Certification of Class Actions

Posted On: April 15, 2012 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–Brinker v. Superior Court: California Supreme Court Affirms, Reverses And Remand Class Action Certification Ruling In Labor Law Class Action Clarifying Meal And Rest Break Requirements

In Considering Class Action Certification Order in Labor Law Class Action, California Supreme Court Holds Rest Periods Not Mandated Prior to Meal Periods, and Employer must Provide Meal Breaks but need not Ensure Employee Takes Meal Breaks

Plaintiffs filed a putative class action in California state court against their employer, Brinker Restaurant, alleging various labor law violations; specifically, the class action complaint alleged that Brinker failed to provide employees with rest breaks, failed to provide employees with meal breaks, and that Brinker required employees to work “off-the-clock.” Brinker Restaurant Corp. v. Superior Court, ___ Cal.4th ___ (April 12, 2012) [Slip Opn., at 1, 4]. With respect to the meal period claim, plaintiffs argued that state law requires employers “to provide a 30-minute meal period at least once every five hours.” Id., at 5. Defense attorneys argued that state law does not so long as it provides one meal period for work shifts exceeding 5 hours and two meal periods for work shifts exceeding 10 hours, then it has complied with state law. Id. Brinker also argued that individual issues predominated so that class action treatment would be inappropriate, id. Specifically, Brinker argued that it was required only to permit its employees to take meal and rest breaks, but it was under no legal obligation to ensure that its employees take such breaks. Id., at 6. Plaintiffs moved the trial court to certify the litigation as a class action, id., at 5. The trial court agreed with plaintiffs, and granted plaintiffs’ motion to certify the lawsuit as a class action. Id., at 7. The Court of Appeal granted Brinker’s petition for writ relief and reversed. The Court of Appeal concluded that common issues did not predominate as a matter of law, and therefore the trial court erred in certifying the claims for class action treatment. Id., at 15. The California Supreme Court granted review and held (1) the trial court properly certified the rest break claim for class action treatment, (2) improperly certified the “off-the-clock” claim, and (3) needed to reconsider the meal period claim. Id., at 1-2. Importantly, with respect to the meal break claim, the Supreme Court held that “an employer’s obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done.” Id., at 2.

The Supreme Court decision in Brinker has been awaited by both sides of the class action bar. Unfortunately, the decision creates as many questions as it solves. For example, with respect to the general rules governing class certification, the Supreme Court recognized that both state and federal decisions hold that consideration of the merits may overlap class certification issues. See Brinker, at 10-12. The Court also held that “[t]o the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them.” Id., at 13. However, in the next breath, the Supreme Court stated that “a court generally should eschew resolution of such issues unless necessary,” id. And relying on its prior decisions, the Court strongly discouraged trial courts from considering the merits of a claim in determining class certification. See id., at 11. But the Court summarized its holding as follows: “if the presence of an element necessary to certification, such as predominance, cannot be determined without resolving a potential legal issue, the trial court must resolve that issue at the certification stage.” Id., at 14. So precisely when trial court consideration of the merits is necessary or prohibited is less clear post-Brinker.

Continue reading "Class Action Defense Cases–Brinker v. Superior Court: California Supreme Court Affirms, Reverses And Remand Class Action Certification Ruling In Labor Law Class Action Clarifying Meal And Rest Break Requirements" »

Posted On: October 10, 2011 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–Ellis v. Costco Wholesale Corp.: Ninth Circuit Vacates And Remands Class Action Certification In Gender Discrimination Labor Law Case

District Court Applied Wrong Legal Criteria in Certifying Gender Discrimination Class Action Requiring Remand for Reconsideration based on Standards Enunciated in Wal-Mart v. Dukes Ninth Circuit Holds

Plaintiffs filed a putative class action against Costco Wholesale alleging that it discriminates in its promotional practices based on gender. Ellis v. Costco Wholesale Corp., ___ F.3d ___, 2011 WL 4336668 (9th Cir. September 16, 2011) [Slip Opn., at 17693, 17697]. The class action complaint was filed after the Equal Employment Opportunity Commission (EEOC) dismissed a charge that Costco engaged in gender discrimination in its practice of promoting employees. The class action complaint alleges violations of Title VII, and sought to be brought on behalf “of a Title VII class of all women employed by Costco in the United States denied promotion to [assistant general managers] and/or [general managers] positions.” Id., at 17702-03. The class action “sought class-wide injunctive relief, lost pay, and compensatory and punitive damages.” Id., at 17703. Plaintiffs moved the district court to certify the lawsuit as a class action based, in part, on the declarations of three experts – a statistician, a labor economist, and a sociologist – who opined that Costco’s female employees were “promoted at a slower rate” and were “underrepresented” in management positions relative to their male peers. Id. Costco opposed class action treatment, based in part on the declarations of 200 employees and the declarations of its own experts. Id. The district court granted class certification, id., at 17703-04. The Ninth Circuit granted Costco’s request for leave to file an interlocutory appeal, and proceeded to affirm in part, vacate in part, and remand the matter for further proceedings. Id., at 17697.

Briefly, Costco operates 350 warehouses, each containing a general manager (GM), two or three assistant general managers (AGM), and three or four senior staff managers (who are themselves divided into four categories consisting of front end managers, administration managers, receiving managers, and merchandise managers). Ellis, at 17699. The company “promotes almost entirely from within its organization” and “[o]nly current Costco AGMs are eligible for GM positions.” Id. No written policy exists explaining the criteria that Costco considers in selecting employees for consideration or in making its promotion decisions. Id., at 17699-700. Among senior staff managers, however, Costco generally rotates managers among the various categories as part of its belief that this exposure trains and develops employees for future positions as AGMs and GMs. Id., at 17700.

Continue reading "Class Action Defense Cases–Ellis v. Costco Wholesale Corp.: Ninth Circuit Vacates And Remands Class Action Certification In Gender Discrimination Labor Law Case" »

Posted On: October 4, 2011 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–In re Community Bank: Third Circuit Court Again Reverses Approval Of Class Action Settlement Holding Wrong Legal Standard Applied To Determine Adequacy Of Representation

District Court Applied Wrong Legal Standard in Finding Named Plaintiffs and Their Counsel to be Adequate Representatives of the Proposed Class under Rule 23(a)(4) and thus Abused its Discretion in Certifying Class and Approving Nationwide Class Action Settlement Third Circuit Holds

