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

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Labor Law Class Action Lawsuits End 2009 With Firm Hold On 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. Because of the holidays, this report covers the time period from December 18 - 30, 2009, during which time 59 new class action cases were filed in these California state and federal courts. Generally, labor law class actions top this list by a wide margin, as they frequently account for more than half of the total number of new class action lawsuits filed. During this reporting period, there were 29 new class actions alleging employment-related claims, representing only 49% 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 16 new class action lawsuits (27% of the new class actions filed during the reporting period).

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

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Class Action Defense Cases–Truk v. Wehlmann: Texas Federal Court Dismisses Securities Fraud Class Action Based On Cautionary Language In Public Offering Documents

Class Action Alleging Violations of Federal Securities Laws based on Oil Company’s “Proved Reserves” Estimates in Public Offering Documents Warranted Dismissal because Cautionary Language Warned Reasonable Investor of Risk of Lower Reserves Texas Federal Court Holds

Plaintiff filed a putative class action against Cano Petroleum (an independent oil and natural gas company) and individual officers and directors of Cano, as well as defendants involved in the underwriting of Cano’s secondary public offering, alleging violations of federal securities laws; specifically, the class action complaint alleged that the documents issued in connection with the secondary public offering contained material misrepresentations in violation of Sections 11, 12 and 15 of the Securities Act of 1933. Truk Int’l Fund LP v. Wehlmann, ___ F.Supp.2d ___ (N.D.Tex. December 3, 2009) [Slip Opn., at 2-3.] According to the allegations underlying the class action complaint, defendants’ disclosures concerning Cano’s “proved reserves” were significantly overstated. Id., at 3-4. The class action further alleged that only one month after the secondary public offering, Cano’s CEO announced that the company’s proved reserves had declined by roughly 20%. Id., at 4-5. Following that announcement, Cano’s stock price fell “sharply and immediately.” Id., at 5. Defense attorneys moved to dismiss the class action on various grounds, see id., at 5-6. The district court granted the motions.

The district court began by summarizing public information relevant to the motion, see Truk, at 7-13, as well as the applicable standards governing the defendants’ motions, see id., at 13-15, and the relevant provisions of the Securities Act, see id., at 15-20. Focusing on the central allegations underlying the class action claims, see id., at 20-23, the district court first held that “[t]he cautionary statements in the Offering Documents made clear that the proved reserve numbers stated in the documents were estimates as of June 30, 2007, and that a large number of factors could cause the estimates to be lower if recalculated as of the date of the offering,” id., at 23. The new estimates had been based on a new estimate provided June 30, 2008, and were the result of circumstances that the Offering Documents warned could lead to a reduction in the proved reserves estimate. Id., at 24. In the federal court’s view, “a reasonable investor would know from reading the cautionary language in the Offering Documents that an investment in Cano was risky and that a part of that risk was in the uncertainty as to the quantity of proved reserves.” Id., at 28. Accordingly, the court granted the motions to dismiss the class action claims. Id., at 28, 30-31. The court also denied leave to amend, noting that “the nature of the pleading deficiencies suggest that repleading would be futile” and that “defendants should not be subjected to further costs of litigation.” Id., at 30.

Download PDF file of Truk v. Wehlmann

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

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PSLRA Class Action Defense Cases–In re Heartland Payment Systems: New Jersey Federal Court Dismisses Securities Fraud Class Action Holding Class Action Complaint Failed To Satisfy PSLRA

Class Action Complaint Alleging Securities Fraud Failed to Adequately Plead Misrepresentation or Scienter under Heightened Pleading Requirements Established by Private Securities Litigation Reform Act (PSLRA) New Jersey Federal Court Holds

Plaintiffs filed a putative class action against Heartland Payment Systems and others alleging violations of federal securities laws; specifically, the class action complaint alleged that defendants concealed information and/or made affirmative misrepresentations that were material to the value of the company’s stock and that plaintiffs suffered damage because the company’s stock value declined almost 80%. In re Heartland Payment Systems, Inc. Securities Litig., U.S.D.C. Case No. 09-1043 (D.N.J. December 7, 2009) [Slip Opn., at 1, 3.] According to the allegations underlying the class action complaint, Heartland “provides bank card payment processing services to merchants” and “maintains millions of credit and debit card numbers on its computer network.” Id., at 1. In 2008, Hackers managed to steal 130 million credit and debit card numbers from Heartland. Id., at 2. At the time of the theft, the company believed hackers had targeted solely the “payroll manager application” which “does not contain data on cardholders’ credit and debit card accounts” but rather “internal corporate information such as employees’ names, addresses, social security numbers, and other confidential information.” Id. Heartland did not discover the full extent of the breach until January 2009, at which time it “immediately notified the U.S. Department of Justice, the U.S. Secret Service, and the credit card companies who account numbers had been stolen,” and soon thereafter “publicly disclosed the theft.” Id. Following the public disclosure, Heartland’s stock price dropped dramatically, id. Plaintiffs filed their class action complaint on the theory that company statements concerning the adequacy of its security systems were fraudulent because the company was “aware that Heartland had poor data security and had not remedied the problem.” Id., at 3. Defense attorneys moved to dismiss the class action on the grounds that it failed to satisfy the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA), id. The district court granted the motion.

