Class Action Defense Blog

Antitrust Class Action Complaint Failed to Adequately Establish Antitrust Injury thus Warranting Dismissal of Certain Antitrust Claims in Class Action Complaint for Lack of Standing California Federal Holds

Plaintiffs filed a class action lawsuit against various defendants for allegedly conspiring to artificially inflate and fix the prices of dynamic random access memory (DRAM) in the market: plaintiffs are indirect purchasers of DRAM, and filed the class action on behalf of other indirect purchasers; the class action named as defendants foreign corporations, or U.S. subsidiaries of foreign corporations, that manufacture and sell DRAM in the U.S. In re Dynamic Random Access Memory (DRAM) Antitrust Litig., ___ F.Supp.2d ___ (N.D. Cal. January 29, 2008) [Slip Opn., at 1-2]. Defense challenges to the class action led to the filing of a second amended class action complaint, and defense attorneys moved to dismiss certain claims therein. Id. The district court granted the motion in part and denied the motion in part.

By way of background, the district court explained at page 2 that in August 2006, defense attorneys moved for judgment on the pleadings with respect to the original class action complaint, and in June 2007, the court granted the motion in part in an order that enunciated “two overarching conclusions”: (1) that “under the standing test enunciated in Assoc. Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983)(‘AGC’), plaintiffs lacked antitrust standing to assert their claims under both the California Cartwright Act and 13 state antitrust statutes, for all claims based on purchases of products in which DRAM is a component,” and “further granted defendants’ motion for lack of standing with respect to 3 more state antitrust statutes, regardless whether those claims were based on purchases of non-component DRAM, or products in which DRAM is a component”; and (2) that the class action claims “under various states’ consumer protection statutes failed, on grounds that the claims were untimely, had procedural deficiencies, or else failed to state a valid claim for relief.” The district court granted plaintiffs’ leave to amend, “but only as to three specific state laws - South Dakota, New York, and Rhode Island.” In re DRAM, at 2. Plaintiffs did so, but then sought leave to further amend the class action complaint believing they could overcome the concerns expressed by the court in its June 2007 order; defense attorneys opposed the motion on the ground of futility, but the court granted leave to amend and a second amended class action complaint was filed. Id., at 2-3. Defense attorneys moved to dismiss certain claims therein, id., at 3.

Continue reading "Class Action Defense Cases-In re Dynamic Random Access Memory: California Federal Court Grants Motion To Dismiss Certain Antitrust Class Action Claims Finding Plaintiffs Lack Antitrust Standing" »

Posted In: Class Action Court Decisions

Judicial Panel Grants Defense Request for Pretrial Coordination of 35 Class Action and Individual Lawsuits Pursuant to 28 U.S.C. § 1407, Joined by Sole Plaintiff Outside California, and Transfers Actions to Southern District of California

Thirty-five (35) individual and class action lawsuits (34 in California and 1 in New Jersey) were filed against various defendants, including Arthur Andersen, “arising out of alleged misrepresentations or omissions relating to improper accounting practices at Peregrine Systems, Inc. In re Peregrine Systems, Inc. Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. January 2, 2008) [Slip Opn., at 1]. Defense attorneys for Arthur Andersen and New Jersey plaintiff’s lawyer filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the litigation pursuant to 28 U.S.C. § 1407 in the Southern District of California; no other party responded to the motion. Id. The Judicial Panel granted the motion to centralize the individual and class action lawsuits, and agreed that the Southern District of California was the appropriate transferee court. Id. Accordingly, the Panel transferred the New Jersey action to California, id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Class Action Plaintiff must Suffer Loss of Money or Property to have Standing to Prosecute UCL (Unfair Competition Law) Class Action and must Establish Causal Connection Between Alleged Loss and Defendants Conduct California State Court Holds

Plaintiff filed a putative action lawsuit against various Time Inc. entities for violations of Californias unfair competition law (UCL) by allegedly tricking people into buying books as part of a free trial period program. Hall v. Time Inc., 158 Cal.App.4th 847, 70 Cal.Rptr.3d 466, 467 (Cal.App. January 28, 2008). The gravamen of the class action was that Time engaged in a scheme by which it induced consumers to purchase books by offering a free preview period during which the consumer had 21 days in which to review the book and return it to Time with no obligation to buy. Id. The class action complaint alleged that after the consumer reviews the book pursuant to an ostensible no obligation free trial basis, Time employs a scheme to obtain immediate payment from the consumer throughmisleading and deceitful tactics. Id. Defense attorneys moved to dismiss the class action on the ground that plaintiff did not suffer an injury in fact and thus lacked standing to prosecute the class action; the trial court agreed and dismissed the class action complaint. Id. The Court of Appeal affirmed.

Plaintiff alleged that he ordered a book from Time. Hall, at 468. The class action alleged that Time sent a bill with the book that encouraged him to pay for the book immediately but made clear that he was under no obligation to do so and that he had 21 days to return the book at Times expense, id., at 467-68. Plaintiff admits he kept the book and did not pay for it. Id., at 468. According to the allegations in the class action complaint, after the trial period ended Time began sending bills to plaintiff demanding payment; when plaintiff failed to pay, the matter was referred to collection. Id. Ultimately, plaintiff paid for the book and then filed the class action complaint alleging that Time had engaged in an ongoing, unfair and/or fraudulent and/or unlawful business practice by sending invoices before the expiration of the free trial period to obtain immediate payment for the book requested. Id. The trial court granted Times motion to dismiss the class action for lack of standing, finding that plaintiff got the book that he asked for, at the price he asked for it, and the payment schedule he wanted. Id.

