Class Action Defense Blog

As a Matter of First Impression, Trial Court has Inherent Power to Impose Terminating Sanction in the Face of Deliberate and Egregious Misconduct and Properly Imposed such a Sanction in this Case California Appellate Court Holds

Though not a class action, this case presents a vivid reminder that attorneys are officers of the court and may be held accountable for the misconduct of their clients and experts. Plaintiff filed suit against Walt Disney alleging that it had failed to pay certain royalties due under a licensing agreement for the Winnie the Pooh children’s stories, and “to assist in prosecuting its lawsuit, [plaintiff] hired an investigator to surreptitiously obtain Disney documents.” Slesinger v. The Walt Disney Co., ___ Cal.App.4th ___ [Slip Opn., at 2] (Cal.App. September 25, 2007). An anonymous caller tipped Disney to the fact that confidential documents had been obtained by an investigator, id., at 6-7. Once Disney learned of the investigator’s misconduct, defense attorneys moved for terminating sanctions, id. Plaintiff argued that it had instructed the investigator to “obey the law,” id. The trial court concluded that only terminating sanctions could protect Disney from plaintiff’s use of the information illegally obtained by its investigator, and granted the defense motion. Id. The California Court of Appeal held as a matter of first impression that the trial court had the inherent power to impose terminating sanctions and affirmed.

At issue were thousands of pages of documents that plaintiff’s investigator obtained “by breaking into an uncertain number of Disney office buildings and secure trash receptacles, and by trespassing onto the secure facility of the company with which Disney had contracted to destroy its confidential documents,” including documents marked “privileged and confidential.” Slesinger, at 2. During the course of the “lengthy, bitter litigation,” the court imposed evidentiary and monetary sanctions against Disney for destroying certain documents, id., at 3. But it then “fell victim to its own litigation abuses,” id., at 4. According to the court, plaintiff hired an investigator for the purpose of “surreptitiously obtaining Disney documents,” id., at 5. And while plaintiff instructed the investigator to “make sure what you’re doing is legal and that you do it by the book,” no other steps were taken to ensure that he complied with that instruction. Id., at 6. To the contrary, plaintiff argued that supervising the investigator “wasn’t my job” and that all plaintiff “did was pay his bills…[and] receive[] documents.” Id.

We do not here summarize the numerous reasons that the court concluded plaintiff and their counsel knew of the investigator’s misconduct, or at the very least should have known of it. By way of example, the investigator had obtained the documents illegally because the investigator produced documents marked “CONFIDENTIAL - For Internal Use Only” in the footer, but when plaintiff finally produced these pages to the defense, this “confidential” tag had been eliminated. Slesinger, at 8. The fact “Slesinger or someone else on [plaintiff’s] behalf altered copies of [Disney documents] after receiving them from [the investigator] to delete any reference to their confidentiality” was evidence of plaintiff’s misconduct. Id., at 22-23.\

Continue reading "Class Action Defense Issues-Slesinger v. Walt Disney: California Appellate Court Affirms Terminating Sanction For "Deliberate And Egregious" Discovery Misconduct" »

Posted In: Class Action Court Decisions

Class Action Defense Counsel Engaged in Bad Faith Conduct in Connection with Discovery Warranting Sanctions Pennsylvania Federal Court Holds

In a blistering 77-page opinion, a Pennsylvania federal court provided a stern warning to class action lawyers, sanctioning not only defendants but their counsel for discovery abuse. Grider v. Keystone Health Plan Central, Inc., ___ F.Supp.2d ___ [Slip Opn., at 2-6] (E.D. Pa. September 28, 2007). While this opinion faulted class action defense counsel, we will discuss tomorrow Slesinger v. The Walt Disney Co., a mirror-image case that sanctions plaintiff and plaintiff’s counsel for abusive discovery tactics, though not in a class action context. Because of the length of the Grider opinion, we summarize it with broad brushstrokes; the slip opinion is well worth reading and may be downloaded at the end of this article. Briefly, in 2001, plaintiffs - a family doctor, and a medical corporation that services 4,000 patients - filed a putative class action in Pennsylvania state court against HMO Keystone Health Plan Central, Highmark (formerly Pennsylvania Blue Shield), Capital Blue Cross and others alleging that they conspired to defraud, delay payment and reduce payment on insurance claims; defense attorneys removed the class action to federal court. Grider v. Keystone Health Plan Central, Inc., ___ F.Supp.2d ___ [Slip Opn., at 7-9] (E.D. Pa. September 28, 2007). The court granted plaintiffs’ motion to certify the litigation as a class action, id., at 14-15. The class action turned on information in the defendants’ possession “that will either prove or disprove plaintiffs’ claims in this matter.” Id., at 38-39. Following years of discovery battles, plaintiffs filed two motions for sanctions against defendants and their counsel. The district court in substantial part granted the motions.

