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

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Labor Law Class Actions Continue Hold on Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

To assist California class action defense attorneys anticipate the types of class action against which they will have to defend, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. This report covers the time period from October 23 - 29, 2009, during which time 56 new class action cases were filed in these California state and federal courts. Labor law class action generally top the list by a wide margin, often accounting for more than half of the total number of new class actions filed. This past week, class action alleging employment-related claims again topped the list with 24 new class action lawsuits (43% of the total number of new class actions filed). The only two other categories to break the 10% threshold again involved class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, with 14 new class action lawsuits (25% of the new class actions filed during the reporting period), and class actions alleging antitrust violations, with 8 new class action lawsuits (14% of the new class actions filed during the reporting period).

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

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FCRA Class Action Defense Cases–Gelman v. State Farm: Third Circuit Affirms Dismissal Of Class Action Complaint Holding Mailer Constituted “Firm Offer” Within Meaning Of Fair Credit Reporting Act (FCRA)

Class Action Alleging Violations of FCRA (Fair Credit Reporting Act) Properly Dismissed because Mailer Constituted “Firm Offer” within Meaning of FCRA Third Circuit Holds

Plaintiff filed a putative class action against State Farm Mutual Automobile Insurance Company alleging violations of the federal Fair Credit Reporting Act (FCRA); specifically, the class action complaint alleged that State Farm obtained credit information in order to send out “prescreened offers” but that it did so in violation of the FCRA. Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 2009 WL 3163553, *2 (3d Cir. 2009). According to the allegations underlying the class action complaint, in November 2004 State Farm asked Experian for plaintiff’s consumer credit report without his consent, and that he did not learn about it until April 2006, “when he received a copy of his consumer credit report from Experian.” Id. State Farm claimed that it obtained plaintiff’s credit report for a “permissible purpose” within the meaning of the FCRA, and “used it to select [plaintiff] to receive materials pertaining to insurance products that he might qualify for and/or be interested in.” Id. The mailer sent to plaintiff stated that it was a “prescreened offer,” and invited him to contact State Farm for a quote in order to determine whether switching to State Farm as his auto insurance carrier could save him money. Id. The mailer also contained a “prescreen & opt-out notice,” id. The class action alleged that the mailer is nothing more than “an invitation to call State Farm to find out about the various insurance products that State Farm might attempt to sell”; in other words, “the State Farm mailing is nothing more than promotional material soliciting him to contact State Farm regarding its various insurance products and that it is therefore not the kind of firm offer of insurance that would legitimize State Farm's access to his credit report under federal law.” Id., at *2. Defense attorneys moved to dismiss the class action; the district court granted the motion as to all claims in the class action complaint, id. The Third Circuit affirmed.

The class action alleged that State Farm intentionally or negligently obtained plaintiff’s credit report under false pretenses and without a permissible purpose, and sent an offer of insurance that failed to include the “clear and conspicuous” disclosures required by the FCRA. Gelman, at *2. The complaint sought declaratory and injunctive relief, id. The district court granted State Farm’s motion to dismiss the class action because it found that the mailer “constituted an offer of insurance under the FCRA,” that “the FCRA does not provide for a private right of action to recover for disclosures that are contrary to provisions of the FCRA,” and that “the FCRA does not provide private litigants declaratory and injunctive relief.” Id. We do not here summarize the Circuit Court’s discussion of the legal background behind the FCRA, see id., at *3-*4. The Circuit Court began its legal analysis by addressing the district court’s conclusion that State Farm’s mailer satisfied the FCRA because the offer of insurance need not have “value” to the consumer. Id., at *4. Plaintiff’s theory was premised “exclusively” on the Seventh Circuit opinion in Cole v. U.S. Capital, Inc., 389 F.3d 719 (7th Cir. 2004), which held that a “firm offer” under the FCRA “must have sufficient value for the consumer to justify the absence of the ... protection of his privacy.” Id. (quoting Cole, 389 F.3d at 726). (The Third Circuit’s summary of Cole may be found at pages *4 and *5 of its opinion.)

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Posted On: October 26, 2009 by Michael J. Hassen Email This Post

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Arbitration Class Action Defense Cases–Cicle v. Chase: Eighth Circuit Reverses Denial Of Bank Motion To Compel Arbitration Of Plaintiff's Class Action Claims On Individual Basis Holding Class Action Waiver Enforceable

District Court Erred in Refusing Motion to Stay Class Action Against Bank and Compel Arbitration of Individual Claim based on Arbitration Clause with Class Action Waiver because Class Action Waiver, and Cost-Sharing Provision, of Arbitration Clause did not Render Provision Unconscionable Eighth Circuit Holds

Plaintiff filed a putative class action in Missouri state court against Chase Bank alleging that it had imposed penalties on credit card holders and that it had violated Missouri’s Merchandising Practices Act (MMPA); in essence, the class action complaint alleged that Chase improperly increased the interest rate charged on credit card balances. Cicle v. Chase Bank USA, 583 F.3d 549, 2009 WL 3172157, *1 (8th Cir. 2009). According to the allegations underlying the class action complaint, plaintiff’s credit card with Chase initially “carried a 7.99% annual percentage rate (APR) on unpaid balances,” but then “increased dramatically, to 25.99%.” Id. When asked about the increase, the Bank responded that “a credit agency had reported her as past due on an unrelated loan or account, so Chase increased the APR from the 7.99% ‘Preferred Customer Pricing’ rate.” Id. Defense attorneys removed for the class action to federal court under CAFA (Class Action Fairness Act of 2005) and on the ground of federal question jurisdiction under the National Bank Act (NBA). Id. The Bank then asked the district court to stay the class action to compel plaintiff to arbitrate her individual claim pursuant to the terms of the arbitration clause in her Cardmember Agreement, which included a class action waiver. Id. The district court denied the defense motion, concluding that the class action waiver and the provisions for cost-sharing were unconscionable under Missouri law, id., at *3. The Eighth Circuit reversed, holding that the class action waiver was neither substantively nor procedurally unconscionable.

The Cardmember Agreement contained an arbitration clause, governed by the Federal Arbitration Act (FAA), that required arbitration on an individual basis of any dispute with the bank; specifically, the arbitration clause contained a class action waiver, prohibiting the cardmember from bringing “a class action or other representative action” and precluding the cardmember from being “part of any class action or other representative action.” Cicle, at *1-*2. The arbitration was to be binding, and covered “any claim, dispute or controversy by either you or us against the other, or against the employees, parents, subsidiaries, affiliates, beneficiaries, agents or assigns of the other, arising from or relating in any way to the Cardmember Agreement, any prior Cardmember Agreement, your credit card Account or the advertising, application or approval of your Account (‘Claim’).” Id., at *2. The arbitration clause provided an exception for small claims court matters, id. With respect to costs, the arbitration clause provided that the Bank would pay for the filing fee (up to $500) and, “if there is a hearing, we will pay any fees of the arbitrator and arbitration administrator for the first two days of that hearing.” Id. The agreement provided that all other fees would be “allocated in keeping with the rules of the arbitration administrator and applicable law,” and that each side otherwise would be responsible for their own attorney fees and costs, regardless of whether they prevailed, unless the arbitrator orders otherwise based on “any applicable law.” Id. Reviewing the district court’s decision de novo, see id., at *3, the Eighth Circuit reversed its refusal to enforce the arbitration clause.