Several putative class actions were filed against various defendants, including Community Bank of Northern Virginia (CBNV), Guarantee National Bank of Tallahassee (GNBT) and Residential Funding Corporation (RFC), arising out of “the alleged predatory lending scheme of the Shumway/Bapst Organization (‘Shumway’), a residential mortgage loan business involved in facilitating the making of high-interest, mortgage-backed loans to debt-laden homeowners.” In re Community Bank of N. Va. & Guar. Nat’l Bank of Tallahassee Second Mortgage Loan Litig., 622 F.3d 275 (3d Cir. 2010) [Slip Opn., at 10]. According to the allegations underlying the class action complaints, Shumway entered into relationships with CBNV and GNBT in order to circumvent state-law restrictions on fees that it could charge; the alleged scheme permitted Shumway to make it appear as if the fees were paid to depository institutions (which are not subject to the fee restrictions) when in reality they were being funneled to Shumway. Id. RFC allegedly aided this conspiracy by purchasing CBNV and GNBT loans on the secondary market, even though it allegedly knew that these institutions were acting as mere “straw parties” for Shumway. Id., at 11. The class actions were consolidated, see id., at 11-12, and ultimately a proposed nationwide class action settlement was reached, id., at 13. Certain members of the class objected to the proposed class action settlement, and certain class members sought leave to intervene in the consolidated class action lawsuit; the district court denied the motion to intervene and overruled the objections to the class action settlement. Id., at 9. The Third Circuit affirmed the district court’s denial of intervention, but reversed and remanded the approval of the class action settlement. Id. The district court again approved the class action settlement, and again the objectors appealed: “The Objectors contend that the failure [to make claims against the defendants under the Truth in Lending Act (TILA) and the Home Ownership and Equity Protection Act (HOEPA)] renders the named plaintiffs and class counsel inadequate class representatives.” Id. The Circuit Court again reversed.

We do not discuss in detail the Circuit Court’s 100-page opinion. In sum, the Third Circuit concluded that “by approaching the adequacy-of-representation questions on remand as though it were ruling on a motion to amend pursuant to Federal Rule of Civil Procedure 15(c) or a motion to dismiss pursuant to Rule 12(b)6)[,] [the district court] applied the wrong legal standard in ruling on class certification under Rule 23.” In re Community Bank, at 9. Accordingly, the Court “reluctantly” vacated the district court order certifying the class action and approving the class action settlement, and again remanded the matter for further proceedings. Id. The Third Circuit also noted, “we continue to reject (i) the claim that the District Court abused its discretion in denying the Objectors’ renewed motion to intervene, and (ii) their renewed petition for mandamus to recuse the District Judge in this case.” Id.

Continue reading "Class Action Defense Cases–In re Community Bank: Third Circuit Court Again Reverses Approval Of Class Action Settlement Holding Wrong Legal Standard Applied To Determine Adequacy Of Representation" »

Posted On: June 21, 2011 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–Wal-Mart v. Dukes: Supreme Court Reverses Class Action Certification Of Largest Labor Law Class Action In History Holding Sex Discrimination Claims Lacked Commonality

Class Action Treatment of Sex Discrimination in Promotion Claim Against Wal-Mart not Proper because Commonality Requirement not Met and because Rule 23(b)(2) Class Inappropriate given Monetary Relief Sought Supreme Court Holds

Plaintiffs filed a putative labor law class action against Wal-Mart Stores, alleging systematic discrimination against women in pay and promotion in violation of Title VII. Wal-Mart v. Dukes, 564 U.S. ___ (June 20, 2011) [Slip Opn., at 1]. The class action sought injunctive and declaratory relief, but also sought monetary damages in the form of backpay. Id. The theory underlying the class action against Wal-Mart was not that the company had “any express corporate policy against the advancement of women” but, rather, that Wal-Mart’s local managers “[exercised] discretion over pay and promotion…disproportionately in favor of men, leading to an unlawful disparate impact on female employees.” Id., at 4. As the Supreme Court explained, “The basic theory of the[] case is that a strong and uniform ‘corporate culture’ permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands of managers – thereby making every woman at the company the victim of one common discriminatory practice.” Id. The district court certified a nationwide class action against Wal-Mart consisting of approximately 1.5 million current and former female employees, id., at 1. The Ninth Circuit affirmed the class action certification order, id. The Supreme Court granted certiorari and reversed.

By way of background, the Supreme Court noted that Wal-Mart is the largest private employer in the United States, operating 4 types of retail stores (Discount Stores, Neighborhood Markets, Sam’s Clubs and Superstores) that are “divided into seven nationwide divisions, which in turn comprise 41 regions of 80 to 85 stores apiece,” each with 40-53 separate departments and anywhere 80-500 employees. Wal-Mart, at 1-2. Decisions regarding pay and promotion “are generally committed to local managers’ broad discretion, which is exercised ‘ in a largely subjective manner.’” Id., at 2, quoting 222 F.R.D. 137, 145 (N.D. Cal. 2004). With respect to the individual named plaintiffs, Betty Dukes began working for Wal-Mart in 1994 and was eventually promoted to customer service manager before being demoted all the way down to greeter due to “a series of disciplinary violations.” Id., at 3. Dukes admitted that she violated company policy, but claimed that her demotions were “retaliation for invoking internal complaint procedures and that male employees have not been disciplined for similar infractions.” Id. Christine Kwapnoski worked at Sam’s Club “for most of her adult life” and held various positions, “including a supervisory position,” but she claimed that her male manager yelled at her and other female employees (but not at men) and told her to dress better, wear makeup and “doll up.” Id. Edith Arana worked at Wal-Mart from 1995-2001, and in 2000 repeatedly asked her store manager about management training “but was brushed off.” Id. She followed internal complaint procedures and was advised to bypass her store manager and apply directly to the district manager for management training, but she elected not to do so. Id. Arana was fired in 2001 for failing to comply with the company’s timekeeping policy. Id.

Continue reading "Class Action Defense Cases–Wal-Mart v. Dukes: Supreme Court Reverses Class Action Certification Of Largest Labor Law Class Action In History Holding Sex Discrimination Claims Lacked Commonality" »

Posted On: May 5, 2011 by Michael J. Hassen Email This Post

Bookmark and Share

Discovery Class Action Defense Cases–Starbucks v. Superior Court: California Appellate Court Reverses Discovery Order Compelling Starbucks To Identify And Disclose Names Of Possible Class Representatives

Trial Court Order Requiring Starbucks to Identify and Disclose Job Applicants with Marijuana Convictions Violates the Privacy Rights Sought to be Redressed by Putative Class Action California Appellate Court Holds

Plaintiffs filed a putative class action against Starbucks for allegedly violating California marijuana laws by asking prospective employees to disclose, on a preprinted form, whether they had suffered any marijuana convictions. Starbucks Corp. v. Superior Court, ___ Cal.App.4th ___ (Cal.App. April 25, 2011) [Slip Opn., at 2]. The class action complaint was premised on the fact that “[I]n the mid-1970s, the California Legislature reformed the state’s marijuana laws to require the ‘destruction’ by ‘permanent obliteration’ of all records of minor marijuana convictions that were more than two years old. Employers were prohibited from even asking about such convictions on their job applications, with statutory penalties of the greater of actual damages, or $200 per aggrieved applicant.” Id. The class action sought $26 million on behalf of 135,000 job applicants, alleging that Starbucks “failed to adequately advise job applicants not to disclose minor marijuana convictions more than two years old.” Id., at 2-3. During the litigation, the Court of Appeal held that the plaintiffs lacked standing to prosecute the class action “because none had any marijuana convictions to reveal.” Id., at 2 (citing Starbucks Corp. v. Superior Court (2008) 168 Cal.App.4th 1436). Accordingly, the trial court subsequently granted Starbuck’s motion for summary judgment and dismissed the named plaintiffs as class representatives. Id. However, rather than dismissing the lawsuit, the trial court ruled that plaintiffs could “file a first amended complaint to include only job applicants with marijuana convictions” as class members, and could “conduct further discovery to find a ‘suitable’ class representative.” Id. Toward that end, Starbucks was ordered “to randomly review job applications until it identifies job applicants with prior marijuana convictions” and to then disclose those names to plaintiffs’ counsel “unless they affirmatively opt out to a neutral administrator.” Id. Starbucks again sought writ review and the Court of Appeal reversed.