The district court explained that the PSLRA requires a plaintiff “to plead the ‘who, what, when, where, and how’ of the allegedly fraudulent statements.” In re Heartland, at 3-4 (citing Institutional Investors Group v. Avaya Inc., 564 F.3d 242, 252 (3d Cir. 2009). Moreover, the PSLERA “requires that the complaint ‘state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.’” Id., at 4 (citation omitted). The federal court agreed with defense attorneys that the class action complaint failed to adequately allege a material misrepresentation, see id., at 5-11. The court agreed further that the class action failed to adequately plead the requisite scienter to support the class action claims. See id., at 11-13. The district court therefore found it unnecessary to address defendant’s loss causation argument. See id., at 5, 13-14. The court dismissed the class action complaint without leave to amend, concluding that “further specificity would not cure the Complaint’s deficiencies,” id., at 14.

Download PDF file of In re Heartland Payment Systems, Inc. Securities Litigation

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

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Percentage Of New Employment-Related Class Action Lawsuits Soar In Relation To Other Categories Of Class Actions Filed In California State And Federal Courts During Past Week

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 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 December 11 - 17, 2009, during which time only 30 new class action cases were filed in these California state and federal courts. Labor law class actions generally top this list by a wide margin, and this was particularly true during the past week. During this reporting period, there were 19 new class actions alleging employment-related claims (63% 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 5 new class action lawsuits (17% of the new class actions filed during the reporting period).

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

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Class Action Defense Cases–In re DirecTV: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiffs’ Motion To Centralize Class Action Litigation But Selects Central District Of California As Transferee Court

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. — 1407, Over Objection of One Group of Class Action Plaintiffs, but Transfers Class Actions to Central District of California

Seven class actions were filed in seven different district courts – the Central and Northern Districts of California, the Southern District of Florida, the Northern District of Georgia, the District of New Jersey, the Eastern District of Pennsylvania, and the Western District of Washington – against various DirecTV challenging its early cancellation fee policies. In re DirecTV, Inc., Early Cancellation Fee Marketing & Sales Prac. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. October 9, 2009) [Slip Opn., at 1]. According to the allegations under the class actions, “defendants commit their customers to minimum programming terms without their knowledge or consent and unlawfully charge an early termination fee if the customer cancels service prior to the expiration of that programming term.” Id. Attorneys for plaintiffs in three of the class actions (Florida, Georgia and Washington) filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Western District of Washington; plaintiffs in the Pennsylvania class action and the New Jersey class action supported the motion. Id. Plaintiffs in the Central District of California class action supported the motion but proposed their district as the appropriate transferee court; plaintiffs in the Northern District of California class action opposed centralization. Id. Defense attorneys opposed centralization but alternatively argued for transfer of the class actions to the Central District of California, id. The Judicial Panel granted the motion to centralize the class action lawsuits, rejecting the arguments of the plaintiffs in the Northern District of California. Id., at 1-2. The Judicial Panel decided that the Central District of California was the appropriate transferee court, where DirecTV was headquartered. Id., at 2. Accordingly, the Panel transferred all class actions pending outside of the Central District of California to that district. Id.

Download PDF file of In re DirecTV, Inc., Early Cancellation Fee Marketing & Sales Prac. Litigation Transfer Order

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

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Class Action Defense Cases–People United For Children, Inc. v. The City of New York: Second Circuit Affirms Approval Of Class Action Settlement But Remands For Clarification Of Scope Of Class Action Release

Class Action Settlement Properly Approved by District Court but Ambiguity in Scope of Release Required Remand for Clarification Second Circuit Holds

Plaintiffs filed a class action in New York federal court against the City of New York and various other defendants that “challenged policies adopted by the New York City Administration for Children's Services (‘ACS’) relating to the removal of children from their homes in cases of abuse and neglect.” People United For Children, Inc. v. The City of New York, ___ F.3d ___, 2009 WL 4576113, *1 (2d Cir. December 8, 2009). According to the allegations underlying the class action complaint, defendants’ conduct constituted “violations of due process, equal protection, and parental, privacy, cultural, and religious rights,” and constituted discrimination “under the New York State and United States Constitutions.” Id. The class action complaint prayed for declaratory and injunctive relief, and for monetary damages. Id., at *2. Ultimately, the district court granted plaintiffs’ motion to certify the litigation as a class action. Id. Following two years of negotiations, the parties agreed upon a proposed class action settlement that won the preliminary approval of the district court. Id., at *3. At the fairness hearing, the district court gave final approval to the class action settlement over the objection of one of the named plaintiffs (Jones) and the objections of a member of the putative class. Id., at *1, *3. In part, the district court concluded that Jones had effectively “opted out” of the class, removed her as a class representative, and concluded that it need not consider her objections to the proposed settlement. Id., at *1. The objectors appealed the order approving the class action settlement, id. The Second Circuit agreed that the district court should not have concluded Jones had “opted out” of the class, but it found the error to be harmless and therefore affirmed.