The hearing on sanctions resembled a trial - the parties called 16 witnesses and introduced 306 exhibits over the course of 9 court days, Grider, at 3-4, resulting in the court making 93 findings of fact, id., at 22-35, and 10 conclusions of law, id., at 35-36. At bottom, the discovery process was deeply affected by the animosity between the parties and their counsel. The district court described the discovery phase as “severely troubling” and summarized at page 37, “This case is nearly six-years old, and discovery is not complete. At times the discovery process has completely broken down. It was necessary to appoint a Special Discovery Master to regulate and control discovery.” The district court described “incessant motion practice” that “threatened to paralyze the operations” of the magistrate and the court, id. In part, the court found that defense counsel “attempt[ed] to subvert discovery by the use of general objections,” id., at 46, which they “raised…in every response to plaintiffs’ discovery” and “steadfastly maintained…were all completely proper,” id., at 47.

Continue reading "Class Action Defense Cases-Grider v. Keystone Health: Pennsylvania Federal Court Sanctions Class Action Defense Counsel And Defendants For Bad Faith Conduct" »

Posted In: Class Action Court Decisions

Defense Negotiated Class Action Settlement with Florida Class Action Counsel Instead of California Class Action Counsel because of Leverage Over Class Counsel and Class Action Settlement Procedurally and Substantively Unfair Florida Federal Court Holds

Numerous class action and individual lawsuits were filed against Sharper Image alleging that its Ionic Breeze air purifier does not clean and purify the air as advertised and is harmful in that it omits excessive ozone; one such class action was filed in the Florida federal court and ultimately the parties sought court approval of a settlement of the class action. Figueroa v. Sharper Image Corp., ___ F.Supp.2d ___ [Slip Opn., at 1] (S.D. Fla. October 11, 2007). In broad terms, the class action settlement provided for $19 Sharper Image coupons or merchandise credits, an OzoneGuard “to protect against ozone emission,” injunctive relief, and $2 million for class counsel. Id., at 1-2. Defense attorneys stressed that the coupon represented the primary financial benefit to the class, not the OzoneGuard, id., at 2 n.2. The settlement provided to the court for final approval was the third amended class action settlement; the district court had given preliminary approval to an earlier version of the settlement agreement in January 2007, and a hearing on final approval of the proposed settlement was held in August 2007. Id., at 1. The federal court refused to approve the settlement.

The lawsuit was filed in May 2005 as a nationwide class action on behalf of purchasers of Sharper Image “ionizing air purifiers,” including the Ionic Breeze®, and sought damages for breach of contract, breach of warranty, money had and received, and unjust enrichment. Figueroa, at 2. In essence, the class action alleged that Sharper Image engaged in the “unlawful conduct of marketing and selling ionizing air purifiers that do not remove impurities from the air and that fail to perform as advertised and sold” and that “the ionizing air purifiers exposed consumers to hazardous levels of ozone.” Id. Defense attorneys moved to stay, dismiss or transfer the class action on the grounds that it simply copied several class action lawsuits filed in California; in response, plaintiffs’ lawyer sought leave to amend the complaint to add the inventor, Zenion Industries, as a party defendant, so the district court denied the defense motion as moot and granted plaintiffs leave to amend. Id., at 2-3. The federal court subsequently dismissed Zenion from the class action for lack of jurisdiction, id., at 5.

