the notices from IndyMac left the date blank, id. Defense attorneys moved to dismiss the class action: The chief magistrate issued and report and recommendation that the motion to dismiss should be granted, relying in part on Palmer v. Champion Mortgage, 465 F.3d 24 (1st Cir. 2006), and the district court adopted the recommendation. Id., at 57. The federal court explained at page 57, “The import of the First Circuit's Palmer decision with regard to the purely technical omission in the document embodying the notice makes the ruling here compelling and inevitable.” Accordingly, the court dismissed the class action.

Defense attorneys argued that, under the First Circuit’s decision in Palmer, the “technical” deficiency underlying the class action is not actionable under TILA, Regulation Z or Massachusetts state law. Megitt, at 58. Palmer, from which the district court quoted at length, essentially holds that if a lender’s 3-day notice of a borrower’s right to cancel tracks the model form for such disclosures is “at the very least, prima facie evidence of the adequacy of the disclosure.” Id., at 59 (quoting Palmer, at 29). As the district court noted, “The court went so far as to recognize that there was both statutory and case law support for the proposition that adherence to a model form bars a TILA non-disclosure claim entirely” but “it left ‘for another day the question of whether such adherence invariably brings a creditor within a safe harbor.’” Id. n.2 (citations omitted). Palmer also explained that courts should rely on “the text of the disclosures themselves rather than on plaintiffs' descriptions of their subjective understandings,” and base their decisions on objectively reasonable factors rather than the plaintiff’s subjective understanding, id., at 59 (citations omitted).

Continue reading "TILA Class Action Defense Cases–Megitt v. IndyMac: Massachusetts Federal Court Dismisses Class Action Holding Technical Deficiencies In TILA 3-Day Notice Of Right To Cance