Posted On: March 30, 2010 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Jones v. DirecTV: Georgia Federal Court Denies Motion To Compel Arbitration Holding Class Action Waiver In Arbitration Clause Rendered It Unconscionable

Class Action Challenging Monthly Fees Imposed by Satellite TV Provider not Subject to Arbitration on Individual Basis because Class Action Waiver in Arbitration Provision was Unenforceable Georgia Federal Court Holds

Plaintiff filed a putative class action in a Georgia federal court against his satellite television provider, DirecTV, alleging breach of contract and unjust enrichment, and seeking an accounting as well as injunctive and declaratory; specifically, the class action complaint alleged that DirecTV “collect[ed] excessive ‘tax’ charges and improperly billed lease fees” in connection with the satellite television service, and sought to prohibit it from collecting or billing customers “for taxes in excess of those actually due and owing.” Jones v. DirecTV, Inc., 667 F.Supp.2d 1379, 1380-81 (N.D.Ga. 2009). As part of the service, plaintiff signed a written customer agreement; “DIRECTV mails any amendments to the terms of the initial customer agreement with subsequent billing statements when necessary.” Id., at 1380. Plaintiff signed up for service with DirecTV in 2002, and received a copy of the customer agreement, which “stated that customers should immediately cancel their service should they choose to reject the terms of the agreement and that use of the DIRECTV service without rejection constitutes acceptance.” Id. In May 2007, plaintiff received an amended agreement (the April 2007 agreement) containing an arbitration clause with a class action waiver provision. Id. The arbitration provision provided that “if the class action waiver provision is unenforceable, then the entire arbitration clause is also unenforceable.” Id., at 1381. In May 2007, plaintiff obtained two DirecTV receivers, signing an “equipment lease addendum” that “expressly incorporated the April 2007 agreement, specifically the agreement’s arbitration provisions.” Id., at 1380. Defense attorneys moved the district court to compel arbitration of plaintiff’s individual claims in light of the class action waiver in the agreement’s arbitration clause. Id., at 1380-81. The federal court denied the motion.

The district court recognized that the Federal Arbitration Act (FAA) “dictates that binding arbitration clauses in written agreements are enforceable in federal court.” Jones, at 3181 (citation omitted). But it also noted that “such a clause may be invalidated under any applicable state law that governs contracts generally, including ‘fraud, duress, or unconscionability.’” Id. The court concluded that, under Georgia law, the class action waiver in the arbitration clause was unconscionable. Id., at 1381-82. Plaintiff (and the other class members) stood to recover but “a very small amount” – the class action challenged monthly lease fees of $4.99 and sales taxes of $0.80. Id., at 1382. Moreover, “the arbitration provision leaves the determination of whether to award fees for attorneys and expert witnesses to the chosen arbitrator,” making it unlikely that an individual would choose to pursue arbitration. Id. The district court concluded, therefore, that “the remedies available to the plaintiff and members of the proposed class are effectively foreclosed.” Id. Accordingly, the class action waiver was unenforceable, rendering the entire arbitration clause unenforceable (as provided by the agreement). Id. The district court therefore denied the motion to compel arbitration. Id.

Download PDF file of Jones v. DirecTV

Posted On: March 27, 2010 by Michael J. Hassen Email This Post

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Surge In Class Action Filings As Labor Law Class Actions Regain Top Spot Among New 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 March 19 - 25, 2010, during which time a surprisingly high number of new class actions -- 73 -- were filed in these California state and federal courts. As a general rule, labor law class actions easily top this list as they usually account for more than 50% of the new class action filed during any particular week. This number has been off during the past few weeks, but rebounded this reporting period. This past week, 36 new labor law class actions were filed, representing a respectable 49% of the total number of new class action filed. Three additional categories also broke the 10% threshold. The second highest number of new class action lawsuits filed alleged violations of California's Unfair Competition Law (UCL), which includes false advertising claims, with 13 new filings (representing 18% of the total number of new class actions filed). Next came the now-familiar claims against Toyota alleging various product liability claims, with 9 new class actions (12% of the total number of new class actions filed), followed by class actions alleging violations of federal securities laws, with 8 new class actions (11% of the total number of new class actions filed).

