Class Action Defense Blog

District Court Erred in Awarding Attorney Fees Against Defendant for Removing Class Action Under CAFA (Class Action Fairness Act of 2005) Because even though Basis for Removal was Flawed - that Class Action was “Commenced” when Removed rather than when Filed - Defense had Objectively Reasonable Grounds for its Interpretation of the Statute Seventh Circuit Holds

In an effort to avoid removal to federal court, plaintiffs filed a putative class action in Illinois state court on February 17, 2005: the class action alleged violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act in that defendant Pfizer misrepresented the health risks of using Celebrex and Bextra, and charged more than fair market value for these drugs. Lott v. Pfizer, Inc., 492 F.3d 789, 790-91 (7th Cir. 2007). Defense attorneys removed the class action to federal court on the basis of CAFA, id., at 790, arguing that the action “commenced” when defense attorneys removed the class action to federal court, id., at 791. The district court remanded the class action to state court on the ground that CAFA applied only to class actions filed after CAFA’s effective date, and awarded attorney fees and costs against Pfizer. Id. The defense appealed the award of fees and the Seventh Circuit reversed.

We do not here discuss the unsuccessful arguments made by the defense in support of removal, both under CAFA and under traditional diversity jurisdiction: suffice it to say that the district court remanded the class action to state court based on its conclusion that it lacked subject matter jurisdiction and that the requirements for diversity jurisdiction had not been met - a decision affirmed by the Seventh Circuit in Pfizer, Inc. v. Lott, 417 F.3d 725, 727 (7th Cir.2005), which held that for purposes of CAFA jurisdiction a class action was “commenced” when it was “filed” not when it was “removed,” and that Pfizer had not established diversity jurisdiction. We address here the defense appeal from the award of attorney fees against Pfizer.

Continue reading "CAFA Class Action Defense Cases-Lott v. Pfizer: Seventh Circuit Holds Defense Basis For Erroneous Removal Of Class Action Pursuant To CAFA (Class Action Fairness Act of 2005) Was Objectively Reasonable So Sanction Award Was Improper" »

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

In order to assist class action defense attorneys anticipate the type of cases against which they will have to defend, 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 7 – September 13, 2007, during which time 39 new class action lawsuits were filed in these California state and federal courts. Labor law class action cases generally lead the list by a wide margin, and this past week was no exception with almost 2 out of every 3 new class actions falling into this category. In fact, employment class action cases proved to be the only category of cases to meet the 10% threshold. New labor class action cases led the list with 24 new lawsuits, representing 62% of the total number of new class actions filed.

Posted In: Class Actions In The News

Judicial Panel Grants Defense Request, Opposed by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees to Transfer Class Actions to Central District of California as Requested by Defense

Two class action lawsuits were filed against Charlotte Russe alleging violations of the federal Fair and Accurate Credit Transactions Act (FACTA) by failing to block certain credit and debit card information from customer receipts. In re Charlotte Russe, Inc., Fair & Accurate Credit Trans. Act (FACTA) Litig., 505 F.Supp.2d 1377, 1378 (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 Central District of California, id., at 1377.. Plaintiffs’ lawyers in both the California and the Pennsylvania class actions opposed centralization, particularly because the Central District of California had refused to certify FACTA class actions in several cases including in the California plaintiffs’ action. Id., at 1378. The Judicial Panel granted the motion to centralize the class actions (recognizing that technically only one of them remained a class action) because the statutory requirements have been met: “Each action involves allegations that Charlotte Russe’s printing of certain credit and debit card information on customer receipts violated [FACTA]. Centralization…will eliminate duplicate discovery; prevent inconsistent pretrial rulings, especially with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also agreed that the Central District of California is the appropriate transferee court because the first class action was filed there and because defendant’s headquarters are in California. Id., at *2.

Posted In: FCRA Class Actions, Multidistrict Litigation, Class Action Court Decisions

While Defense Failed to Timely Remove Class Action to Federal Court Thereby Necessitating Remand of the Class Action Complaint to State Court, the Class Action Claims are Precluded by SLUSA (Securities Litigation Uniform Standards Act) thus Entitling Defense to Judgment in State Court Illinois District Court Holds