Continue reading "UCL Class Action Defense Cases-Hall v. Time: California State Court Affirms Dismissal Of Class Action Complaint Concluding Plaintiff Lacked Standing Under Unfair Competition Law (UCL) To Prosecute Class Action Claims" »

Posted In: Certification of Class Actions, Class Action Court Decisions

In Motion for Remand of Class Action Against Insurer for Failure to Provide No-Fault Insurance, both Plaintiff and Defense Failed to Present Admissible Evidence of Amount in Controversy so Court had Insufficient Evidence to Determine Whether Removal Jurisdiction Existed Under CAFA (Class Action Fairness Act) Arkansas Federal Court Holds

Plaintiff filed a putative class action in Arkansas state court against her automobile insurance carrier, Sagamore Insurance, alleging various breaches of the terms of the auto policy. Toller v. Sagamore Ins. Co., 514 F.Supp.2d 1111, 1113-14 (E.D. Ark. 2007). The class action complaint alleged that Sagamore “has consistently issued automobile liability insurance policies without providing no-fault coverages or obtaining waivers of such coverage as required by Arkansas law.” Id., at 1114. Defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA); plaintiff’s lawyer moved to remand the class action on the ground that removal jurisdiction did not exist under CAFA because the requisite amount in controversy had not been established. Id. The district court found that it lacked sufficient evidence from either side to rule on the remand motion and, accordingly, held the motion in abeyance pending receipt of such evidence.

Plaintiff’s class action alleged that Sagamore issued her an automobile insurance policy without providing her no-fault coverage and without obtaining from her a waiver of such coverage in writing. Toller, at 1114. Following a car accident in which she suffered $48,000 in medical costs, Toller filed her lawsuit alleging that Sagamore wrongly denied her claim. The class action complaint provided no further information regarding alleged damages, and plaintiff did not limit her damages to an amount under $75,000. Id. The relief sought in the complaint includes attorney fees, penalties for breach of contract, and declaratory and injunctive relief, but the class action provides that “the amount in controversy will not exceed the sum or value of $4,999,999, and she specifically waives any amount of compensatory damages, restitution, interest, costs, and attorneys' fees above that amount.” Id. Defense attorneys removed the class action to federal court alleging both diversity jurisdiction and CAFA removal jurisdiction: we do not discuss here the district court’s conclusion that the requirements for diversity jurisdiction had not been met, see id., at 1116-18; rather, we discuss here solely removal jurisdiction under CAFA, and Sagamore’s argument “that this case is a class action, that the class has more than 100 members, that the amount in controversy exceeds $5,000,000, and that minimal diversity exists, so this Court has jurisdiction pursuant to the Class Action Fairness Act, codified at 28 U.S.C. § 1332(d),” id., at 1114.

Continue reading "CAFA Class Action Defense Cases-Toller v. Sagamore: Arkansas Federal Court Delays Ruling On Motion To Remand Class Action Against Insurer Pending Additional Evidence Of Amount In Controversy For Removal Under Class Action Fairness Act (CAFA)" »

Posted In: Class Action Fairness Act (CAFA), Removal & Remand, Class Action Court Decisions

Securities Class Action Complaint Failed to Adequately Articulate Factual Bases for Claims Necessitating Dismissal but with Leave to Amend California Federal Court Holds

Various plaintiffs filed a class action lawsuit against New Century. and various officers and directors aris[ing] from the collapse of New Century Financial Corporation in the wake of the subprime mortgage crisis, and allegations of securities law violations that drastically reduced the value of stocked owned by shareholders. Gold v. Morrice, ___ F.Supp.2d ___ (C.D. Cal. January 31, 2008) [Slip Opn., at 1]. In September 2007, lead plaintiff (New York Teachers Retirement System) filed a consolidated class action complaint; defense attorneys moved to dismiss various class action claims, id. The class action was filed after New Centurys stock dropped 97% following several disclosures regarding errors in its previously reported financial statements, id., at 2. Specifically, the class action complaint alleged violations of Section 11 and Section 12(a) of the Securities Act, as well as securities fraud claims under Section 10(b) and Section 20(a) of the Exchange Act against the individually-named defendants, id. The district court granted the motion to dismiss but with leave to file an amended class action complaint.

In granting the defense Rule 12(b)(6) motion as to the class actions Securities Act claims, the district court concluded that the complaint lacks clarity in articulating the grounds for its claims and attributes this failure to a lack of organization and somewhat unclear presentation of the allegations. Gold, at 6. The court noted, for example, that despite many detailed factual allegations and underlined statements from stock offering documents, press releases, or other communications, the court ha[d] difficulty in determining whether Plaintiffs have stated a claim because the class action complaint either lacks facts to support that the statements are false or misleading or provides those facts in a different paragraph without guidance for cross-reference. Id. For guidance, recommended that the class action complaint be clear and concise in identifying false statements and articulating the factual allegations supporting an inference that the statement is false or misleading and directed plaintiffs to attach a chart to the complaint set[ting] forth for each claim ([i]) the alleged false or misleading statements, including the source of the statement in a registration statement where a required element of the claim; (ii) the supporting factual allegations; and (iii) the ultimate conclusion. Id., at 7.

Continue reading "Subprime Securities Law Class Action Defense Cases-Gold v. Morrice: California Federal Court Grants Motion To Dismiss Class Action Claims But Gives Plaintiffs Leave To File Amended Class Action Complaint" »

Posted In: Class Action Court Decisions, PSLRA/SLUSA Class Actions

Failure to Timely Seek Permission to Appeal Denial of Motion to Remand Class Action Complaints Removed to Federal Court under CAFA (Class Action Fairness Act) Required Dismissal of Appeals for Lack of Jurisdiction Eleventh Circuit Holds

Plaintiff, a pharmacy, filed a putative class action against insurance/pharmacy benefit management companies for misrepresentation, breach of contract, unjust enrichment and conspiracy, alleging that defendants failed to reimburse pharmacies “according to an agreed-upon formula for brand name prescriptions dispensed to Defendants' insureds.” Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F.Supp.2d 1323, 1324 (M.D. Ala. 2006). Defense attorneys removed the action to federal court asserting, inter alia, federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id. The district court held that even under CAFA the defense bears the burden of establishing removal jurisdiction, but concluded that the defense had satisfied the amount in controversy requirement. Our summary of that district court order may be found here. Plaintiffs filed notices of appeal with the Eleventh Circuit; the Circuit Court dismissed the appeals for lack of jurisdiction. Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 475 F.3d 1228 (11th Cir. 2007).