Posted On: March 20, 2010 by Michael J. Hassen Email This Post

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Second Weekly Drop In New Labor Law Class Action Filings Allow UCL Class Actions To Claim Top Spot Among New Class Action Lawsuits Filed In California State And Federal Courts

As a resource for California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in 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 March 12 - 18, 2010, during which time 48 new class actions were filed in these California state and federal courts. As a general rule, labor law class actions easily top this list as they usually account for more than 50% of the new class action filed during any particular week. Last week, only 13 new labor law class actions were filed, representing a meager 30% of the total number of new class actions filed, and those numbers carried into this week. Again, only 13 new labor law class actions were filed, representing only 27% of the total number of new class action filed during the past week. However, there were 18 new class action lawsuits filed alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, representing 38% of the total number of new class actions filed. The only other category to break the 10% threshold involved class actions against Toyota involving product liability claims, with 6 new lawsuits representing 13% of the new class actions filed during the reporting period.

Posted On: March 17, 2010 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Gintis v. Bouchard Transportation: First Circuit Reverses Denial Of Class Action Treatment Holding Defense Arguments Suggest Common Issues May Predominate

District Court Denial of Class Action Certification on Grounds that Individuals Issues will Predominate over Common Issues Contradicted by Defense Arguments on Appeal that it will Raise Common Challenges in Individual Lawsuits First Circuit Holds

Plaintiffs filed a class action against Bouchard Transportation arising out of an oil spill in Buzzards Bay in southeastern Massachusetts; the class action complaint alleged Massachusetts state law claims for “strict liability for damage to real property on the owner of a vessel from which oil has spilled” and for “negligent discharge of petroleum,” and a common law claim for nuisance. Gintis v. Bouchard Transp. Co., ___ F.3d ___ (1st Cir. February 23, 2010) [Slip Opn., at 2, 3]. According to the allegations underlying the class action complaint, in 2003 a fuel barge owned and operated by defendant strayed off course in Buzzards Bay and struck a reef, spilling 98,000 barrels of oil and contaminating 90 miles of the shore. Id., at 2. Defendants engaged in government-supervised cleanup operations that were completed in October 2006, id., at 2-3, Plaintiffs owned “residential waterfront property on the bay,” id., at 2. Plaintiffs moved the district court to certify the litigation as a class action; the district court denied class action treatment concluding that individual issues would predominate. Id., at 3-4. Specifically, the district court observed that defendant “has not conceded liability to any individual plaintiffs, that on the public nuisance claim plaintiffs must show both unreasonable interference and special injury to each claimant, and that plaintiffs must establish compensatory damages specific to each piece of property.” Id., at 4. The First Circuit reversed.

The Circuit Court noted that the district court’s class action certification determination had “relied heavily on the denial of class certification in Church v. General Electric Co., 138 F. Supp. 2d 169 (D. Mass. 2001), which had stressed that recovery for contamination of land downstream from a point of toxic discharge into a river would require parcel-by-parcel determinations as to injury and damages.” Gintis, at 4. The First Circuit concluded, however, that Church “does not support a general rule that pollution torts charged against a single defendant escape class treatment on the ground that the requirements to show injury, cause and compensatory amount must be sustainable as to specific plaintiffs.” Id., at 5. On the contrary, “If that were the law, the point of the Rule 23(b)(3) provision for class treatment would be blunted beyond utility, as every plaintiff must show specific entitlement to recovery, and still Rule 23 has to be read to authorize class actions in some set of cases where seriatim litigation would promise such modest recoveries as to be economically impracticable.” Id. (citation omitted). The Circuit Court also observed that several cases “in the same genre go the other way.” Id., at 5-6 (citations omitted).

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Posted On: March 15, 2010 by Michael J. Hassen Email This Post

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Sprint Class Action Defense Cases–Hesse v. Sprint: Ninth Circuit Court Reverses Summary Judgment Dismissing Class Action Holding That Prior Nationwide Class Action Settlement Did Not Bar Present Class Action Complaint

Broad Release Language in Prior Nationwide Class Action Settlement did not Preclude Instant Class Action Lawsuits because Class Representative in Nationwide Class Action was not Adequate Representative of Instant Class and because Class Actions were not Premised on “Identical Factual Predicate” Ninth Circuit Holds

