Posted On: July 31, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases—In re LandAmerica: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In District of South Carolina

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

Two class actions – one in California and one in South Carolina – were filed against various defendants, including LandAmerica and SunTrust Banks, “on behalf of individuals and entities that sought to enter into a Section 1031 tax-deferred exchange and entrusted money to facilitate the exchange with the qualified intermediary LandAmerica 1031 Exchange Services, Inc.” but who “lost their investment due to alleged misconduct by various defendants, including SunTrust, where most such funds were deposited.” In re Landamerica 1031 Exchange Serv., Inc., Internal Revenue Service § 1031 Tax Deferred Exch. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 12, 2009) [Slip Opn., at 1]. Plaintiffs in the South Carolina class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in that district or in the District of Nevada; plaintiffs in the California class action supported the motion, but while they did not oppose pretrial coordination in Nevada, they requested centralization either in South Carolina or California. Id. SunTrust also did not oppose centralization, but requested transfer to Georgia or Virginia, and three individual defendants supported transfer to Virginia. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed that the District of South Carolina was the appropriate transferee court because it was “nearer to SunTrust’s headquarters in Atlanta, Georgia, where relevant documents and witnesses are likely to be found.” Id., at 1-2. Accordingly, it ordered the class actions to be centralized in the District of South Carolina, id., at 2.

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Posted On: July 30, 2009 by Michael J. Hassen Email This Post

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BofA Class Action Defense Cases–In re Consumer Privacy: California Appellate Court Affirms Trial Court Approval Of Class Action Settlement And Award Of Attorney Fees Under Clear Sailing Agreement

Trial Court did not Err in Approving Class Action Settlement in Class Action Against Bank of America for Invasion of Privacy Arising from Sale of Customer Information to Third Party Marketers and “Clear Sailing Agreement” as to Attorney Fee Award to Class Counsel did not Invalidate Award California Appellate Court Holds

Plaintiffs filed a putative class action against Bank of America and related entities alleging inter alia invasion of privacy arising from the Bank’s alleged disclosure of “personal and confidential information to third party telemarketers and direct mail marketers for a fee, to enable them to market services to plaintiffs”; the class action was coordinated with two similar class actions against the Bank, and a consolidated class action complaint was filed in 2003. In re Consumer Privacy Cases, ___ Cal.App.4th ___, 96 Cal.Rptr.3d 127, 130 (Cal.App. 2009). The trial court certified a state-wide class action, but deferred ruling on plaintiffs’ request for nationwide class action treatment until additional discovery had been completed. Id. The parties negotiated a settlement of the class action in early 2007 that included a provision that the Bank would not oppose any request by class counsel for attorney fees and costs, provided that the request did not exceed $4 million. Id., at 130-31. The trial court rejected objections to the proposed settlement, and approved the class action settlement; the court additionally awarded $2.9 million in attorney fees and $110,000 in costs. Id., at 131. Four of the objectors appealed the court order, id., at 131-32. The Court of Appeal affirmed.

The appellate court first addressed the objectors’ challenge to the award of attorney fees. See In re Consumer Privacy, at 132 et seq. The appellants did not “challenge the total amount of the fee award” or claim that “the award was excessive”; rather, appellants argued “that any settlement process that purports, as here, to separately provide for fees is a legal fiction which is pernicious and unethical, and inherently unfair to class members.” Id., at 132. The class action settlement in this case involved what is referred to as a “clear sailing agreement” with respect to attorney fees, id. After a detailed analysis, that we do not summarize here, the California Court of Appeal rejected this challenge because the trial court did not shirk its obligation to carefully analyze the fee request and to make a reasonable award. See id., at 132-37. The appellate court also rejected the claim that the difference between the amount of attorney fees and costs awarded by the trial court and the $4 million “no challenge” amount somehow belonged to the class. See id., at 137-38. Put simply, there was no “surplus” to be additionally awarded to the class. Id., at 138. Finally, the appellate court rejected the claim that objectors were entitled to attorney fees and costs for prosecuting an unsuccessful appeal, holding that the appeal was of no benefit to the class. Id., at 138-39. Accordingly, the appellate court affirmed the trial court judgment in its entirety, id., at 139.

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Posted On: July 29, 2009 by Michael J. Hassen Email This Post

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Labor Law Class Action Defense Cases–Hernandez v. Vitamin Shoppe: California Court Affirms Order Barring Attorney In One Class Action From Contacting Class Members In Related Class Action After Class Conditionally Certified In That Action

As Matter of First Impression, Class Action Plaintiff Attorney Ethically Prohibited from Contacting Class Members in Class Action once Trial Court Conditionally Certifies Litigation as a Class Action and Appoints Class Counsel California State Court Holds

Plaintiffs filed three separate putative class action lawsuits against Vitamin Shoppe alleging labor law violations; specifically, the class action complaint alleged that defendant failed to pay employees overtime, or to provide meal and rest periods, as allowed by California law. Hernandez v. Vitamin Shoppe Ind. Inc., 174 Cal.App.4th 1441, 95 Cal.Rptr.3d 734, 737-38 (Cal.App. 2009). The Perry class action (which included appellant Lisa Hernandez as a named plaintiff) was filed in Marin County, as was the Beauford class action; the Thompson class action was filed in Orange County. Id., at 738. Plaintiff’s attorney in the Thompson class action was Jeffrey Spencer; Spencer also represented named plaintiff Hernandez in the Perry class action. Id., at 737-38. Defense attorneys offered to settle the putative class actions on a class-wide basis, provided that all three plaintiffs attended the mediation; Spencer, on behalf of the Thompson class action, refused to participate. Id., at 738. The parties reached a proposed class action settlement of the Perry class action, and Spencer – as plaintiff’s attorney in Thompson – tried unsuccessfully to coordinate the three class actions or, alternatively, to stay the Perry class action. Id. Spencer, again acting as counsel for the Thompson plaintiffs, opposed court approval of the proposed class action settlement in Perry on the grounds that the settlement “was based on erroneous factual and legal assumptions, and that it was not within a range of reasonableness.” Id. The trial court gave preliminary approval to the proposed class action settlement in Perry and appointed class counsel (not Spencer), but before the claims administrator had sent notice to the class, Spencer (acting as counsel in the Thompson class action) sent letters to Vitamin Shoppe employees urging them to opt-out of the proposed settlement in the Perry class action and to retain him as their attorney. Id., at 739. In pertinent part, the court proceedings that followed included a court order that “ordered that a corrective notice be sent, directed Spencer to refrain from any further communications with class members that he did not represent, and granted the request for monetary sanctions.” Id., at 740. Following reassignment to a new judge after Spencer successfully challenged the original trial court for bias, id., the trial court reaffirmed the court order enjoining Spencer from communicating with any class members that he did not represent, ordering a corrective notice be sent to the class (as well as a procedure for determining the impact of Spencer’s letter on class members), and imposing sanctions against Spencer, id., at 741. The appellate court affirmed the order except for the award of sanctions.