Plaintiff filed a putative class action in Illinois state court against securities brokerage firm Citigroup, as successor in interest to Salomon Smith Barney, seeking damages because it allegedly “disseminated misleading research concerning the value of shares in certain Internet and telecommunications companies, thereby inducing Smith Barney customers like [plaintiff] to hold the shares.” Disher v. Citigroup Global Markets, Inc., 487 F.Supp.2d 1009, 1012 (S.D. Ill. 2007). Defense attorneys removed the class action federal court under the Securities Litigation Uniform Standards Act (SLUSA), but the district court remanded the matter to state court, id. On appeal, the Seventh Circuit reversed, holding that SLUSA applied and required dismissal of the class action complaint, id., at 1012-13 (see Disher v. Citigroup Global Markets, Inc., 419 F.3d 649 (7th Cir. 2005)). The Supreme Court granted certiorari and reversed, holding that district court remand orders of class actions removed under SLUSA are not reviewable on appeal, see Disher v. Citigroup Global Markets, Inc., ___ U.S. ___, 126 S.Ct. 2964 (2006), causing the class action to wind its way back to state court, id., at 1013. Once there, defense attorneys again removed the class action to federal court, and the plaintiff again sought remand, id. The district court granted the motion finding “procedural defects in removal,” id., at 1012, but essentially hands defense victory on the merits by holding that the class action claims are barred by SLUSA and declaring that holding to be law of the case.

After discussing the general rules governing removal, including the burden placed on the party seeking removal to establish federal jurisdiction and the general rule that removal must be sought within 30 days of service of the initial pleading, see Disher, at 1014-15, the district court turned to whether an amended pleading created a basis to support defense removal of the class action, id., at 1015. Defense attorneys “point[ed] to numerous purported orders or other papers supposedly authorizing removal of the claims” in the class action complaint, id., but the district court found each pleading insufficient to support the delayed filing of the notice of removal including (1) that the motions and orders filed in state court authorized removal, see id., at 1015-17; (2) that plaintiff’s amended class action complaint did not trigger a right of removal because even though “the claims alleged in both [plaintiff’s] original complaint and his amended complaint are precluded by SLUSA,” id., at 1018, the fact remained that the defense failed to timely file its notice of removal and the amended class action complaint did not revive the right to remove because it did not alter the basic nature of the allegations, id., at 1019-22; and (3) that the appellate proceedings did not authorize removal of the action to federal court, id., at 1022. Accordingly, the federal court remanded the putative class action to state court, id., at 1023-24.

But while the district court denied the defense effort to maintain the class action federal court, it nonetheless handed the defense a victory on the merits. The federal court concluded at pages 1022 and 1023,

Continue reading "SLUSA Class Action Defense Cases-Disher v. Citigroup: Illinois Federal Court Holds Securities Class Action Must Remanded To State Court But Holds Further That SLUSA Bars Prosecution Of Class Action Claims" »

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

Where Class Action Asserted Claims Under Both Agricultural Worker Protection Act (AWPA) and Fair Labor Standards Act (FLSA), District Court did not Abuse its Discretion in Certifying AWPA “Opt-Out” Class Action After Conditionally Certifying FLSA “Opt-In” Class Action Eleventh Circuit Holds

Plaintiffs, migrant workers hired under the H2-B non-immigrant visa program, filed a class action in Georgia federal court against Eller & Sons Trees alleging violations of the Migrant and Seasonal Agricultural Worker Protection Act (AWPA) and the Fair Labor Standards Act (FLSA). De Leon-Granados v. Eller & Sons Trees, Inc., ___ F.3d ___, 2007 WL 2456206, *1 (11th Cir. August 31, 2007). Plaintiffs sought class action treatment of their AWPA claims, but the district court denied the motion without prejudice; plaintiffs also sought preliminary certification of a class action under the FLSA, which the district court granted. Id. After conducting additional discovery, and after receiving only 5 “opt-in” requests from among the 1800 notices sent under the FLSA class action, plaintiffs again sought certification of a class action for the AWPA claims. Id. The district court granted the motion and certified a Rule 23(b)(3) “opt out” class action under the AWPA, id. Specifically, the district court certified a class action on behalf of more than 1,500 migrant workers admitted to the United States under the H-2B temporary foreign worker visa program, and sub-class of migrant workers who pledged collateral with Eller & Sons' agents in order to obtain employment. Id., at *2. Defense attorneys filed an interlocutory appeal but the Eleventh Circuit affirmed, holding that the district court did not abuse its discretion in granting plaintiffs’ motion for class action treatment.