Plaintiffs filed separate putative class action lawsuits in Washington state court against Sprint alleging violations of the state’s Business & Occupation Tax (“B&O tax”) and Consumer Protection Act (“CPA”), as well as breach of contract and unjust enrichment; specifically, the class action complaints alleged that Sprint unlawfully passed the B&O tax on to consumers. Hesse v. Sprint Spectrum LP, 598 F.3d 581 (9th Cir. 2010) [Slip Opn., at 3845, 3849-50]. According to the allegations underlying the class action complaints, Sprint included “a separate line item labeled ‘Washington State B&O Tax Surcharge’” on customer invoices, id., at 3850; however, “Washington law specifies that the B&O tax must be collected from a business as part of its ‘operating overhead’ rather than imposed as a separate ‘tax[] upon purchasers or customers,” id., at 3849-50 (citation omitted). Defense attorneys removed the class actions to federal court, and the moved to dismiss the class action complaints. Id., at 3850. The district court granted the motion with respect to all class action claims “predicated on the B&O Tax Statute,” finding that the claims were preempted by the Federal Communications Act; however, the court otherwise denied the motion to dismiss. Id. Eventually, the class action complaints were consolidated, and the district court certified the litigation as a class action. Id. Sprint answered the class action complaint and then moved for summary judgment on the grounds that the claims were “barred by a [nationwide class action] settlement between Sprint and its customers approved by a Kansas state court in 2006” known as the Benny Settlement. Id. The district court granted the motion, concluding that the prior class action settlement barred the present lawsuit. Id., at 3849. The Ninth Circuit reversed.

The Circuit Court explained that the Benny Settlement resolved several class actions that had been filed “in various state courts and then dismissed and refilled in Kansas state court in 2005 for the purposes of settlement.” Hesse, at 3850. One of those class actions challenged Sprint’s practice of imposing surcharges to “recoup federal regulatory fees” – defined in the class action settlement agreement “to include only specified fees imposed to recover the cost of compliance with federally mandated programs” – in violation of consumer protection laws, and alleging breach of contract and unjust enrichment. Id., at 3850-51. Plaintiffs in the present class action did not dispute that they were members of the class covered by the Benny Settlement and that they did not opt out of that class, id., at 3851. The question was whether the instant class action claims were barred by the broad release language of the Benny Settlement.

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Posted On: March 13, 2010 by Michael J. Hassen Email This Post

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Labor Law Class Action Filings Drop Significantly But Still Top List Of New 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 March 5 - 11, 2010, during which time 44 new class actions were filed in these California state and federal courts. While class actions involving employment-related claims often account for more than half of the new class action filings in any particular week, this past week saw a substantial drop in such filings. During this reporting period, only 13 new labor law class actions were filed, representing a relatively paltry 30% of the total number of new class actions filed. The only other categories 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 (23% of the new class actions filed during the reporting period), and class actions alleging violations of federal securities laws, with 7 new filings (16% of the total number of class action filings).

Posted On: March 6, 2010 by Michael J. Hassen Email This Post

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Employment-Related Class Action Complaints Again Top Categories Of Class Action Lawsuits Filed In California State And Federal Courts During Past Week

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 February 26 - March 4, 2010, during which time 54 new class actions were filed in these California state and federal courts. Readers know well that labor law class actions generally top this list by a wide margin, and this yet again proved true though the percentage of such class action claims was lower than usual. During this reporting period, 25 new labor law class actions were filed, representing 46% of the total number of new class actions filed. The only other categories to break the 10% threshold involved class actions alleging violations of California's Unfair Competition Law (UCL), which includes false advertising claims, with 11 new class action lawsuits (20% of the new class actions filed during the reporting period), and class actions alleging violations of federal securities laws, with 6 new filings (11% of the total number of class action filings).