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

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New Labor Law Class Actions Hold Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

To assist class action defense attorneys anticipate the types of cases against which they will have to defend in California 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 relevant timeframe. This report covers the time period from October 16 - 22, 2009, during which time 44 new class action cases were filed in these California state and federal courts. Class actions alleging employment-related claims generally top the list by a wide margin. This past week, however, a relatively low number of new class action lawsuits involved labor law claims, with only 20 such filings (45% of the total number of new class actions filed). The only other category to break the 10% threshold involved class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, with 13 new class action lawsuits (30% of the new class actions filed during the reporting period).

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

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Class Action Defense Cases—In re Checking Account Overdraft: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Plaintiff To Centralize Class Action Litigation In Southern District Of Florida

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Despite Certain Plaintiff and Defense Objections, and Transfers Actions to Southern District of Florida

Five class actions – two in California and Florida, and one in New Jersey – were filed against various defendants – including Wachovia Bank, Bank of America and Citibank – “relating to industry-wide bank posting policies and procedures” surrounding overdraft fees. In re Checking Account Overdraft Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2009) [Slip Opn., at 1, 2]. According to the allegations under the class actions, the various defendant banks had implemented policies and procedures “relating to the imposition of overdraft fees…on their customer’s checking accounts in a manner to maximize these fees.” Id., at 2. Plaintiffs in one of the Florida class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Southern District of Florida, id., at 1. Plaintiffs in the New Jersey class action and defendants Wachovia and Bank of America supported the motion, but Bank of America argued for transfer to the Western District of North Carolina. Id. Plaintiffs in the California class actions and defendant Citibank opposed the motion and if the motion were granted argued for centralization in the Northern District of California. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, explaining at page 2: “While there will be some unique questions of fact from bank-to-bank, these actions share sufficient factual questions relating to industry-wide bank posting policies and procedures to warrant centralization of all actions in one MDL docket.” The Panel also agreed that the Southern District of Florida was the appropriate transferee court “because (1) two of the involved actions before the Panel are pending there, and (2) this district has the capacity to manage this MDL proceeding.” Id., at 2. Accordingly, the Panel transferred the class actions centralized in the Southern District of Florida. Id., at 2-3.

Download PDF file of In re Checking Account Overdraft Litigation Transfer Order

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

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Class Action Defense Cases–Baghdasarian v. Amazon: California Federal Court Grants Class Action Treatment To UCL/CLRA Class Action Against Amazon.Com Concerning Shipping And Handling Fees

Class Action Complaint Against Amazon Challenging Shipping and Handling Fees Satisfied Rule 23 Requirements for Class Action Treatment California Federal Court Holds

Plaintiff filed a putative class action against Amazon.com alleging violations of California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA); specifically, the class action complaint alleged that Amazon, in addition to receiving “a sales commission and a percentage of the sales price for each item sold,” charged shipping and handling fees to buyers “without input from Marketplace Sellers” even though it was the sellers who “took care of packaging and shipping products.” Baghdasarian v. Amazon.Com, Inc., 258 F.R.D. 383, 385 (C.D. Cal. 2009). According to the allegations underlying the class action complaint, Amazon failed to disclose to buyers that it kept a portion of the shipping and handling fees and this act was “fraudulent” within the meaning of the UCL and CLRA, id. Plaintiff decided not to seek class action treatment of the class action complaint’s CLRA claim, but moved for class action certification of the UCL claim. Id. Plaintiff argued that the lawsuit satisfied the requirements for class action certification under Rule 23(b)(3), id., at 386. Defense attorneys opposed class action treatment, but the district court granted the motion.

The district court first held that plaintiff had standing to prosecute the class action. See Baghdasarian, at 386-87. Specifically, the federal court held that plaintiff had standing to prosecute the class action’s UCL claim, rejecting defense arguments that plaintiff had not suffered any economic harm because he “received the benefit of his bargain.” See id., at 386-87. The court also had little difficulty in finding that the requirements of Rule 23(a) for class action certification had been met. Id., at 388-89. The court also found that the class action requirements for certification under Rule 23(b)(3) had been met. The federal court readily found that the predominance test had been satisfied, see id., at 389-90, and also concluded that a class action would be “the most efficient way to resolve the claims of all class members, especially since the individual claims are small and economically unfeasible to litigate individually,” id., at 390, thus satisfying the superiority prong of Rule 23(b)(3). Accordingly, the district court granted plaintiff’s motion for class certification, see id., at 391.

Download PDF file of Baghdasarian v. Amazon.Com

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

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Class Action Defense Cases–Comer v. Murphy Oil: Fifth Circuit Reinstates Class Action Alleging Global Warming Exacerbated Damage Caused By Hurricane Katrina

Class Action Alleging Defendants’ Greenhouse Gas Emissions Contributed to Global Warming thereby Increasing Ferocity of Hurricane Katrina Improperly Dismissed because Plaintiffs had Standing to Assert Class Action’s Nuisance, Trespass and Negligence Claims and these Claims did not Present Nonjusticiable Political Questions Fifth Circuit Holds

Plaintiffs filed a putative class action against numerous defendants seeking damages arising from Hurricane Katrina; the class action complaint, filed on behalf of property owners on the Mississippi Gulf coast, alleged that “defendants’ operation of energy, fossil fuels, and chemical industries in the United States caused the emission of greenhouse gasses that contributed to global warming, viz., the increase in global surface air and water temperatures, that in turn caused a rise in sea levels and added to the ferocity of Hurricane Katrina, which combined to destroy the plaintiffs’ private property, as well as public property useful to them.” Comer v. Murphy Oil USA, Inc., 585 F.3d 855 (5th Cir. 2009) (Slip Opn., at 1). The class action complaint sought “compensatory and punitive damages based on Mississippi common-law actions of public and private nuisance, trespass, negligence, unjust enrichment, fraudulent misrepresentation, and civil conspiracy.” Id., at 2. Defense attorneys moved to dismiss the class action on the grounds of that plaintiffs lacked standing and that the class action claims constituted “nonjusticiable political questions.” Id. The district court granted defendants’ motion and dismissed the class action, id. The Fifth Circuit reversed as to the nuisance, trespass and negligence, concluding that plaintiffs had standing and that the claims do not “present nonjusticiable political questions,” but affirmed the dismissal of the class action’s remaining claims. Id., at 3.