Before the district court ruled on plaintiffs’ motion to certify the lawsuit as a class action, the parties advised the court that “an agreement on all aspects of the class claims on a nationwide basis, and that what remained to be resolved was the issue of attorney’s fees.” Figueroa, at 5. The court therefore continued the hearing on the class certification motion in order to allow the parties to present a “complete package” for approval by the court. Id. Soon thereafter, however, class counsel for the certified nationwide class action pending in California contacted the district court and advised that he had “reason to believe that the parties here are attempting to settle the claims belonging to the California Actions class, without the knowledge or consent of the class representatives or Class Counsel” and that the parties to the Florida class action had refused voluntarily to provide information in this regard. Id., at 5-6. California counsel also sought discovery of documents filed under seal with the Florida district court, id., at 5, and, following a hearing and over defense objection, the federal court ordered defense counsel to produce certain documents, id., at 6. At that time, the court expressed concern “with the parties’ practice of filing documents under seal in a purported class action lawsuit.” Id., at 6.

The parties filed a proposed class action settlement that, which the district court summarized at pages 6 and 7 as follows: “The essence of this first Settlement Agreement was to provide to class members, limit one per household, a $19 merchandise credit, valid for one year, for use at Sharper Image retail stores on Sharper Image branded products. The first Agreement also provided class members the ability to purchase (during a six-month period of time) an OzoneGuard attachment, for Ionic Breeze® floor models only, for $7. Sharper Image also agreed to make modifications with respect to its advertisements of the Ionic Breeze®, for example, to not state that the Ionic Breeze® is a medical device and to remove the British Allergy Foundation and the Asthma and Allergy Foundation of America seals from its advertising.” The parties also represented to the court that the Florida class action was “significantly broader” than the California class action, particularly as the California class actions were “limited to claims under California state law,” and jointly moved the court to enjoin competing class actions from proceeding “in order to facilitate an efficient and expeditious settlement and approval process, and to preserve the Court’s jurisdiction to adjudicate the settlement.” Id., at 7. The federal court characterized as a “consistent theme” the argument that Sharper Image “was on the verge of bankruptcy, and that the proposal then under consideration was the best deal that could be arranged.” Id., at 30.

Continue reading "Sharper Image Class Action Defense Cases-Figueroa v. Sharper Image: Florida Federal Court Rejects Class Action Settlement Because Class Counsel Negotiated From Position Of Weakness" »

Posted In: Class Action Court Decisions

Following Guilty Pleas of Former Partners, Weiss Vows to Fight Criminal Charges

Noted class action plaintiff lawyer Melvyn Weiss, co-founder of the Milberg Weiss securities fraud class action firm, has been released after depositing $1,000,000 in cash with the court, posting a $500,000 bond and surrendering his passport, Michael Parrish of the New York Times reports today. According to Parrish’s report, Weiss intends to fight the federal criminal charges of conspiracy, racketeering, obstruction of justice and making false statements under oath arising out of his alleged payment of millions of dollars in illegal kickbacks to various individuals in return for their agreement to serve as plaintiffs in shareholder class action lawsuits. We have previously reported that others indicted in connection with this scheme – including Weiss’s former partners David Bershad and Steven Schulman, and protégé William Lerach – have pleaded guilty. Weiss is reportedly permitted to travel throughout California, Florida and Washington, but must report travel of more than three days to any other state within the continental U.S.

Mr. Parrish’s article, entitled “Bail Is Set For Lawyer Who Sued For Investors,” may be found in Section C. of the October 13, 2007 edition of the New York Times.

Posted In: Class Actions In The News

In order to assist class action defense attorneys anticipate the cases against which they will have to defend in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. This report covers the time period from October 5 – October 11, 2007, during which time 29 new class action lawsuits were filed in these California state and federal courts. Last week, by contrast, more than 60 new class actions were filed in these courts. Generally, labor law class action cases lead the list by a wide margin, but the gap was necessarily narrower this past week in light of the smaller number of new class action lawsuits. During the time period at issue, 11 of the new class action filings involved labor law claims (38% of the total number of new class action cases), followed by seven (7) new antitrust class actions (24% of the total), mostly involving now-familiar claims against Korean Airlines. Two other categories of class actions managed to break the 10% threshold: four (4) involved new unfair competition law (UCL) class action filings, which include false advertising claims (14% of the total), and three (3) class actions alleging securities fraud (10%).