Posted On: March 4, 2010 by Michael J. Hassen Email This Post

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UCL Class Action Defense Cases–Kaing v. Pulte Homes: California Federal Court Dismisses UCL/CLRA Class Action Holding Plaintiff Lacked Standing For Failing To Adequately Allege Damages

Class Action Complaint Alleging Homebuilder Inflated Purchase Price of New Homes and Loaned Money to High Foreclosure Risk Purchasers Failed to Adequately Allege Damages so Plaintiff Lacked Standing to Prosecute Class Action Claims California Federal Court Holds

Plaintiff filed a putative class action against various Pulte Home entities arising out of her purchase from Pulte of a newly-constructed single-family residence; the class action complaint alleged that Pulte – which both manufactures homes and provides financing for their purchase – induced plaintiff to obtaining financing through Pulte by “provid[ing] significant financial incentives” to her and others, without disclosing that they would not otherwise qualify for a home loan and were at high risk of foreclosure. Kaing v. Pulte Homes, Inc., ___ F.3d ___ (N.D.Cal. February 18, 2010) [Slip Opn., at 1-3]. According to the allegations underlying the class action complaint, plaintiff was told she would receive a $75,000 reduction from the home’s $575,000 sales price if she financed through Pulte, and that she would not receive this discount if she went to a different lender, id., at 3. The class action alleges that “Pulte knew from appraisals on other homes in the subdivision, that the house was worth less than $500,000” but that the Pulte-selected appraiser “inflated” the value to $518,000 – proving it was not worth $575,000 and that the $575,000 sales price plus $75,000 discount were “phony numbers from the start.” Id. Plaintiff ultimately paid $518,000 for the home, and financed the purchase with Pulte, but that “she ‘would not have and could not have qualified for her loan’ if she had been working with a ‘lender acting in good faith in an arms-length transaction.’” Id. The class action complaint alleged violations of California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA), as well as negligent misrepresentation and breach of an implied covenant of good faith and fair dealing. Id., at 5. Defense attorneys moved to dismiss the class action complaint for lack of standing, id., at 1. The district court granted the motion.

In ruling on the motion to dismiss, the district court observed that while plaintiff had alleged monthly income of “less than $3500,” she “has not indicated that she has been unable to make her regular payments on the mortgage, nor does she allege that she has been harmed by any of the terms in the loan documents to which she is a party.” Kaing, at 3-4. Rather, the thrust of her class action complaint was that Pulte had failed to “provide Plaintiff with any disclosure that Defendants had sold houses, and would sell houses in the future, to unqualified and high foreclosure-risk buyers” or that “they had sold houses, and planned to sell houses in the future, to investors who would not occupy the houses or to owners who were not financially qualified.” Id., at 4. In essence, the complaint alleged that Pulte’s “questionable loan practices” increased the risk of foreclosure which, in turn, “had a ‘devastating’ impact on the value and desirability of the neighborhoods.” Id. Plaintiff alleges “her home decreased in value by over 50%.” Id., at 5.

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Posted On: March 3, 2010 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Archdiocese v. Halliburton: Fifth Circuit Affirms Denial Of Class Action Certification In Securities Fraud Class Action Complaint Against Halliburton

Class Action Complaint Against Halliburton Alleging Violations of Securities Laws did not Apply Wrong Legal Standard in Ruling on Class Action Certification Motion and Properly Denied Class Action Treatment because Plaintiff Failed to Establish Causation Seventh Circuit Holds

Plaintiff filed a putative class action against Halliburton and David Lesar (its COO and then CEO during the class period alleging violations of various federal securities laws; specifically, the class action complaint alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10(b)-5. The Archdiocese of Milwaukee Supporting Fund, Inc. v. Halliburton Co., ___ F.3d ___, 2010 WL 481407, *1 (5th Cir. February 12, 2010). According to the allegations underlying the class action complaint, defendant was liable for securities fraud violations under a “fraud-on-the-market” theory, alleging that false statements had been made concerning “(1) Halliburton's potential liability in asbestos litigation, (2) Halliburton's accounting of revenue in its engineering and construction business, and (3) the benefits to Halliburton of a merger with Dresser Industries.” Id. Plaintiff moved the district court to certify the litigation as a class action; defense attorneys opposed class action treatment. Id. The district court denied the motion, holding that the Rule 23’s requirements for certification of a class action had not been met. Id. Specifically, in order to obtain class certification “Plaintiff was required to prove loss causation, i.e., that the corrected truth of the former falsehoods actually caused the stock price to fall and resulted in the losses.” Id. The district court denied certification because it found that plaintiff had failed to establish the necessary “causal relationship,” id. The Fifth Circuit affirmed.