The Circuit Court spent a considerable amount of time on the question of standing, see Comer, at 3-17, but we do not here discuss that aspect of the opinion in detail. We note only that the Fifth Circuit concluded that the class action’s “nuisance, trespass and negligence claims…clearly satisfied the…constitutional minimum standing requirements” because “[t]hese state common-law tort claims, in which plaintiffs allege that they sustained actual, concrete injury in fact to their particular lands and property, can be redressed by the compensatory and punitive damages they seek for those injuries.” Id., at 7-8. The question, then, was “whether any of those claims present a nonjusticiable political question, as the district court believed they did.” Id., at 17. Based on its lengthy analysis, see id., at 18-34, the Circuit Court held that these class action claims could proceed “[b]ecause those claims do not present any specific question that is exclusively committed by law to the discretion of the legislative or executive branch” and accordingly “they are justiciable,” id., at 17. Again, we do not summarize that detailed legal analysis here. Interested readers may find the entire text of the Fifth Circuit opinion below. We simply set forth the Circuit Court’s conclusion, at pages 34 and 35 of the opinion, which states:

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

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Class Action Defense Cases–Somers v. Apple: California Federal Court Denies Class Action Certification Of Rule 23(b)(3) Class In Indirect Purchaser Antitrust Class Action But Reserves Ruling On Class Action Treatment Under Rule 23(b)(2)

Class Action Alleging Antitrust Violations on Behalf of Indirect Purchasers Failed to Satisfy Class Action Requirements of Rule 23(b)(3) because no Methodology for Establishing Class Wide Damages but Request for Class Action Certification under Rule 23(b)(2) taken under Submission California Federal Court Holds

Plaintiff filed a putative class action against Apple alleging violations of federal and state antitrust laws; specifically, the class action complaint challenged Apple’s sale of music for its iPod through its iTunes online music store. Somers v. Apple, Inc., 258 F.R.D. 354, 355 (N.D. Cal. 2009). According to the allegations underlying the class action complaint, Apple utilizes proprietary hardware and software for its iPod and digital music downloads, Apple’s share of the online music market is 83% and of the online video market is 75%, and Apple “deliberately” makes music and videos purchased at its online store “inoperable with its competitors’ [hardware],” id., at 355-56. The class action alleges that this allows Apple “to charge iPod purchasers a supracompetitive price by preventing consumers who have purchased music files from iTMS from playing their music on Apple’s competitors’ digital media players.” Id., at 356. While a related case sets forth parallel allegations on behalf of consumers who purchased iPod’s directly from Apple, see The Apple iPod iTunes Antitrust Litigation, U.S.D.C. Northern District of California Case No. C 05-00037 JW, this class action is filed on behalf of consumers who made their purchases through third-party vendors. Id. Plaintiff moved the court to certify the litigation as a class action under both Rule 23(b)(2) and (b)(3), id., at 357. Defense attorneys opposed the motion, arguing that “Plaintiff fails to advance class-wide methods of demonstrating individual coercion or damages” and that “a nationwide class is not appropriate, because California antitrust law should not be applied on a nationwide basis.” Id., at 357-58. The district denied the motion.

After summarizing the legal framework surrounding certification of class actions in indirect purchaser antitrust class actions, see Somers, at 358-59, the district court turned to the request for certification under Rule 23(b)(3). (The court assumed without discussion that requirements of Rule 23(a) had been met.) Plaintiff argued that a class action would be manageable because “her expert’s methodology is sufficient to establish damages on a class-wide basis.” Id., at 359. Defense attorneys disagreed, arguing that the expert “fails to demonstrate how all class members suffered injury as a consequence of [Apple’s] alleged anticompetitive activity,” id. The district court held an evidentiary hearing on the competing, proposed methodologies, id., at 360-61, and concluded that plaintiff had not assuaged the court’s concerns as to a method of establishing damages for the class, id., at 361. Accordingly, the court denied class action certification because “Plaintiff has failed to meet her burden of establishing ‘a reliable method for proving common impact on all purchasers of [D]efendant’s products throughout the chain of distribution.’” Id., at 361 (citation omitted). And with respect to plaintiff’s motion for certification of a class under Rule 23(b)(2), the district court noted that it had requested further briefing on this issue and held that “the Court will not rule on this issue until it has greater understanding of the claims, the class definition, and the form of injunctive relief sought by Plaintiff in this case and the Plaintiffs in the parallel Direct Purchaser Action.” Id. Accordingly, it took the latter request under submission. Id.

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Posted On: October 19, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Castaneda v. Burger King: California Federal Court Severely Limits Scope Of Class In ADA Class Action Holding Commonality/Typicality Not Met For Stores Not Frequented By Named Plaintiffs

Class Action Alleging Violations of Federal Americans with Disabilities Act (ADA) could not Properly be Certified with Respect to All 92 Franchise Restaurant Locations because no Common Architectural Design to Stores so no Commonality/Typicality Existed, but Class Action Treatment Warranted as to 10 Stores Frequented by Named Plaintiffs California Federal Court Holds

Three named plaintiffs filed a putative class action against Burger King alleging that certain of its California restaurants violated the federal Americans with Disabilities Act (ADA), California’s Americans with Disabilities Act (Unruh) and California’s Disabled Persons Act (CDPA) in various ways; specifically, the class action complaint alleged that the three named plaintiffs are mobility-impaired and had encountered barriers at Burger King restaurants. Castaneda v. Burger King Corp., ___ F.Supp.2d ___, 2009 WL 3151168 (N.D. Cal. September 25, 2009) (Slip Opn., at 1-2). Burger King has about 600 California locations, 92 of which “are leased by Burger King Corporation to the franchisees, which operate and maintain them.” Id., at 2. This class action involved only the 92 leased properties, id. The class action complaint sought injunctive relief, as well as statutory penalties under Unruh and the CDPA. Id. According to the allegations underlying the class action, the locations at issue “were built according to ‘one or a limited number of architectural design prototypes developed by Burger King’” and that some locations were “remodeled in conformance with Burger King’s construction and design plans and specifications.’” Id., at 5 (italics omitted). Plaintiffs moved the district court to certify the litigation as a state-wide class action, but “retreated from their allegations of common architecture, design, construction, and policies.” Id. Instead, plaintiffs argued that Burger King “maintains substantial control over the leased restaurants,” id., at 9. Defense attorneys opposed class action treatment, arguing inter alia that common questions do not predominate. The district court granted class action treatment, but severely limited the scope of the class: the court explained, “The normal class in an ADA action proceeds against a single store on behalf of all disabled persons using that store. The instant action seeks to proceed against approximately 92 different stores throughout California on behalf of a class of all mobility-impaired persons at all 92 locations. All of the stores are Burger King restaurants. Although the class claims would share Burger King Corporation as a common target, the physical differences among the 92 locations would predominate over the common issues, there being no common blueprint among them (or even among any subset of them). Whether or not any store was ever out of ADA compliance would have to be determined store by store, feature by feature, before turning to the easier question of whether defendant as the franchisor/landlord, would have a duty to force the franchise to remediate. Therefore, such a large sprawling class will not be certified. Instead, separate classes will be certified against each of the ten individual restaurants where a named plaintiff encountered alleged access barriers.” Id., at 1-2.