For purposes of this article, we focus on the court order prohibiting Spencer from further communication with members of the putative class and awarding sanctions. The appellate court easily found that the court order did not create any conflict with Spencer’s ethical obligation to communicate with clients because it specifically exempted communications with class members who had retained him. See Hernandez, at 743-44. On the contrary, the court order prohibited Spencer from communicating directly with individuals represented by other counsel – class counsel. The Court of Appeal also concluded that the trial court order was well within its discretionary power to oversee litigation, and “‘to protect the rights of all parties, and to prevent abuses which might undermine the proper administration of justice.’” Id., at 745 (citation omitted). In this regard, the appellate court held that the trial court’s duty to protect absent class members is “particularly pronounced” following class action certification “because class members must decide whether or not to opt out.” Id. (citation omitted). In this case, “Spencer sent his letters unilaterally, without court approval, after the court had reviewed the proposed settlement, counsel’s arguments, preliminarily approved the settlement, and ordered the claims administrator to send notice to the class.” Id. Moreover, Spencer’s letters were misleading, id., at 745-46. And finally, the Court of Appeal rejected the claim that the court order infringed on Spencer’s right to free speech, holding at page 746, “Spencer fails to establish that his constitutional free speech rights entitled him to interfere with the trial court’s duty and authority to supervise the exclusion process after conditionally certifying the class, or to contact class members for whom the court had appointed class counsel.” Accordingly, the Court affirmed the trial court orders, save for the sanction as noted below. Id., at 751.

Continue reading "Labor Law Class Action Defense Cases–Hernandez v. Vitamin Shoppe: California Court Affirms Order Barring Attorney In One Class Action From Contacting Class Members In Related Class Action After Class Conditionally Certified In That Action" »

Posted On: July 28, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Martorana v. Marlin & Saltzman: California Court Affirms Dismissal Of Claims Against Defendant And Class Counsel Arising From Class Action Settlement By Class Member Who Submitted An Untimely Claim

Class Action Settlement Approved by Court Provided Procedure for Timely Submitting Claims for Benefits as part of Resolution of Labor Law Class Action, and Putative Class Member’s Negligence Claims against Class Action Defendant and Negligence/Malpractice Claims against Class Counsel Properly Dismissed because Defendant and Class Counsel Owed no Duty to Class Members to Ensure that they Timely Submitted Claims Forms California State Court Holds

A putative class action was filed in California state court against Allstate Insurance Company (the Sekly action) alleging that the company failed to pay overtime wages to its claims adjusters in violation of California’s Labor Code, and seeking damages and related penalties; several years later, “the parties in the Sekly action agreed to a class action settlement totaling $1.2 million.” Martorana v. Marlin & Saltzman, ___ Cal.App.4th ___, 96 Cal.Rptr.3d 172 (Cal.App. July 1, 2009) [Slip Opn., at 2-3]. The trial court approved the class action settlement, id., at 3. Plaintiff Ron Martorana was a member of the class and, id., at 2, and as “a senior claims adjuster for Allstate, …[he] was entitled to receive approximately $65,000 as his portion of the settlement provided that he submit a timely claim form,” id., at 3. However, because plaintiff filed to timely submit a claim form, he did not receive any of the settlement proceeds, id., at 2. Plaintiff filed suit against Allstate and against counsel for the class alleging that they were “negligent in failing to take action to contact [him] before the claim filing deadline to determine why he had not filed a claim form and to make sure that he was aware of the need to timely do so.” Id. Defendants demurred to the complaint, and the trial court sustained the demurrers and granted Allstate’s request for sanctions under Code of Civil Procedure section 128.7. Id. Plaintiff appealed, and the appellate court affirmed the dismissal of the lawsuit but set aside the award of sanctions.

Approval of the class action settlement followed the usual process: the trial court gave preliminary approval to the class action settlement and a claims administrator sent notice to each member of the class at their last known address; class members had 75 days to submit claim forms or to opt out of the class; and the trial court ultimately gave final approval to the class action settlement finding that it was “fair and adequate and . . . the result of arms length negotiations between the parties.” Martorana, at 3. Plaintiff does not dispute that he received the necessary paperwork; rather, he argued that he submitted an untimely claim form because of health problems. Id. His original complaint alleged negligence against Allstate, and negligence and malpractice against class counsel, id. According to plaintiff, “Allstate and Class Counsel owed a duty to the class as a whole to establish a settlement notice procedure whereby class members who had not responded to the notice would be contacted prior to the claim filing deadline to ascertain the reason why they had not submitted a timely claim form.” Id., at 4. The malpractice claim additionally alleged that “Class Counsel owed a duty to [plaintiff] individually to take reasonable steps to contact him about his failure to file a claim and to make sure that his claim form was timely submitted.” Id. The trial court sustained Allstate’s demurrer without leave to amend, and awarded $4,800 in sanctions because the lawsuit “was so completely devoid of merit that the court finds it was filed to harass, annoy, or vex Allstate.” Id. The trial court sustained the demurrer of class counsel with leave to amend as to the malpractice claim, but when class counsel demurred to the amended complaint, the court sustained the demurrer without leave to amend. Id., at 4-5. Put simply, the court found that class counsel owed, but did not breach, a duty of care to plaintiff. Id., at 5-6.

Continue reading "Class Action Defense Cases–Martorana v. Marlin & Saltzman: California Court Affirms Dismissal Of Claims Against Defendant And Class Counsel Arising From Class Action Settlement By Class Member Who Submitted An Untimely Claim" »

Posted On: July 27, 2009 by Michael J. Hassen Email This Post

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Labor Law Class Action Defense Cases–Vinole v. Countrywide: Ninth Circuit Affirms Order Granting Defense Motion To Deny Class Action Treatment To Labor Law Class Action

District Court did not Err in Granting Defense Motion to Deny Class Action Certification in Labor Law Class Action because Rule 23 does not Preclude Defendants from Filing such Motions, Plaintiffs had Adequate Time to Conduct Discovery, and District Court did not Abuse its Discretion in Concluding Rule 23(b)(3)’s Predominance Requirement could not be Satisfied Ninth Circuit Holds

Plaintiffs filed a putative class action against Countrywide Home Loans alleging labor law violations; the class action complaint alleged that defendant misclassified its 1,140 External Home Loan Consultants (HLCs) as “exempt” and, accordingly, failed to pay them overtime and other wages lawfully due non-exempt employees. Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935 (9th Cir. 2009) [Slip Opn., at 8299, 8303]. Plaintiffs filed the class action in California state court, but defense attorneys removed the class action to federal court. Id., at 8305. According to the allegations underlying the class action, Countrywide employs HLCs to sell loan products and pays them entirely on a commission basis. HLCs “are focused on outside sales and ‘represent Countrywide in local communities, and specifically work with realtors, builders, and other potential business partners in order to develop business relationships and obtain referral business.’” Id., at 8304. Prior to the discovery cut-off date and before plaintiffs moved for class certification, defense attorneys filed a motion to deny class action treatment. Id., at 8303. Countrywide admitted that it “applies a uniform wage exemption to HLCs,” classifying them as “exempt” outside salespeople under California law and the federal Fair Labor Standards Act (FLSA). See id., at 8304-05. But Countrywide asserted that it does not monitor what the HLCs do and that it “has no control over what HLCs actually do during the day”; rather, each HLC independently decides “how much, or how little time HLCs spend in the office, or working overall,” “how they want to market themselves,” and “how much money they want to make.” Id., at 8304. With respect to this last issue, the average HLC was paid more than $100,000 per year, and some earned “several hundreds of thousands of dollars,” id. Countrywide additionally introduced evidence that the amount of time individual HLCs spent in the office “varies greatly” and that it tracks only “the number and value of loans that HLCs close each month.” Id., at 8305. The district court granted Countrywide’s motion, concluding that class action treatment was not warranted. Id., at 8303. Plaintiffs appealed, and the Ninth Circuit affirmed.