Plaintiff argued on appeal “that the district court applied an erroneous standard for loss causation and required it to prove more than is required under law.” Halliburton, at *1. The Circuit Court disagreed. The Court explained,

In the case of a putative class, a plaintiff may create a rebuttable presumption of reliance under the fraud-on-the-market theory by showing “that (1) the defendant made public material misrepresentations, (2) the defendant's shares were traded in an efficient market, and (3) the plaintiffs traded shares between the time the misrepresentations were made and the time the truth was revealed.”… A defendant may rebut the presumption “by ‘[a]ny showing that severs the link between the alleged misrepresentation and either the price received (or paid) by the plaintiff, or his decision to trade at fair market price[.]’”

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Posted On: March 2, 2010 by Michael J. Hassen Email This Post

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Class Action Defense Cases–Yokoyama v. Midland National Life: Ninth Circuit Reverses Denial Of Class Action Certification Holding Individualized Reliance Not Required Under Hawaii Deceptive Practices Act

District Court Erred in Denying Class Action Certification Motion in Class Action Alleging Violations of Hawaii’s Deceptive Practice Act because Hawaii Case Law Establishes that Individualized Reliance need not be Shown so Common Questions Predominated over Individual Questions Ninth Circuit Holds

Plaintiff filed a putative class action against Midland National Life Insurance Company alleging violations of Hawaii’s Deceptive Practices Act; specifically, the class action complaint alleged that the brochures prepared by Midland to market annuities to senior citizens violated Hawaii law. Yokoyama v. Midland National Life Ins. Co., ___ F.3d ___ (9th Cir. February 8, 2010) [Slip Opn., at 2127, 2130]. (Similar class actions had been filed against Midland, but this class action was exempted by the order of the Judicial Panel on Multidistrict Litigation which centralized the other class actions in the Central District of California “, because this action has been narrowly tailored to rely only on Hawaii law.” Id., at 2130-31.) Plaintiff moved the district court to certify the litigation as a class action; defense attorneys opposed class action treatment on the ground, inter alia, that plaintiff failed to establish the predominance and superiority requirements for a Rule 23(b)(3) class. Id., at 2131. “The district court denied class certification, holding that in order to succeed under the Hawaii Act, each plaintiff would have to show subjective, individualized reliance on deceptive practices within the circumstances of each plaintiff’s purchase of the annuity.” Id. (citing Yokoyama v. Midland Nat’l Life Ins. Co., 243 F.R.D. 400 (D. Haw. 2007)). Plaintiffs appealed the denial of class action certification, id. The Ninth Circuit reversed.

The Ninth Circuit began its analysis with the following observation: “The dispositive issue is…whether Hawaii’s Deceptive Practices Act requires a showing of individualized reliance.” Yokoyama, at 2131. The district court concluded that common issues did not predominate because of the individual inquiries inherent in determining reliance: “The district court refused to certify a class in this case because it determined that Hawaii’s consumer protection laws require individualized reliance showings. Believing that the plaintiffs’ claims would ‘require inspection of whether the class members individually relied on Midland’s misstatements,’ the district court concluded that class issues do not predominate over issues affecting individual members.” See id., at 2138. In so ruling, the district court misinterpreted Hawaii law. The Ninth Circuit explained that, under Hawaii law, individual proof of reliance was unnecessary. “The Hawaii Supreme Court has considered the issue of whether the statute requires actual, i.e., subjective reliance. It has said that the dispositive issue is whether the allegedly deceptive practice is “likely to mislead consumers acting reasonably under the circumstances.” [Citation.] “[A]ctual deception need not be shown, the capacity to deceive is sufficient.” [Citation.] This is an objective test, and therefore actual reliance need not be established. Accordingly, there is no reason to look at the circumstances of each individual purchase in this case, because the allegations of the complaint are narrowly focused on allegedly deceptive provisions of Midland’s own marketing brochures, and the fact-finder need only determine whether those brochures were capable of misleading a reasonable consumer.” Id., at 2131. See also, id., at 2136-38. More specifically, the Circuit Court explained, “These plaintiffs base their lawsuit only on what Midland did not disclose to them in its forms. The jury will not have to determine whether each plaintiff subjectively relied on the omissions, but will instead have to determine only whether those omissions were likely to deceive a reasonable person. This does not involve an individualized inquiry.” Id., at 2138-39. The Ninth Circuit held, therefore, that the district court abused its discretion in denying class action treatment because its decision was premised on a legal error. Id.

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