The district court addressed first plaintiffs’ request for certification under Rule 23(b)(2) of a class action covering all 92 leased stores. See Castaneda, at 12 et seq. The federal court found “several major obstacles to a 92-store class.” Id., at 13. It found the class lacked commonality under Rule 23(a)(2), explaining that “[b]ecause each location has unique facilities, there is neither a common core of salient facts regarding what accessibility barriers each restaurant’s patrons face nor a shared predicate legal issue of whether each restaurant’s facilities violates the ADA or California statutes.” Id. The court also found that typicality under Rule 23(a)(3) was missing “because every store may well be different,” id. As to Rule 23(b)(2)’s class action factors, the district court found class action treatment inappropriate because (1) the class action complaint sought significant statutory damages, and (2) injunctive relief cannot be awarded against stores that are not in violation of the ADA, which would require “a highly individualized and extremely detailed mirror-by-mirror, door-to-door, ramp-by-ramp, detail-by-detail examination of each store.” Id. The federal court’s detailed analysis of these factors may be found at pages 14 through 22 of its opinion.

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

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New Class Action Lawsuits Alleging Employment-Related Claims Maintain Top Spot 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 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 relevant timeframe. This report covers the time period from October 9 - 15, 2009, and just like the prior reporting period, 51 new class action cases were filed in these California state and federal courts. Also just like the last reporting period, 27 of the new class action lawsuits involved labor law claims (53% of the total number of new class actions filed). And in a marked coincidence, the only other category to break the 10% threshold again involved class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, with 9 new class action lawsuits (18% of the new class actions filed during the reporting period).

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

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

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

Four class actions – one each in Kentucky, Louisiana, Massachusetts and New York – were filed against various defendants including Merrill Lynch arising out of “allegations that Merrill Lynch and/or its employees made misrepresentations or omissions in the context of the sale of auction rate securities (ARS) and manipulated the auctions for ARS in order to prevent auction failures.” In re Merrill Lynch & Co., Inc., Auction Rate Securities (ARS) Marketing Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2009) [Slip Opn., at 1]. According to the allegations underlying the class action lawsuits, “Merrill Lynch failed to disclose that (1) ARS were not cash alternatives similar to money market funds, and (2) the ARS sold by Merrill Lynch were only liquid because, at the time of sale, Merrill Lynch and other broker-dealers artificially supported and manipulated the market to maintain the appearance of liquidity and stability.” Id., at 1-2. 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; plaintiffs in the class actions pending outside of that district opposed the motion. Id., at 1. The Judicial Panel rejected the objections to pretrial coordination and granted the motion to centralize the class action lawsuits, finding that “Centralization under Section 1407 will eliminate duplicative discovery, prevent inconsistent pretrial rulings, and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also agreed that the Southern District of New York – “where the first-filed has been pending for over a year” – was the appropriate transferee court. Id., at 2. Accordingly, the Panel ordered all class actions outside of the Southern District of New York transferred to that district, id., at 34.

Download PDF file of In re Merrill Lynch & Co., Inc., Auction Rate Securities (ARS) Marketing Litigation Transfer Order

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

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Class Action Defense Cases–Cirzoveto v. AIG: Tennessee Federal Court Grants Defense Motion For Summary Judgment Against Claims Asserted In Class Action Alleging Breach Of Contract

Class Action Alleging Breach of Annuity Contract for Failure to Pay Promised Interest Rate Failed Entitling Defense to Summary Judgment on Class Action Complaint Tennessee Federal Court Holds

Plaintiff filed a putative class action against AIG Annuity Insurance Company alleging breach of contract; specifically, the class action complaint alleged that AIG failed to pay the amount of interest promised under the annuity contract. Cirzoveto v. AIG Annuity Ins. Co., 625 F.Supp.2d 623, 625 (W.D. Tenn. 2009). According to the allegations underlying the class action complaint, plaintiff purchased an annuity “designed and issued by AIG Annuity and sold by Union Planters Bank” that was to pay 4.6% interest and that “all expenses, including anticipated interest credited to an annuity owner's contract, were considered when determining the initial base rate of interest.” Id. Defense attorneys moved for summary judgment on the ground that it complied with the terms of the annuity contract because the contract expressly disclosed that the 4.6% interest rate was for the first year only, and that it was guaranteed to be at least 2% thereafter. Id. Further, plaintiff had signed an “Owner Acknowledgement Form” confirming that he had “read and understood the disclosures regarding, among other contract features, the payment of interest rates and assessment of withdrawal charges.” Id. Further, contrary to the allegations in the class action complaint, the contract set forth a “Withdrawal Charge Schedule” setting forth the charges for “early withdrawals,” id.; plaintiff, however, had withdrawn all funds within 18 months of obtaining the annuity, id., at 626. The district court granted AIG’s motion and entered judgment in its favor on the class action complaint.

The district court found that AIG did not breach the annuity contract with plaintiff because, contrary to the class action's allegations, the contract did not "expressly or implied" guarantee plaintiff a 4.6% interest return for the life of the annuity. Cirzoveto, at 626. With respect to the breach of contract claim, plaintiff argued that AIG breached the “reasonable expectation” that the higher interest rate would be paid beyond the first year, but the federal court held that such personal opinions cannot trump the clear and unambiguous language of the contract. Id., at 627. Further, plaintiff “failed to produce substantial evidence that he has suffered damages,” because plaintiff cashed out less than 18 months after purchasing the annuity and “was entitled to receive only the value of the premiums he had paid, less any previous withdrawals he made from the annuity.” Id. In other words, he was entitled to receive only a refund of premium, which is “exactly what he received.” Id., at 627-28

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

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Class Action Defense Cases–Sher v. Raytheon: Florida Federal Court Grants Class Action Status To Class Action Complaint Alleging Toxic Tort Liability For Ground Contamination

Class Action Seeking Damages for Diminished Property Values resulting from Release of Chemicals causing Ground Contamination Warranted Class Action Treatment Florida Court Holds