We do not here summarize the notice provided to the class or the objections leveled against the class action settlement. See McReynolds, at *4-*6. The central issues on appeal were (1) whether Jones had “opted out” of the class and (2) whether the district court should have ignored her objections to the proposed settlement. Id., at *6. With respect to the first issue, the Second Circuit held that the district court erred because Jones had simply objected to the proposed settlement, and stated as much at the fairness hearing. Id., at *7. The Circuit Court explained at page *7, “Despite Jones' clear indication that she did not intend to opt out of the class action and her invocation of her right to object under the ‘rules,’ the District Court nevertheless found that Jones had opted out of the class because she ‘can't have it both ways.’ In so finding, the District Court erred in two ways: first, the finding that Jones elected to opt out of the class action was a clearly erroneous finding of fact; and, second, the court's conclusion that Jones opted out of the class by reason of her objection to the class settlement was an error of law.” The error was harmless, however, because Jones’ objections had been raised by other members of the putative class and so had been considered (and rejected) by the district court. See id., at *8-*9.

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

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Class Action Defense Cases–Mohawk Industries v. Carpenter: Supreme Court Holds Collateral Order Doctrine For Appellate Jurisdiction Does Not Extend To Disclosure Orders Adverse To Attorney-Client Privilege

District Court Order Compelling Production of Discovery Protected by Attorney-Client Privilege on Grounds Privilege had been Waived not Appealable because Collateral Order Doctrine does not Extend to such Orders Supreme Court Holds

Plaintiff Carpenter filed a lawsuit against his employer, Mohawk Industries, in a Georgia federal court alleging violations of various labor laws; specifically, plaintiff alleged that he was wrongfully terminated for informing the company’s human resources department that Mohawk was employing illegal aliens. Mohawk Industries, Inc. v. Carpenter, ___ U.S. ___, 130 S.Ct. 599, 2009 WL 4573276, *3 (December 8, 2009). At the time, plaintiff did not know that a putative class action lawsuit (“Williams”) had been filed against Mohawk that accused it of “conspiring to drive down the wages of its legal employees by knowingly hiring undocumented workers in violation of federal and state racketeering laws.” Id. According to the allegations underlying plaintiff’s individual lawsuit, Mohawk fired him after he refused to be pressured into retracting his accusation. Id. Plaintiffs in the Williams class action learned of the Carpenter lawsuit, and “sought an evidentiary hearing to explore Carpenter's allegations.” Id. The company opposed the motion, characterizing Carpenter’s accusations as “pure fantasy” and by attacking Carpenter in its explanation of his termination. Id. At the same time, Carpenter was seeking discovery of company documents concerning the meeting with company employees and counsel that preceded his termination; Mohawk opposed the discovery request in Carpenter on the grounds that it sought information protected by the attorney-client privilege. Id., at *4. The district court in Carpenter concluded that the attorney-client privileged had been waived based on the disclosures made in the Williams action concerning the grounds for Carpenter’s termination. Id. Defense attorneys appealed the court’s order or, in the alternative, sought mandamus relief; the Eleventh Circuit dismissed the appeal for lack of jurisdiction as the order was not appealable, and denied the petition for writ of mandate. Id. The Supreme Court granted certiorari “to resolve a conflict among the Circuits concerning the availability of collateral appeals in the attorney-client privilege context.” Id.

We do not discuss the Supreme Court’s analysis in detail, as we are concerned here only with its holding. (Interested readers may find the entire text of the Supreme Court opinion below.) In brief, the High Court summarized the “final decision” jurisdiction of Courts of Appeal, and the “‘small class’ of collateral rulings that, although they do not end the litigation, are appropriately deemed ‘final.’” Mohawk Industries, at *5 (citation omitted). The Supreme Court explained, “That small category includes only decisions that are conclusive, that resolve important questions separate from the merits, and that are effectively unreviewable on appeal from the final judgment in the underlying action.” Id. (citation omitted). But the Court expressed concern that the “small class” of cases fitting within this exception be interpreted so as to swallow the general rule. Id. And the High Court concluded that “collateral order appeals are not necessary to ensure effective review of orders adverse to the attorney-client privilege,” id., at *6. The Court explained that its holding turned not on the importance of the interest sought to be protected “in the abstract,” but rather “whether deferring review until final judgment so imperils the interest as to justify the cost of allowing immediate appeal of the entire class of relevant orders.” Id. In this regard, the Court noted that it “routinely require[s] litigants to wait until after final judgment to vindicate valuable rights, including rights central to our adversarial system.” Id. (citations omitted). Here, too, the Supreme Court held that “post-judgment appeals generally suffice to protect the rights of litigants and assure the vitality of the attorney-client privilege.” Id.