This case is surprisingly simple. As the Court of Appeal summarized its opinion, “By providing for the disclosure of job applicants with minor marijuana convictions, the discovery order ironically violates the very marijuana reform legislation the class action purports to enforce. We fail to understand how destroying applicants’ statutory privacy rights can serve to protect them.” Starbucks, at 2-3.

By way of background, the trial court believed plaintiffs had standing to prosecute this putative class action: “None of the plaintiffs had been convicted of a marijuana-related crime. But they contended that California law allowed any job applicant to receive a minimum statutory penalty of $200 per applicant if they filled out an improper job application.” Starbucks, at 3. The trial court agreed with plaintiffs, and found that every job applicant was entitled to receive the $200 statutory penalty “even those who never had sustained a marijuana conviction,” id. The appellate court disagreed, holding that “neither plaintiffs nor the tens of thousands of job applicants they purported to represent were entitled to recover statutory penalties where they did not have any marijuana convictions to disclose.” Id. Rather, “Only an individual with a marijuana-related conviction falls within the class of people the Legislature sought to protect.” (168 Cal.App.4th at 1449.)

Continue reading "Discovery Class Action Defense Cases–Starbucks v. Superior Court: California Appellate Court Reverses Discovery Order Compelling Starbucks To Identify And Disclose Names Of Possible Class Representatives" »

Posted On: May 4, 2011 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–Mora v. Big Lots Stores: California Appellate Court Affirms Denial Of Class Action Treatment In Labor Law Misclassification Class Action Brought By Store Managers

Trial Court did not Abuse Discretion in Denying Class Action Certification of Store Manager Misclassification Claim because Individual Questions Predominate California Appellate Court Holds

Plaintiffs filed a putative class action against their former employer, Big Lots Stores, alleging violations of California’s Labor Code for failure to pay them overtime or to compensate them for missed meal and rest periods. Mora v. Big Lots Stores, Inc., ___ Cal.App.4th ___ (Cal.App. April 18, 2011) [Slip Opn., at 2]. According to the allegations underlying the class action complaint, defendant “uniformly misclassifies its store manager as exempt employees based on their job description alone rather than on consideration of actual work performed, which involves a significant amount of time on nonexempt tasks.” Id. Specifically, plaintiff’s class action complaint alleged that Big Lots operates “closeout retail stores in California, [and] has intentionally and improperly designated certain employees as ‘exempt’ store managers in order to avoid payment of overtime wages and other benefits required by [California law].” Id. Plaintiffs’ counsel moved to certify the litigation as a class action; the trial court denied the motion finding “the company does not operate its stores in a standardized manner and has no systematic practice of misclassification of managers.” Id. Plaintiffs appealed. The California Court of Appeal affirmed.

The evidence presented by both sides was substantial. Plaintiffs cited defendant’s deposition testimony to establish that Big Lots “classified all its store managers in California as falling within the ‘executive exemption’” as its basis for failing to pay them overtime or provide meal and rest breaks. Mora, at 4, Plaintiffs also submitted declarations from 44 putative class members to “demonstrate[] that the basic job duties of store managers in California are the same regardless of location and that Big Lots runs all its stores in the state in a uniform and standardized manner.” Id. These declarations also stated that “Strict compliance with corporate manuals and actions plans, which set forth state-wide policies and procedures, is required; and such compliance is ensured by district managers, who supervise all store managers.” Moreover, “training of store managers is standardized, and their job performance is evaluated on the same basis and on the same form regardless of purported store-to-store differences.” Id. The declarations “averred that store managers are primarily engaged in nonexempt activities and routinely work more than 40 hours per week,” and that they “typically spend more than 75% of their time performing the same physical labor and routine clerical tasks” as nonexempt employees. Id., at 4-5. Finally, plaintiffs submitted an expert declaration in support of their motion for class action treatment. Id., at 5-6.

Continue reading "Class Action Defense Cases–Mora v. Big Lots Stores: California Appellate Court Affirms Denial Of Class Action Treatment In Labor Law Misclassification Class Action Brought By Store Managers" »

Posted On: May 3, 2011 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–Madison v. Chalmette Refining: Fifth Circuit Court Reverses Class Action Certification Order For Failure Of District Court To Meaningfully Consider Trial Administration Issues

District Court Failed to Consider the Manner in which a Class Action Trial would Proceed Prior to Granting Class Action Treatment, Requiring Reversal of Class Action Certification for Abuse of Discretion Fifth Circuit Holds

Plaintiffs filed a putative class action against Chalmette Refining following the release of petroleum coke dust from the Chalmette Refinery. Madison v. Chalmette Refining, L.L.C., ___ F.3d ___ (5th Cir. April 24, 2011) [Slip Opn., at 2]. According to the allegations underlying the class action complaint, plaintiffs (a group of school children and their parent and teachers) were exposed to the petroleum coke dust while reenacting a battle at the Chalmette National Battlefield, located adjacent to the refinery. Id. The class action complaint sought damages for “personal injury, fear, anguish, discomfort, inconvenience, pain and suffering, emotional distress, psychiatric and psychological damages, evacuation, economic damages, and property damages.” Id. Consistent with Fifth Circuit authority, the district court allowed the parties to conduct pre-certification discovery relevant to the propriety of class action treatment. Id. Defense attorneys deposed the five named plaintiffs, but plaintiffs’ counsel elected not to conduct discovery. Id. Plaintiffs then sought class action certification of a Rule 23(b)(3) class, which defendant opposed. Id., at 2-3. “Over two years later, the district court held a hearing on the motion to certify the class. At the conclusion of that hearing, and without any evidence being introduced, the district court orally granted Plaintiffs’ motion.” Id., at 3. Defendant petitioned the Fifth Circuit for leave to take an interlocutory appeal, which the Fifth Circuit granted. Id. Two months later (and after the Fifth Circuit had granted defendant’s petition for interlocutory appeal), the district court issued a written order granting class certification. Id. The Circuit Court reversed.

After summarizing the requirements for class action treatment under Rule 23, see Madison, at 3-4, the Circuit Court opened its analysis at page 4 with the following observation: “Recognizing the important due process concerns of both plaintiffs and defendants inherent in the certification decision, the Supreme Court requires district courts to conduct a rigorous analysis of Rule 23 prerequisites.” The Fifth Circuit stressed that the moving party bears the burden of satisfying the requirements of Rule 23, and that the district court must take “‘a close look at the case before it is accepted as a class action.’” Id., at 4 (quoting Amchem Prods. v. Windsor, 521 U.S. 591, 613 (1997)). The lower court, however, failed to perform such an analysis. Rather, the district court found it sufficient that “there is one set of operative facts that [will] determine liability” because “Plaintiffs were either on the battlefield and exposed to the coke dust or they were not.” Id., at 6.