Eller & Sons is a small Georgia company that provides reforestation and forestry services; most of its employees plant trees throughout the southern U.S. from December through February. Eller hires people from Guatemala, Honduras and Mexico under the H2-B non-immigrant visa program, and is required to pay hourly wages as determined by the State Workforce Agency (SWA). De Leon-Granados, at *1. The class action complaint alleges that Eller was to pay an average hourly rate of $8.32, well above the federal minimum wage rate, but that it failed to do so. Id. The defense objected to class action treatment, arguing that a collective action under the FLSA would be a superior method of addressing the AWPA claims, but the district court disagreed. Id., at *2. The district court further found that plaintiffs had satisfied the requirements for class actions under Rule 23, id. The appellate court reviewed that ruling for abuse of discretion, id.

Defense attorneys first argued that the AWPA claims were premised on violations of the FLSA and “must therefore be adjudicated as an opt-in collective action under 29 U.S.C. § 216(b) instead of an opt-out Rule 23(b)(3) class action.” De Leon-Granados, at *2-*3. Under the FLSA, class members must affirmatively elect to “opt in” to the class action, but under Rule 23(b)(3) “all qualifying class members become party-plaintiffs unless they opt out of the action.” Id., at *3 (citations omitted). After rejecting defense claims that “the workers' AWPA claims are truly FLSA claims in disguise,” the Eleventh Court concluded that the statutory language of the AWPA indicates Congressional intent to allow such claims to be brought as Rule 23 class actions. Id. The Circuit Court concluded at page *3, “If Congress intended § 216(b) to be the exclusive remedy for violations of the AWPA's wage payment provisions, it would have also said so.” It therefore held that the district court did not abuse its discretion in certifying an AWPA class action, id. (The author notes that there is case law holding that it is improper to certify “opt in” and “opt out” classes as part of the same action, but it does not appear that defense attorneys asserted this objection.)

Continue reading "FLSA Class Action Defense Cases-De Leon-Granados v. Eller & Sons: Eleventh Circuit Holds That Agricultural Worker Protection Act (AWPA) Class Action May Be Certified Independent Of FLSA Class Action Claims" »

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

Absence of Ability to Recover Attorney Fees Rendered Class Action Waiver and Arbitration Clause Unconscionable Because it would Effectively Insulate Company from Liability for Small-Value Claims Eleventh Circuit Holds

Plaintiffs filed a class action lawsuit in Georgia federal court against their cable television provider, Comcast, alleging violations of the federal Cable Communications Policy Act of 1984 (Cable Act), 47 U.S.C. § 521 et seq., by miscalculating the “pass-through” franchise fees charged customers. Dale v. Comcast Corp., 498 F.3d 1216, 2007 WL 2471222, *1 (11th Cir. 2007). Defense attorneys moved to dismiss the class the action and compel arbitration based on the arbitration clause contained in the subscriber agreements; the district court granted the motion and dismissed the class action. Id. The Eleventh Circuit reversed, concluding the arbitration agreement and class action waiver provision to be unenforceable.

Defense attorneys argued that the class action had to be dismissed because in 2004, either in the “welcome kit” given new subscribers or with the December invoice of existing subscribers, each customer received a “Policies and Procedures” notice that contained a mandatory arbitration clause. Dale, at *1. The arbitration clause contained a class action waiver provision, id., and “Comcast argued the subscribers accepted the Arbitration Provision, including the class action waiver, by their continued subscription to Comcast’s services after receiving the notices,” id., at *2. Plaintiffs argued that the damages suffered by the class in this case were $0.66 every three months, or a total of $10.56 over the four-year class period, and so the class action waiver was substantively unconscionable because “if Comcast’s class action waiver is held valid, they will effectively be denied any remedy.” Id., at *3. Plaintiffs also challenged the arbitration fee structure imposed under the subscriber agreement, which placed on subscribers the financial burden of attorney fees and all costs incurred in the arbitration other than the filing fee and arbitrator’s costs. Id. The district court rejected plaintiffs’ argument that the class action waiver was unconscionable, dismissed the class action, and compelled arbitration of the dispute. Id., at *2.

Continue reading "Arbitration Class Action Defense Cases-Dale v. Comcast: Eleventh Circuit Distinguishes Prior Cases Upholding Class Action Waivers And Holds Class Action Waiver And Arbitration Clause Unconscionable" »

Posted In: Arbitration, Class Action Court Decisions

The Kansas City Business Journal reports that federal judge John Lungstrum has given final approval to a $57 million settlement of an employment discrimination class action against Sprint. The class action, filed in Kansas federal court, alleged that Sprint unlawfully fired nearly 1,700 employees because of their age. The Business Journal reports that the class action plaintiffs charged Sprint with using a computerized performance management system that unfairly singled out employees over 40 for termination. The settlement purportedly allocates approximately $20 million to class counsel.