Continue reading "Class Action Defense Cases–Mohawk Industries v. Carpenter: Supreme Court Holds Collateral Order Doctrine For Appellate Jurisdiction Does Not Extend To Disclosure Orders Adverse To Attorney-Client Privilege" »

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

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Labor Law Class Action Lawsuits Maintain Grip On 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, 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 December 4 - 10, 2009, during which time 41 new class action cases were filed in these California state and federal courts. Generally, class actions alleging employment-related claims top this list by a wide margin, often accounting for more than half of the total number of new class action lawsuits filed. This yet again proved to be the case. During this reporting period, there were 24 new class actions alleging employment-related claims (59% 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 9 new class action lawsuits (22% of the new class actions filed during the reporting period).

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

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Class Action Defense Cases–In re Sony: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Eastern District Of New York

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 Class Actions to Eastern District of New York

Seven class actions – five in the Southern District of New York, and one each in the Eastern District of New York and Eastern District of Texas – were filed against various Sony entities “arising from the performance of the ‘optical block’ of second generation Sony WEGA SXRD rear projection HDTV televisions.” In re Sony Corp. SXRD Rear Projection Television Marketing, Sales Practices & Products Liab. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. October 9, 2009) [Slip Opn., at 1]. According to the allegations under the class actions, “this major component of the subject televisions is inherently defective, causing yellow stains, green haze and other color anomalies that interfere with the television’s display.” Id. Defense attorneys for Sony Corp. of America, Sony Electronics Inc., and Sony Corp. filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Eastern District of New York or, alternatively, in the Southern District of California. Id. None of the class action plaintiffs opposed Sony’s motion or opposed transfer of the class actions to the Eastern District of New York. Id. The Judicial Panel granted Sony’s motion and agreed that the Eastern District of New York was the appropriate transferee court, id., at 1-2. Accordingly, the Panel transferred all class actions pending outside of the Eastern District of New York to that district. Id., at 2.

Download PDF file of In re Sony Corp. SXRD Rear Projection Television Marketing, Sales Practices & Products Liab. Litigation Transfer Order

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

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Class Action Defense Cases–Carr v. Gateway: Illinois Appellate Court Affirms Denial Of Motion To Compel Arbitration Of Consumer Class Action Claims Because Required Forum Unavailable To Arbitrate Dispute

Illinois Appellate Court Holds Motion to Compel Arbitration of Individual Claims in Class Action Complaint Alleging Violations of Various Consumer Protection Laws, based on Arbitration Clause Containing Class Action Waiver, Properly Denied because Agreement Required Disputes be Heard by National Arbitration Forum which no Longer Conducted Consumer Arbitrations

Plaintiffs filed a putative class action in Illinois state court against Gateway, Intel, Hewlett-Packard and others alleging inter alia violations of various California and Illinois consumer protection statutes; specifically, the class action complaint challenged defendants’ marketing of computers equipped with Intel’s Pentium 4 processor. Carr v. Gateway, Inc., ___ Cal.App.4th ___ (Ill.App. November 24, 2009) [Slip Opn., at 1.] According to the allegations underlying the class action complaint, defendants “have engaged in conduct which is likely to mislead, and has misled, the public through the suppression and concealment from the public of the material fact that there is no benefit to consumers in choosing the Pentium 4 over the Pentium III and that the Pentium 4 is less powerful and slower than the Pentium III and/or the AMD Athlon processors.” Id., at 1-2. The class action also alleged that defendants “made or disseminated misleading statements regarding the power and speed of the Pentium 4.” Id., at 2. Counts IV, V and VI of the class action complaint alleged violations of California’s Consumers Legal Remedies Act (CLRA) and Unfair Competition Law (UCL), and of Illinois’ Consumer Fraud and Deceptive Business Practices Act (the Act); these claims were ultimately severed from the class action complaint and they are the claims at issue in this opinion. Id. Defense attorneys moved the circuit court to dismiss the class action complaint, or to stay the class action and compel plaintiff to arbitrate his individual claim based on an arbitration clause that contained a class action waiver. Id., at 1, 2-3. After holding an evidentiary hearing, id., at 3-4, the court denied the motion on the grounds that arbitration clause “was not a part of the sales contract that was entered into by the parties” and, in any event, would be unenforceable as unconscionable, id., at 4. The Illinois Supreme Court then issued its opinion in Barbara's Sales, Inc. v. Intel Corp., 227 Ill.2d 45 (2007), see id., at 4-5. (This Blog’s article discussing that opinion may be found here.) The circuit court reaffirmed its order, and Gateway appealed. The appellate court affirmed.

The appellate court began its analysis by observing that the lower court denied Gateway’s motion to compel “primarily on its finding that the Agreement was not a part of the contract for the purchase of the Gateway computer.” Carr, at 6. If the arbitration clause was part of the contract, it called for any disputes to be “resolved exclusively and finally by arbitration administered by the National Arbitration Forum (NAF) and conducted under its rules,” id. However, during the pendency of the appeal, “the NAF has ceased administering consumer arbitrations.” Id. Noting that it could “affirm the circuit court's order on any basis in the record,” the appellate court analyzed” the impact the unavailability of the NAF has upon the validity of the arbitration provision.” Id. Gateway argued that section 5 of the Federal Arbitration Act (FAA) provides a “method” exists for selecting “an alternative arbitration forum” under its contract with consumers, id., at 6-7. The appellate court rejected this claim, finding that “the specific designation of the NAF as the exclusive arbitration forum is an integral part of the arbitration clause in the Agreement.” Id., at 7. Because NAF was no longer available to resolve consumer disputes under the Agreement, and because the FAA “cannot be used to reform the arbitration provision,” the appellate court affirmed the circuit court’s order denying Gateway’s motion to compel arbitration. Id., at 8.