Posted In: Class Actions In The News

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

Thirteen (13) lawsuits putative class actions were filed against Menu Foods asserting products liability claims arising out of the sale of allegedly tainted pet food products. In re Pet Food Products Liab. Litig., 499 F.Supp.2d 1346, 1346-47 (Jud.Pan.Mult.Lit. 2007). Three motions were filed with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization with the class action lawsuits pursuant to 28 U.S.C. § 1407, id., at 1346; the Judicial Panel was also advised that as many as 97 additional class action and individual lawsuits had been filed, which would be treated as “tag-along” actions, id. n.1. While all responding parties - plaintiff and defense - agreed that pretrial coordination was warranted, they disagreed on the appropriate transferee court, id., at 1346-47. Defense attorneys agreed that pretrial coordination was appropriate, but argued that the Northern District of Illinois was the appropriate transferee court, id., at 1347. Plaintiffs’ lawyers, on the other hand, requested transfer to New Jersey, Washington, Tennessee, Arkansas, California and Ohio. Id., at 1346-47. The Judicial Panel granted the motion to centralize the class actions and selected the District of New Jersey because "[p]retrial proceedings are advancing well there and about one-third of all pending actions are already in this district." Id., at 1347.

Posted In: Multidistrict Litigation, Class Action Court Decisions

California Court Holds that Putative Class Action Alleging Violations of State’s Unfair Competition Law, False Advertising Law and Consumers Legal Remedies Act Fails for Lack of Actual Reliance and Lack of Standing Where Plaintiff Purchased Products for the Purpose of Filing Class Action

In a case with broad implications to class action lawsuits, plaintiffs filed an individual lawsuit in California state court against Threshold Enterprises and more than 30 other defendants alleging violations of the state’s unfair competition law (UCL), false advertising law (FAL) and Consumers Legal Remedies Act (CLRA) because its skin cream was a “misbranded or mislabeled drug.” Buckland v. Threshold Enterprises, Ltd., ___ Cal.App.4th ___, 2007 WL 2773497 (Cal.App. September 25, 2007) [Slip Opn., at 2]. Defense attorneys demurred to the complaint on the grounds that plaintiffs lacked standing to assert the various UCL, FAL and CLRA claims, id. at 3. The trial court sustained the defense demurrer to the complaint but granted plaintiffs leave to amend; plaintiffs refused to amend the complaint so the court entered judgments of dismissal and plaintiffs appealed. Id., at 2. The Court of Appeal affirmed, holding that .

Plaintiffs California Women’s Law Center and its executive director, Katherine Buckland, “seek[] to advance the civil rights of women and girls” and allege that the some skin creams and lotions sold by defendants contain progesterone or other chemicals regulated by the FDA but that defendants failed to provide adequate warnings in violation of FDA regulations. Buckland, at 2-3. Plaintiffs sought a preliminary injunction to enjoin Threshold from selling skin cream, id. at 3. Buckland admitted, however, that she did not suffer any personal injury but rather purchased the items for the express purpose of determining whether lawsuits could be filed based on the chemicals contained in them. Id. Threshold opposed the injunction on the grounds that plaintiff would not likely prevail on the merits and that the “balance of hardships” weighed against such relief. Id., at 3-4.

Continue reading "UCL Class Action Defense Issues-Buckland v. Threshold Enterprises: Plaintiff Who Buys Products For Purpose Of Filing Class Action Has Not Suffered Loss Supporting Dismissal Of UCL/CLRA Class Action California Court Holds" »

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

Michael Parrish of the New York Times reports that class action plaintiff lawyer Steven Schulman, formerly a named-partner at the plaintiff class action law firm now known as Milberg Weiss, has pleaded guilty to a federal racketeering conspiracy charge. According to Parrish’s article, Schulman “admitted in federal court to being part of a scheme in which the firm, known for its class-action lawsuits against companies, gave secret kickbacks to individuals who remained on call to act as lead plaintiffs.” Schulman is reportedly cooperating with federal prosecutors, and “agreed to forfeit $1.85 million in profit, pay a $250,000 fine and accept a prison sentence.” While Schulman could be sentenced to upwards of 20 years, Parrish reports that the sentence is expected to fall within the range of 27-33 months.

Mr. Parrish’s article, entitled “Ex-Partner at Law Firm Pleads Guilty in Kickback Case,” may be found in the October 10, 2007 edition of the New York Times.