Posted In: Class Actions In The News

District Court Erred in Granting Defense Motion to Dismiss Class Action Challenging Advertising of “Light” and “Low Tar” as Expressly Preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA) First Circuit Holds

Plaintiffs filed a class action against Philip Morris and others violations of the state’s unfair and deceptive business practices statutes arising out of its design, marketing and sale of “light” and “low tar” cigarettes, which plaintiffs argued suggested that they were “safer” - i.e., lower in tar and nicotine - than regular cigarettes. Good v. Altria Group, Inc., ___ F.3d ___, Slip Opn., at 2-3 (1st Cir. August 31, 2007). Defense attorneys moved the federal court for summary judgment on the ground that the claims in the class action complaint were preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA), id., at 2. The district court agreed the dismissed the class action, but the First Circuit reversed, concluding that the class action claims were not preempted.

Plaintiffs alleged that they had smoked for 15 years. Good, at 2. The class action apparently did not contest that under the “Cambridge Filter Method” test conducted using a machine that “smoked” cigarettes and collected tar and nicotine for weighing, less tar and nicotine was drawn into the filter using “light” or “low tar” cigarettes. Id., at 3. Rather, plaintiffs alleged that a smoker “engages in unconscious behavior that essentially negate” the benefits sought to be achieved by the cigarette filter design, id. The class action claimed that defendants knew of this “compensation” effect yet marketed “light” cigarettes with an intent to deceive smokers into believing that the cigarettes were less harmful, id., at 4. Defense attorneys argued that the FCLAA expressly preempted the class action claims, id., at 5. Alternatively, the defense argued that the class action claims were implicitly preempted by “the efforts of Congress and the [Federal Trade Commission] for 40 years to implement to a national, uniform policy of informing the public about the health risks of smoking,” id. Finally, the defense argued that the state law claims in the class action complaint, brought under the Maine Unfair Trade Practices Act, id. The thrust of Philip Morris’ argument was the FTC’s “comprehensive, nationwide program regulating the disclosure of tar and nicotine yields,” id., at 5, and that tobacco companies have been complying with FTC pronouncements concerning tar and nicotine content of cigarettes, id., at 5-8. Accordingly, the class action constituted, in effect, “a challenge to the FTC’s regulatory scheme,” id., at 8. The district court agreed and dismissed the class action finding that it was expressly preempted by the FCLAA, id., at 8-9.

Continue reading "Tobacco Class Action Defense Cases-Good v. Altria Group: First Circuit Holds That Class Action Claims Challenging "Light" And "Low Tar" Labels Not Preempted By Federal Law And Reverses Dismissal Of Class Action" »

Posted In: 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 relevant timeframe. This report covers the time period from August 31 – September 6, 2007, during which time 44 new class action lawsuits were filed in these California state and federal courts. Employment law class action cases generally lead the list by a substantial margin, and this proved true once again. New labor class action cases led the list with 19 new lawsuits (6 of which involved claims under the Hotel Service Charge Reform Ordinance, representing 43% of the total number of new class actions filed. While there was a three-way tie for second place, no other category of class action filings came close. Six (6) new class action lawsuits, representing 14% of the new class action cases, were filed alleging violations of (a) California's unfair competition laws, which include false advertising claims, (b) federal securities laws, and (c) federal Truth in Lending Act (TILA).

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, Rejecting Objection by one Group of Plaintiffs, and Concurs with Request to Transfer Class Actions to District of New Jersey

Four putative class action lawsuits were filed (two in California, one in New Jersey and one in Washington) against various Vonage entities challenging defendants’ marketing and sales practices with respect to its internet telephone services, including its “one free month” trial period. In re Vonage Marketing & Sales Practices Litig., 505 F.Supp.2d 1375, 1376 (Jud.Pan.Mult.Lit. 2007). Plaintiff's lawyer in the New Jersey 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 that district, and defense attorneys for the common defendants supported the motion, id. Plaintiff’s lawyer in the Southern District of California class action voiced the sole opposition to the motion, arguing that centralization was unnecessary and inappropriate because the class actions “do not present significant overlapping issues of fact.” Id. The Judicial Panel disagreed, explaining irrespective of any differences between the class actions, “they raise common factual questions concerning Vonage's marketing and sales practices with respect to its internet telephone services” and pretrial coordination “has the salutary effect of placing all actions in this docket before a single judge who can formulate a pretrial program that: (1) allows discovery with respect to any non-common issues to proceed concurrently with discovery on common issues [citation]; and (2) ensures that pretrial proceedings will be conducted in a streamlined manner leading to the just and expeditious resolution of all actions to the overall benefit of the parties and the judiciary.” Id. Accordingly, the Panel granted the motion to centralize the class actions.