The Eleventh Circuit noted the two consolidated class action lawsuits had been filed prior to CAFA’s effective date but the clerk of the court did not issue the summons until after CAFA’s effective date. Defense attorneys removed the class actions to federal court, and plaintiffs’ lawyers filed motions to remand arguing that the class action complaints had been filed before CAFA went into effect. The district court denied the motion. Main Drug, at 1229. Plaintiffs appealed the denial of the motion to remand within seven (7) days of the district court order, but never sought permission to appeal pursuant to Rule 5. Id. The Circuit Court explained at pages 1229 and 1230,

Continue reading "CAFA Class Action Defense Cases-Main Drug v. Aetna: Eleventh Circuit Dismisses For Lack Of Jurisdiction Appeal From District Court Refusing To Remand Class Action Removed Under Class Action Fairness Act (CAFA)" »

Posted In: Class Action Fairness Act (CAFA), Class Action Court Decisions

Defense Motion for Summary Judgment Arguing that Class Action Claims Seeking Compensation under Federal Fair Labor Standards Act (FLSA) for Time Spent Donning and Doffing Safety Gear Required by Employer Denied for Failure to Establish as a Matter of Law that Class Action Claims Fell Within Exception to FLSA Compensation Requirement Wisconsin Federal Court Holds

Plaintiffs filed a class action lawsuit against their employer, Kraft Foods, alleging violations of the federal Fair Labor Standards Act (FLSA) and state law for time spent in donning and doffing safety and sanitation equipment as part of their jobs at a meat processing plant. Spoerle v. Kraft Foods Global, Inc., 527 F.Supp.2d 860, 2007 WL 4564094, *1 (W.D. Wis. 2007). Defense attorneys moved for summary judgment arguing that the class action claims fell within the Portal-to-Portal Act exception, that the allegations in the class action complaint did not constitute “changing clothes” within the meaning of the FLSA, and that in any event the class action claims fell within the FLSA’s “de minimis” exception. Id. (While such dispositive motions are generally inappropriate prior to the court’s ruling on a class action certification motion, plaintiffs stipulated that they would not seek class action treatment until the court ruled on the summary judgment motion, id.) Except as explained in the Note, below, the district court denied the defense motion because it could not find as a matter of law “that the donning and doffing of the equipment at issue in this case is excluded from the protections of the FLSA,” id.

The district court stated at page 1, “This case presents a straightforward question: does the Fair Labor Standards Act, 29 U.S.C. §§ 201-219, require defendant Kraft Foods Global, Inc., to pay its employees for time they spend putting on and taking off items of safety and sanitation equipment that defendant's policies and federal law require the employees to wear?” Kraft operates a meat processing plant in Wisconsin and requires employees to use time clocks “typically [located] right outside the ‘production area’” to track their time. Spoerle, at *1. Federal law, as well as company policy, requires employees wear safety and sanitation equipment in the production area, which “includes a hard hat or bump cap, steel-toed shoes or sanitation boots, ear plugs, hairnet and beard net, safety glasses, a freezer coat (if necessary), gloves, plastic gloves, paper frock or plastic apron, sleeves, slickers (for employees that work in wet areas) or a cotton frock (employees may choose to wear cotton pants and a shirt instead, which the parties refer to as ‘career clothes’).” Id. Failure to wear the required equipment may lead to discipline, id. The gravamen of the class action is that some of these items - all of which are owned by the employer and stored at the plant - must be put on before clocking in, id., at *2. The court noted that “The current collective bargaining agreement between plaintiffs and defendant does not guarantee compensation for the time spent donning and doffing personal protective equipment,” id., and noted further that Kraft did not dispute that such conduct was “work,” id., at *3; rather, the defense argued that the conduct falls within an exception.

Continue reading "FLSA Class Action Defense Cases-Spoerle v. Kraft Foods: Wisconsin Federal Court Denies Defense Summary Judgment Motion In FLSA Class Action Seeking Compensation For Donning And Doffing Protective Equipment" »

Posted In: Employment Law Class Actions, Class Action Court Decisions

Judicial Panel Grants Defense Request, Over Plaintiffs’ Objections, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees With Defense that District of Minnesota is Appropriate Transferee Court

Twenty-eight class action lawsuits were filed in 27 districts against various defendants, including KFC Corp. alleging violations of the federal Fair Labor Standards Act (FLSA) for failure to pay assistant managers overtime pay. In re KFC Corp. Fair Labor Standards Act Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. January 3, 2008) [Slip Opn., at 1]. Defense attorneys for KFC filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the District of Minnesota; plaintiffs in each of the class actions opposed pretrial coordination. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, rejecting plaintiffs’ central argument that most discovery already had been completed, id. The Panel explained at page 1, “Discovery and motion practice with respect to the common factual questions regarding the propriety of KFC’s employment practices and compliance with the FLSA and related state laws remains. Centralization under Section 1407 has the salutary effect of placing all actions in this docket before a single judge who can formulate a pretrial program that ensures streamlined resolution of all actions to the benefit of the parties and the judiciary.” Id. The Judicial Panel also agreed with the defense that the District of Minnesota was the appropriate transferee court because “[a]ll actions now before the Panel arise from the decertification of a conditionally certified nationwide collective action filed in the District of Minnesota…, which has been pending for over two years.” Id., at 1-2. Accordingly, the Panel ordered that all actions pending outside Minnesota be transferred there, id., at 2.