Posted In: Class Actions In The News

Inherent Powers of Trial Court Include Power to Reconsider Interim Rulings Long After the Statutory Time Period for Motions for Reconsideration has Lapsed California Appellate Court Holds

Plaintiffs filed a putative class action against their employer, First Union Securities, and its successor, Wachovia Securities for alleged violations of state labor laws. Clark v. First Union Securities, Inc., ___ Cal.App.4th ___, 64 Cal.Rptr.3d 313, 315 (Cal.App. 2007). Defense attorneys moved to compel arbitration before the National Association of Securities Dealers (NASD) and to stay proceedings on the class action claims for injunctive or declaratory relief, which are not subject to arbitration, see Broughton v. Cigna Healthplans, 21 Cal.4th 1066, 1079-80 (Cal. 1999); the trial court granted the motion. Id. , at 314. After the arbitrators ruled that the class action claims were “not eligible for arbitration,” the trial court sua sponte reconsidered its ruling on the defense motion and ruled that the class action would proceed in state court. Id., at 314-15. Defense attorneys appealed, and the California court of appeal affirmed. The appellate court held that the trial court had the inherent authority to reconsider its ruling referring class action claims to arbitration, that the employment contract did not preclude state court jurisdiction over the putative class action complaint, and that the dismissal of the class action claims by the arbitrators did not constitute a class action waiver.

Plaintiff Clark was hired by First Union as an investment consultant candidate, which required that he hold a license from the NASD and to execute the SEC-approved Uniform Application for Securities Industry Registration or Transfer Form U-4 (Form U-4), which contains an arbitration clause that states "I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the [NASD] as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of competent jurisdiction." Clark, at 315. Plaintiff executed the form in October 1998 and began working for First Union in November 1998, id. The SEC promulgated several rules directly implicated by this case, including Rule 10301(d) which addresses investor class action lawsuits filed under FRCP Rule 23. Id., at 316. As the Court of Appeal noted at page 316, “The SEC issued a public notice in connection with the approval of Rule 10301(d). In this 1992 approval order, the SEC gave notice that under the new provision class actions were excluded from arbitration.”

The class action complaint alleged numerous labor law violations based on an array of alleged misconduct ranging “from misrepresentations regarding the sale of securities, to the failure to pay wages and to reimburse for business expenses.” Clark, at 317-18. Defense attorneys moved to compel arbitration of each cause of action in the class action complaint except the claims seeking injunctive and declaratory relief; the defense argued that “because all allegations arose out of Clark's employment or termination of employment, they must be resolved in arbitration pursuant to the arbitration provision in the Form U-4 and the NASD Code.” Id., at 318. The appellate court noted that defense attorneys did not cite Rule 10301(d) in support of the motion, id. Plaintiff countered that the NASD arbitration procedures were unconscionable - an issue the Court of Appeal found unnecessary to address - and that because the class action claim for unfair practices was asserted on behalf of all Wachovia employees it was not subject to arbitration. Id. Plaintiff’s lawyer argued, "The only forum for the unfair practice claims is a civil lawsuit. The NASD arbitration rules do not even permit putative or class claims to be arbitrated." Id.

Continue reading "Class Action Defense Cases-Clark v. First Union: California Appellate Court Affirms Trial Court Order Vacating Referral Of Certain Class Action Claims To Arbitration And Staying Other Class Action Claims" »

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

The Associated Press reports that a North Dakota federal court has approved $7 million class action settlement, bringing to a close a 5-year-old class action against CP Rail arising from a January 2002 derailment and chemical spill that “sent a deadly cloud” into the air and killed a man. AP reports that more than 40% of the class action settlement proceeds will go to the plaintiffs’ lawyers, who will get $2.9 million. The three lead plaintiffs will reportedly receive $25,000 each, leaving the estimated 2000 absent class members of the class action to split the remainder (roughly $2000 per class member). Claims must be submitted by November 8, 2007. The class action settlement reportedly will not affect any individual lawsuits filed against CP Rail.