The Judicial Panel further agreed that the District of New Jersey was the appropriate transferee court because Vonage is headquartered there and because the federal judge “already presides over another MDL docket involving Vonage.” In re Vonage, at *1. Accordingly, the Judicial Panel transferred the class actions to the District of New Jersey, id., at *2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Chad Bray of the Wall Street Journal reports today that a federal court has given final approval to settlement of a class action against Merrill Lynch. The lawsuit alleged that Merrill Lynch and its former top technology-stock analyst, Henry Blodget, issued false or misleading research reports regarding Internet-based companies. The settlement reportedly covers 20 separate class action lawsuits filed against Merrill Lynch in federal court.

Mr. Bray’s article, entitled “Merrill Settlement is Approved,” may be found on page C7 of the September 6, 2007 edition of the Wall Street Journal.

Posted In: Class Actions In The News

Class Action Waiver Rendered Arbitration Clause Unconscionable “Notwithstanding the Availability of Market Alternatives” and Federal Arbitration Act (FAA) does not Preempt California State Court Holding that Class Action Waivers are Unconscionable under California Law

Plaintiffs filed a putative class action in California state court against T-Mobile alleging violations of the state’s unfair business practices statute arising out of the early termination fees charged cellular telephone service customers and the sale of “locked” cellular phones that customers cannot use if they switch to another carrier. Gatton v. T-Mobile USA, Inc., 152 Cal.App.4th 571, 61 Cal.Rptr.3d 344, 346 (Cal.App. 2007). The trial court denied a defense motion to compel arbitration pursuant to the service agreement’s arbitration clause, which included a class action waiver, id., at 346-47. The California Court of Appeal affirmed, holding that “the class action waiver rendered the arbitration provision unenforceable” and that the Federal Arbitration Act (FAA) did not “preempt[] any rule that class action waivers are unconscionable under California law.” Id., at 347. The appellate court therefore affirmed the trial court order, which permitted plaintiffs to prosecute the putative class action in state court. The appellate court’s discussion of the FAA’s impact on class action waivers is contained in a portion of the court’s opinion that, pursuant to California Rules of Court, is not published and therefore many not cited; accordingly, we summarize here only that part of the opinion holding that the class action waiver rendered the arbitration clause unenforceable.

Plaintiffs signed cellular telephone service agreements with T-Mobile, acknowledging that they had “received and reviewed the T-Mobile Terms and Conditions” and that “ All disputes are subject to mandatory arbitration in accordance with paragraph 3 of the Terms and Conditions." Gatton, at 347. The introductory paragraph of the Terms and Conditions advised people to “carefully read these Terms and Conditions” and to “NOT USE THIS SERVICE OR YOUR UNIT” if they are unwilling to agree to be bound by the provisions contained therein. Id. Section 3 of the Terms and Conditions, entitled “Mandatory Arbitration; Dispute Resolution,” precluded customers from seeking class action relief, id., and the appellate court summarized at pages 347 and 348 that “The terms and conditions incorporated into each of the plaintiff's agreements included a mandatory arbitration clause including a class action waiver.” The contract required each party to pay for their own attorney fees, and for customers to pay $25 toward the arbitrator’s fee (save for claims of less than $25, in which case T-Mobile would pay for the arbitrator’s fee). Id., at 348, n.3.

With respect to the early termination fees underlying the class action allegations of certain plaintiffs, the class action complaint alleged that customers who terminate service prior to the expiration of the service contract are required to pay approximately $200 per telephone, and that this fee is also charged if T-Mobile cancels the contract for nonpayment or other reasons. Gatton, at 348. According to the class action complaint, the early termination fee is the same “whether the contract has been in effect for several weeks or several months,” and this “flat-fee early termination penalty constitutes an unlawful penalty under Civil Code section 1671, subdivision (d), is unlawful under the unfair competition law [(UCL)] (Bus. & Prof. Code, § 17200 et seq.), and is unconscionable under the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.).” Id., at 348-49 (footnote omitted). With respect to the class action’s claims concerning handset, the complaint charges that it is unlawful require prevent customers to purchase a new phone if they switch service providers. Id., at 349. The class action alleged that T-Mobile locked the SIM card so that the phone could not be programmed to operate on the service network of a competitor, and that the SIM can be unlocked simply by entering a numerical code, id. The class action complaint alleges that T-Mobile falsely represents that its phones “are not compatible with and will not work with other wireless networks” in violation of the UCL and the CLRA. Id. The complaint further alleges that locking the SIM “makes it impossible or impracticable for subscribers to switch cell phone service providers without purchasing a new handset.” Id.