Continue reading "Class Action Defense Cases–Madison v. Chalmette Refining: Fifth Circuit Court Reverses Class Action Certification Order For Failure Of District Court To Meaningfully Consider Trial Administration Issues" »

Posted On: May 2, 2011 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–Marlo v. United Parcel Service: Ninth Circuit Court Affirms District Court Order Decertifying Class Action In Labor Law Misclassification Case

District Court did not Abuse its Discretion in Decertifying Class Action Alleging Misclassification of Employees based on its Determination that Common Question of Law and Fact did not Exist Ninth Circuit Holds

Plaintiff filed a putative class action against his employer, United Parcel Service (UPS), alleging violations of California’s Labor Code for failure to pay him overtime or to compensate him for missed meal and rest periods. Marlo v. United Parcel Service, Inc., ___ F.3d ___ (9th Cir. April 28, 2011) [Slip Opn., at 5544]. According to the allegations underlying the class action complaint, plaintiff worked as a full-time supervisor (FTS) for UPS from 1999 to 2008, and “worked more than forty hours per week on a regular basis without taking meal or rest-period breaks, or receiving overtime compensation.” Id. Because he was an FTS, UPS classified plaintiff as exempt from California’s overtime law under the executive and administrative exemptions. Id. Plaintiff alleged that he had been misclassified, and sought and obtained an order certifying the litigation as a class action. Id. The district court subsequently granted summary judgment in favor of UPS, but the Ninth Circuit reversed finding that plaintiff “ha[d] raised material issues of fact related to whether the FTS ‘customarily and regularly exercise[] discretion and independent judgment.’” Id., at 5545 (quoting Marlo v. United Parcel Serv., Inc., 254 Fed. App’x. 568, 568 (9th Cir. 2007)). On remand, however, the district court decertified the class, finding that plaintiff “had failed to establish that common issues of law or fact predominated over individual ones” as required by Rule 23(b)(3). Id., at 5544. A juy returned a partial verdict in favor of plaintiff, finding that the executive and administrative exemptions did not apply to certain supervisorial positions plaintiff held. Id., at 5546. Both sides appealed. The Ninth Circuit affirmed the decertification order, id., at 5544.

The decertification order was based on “doubt regarding the continuing efficacy of a class action in this case.” Marlo, at 5545 (quoting Marlo v. United Parcel Serv., Inc., 251 F.R.D. 476, 480 (C.D. Cal. 2008)). In part, the district court reasoned that “the existence of a uniform policy classifying FTS as exempt is insufficient absent evidence of misclassification,” and that plaintiff “had relied heavily on a survey that was neither reliable nor representative of the class.” Id. (citations omitted). The court explained at 251 F.R.D. at 486,

Continue reading "Class Action Defense Cases–Marlo v. United Parcel Service: Ninth Circuit Court Affirms District Court Order Decertifying Class Action In Labor Law Misclassification Case" »

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

Bookmark and Share

Class Action Defense Cases–American Honda v. Allen: Seventh Circuit Court Reverses Class Action Certification Order Holding District Court’s Daubert Analysis Inadequate And Expert Testimony Inadmissible

District Court Erred in Granting Class Action Certification because Expert Testimony Establishing Rule 23(b)(3)’s Predominance Prong was Unreliable and District Court’s Daubert Analysis Inadequate Seventh Circuit Holds

Plaintiffs filed a putative class action against American Honda and Honda of America (collectively “Honda”) alleging product defect liability concerning Honda’s Gold Wing GL1800 motorcycle; specifically, the class action complaint alleged that a design defect in the steering assembly causes the motorcycle to “wobble.” American Honda Motor Co., Inc. v. Allen, 600 F.3d 813, 814 (7th Cir. 2010). Plaintiffs moved the district court to certify the litigation as a class action under Rule 23(b)(3), relying heavily on an expert’s opinion that common issues predominate; Honda opposed class action treatment and challenged the expert opinion relied upon by plaintiffs in their motion. Id. Defense attorneys moved under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), to strike plaintiffs’ expert report on the grounds that the expert’s “wobble decay standard was unreliable because it was not supported by empirical testing, was not developed through a recognized standard-setting procedure, was not generally accepted in the relevant scientific, technical, or professional community, and was not the product of independent research.” Id. The district court agreed to rule on the admissibility of the report prior to ruling on class certification because the report was central to the motion, id. But while the court announced “definite reservations about the reliability of [the expert’s] wobble decay standard,” it refused to exclude the report entirely “at this early stage of the proceedings.” Id., at 814-15. The district court granted class action certification, id., at 815, and Honda sought leave to appeal, id., at 814. The Seventh Circuit granted Honda’s request and reversed.

The Circuit Court explained that the issue before it was “whether the district court must conclusively rule on the admissibility of an expert opinion prior to class certification in this case because that opinion is essential to the certification decision.” American Honda, at 814. The Court summarized the expert’s “wobble decay” opinion, which was based on a standard the expert himself had devised and that he himself characterized as “reasonable.” Id. The expert opinion was important because “most of Plaintiffs' predominance arguments rest upon the theories advanced by [their expert].” Id. (quoting Allen v. Am. Honda Motor Co., 264 F.R.D. 412, 425 (N.D. Ill. 2009)). In response to Honda’s objections and following the Daubert hearing, the district court “noted that it was concerned that, among other things, [the expert’s] wobble decay standard may not be supported by empirical evidence, the standard has not been generally accepted by the engineering community, and [his] test sample of one may be inadequate to conclude that the entire fleet of GL1800s is defective.” Id., at 814-15. Nevertheless, the lower court believed it was too early in the litigation to dismiss the4 expert’s opinion in its entirety, and so it granted class action treatment without prejudice to Honda moving to exclude the expert’s opinion. Id., at 815.