Posted In: Employment Law Class Actions, Multidistrict Litigation, Class Action Court Decisions

Plaintiffs in Labor Law Class Action Failed to Establish that Defense Failed to Properly Respond to Pre-Certification Discovery and Defense failed to Establish Good Cause for Untimely Designation of Rebuttal Expert District of Columbia Federal Magistrate Holds

Plaintiffs, five deaf employees of the United States Postal Service (USPS), filed a putative class action alleging that they were “denied a qualified sign language interpreter at safety meetings and mandatory work meetings” and that this “prevented from performing their duties safely, which they contend is an essential function of their job.” Hubbard v. Potter, 247 F.R.D 27, 2008 WL 43867, *1 (D.D.C. 2008). Plaintiffs alleged that a class action could be certified under either Rule 23(b)(2) or (b)(3), and sought pre-certification discovery to support a motion for class action certification. Id. Defense attorneys moved to terminate pre-certification discovery and for leave to designate a rebuttal expert witness, id. The federal magistrate granted the first motion but denied the second.

With respect to their first motion, defense attorneys argued that plaintiffs had been given sufficient time to conduct the discovery necessary to file for class action certification, and that further discovery was inappropriate pre-certification because “Plaintiffs either (a) have the evidence they need for class certification and are attempting to collect that which they need for trial on the merits, or (b) have failed in their attempts to meet the class certification requirements following this Court's dismissal of their first class complaint and are trying to squeeze every last document out of the Postal Service in a vain attempt to piece together a plausible class certification theory for their second amended complaint.” Hubbard, at *1. Plaintiffs’ opposition “raised legitimate concerns regarding the discovery that has been thus far produced by defendant,” characterizing USPS’s discovery responses as “grossly insufficient and manifestly incomplete.” Id.

Continue reading "Class Action Defense Cases-Hubbard v. Potter: Federal Magistrate Grants Defense Motion To End Pre-Certification Discovery In Labor Law Class Action But Denies As Untimely Defense Motion To Designate Rebuttal Expert" »

Posted In: Employment Law Class Actions, Class Action Court Decisions

Documents Plaintiff's Counsel Found on Internet and Intends to Use in Prosecuting Class Action Against State Farm not Protected by Work Product Doctrine Indiana Federal Court Holds

Plaintiff filed a class action lawsuit against State Farm Mutual Automobile Insurance Company; prior to the filing the class action, plaintiff’s lawyer “undertook a comprehensive factual investigation relevant to the claims being asserted,” gathering “numerous documents from publicly available sources, including from Defendant State Farm's own web sites.” Kartman v. State Farm Mut. Auto. Ins. Co., ___ F.Supp.2d ___, 2007 WL 4561607, *1 (S.D. Ind. December 21, 2007). In order to prepare its defense against the class action claims, defense attorneys requested production of all documents plaintiff obtained from “publicly available sources” prior to filing suit, id., at *3. Plaintiff’s lawyer admitted that he “plan[ned] to use these documents ‘for the purpose of cross-examining and impeaching State Farm representatives,’” but refused to produce them on the ground that the documents were protected by the work product doctrine. Id., at *1. Defense attorneys filed a motion to compel, id., and the district court granted motion.

The federal court explained that plaintiff bore the burden of proving that the documents sought were “prepared in anticipation of litigation.” Kartman, at *1. Plaintiff argued the documents “would necessarily reveal counsel's mental impressions and litigation strategy”; defense attorneys countered that “Plaintiffs intend to withhold clearly responsive documents from State Farm based upon a temporary invocation of work product protection that Plaintiffs will waive at tactically opportune times.” Id. The district court explained that in order for the work product doctrine to apply, “the material must be documents or other tangible things, must be prepared in anticipation of litigation, and must be prepared by or for a party or his counsel.” Id., at *2. Here, however, the documents were “secured from other sources” and “were not prepared in anticipation of this particular litigation” or “by or for Plaintiff or his counsel in this litigation.” Id. In fact, the district court noted, the documents from State Farm’s web site “were prepared by State Farm with absolutely no thought whatsoever of this particular litigation.” Id., at *3. And while it is true that plaintiff’s lawyer assembled the documents from various public sources, the district court found persuasive the defense argument that “Merely gathering documents from third parties does not gloss the documents with an attorney's mental impressions any more that simply sharing documents with an attorney stamps the documents with the imprimatur of attorney-client privilege.” Id.

Continue reading "State Farm Class Action Defense Cases-Kartman v. State Farm: Indiana Federal Court Grants Defense Motion To Compel Production Of Documents Plaintiff's Counsel Believes Relevant To Class Action Claims" »

Posted In: Class Action Court Decisions

Class Action Alleging Fidelity Failed to Disclose and Provide Discounted Title Insurance Rates to Homeowners as Part of Refinance Transactions Entitled to Class Action Treatment Ohio Federal Court Holds

Plaintiffs filed a class action lawsuit against their title insurance carrier, Fidelity National Title, alleging that the cost it charged insureds for insurance issued in connection with refinance transactions; specifically, the class action alleged that plaintiffs “have been injured and wronged by defendant’s failure to charge them a lower premium,” as required by Ohio law, “even though they were not named insureds under the title insurance policy.” Randleman v. Fidelity National Title Ins. Co., ___ F.Supp.2d ___ (N.D. Ohio January 31, 2008) [Slip Opn., at 1]. Of course, homeowners typically pay for title insurance, both for themselves and for their lenders, id., at 2. Defense attorneys filed a motion to dismiss the class action to the extent it asserted claims for breach of implied-in-fact contract and unjust enrichment, which the district court denied. See Randleman v. Fidelity National Title Ins. Co., 465 F.Supp.2d 812, 827 (N.D. Ohio 2007). Plaintiffs then filed a motion to certify the litigation as a class action, id. The trial court concluded that the matter may proceed as a class action.