The class action complaint alleged twelve causes of action against Countrywide, each premised on the assumption that Countrywide misclassified HLCs as exempt. Vinole, at 8305. The appeal centered on “whether the district court abused its discretion by (1) considering Countrywide’s motion to deny class certification before Plaintiffs had filed a motion to certify and prior to the pretrial and discovery cutoffs, and (2) denying class certification based on its reasoning that individual issues predominate over common issues.” Vinole, at 8303. We do not belabor the Ninth Circuit’s holding that “Rule 23 does not preclude a defendant from bringing a ‘preemptive’ motion to deny certification.” Id., at 8307. Other courts have reached a similar conclusion, and it rests on the solid observation that “[n]othing in the plain language of Rule 23(c)(1)(A) either vests plaintiffs with the exclusive right to put the class certification issue before the district court or prohibits a defendant from seeking early resolution of the class certification question.” Id., at 8307-08. In resolving this issue of first impression in the Ninth Circuit, the Court explained that “no rule or decisional authority prohibited Countrywide from filing its motion to deny certification before Plaintiffs filed their motion to certify, and Plaintiffs had ample time to prepare and present their certification argument.” Id., at 8303.

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Posted On: July 25, 2009 by Michael J. Hassen Email This Post

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Labor Law Class Actions Retain Grip On Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

As a resource for California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in the state and federal courts located in 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 period from July 17 - 23, 2009, during which time 35 new class actions were filed. Labor law class actions generally top this list by a wide margin. During this reporting period, only 12 class actions alleging employment-related claims were filed, representing only 34% of the total number of new class actions filed. For reference, labor law class actions often account for more than half of all of the new class actions filed in California state and federal courts during any particular week. Only two other categories met the 10% threshold: there were 8 new class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, accounting for 23% of the new class actions filed, and there were 5 new class actions alleging violations of securities laws, accounting for 14% of the new class actions filed.

Posted On: July 24, 2009 by Michael J. Hassen Email This Post

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BofA Class Action Defense Cases—In re Bank of America: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District Of New York

Judicial Panel Grants Unopposed Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, and Transfers Actions to Southern District of New York

Thirty (30) individual and class action lawsuits were filed against Bank of America and other defendants arising out of “alleged misrepresentations and omissions made in the context of Bank of America’s acquisition of Merrill Lynch & Co., Inc.”; 28 of the lawsuits had been filed in New York, and one each in California and Kansas. In re Bank of America Corp. Securities, Derivative & Employee Retirement Income Security Act (ERISA) Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2009) [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 Southern District of New York; plaintiff in the Kansas action requested that the Judicial Panel “coordinate” rather than “consolidate” the lawsuits for pretrial purposes, but otherwise did not oppose the motion. Id. Plaintiffs in a potential tag-along action, filed in Delaware, urged the Panel to transfer the lawsuits to Delaware, id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed that the Southern District of New York was the appropriate transferee court, particularly because “[m]ost of the 28 actions in this district are already pending before [a single judge], who has had an opportunity to become familiar with the contours of this litigation” and because “both Merrill Lynch and Bank of America have a significant presence in the Southern District of New York” so “[r]elevant documents and witnesses can thus be expected to be found there.” Id., at 2. As for the concerns of the Kansas plaintiff, the Judicial Panel directed her to present to the transferee judge her concerns “regarding the manner and extent of coordination or consolidation of her action with the pretrial proceedings in other actions.” Id.

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Posted On: July 23, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Steinberg v. Nationwide: New York Federal Court Awards Attorney Fees Following Class Action Settlement Using Lodestar Method And Applying 1.5 Multiplier

Class Action Counsel Obtained Significant Benefit through Class Action Settlement Following 10-Year Litigation but Requested Multiplier was Excessive given Billing Rates of Class Counsel, Warranting Multiplier of 1.5 rather than 1.79 as Requested New York Federal Court Holds

Plaintiff filed a class action in New York state court against his automobile insurance company following its payment of insurance benefits that allegedly “did not reflect the amount that plaintiff, the insurance adjuster and the dealer had agreed upon. Steinberg v. Nationwide Mutual Ins. Co., 612 F.Supp.2d 219, 220-21 (E.D.N.Y. 2009). Defense attorneys removed the class action to federal court and the district court denied plaintiff’s motion to remand the class action to state court, id., at 221. According to the class action complaint, the insurer “subtracted a $563.17 ‘betterment’ charge reflecting the difference in value between the used engine and the new replacement engine.” Id., at 220. More specifically, the class action “alleged that this betterment deduction was not disclosed in or authorized by his insurance policy” and that the insurer “had taken betterment deductions from millions of insureds with policies similar to his since 1993.” Id. Ultimately the district court granted plaintiff’s motion to certify the litigation as a class action, id., at 221. The litigation dragged on for nearly a decade before it was finally settled, id., at 220. The settlement provides for the insurer to “pay 50% of the total betterment charges that it deducted from the automobile repair estimates of class members who submit valid claims.” Id., at 222. The insurer also agreed to modify its insurance forms, and to pay attorney fees and costs in an amount not to exceed $2.75 million. Id.

While federal courts have awarded attorney fees in class actions either by using the lodestar method or based upon a percentage of the common fund, the district court held that in this case “the latter method would be unworkable because the exact amount paid into the common fund is as yet undetermined.” Steinberg, at 222. Accordingly, the federal court used the lodestar method to determine the appropriate attorney fee award. Id. We do not go into detail in summarizing the court’s ruling. We note that, following its presentation of their lodestar figure, class counsel “requested that the Court exercise its discretion to increase the lodestar figure by applying a multiplier of 1.79 % to increase the total award of costs and fees to $2.75 million-the maximum amount consented to by Nationwide in the parties' Settlement.” Id., at 223. The district court agreed that class counsel had “achieved an excellent result for the class,” id., at 223-24. The district court also explained at page 224, “Here, the relationship between the requested fee and the Settlement is somewhat difficult to assess because it is not clear, ultimately, how much Nationwide will pay into the common fund. However, the Court notes with approval that the fee award will not be drawn from the common fund but will be paid directly by Nationwide. In this regard, the fee award, however substantial, will have no effect on the monetary relief afforded to class members.” Nonetheless, the court concluded that a multiplier of 1.79 “would be excessive” given that “the lodestar figure is already inflated due to the high billable rates proposed by [class counsel].” Id. Accordingly, it agreed to a multiplier of 1.5, id., at 224-25.

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Posted On: July 22, 2009 by Michael J. Hassen Email This Post

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FLSA Class Action Defense Cases–Haro v. City of Rosemead: California Court Dismisses Appeal From Denial Of Class Action Treatment Of FLSA Class Action Complaint And Reaffirms FLSA Actions Not Subject To Class Action Treatment

Putative Class Action Alleging Violations of Federal Fair Labor Standards Act (FLSA) not Subject to Class Action Treatment because “Opt-In” Provision of FLSA Incompatible with “Opt-Out” Nature of California Class Action Lawsuits California State Court Holds

Plaintiffs filed a putative class action in California state court against the City of Rosemead alleging violations of the federal Fair Labor Standards Act (FLSA); the class action complaint alleged that the City failed to pay nonexempt employees “for all hours worked.” Haro v. City of Rosemead, 174 Cal.App.4th 1067, 94 Cal.Rptr.3d 874, 876 (Cal.App. 2009). According to the allegations underlying the class action complaint, the City did not pay the employees sought to be covered by the action “the wages to which they were entitled.” Id., at 878. Plaintiffs filed a motion with the trial court to certify the litigation as a class action under California Code of Civil Procedure section 382; defense attorneys opposed class action treatment on the ground that the “opt-in” requirement of an FLSA collective action was incompatible with the “opt-out” nature of class actions under Section 382. Id. The trial court agreed and refused to certify the litigation as a class action, id., at 876; in so ruling, the court observed that plaintiffs had not sought to proceed with a “collective action” under the FLSA but, rather, as a class action under Section 382, id., at 878-79. The trial court denied also plaintiffs’ motion for leave to amend their class action complaint. Id., at 876. Plaintiffs appealed both orders, and the California Court of Appeal dismissed the appeals on the grounds that the underlying trial court orders were not appealable.