Plaintiffs filed a putative class action against Raytheon alleging that the release of chemicals at a Facility owned by Raytheon caused ground contamination that diminished the property values. Sher v. Raytheon Co., 261 F.R.D. 651 (M.D. Fla. 2009) (Slip Opn., at 1-2, 13-14). According to the allegations underlying the class action complaint, “various industrial activities” were performed at the site which “caused chemicals…including TCE, vinyl chloride and 1, 4-dioxane, to leak into the soil and groundwater at the Facility.” Id., at 2 (footnotes omitted). The class action alleges that the chemicals leaked into the ground and “migrated beyond the boundaries of the Facility and into the surrounding neighborhood,” id., at 2-3. Plaintiffs claim that they were unaware of the ground contamination until a March 2008 news article and newscast. Id., at 4. The federal court explained, “In its current form, the proposed class area consists of over 1,000 property owners and 1,300 parcels of property…. The proposed class area is composed of ten sub-areas or neighborhoods…. There are seventeen different property types within the proposed class area, including various residential (single-family, apartments, condominiums); commercial (stores, shopping center); and institutional uses (schools, a church); as well as vacant land….” Id., at 5. The class action sought monetary damages “for the diminution in the value of their properties that the contamination caused and any restoration costs,” as well as injunctive relief to prevent further contamination. Id., at 13-14. Plaintiffs moved the district court to certify the litigation as a class action, id., at 1. Defense attorneys opposed class action treatment primarily on the ground that “common issues cannot predominate when the Court will have to make individualized inquiries as to causation and damages for each property owner.” Id., at 14. The defense also argued that “under Plaintiffs’ definition, every property owner would be included even if chemicals from the Facility cannot be detected in their groundwater.” Id. The district court granted class action treatment.

We do not here summarize the federal court’s discussion of the named plaintiffs or the various experts. See Sher, at 5-13. The district court began its analysis by noting that the definition of the class “is an overriding concern in environmental or mass toxic tort cases” and that “many courts treat ‘class definition’ as a threshold issue.” Id., at 17. This requirement necessitates that plaintiffs “‘distinguish[] members of the proposed class from the general public based upon’ the defendant's alleged actions against them.” Id. (citations omitted). Plaintiffs argued that their proposed class definition was proper “because it includes a particular group (real property owners), that were harmed during a particular time frame (beginning on March 29, 2008), in a particular location (over Defendant’s groundwater plume) and in a particular way (groundwater contamination).” Id., at 18. Defense attorneys countered that “the geographic boundaries delineated on the Property Map arbitrarily identify a subset of the general public http://classactiondefense.jmbm.com/cgi-bin/mt.cgi?__mode=view&_type=entry&blog_id=1#rather than a distinct class of persons affected by Defendant's alleged activities” and that the putative class subsumes within its sweep “every property owner in the proposed class area – including countless persons whose properties show no detection of chemicals from the Facility.” Id. The federal court concluded that the class definition was sufficiently definite. Id., at 18-20.

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

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ADA Class Action Defense Cases–Ault v. Walt Disney World: Florida Federal Court Dismisses ADA Class Action For Lack Of Standing Holding Class Action Did Not Seek "Access" But "Human Dignity" Through New Technology

Class Action Challenging Disney Prohibition Against use of Segways at Parks Warranted Dismissal for Lack of Standing Florida Federal Holds because Disney Afforded Named Plaintiffs “Access” to its Parks through Scooters, Wheelchairs, and 4-Wheel “Electronic Stand-Up Vehicles” (ESVs) but Barred Segways for Safety Reasons

Plaintiffs filed a putative class action against Walt Disney World alleging violations of the federal Americans with Disabilities Act (ADA); specifically, the class action complaint alleged that Disney violated the ADA by refusing to allow disabled persons to use Segways within the park. Ault v. Walt Disney World Co., ___ F.Supp.2d ___ (M.D. Fla. October 6, 2009) (Slip Opn., at 1, 3-5). According to the allegations underlying the class action complaint, plaintiffs are disabled individuals who prefer to use Segways for mobility “rather than a ‘traditional’ mobility device such as a wheelchair or scooter.” Id., at 3. Disney accommodates disabled guests, and provides wheelchairs and scooters, but for safety reasons has banned the use of two-wheeled devices such as Segways. Id. However, because it realized that some disabled guests would prefer to stand, it designed a 4-wheel “electronic stand-up vehicle” (ESV) that it makes available to guests. Id., at 4. The parties vigorously litigated the class action, and ultimately reached a proposed class action settlement that would permit Disney’s policy against Segways to remain but require Disney “to make a certain number of its ESVs available to disabled guests at its Parks.” Id., at 5. The district court conditionally certified the matter as a class action for settlement purposes and granted preliminary approval to the settlement, id., at 1. The federal court received almost 100 objections to the proposed settlement, including objections from various disability-rights groups, the U.S. Department of Justice and the Attorneys General of twenty-three States. Id., at 1-2. After conducting “an extensive two-day fairness hearing,” the federal court concluded that plaintiffs lacked standing to prosecute the action and, accordingly, vacated its prior order and dismissed the class action complaint without prejudice. Id., at 2.

The class action focuses on the use of Segways at Disney parks. The district court explained, “Although Disney has reviewed its policy against Segways annually, it has consistently concluded that Segway use may not be safe in its densely crowded Parks. For that reason, Disney’s ESV was built around essentially the same technology as its proprietary sit-down scooters and underwent similar safety testing.” Ault, at 4-5. Specifically, Disney designed its ESV to meet “the safety standards for power scooters established by the Rehabilitation Engineering and Assistive Technology Society of North America.” Id., at 5 n.8. In examining the standing of the named plaintiffs, the court noted that one of them, who suffered from progressive Multiple Sclerosis, would “sometimes uses a Segway as her mobility device,” but her legs would get stiff and it was “difficult for her to even stand without needing to hold on to something,” id., at 6; accordingly, she only used her Segway about once a month, id., at 6 n.11, and previously used a traditional scooter during a multi-day visit to Disney parks, id., at 6. Another named plaintiff walked around the park during the first two days of her trip to Disney World, but used a scooter on the third day for a couple of hours. Id., at 7. The last named plaintiff testified that he is “physically able to use a wheelchair or scooter” but prefers his Segway “because no one looks at him and wonders what is ‘wrong’ with him,” id. The district court also summarized various objections to the class action settlement. See id., at 8-11.

Continue reading "ADA Class Action Defense Cases–Ault v. Walt Disney World: Florida Federal Court Dismisses ADA Class Action For Lack Of Standing Holding Class Action Did Not Seek "Access" But "Human Dignity" Through New Technology" »

Posted On: October 12, 2009 by Michael J. Hassen Email This Post

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HAPPY COLUMBUS DAY FROM THE CLASS ACTION DEFENSE BLOG

The author of the Class Action Defense Blog wishes all of you a very happy Columbus Day holiday. A new class action article will be published tomorrow.

