Class Action Defense Blog

Judicial Panel Grants Defense Motion for Pretrial Coordination of Individual and Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Individual and Class Action Plaintiffs and Supported by Some Responding Individual and Class Action Plaintiffs, and Transfers Actions to Southern District of New York

Eighteen (18) individual and class action lawsuits were filed (1 in New Jersey and 17 in New York) against Merrill Lynch and other defendants “arising from Merrill Lynch’s conduct and representations regarding its investments in collateralized debt obligations secured by subprime mortgage debt.” In re Merrill Lynch & Co., Inc., Securities, Derivative & "ERISA" Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. April 7, 2008) [Slip Opn., at 1]. The individual and class action complaints were “brought by securities holders seeking relief under the federal securities laws, shareholders suing derivatively on behalf of Merrill Lynch, [and] participants in retirement savings plans suing for violations of ERISA,” id. Defense attorneys for Merrill Lynch filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the individual and class action cases pursuant to 28 U.S.C. § 1407 in the Southern District of New York; no responding party opposed the motion, and some individual and class action plaintiffs supported the motion. Id. The Judicial Panel granted the motion to centralize the individual and class action lawsuits, finding common questions of fact and law despite the diversity of the types of actions at issue, id. The Panel also agreed with defense attorneys that the Southern District of New York was the appropriate transferee court because “Merrill Lynch is headquartered in New York and, therefore, discovery is likely to take place there” and because “all actions save one are already pending in that district.” Id., at 1.

Posted In: Multidistrict Litigation, Class Action Court Decisions

As a resource to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers June 27 - July 2, 2008, during which time 39 new class action lawsuits were filed. Class action lawsuits alleging employment-related claims generally top the list, and this was once again teh case. This past week, 21 new labor law class actions lawsuits were filed, representing 54% of the total number of new class action lawsuits. The only other categories that met the 10% threshold involved federal antitrust class actions and class action lawsuits alleging unfair business practice claims, which include false advertising claims, each with four (4) new filings (10%).

Posted In: Class Actions In The News

Judicial Panel Grants Plaintiffs Motions for Pretrial Coordination of Individual and Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Other Individual and Class Action Plaintiffs and by Responding Defendants, and Transfers Individual and Class Action Lawsuits to Middle District of Pennsylvania

Twenty (20) individual and class action lawsuits were filed in seven (7) different federal district courts against several defendants alleging federal antitrust violations arising out of the allegation that the defendants “conspired to fix, raise, maintain and/or stabilize the price of chocolate confectionary products in the United States at supracompetitive levels.” In re Chocolate Confectionary Antitrust Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. April 7, 2008) [Slip Opn., at 1-2]. Lawyers for individual and class action plaintiffs in six (6) of the lawsuits (2 in New Jersey and 4 in Pennsylvania) filed four (4) motions with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the individual and class action cases pursuant to 28 U.S.C. § 1407; no responding party (consisting of other individual and class action plaintiffs, as well as defendants Cadbury Adams U.S.A. LLC, The Hershey Co., ITWAL Ltd., Mars, Inc., Masterfoods USA, and Nestle U.S.A., Inc.) opposed pretrial coordination, but the parties did not agree on the appropriate transferee court. Id., at 1. As the Judicial Panel summarized at page 1, “Moving and responding plaintiffs variously support centralization in the following districts: the Central District of California, the Eastern District of Michigan, the District of New Jersey, the Southern District of New York, the Eastern District of Pennsylvania, the Middle District of Pennsylvania, the Eastern District of Texas, or the Eastern District of Virginia. Responding defendants support centralization in the Southern District of New York.” The Judicial Panel granted the motion to centralize the individual and class action lawsuits, and selected the Middle District of Pennsylvania as the appropriate transferee court “[b]ecause defendant Hershey’s worldwide headquarters are located there, and several of the defendants maintain a presence in or near that district, relevant documents and witnesses are likely located in that area.” Id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

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

Two class actions – one in California and one in Pennsylvania – were filed against Oilily and others alleging violations of the federal Fair and Accurate Credit Transactions Act (FACTA). In re Oilily Fair & Acc. Cred. Trans. Act (FACTA) Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. April 10, 2008) [Slip Opn., at 1]. Both class actions alleged that defendants violated FACTA by printing certain credit and debit card information on customer receipts, id. Plaintiff’s lawyers in the Pennsylvania class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Northern District of California; plaintiffs in the California class action did not oppose the motion, and the motion was unopposed by any of the class action defendants. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed that the Northern District of California was the appropriate transferee court “because the first-filed action is pending there and this choice is unopposed.” Id. Accordingly, the Panel ordered the Pennsylvania class action be transferred to California, id., at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Wal-Mart Willfully Violated Minnesota Labor Laws Entitling Members Covered by Class Action Lawsuit to Millions in Damages and Potentially Billions in Civil Penalties Minnesota Trial Court Holds