Posted In: Class Actions In The News

Interests of Plaintiffs in Class Action Conflicted with other Class Members, Warranting Certification of Subclass and new Hearing on Approval of Class Acton Settlement Second Circuit Holds

Plaintiffs filed a class action Merck-Medco managed Case, L.L.C., a/k/a Medco Health Solutions, Inc., a pharmaceutical benefits manager (PBM), and its former parent company Merck & Co. Inc. (collectively Medco) alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA) for breach of fiduciary duties. Gruer v. Merck-Medco Managed Care, LLC, ___ F. 3d ___ (2d Cir. October 4, 2007) [Slip Opn., at 6]. Ultimately, the parties reached a tentative settlement of the class action. Important to our discussion, the class action settlement required Medco pay $42.5 million to class members, allocated primarily on a pro rata share of monies spent by each plan but reducing by 55% the share of certain plans because those plans could not have been injured directly by the conduct of Medco. Id., at 8. The district court approved the class action settlement, but the Second Circuit reversed and remanded holding that the lower court erred in failing to consider the conflict of interest between the purported representatives of the class action and other members of the class.

In very broad terms, plaintiffs in the class action complaint consisted of individuals, as beneficiaries of certain welfare benefit plans, and of trustees of welfare benefit plans. Gruer, at 4. The class action complaint alleged that Medco breached fiduciary duties under ERISA by “failing to act in their best interest in its capacity as a pharmaceutical benefits manager for the plans,” id., as set forth in the Note. A class action settlement was proposed, at which time certain entities sought leave to intervene and/or objected to the settlement. Id. The district court certified a class action, approved the settlement, awarded legal fees, and severed those cases in which ERISA plans opted out of the class action settlement, id.

Continue reading "Class Action Defense Cases-Gruer v. Merck-Medco: Second Circuit Reverses District Court Order Approving Class Action Settlement Holding Class Action Plaintiffs Were Not Representative Of Class" »

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

Class Action Complaint Alleging Violations of Federal Fair Labor Standards Act (FLSA) and State Law Equivalent Failed to Adequately Plead Overtime Violations New York Federal Court Holds

Plaintiff filed a putative class action against his employer, August August Corp. (doing business as “River Vietnamese and Thai Restaurant”) alleging failure to pay overtime and minimum wages required by the federal Fair Labor Standards Act (FLSA) and New York’s Minimum Wage Act (NYMWA). Zhong v. August August Corp., 498 F.Supp.2d 625, 627 (S.D.N.Y. 2007). The class action complaint asserted that federal court jurisdiction exists under 28 U.S.C. § 1337 as to the FLSA §§ 206 and 207 claims (the first and second claims for relief), and under 28 U.S.C. §1367 (supplemental jurisdiction) over the third claim for relief brought under New York state law, id. Defense attorneys moved to dismiss the class action on several grounds; the district court granted the motion in part.

Preliminarily, the district court rejected defense claims that the class action complaint failed to adequately plead that defendant was plaintiff’s “employer” within the meaning of the FLSA, holding that under the liberal standards applicable to a motion to dismiss, the allegations that plaintiff was “an employee” and was “employed by” sufficiently placed defendant on notice of the claims against it. Zhong, at 628-29. The next question was whether defendant was “engaged in commerce or in the production of goods for commerce” within the meaning of the FLSA, id., at 629. Again, the federal court held that the class action complaint adequately alleged this element of an FLSA claim, id. Similarly, the allegation that plaintiff earned only $10 per day but worked 3 or 4 hours a day adequately pleaded a breach of the FLSA’s minimum wage requirement. Id., at 629. In this regard, while the district court acknowledged that plaintiff had not demanded any specific amount in damages, “he has provided enough information to give August sufficient notice from which to calculate the alleged damages” because he alleged that he worked “twenty hours per week, spread out over six days per week, at a wage of $10.00 per day, for a total of (roughly) twenty weeks.” Id., at 629-30.

Continue reading "FLSA Class Action Defense Cases-Zhong v. August August: New York Federal Court Partially Grants Defense Motion To Dismiss Overtime/Minimum Wage Class Action Claims" »

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

The Wall Street Journal reports today that Merck has won another trial, bringing to 11 the number of verdicts in its favor against five (5) losses. The latest victory came at the hands of a Florida jury, reportedly the first Vioxx case to go to trial in that state. Thousands of individual and class action lawsuits were filed against Merck after it pulled Vioxx from the market in September 2004, and Merck has argued vigorously for the right to litigate each case on an individual rather than class action basis. In large part, Merck has been successful in defeating class action certification motions. The Journal reports that “Merck also claimed victory in two multibillion-dollar class-action lawsuits, on behalf of shareholders and private insurers seeking to recoup what they paid for Vioxx prescriptions.”