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

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Labor Law Class Actions Continue Dominance Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

To assist class action defense attorneys anticipate the types of cases against which they will have to defend in California 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 relevant timeframe. This report covers the time period from October 2 - 8, 2009, during which time 51 new class action cases were filed in these California state and federal courts. Class actions alleging employment-related claims generally top the list by a wide margin. This past week, 27 of the new class action lawsuits involved labor law claims (53% of the total number of new class actions filed). The only other category to break the 10% threshold involved class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, with 10 new class action lawsuits (20% of the new class actions filed during the reporting period).

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

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Class Action Defense Cases—In re Oppenheimer: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Northern District Of Georgia

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

Thirteen (13) class actions – four in California, four in the Eastern District of New York, three in Colorado and one in the Southern District of New York and the Western District of Pennsylvania – were filed against various defendants including various Oppenheimer entities. In re Oppenheimer Rochester Funds Group Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 17, 2009) [Slip Opn., at 1]. The class actions shared a common basis: “All actions share factual questions relating to (1) the operation of municipal bond markets and their liquidity, (2) the impact of market conditions on the types of assets held in the funds, (3) the risks inherent in certain types of holdings, including tobacco bonds and inverse floaters, (4) whether these types of investments were properly disclosed prior to October 2008, and/or (5) whether the concentration of these and other allegedly risky investments was contrary to the fundamental investment objectives and representations of the Oppenheimer municipal bond funds. Although four different municipal bond funds are involved in these thirteen actions, the investment strategies and public disclosures are similar and all funds are overseen by a common investment manager and distributor/underwriter. Thus, regardless of which municipal bond fund is involved in each action, all actions can be expected to focus on a number of common defendants and/or witnesses.” Id., at 2. Defense attorneys for various Oppenheimer 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 Southern or Eastern District of New York, id., at 1. The responses by plaintiffs in the various class actions were all over the map – some opposed the motion, while others supported the motion but requested centralization in Colorado, California, Pennsylvania. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, id., at 2. The Panel also selected the District of Colorado as the appropriate transferee court because “RBSW is headquartered in Atlanta, a significant amount of discovery is likely to take place in that district.” Id. Accordingly, the Panel transferred the Ohio class action to Georgia. Id., at 1-2.

Download PDF file of In re Oppenheimer Rochester Funds Group Securities Litigation Transfer Order

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

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CAFA Class Action Defense Cases–Irish v. Burlington: Wisconsin Federal Court Reaffirms Order Remanding Class Action To State Court Holding Post-Removal Amendments Destroyed CAFA Removal Jurisdiction

Plaintiffs’ Amendment to Class Action Complaint Following Removal under Class Action Fairness Act (CAFA) Defeated CAFA Jurisdiction Warranting Remand of Lawsuit to State Court Wisconsin Federal Court Holds

Plaintiffs filed a putative class action in Wisconsin state court against various defendants seeking “damages resulting from a flash flood that inundated plaintiffs’ homes in the town of Bagley, Wisconsin in 2007.” Irish v. Burlington Northern Santa Fe Railway Co., 632 F.Supp.2d 871, 872 (W.D. Wis. 2009). Defense attorneys removed the class action to federal court on grounds of diversity even though two of the defendants shared Wisconsin citizenship with the plaintiffs, arguing that the Wisconsin-resident defendants were fraudulently joined to defeat diversity, and also asserting removal jurisdiction under the Class Action Fairness Act (CAFA). Id., at 872-83. “Plaintiffs’ moved to remand the case to state court, arguing that joinder was not fraudulent and that their suit was not subject to the Class Action Fairness Act.” Id., at 873. The district court determined that the joinder was not fraudulent but that CAFA removal jurisdiction existed, id. Plaintiffs sought and obtained leave to amend their class action complaint, “disavowing their class action allegations and seeking relief for only the named plaintiffs.” Id. The district court then remanded the class action to state court on the ground that it “no longer had subject matter jurisdiction under the Class Action Fairness Act.” Id. Defense attorneys moved the district court to reconsider its remand order, arguing that because CAFA jurisdiction existed at the time of removal, it could not be taken away by subsequent amendment “even if the case was no longer a class action.” Id. The district court granted reconsideration but again held that the case had to be remanded to state court.

As a preliminary procedural matter, the district court noted that defendants also filed a notice of appeal from the remand order with the Seventh Circuit. Irish, at 873. For reasons we do not discuss here, the district court concluded that it retained jurisdiction over the matter to reconsider its remand order. See id., at 873-74. Turning to the merits, the district court noted that the reconsideration motion was primarily directed at “[the] decision to remand the suit on the basis of a post-removal amendment of the complaint.” Id., at 874. The district court rejected the argument that “for the purpose of determining whether subject matter jurisdiction exists in a case removed from state court under [CAFA], the court is bound by the allegations of the original complaint and may not consider any later amendments.” Id., at 875. The court reaffirmed its holding that “the dismissal of plaintiff's class action claims eliminated the ground for the court's grant of diversity jurisdiction under the Class Action Fairness Act.” Id., at 876.

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

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UCL Class Action Defense Cases–Marilao v. McDonald’s: California Federal Court Dismisses Class Action Alleging McDonald’s Legally Required To Redeem Gift Cards For Cash But Grants Leave To Amend Class Action Complaint

Class Action Failed to Allege Violation of California’s Unfair Competition Law (UCL) based on Merchant’s Refusal to Redeem Gift Card for Cash because California Law gives Merchant Option Whether to Redeem (So Long as Gift Card Value Less than $10) California Federal Court Holds

Plaintiff filed a putative class action in California state court against McDonald’s alleging violations of California’s Unfair Competition Law (UCL) and unjust enrichment. Marilao v. McDonald's CORP., 632 F.Supp.2d 1008, 1009-10 (S.D. Cal. 2009). According to the allegations underlying the class action complaint, plaintiff sought “to redeem a gift card he received for cash instead of dining at McDonald's, but was told…that he could not receive cash for his gift card.” Id., at 1010. The class action complaint further alleged that “McDonald's gift cards provide…‘[t]he value on this card may not be redeemed for cash ... unless required by law.’” Id. Defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA), id., at 1009-10. McDonald’s then moved to dismiss the class action for failure to state a claim, id., at 1010. The district court granted the motion and dismissed the class action with leave to amend.