Continue reading "Class Action Defense Cases–American Honda v. Allen: Seventh Circuit Court Reverses Class Action Certification Order Holding District Court’s Daubert Analysis Inadequate And Expert Testimony Inadmissible" »

Posted On: July 12, 2010 by Michael J. Hassen Email This Post

Bookmark and Share

iPhone Class Action Defense Cases–Apple and AT&T Mobility Antitrust Litigation: California Federal Court Certifies Nationwide Class Action Against Apple And AT&T On iPhone Antitrust Claims

Class Action Complaint Against Apple and AT&T for Antitrust Violations in Connection with Sale and Marketing of iPhone Warranted Class Action Treatment California Federal Court Holds

Plaintiffs filed a putative nationwide class action against Apple and AT&T Mobility (ATTM) alleging federal antitrust violations; specifically, the class action complaint alleged “monopolization in violation of Section 2 of the Sherman Act, violation of the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301, et seq., and violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030.” In re Apple & ATTM Antitrust Litig., ___ F.Supp.3d ___ (N.D.Cal. July 8, 2010) [Slip Opn., at 1]. The district court summarized the allegations underlying the class action complaint at page 1 as follows: “Plaintiffs allege that although they were required to purchase a two-year service agreement with ATTM when they purchased their iPhones, Apple and ATTM had secretly agreed to technologically restrict voice and data service in the aftermarket for continued voice and data services for five years, i.e., after Plaintiffs’ initial two-year service period expired. Plaintiffs also allege that Apple monopolized the aftermarket for third party software applications for the iPhone, and that Apple caused the iPhone to become unusable if it detected that a customer had “unlocked” their iPhone for use with other service providers.” Defense attorneys for Apple moved for summary judgment with respect to the class action’s iPhone Operating System Version 1.1.1 claims, which the district court granted. Id., at 2. We do not here discuss that portion of the court order. Rather, as part of the same order, the district court considered plaintiffs’ motion to certify the litigation as a class action; the district court granted class action treatment to the lawsuit. Id. It is the class action certification portion of the decision that we discuss below.

Plaintiff’s class action certification motion sought to certify the litigation on behalf of a nationwide class defined as follows: “All persons who purchased or acquired an iPhone in the United States and entered into a two-year agreement with Defendant AT&T Mobility, LLC for iPhone voice and data service any time from June 29, 2007, to the present.” In re Apple, at 12-13. (The motion additionally sought certification of a sub-class defined as “All iPhone customers whose iPhones were ‘bricked’ by [Apple] at any time during the Class Period.” Id., at 13. However, the district court granted Apple’s motion for summary judgment on the “bricking” claim, so the court did not address the sub-class. Id.) The federal court noted that with respect to Rule 23(a)’s requirements for class action certification, Apple and ATTM did not contest numerosity, see id., at 13-14, nor did they contest adequacy of representation, see id., at 21-22. But defendants argued that the commonality and typicality requirements of Rule 23(a) had not been met, and that Rule 23(b) had not been met.

Continue reading "iPhone Class Action Defense Cases–Apple and AT&T Mobility Antitrust Litigation: California Federal Court Certifies Nationwide Class Action Against Apple And AT&T On iPhone Antitrust Claims" »

Posted On: July 8, 2010 by Michael J. Hassen Email This Post

Bookmark and Share

Bankruptcy Class Action Defense Cases–In re Wilborn: Fifth Circuit Court Reverses Class Action Certification Order By Bankruptcy Court Because Requirements Of Rule 23(b) Not Met

Bankruptcy Court had Jurisdiction to Certify Debtor-Class Action Against Wells Fargo but Prerequisites for Class Action Certification under Rule 23(b) were not Satisfied, Particularly with Respect to Damages Fifth Circuit Holds

The three named plaintiffs in this action (Judy Wilborn, Karlton and Monica Flournoy, and Judy Martin) filed Chapter 13 bankruptcy petitions in Texas. In re Wilborn, ___ F.3d ___ (5th Cir. June 18, 2010) [Slip Opn., at 1-2]. According to the allegations underlying the class action complaint, plaintiffs have home loans that are held or serviced by Wells Fargo Bank, and they allege that the Bank “charged, or charged and collected, unreasonable and unapproved post-petition professional fees and costs during the pendency of their bankruptcies.” Id., at 2. The fees and costs challenged by the class action – which “include such things as bankruptcy attorneys’ fees, recording fees, notification fees, title search fees, document fees, and property inspection fees” – are permitted under each plaintiff’s loan documents. Id. Nonetheless, plaintiffs’ class action complaint accused the Bank of engaging in a pattern and practice of charging such fees in violation of bankruptcy laws on the theory that “Wells Fargo’s failure to disclose these fees to the bankruptcy court interferes with their ability to complete their Chapter 13 reorganization plans and emerge from bankruptcy having cured all arrearages.” Id. Plaintiffs also object to the fact that these fees and costs continued to accumulate during the pendency of the bankruptcy even though Wells Fargo received distributions from the Chapter 13 Trustee in accord with the individual bankruptcy plans. Id. The class action complaint acknowledged that the Bank charged plaintiffs fees that it had incurred both prior to and after confirmation of the bankruptcy plans, that the fees ranged from $1200 to $4000, and that in some instances at least a portion of the fees were approved by the bankruptcy court. Id., at 3. Plaintiffs moved the bankruptcy court to certify their complaint as a class action; the bankruptcy court granted the motion, certifying a class that consisted of more than 1200 members. Id., at 3-4. The bankruptcy court certified its class action certification order for direct appeal to the Fifth Circuit, and Wells Fargo also petitioned the Circuit Court for permission to appeal the certification order. Id., at 4. The Fifth Circuit granted the Bank’s petition for an interlocutory appeal and reversed the class action certification order. The Court concluded that “a bankruptcy judge may certify a class of debtors under appropriate circumstances but that the proposed class in this case does not satisfy the requirements of Federal Rule of Civil Procedure 23 and Federal Bankruptcy Rule of Procedure 7023.” Id., at 2.

The Fifth Circuit explained that the appeal presented two issues: “The questions at issue are whether a bankruptcy judge may certify a class action comprised of debtor-plaintiffs, and if so, whether the class certification in this case was proper.” In re Wilborn, at 1-2. Wells Fargo first challenged whether the bankruptcy court had jurisdiction to enter the class certification order, id., at 4. While the Circuit Court recognized that “there has been disagreement among courts as to whether a bankruptcy judge may certify a class action of debtors,” id., at 8, it had no difficulty in holding that the bankruptcy court had jurisdiction over the putative class action, see id., at 4-9. The central issue on appeal, then, was whether the prerequisites for class certification under Rule 23 had been met. Id., at 9.

Continue reading "Bankruptcy Class Action Defense Cases–In re Wilborn: Fifth Circuit Court Reverses Class Action Certification Order By Bankruptcy Court Because Requirements Of Rule 23(b) Not Met" »

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

Bookmark and Share

FLSA Class Action Defense Cases–Luiken v. Domino's Pizza: Minnesota Federal Court Grants Conditional Class Action Treatment To Nationwide Labor Law Class Action Alleging Failure To Pay Minimum Wage To Delivery Drivers

Nationwide Class Action (excluding California and New York) Alleging Domino’s Systematically Underpaid Delivery Drivers in Violation of Fair Labor Standards Act (FLSA) Entitled to Conditional Class Action Certification because Evidence Submitted by Plaintiffs Met Minimal Burden Required at First Stage of FLSA Proceedings Minnesota Federal Court Holds

Plaintiffs filed a putative class action against their employer, Domino’s Pizza, alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Domino’s failed to pay its pizza delivery drivers minimum wage. Luiken v. Domino’s Pizza, LLC, ___ F.Supp.2d ___ (D. Minn. June 21, 2010) [Slip Opn., at 1-3]. According to the allegations underlying the class action, Domino’s failed to reimburse its delivery drivers for all automobile expenses incurred in the course of their employment, id., at 4. The class action sought to represent a nationwide class, except for delivery drivers in California and New York. Id., at 2. Plaintiffs moved the district court to certify the litigation as a class action, id., at 1. Defense attorneys opposed class action treatment, arguing that class members were not “similarly situated” because of “highly individualized fact-specific determinations taking into account driver-specific factors such as type of car, routes, and total mileage” and because “reimbursements vary by geographic region.” Id., at 2. Noting the difference between class action certification motions under Rule 23 and conditional class certification under the FLSA (technically, certification of a “collective action”), the district court granted plaintiffs’ motion.