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

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Class Action Defense Cases–Keller v. Tuesday Morning: California Appellate Court Affirms Decertification Of Labor Law Class Action Because Evidence Supported Finding That Individualized Inquiries Would Predominate

Class Action Alleging Employer Misclassified Managers as Exempt and Failed to Pay them Overtime Wages Properly Decertified as Class Action because Amount of Time Spent on Managerial Duties Required Individual Inquiry and because “Individualized Issues of Liability and Damages will Predominate” California Appellate Court Holds

Plaintiffs filed a putative class action against their employer, Tuesday Morning, alleging violations of California labor laws; specifically, the class action complaint alleged that defendant misclassified its managers as exempt employees and failed to pay them overtime wages. Keller v. Tuesday Morning, Inc., ___ Cal.App.4th ___ (Cal.App. November 4, 2009) [Slip Opn., at 1-2.] Plaintiffs’ motion for class action certification was granted. Id., at 1. Two years later, defense attorneys moved the trial court to decertify the class. Id. Defendant filed the motion after the parties had conducted “extensive discovery” and supported the motion with 10 declarations and references to the deposition testimony of 49 managers. Id., at 2. “A different trial judge granted the motion on the ground that individual issues predominated over common issues, thus a class action was not the appropriate mechanism by which to litigate the managers’ claims.” Id., at 1. The new trial judge issued his ruling after conducting a three-day evidentiary hearing on the motion. Id., at 6. Based on the evidence, the court concluded that even though there were some common issues, “the amount of time a manager spent performing [various] acts and his or her exercise of discretion are matters of individual inquiry.” Id. Specifically, “the time spent in a managerial duty is an individual inquiry,” and “[e]ach manager’s background and management style varied from store to store.” Id., at 7. Plaintiffs appealed the class action decertification order, and the Court of Appeal affirmed.

The appellate court summarized the evidence presented by defense attorneys in support of the decertification motion. See Keller, at 2-5. The Court of Appeal also discussed two appellate court decisions that similarly concerned “unpaid overtime in retail chain operations” – Walsh v. IKON Office Solutions, Inc., 148 Cal.App.4th 1440 (Cal.App. 2007), and Dunbar v. Albertson’s Inc., 141 Cal.App.4th 1422 (Cal.App. 2006) – each of which affirmed trial court orders denying or decertifying class action treatment. See Keller, at 9-10. Based on Walsh and Dunbar, and the evidence presented in support of the motion to decertify the class, the Court of Appeal held that “[s]ubstantial evidence supports the trial court’s conclusion that individualized issues of liability and damages will predominate over issues common to the class if the overtime claims are tried as a class action.” Id., at 11. Accordingly, the appellate court affirmed the trial court order decertifying the litigation as a class action. Id.

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

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Class Action Defense Cases–Amburgy v. Express Scripts: Missouri Federal Court Dismisses Theft Of Personal Information Class Action Complaint For Lack Of Standing Because Plaintiff’s Information And Identity Not Stolen

Class Action Seeking Monetary and Injunctive Relief Arising from Theft of Personal Information, Allegedly Creating “Increased Risk” of Identity Theft Requiring Monitoring of Credit, Dismissed for Lack of Standing because Putative Class Representative did not Allege his Information was Stolen or had been used or Disclosed so Plaintiff Failed to Establish Injury-in-Fact Missouri Federal Court Holds

Plaintiff filed a putative class action against Express Scripts for negligence, breach of contract, violations of various “data breach notification laws” and violations of Missouri’s Merchandising Practices Act, arising out of the theft of its customers’ personal identification information; the class action complaint alleged that “inadequate security measures in relation to its computerized database system allowed unauthorized persons to gain access to confidential information of Express Scripts members contained in the database, with such information including names, dates of birth, Social Security numbers, and prescription information.” Amburgy v. Express Scripts, Inc., ___ F.Supp.2d ___ (E.D.Mo. November 23, 2009) [Slip Opn., at 1, 3.] Plaintiff filed the class action in federal court, asserting jurisdiction under the Class Action Fairness Act of 2005 (CAFA), id., at 3. According to the allegations underlying the class action complaint, the criminals who stole the information advised Express Scripts “that they would make public the confidential information obtained through the breach if Express Scripts did not pay a certain amount of money to them.” Id., at 2. Express Scripts advised its customers of the security breach, id. The class action alleged that the theft placed class members “at an increased risk of becoming victims of identity theft crimes, fraud, abuse, and extortion,” and that class members would be required to spend “considerable time and money to protect themselves” from injury. Id. Defense attorneys moved to dismiss the class action complaint on the grounds that plaintiff lacked standing and that the class action failed to state a claim for relief. Id., at 3. The district court granted the motion.