Like all other title insurers doing business in Ohio, Fidelity belongs to the Ohio Title Insurance Rating Bureau (OTIRB) and files its insurance rates with the Ohio Superintendent of Insurance. Randleman, at 2. “The OTIRB files a manual of rates with the Ohio Department of Insurance (ODI), setting forth the rates title insurers will charge for policies.” Id. The rates in the manual are binding on title insurers, and the listed rates are mandatory though Ohio law provides for certain discounted rates, id., at 2-3. The class action complaint alleged that plaintiffs refinanced their Ohio home and paid a non-discounted rate for a title policy for their lender, id., at 3. The class action further alleged that plaintiffs had refinanced within the time period that would have qualified them to receive a discounted reissue rate, and that “they were overcharged $213.57.” Id., at 4. Plaintiffs’ class action certification motion argued that Fidelity systematically failed to provide discounts “despite knowledge that particular consumers are entitled to the discounted rate.” Id., at 5. Defense attorneys opposed class action treatment on the ground that “the issue of knowledge of the discount on the part of each individual class member would be determinative, and would require individualized adjudication of ‘as to the knowledge and practices of the particular lender, mortgage broker, agent, and borrower involved in the transaction’…, and thus, individual adjudication of each class member’s claim.” Id. Plaintiffs countered that Fidelity’s non-disclosure or a homeowner’s lack of knowledge is not an element of the causes of action underlying the class certification motion, so individual trials would not be required. Id., at 5-6.

Continue reading "Fidelity Class Action Defense Cases-Randleman v. Fidelity National Title: Ohio Federal Court Grants Class Action Treatment Against Title Insurer Alleging Class Action Claims Based On Failure To Give Homeowners Discounted Rates" »

Posted In: Certification of Class Actions, Class Action Court Decisions

On Appeal from Order Granting Class Action Treatment Against Dow Chemical for Damages Allegedly Caused by Dioxin from Dow Plant, Defense Failure to Request or Seek to Introduce Evidence in Opposition to Motion to Certify Class Action Undermines Claim that Trial Court Erred in Failing to Hold Evidentiary Hearing Split Michigan State Court Holds

Plaintiffs filed a class action lawsuit against Dow Chemical alleging toxic tort claims based on the alleged release of dioxin at Dow’s Midland, Michigan, plant. Henry v. Dow Chemical Co., Mich. Ct. App. Case No. 266433 (unpublished) (Mich.App. January 24, 2008) [Slip Opn., at 1]. In part, the class action complaint “presented an issue of first impression” in that plaintiffs sought certification of a class action to create a medical monitoring program funded by Dow, id. In 2003, plaintiffs moved for class action certification, and defense attorneys moved for summary disposition of the medical monitoring claim, id., at 2. The trial court denied the defense motion, but the Michigan Supreme Court reversed reasoning that “[b]ecause plaintiffs do not allege a present injury, plaintiffs do not present a viable negligence claim under Michigan’s common law.” Henry v. The Dow Chemical Co., 701 N.W.2d 684, 473 Mich. 63, 68 (Mich. 2005). On remand, the trial court considered class action treatment of the remaining claims for nuisance, negligence, and public nuisance, Slip Opn., at 3, and granted the motion, id., at 6-7. Defense attorneys appealed and, in an unpublished and divided opinion, the Michigan Court of Appeals affirmed.

The Court of Appeals noted that the sole issue before it was whether the trial court’s order granting class action treatment was “clearly erroneous.” Henry, at 7 (citation omitted). Defense attorneys argued on appeal that individual questions of law or fact will predominate over common questions, and that the trial court erred in concluding otherwise without first holding an evidentiary hearing. Id., at 8. The lead opinion, by Judge Hood, states at page 7 that “in my view, the trial court’s decision with regard to certification of the class was not clearly erroneous.” With respect to the lack of an evidentiary hearing, the court noted that the parties made the strategic decision not to introduce evidence but, rather, to rely on case law in support of, and opposition to, the class action certification motion, id., at 8. Of course, “[w]ithout an evidentiary hearing, there are no factual findings to review,” id., and having made the tactical decision not to request an evidentiary hearing or seek to present testimony in opposition to class certification, the defense could not now be heard to complaint. And with respect to Dow’s arguments that “the properties and the dioxin levels vary,” thus creating predominantly individual questions of fact, the appellate court concluded that (1) under Michigan law, “the trial court is not required to accept the defendant’s assertions and proofs, but looks to the allegations in the complaint,” and (2) the investigation and report of the Michigan Department of Environmental Quality (MDEQ) concluded that certain areas contained excessive amounts of dioxin and that Dow’s Midland facility was the source of the contamination. Id., at 11-12. While Dow argued that another sources of contamination existed, the MDEQ had concluded that the alternate source was not a factor so the trial court’s decision was not clearly erroneous. Id., at 12.

Continue reading "Dow Class Action Defense Cases-Henry v. Dow Chemical: Divided Michigan Appellate Court Affirms Class Action Certification Of Toxic Tort Class Action Complaint Arising From Release Of Dioxin At Dow Chemical Plant" »

Posted In: Certification of Class Actions, Class Action Court Decisions

Class Action Claims Against Federal Government Arising out of Failed Levee System Fell Within Immunity Afforded by Flood Control Act thus Warranting Dismissal of Class Action Complaint as to Government Louisiana Federal Court Holds

Plaintiffs filed a class action complaint against various defendants, including the U.S. Army Corps of Engineers, arising out of the “catastrophic failures of the levee system surrounding New Orleans and its vicinity” as a result of Hurricane Katrina, centering on the “breaches and failures that occurred at the three ‘outfall canals’ and the floodwalls constructed thereon.” In re Katrina Canal Breaches Consolidated Litig., ___ F.Supp.2d ___ (E.D. La. January 30, 2008) [Slip Opn., at 1-2]. The canals at issue in the class action “serve as conduits for the drainage of excess water from the streets of New Orleans during rain events, [but] these same canals become channels for incoming storm surge creating increased risk of flooding caused by Lake Pontchartrain hurricane driven water.” Id., at 2. Defense attorneys for the federal government moved to dismiss the class action claims against it, id., at 1, and in ruling on the motion the district court relied on an “exhaustive report” prepared by the U.S. Army Corps of Engineers that, in the court’s words, “provides detailed time lines and discussions concerning what proved to be a fifty-year exercise in ineptitude and gross economic and technological mismanagement,” id., at 3 n.2.