The Court of Appeal began by analyzing the differences between “collective actions” under the FLSA and “class actions” under Section 382. Haro, at 876. Importantly, the FLSA requires that members of the putative class affirmatively “opt-in” to the litigation, id. (citation omitted), which has been referred to as “‘[p]robably the most significant difference in procedure between the FLSA’ and, in federal practice, class actions under Federal Rules of Civil Procedure, rule 23,” id. (citation omitted). For this reason, at least one federal circuit court has held, “There is a fundamental, irreconcilable difference between the class action described by Rule 23 and that provided for by FLSA § 16(b). In a Rule 23 proceeding a class is described; if the action is maintainable as a class action, each person within the description is considered to be a class member and, as such, is bound by judgment, whether favorable or unfavorable, unless he has ‘opted out’ of the suit. Under § 16(b) of FLSA, on the other hand, no person can become a party plaintiff and no person will be bound by or may benefit from judgment unless he has affirmatively ‘opted into’ the class; that is, given his written, filed consent.” Id., at 876-77 (quoting LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286, 288 (5th Cir.1975) (footnote omitted). Moreover, “at least one California court has held that the opt-in feature cannot be adopted in California class actions.” Id., at 877 (citing Hypertouch, Inc. v. Superior Court, 128 Cal.App.4th 1527, 1550 (Cal.App. 2005). The California appellate court reaffirmed that “FLSA actions are not class actions,” id.

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Posted On: July 21, 2009 by Michael J. Hassen Email This Post

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CAFA Class Action Defense Cases–Admiral Insurance v. Abshire: Fifth Circuit Affirms Remand Of Class Action Holding Amended Complaint Did Not Commence Civil Action Under Class Action Fairness Act (CAFA)

District Court did not Err in Remanding Class Action to State Court because Addition of Class Action Allegations to Ninth Amended Complaint did not Commence a Civil Action under CAFA (Class Action Fairness Act) and Addition of New Plaintiffs and Claims did not Commence a Civil Action under CAFA Fifth Circuit Holds

In the early 1990s, plaintiffs, as purchasers of “life insurance policies, annuities, and corporate notes from three Louisiana companies” – Public Investors Life Insurance Co. (PILCO), Public Investors (PI) and Midwest Life Insurance (MLI) – filed a class action in Louisiana state court against the State of Louisiana and other defendants after all three companies failed; the class action complaint alleged “negligent, intentional, and criminal acts (regulatory and otherwise) that they claim contributed to these failures.” Admiral Ins. Co. v. Abshire, ___ F.3d ___, 2009 WL 1887381, *1 (5th Cir. 2009). The original lawsuits were not styled as class actions; rather, originally more than 1300 plaintiffs filed three lawsuits in two different Louisiana state courts. Id. Eventually, the three lawsuits were consolidated and a ninth amended complaint was filed that sought class action treatment. Id. Defense attorneys removed the ninth amended class action complaint to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA). Id. The district court remanded the lawsuit to state court, but denied plaintiffs’ motion for fees and costs associated with securing remand, id. Both sides appealed and the Fifth Circuit affirmed both the remand order and the denial of fees and costs.

The state-court complaint was amended to seek class action treatment because plaintiffs’ counsel lost contact with about 250 of the plaintiffs and an advisory opinion from the Ethics Advisory Service Committee of the Louisiana State Bar Association “determined that [plaintiffs’] attorneys would violate the Rules of Professional Conduct if they tried or settled the claims of plaintiffs with whom they had lost contact, using only the powers of attorney that these plaintiffs had executed at the time of retainer.” Abshire, at *1. Plaintiffs’ counsel initially sought to withdraw as counsel for those clients, but subsequently pursued the class action route in order to resolve the ethical issues created by loss of contact with their clients. Id., at *1-*2. Defense attorneys removed the lawsuit to federal court immediately after the ninth amended complaint was filed, id., at *2. Plaintiffs moved to remand the class action on the ground that it had been “commenced” long before CAFA’s February 18, 2005 effective date; the district court agreed, id. Pursuant to 28 U.S.C. § 1447(c), plaintiffs requested attorneys’ fees and costs incurred in winning remand, arguing that the State’s removal of the class action to federal court under CAFA was “objectively unreasonable.” Id., at *3. The district court refused to award fees “because case law in the area was unsettled at the time of removal.” Id.

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Posted On: July 20, 2009 by Michael J. Hassen Email This Post

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Wells Fargo Class Action Defense Cases–In re Wells Fargo: Ninth Circuit Reverses Certification Of Labor Law Class Action Holding District Court Erred In Relying On Employer's Uniform Exemption Policy To Exclusion Of Other Factors

Labor Law Class Action Certification Order Reversed because District Court Abused its Discretion in Relying on Wells Fargo’s Internal Policy of Treating Employees as Exempt “To the Near Exclusion of Other Relevant Factors Touching on Predominance” under Rule 23(b)(3) Ninth Circuit Holds

Plaintiffs filed a putative class action in California against their employer, Wells Fargo Home Mortgage, alleging labor law violations; the class action complaint – brought individually and on behalf of roughly 5000 other current and former Wells Fargo home mortgage consultants (HMCs), who market and sell mortgages – alleged defendant paid HMCs by sales commission until 2005, when “Wells Fargo changed the commission system to include a minimum, non-recoverable draw against commissions.” In re Wells Fargo Home Mortgage Overtime Pay Litig., 571 F.3d 953 (9th Cir. 2009) [Slip Opn., at 8325, 8328-29]. According to the allegations underlying the class action, prior to 2005 Wells Fargo did not track the hours worked by HMCs or pay them overtime because “it treated nearly all of its HMCs as exempt from state and federal overtime requirements.” Id., at 8329. Several plaintiffs filed various putative class action lawsuits against Wells Fargo alleging state and federal labor law violations, which the Judicial Panel on Multidistrict Litigation ultimately consolidated in the Northern District of California. Id. The plaintiffs in this particular California class action (Mevorah) alleged that Wells Fargo’s conduct violated California’s Unfair Competition Law (UCL) by violating the federal Fair Labor Standards Act (FLSA), id. Plaintiffs’ counsel moved the district court to certify the litigation as a class action; defense attorneys opposed the motion in part on the ground that “individual issues predominated and that class treatment was not superior,” and “pointed to a number of exemptions under the FLSA (applicable through the UCL) and California labor law that would require individualized inquiries.” Id. The district court agreed that “individual inquiries would be necessary with respect to five exemptions: the federal outside sales exemption…, California’s outside sales exemption…, California’s commissioned sales exemption…, and the federal highly compensated employee exemption….” Id., at 8329-30. Specifically, the federal court found that these inquiries “would require an analysis of the job experiences of the individual employees, including the amount of time worked by each HMC, how they spend their time, where they primarily work, and their levels of compensation.” Id., at 8330. On the other hand, the district court concluded that common issues existed only as to two exemptions – “whether Wells Fargo qualifies as a ‘retail or service establishment’ for purposes of a federal exemption for commissioned sales…, and whether the employees earned ‘commission wages’ under California’s commissioned sales exemption….” Id. The court nonetheless granted class action treatment “relying on Wells Fargo’s uniform exemption policies,” id., at 8330-31. The Ninth Circuit reversed, holding that while “uniform exemption policies” – such as “an employer’s internal policy of treating its employees as exempt from overtime laws” – is relevant to the predominance test in Rule 23(b)(3), “it is an abuse of discretion to rely on such policies to the near exclusion of other relevant factors touching on predominance.” Id., at 8328.