The federal court noted, “Database breaches appear to provide the basis for a new breed of lawsuits, and especially class action lawsuits, in which plaintiffs allege, as here, that the database handlers’ negligence in developing and maintaining security measures have resulted in otherwise personal and confidential information being compromised, thereby increasing the risk of identity theft for those individuals whose information was so compromised. The remedies sought in these actions vary, but generally include costs for credit monitoring, costs for closing and opening financial accounts, and damages for emotional distress.” Amburgy, at 5. The district court observed that federal courts have reached different conclusions as to whether individuals have Article III standing to prosecute such lawsuits, though the “recent trend” has been to find that standing exists based on a Seventh Circuit decision in Pisciotta v. Old Nat’l Bancorp., 499 F.3d 629 (7th Cir. 2007). See id., at 5-7. But the court explained at page 7, “because the requirement of standing is firmly rooted in the Constitution and is not subject to whim, the undersigned is reluctant to look to a ‘recent trend’ when analyzing whether or not a party has standing to sue in federal court.” Accordingly, it examined the standing issue with fresh eyes.

Continue reading "Class Action Defense Cases–Amburgy v. Express Scripts: Missouri Federal Court Dismisses Theft Of Personal Information Class Action Complaint For Lack Of Standing Because Plaintiff’s Information And Identity Not Stolen" »

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

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Class Action Defense Cases–Ackerson v. Bean Dredging: Fifth Circuit Affirms Dismissal Of Class Action Against Dredging Contractors For Damage Caused By Hurricane Katrina Holding Government-Contractor Immunity Applied

District Court did not Err in Dismissing Class Action Complaint Against Dredging Contractors seeking Monetary and Injunctive Relief for Damages Caused by Hurricane Katrina because Defendants Acted Pursuant to Government Contracts under Act of Congress and were Entitled to Government-Contractor Immunity Fifth Circuit Holds

Plaintiffs filed a putative class action against the federal government and thirty-two others (the Contractor Defendants) “who dredged the Mississippi River Gulf Outlet to recover damages sustained during Hurricane Katrina.” Ackerson v. Bean Dredging LLC, 589 F.3d 196, 2009 WL 4066679, *1 (5th Cir. 2009). According to the allegations underlying the class action complaint, “[The] Contractor Defendants’ dredging activities caused environmental damage to protective wetlands in the Mississippi River Gulf Outlet (MRGO). The Plaintiffs also alleged that the MRGO project caused an amplification of the storm surge in the New Orleans region during Hurricane Katrina, undermining the levees and flood walls along the MRGO and the Industrial Canal that breached and flooded St. Bernard Parish and Orleans Parish. The Plaintiffs asserted claims against the Contractor Defendants for negligence, breach of implied warranty, concealment, and violation of environmental-protection laws and sought a myriad of damages and an injunction to prevent future dredging activities.” Id., at *2. The federal government moved to dismiss the class action claims against it for failure to exhaust administrative remedies; the district court granted the motion and plaintiffs did not appeal that ruling. Id. Defense attorneys for the dredging companies moved to dismiss the class action claims against the Contractor Defendants on the grounds that they had government-contractor immunity. Id. “The district court dismissed the claims against the dredgers because it determined that the defendants acted pursuant to contracts with the United States government under authority granted by an act of Congress.” Id., at *1. Further, the district court denied plaintiffs’ request to conduct discovery “calling the request a ‘fishing expedition,’” and denied plaintiffs’ request to file an amended class action complaint as “futile.” Id., at *2. The Fifth Circuit affirmed.

The Fifth Circuit reviewed the district court’s order de novo. Ackerson, at *3. It held that “the Contractor Defendants are entitled to government-contractor immunity under Yearsley.” Id. We do not discuss the Fifth Circuit’s opinion in detail as the author finds its holding to be compelled by well-settled case law, as detailed in the Court’s opinion. See id., at *3-*5. The Circuit Court also held that the district court did not err in dismissing the class action complaint with prejudice, see id., at *5, and that the lower court did not err in denying plaintiffs’ request to file an amended class action complaint because “Plaintiffs' proffered amendment does not go beyond the conclusory allegation that the Contractor Defendants activities somehow violated various laws and regulations at some unspecified time and place,” id., at *6. Finally, the Fifth Circuit held that the district court did not err in denying plaintiffs’ request to conduct discovery, id., at *7. Accordingly, the Circuit Court affirmed the district court order dismissing the class action complaint. Id.

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

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New Class Action Lawsuits Alleging Employment-Related Claims Retain 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. Because of the Thanksgiving holiday, this report covers the time period from November 20 - December 3, 2009, during which time 71 new class action cases were filed in these California state and federal courts. Labor law class actions often account for more than half of the total number of new class action lawsuits filed in California, and generally top this list by a wide margin. During this reporting period, there were 33 new class actions alleging employment-related claims (46% 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 17 new class action lawsuits (24% of the new class actions filed during the reporting period).