The article, entitled “Florida Circuit Court Rules In Merck’s Favor Over Vioxx,” may be found on page B7 of the October 7, 2007 edition of the Wall Street Journal.

Posted In: Class Actions In The News

The Los Angeles Times reports today that CB Richard Ellis Group has agreed to pay upwards of $150,000 per female employee under a class action settlement of a lawsuit alleging sexual harassment. According to the report, the class action complaint alleged that female employees were “subjected to lewd remarks, unwanted groping and sexual propositions by male co-workers,” as well as pornographic material “distributed via email and displayed on office computers.” CB Richard Ellis did not admit any of the class action allegations, but agreed to pay $3.4 million in attorney fees, donate $400,000 to a trade group to “promote the advancement of women in the [commercial real estate brokerage] industry,” and pay from $1,500 to $150,000 to female employees in accordance with a graduated proof plan. According to the Times, female employees can maintain anonymity and still recover $1500 if they prove to an arbitrator that they were subjected to sexual harassment or discrimination. A “second tier” permits female employees to recover up to $15,000 but they must disclose their identity to defense attorneys and CB Richard Ellis would be entitled to submit documents disputing each claim. Women who participate in the top tier may recover up to $150,000 but their claims “would be subject to full arbitration hearings with witnesses.”

Posted In: Class Actions In The News

As a resources to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. This report covers the time period from September 28 – October 4, 2007, during which time 62 new class action lawsuits were filed in these California state and federal courts. Class actions asserting employment law violations generally lead the list, often by a wide margin, and this past week was no exception. During the time period at issue, 36 of the new class action filings involved labor law claims (58% of the total number of new class action cases). The only other category of class actions to break the 10% threshold involved new antitrust class action filings, which came in a distant second with 9 new class action cases (15%).

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 but Rejects Defense Request to Centralize Class Actions in Maryland or New Jersey, Instead Transferring the Class Actions to the District of Massachusetts

Nine class action lawsuits were filed against Wellnx Life Sciences and others seeking damages for strict liability, fraud and unjust enrichment arising from the manufacture, marketing and sale of Wellnx Slimquick and/or NV products, and several class actions alleged that the marketing and sale of the products violated various state consumer protection laws. In re Wellnx Marketing & Sale Prac. Litig., 505 F.Supp.2d 1380, 1380 (Jud.Pan.Mult.Lit. 2007). 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 District of Maryland or the District of New Jersey. Id. All plaintiffs responding to the motion supported pretrial coordination, but argued alternatively for Arizona, Massachusetts or New Jersey as the appropriate transferee court. Id. The Judicial Panel granted the motion to centralize the class actions, agreeing that it would “eliminate duplicative discovery; prevent inconsistent pretrial rulings; and conserve the resources of the parties, their counsel and the judiciary.” Id., at 1381. The Panel concluded that the District of Massachusetts was the appropriate transferee court, but did not explain its reasoning for that selection. Id.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Class Action Certification Motion Granted by Federal Court in California Class Action Attacking Target’s Failure to Permit “Screen-Reading” Software to Work on its Website

Molly Selvin of the Los Angeles Times reports that U.S. District Court Judge Marilyn Hall Patel has granted plaintiffs’ class action certification motion in a California class action against Target challenging the accessibility of the company’s website to the blind. According to Ms. Selvin, the class action complaint alleges that Target’s website violates the federal Americans with Disabilities Act (ADA) as well as California state law because “screen-reading software doesn’t work on parts of its website, essentially making it unusable to blind people.” Plaintiffs sought class action treatment arguing that “Target hasn’t implemented ‘technologically simple and not economically prohibitive’ code into its site that would allow the software to vocalize all [of] the site’s content.” In agreeing that class action treatment was warranted, Judge Patel noted “that this is ‘an age when commerce is increasingly conducted on and through the Internet.’” Target promises to appeal the ruling.

Ms. Selvin’s article, entitled “Suit may spur greater Web access for blind,” may be found in the Business Section of the October 4, 2007 edition of the Los Angeles Times.

Posted In: Class Actions In The News

Molly Selvin of the Los Angeles Times reports today that a California federal district court has granted class action status to a lawsuit against Target seeking website accessibility for the blind. The class action complaint alleges that Target has failed to upgrade its website by implementing “technologically simple and not economically prohibitive” code that would allow screen-reading software to vocalize content on the Target website. In certifying the class action, the federal court reportedly noted that this is “an age when commerce is increasingly conducted on and through the Internet.” Ms. Selvin reports that defense attorneys plan to seek appellate review of the district court’s order.