The Ninth Circuit explained at page 8332: “The question here is whether the district court abused its discretion in finding Rule 23(b)(3)’s predominance requirement was met based on Wells Fargo’s internal policy of treating all HMCs as exempt from state and federal overtime laws. To succeed under the abuse of discretion standard, Wells Fargo must demonstrate that the district court either (a) should not have relied on its exemption policy at all or (b) made a clear error of judgment in placing too much weight on that single factor vis-a-vis the individual issues.” The Circuit Court construed Wells Fargo’s arguments “as a challenge to the weight accorded to the internal exemption policies” in that the district court “[considered] the proper factors but committing clear error in weighing them.” In re Wells Fargo Home Mortgage, at 8332. Specifically, defense attorneys argued that the weight afforded by the district court to Wells Fargo’s exemption policy “was tantamount to estoppels.” Id., at 8332-33. The Circuit Court agreed, finding at page 8333 that the district court’s class action certification order “was clearly driven by Wells Fargo’s uniform exemption policy.” That finding, in turn, “leads to the central question: whether such heavy reliance constituted a clear error of judgment in assaying the predominance factors.” Id.

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Posted On: July 18, 2009 by Michael J. Hassen Email This Post

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Extremely Light Week For California Class Action Lawsuits But Labor Law Class Actions Regain Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

In order 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 the state and federal courts located in 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 period from July 10 - 16, 2009, during which time only 27 new class actions were filed. As a general rule, class actions alleging employment-related claims top this list by a wide margin. During this reporting period, only 11 labor law class actions were filed, representing 41% of the total number of new class actions filed. Only one other category met the 10% threshold: there were 7 new class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, accounting for 26% of the new class actions filed.

Posted On: July 17, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases—In re Cox Enterprises: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Transfers Class Actions To Western District Of Oklahoma

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

Four class actions – two in Louisiana and one in Arizona and Georgia – were filed against various defendants, including Cox Enterprises, Cox Communications, Cox Communications Louisiana, Cox Communications New Orleans, and CoxCom (collectively “the Cox defendants”), together with an additional 14 potentially-related class action alleging antitrust violations; specifically, the class action complaints allege “that Cox improperly tied and bundled the lease of cable boxes to the ability to obtain premium cable services in violation of Section 1 of the Sherman Antitrust Act.” In re Cox Enterprises, Inc., Set-Top Cable Television Box Antitrust Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2008) [Slip Opn., at 1 and n.1]. Defense attorneys for the Cox defendants filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Middle District of Georgia; plaintiffs in both class actions supported the motion. Id., at 1. Plaintiffs in two of the class actions and 5 of the potentially-related actions supported the motion but requested transfer to the Eastern District of Louisiana, while plaintiffs in the other two class actions and 2 of the potentially-related actions supported the motion but requested centralization in the Western District of Oklahoma, id. The Judicial Panel granted the motion to centralize the class action lawsuits but selected the Western District of Oklahoma as the appropriate transferee court, id., at 1-2. The Panel explained that “[a] potentially related action is pending in that district,” and that “Judge Robin J. Cauthron has the time and experience to steer this litigation on an expeditious course.” Id., at 1.

Download PDF file of In re Cox Enterprises, Inc., Set-Top Cable Television Box Antitrust Litigation Transfer Order

Posted On: July 16, 2009 by Michael J. Hassen Email This Post

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Labor Law Class Action Defense Cases–Johnson v. Arvin-Edison: California Court Affirms Dismissal Of Labor Law Class Action Against Water Storage District Holding Public Agency Exempt From State Labor Laws

Labor Law Class Action Against Water Storage District Properly Dismissed by Trial Court because Water District Subject to Federal Labor Laws but not State Labor Laws California State Court Holds

Plaintiff filed a putative class action in California state court against his employer, Arvin-Edison Water Storage District (the District), alleging violations of California’s labor code; the class action complaint alleged that defendant failed to pay its employees overtime or to provide meal breaks required by California law. Johnson v. Arvin-Edison Water Storage District, 174 Cal.App.4th 729, 95 Cal.Rptr.3d 53, 55 (Cal.App. 2009). Defense attorneys demurred to the class action complaint on the grounds that “as a public entity, [defendant] is exempt from the subject wage and hour statutes.” Id. The trial court agreed and dismissed the class action, id. Plaintiff appealed, “argu[ing] that, contrary to the trial court's ruling, public employers are subject to the California wage and hour provisions at issue unless they are expressly made exempt.” Id. The California Court of Appeal affirmed the dismissal of the class action, finding that the District is a “municipal corporation” and therefore exempt from California labor laws. Id., at 55-56.

Plaintiff argued that “the [California] Legislature intended that water storage districts provide their employees with overtime and meal periods as required by [California law].” Johnson, at 55. The appellate court summarized the formation of the District and its compliance with the federal Fair Labor Standards Act (FLSA), see id., at 56, the Court observed that the facts were undisputed and the questions of law were subject to independent review, id. (citation omitted). And based on the appellate court’s detailed analysis, the Court concluded that the District is a public agency exempt from California’s labor laws. Id., at 57-62. Accordingly, it affirmed the trial court judgment and awarded costs on appeal to the District, id., at 62.

Download PDF file of Johnson v. Arvin-Edison

Posted On: July 15, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–In re HealthSouth: Eleventh Circuit Affirms Class Action Settlement Of Securities Fraud Class Action Including Bar Order Impacting CEO’s Indemnity Agreement With Company

Class Action Settlement Calling for Bar Order, Wiping Out Corporate Officer’s Indemnification Agreement and Advancement of Attorney Fees from Company Properly Approved by District Court Eleventh Circuit Holds

Plaintiffs filed a class action against HealthSouth Corporation and others, including its former chairman and CEO Richard M. Scrushy, alleging securities fraud; the class action complaint was filed in March 2003, after “HealthSouth acknowledged that its previous financial statements had substantially overstated its income and assets.” In re HealthSouth Corp. Sec. Litig., 572 F.3d 854, 2009 WL 1675398, *1 (11th Cir. 2009). According to the several class action complaints that were filed, defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934. Id. Ultimately, the class actions were consolidated in the Northern District of Alabama, and a partial settlement was reached between HealthSouth and the lead plaintiffs whereby HealthSouth would pay $445 million in settlement. Id. Scrushy was not a party to the settlement (having been prohibited from the mediation as the alleged mastermind of the fraud), and the district court approved the settlement over his objections, id. In part, the settlement included a bar order that extinguished “[Scrushy’s] contractual claims against HealthSouth for indemnification of settlement payments he might make to the underlying plaintiffs and extinguishes his claims for advancement of legal defense costs.” Id.

The basis of the appeal is that, in 1994, “Scrushy and HealthSouth executed an agreement requiring HealthSouth to indemnify Scrushy to the fullest extent permitted by law.” In re HealthSouth, at *1. Specifically, the indemnity agreement “require[d] HealthSouth to indemnify Scrushy for any judgment or settlement in any action in which he is sued for actions taken as a director or officer of the company, if he acted in good faith and reasonably believed he was acting in the best interest of the company.” Id. The bar order, however, wiped out any indemnity obligations, id. Scrushy’s objection was premised on the fact that the bar order “extinguished valuable and enforceable rights to which Scrushy was entitled under his indemnification agreement with HealthSouth.” Id., at *2. But “[t]he Bar Order is reciprocal, extinguishing similar claims by the settling defendants.” Id., at *2 (footnote omitted). The Eleventh Circuit reviewed Scrushy’s challenges to the settlement bar order for an abuse of discretion, id., at *3.