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

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Class Action Defense Cases–In re Cheerios: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiffs’ Motion To Centralize Class Action Litigation But Selects District Of New Jersey As Transferee Court

Judicial Panel Grants Plaintiffs’ Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. — 1407, Supported by All Responding Parties Despite Disagreement over Appropriate Transferee Court, but Transfers Class Actions to District of New Jersey

Five class actions – two in the Central and one in the Eastern Districts of California and one each in the District of New Jersey and the Eastern District of New York – were filed against General Mills alleging false advertising claims arising out of its “labeling of its Cheerios cereals, and, specifically, claims that eating Cheerios can lower a person’s cholesterol.” In re Cheerios Marketing & Sales Prac. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. October 9, 2009) [Slip Opn., at 1]. Plaintiffs in the Eastern and one of the Central District of California 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 Eastern District of California. Id. All responding parties supported pretrial coordination, but plaintiffs in the New York class action urged for transfer of the class actions to that district, and common defendant General Mills argued for transfer of the class actions to the District of New Jersey. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, but agreed with defense attorneys that the District of New Jersey was the appropriate transferee court, id. The Panel explained that one of the class action lawsuits already was pending in that district and that “[the judge] presiding over that action[] has the time and experience to steer this litigation on a prudent course.” Id., at 1-2. Accordingly, the Panel transferred all class actions pending outside of Pennsylvania to that district. Id., at 2.

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

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FACTA Class Action Defense Cases–Pezl v. Amore Mio: Illinois Federal Court Denies Class Action Certification/Grants Defense Summary Judgment In FACTA Class Action Because FCRA Does Not Cover Corporations

FACTA Class Action Alleging Defendant Printed more than Last Five Numbers of Credit Card on Customer Receipt not Entitled to Class Action Treatment because Plaintiff Utilized Business Card for Business Purposes and Corporations do not have Private Rights of Action under FCRA Illinois Federal Court Holds

Plaintiff filed a putative class action in Illinois state court against Amore Mio alleging violations of the federal Fair and Accurate Credit Transactions Act (FACTA), which is part of the Fair Credit Reporting Act (FCRA); specifically, the class action complaint alleged that plaintiff used his business credit card at an Amore Mio Restaurant and received a credit card receipt that contained more than the last five digits of his credit card number in violation of FACTA. Pezl v. Amore Mio, Inc., 259 F.R.D. 344, 345 (N.D.Ill. 2009). The original class action complaint was filed by plaintiff’s business, CE Design, but an amended class action complaint substituted in plaintiff as an individual in place of his business. Id., at 345-46. Defense attorneys removed the class action to federal court, id., at 345. Plaintiff moved the district court to certify the litigation as a class action; defense attorneys opposed class action treatment and moved for summary judgment. Id., at 346. The district court denied plaintiff’s motion for class certification and granted defendant’s motion for summary judgment. In ruling on the motions, the district court noted that class action certification generally should be determined prior to addressing the merits, see id., at 346 n.4, so the court began by analyzing plaintiff’s request for class action treatment.

The federal court readily concluded that the numerosity test of Rule 23(a)(1) had been met because the putative class contained thousands of members. See Pezl, at 346. The district court also easily found that the commonality requirement of Rule 23(a)(2) had been satisfied because the “common nucleus of operative fact” involved defendant’s “standardized conduct” of allegedly “printing of receipts in violation of FACTA.” See id., at 346-47. But the court found that plaintiff failed to satisfy the typicality test of Rule 23(a)(3) because of the existence of “defenses particular to the named plaintiff” – specifically, that plaintiff’s claim was “based on a credit card number belonging to a corporation,” id., at 347. As previously noted, plaintiff used a business credit card to pay for a transaction that “was for business purposes,” id. The FCRA, however, excludes business transactions; the FCRA provides for liability to a “consumer,” which is defined as “an individual.” Id. (citations omitted). Plaintiff’s business therefore did not have a private right of action under the FCRA, id. The district court rejected plaintiff’s argument that FACTA claims may be treated differently, holding that “only consumer cardholders have a private right of action under FACTA.” Id., at 347-48 (citation omitted). Accordingly, plaintiff’s claims were not “typical” of the putative class and so the complaint did not warrant class action certification. Id., at 348. (For the same reasons, the federal court additionally found that plaintiff failed to satisfy the adequate representation test of Rule 23(a)(4). See id., at 348 n.8.)