Ms. Selvin’s article, entitled “Suit may spur greater Web access for blind,” may be found in the Business Section of the October 4, 2007 edition of the Los Angeles Times.

Posted In: Class Actions In The News

Following $78.5 Million Jury Verdict in Labor Law Class Action, Pennsylvania Court Awards an Additional $62.3 Million for Wal-Mart’s Withholding of Employee Pay for More than 30 Days

The Associated Press reports that a Pennsylvania court yesterday awarded an additional $62.3 million against Wal-Mart in a labor law class action. The class action resulted in a jury verdict of $78.5 million, but an additional 125,000 members of the class qualified for additional damages because Wal-Mart withheld their pay for more than 30 days. The court rejected the arguments made by Wal-Mart’s class action defense team, and awarded each class member an additional $500 in damages for violating Pennsylvania’s state employment laws. AP reports that this latest setback follows a $172 million damage award in a California class action, and a $50 million settlement of a Colorado class action. Wal-Mart’s defense team is preparing for trial in several other class action lawsuits as well, including Minnesota and New Jersey.

Posted In: Class Actions In The News

Trial Court Class Action Judgment Against FedEx for Labor Law Violations Generally Upheld but California State Appellate Court Reverses Attorney Fee Award as Excessive and because Multiplier Improperly Based on Same Facts that Triggered Entitlement to Fees

Plaintiffs filed a class action in California state court against FedEx Ground Package System, Inc. alleging violations of the state’s labor laws for failure to reimburse work-related expenses; the thrust of the class action complaint was that, “for the limited purpose of their entitlement to reimbursement for work-related expenses, [class members] were employees, not independent contractors.” Estrada v. FedEx Ground Package Sys., Inc., 64 Cal.Rptr.3d 327 330 (Cal.App. 2007). The trial court granted plaintiffs’ motion to certify the litigation as a class action, and a trifurcated trial followed during which (1) “the court found the drivers were employees within the meaning of Labor Code section 2802 (Phase I) , ordered FedEx to reimburse some (about $5 million, including prejudgment interest) but not all of their expenses (Phase II), granted most of the equitable relief sought by the drivers (Phase III), and ordered FedEx to pay the drivers' costs and attorneys' fees (about $12.3 million).” Id. Defense attorneys appealed and plaintiffs cross-appealed.

The Court of Appeal noted that this represented the third appeal in this case, and that it here considered defense challenges to the trial court order certifying the class action, the finding that the drivers were employees, the reimbursement findings, and the award of attorney fees. Estrada, at 330-31. The facts are quite detailed, and we do not repeat them here. See id., at 331-34. On the direct appeal, the Court of Appeal affirmed that the drivers were employees of FedEx, not independent contractors. Id., at 335. The appellate court noted that the California Labor Code does not define "employee" for purposes of section 2802 so the common law test applies, and explained at page 335 that under that test the question is “whether the principal has the right to control the manner and means by which the worker accomplishes the work” based on a number of factors including “(1) whether the worker is engaged in a distinct occupation or business, (2) whether, considering the kind of occupation and locality, the work is usually done under the principal's direction or by a specialist without supervision, (3) the skill required, (4) whether the principal or worker supplies the instrumentalities, tools, and place of work, (5) the length of time for which the services are to be performed, (6) the method of payment, whether by time or by job, (7) whether the work is part of the principal's regular business, and (8) whether the parties believe they are creating an employer-employee relationship.” (Citations omitted.) Under those factors, substantial evidence supported the finding that the drivers were “employees,” see id., at 336-37.

Next, the Court of Appeal affirmed that class action treatment was appropriate, holding that “it is clear that common issues - whether the drivers were employees and, if so, which expenses would be reimbursable - predominated.” Estrada, at 338. The appellate court affirmed also the trial court finding that FedEx failed to reimburse the drivers for all expenses required by law, see id., at 339.

Continue reading "Labor Law Class Action Defense Cases-Estrada v. FedEx: California State Court Upholds Class Action Judgment Against FedEx But Holds $14.4 Million Fee Award Must Be Reduced As Excessive" »

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