With respect to the class action’s UCL claim, plaintiff alleged that McDonald’s conduct violated California Civil Code § 1749.5(b)(1), which provides that “[a]ny gift certificate sold after January 1, 1997, is redeemable in cash for its cash value, or subject to replacement with a new gift certificate at no cost to the purchaser or holder.” Marilao, at 1011. However, California Civil Code § 1448 provides, “If an obligation requires the performance of one of two acts, in the alternative, the party required to perform has the right of selection, unless it is otherwise provided by the terms of the obligation.” In this case, then, the district court reasoned, McDonald’s had the option of “either redeeming a gift card in cash for its cash value or by replacing a gift card with a new card at no cost to the purchaser or holder.” Marilao, at 1011. The statute relied upon by plaintiff does not compel a contrary finding, so McDonald’s did not violate § 1749.5(b)(1) by refusing to redeem plaintiff’s gift card for cash. Id., at 1011-12. The court stressed that the class action did not implicate § 1749.5(b)(2), added in 2007, which requires merchants to redeem gift certificates with a cash value of less than $10, id., at 1012. The federal court also agreed with defense attorneys that plaintiff lacked standing to assert the class action’s UCL claim because he had not suffered injury in fact, or lost money or property, as a result of the allegedly unfair act. Id., at 1012. The court explained at page 1013, “Plaintiff did not expend money on his gift card, as he alleges that he received it as a gift…. Plaintiff does not allege that he lost money or property, as his gift card still retains its value to redeem it for McDonald's products. Plaintiff also does not sufficiently allege that he has been denied money to which he has a cognizable claim, as Plaintiff is not entitled to redeem his McDonald's gift card for cash whenever presented to McDonald's under § 1749.5(b)(1). Accordingly, the Court concludes that Plaintiff fails to sufficiently allege his standing to bring a claim under the UCL.”

Continue reading "UCL Class Action Defense Cases–Marilao v. McDonald’s: California Federal Court Dismisses Class Action Alleging McDonald’s Legally Required To Redeem Gift Cards For Cash But Grants Leave To Amend Class Action Complaint" »

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

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Class Action Defense Cases–Movsesian v. Victoria Versicherung: Ninth Circuit Reverses Denial Of Motion To Dismiss Class Action Holding California Statute Regarding Armenian Genocide Unconstitutional

District Court Erred in Denying Motion to Dismiss Class Action because California Statute Regarding Armenian Genocide was Preempted by Foreign Affairs Doctrine Ninth Circuit Holds

In December 2003, plaintiff filed a class action against various defendants on behalf of “persons of Armenian descent who claim benefits from insurance policies issued by” two of the defendants; the class action complaint sought damages for breach of contract and breach of the implied covenant of good faith and fair dealing, among other claims. Movsesian v. Victoria Versicherung AG, 578 F.3d 1052, 1055 (9th Cir. 2009). The class action complaint followed California’s enactment of Code of Civil Procedure section 354.4 in 2000, which “provide[d] California courts with jurisdiction over certain classes of claims arising out of insurance policies that were held by ‘Armenian Genocide victim[s]’” and which “extend[ed] the statute of limitations for such claims until December 31, 2010.” Id., at 1054. The Ninth Circuit noted that “Section 354.4 was modeled after §§ 354.5 and 354.6, which extended the statute of limitations until 2010 for Holocaust-era insurance claims and World War II slave labor claims, respectively…. Both of these sister statutes have been found unconstitutional, because they interfered with the national government's foreign affairs power.” Id., at 1054-55 (citations omitted). Defense attorneys moved to dismiss the class action complaint on the grounds that the class members lacked standing and that Section 354.4 was unconstitutional because it “violated the due process clause of the United States Constitution and was preempted under the foreign affairs doctrine.” Id., at 1055. The district court held that the statute was not preempted and accordingly allowed certain claims in the class action to remain. Id. The Ninth Circuit reversed.

The Circuit Court summarized the case at page 1053 as follows: “Section 354.4 of the California Code of Civil Procedure extends the statute of limitations until 2010 for claims arising out of life insurance policies issued to ‘Armenian Genocide victim[s].’ [Citation.] The primary issue in this appeal is whether § 354.4 interferes with the national government's conduct of foreign relations. We conclude that it does, and accordingly, we hold that the California statute is preempted. The district court's order denying the Rule 12(b)(6) motion to dismiss is reversed.” After summarizing the de novo standard of review, see id., at 1055-56, the Ninth Circuit analyzed the constitutionality of § 354.4 under the foreign affairs doctrine. The Circuit Court explained at page 1056, “This case presents the issue whether § 354.4 of the California Code of Civil Procedure interferes with the national government's power to conduct foreign affairs.” After a detailed analysis, that we do not summarize here, see id., at 1056-60, the Ninth Circuit concluded that “there is an express federal policy prohibiting legislative recognition of an ‘Armenian Genocide,’” id., at 1060. The Circuit Court next turned to whether the statute “clearly conflicts with the presidential foreign policy prohibiting legislative recognition of an Armenian Genocide,” and concluded that it did because it uses the phrase, “Armenian Genocide.” See id., at 1060-61.

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Posted On: October 5, 2009 by Michael J. Hassen Email This Post

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FLSA Class Action Defense Cases–Rutti v. Lojack: Ninth Circuit Affirms Defense Summary Judgment In FLSA Class Action Except As To One Claim Seeking Compensation For Postliminary Activities

District Court Properly Granted Defense Motion for Summary Judgment as to Commute Time and Preliminary Activities Time, but Issue of Fact Existed as to Whether Postliminary Activity of Daily Transmissions to Employer Warranted Compensation Ninth Circuit Holds

Plaintiff filed a putative class action against his employer, Lojack, alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that defendant failed to compensate its installation technicians for “time they spent commuting to worksites in Lojack's vehicles and for time spent on preliminary and postliminary activities performed at their homes.” Rutti v. Lojack Corp., Inc., 578 F.3d 1084, 1086-87 (9th Cir. 2009) (footnote omitted). According to the allegations underlying the class action, most installation and repair work was performed on location, and plaintiff was “required to travel to the job sites in a company-owned vehicle.” Id. Lojack paid its installation technicians on an hourly basis, and plaintiff was paid “for the time period beginning when he arrived at his first job location and ending when he completed his final job installation of the day.” Id., at 1086. Plaintiff alleged, however, that he was not compensated for “off-the-clock” activities that he “performed before he left for the first job in the morning and after he returned home following the completion of the last job,” and that “Lojack required technicians to be ‘on call’ from 8:00 a.m. until 6:00 p.m. Monday through Friday, and from 8:00 a.m. until 5:00 p.m. on Saturdays,” during which time they had to “keep their mobile phones on and answer requests from dispatch to perform additional jobs, but they were permitted to decline the jobs.” Id. (footnote omitted). Defense attorneys moved for summary judgment; the district court granted the motion, “holding that [plaintiff’s] commute was not compensable as a matter of law and that the preliminary and postliminary activities were not compensable because they either were not integral to [plaintiff’s] principal activities or consumed a de minimis amount of time.” Id. Plaintiff appealed, id., at 1087. The Ninth Circuit affirmed in part, agreeing that plaintiff’s commute time and preliminary activities were not compensable, but reversed and remanded with respect to plaintiff’s “postliminary activity of required daily portable data transmissions,” id., at 1086.