The federal court explained that class action certification under the FLSA is a two-part process, and that in determining whether to conditionally certify a class (the first step in the process), the court determines whether plaintiffs have established “a colorable basis that the putative class members are the victims of a single decision, policy, or plan.” Luiken, at 4 (citation omitted). Here, plaintiffs argued that Domino’s employed “a single policy which systematically under-reimbursed them for automobile expenses incurred in the course of their employment” and, accordingly, they were “paid below the federal minimum wage.” Id. In brief, plaintiffs argued that Domino’s used a uniform set of assumptions in determining reimbursement rates, and that those assumptions were uniformly unfair. Id. Defense attorneys countered that individual issues, including the base wages paid each driver, defeat class certification. Id., at 5. Domino’s additionally argued that at least some drivers were paid more than the federal minimum wage, and plaintiffs conceded that subclasses may be necessary due to differences in base pay. Id., at 5 n.5.

Continue reading "FLSA Class Action Defense Cases–Luiken v. Domino's Pizza: Minnesota Federal Court Grants Conditional Class Action Treatment To Nationwide Labor Law Class Action Alleging Failure To Pay Minimum Wage To Delivery Drivers" »

Posted On: June 28, 2010 by Michael J. Hassen Email This Post

Bookmark and Share

Class Action Defense Cases–Donovan v. Philip Morris: Massachusetts Federal Court Certifies Class Action Seeking Medical Monitoring For Lung Cancer Of 20-Year Marlboro Smokers

Class Action Against Tobacco Company Alleging Unfair Trade Practices and Breach of Implied Warranty and Seeking Medical Monitoring for Lung Cancer on Behalf of Class of Smokers who have not been Diagnosed with Lung Cancer and who are Asymptomatic Warranted Class Action Certification under both Rule 23(b)(2) and (b)(3) Massachusetts Federal Court Holds

Plaintiffs filed a putative class action against Philip Morris alleging “unfair or deceptive” trade practices in violation of Massachusetts state law, breach of implied warranty, and negligence; specifically, the class action complaint “allege[d] that Philip Morris designed, marketed, and sold Marlboro cigarettes that delivered an excessive and dangerous level of carcinogens.” Donovan v. Philip Morris USA, Inc., ___ F.Supp.2d ___ (D.Mass. June 24, 2010) [Slip Opn., at 1]. According to the allegations underlying the class action complaint, “plaintiffs have no apparent symptoms of lung cancer, and as such, are not seeking damages.” Id. Thus, this class action “diverges from a typical tobacco suit,” id. Instead of seeking damages, the class action sought to compel Philip Morris to pay for medical monitoring – “that is, regular screenings to determine whether they have early signs of the disease” based on the argument that “if [class members] do eventually develop lung cancer, these screenings will increase their likelihood of survival almost six-fold.” Id., at 1-2. Plaintiffs sought certification of a class action “on behalf of Massachusetts residents, age fifty and older, who have smoked Marlboro cigarettes for at least twenty pack-years.” Id., at 1. Further, “No class member may be diagnosed with lung cancer or be under a physician’s care for suspected lung cancer, and all must have smoked Marlboro cigarettes within the Commonwealth of Massachusetts.” Id., at 2. Defense attorneys opposed class action treatment. In a 56-page order, the district court granted plaintiffs’ motion for class action certification.

In analyzing whether to grant class action treatment, the district court noted that “the motion was not easily resolved because it raised threshold issues of Massachusetts products liability law.” Donovan, at 2. First, the class action certification motion presented a set of issues tied to “the unusual remedy plaintiffs seek, a supervised medical monitoring program using Low-Dose Computed Tomography (‘LDCT’) scans.” Id. Plaintiffs argued that unlike x-rays, which could only detect lung cancer “when it had reached an advanced stage,” the new LDCT-scanning technology allowed for much earlier detection “significantly increasing survival rates from about fifteen percent to eighty-five percent.” Id. (Plaintiffs argued that monetary damages would not adequately compensate class members for the cost of medical monitoring, id., at 3.) Second, the class action certification motion presented the question of whether the named plaintiffs had standing to prosecute the class action because “[b]y definition, plaintiffs who seek medical monitoring to determine whether they have cancer are asymptomatic.” Id. And third, the class action presents a “novel issue [that] pertains to the timing of plaintiffs’ claims and the related issue of claim preclusion.” Id. “Typically, toxic tort exposure cases put the plaintiffs on the horns of a dilemma. If they bring a claim when they are aware of their exposure – assuming the standing issues are resolved – they take the risk that they cannot recover if they develop cancer in the future under the ‘single controversy rule.’ If they wait until they develop cancer to bring a claim, the statute of limitations will have expired because they knew of the risks at an earlier time.” Id. Here, plaintiffs argued that this dilemma was avoided because “The statute of limitations should run from the date that plaintiffs develop subcellular changes that substantially increase their risk of cancer and where that increase triggers a medically-accepted form of screening.” Id., at 4.

Continue reading "Class Action Defense Cases–Donovan v. Philip Morris: Massachusetts Federal Court Certifies Class Action Seeking Medical Monitoring For Lung Cancer Of 20-Year Marlboro Smokers" »

Posted On: April 29, 2010 by Michael J. Hassen Email This Post

Bookmark and Share

Wal-Mart Class Action Defense Cases–Dukes v. Wal-Mart: Ninth Circuit Court Affirms Class Action Certification Of Largest Labor Law Class Action In U.S. History

Labor Law Class Action Alleging Wal-Mart Discriminates Against Female Employees in Violation of Title VII of the Civil Rights Act of 1964 Properly Certified As Nationwide Class Action by District Court Ninth Circuit Holds

Plaintiffs filed a class action against Wal-Mart alleging violations of Title VII of the Civil Rights Act of 1964; specifically, the class action complaint alleged that Wal-Mart discriminates against its female employees. Dukes v. Wal-Mart Stores, Inc., ___ F.3d ___ (9th Cir. April 26, 2010) [Slip Opn., at 6137, 6146]. According to the allegations underlying the class action complaint (originally filed in 2004), Wal-Mart discriminated against women employees in violation of Title VII of the 1964 Civil Rights Act because “women employed in Wal-Mart stores: (1) are paid less than men in comparable positions, despite having higher performance ratings and greater seniority; and (2) receive fewer—and wait longer for—promotions to in-store management positions than men.” Id., at 6147. The class action complaint sought to represent a nationwide class on the grounds “that Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.” Id. The proposed class included “women employed in a range of Wal-Mart positions, from part-time entry-level hourly employees to salaried managers.” Id. Plaintiffs’ counsel moved the district court to certify the litigation as a class action, defined as “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998 who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” Id., at 6148. Defense attorneys opposed class certification and stressed that the proposed class would consist of as many as 1.5 million current and former employees who worked at 3,400 stores in 41 regions. Id., at 6148 and n.3. The district court granted the motion and certified the litigation as a class action, id., at 6146-47. The Ninth Circuit affirmed. The Circuit Court opinion is quite lengthy, so we simply “hit the highlights” in this article. Defense attorneys may contact the author of the Blog for a more detailed discussion of the case.