As to the U.S. Army Corps of Engineers, plaintiffs’ 73-page class action complaint, brought under the Federal Tort Claims Act, alleged that the Corps “had the legal responsibility and duty to these plaintiffs to cause, allow, and/or conduct the aforesaid dredging activity in a manner that would not compromise the safety of the canal's levee/flood wall system" but that the Corps “(1) negligently failed to follow federal regulations and its own engineering standards and procedures , in regard to the issuance of a permit to dredge the 17th Street Canal…; (2) violated federal law to the extent [that] the River & Harbors Act prohibits the granting of a dredging permit that is contrary to the public interest…; (3) violated of federal regulations…for failing to properly balance the benefits of the requested dredging against the reasonably foreseeable harm, including possible harm related to detrimental effects on flood Control…; [and] (4) negligently issued a dredging permit which cased and allowed changes to occur in the 17th Street Canal Bottom, leading to subsurface and soil destabilization of the canal levee….” In re Katrina, at 19-20. Defense attorneys moved to dismiss the class action claims against the U.S. “based on § 702c immunity granted under the Flood Control Act of 1928 [(FCA)] and the discretionary function exception with respect to allegations of the negligent granting of the dredging permit of the 17th St. Canal.” Id., at 21.

Continue reading "Katrina Class Action Defense Cases-In re Katrina: Louisiana Federal Court Dismisses Class Action Complaint Against Government Finding Class Action Claims Based On Levee System Failure During Hurricane Katrina Barred By Governmental Immunity" »

Posted In: Class Action Court Decisions

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

Three products liability class action lawsuits were filed in California, Oregon and Washington against various defendants, including General Motors Corp., arising out of the allegation that the speedometers in certain GM pick-ups and sport utility vehicles registered inaccurately and that GM “failed to disclose and/or fraudulently concealed this alleged defect.” In re General Motors Corp. Speedometer Prods. Liab. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. January 8, 2008) [Slip Opn., at 1]. Defense attorneys for common defendant General Motors filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Western District of Washington; responding plaintiffs initially supported pretrial coordination provided the Panel select the Northern District of California as the appropriate transferee court, but at the hearing on the motion they consented to transfer to the Western District of Washington. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed with the defense, and plaintiffs, that the Western District of Washington was the appropriate transferee court. Id. Accordingly, the Panel granted the defense motion, id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Class Action Alleging Auto Insurer Breached Insurance Contract by Failing to Pay for Seatbelt Inspections Following Accidents Properly Dismissed Fifth Circuit Holds

Plaintiffs filed a class action lawsuit against their automobile insurance carrier alleging that it was “contractually obligated to provide an extensive seatbelts inspection” following auto accidents. Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F. 3d 673, 2007 WL 4260892, *1 (5th Cir. 2007). The class action complaint does not challenge State Farm’s payment of repair costs as estimated by the body shops that inspect the insured vehicles after accidents; rather, it alleged that the manufacturer and a trade group recommend inspecting seatbelts and their locking mechanisms following any accident. Id. The class action further alleged that if “a body shop deems such an inspection unnecessary and does not list it on the estimate, then State Farm will not cover the cost of the seatbelt inspection.” Id. However, plaintiffs “refused to allege that there is in fact anything wrong with the seatbelt (or even that there seemed to be something wrong).” Id., at *3 n.2. Defense attorneys moved to dismiss the class action for failure to state a claim, noting that plaintiffs “do not allege that their seatbelts were harmed in any way during or after the collisions”; the district court granted the motion because “based on the contractual agreement to repair, if there is no complaint of a failure, there is nothing to repair.” Id., at *1. The Fifth Circuit affirmed.

The Circuit Court summarized plaintiffs’ theory on appeal as “arguing that the term ‘cost of repair’ necessarily includes the cost of the seatbelts inspection because in order to repair something, one must first inspect to determine what is in need of repair.” Sonnier, at *1. The Court disagreed. Interpreting the policy language under Louisiana law, the Fifth Circuit found unambiguous that State Farm’s contractual obligations were limited to loss or damage, and that the cost of repair or replacement was, under the facts of this case, based on “an estimate written based upon the prevailing competitive price.” Id., at *2. The Circuit Court concisely explained its rationale for rejecting plaintiffs’ theory as follows: “State Farm is obligated to pay for loss or damage to [plaintiffs’] vehicles based upon a written estimate. In creating estimates, body shops conduct an inspection, list the items in need of repair, and determine the amount State Farm owes ‘based upon the prevailing competitive price.’ [Plaintiffs’] argument that an estimate must necessarily include an extensive seatbelts inspection finds no support in the policy language. There is no policy language describing State Farm's duty to conduct or pay for automobile inspections. State Farm's duty is to pay for loss or damage to Appellants' vehicles, measured by the cost of repair. That obligation was fulfilled in this case, and [plaintiffs] do not further identify anything broken that needs to be fixed.” Id.