Plaintiffs filed a labor law class action against Wal-Mart in Minnesota state court alleging that it required them to work “off the clock” without pay and deprived them of meal and rest breaks, that it violated Minnesota’s Fair Labor Standards Act (MFLSA), and that it failed to maintain accurate time records. Braun v. Wal-Mart, Inc., Case No. 19-CO-01-9790 (Minn. Dakota County, June 30, 2008) [Slip Opn., at 1-2 and 6-7]. The class action sought various relief including civil penalties, liquidated damages, and injunctive relief, id., at 2. The class action complaint alleged further that Wal-Mart’s conduct was “willful” so as to fall within the longer three-year statute of limitations period under Minn. Stat. § 541.07(5), id. The scope of the class action included claims against Sam’s Club, id., at 3 n.1. The trial court certified the litigation as a class action, id., at 7, and the matter proceeded to a bifurcated bench trial, id., at 2. At the liability phase, the trial court limited each side to 60 witnesses and 100 hours of testimony. Id., at 2. The trial court heard about 160 hours of testimony from more than 90 witnesses, and received into evidence almost 1200 exhibits. Id. Forty (40) of the witnesses were Wal-Mart hourly employees, id., at 7. The court then issued a 151-page opinion ruling against Wal-Mart in the class action.

In part, defense attorneys argued that class action treatment was inappropriate because “each individual’s experience is so intrinsically unique that each individual should have to testify about their experience.” Braun, at 11. The trial court found, however, that “[s]ome general patterns and some shared experiences emerged from the testimony at trial” such that it could “decide the factual and legal issues in dispute on a class-wide basis.” Id. In part, the court found that Wal-Mart “should have been on notice of that there was a potential widespread problem of missed rest and meal breaks.” Id., at 18. This problem appears to have been caused by understaffing, and while employee contemporaneous complaints that there were too few employees was not alone sufficient to establish chronic understaffing, see id., at 16-17, an internal audit that revealed tens of thousands of missed meal and rest breaks attributed the problem to “staffing and scheduling not being prepared appropriately,” see id., at 19. The understaffing was particularly problematic in light of Wal-Mart’s written policy to avoid overtime. See id., at 27-29. The trial court found that Wal-Mart “ignored” the internal audits, id., at 20. Subsequent audits revealed that “in November 2003, every audited store in Minnesota scored ‘unsatisfactory’ for the portion of the audit dealing with rest and meal break compliance.” Id., at 21. Moreover, nationally “rest and meal break compliance was the item most frequently rated as ‘unsatisfactory.’” Id., at 22. The court rejected defense efforts to attack the reliability of these audits. Importantly, the court also found that Wal-Mart’s decision to terminate the practice of employee swiping in and out for breaks was directly tied to the problems identified by the audits: “Wal-Mart chose to stop requiring associates to clock in and out for rest breaks, at least in part, to avoid creating what might be construed or used, whether fairly or not, as evidence of missed breaks in litigation.” Id., at 24. The court additionally found that “payroll pressure” contributed to this problem, id., at 25-27.

Continue reading "Wal-Mart Class Action Defense Cases–Braun v. Wal-Mart: Minnesota Trial Court Rules In Favor Of Class Action Plaintiffs In Labor Law Class Action Against Wal-Mart And Finds Maximum Potential Damages May Approximate $2 Billion" »

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

Summary Judgment Properly Granted in Class Action under California’s Song-Beverly Act, Concerning Merchant Requests for Personal Information in Connection with Credit Card Transactions, because Class Action Arose from Merchant Request as part of a Return Transaction rather than a Sale California Court Holds

Plaintiff filed a putative class action against AutoZone alleging that it violated California’s Song-Beverly Act, Cal. Civil Code, § 1747.08, by requesting that he provide his name, telephone number and signature in connection with his return of a product. Absher v. AutoZone, Inc., ___ Cal.App.4th ___ (Cal.App. June 26, 2008) [Slip Opn., at 2-3]. The class action alleged that plaintiff purchased a locking gas cap from AutoZone, took it to the parking lot and, finding that it did not fit, immediately returned it. Id., at 2. The class action complaint further alleged that, in order to return the item, plaintiff was required to provide personal identification information in violation of a California law that prohibits merchants from obtaining personal information in connection with credit card transactions. Id., at 2-3. Plaintiff alleges that he asked the clerk the reason for requiring his telephone number, because he previously had been the victim of identity theft, but the clerk could not provide an answer, id., at 3. Plaintiff filed his class action complaint alleging but a single cause of action under Song-Beverly. Id. Defense attorneys moved for summary judgment on the ground that Song-Beverly did not apply to transactions concerning returns, only at the time of sale; the trial court agreed and dismissed the class action. Id. The appellate court affirmed.