Continue reading "Arbitration Class Action Defense Cases-Gatton v. T-Mobile: California Court Holds Class Action Waiver Renders Arbitration Clause Unconscionable And Unenforceable Despite Consumer Alternatives To Services From Defendant" »

Posted In: Arbitration, Class Action Court Decisions

As Matter of First Impression in Eighth Circuit, Plaintiff in FLSA Class Action must Establish that Other “Similarly Situated” Putative Class Members Desire to “Opt In” to the Lawsuit as a Prerequisite to Conditional Class Certification Minnesota District Court Holds

Two former truck drivers filed suit against regional package delivery company Rowland Express for violations of the federal Fair Labor Standards Act (FLSA), the Employee Retirement Income Security Act of 1974 (ERISA) and Minnesota and Iowa state law, alleging that Rowland improperly classified its drivers as independent contractors instead of employees, thereby denying them overtime pay. Parker v. Rowland Express, Inc., 492 F.Supp.2d 1159, 1162-63 and n.1 (D.Minn. 2007). Plaintiffs filed a motion requesting that the court conditionally certify a class action under FLSA (technically a “collective action”) so that other Rowland employees may be provided an opportunity to “opt in” to the putative class action. Id., at 1162. Defense attorneys opposed class action treatment, arguing Eleventh Circuit precedent that conditional class certification requires a showing that other class members desire to “opt in” to the lawsuit. The district court denied the motion, holding as a matter of first impression in the Eighth Circuit that conditional class action certification and notice to putative class members is not warranted absent evidence that other similarly situated class members wish to join the action.

The class action complaint alleged that Rowland previously classified its drivers as “employees” and paid them overtime, but that after it became affiliated with DHL it changed the classification of its drivers to “independent contractors” and ceased paying overtime. Parker, at 1162-63. After conducting limited discovery, plaintiffs moved for an order conditionally certifying a FLSA class action on the grounds that plaintiffs “are ‘informed and believe’ that other drivers worked in excess of 40 hours per week and did not receive overtime compensation.” Id., at 1163. Defense attorneys opposed class action treatment, arguing in part that plaintiffs “failed to show that other ‘similarly situated’ individuals desire to opt in to this litigation,” id.

After discussing FLSA class actions and the FLSA’s requirement that the other employees be “similarly situated” to the plaintiffs but failure to define that term, see Parker, at 1163-64, the district court described the two-stage process generally followed in determining whether the plaintiffs are “similarly situated” to other putative class members: the first stage, known as the “notice stage,” involves a preliminarily determination “usually based only on the pleadings and any affidavits which have been submitted” as to whether notice of the class action should be provided in order to give putative class members an opportunity to “opt in”; the second stage involves a more in-depth analysis by the court into whether the plaintiffs are in fact similarly situated to the putative class, id., at 1164. At the first stage, the plaintiffs’ burden “is not onerous” but neither is it “invisible,” id.

Continue reading "FLSA Class Action Defense Cases-Parker v. Rowland: Minnesota District Court Adopts Eleventh Circuit Holding That Conditional Class Action Certification Of FLSA Class Action Requires Proof That Other Class Members Want To Opt In" »

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

Class Action Lawsuits are More Effective in Redressing Employee Labor Law Claims thus Rendering Class Action Waiver in Arbitration Clause Unenforceable, and Arbitration Clause was Procedurally Unconscionable Despite 30-Day Window to Opt Out of Entirely Voluntary Dispute Resolution Program California Supreme Court Holds

Plaintiff filed a putative class action in California state court against Circuit City alleging violations of the state’s unfair and deceptive business practices statutes and labor code arising out of its misclassifying employees as exempt in order to deny them overtime pay. Gentry v. Superior Court, ___ Cal.4th ___, 64 Cal.Rptr.3d 773, Slip Opn., at 2-3 (Cal. August 30, 2007). Defense attorneys moved to dismiss the class action and compel arbitration pursuant to an arbitration clause with a class action waiver. The trial court found the arbitration clause and the class action waiver to be fully enforceable, and granted the defense motion. The Court of Appeal agreed with the trial court’s reasoning, but the California Supreme Court reversed.