The Ninth Circuit spent a considerable amount of time discussing the standard governing district court consideration of class certification under Rule 23 and clarified the “proper standard of Rule 23 adjudication.” See Dukes, at 6149-83. This analysis includes a discussion, and rejection, of the dissent’s “significant proof” standard. See id., at 6177-83. The Circuit Court then turned to the merits of the Rule 23 analysis, beginning with Rule 23(a)(1)’s numerosity requirement, which was not contested given the enormous size of the class. Id., at 6185. The Court also found that Wal-Mart had not waived its right to object to Rule 23(a)(3)’s typicality requirement, see id., at 6209-10, but concluded that the district court did not err in finding that the named-plaintiffs’ claims were sufficiently typical of those of the class: “Even though individual employees in different stores with different managers may have received different levels of pay or may have been denied promotion or promoted at different rates, because the discrimination they claim to have suffered occurred through alleged common practices—e.g., excessively subjective decision making in a corporate culture of uniformity and gender stereotyping—the district court did not abuse its discretion by finding that their claims are sufficiently typical to satisfy Rule 23(a)(3).” Id., at 6210. Moreover, “because all female employees faced the same alleged discrimination, the lack of a class representative for each management category does not undermine Plaintiffs’ certification goal.” Id., at 6211. And the Ninth Circuit found no difficulty in finding that the adequacy of representation test in Rule 23(a)(4) had been met. Id., at 6212.

Continue reading "Wal-Mart Class Action Defense Cases–Dukes v. Wal-Mart: Ninth Circuit Court Affirms Class Action Certification Of Largest Labor Law Class Action In U.S. History" »

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

Bookmark and Share

Class Action Defense Cases–Shady Grove v. Allstate: Divided Supreme Court Reverses Dismissal Of Class Action Holding New York Law Barring Class Actions Seeking Penalties Falls To Rule 23

District Court Erred in Dismissing Class Action Based on New York law Barring Class Actions that Seek Penalties or Statutory Damages because the Statute is Incompatible with Rule 23’s Mandate Allowing Class Action Certification if Requirements are Met Supreme Court Holds

Plaintiff, a medical care provider, filed a class action in New York federal court against Allstate Insurance; the class action complaint alleged that plaintiff provided medical care to an Allstate insured and accepted an assignment of the insured’s rights to benefits of her Allstate policy, and that Allstate paid benefits under the policy “but not on time, and it refused to pay the statutory interest that accrued on the overdue benefits (at two percent per month).” Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., ___ U.S. ___, 130 S.Ct.1431, 2010 WL 1222272, *3 (March 31, 2010). (The class action asserted federal court jurisdiction under the Class Action Fairness Act (CAFA), id. n.3.) According to the allegations underlying the class action complaint, “Allstate routinely refuses to pay interest on overdue benefits” so plaintiff “sought relief on behalf of itself and a class of all others to whom Allstate owes interest.” Id. Defense attorneys moved to dismiss the class action for lack of jurisdiction on the grounds that New York law, § 901(b), prohibits class actions which seek only to recover “penalties” as damages. Id. Defense attorneys moved to dismiss the class action complaint, id. The district court granted the motion, concluding that statutory interest constituted a “penalty” under § 901(b), and dismissed the class action. See 466 F.Supp.2d 467 (2006). On appeal, the Second Circuit held that no conflict existed between § 901(b) and Rule 23 because they address different issues; accordingly, the Circuit Court affirmed the dismissal of the class action. See 549 F.3d 137 (2008). The Supreme Court granted certiorari and, in a sharply divided decision, reversed.

The Supreme Court explained, “New York law prohibits class actions in suits seeking penalties or statutory minimum damages.” Shady Grove, at *3 and n.1 (citing N.Y. Civ. Prac. Law Ann. § 901(b) (West 2006) [“Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.”]). The issue before the Court was “whether this precludes a federal district court sitting in diversity from entertaining a class action under [Rule 23].” Id. The High Court explained the framework for its analysis as follows: “We must first determine whether Rule 23 answers the question in dispute…. If it does, it governs-New York's law notwithstanding-unless it exceeds statutory authorization or Congress's rulemaking power…. We do not wade into Erie's murky waters unless the federal rule is inapplicable or invalid….” Id., at *4 (citations omitted).

Continue reading "Class Action Defense Cases–Shady Grove v. Allstate: Divided Supreme Court Reverses Dismissal Of Class Action Holding New York Law Barring Class Actions Seeking Penalties Falls To Rule 23" »

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

Bookmark and Share

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).

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

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

Bookmark and Share

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.

Continue reading "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" »

Posted On: February 10, 2010 by Michael J. Hassen Email This Post

Bookmark and Share

CAFA Class Action Defense Cases–Cunningham Charter v. Learjet: Seventh Circuit Court Holds Class Action Removed To Federal Court Under CAFA Remains In Federal Court Following Denial Of Class Action Certification

In Case Removed to Federal Court under Class Action Fairness Act (CAFA), District Court Erred in Remanding Class Action Complaint to State Court Following Denial of Class Action Treatment because Jurisdiction is Generally Determined at Time Complaint is Filed and Class Action Allegations were not Frivolous Seventh Circuit Holds

Plaintiff filed a putative class action in Illinois state court against Learjet alleging breach of warranty and product liability claims; the class action complaint sought to represent all purchasers of Learjets “who had received the same warranty from the manufacturer that [plaintiff] had received.” Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805 (7th Cir. 2010) [Slip Opn., at 1]. Defense attorneys removed the class action to federal court under CAFA (the Class Action Fairness Act of 2005), id., at 1-2. Plaintiff then moved the district court to certify two classes, but the court denied class action treatment “on the ground that neither proposed class satisfied the criteria for certification set forth in Rule 23.” Id., at 2. The federal court then ruled that the denial of the class action certification motion removed federal court jurisdiction under CAFA and remanded the complaint to state court. Id. Defendant petitioned the Seventh Circuit for leave to appeal the remand order; the Circuit Court granted the petition “to resolve an issue under the Class Action Fairness Act that this court has not heretofore had to resolve.” Id. The Circuit Court reversed.