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Posted On: July 14, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–In re Neurontin: Massachusetts Federal Court Denies Class Action Certification In Class Action Complaint Arising Out Of Manufacture And Sale Of Prescription Drug Neurontin

Class Action Plaintiffs’ Renewed Motion for Class Action Treatment Adequately Addressed District Court’s Concerns Regarding Rule 23(a)’s Requirements for Class Action Certification but Failed to Satisfy Predominance Prong of Rule 23(b)(3) Massachusetts Federal Court Holds

Plaintiffs – consisting of consumers and third-party payors (TPPs) – filed a putative nationwide class action against Warner-Lambert and Pfizer arising out of defendants’ manufacture and distribution of the drug Neurontin; specifically, the class action complaint alleged that defendants “systematically and knowingly engaged in a fraudulent campaign to market and sell Neurontin for treatment of ‘off-label’ indications – conditions for which the Federal Drug Administration (‘FDA’) had not approved Neurontin – even though defendants knew Neurontin was not effective for those conditions.” In re Neurontin Marketing, Sales Practices & Prod. Liab. Litig., ___ F.R.D. ___ (D.Mass. May 13, 2009) [Slip Opn., at 1]. According to the allegations in the class action complaint, defendants’ conduct violated federal RICO (Racketeer Influenced and Corrupt Organizations Act) and the New Jersey Consumer Fraud Act (NJCFA), as well as claims for common law fraud and unjust enrichment, id., at 1-2. Thus, despite its caption, the class action was not a products liability case, id., at 2. Plaintiffs’ moved the district court to certify the litigation as a nationwide class action, but the court denied the motion finding that plaintiffs “failed to satisfy the commonality, numerosity, typicality, and predominance requirements of Rule 23 of the Federal Rules of Civil Procedure.” See In re Neurontin Mktg. & Sale Practices Litig., 244 F.R.D. 89, 105-107 and 114-16. (D. Mass. 2007). But the federal court denied class action certification without prejudice to the filing of a new motion for class action treatment “that addressed the Court’s concerns.” In re Neurontin, at 2 (citing 244 F.R.D. at 115). Plaintiffs filed a new motion for class certification, but the district court denied the motion finding that “common questions will not predominate over issues affecting individual plaintiffs, in accordance with Rule 23(b)(3),” id., at 2-3.

We do not here summarize the factual history set forth in the district court’s opinion, see In re Neurontin, at 3-6, or the court’s analysis of the commonality, numerosity and typicality requirements of Rule 23(a) for class action treatment, which the court concluded were satisfied by plaintiffs’ renewed motion for class certification, see id., at 6-17. But the district court spent more than 30 pages analyzing whether the predominance prong of Rule 23(b)(3) had been met, and concluded that it had not. See id., at 17 et seq. We do not discuss the lengthy order in detail. We note that with respect to the first class certification motion, “the Court’s concerns [with predominance] with respect to both groups emanated from their ability to demonstrate by common proof that defendants’ fraudulent marketing of Neurontin caused financial injury to all plaintiffs.” Id., at 18. More specifically, on the facts of this case “the Court could not simply presume that defendants’ fraudulent conduct caused all the off-label Neurontin prescriptions.” Id., at 23. Based on the New Jersey Supreme Court’s subsequent opinion concerning Vioxx in International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., Inc., 192 N.J. 372 (2007), referred to as Vioxx by the district court, the federal court refused to grant class action treatment to the litigation because “Vioxx precludes NJCFA plaintiffs from establishing causation through a report from a single expert, and the instant plaintiffs seek to do exactly that,” id., at 25.

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Posted On: July 13, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases-Satterfield v. Simon & Schuster: Ninth Circuit Reverses Defense Summary Judgment In Class Action Holding Text Message Is A "Call" Under TCPA And Triable Issues Exist As To Class Action Plaintiff's Consent To Receive Text Message

Summary Judgment in Telephone Consumer Protection Act (TCPA) Class Action Improper because Text Message may Constitute a “Call” within the Meaning of TCPA and because Triable Issues of Material Fact Exist as to Whether Defendants were “Affiliates” of Nextones.com and therefore Whether Plaintiff Consented to Receive Text Message Ninth Circuit Holds

Plaintiff filed a putative class action against Simon & Schuster, Inc. and ipsh!net Inc. alleging violations of the federal Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227; the class action complaint was filed after plaintiff received an unsolicited text message. Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009) [Slip Opn., at 7329, 7332-33]. According to the allegations in the class action, plaintiff received the text message after she became a registered user of Nextones.com “in order to receive a free ringtone,” id., at 7333. Plaintiff had signed up at the request of her minor son, and his initials and first three letters of his last name, her email address, zip code, phone number and account information in order to sign up. Id., at 7333-34. Further, she affirmatively agreed to “receive promotions from Nextones affiliates and brands.” Id., at 7334. Plaintiff thereafter received a text message from Simon & Schuster, sent by ipsh!, promoting the sale of a new Stephen King novel, id. Plaintiff’s number was one of 100,000 cell phone numbers obtained by ipsh! from Mobile Information Access Company (MIA), the “exclusive agent for licensing the numbers of Nextones subscribers.” Id. Defense attorneys moved for summary judgment on the class action claims on the grounds that “(1) it had not used an ATDS [Automatic Telephone Dialing System], (2) [plaintiff] had not received a ‘call’ within the meaning of the TCPA, and (3) [plaintiff] had consented to the message and had not been charged for its receipt.” Id., at 7335. The district court granted the summary judgment “holding that (1) Simon & Schuster and ipsh! had not used an ATDS and (2) [plaintiff] had consented to receiving the message.” Id. The district court did not reach the issue of whether the text message was a “call” within the meaning of the TCPA, id. The Ninth Circuit reversed.

After summarizing the TCPA, the Ninth Circuit held that the district court erred in granting summary judgment because “there was a disputed issue of material fact as to whether the system Simon & Schuster used was an ATDS; (B) the text message was a ‘call’ within the meaning of the TCPA; and (C) [plaintiff] did not consent to the receipt of such a message, because Simon & Schuster is not an affiliate or brand of Nextones.” Satterfield, at 7336-37. First, the Circuit Court held that the district court erroneously limited an ATDS to a phone system that “produced, or called numbers ‘using a random or sequential number generator.’” Id., at 7337. Based on its analysis of the statute, the Ninth Circuit held that the relevant inquiry is “whether the equipment has the capacity ‘to store or produce telephone numbers to be called, using a random or sequential number generator,’” not whether it actually did so in the particular case at bar. Id., at 7337-38. So defined, the Court reversed summary judgment because it found “a genuine issue of material fact with regard to whether this equipment has the requisite capacity,” id., at 7338.

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Posted On: July 11, 2009 by Michael J. Hassen Email This Post

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Very Heavy Two-Week Period For California Class Action Lawsuits And Labor Law Class Actions Drop To Second Place Among Weekly Class Action Lawsuits Filed 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 the state and federal courts located in 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 period from June 26 - July 9, 2009, during which time a remarkable high number of new class actions -- 108 -- were filed. As a general rule, class actions alleging employment-related claims top this list by a wide margin. During this reporting period, however, a surprisingly large number of ADA (Americans with Disabilities Act) class action lawsuits were filed; 40 new class actions, representing 37% of the total number of new class actions filed during the past two weeks. Class actions alleging employment-related claims came in a strong second, with 35 new class actions (32% of the total number of new class actions filed). Despite the high number of class actions filed, only one other category met the 10% threshold: there were 14 new class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, accounting for 13% of the new class actions filed.