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

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AT&T Class Action Defense Cases–Laster v. AT&T Mobility: Ninth Circuit Affirms District Court Order Denying Motion To Compel Arbitration Of Class Action Claims On Individual Basis Holding Class Action Waiver Unconscionable

Class Action Challenging Advertisement of “Free” Phones may Proceed as Putative Class Action Despite Arbitration Clause Containing Class Action Waiver because under California Law Class Action Waiver Rendered Arbitration Clause Unconscionable Ninth Circuit Holds

Plaintiffs filed a putative class action against AT&T Mobility challenging its “offer of a ‘free’ phone to anyone who signs up for its service” because AT&T “charges the new subscriber sales tax on the retail value of each ‘free’ phone.” Laster v. AT&T Mobility LLC, 584 F.3d 849 (9th Cir. 2009) [Slip Opn., at 14387, 14390.] Defense attorneys moved to compel plaintiffs to arbitrate their claims individually, rather than as part of a class action, pursuant to an arbitration clause that requires arbitration of disputes and prohibits class actions. Id., at 14390. Plaintiffs argued that because federal jurisdiction was predicated on diversity, California law governed the district court’s interpretation of the arbitration clause and, under California law, “both the arbitration clause and the class action waiver [were] unconscionable, hence, unenforceable.” Id. The district court denied AT&T’s motion based on the Ninth Circuit opinion in Shroyer v. New Cingular Wireless Services, Inc., 498 F.3d 976 (9th Cir. 2007). Id., at 14390-91. On appeal, defense attorneys argued that the arbitration clause was distinguishable from the one at issue in Shroyer because “this arbitration clause provides for a ‘premium’ payment of $7,500…if the arbitrator awards the customer an amount greater than [AT&T’s] last written settlement offer,” id., at 14391. Defense attorneys also argued that “the Federal Arbitration Act (FAA) preempts California’s unconscionability law.” Id. The Ninth Circuit found the provision for a premium payment did not sufficiently distinguish the case from Shroyer and that the FAA does not preempt California law; accordingly, the Circuit Court affirmed the district court order.

Plaintiffs executed a Wireless Service Agreement with AT&T and received free cell phones by agreeing to a 2-year contract. Laster, at 14391. However, AT&T charged plaintiffs $30 in sales tax for the phones, calculated by using the full retail value of the phones. Id., at 14391-92. As noted above, the Agreement contained an arbitration clause that required arbitration of disputes and barred class actions. Id., at 14392. Plaintiffs filed suit in California federal court alleging that AT&T’s advertisement for a free phone was fraudulent; AT&T thereafter amended the Agreement to include the “premium payment clause” and, later still, moved to compel plaintiffs to arbitrate their claims on an individual basis, not as a class action, based on the revised arbitration clause. Id. The district court denied the motion, holding that the class action waiver in the arbitration clause rendered it unconscionable under California law and that the FAA did not preempt California law regarding unconscionability. Id.

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

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Class Action Defense Cases–Menagerie Productions v. Citysearch: California Federal Court Grants Class Action Certification Of Nationwide Class Action Challenging Charges For Pay-Per-Click Advertising

Class Action Alleging Violations of California’s Unfair Competition Law and Breach of Contract for “Pay-Per-Click” Charges based on Click Fraud/Doubleclicks Warranted Nationwide Class Action Treatment California Federal Court Holds

Plaintiff filed a putative class action in California state court against IAC/Interactive Corp., Ticketmaster dba Citysearch.com, and Citysearch.com alleging violations of California’s Unfair Competition Law (UCL), as well as breach of contract and negligence; defense attorneys removed the class action to federal court. Menagerie Productions v. Citysearch, ___ F.Supp.2d ___ (C.D.Cal. November 9, 2009) [Slip Opn., at 1.] According to the allegations underlying the class action complaint, class members “entered into a contract with Citysearch to place ‘pay-per-click’ advertisements on the Citysearch website, and that Citysearch failed to detect and prevent ‘click fraud.’” Id., at 2. Following extensive law and motion practice and amendments to the class action complaint that added new party plaintiffs, see id., plaintiffs moved the district court to certify the litigation as a class action, id., at 3. The class action sought certification of a nationwide class defined as, “All persons or entities in the United States who paid money for pay-per-click advertising through Citysearch.com.” Id., at 7. Defense attorneys opposed class action treatment. The district court concluded that the complaint warranted class action treatment as to certain claims but denied class action certification as to other claims.

The federal court explained that the class action complaint was premised on two theories. First, that class members’ contracts with defendants for pay-per-click advertising “contained an implied covenant of good faith and fair dealing” which Citysearch violated “by collecting fees from plaintiffs and the Class for click fraud even though Citysearch knew, or should have reasonably known, that the clicks were not ‘actual clicks’ but rather purposeful clicks made for an improper purpose” and “by failing to implement effective oversight, investigating oversight and prevention of click fraud.” Menagerie Productions, at 6-7. Second, that Citysearch engaged in “unfair business practices” within the meaning of California’s UCL “because Citysearch ‘(a) fails to employ any method to track fraudulent clicks, including clicks originating from its own employees and/or agent and clicks originating from Citysearch’s “partner sites”; (b) fails to inform its customers that it does not employ a method to track fraudulent clicks, including clicks originating from its own; and (c) charges customers for invalid clicks.’” Id., at 7. The class action alleged that this conduct violated the UCL because Citysearch led customers to believe “that they will not be charged for ‘invalid’ clicks, when in fact, Citysearch routinely charges its customers for clicks that it knows, or by the exercise of reasonable care, should know are not clicks that originate from potential customers who actively and legitimately chose the advertiser’s link.” Id.

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