The Seventh Circuit explained that CAFA creates federal court diversity jurisdiction in cases of minimal diversity; that is, “over certain class actions in which at least one member of the class is a citizen of a different state from any defendant (that is, in which diversity may not be complete).” Learjet, at 2. CAFA expressly applies “to any class action [within the Act’s scope] before or after the entry of a class certification order.” Id. (quoting § 1332(d)(8)). The Circuit Court explained that CAFA implies an “expectation” of class certification in that a district court should remand a putative class action to state court if “it would have been certain from the outset of the litigation that no class could be certified.” Id., at 3. On the other hand, “jurisdiction attaches when a suit is filed as a class action, and that invariably precedes certification.” Id. The Circuit Court concluded, therefore, “All that section 1332(d)(1)(C) means is that a suit filed as a class action cannot be maintained as one without an order certifying the class. That needn’t imply that unless the class is certified the court loses jurisdiction of the case.” Id.

Continue reading "CAFA Class Action Defense Cases–Cunningham Charter v. Learjet: Seventh Circuit Court Holds Class Action Removed To Federal Court Under CAFA Remains In Federal Court Following Denial Of Class Action Certification" »

Posted On: February 1, 2010 by Michael J. Hassen Email This Post

Bookmark and Share

Vioxx Class Action Defense Cases–In re Vioxx: California Appellate Court Affirms Denial Of Class Action Treatment In Putative UCL/CLRA Class Action Involving Vioxx Because Individual Issues Predominate

Class Action under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) Arising out of Merck’s Manufacture and Marketing of Vioxx Properly Denied Class Action Certification because Evidence Supported Trial Court’s Conclusion that Individual Issues Predominate Over Common Issues California Appellate Court Holds

Plaintiffs filed a putative class action in California state court against Merck arising out of its manufacture and marketing of Vioxx, which Merck pulled from the market in September 2004 after a study revealed an increased risk of cardiovascular problems associated with the drug; specifically, the class action complaint alleged causes of action for violations of California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) and alleging unjust enrichment. In re Vioxx Class Cases, 180 Cal.App.4th 116, 103 Cal.Rptr.3d 83, 87-88 (Cal.App. December 15, 2009). According to the allegations underlying the class action complaint, plaintiffs did not “suffer[] any adverse effects from taking Vioxx” but, they alleged, Merck was liable for false advertising and for marketing a drug that was “less safe than other, less expensive, pain relievers.” Id., at 87; see also id., at 89-90. Plaintiffs moved the trial court to certify the litigation as a class action, id., at 90; defense attorneys opposed class action treatment on the grounds that individual issues would predominate over questions common to the putative class and that the claims of the named representatives were not typical. Id., at 91-92. The trial court agreed with Merck and denied class action certification. Id., at 92-93. In part, the trial court found that the named plaintiffs (who were individuals) “did not possess claims typical of prescription drug benefit providers,” id., at 88. The California Court of Appeal affirmed, rejecting plaintiffs’ claim that reversal was compelled by the Supreme Court’s decision in In re Tobacco II Cases, 46 Cal.4th 298 (Cal. 2009), which issued after the trial court order denying class action treatment.

The appellate court observed that “trial courts are ideally situated to evaluate the efficiencies and practicalities of permitting group action, [and so] they are afforded great discretion in granting or denying certification.” In re Vioxx, at 93 (quoting In re Tobacco II, at 311). In California, “in the absence of other error, a trial court ruling supported by substantial evidence generally will not be disturbed ‘unless (1) improper criteria were used [citation]; or (2) erroneous legal assumptions were made [citation].’” In re Tobacco II, at 311. Particularly here, where the trial court considered thousands of pages of documents in determining the propriety of class action treatment, the appellate court will not substitute its decision for the trial court’s with respect to the inferences to be drawn from the evidence. In re Vioxx, at 94 (citation omitted).

Continue reading "Vioxx Class Action Defense Cases–In re Vioxx: California Appellate Court Affirms Denial Of Class Action Treatment In Putative UCL/CLRA Class Action Involving Vioxx Because Individual Issues Predominate" »

Posted On: January 25, 2010 by Michael J. Hassen Email This Post

Bookmark and Share

Microsoft WGA Class Action Defense Cases–Johnson v. Microsoft: Washington Federal Court Dismisses All Class Action Allegations In Class Action Complaint And Requires Plaintiffs Pay Defense Fees Incurred Opposing Withdrawn Class Certification Motion

Class Action Complaint Challenging Microsoft’s “Windows Genuine Advantage” Software could be Amended to Withdraw Class Action Allegations Provided Plaintiffs Dismiss All Class Claims and Provided Plaintiffs Reimburse Microsoft the Attorney Fees Reasonably Incurred in Opposing Plaintiffs’ Class Action Certification Motion before Plaintiffs Voluntarily Withdrew that Motion Washington Federal Court Holds

In April 2009, plaintiffs filed a putative class action against Microsoft in Washington federal court alleging, in the second amended class action complaint, “claims for unjust enrichment, breach of End User License Agreement (‘EULA’) contracts, violation of Washington’s Consumer Protection Act, and trespass to chattels, nuisance and interference with property” arising out of “Microsoft’s distribution of Windows Genuine Advantage (‘WGA’) software.” Johnson v. Microsoft Corp., ___ F.Supp. 2d ___ (W.D.Wash. January 15, 2010) [Slip Opn., at 1-2.] In September 2008, plaintiffs filed a motion requesting that the district court certify the litigation as a class action; however, in November 2009, plaintiffs withdrew their class action certification motion and “indicated an intent to withdraw class allegations.” Id., at 2. Plaintiffs thereafter moved to file a third amended class action complaint “that would eliminate most (but not all) class allegations, add a new cause of action and related allegations, and specify injunctive relief sought.” Id. Defense attorneys opposed the motion with one exception: Microsoft did not oppose the motion to the extent it sought to withdraw class action claims, provided that plaintiffs did not seek to “re-inject them at a later point in the proceeding.” Id. In addition, defense attorneys requested permission “to file a fee petition for the expenses incurred as a result of defending against Plaintiffs’ class-certification motion,” id. The district court granted the motion in part and denied the motion in part.

The district court began by noting the well-settled rule that leave to amend is “generally allowed absent bad faith, undue delay, futility, or prejudice to the opposing party.” Johnson, at 2 (citing Eminence Capital, L.L.C. v. Aspeon, Inc., 316 F.3d 1048, 1051-52 (9th Cir. 2003)). Nonetheless, the federal court denied plaintiffs’ request to add claims (and allegations in support of claims) for fraudulent misrepresentation, negligent misrepresentation and fraudulent concealment because defense attorneys opposed these amendments and plaintiffs agreed to withdraw them. Id., at 2-3. Similarly, Microsoft opposed plaintiffs’ request to seek additional forms of injunctive relief, and plaintiffs agreed to withdraw those proposed amendments. Id., at 3. Accordingly, the district court denied that portion of plaintiffs’ motion, id. For our purposes, the most important aspect of the district court’s order concerns the class action allegations, to which we now turn.

Continue reading "Microsoft WGA Class Action Defense Cases–Johnson v. Microsoft: Washington Federal Court Dismisses All Class Action Allegations In Class Action Complaint And Requires Plaintiffs Pay Defense Fees Incurred Opposing Withdrawn Class Certification Motion" »