Continue reading "Class Action Defense Cases-Sonnier v. State Farm: Fifth Circuit Affirms Dismissal Of Class Action Complaint Against Automobile Insurance Company Because Allegations In Class Action Failed To State Claim For Failure To Inspect Seatbelts After Accidents" »

Posted In: Class Action Court Decisions

UCL Class Action Against Bank Challenging Overdraft Fees Fails because National Bank Act (NBA) Preempted Class Action Claims Under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) California Federal Court Holds, but Grants Plaintiff 20 Days’ Leave to Amend Class Action Complaint

Plaintiff filed a putative class action in California state court against Bank of America alleging violations of California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) arising out of the Bank’s failure to disclose its Nonsufficient Funds/Overdraft Fees policy (NSF/OD fees policy). Montgomery v. Bank of America Corp., 515 F.Supp.2d 1106, 1108 (C.D. Cal. 2007). The thrust of plaintiff’s class action was that the Bank charged NSF/OD fees “on a sliding scale per overdraft[ that is] overly harsh, unjustified, and bear no relation to the actual damages incurred by the bank and are therefore in breach of California contract law,” and that the Bank’s NSF/OD fee agreements “are contracts of adhesion and unconscionable” due to their failure to accurately disclose the fees that may be assessed. Id., at 1111. Defense attorneys removed the class action to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA), id., at 1108. In the face of a defense motion for judgment on the pleadings, plaintiff filed an amended class action complaint; defense attorneys moved to dismiss the amended complaint. Id. The only ground addressed by the district court was whether the class action claims were “preempted by regulations promulgated by the Office of the Comptroller of the Currency (‘OCC’) pursuant to the National Bank Act (‘NBA’).” Id., at 1109. Because the district court found that the claims were preempted, it granted the defense motion and dismissed the class action complaint.

After noting that Congress did not expressly preempt state laws in this area, Montgomery¸ at 1109, the district court turned to whether “field preemption” existed or whether the court could “imply preemption” to the class action claims, id., at 1109-10. It noted that “The National Bank Act of 1864 was enacted to protect national banks against intrusive regulation by the States.” Id., at 1110 (citations omitted). And under established case law, “state attempts to control the conduct of national banks are void if they conflict with federal law, frustrate the purposes of the [NBA], or impair the efficiency of national banks to discharge their duties.” Id. (citation omitted). Defense attorneys argued that the claims in the class action complaint were preempted by 12 C.F.R. § 7.4002, which expressly authorizes banks to “impose charges and fees” as described therein. Id., at 1111. Under the Bank’s theory, because federal regulations authorize banks to charge fees, federal law occupies the field and “it is up to the OCC, not private plaintiffs, to determine whether a bank has properly weighed the discretionary factors set forth in Section 7.4002 when setting the fee amounts.” Id., at 1112. Plaintiff’s lawyer countered that preemption is disfavored, particularly as it concerns the “historic police powers of the States” to protect consumers. Id., at 1112-13 (quoting Smiley v. Citibank, 11 Cal.4th 138, 148 (Cal. 1995), aff'd, 517 U.S. 735). Plaintiff also argued that the class action’s “failure to disclose” allegations are not preempted by the NBA, id., at 1113.

Continue reading "Class Action Defense Cases-Montgomery v. Bank of America: California Federal Court Dismisses Class Action Complaint Holding National Bank Act (NBA) Preempts Class Action Claims Challenging Nonsufficient Funds/Overdraft Fees" »

Posted In: Class Action Court Decisions

Motion to Intervene in Class Action under Age Discrimination in Employment Act (ADEA) Denied because of Failure to Comply with Statutory Deadline for Filing Notice of Intent to Sue and Former Plaintiff’s Motion to Rejoin Class Action Fails as Time-Barred District of Columbia District Court Holds

Plaintiffs, air traffic controllers, filed a putative class action against their federal employer alleging violations of the Age Discrimination in Employment Act (ADEA), following a February 2005 work force reduction that would, and did, result in their termination in October 2005. Breen v. Peters, 529 F.Supp.2d 24, 2008 WL 62626, *1 (D.D.C. 2008). Plaintiffs bypassed the administrative complaint process, provided the requisite 30-day notice of intent to sue, see 29 U.S.C. § 633a(d), and in March 2005 filed the class action. Id. Plaintiffs subsequently moved to join 20 individuals as named plaintiffs, and the 20 individuals simultaneously moved for leave to intervene; additionally, one plaintiff dismissed from the class action at his request, filed a motion to be reinstated as a party plaintiff. Id. Oddly, the class action complaint defined an 834-person class by name, attaching as an exhibit a list of each of the individuals on whose behalf the putative class action had been filed. Over the course of the litigation, some class members were added and others were dismissed; however, the 20 individuals seeking leave to intervene were never part of the putative class. Id. Defense attorneys opposed each of these motions, id. The district court denied the motions.

With respect to the 20 individuals, defense attorneys argued that they should be denied leave to join the class, either as named plaintiffs or by intervention, because they failed to comply with the statutory filing deadlines for bringing an ADEA claim. Plaintiffs’ conceded this point, but argued, in essence, that since there were more than 800 members of the putative class, what’s another 20? Breen, at *1. The federal court found unpersuasive the argument that the 20 should be permitted to piggy-back on the timely claims filed by or on behalf of the members of the putative class: The ADEA expressly requires that notice of intent to sue be filed with the Equal Employment Opportunity Commission within 180 days of the allegedly unlawful act, see 29 U.S.C. § 633a(d), and while this deadline is not jurisdictional and may, under appropriate circumstances, be deemed tolled, “a court should use its equitable power to toll a statutory deadline only in extraordinary and carefully circumscribed circumstances.” Id., at *2. As the moving parties, the 20 individuals bore the burden of persuaded the district court that the statutory deadline had been equitably tolled, but they failed to meet that burden, id. Indeed, they offered no facts in support of their motion but, rather, “argue[d] that they should be treated as having vicariously met the statutory filing deadline, because several hundred plaintiffs in the case did provide timely notice to the defendants of their intent to sue under the ADEA in compliance with 29 U.S.C. § 633a(d).” Id. They argued defendants would not be prejudiced by adding 20 more class members, but they did not counter the argument that they simply sat on their rights as the statutory deadline passed, id. Accordingly, the district court refused the motions seeking to add the 20 individuals to the class action. Id., at *3.