Posted On: July 10, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases—In re Oral Sodium Phosphate: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Northern District Of Ohio

Judicial Panel Grants Defense Request for Pretrial Coordination of 38 Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, and Transfers Actions to Northern District of Ohio even though Only One of the Class Actions was Pending in that District

Thirty-eight (38) class actions were filed against common defendant C.B. Fleet (Fleet) and various defendants alleging products liability claims; specifically, the class action complaints allege oral sodium phosphate solution-based (OSPS) products by Fleet were unsafe and caused personal injuries because they “high doses of OSPS products could lead to acute phosphate nephropathy, a type of kidney injury, and that Fleet knew of the risks associated with high doses of OSPS but downplayed or obscured those risks.” In re Oral Sodium Phosphate Solution-Based Products Liability Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 23, 2009) [Slip Opn., at 1, 2]. Defense attorneys for Fleet filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Northern District of Ohio – 13 of the class actions were pending in Arizona, 4 class actions were pending in Georgia, 3 class actions were pending in California, Colorado and Florida, and 2 class actions were pending in Minnesota, but only one lawsuit had been filed in the Northern District of Ohio. Id., at 1. As one might expect from the number of class actions involved, the view of responding plaintiffs ranged from full support to objections and requests for exclusion from any centralization order, see id., at 1-2. The Judicial Panel granted the motion to centralize the class action lawsuits, rejecting the argument by some plaintiffs that “their actions are too far advanced to warrant inclusion in the centralized proceedings.” Id., at 2. The Panel left to the discretion of the transferee court the resolution of such issues, id. The Judicial Panel also agreed that the Northern District of Ohio was the appropriate transferee court, even though only one action was currently pending in that district, and accordingly it ordered all other actions transferred to that district. Id., at 2-3.

Download PDF file of In re Oral Sodium Phosphate Solution-Based Products Liability Litigation Transfer Order

Posted On: July 9, 2009 by Michael J. Hassen Email This Post

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Ford Class Action Defense Cases–Kearns v. Ford Motor: Ninth Circuit Affirms Dismissal Of Class Action Under California UCL/CLRA Holding Class Action Complaint Failed To Satisfy Rule 9(b)’s Heightened Pleading Requirements

Class Action Alleging Violations of California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) Properly Dismissed because Heightened Pleadings Requirements of Rule 9(b) for Fraud Applied to Allegations in Class Action Complaint and Plaintiff Failed to Allege Fraud with Requisite Specificity Ninth Circuit Holds

Plaintiff filed a putative class action in California state court against Ford Motor and certain dealerships (collectively “Ford”) alleging violations of California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA); specifically, the class action complaint . Kearns v. Ford Motor Co., 567 F.3d 1120, 1122 (9th Cir. 2009). Defense attorneys removed the class action to federal court on grounds of diversity; the district court denied plaintiff’s motion to remand the class action to state court under the “local controversy exception” to the Class Action Fairness Act (CAFA). Id., at 1123. According to the allegations underlying the class action, Ford sells vehicles as either new, used, or Certified Pre-Owned (CPO) – “CPO vehicles are late model used vehicles, which Ford purports to put through a rigorous inspection process in order to certify that the vehicle's safety, reliability, and road-worthiness surpass non-certified used vehicles.” Id., at 1122. Ford sells CPA vehicles for more than it sells non-certified used vehicles, id., at 1122-23, and the class action alleged that Ford “acted illegally to increase sales of [its CPO] vehicles, in violation of the CLRA and UCL,” id., at 1122. Defense attorneys moved to dismiss the third amended class action complaint on the grounds that the UCL and CLRA claims were premised on allegations of fraud, and that the class action complaint failed to plead fraud with the particularity required by Rule 9(b). Id. The district court granted the motion to dismiss but gave plaintiff an additional opportunity to amend the class action complaint; plaintiff refused, believing that the complaint satisfied the requisite pleading requirements, and the district court dismissed the class action, id., at 1123-24. Plaintiff appealed, and the Ninth Circuit affirmed.

The gravamen of the class action complaint is that “Ford makes false and misleading statements concerning the safety and reliability of its CPO vehicles.” Kearns, at 1123. According to the class action, “by making such false statements, Ford conspires to mislead class members into believing that the CPO program guarantees a safer, more reliable, and more roadworthy used vehicle.” Id. Ford allegedly charges an additional $1,000 dollars for CPO vehicles, but fails to disclose that provides “very little oversight…over the certification process.” Id. The class action complaint further alleged “that Ford misrepresents (1) the quality of the complete repair and accident-history report; (2) the level of training of CPO technicians; and (3) the rigorous certification inspection.” Id. Plaintiff claims “the inspection is not rigorous; the warranty does not cover all components; and the CPO vehicles are not any safer, more reliable, or more roadworthy than a regular used vehicle.” Id.

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Posted On: July 8, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Utility Consumers’ Action Network v. Sprint: California Federal Court Denies Nationwide Class Action Treatment To Class Action Complaint Alleging Violations Of California Laws

Class Action Complaint Alleging Violations of California State Laws not Entitled to Nationwide Class Action Treatment because Plaintiffs Failed to Establish that California Law Applies to Non-Residents or that Nationwide Class Action Treatment would be “Superior” Means of Adjudicating Dispute or that Trial of Nationwide Class Action would be Manageable California Federal Court Holds

Plaintiffs filed a putative nationwide class action against Sprint Solutions and Sprint Spectrum (Sprint) alleging violations of various California consumer protection statutes; specifically, the class action complaint alleged inter alia claims under California’s Unfair Competition Law (UCL), Consumer Legal Remedies Act (CLRA), and Public Utilities Code (for cramming), as well as under the Federal Communications Act, 47 U.S.C. §201(b). Utility Consumers’ Action Network v. Sprint Solutions, Inc., ___ F.R.D. ___ (S.D.Cal. June 23, 2009) [Slip Opn., at 1]. Plaintiffs moved the district court to certify the litigation as a class action, id., at 1-2. Defense attorneys opposed class action certification, in part on the ground that various states will interpret the relevant contracts differently and have different consumer protection laws such that a nationwide class action would be unworkable. Id., at 2. The federal court refused to grant class action treatment to the lawsuit.

In arguing in favor of a nationwide class action, plaintiffs asserted that “California law applies to non-California residents because there is a presumption California law applies absent a showing to the contrary under California choice of law principles, and that California law does not conflict with other state laws. “ Sprint, at 2. Plaintiffs further argued that a nationwide class action was the “superior” means of adjudicating the dispute “because the common issue is the misbilling practices of the Defendants,” id. Defense attorneys countered “that there are individual issues that predominate; that various states will enforce several provisions in the terms and conditions of relevant contracts in various ways; that California statutes cannot be applied to consumers outside of California; and that Plaintiffs’ proposed trial plan is unworkable.” Id. The district court cited well-settled law that the moving party bears the burden of establishing that the requirements for class action treatment have been met, id., at 2-3, and turned immediately to a “rigorous analysis” of whether the class action requirements of Rule 23(b)(3) had been met because the elements of Rule 23(a) “are not seriously in dispute,” id., at 3-4.