The Court of Appeal noted that three recent decisions have addressed the precise issue presented here, and that each of held that Song-Beverly does not apply to requests for refunds in connection with the return of merchandise but, rather, only at the point of sale. Absher, at 7 (citations omitted). The appellate court’s analysis tracked these prior cases, see id., at 7-10, and the court held that the personal information requested served the merchant’s “stated rationale” of “detect[ing] and prevent[ing] employee fraud,” id., at10. The Court additionally explained at page 15 that transactions involve merchandise returns “arguably are different” from sales transactions because the merchant may need “[c]ertain personal information…to verify that the return transaction was bona fide and to prevent employees from manipulating such transactions for their own benefit.” For example, “if the product returned has been used or damaged prior to the return, the merchant may have a legitimate need to contact the customer who made the return.” Id. Thus, legitimate uses, separate and apart from marketing, exist for the information sought by the merchant in this case. Accordingly, the defense was entitled to summary judgment against the class action claims, id., at 16.

Posted In: Class Action Court Decisions

Securities Fraud Class Action Complaint, though Extremely Lengthy, Failed to Plead Fraud with Specificity Required by PSLRA (Private Securities Litigation Reform Act) Missouri Federal Court Holds

Plaintiff filed a class action complaint against Novastar Financial and three of its officers alleging securities fraud. In re 2007 Novastar Financial, Inc., Securities Litig., ___ F.Supp.2d ___ (W.D. Mo. June 4, 2008) [Slip Opn., at 1]. Defense attorneys moved to dismiss the class action for failure to comply with the heightened pleadings requirements of the Private Securities Litigation Reform Act (PSLRA), and requested that the district court take judicial notice of certain documents. Id., at 1-2. The district court granted the motion and dismissed the class action, beginning its analysis with an insightful observation and warning as to a court’s consideration of the alleged falsity of a defendants’ statements: “One might be tempted to think that a complaint spanning more than 100 pages and consisting of more than 200 paragraphs could not fail to be specific. The temptation is dangerous and must be resisted.” Id., at 3. Here, the class action merely paints a “broad picture” and consists of “generalities” – which is “precisely what the PSLRA counsels against.” Id. The federal court explained at page 3, “This has allowed Plaintiff to pick isolated threads and snippets from the Complaint to create an illusion of detail and insinuate the existence of fraud, which in turn has made it exceedingly difficult for the Court to conduct the analysis required by law. The Court does not intend to parse out each and every sentence contained in the Complaint because doing so ignores the real problem: what the Complaint does not say is as critical as what it actually says.”

The fact the class action complaint contains more than 50 paragraphs spanning 35 pages does not serve as a talisman to create the requisite specificity. In re 2007 Novastar Financial, at 4. Neither the complaint nor plaintiff’s opposition to the motion to dismiss explained what was false about the challenged statements, id. Federal law does not require a company “to divulge every ‘fact’ known to everyone in a company”; indeed, “the PSLRA’s effort to combat claims of ‘fraud by hindsight’ demonstrates a reluctance to countenance claims that attach heightened importance to facts only when looking back at the aftermath of misfortune. “ Id. Based on the court’s analysis, the challenged statements failed to satisfy the PSLRA’s pleading requirements, id., at 5-6. In the end, the federal court found that the class action “fails to identify a single false entry in the Company’s financial statements, nor does he identify the ‘truth’ that should have been disclosed.” Id., at 6. In the court’s view, the class action complaint “reads more like a cautionary tale from a treatise on business management than a charge of knowing misstatements and concealments.” Id. At worst, the allegations may constitute negligence, breach of fiduciary duty or mismanagement, but not fraud. Id.