Continue reading "ADEA Class Action Defense Cases-Breen v. Peters: District of Columbia Federal Court Denies Motion To Add 20 New Plaintiffs To ADEA Class Action And Denies Former Plaintiff's Motion To Rejoin Class Action" »

Posted In: Employment Law Class Actions, Class Action Court Decisions

District Court Erred in Holding Plaintiffs Lacked Standing to Prosecute Class Action Complaint and in Ruling on Suitability of Complaint for Class Action Treatment at the Pleading Stage of the Litigation Eleventh Circuit Holds

Plaintiffs filed a class action lawsuit in Florida state court against their mobile home owner’s insurance carrier, Foremost Insurance, for underpayment of damages caused by hurricanes, and defense attorneys removed the class action to federal court. Mills v. Foremost Ins. Co., 511 F.3d 1300, 2008 WL 45806, *1 (11th Cir. 2008). The class action complaint alleged that plaintiffs tendered a claim to Foremost for hurricane damages, but that “Foremost failed to compensate the Millses for contractors' overhead and profit charges, and for state and local sales taxes on materials, incurred by the Millses in having their hurricane-damaged property repaired or replaced.” Id. The Eleventh Circuit referred to these unpaid items as “Withheld Payments,” see id. n.2. Before either side filed a motion concerning class action certification, defense attorneys moved to dismiss the class action on the ground “that class action treatment was inappropriate because common legal or factual questions would not predominate over individual issues.” Id. The district court granted the motion to dismiss on the ground that plaintiffs lacked standing to prosecute the class action claims, id. Plaintiffs appealed dismissal of the class action, and the Eleventh Circuit reversed.

The district court dismissed the class action based on its conclusion that, in order to have standing to prosecute the class action, plaintiffs had to satisfy three “preconditions” set forth in the insurance policy: “(1) they must complete the repairs or replacement of the damaged property; (2) they must actually incur overhead, profit, and sales tax in connection with the repairs or replacement; and (3) they must make a further claim for any ‘additional costs’ (including overhead, profit, and sales tax) incurred in repairing or replacing the damaged property.” Mills, at *1. Because the class action complaint sought damages for Withheld Payments, the district court reasoned that plaintiffs themselves would not be entitled to such damages unless they met these preconditions. Because plaintiffs “failed to allege that they had completed the repairs or replacement and made a claim for such repair or replacement costs,” the district court held that they lacked standing to prosecute the complaint either individually or as a class action. Id. The district court further held that class action treatment would be inappropriate because “the individual inquiry of the facts surrounding the property damage claims of thousands of Foremost policy holders under thousands of separate insurance policies would predominate and overwhelm any common issue.” Id., at *2. Accordingly, it granted the defense 12(b)(6) motion to dismiss the class action complaint, id.

Continue reading "Class Action Defense Cases-Mills v. Foremost: Eleventh Circuit Reverses District Court Dismissal Of Class Action Complaint Alleging Underpayment Of Policy Benefits Holding Plaintiffs Possess Standing And Should Be Allowed To Conduct Discovery" »

Posted In: Certification of Class Actions, Class Action Court Decisions

Judicial Panel Grants Defense Request, Over Plaintiffs’ Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees With Defense that Eastern District of New York is Appropriate Transferee Court

Nineteen (19) class action lawsuits - 18 in New York and one in Florida - were filed against American Home Mortgage Investment Corp. and various other defendants, including Citigroup Capital Markets, alleging violations of federal securities laws. In re American Home Mortgage Securities Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. December 19, 2007) [Slip Opn., at 1]. Defense attorneys for Citigroup Capital filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Eastern District of New York. Id. Eight individual defendants supported the motion, but plaintiffs opposed pretrial coordination of the class actions, id. The Judicial Panel granted the motion to centralize the class action lawsuits, explaining that “All of these actions share issues regarding the financial condition of American Home Mortgage Investment Corp. (AHM) during the 2006-07 time period, and whether the defendants…misrepresented or failed to disclose material information concerning the company and its financial condition and prospects.” Id. The Panel agreed with defense counsel that the Eastern District of New York was the appropriate transferee court, both because 18 of the class action lawsuits already were pending in that court, and because AHM is headquartered in that district. Id., at 1-2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Class Action Claims Under 24 U.S.C. § 413(b) were not Rendered Moot by 2006 Congressional Amendment to Section 413 District of Columbia Circuit Holds

Plaintiffs, elderly veterans who were full-time residents of the Armed Forces Retirement Home, filed a class action lawsuit against the Secretary of Defense and the Chief Operating Officer of the Armed Forces Retirement Home; the class action sought to compel the Armed Forces Retirement Home to provide “‘high quality’ health care, as required by 24 U.S.C. § 413(b).” Cody v. Cox, 509 F.3d 606, 2007 WL 4354429, *1 (D.C. Cir. 2007). Defense attorneys moved to dismiss the class action; the district court granted the motion, holding that the 2006 Congressional amendment to section 413 rendered the class action claims moot. See Cody v. Rumsfeld, 450 F.Supp.2d 5, 9-11 (D.D.C. 2006). The Circuit Court reversed. The Court concluded that the district court erred in dismissing the class action complaint because the amendment to section 413 did not render the claims moot. Cody v. Cox, at *1. Accordingly, it reversed and remanded.

The opinion of the District of Columbia Circuit contains an interesting discussion of the federal mootness doctrine, and those interested that doctrine are encouraged to review the opinion.

Posted In: Class Action Court Decisions