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Posted On: July 7, 2009 by Michael J. Hassen Email This Post

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T-Mobile Class Action Defense Cases–Smith v. T-Mobile: Ninth Circuit Dismisses Appeal In Labor Law Class Action Holding Settlement Of Individual FLSA Claims Without Opt-In Plaintiffs Rendered Appeal Moot

Settlement of State Labor Law Class Action and Federal Law FLSA Claims by Putative Class Action Plaintiffs, Following Denial of Conditional Certification of FLSA Collective Action and Before any Other Plaintiffs Agreed to Opt-In to Litigation, Rendered Moot Appeal from Denial of Motion for Conditional Certification Despite Effort to Preserve Right to Appeal Ninth Circuit Holds

Plaintiffs Mentha Smith and Justin Gossett, former sales representatives of T-Mobile, filed a putative class action against T-Mobile USA purportedly on behalf of 25,000 workers alleging labor law violations; specifically, the class action complaint “alleged that T-Mobile willfully failed to pay its hourly employees for all the hours they worked, forcing employees to work ‘off the clock’ and denying pay for hours worked during breaks.” Smith v. T-Mobile USA Inc., ___ F.3d ___ (9th Cir. June 15, 2009) [Slip Opn., at 7129, 7132]. The class action alleged violations of the federal Fair Labor Standards Act (FLSA), and of California’s Labor Code and Unfair Competition Law (UCL), id., at 7132. The district court denied plaintiffs’ first motion for conditional class action treatment of the FLSA claims, id., at 7132-33. However, the district court “tolled the statute of limitations until discovery was complete and the court could rule on a second motion for conditional certification.” Id., at 7133. Ultimately, the district court denied plaintiffs’ second motion for class action “collective” treatment of the FLSA claims, and plaintiffs settled their individual claims with T-Mobile. Id. The settlement included resolution of any attorney fee claim by plaintiffs, id., at 7133-34. Before finalizing this settlement, plaintiffs advised the district court that they desired to preserve their right to appeal its denial of their motion for conditional certification of an FLSA collective action, and the district court signed a stipulated judgment that purported to preserve plaintiffs’ right to appeal. Id., at 7134. Plaintiffs appealed, and the Ninth Circuit dismissed the appeal as moot.

The Ninth Circuit explained, “We review de novo whether a case is moot and whether plaintiffs have standing.” Smith, at 7135 (citations omitted). The Circuit Court also noted the well-established rule that “The case or controversy requirement of Article III restricts federal court jurisdiction to ‘disputes capable of judicial resolution.’” Id. (citation omitted). And under Supreme Court authority, “Generally, when a party settles all of his personal claims before appeal, an appeals court must dismiss the appeal as moot unless that party retains a personal stake in the case that satisfies the requirements of Article III.” Id. (citations omitted). The Ninth Circuit noted that it had not yet resolved the issue of “whether a Rule 23 class action plaintiff who settles his individual claims can preclude mootness by affirmatively preserving his claim to appeal in the settlement agreement and then asserting a procedural right to represent a class.” Id., at 7135 (citations omitted). But it again found it unnecessary to resolve this issue “because here, structural distinctions between a FLSA collective action and a Rule 23 class action foreclose appellants’ claims of a continuing personal stake.” Id. Put simply, “A plaintiff seeking FLSA collective action certification does not have a procedural right to represent a class in the absence of any opt-in plaintiffs.” Id., at 7136. Because plaintiffs settled their individual claims before any putative members of the class elected to opt-in to the class action litigation, the Ninth Circuit dismissed the appeal as moot, “join[ing] our sister circuits in holding that a FLSA plaintiff who voluntarily settles his individual claims prior to being joined by opt-in plaintiffs and after the district court’s certification denial does not retain a personal stake in the appeal so as to preserve our jurisdiction.” Id., at 7135-36 (citing Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 915-19 (5th Cir. 2008); Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1247-49 (11th Cir. 2003)). The Circuit Court therefore dismissed the appeal, id., at 7137.

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Posted On: July 6, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Arias v. Superior Court: California Supreme Court Holds Representative Actions Under UCL Must Comply With Class Action Requirements But Labor Law PAGA Representative Claims Need Not Meet Class Action Requirements

Employee Representative Action Under California’s Unfair Competition Law (UCL) Must Satisfy Class Action Requirements, but Employee Representative Actions Seeking Penalties Under California Labor Code’s Private Attorneys General Act of 2004 (PAGA) Need Not Satisfy Class Action Requirements California Supreme Court Holds

Plaintiff filed a putative class action against his former employer, Angelo Dairy, alleging labor law violations; the class action complaint alleged causes of action for violations of the Labor Code, labor regulations, and an Industrial Welfare Commission wage order, for .breach of contract and “breach of the warranty of habitability on the ground that defendants provided residential units in a defective and dangerous condition,” for violations of California’s Unfair Competition Law (UCL) “based on defendants' failures to credit plaintiff for all hours worked, to pay overtime wages, to pay wages when due, to pay wages due upon termination, to provide rest and meal periods, and to obtain written authorization for deducting or offsetting wages.” Arias v. Superior Court, ___ Cal.4th ___, 95 Cal.Rptr.3d 588, 2009 WL 1838973, *1 (Cal. June 29, 2009). In addition, the class action complaint sought enforcement under the UCL of penalties provided for in the Labor Code, and alleged under California’s Private Attorneys General Act of 2004 (PAGA), Labor Code § 2698 et seq., that “defendants had violated the Labor Code, labor regulations, and an Industrial Welfare Commission wage order by failing to pay all wages due, to provide itemized wage statements, to maintain adequate payroll records, to pay all wages due upon termination, to provide rest and meal periods, to offset proper amounts for employer-provided housing, and to provide necessary tools and equipment.” Id. Defense attorneys moved to strike five causes of action in the class action complaint “on the ground that plaintiff failed to comply with the pleading requirements for class actions”; the trial court granted the motion. Id. Plaintiff sought a writ of mandate from the Court of Appeal, which held that UCL claims brought in a representative capacity had to satisfy class action requirements, but that representative labor law claims under PAGA need not, id. The Supreme Court granted review and held “that an employee who, on behalf of himself and other employees, sues an employer under the [UCL]…for Labor Code violations must satisfy class action requirements, but that those requirements need not be met when an employee's representative action against an employer is seeking civil penalties under [PAGA].” Id.

The Supreme Court began in analysis by rejecting plaintiff’s claim that representative actions under the UCL (brought individually and on behalf of others) need not comply with the requirements for class actions. Arias, at *2. After summarizing California’s UCL, including the 2004 amendments thereto, and after noting that California Code of Civil Procedure § 382 does not mention the words “class action,” the Court addressed the issue of whether the UCL, as amended by the voters so as to require that private plaintiffs bringing representative actions comply with Section 382, “imposes a requirement that the action be brought as a class action.” Id. Based on the Supreme Court’s analysis of the statutory language, and recognizing that a “literal construction of an enactment…will not control when such a construction would frustrate the manifest purpose of the enactment as a whole,” id., at *3, the Supreme Court concluded that California voters clearly intended “to impose class action requirements on private plaintiffs' representative actions” under the UCL, id. The Court therefore held that representative actions under the UCL must comply with class action requirements, id., at *4.

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Posted On: July 4, 2009 by Michael J. Hassen Email This Post

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HAPPY JULY 4th FROM THE CLASS ACTION DEFENSE BLOG

The author of the Class Action Defense Blog wishes all of you a very happy Independence Day. The author has been on vacation but anticipates that new class action articles will be published next week.