At the time Circuit City hired plaintiff, he was provided with written materials that included the company’s “Dispute Resolution Rules and Procedures”; the program gave employees “various options, including arbitration, for resolving employment-related disputes” and provided that if the employee elected arbitration - a choice that was subject to a class action arbitration waiver - then the company could compel the employee to dismiss any civil action in favor of arbitration. Gentry, at 3. As the Supreme Court explained, “The packet included a form that gave the employee 30 days to opt out of the arbitration agreement. [Plaintiff] Gentry did not do so.” Id. Both the trial court and the appellate court were influenced by the fact that plaintiff failed to opt out of the arbitration program within the 30-day window, despite the fact that there would have been no adverse employment ramifications had he done so. Id., at 3-4. The Supreme Court, however, disagreed.

In a strangely vague and sharply split opinion, the Supreme Court held that class action arbitration waiver provisions in overtime cases “may be contrary to public policy,” Gentry, at 5 (italics added). But despite all of its hedging, the Court seems to be clear that anything short of an attorney-supervised waiver would not withstand scrutiny, explaining at page 12:

Continue reading "Circuit City Class Action Defense Case-Gentry v. Superior Court: California Supreme Court Invalidates Class Action Waiver In Arbitration Clause As Against Public Policy And Concludes Arbitration Clause Procedurally Unconscionable Despite Right To Opt Out" »

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

Judicial Panel Grants Defense Request, Opposed by Virtually All Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Defense Request to Transfer Class Actions to Alabama

Eighteen (18) putative class action lawsuits were filed in ten federal courts against Tyson Foods, Tyson Chicken and Tyson Farms (collectively “Tyson”) alleging, inter alia, violations of the federal Fair Labor Standards Act Litigation (FLSA). In re Tyson Foods, Inc., 502 F.Supp.2d 1358, 2007 WL 2386422, *1 (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 Northern District of Alabama, where four of the class actions were pending. The Georgia plaintiffs supported centralization but urged the Judicial Panel to coordinate the class actions in either Arkansas or Georgia, but lawyers for plaintiffs in the remaining 17 class action lawsuits opposed centralization. Id. The Judicial Panel granted the motion to centralize the class actions, explaining that the 18 class actions “involve common questions of fact” that “aris[e] out of similar allegations that certain Tyson employees are entitled to compensation under the Fair Labor Standards Act” such that “[c]entralization under Section 1407 will eliminate duplicative discovery; prevent inconsistent rulings on pretrial motions, including those with respect to certification of collective actions; and conserve the resources of the parties, their counsel and the judiciary.” Id. In rejecting plaintiff objections that centralization was not necessary because the class action did not involve “significant overlapping issues of fact” because “the actions will likely depend on facts unique to each Tyson plant at which plaintiffs worked,” id., the Panel explained its reasons for disagreement as follows:

Transfer under Section 1407 does not require a complete identity or even a majority of common factual or legal issues as a prerequisite to transfer. Regardless of any differences among the actions, they raise common factual questions regarding Tyson's employment practices and compliance with the FLSA. 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: (1) allows discovery with respect to any non-common issues to proceed concurrently with discovery on common issues…; and (2) ensures that pretrial proceedings will be conducted in a streamlined manner leading to the just and expeditious resolution of all actions to the overall benefit of the parties and the judiciary. (Citation omitted.)

The Panel further explained that while certain actions “may be ready for trial in advance of the remaining actions,” this does not preclude pretrial coordination because “nothing in the nature of Section 1407 centralization will impede the transferee court, whenever it deems appropriate, from recommending Section 1407 remand.” In re Tyson Foods, at *2 (citations omitted).

Though it granted the defense motion for centralization, the Judicial Panel did not concur in the defense request to transfer the class actions to Alabama, selecting instead the Middle District of Georgia as the appropriate transferee court because it “has general docket conditions permitting us to effect the Section 1407 assignment to a court with the resources available to manage this litigation.” In re Tyson Foods, at *2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

As a resource to class action defense lawyers who defend securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for the separability of the provisions of the PSLRA in 15 U.S.C. § 78gg, which states:

§ 78gg. Separability

If any provision of this chapter, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the chapter and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

Posted In: Statutes & Rules

To assist class action defense attorneys anticipate the claims 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 August 24 – August 30, 2007, during which time 38 new class action lawsuits were filed in these California state and federal courts. New labor law class action cases typically lead the list by a wide margin, and in that regard the new class action filings over the past week are not a surprise. New employment law class action cases again headed the list with 15 new lawsuits, representing 39% of the total number of new class actions filed. No other category came close. New class actions alleging violations of California's unfair competition laws, which include false advertising claims, came in second with 5 new class action complaints (13%), with new antitrust class action lawsuits right behind with 4 new filings (11%).