Continue reading "PSLRA Class Action Defense Cases–In re 2007 Novastar Financial: Missouri Federal Court Grants Defense Motion To Dismiss Securities Class Action For Failure To Plead Fraud With Requisite Specificity" »

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

$2.5 Billion Punitive Damage Award in Class Action Against Exxon Arising out of Valdez Oil Spill Excessive because Considerations of Predictability Warranted 1:1 Ratio Cap on Punitive Damages Awarded under Federal Maritime Law Supreme Court Holds, Resulting in Reduction of Class Action Punitive Damage Award to $500 Million and, as Modified, Class Action Judgment Affirmed Bringing end to 20-year Lawsuit

Almost 20 years ago, in March 1989, Exxon’s supertanker, the Valdez, ran aground off the coast of Alaska and spilled millions of gallons of crude oil into Prince William Sound. Plaintiffs, commercial fishermen and Native Alaskans, filed a class action against Exxon seeking compensatory and punitive damages. Exxon Shipping Co. v. Baker, 554 U.S. ___ (June 25, 2008) [Slip Opn., at 1-2]. (More accurately, various individual civil cases were consolidated into one lawsuit against Exxon and others, and at Exxon’s request the federal court “certified a mandatory class of all plaintiffs seeking punitive damages, whose number topped 32,000.” Id., at 5.) Exxon stipulated to its negligence and a jury trial was held to determine compensatory damages and fix punitive damages, id. The jury awarded plaintiffs $5 billion in punitive damages against Exxon. Id., at 7. The Ninth Circuit affirmed the judgment but reduced the punitive damage award to $2.5 billion, id. The Supreme Court granted certiorari to address three questions of maritime law: “whether a shipowner may be liable for punitive damages without acquiescence in the actions causing harm, whether punitive damages have been barred implicitly by federal statutory law making no provision for them, and whether the award of $2.5 billion in this case is greater than maritime law should allow in the circumstances.” Id., at 1. The High Court held that federal law did not preclude an award of punitive damages against Exxon, but that the award “should be limited to an amount equal to compensatory damages.” Id. The Supreme Court vacated the judgment and remanded the class action. Id., at 7. The Court held that the punitive damages awarded in the class action should not have exceeded the compensatory damage award and, accordingly, must be reduced to $500 million.

We do not here recount the factual history of the Valdez oil spill, or the evidence presented concerning Exxon’s culpability in allowing its employee, Captain Joseph Hazelwood, to serve as captain of the Valdez on the fateful night. That history may be found at pages 2 to 4 of the Court’s opinion. Exxon spent approximately $2.1 billion to clean up the oil spill. Exxon Shipping, at 4. The federal government brought criminal charges against Exxon for violating several federal laws; Exxon pleaded guilty to violating various federal laws and ultimately paid a $25 million fine and $100 million in restitution. Id., at 4-5. The federal government also filed a civil action against Exxon, along with the State of Alaska, and obtained a consent decree requiring Exxon to pay another $900 million toward restoring natural resources. Id., at 5. Exxon additionally paid approximately $300 million to settle claims with fishermen, property owners and others. Id.

Continue reading "Punitive Damages Class Action Defense Cases–Exxon v. Baker: Supreme Court Reduces Class Action Punitive Award In Exxon Valdez Case Holding Punitive Damages Under Federal Maritime Law Should Be Limited To Amount Of Compensatory Damages" »

Posted In: Class Action Court Decisions

To assist class action defense attorneys anticipate the types of class actions against which they will have to defend in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers June 20 - 26, 2008, during which time 47 new class action lawsuits were filed. With rare exception, labor law class action lawsuits generally top the list of new class action cases by a wide margin. This past week was no exception, as employment-related class actions lawsuits accounted for fully 28 of the new class actions filed during this reporting period (60% of the total number of new class action lawsuits during the past week). Only one other category met the 10% threshold -- class action lawsuits alleging unfair business practice claims, which include false advertising claims, with five (5) new class actions (11%).

Posted In: Class Actions In The News

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

Two class actions – one in New Jersey and one in Pennsylvania – were filed against Orleans Homebuilders and OHB Homes alleging violations of the federal Fair Labor Standards Act; specifically, the class action complaints allege “that defendants avoided paying overtime to employees classified as ‘community sales managers,’ ‘sales assistants,’ or ‘sales associates.’” In re Orleans Homebuilders, Inc., Fair Labor Standards Act Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. June 10, 2008) [Slip Opn., at 1]. Defense attorneys filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Eastern District of Pennsylvania; plaintiffs in both class actions supported the motion. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed that the Eastern District of Pennsylvania was the appropriate transferee court, particularly as it was “supported by all parties.” Id.

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