The Ninth Circuit first held that the time plaintiff spent commuting was not compensable. See Rutti, at 1088-93. The Circuit Court explained that, under the Employee Commuting Flexibility Act, 29 U.S.C. § 254(a)(2), an employer may require an employee to commute in a company vehicle. See id., at 1088-90. Further, the Court held that the conditions placed by defendant on plaintiff’s use of the company vehicle did not render his commute time compensable. See id., at 1090-92 (citing Bobo v. United States, 136 F.3d 1465 (Fed. Cir. 1998), and Adams v. United States, 471 F.3d 1321 (Fed. Cir. 2006)). And finally, the Ninth Circuit held that California law did not require Lojack to compensate plaintiff for his commute time in the company’s vehicle. See id., at 1092-93. Accordingly, the Circuit Court affirmed the district court’s conclusion “that [plaintiff] is not entitled to compensation for the time spent commuting to and from his job sites in a vehicle provided by Lojack under either 29 U.S.C. § 254(a)(2) or California law.” Id., at 1093.

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Posted On: October 3, 2009 by Michael J. Hassen Email This Post

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Class Actions Alleging Employment-Related Claims Take Top Spot 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 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 relevant timeframe. This report covers the time period from September 25 - October 1, 2009. During that time period, 47 new class action cases were initiated in these California state and federal courts. Labor law class actions generally top the list by a wide margin, often accounting for more than half of the new class action lawsuits filed, but this past week only 18 of the new class action filings involved employment-related claims (38% of the total number of new class actions filed). The only other category to break the 10% threshold involved class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, with 13 new class action lawsuits (28% of the new class actions filed during the reporting period).

Posted On: October 2, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases—In re RBS Worldpay: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Northern District Of Georgia

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

Two class actions – one in Georgia and one in Ohio – were filed against various defendants including RBS Worldypay arising out of “an unauthorized intrusion into RBSW’s computer system.” In re RBS Worldpay, Inc., Customer Data Security Breach Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 9, 2009) [Slip Opn., at 1]. According to the allegations under the class actions, the intrusion meant that various personal information (including Social Security numbers) of more than one million holders of gift cards and payroll cards was allegedly compromised.” Id. Defense attorneys for RBS Worldpay 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 Georgia; plaintiffs in the Georgia class action supported the motion. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed that the Northern District of Georgia was the appropriate transferee court because “RBSW is headquartered in Atlanta, a significant amount of discovery is likely to take place in that district.” Id. Accordingly, the Panel transferred the Ohio class action to Georgia. Id., at 1-2.

Download PDF file of In re RBS Worldpay, Inc., Customer Data Security Breach Litigation Transfer Order

Posted On: October 1, 2009 by Michael J. Hassen Email This Post

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Class Action Defense Cases–21st Century v. Superior Court: California Supreme Court Affirms Appellate Court Order Compelling Dismissal Of Class Action Against Auto Insurer Involving Med-Pay Issues

As a Matter of First Impression, in the “Med-Pay” Automobile Insurance Context, the “Made Whole” Rule does not Include Liability for Attorney Fees California Supreme Court Holds

Plaintiff filed a putative class action in California state court against auto insurance company, 21st Century Insurance, alleging violations of the state’s Unfair Competition Law (UCL), conversion, unjust enrichment and declaratory relief. 21st Century Ins. Co. v. Superior Court, 47 Cal.4th 511, 518-19 (Cal. 2009). According to the allegations underlying the class action complaint, plaintiff was injured in a car accident; her auto insurance policy, issued by 21st Century, “included first party, no-fault medical payment (med-pay) insurance coverage in case of an accident,” and she received $1,000 under this provision. Id., at 518. Plaintiff filed suit against the driver of the other vehicle and settled that lawsuit for $6,000, “which sum represented her total damages. In obtaining the settlement, she incurred approximately $2,000 in attorney fees and costs,” id. Her insurer sought reimbursement of the $1,000 previously paid under the policy; the parties ultimately agreed on the return of $600 by plaintiff, which represented the insurer’s pro rata share of attorney fees expended by the insured in pursuing the third party. Id., at 519. Plaintiff then filed her class action against 21st Century, alleging that “21st Century could not lawfully require any reimbursement under its policy terms because she had not been made whole by the third party damages settlement ($6,000) and medical payments received from the insurer ($1,000) when her attorney fees of $2,106.50 were included as part of her made whole recovery.” Id. Defense attorneys demurred to the complaint on the ground that California law does not require an insurer to include attorney fees or costs in its made-whole calculation. Id., at 520. The trial court rejected this argument, but the Court of Appeal granted defendant’s petition for writ relief and reversed, holding that attorney fees fall under the “common fund doctrine.” Id. The California Supreme Court granted plaintiff’s petition for review. The Court explained, “The narrow issue before us in this writ proceeding is whether the made-whole rule includes liability for all the attorney fees insureds must pay in order to obtain medical payment compensation from a third party tortfeasor.” Id., at 518. It held that “although the made-whole rule applies in the med-pay insurance context, and the insured must be made whole as to all damages proximately caused by the injury, liability for attorney fees is not included under the made-whole rule.” Id. Rather, “[t]hose fees instead are subject to a separate equitable apportionment rule (or pro rata sharing) that is analogous to the common fund doctrine,” id. The Court therefore affirmed the appellate court decision requiring dismissal of the class action.

The California Supreme Court explained at page 518, “Insurance policies typically have, and her policy did have, a provision requiring her to reimburse her insurer for monies she recovered from a third person that duplicated her recovery under her policy. Underlying these provisions, the basic idea is that insureds should not recover the same amount twice, once from their insurance company and again from a third party. In sum, insureds are entitled to be ‘made whole’ from the insurance proceeds and tort recovery, but they are not entitled to a double recovery.” The Supreme Court’s holding is fully summarized above, and we do not discuss it further. We note, however, that the Court stressed the limited application of its decision: “Our analysis is limited to auto insurance med-pay cases. The reason is that automobile insurance coverage may differ in scope from coverage under other liability policies or homeowner's property insurance that may or may not have reimbursement provisions, insurer participation requirements, or definitions that apply only to the particular insurance policy terms.” 21st Century, at 518 n.1.

Download PDF file of 21st Century Insurance v. Superior Court