Posted In: Class Actions In The News

Divided California Supreme Court Holds Class Action Arbitration Clause would "Undermine the Vindication of the Employees’ Unwaivable Statutory Rights and would Pose a Serious Obstacle to the Enforcement of the State’s Overtime Laws"

Yesterday, in a 4-3 decision with far-reaching impacts on class action arbitration waivers in California, the Supreme Court essentially held that class action waivers are unenforceable under California law. While the majority opinion claims that it is not condemning all such waivers, the dissent cogently observes that -- for all intents and purposes -- it is the practical effect of the decision. Even more surprising, the Supreme Court held that an arbitration clause in an employment contract was procedurally unconscionable even though the employee had been given a 30-day right to opt out of the arbitration provision without any adverse impact if the employee opposed arbitration. This aspect of the opinion is crucial, because under California law a contract is not unconscionable unless it is both procedurally and substantively unconscionable. Accordingly, if (as the trial court and appellate court held) the 30-day right to opt out of the arbitration aspect of the dispute resolution program meant that the arbitration clause was not procedurally unconscionable, then the arbitration provision would be insulated from attack. The Supreme Court found "an element of procedural unconscionability notwithstanding the opt-out provision," and so it remanded the putative class action to the trial court for a determination of whether the arbitration clause was also substantively unconscionable.

We plan to post an article covering the Supreme Court opinion on Tuesday, September 4, following the Labor Day weekend, but a copy of the opinion may be downloaded here.

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 Concurs with Request to Transfer Class Actions to District of South Carolina

Antitrust class action lawsuits were filed in Illinois and South Carolina against various moving companies for violation of the Sherman Act arising from the allegation that defendants entered into an agreement concerning the method for calculating fuel surcharges. In re Household Goods Movers Antitrust Litig., 502 F.Supp.2d 1356, 2007 WL 2386409, *1 (Jud.Pan.Mult.Lit. 2007). Plaintiff's lawyer in the South Carolina 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 that district; defense attorneys agreed that pretrial coordination was appropriate, as did plaintiffs in the Illinois class action. Id. Even though only two class actions had been filed, the Judicial Panel granted the motion to centralize the class actions concluding that centralization “will eliminate duplicative discovery; prevent inconsistent pretrial rulings, especially with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also concurred that the District of South Carolina was an appropriate transferee court “because the first-filed and more advanced action is pending there, and all responding parties favor centralization in the District of South Carolina.” Id.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Motion for Reconsideration of Denial of Class Action did not Toll Statutory Time Period for Appealing Court Order Appellate Court Holds

Plaintiffs filed a putative class action in Illinois state court against The Mortgage Exchange alleging violations of the federal Telephone Consumer Protection Act of 1991 (TCPA), which makes it unlawful to send unsolicited advertisements via facsimile, and the state’s Consumer Fraud and Deceptive Business Practices Act, which prohibits “unfair or deceptive acts or practices.” CE Design, Ltd. v. The Mortgage Exch., Inc., ___ N.E.2d __, Slip Opn., at 1-2 (Ill.App. July 23, 2007). On October 13, 2006, the trial court denied plaintiffs’ motion to certify the litigation as a class action holding (1) “issues such as the specific receipt of and consent to receive a facsimile transmission by each class member were not common issues,” id., at 2-3, and (2) class action treatment was not appropriate “because when Congress enacted the TCPA, it envisioned individual, small claims litigation, not private class actions with potential recoveries in the millions of dollars,” id., at 3. Plaintiffs filed a motion for reconsideration on November 13, 2006, which the trial court denied on February 22, 2007. Id. On March 26, 2007, plaintiffs filed a petition for leave to appeal the denial of their class certification motion, but the appellate court dismissed the petition for lack of jurisdiction.

Illinois law requires that petitions for leave to appeal the denial of a motion to certify a class action must be made within 30 days of the trial court order. CE Design, at 5. Plaintiffs argued that the time period was tolled during the pendency of the motion for reconsideration, id., at 5-6, but the appellate court rejected this argument, see id., at 6-8. Plaintiffs argued in the alternative that their motion for reconsideration was actually a new motion seeking certification of a class action, id., at 8, but the appellate court rejected that argument as well, see id., at 8-9. Accordingly, it dismissed the appeal for lack of jurisdiction, id., at 9.

Posted In: Class Action Court Decisions