Class Action Defense Blog

As Matter Of First Impression, 10-Day Deadline for Seeking Interlocutory Review of Court Order Refusing to Certify Class Action is Jurisdictional and District Court Cannot “Extend” Deadline by Vacating and Reentering its Order Eleventh Circuit Holds

Plaintiffs filed a putative class action against their employer, BellSouth, alleging a “pattern and practice of racial discrimination in promotions and compensation.” Defense attorneys opposed plaintiff’s motion to certify the lawsuit as a class action, and on September 19, 2006, the district court entered its order denying class certification. Jenkins v. BellSouth Corp., ___ F.3d ___, 2007 WL 1881294, *1 (11th Cir. July 2, 2007). On October 3, plaintiffs sought reconsideration of the order denying class action treatment, but on November 7 the court denied that request. Id. On November 24 plaintiffs asked the Eleventh Circuit for permission under FRCP Rule 23(f) to proceed with an interlocutory appeal of the class action certification order, but the Circuit Court dismissed the petition as untimely. Id. In response, plaintiffs asked the district court to “vacate and reenter” the order denying reconsideration, pleading that its petition in the Circuit Court was due November 22 (the day before Thanksgiving), that it attempted on November 21 to file its petition by overnight delivery, and that the package was delivered November 24 (the day after Thanksgiving). Id. The district court granted plaintiffs’ motion on March 5, 2007; specifically, the court “vacated its order of November 7, 2006, and reentered an identical order,” id. Plaintiffs filed their second Rule 23(f) petition on March 14, 2007, id.

The Eleventh Circuit stated that the issue presented had not been addressed previously in the circuit, explaining at page *1: “This petition presents an issue of first impression: whether a district court has the authority to circumvent the ten-day deadline for obtaining interlocutory review of an order denying class certification by vacating and reentering that order, after the aggrieved parties filed and this Court dismissed an untimely petition for an interlocutory appeal.” The Circuit Court held that “the district court lacked the authority to circumvent the ten-day deadline provided in Rule 23(f) by vacating and reentering its earlier order” and, accordingly, that plaintiffs’ petition was untimely, id. Accordingly, the Court dismissed the petition for lack of jurisdiction.

Continue reading "Employment Class Action Defense Cases-Jenkins v. BellSouth: Eleventh Circuit Holds District Court Cannot Avoid 10-Day Deadline For Seeking Interlocutory Review of Class Action Certification Order By Vacating And Reentering Order" »

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

Distributors of Dietary Supplements were not Adequate Class Representatives in Class Action Against Manufacturer Because Goal of Class is Disgorgement of Profits but Putative Class Representatives’ Self-Interest would be to Retain Profits Realized from Drug Sales

Plaintiffs filed a putative class action against Neways and others alleging inter alia unfair competition arising out of the sale of a dietary supplement without a prescription. Seastrom v. Neways, Inc., 149 Cal.App.4th 1496, 1499 (Cal.App. 2007). Defendant manufactured and distributed an oral spray called BioGevity as an anti-aging dietary supplement. Id. BioGevity contained HGH, which cannot be sold without a prescription, but defendant did not require a prescription to purchase the product, id. The class action complaint alleged that Neways and its independent distributors engaged in a pyramid sales scheme in which distributors could purchase BioGevity for $59-$66 per bottle, with a suggested retail price of $84.35-$94.40, and “keep the difference between the wholesale and retail prices on products they sold directly, and to commissions on the sale of products by distributors under them in the pyramid scheme.” Id. The putative class action alleged that some distributors had upwards of 8,800 “downline” distributors in the “pyramid” and made millions of dollars off the pyramid scheme, id. The court denied the motion of two distributors, acting as putative class representatives, to certify the lawsuit as a class action, and the Court of Appeal affirmed.

Following an investigation by the U.S. Attorney's Office into Neways' sale of BioGevity without prescriptions, “In September 2003 Neways pleaded guilty to knowingly selling approximately 100,000 bottles of a product that contained HGH in violation of [federal law] and to criminal forfeiture under sections 333(e)(3) and 853(a)(1).” Seastrom, at 1499-1500. The company also paid $1.75 million as part of a stipulated fine and forfeiture of profits from the sale of BioGevity; in return, the federal government agreed not to prosecute Neways distributors. Id., at 1500. In June 2003, just before Neways resolved the U.S. Attorney’s investigation, an unfair competition lawsuit was filed against Neways by a Marc Lewis. Id. However, because Lewis had never purchased BioGevity, he lacked standing to prosecute the class action after California voters enacted Proposition 64, id.

Continue reading "Class Action Defense Cases-Seastrom v. Neways: California Appellate Court Affirms Order Refusing To Certify Class Action Because Putative Class Representatives Were Potential Defendants In The Same Action" »

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

Plaintiff Failed to Establish Membership in Class Defined by Class Action Complaint and Failed to Allege Adequately Entitlement to Reduced Insurance Rate Underlying Damage Claims thus Warranting Court Order Granting Defense Motion to Dismiss Class Action Claims, but Plaintiff Given Leave to Amend

Plaintiff filed a putative class action against defendant Fidelity National Title Insurance Company of New York on behalf of purchasers of title insurance who, in connection with refinance transactions, qualified for discounted refinance rates but did not receive them. Lentini v. Fidelity Nat’l Title Ins. Co. of New York, 479 F.Supp.2d 292, 295 (D. Conn. 2007). The class action complaint alleged violations of Connecticut’s Unfair Trade Practices Act (CUTPA) (Count I), fraudulent misrepresentation (Count II), negligent misrepresentation (Count III) and unjust enrichment (Count IV), id., at 296. Defense attorneys moved to dismiss Counts I-III of the class action complaint, id., at 295-96; the district court granted the motion as to certain claims for relief but granted plaintiff leave to amend, id., at 303.

According to the class action complaint, Fidelity’s title insurance rate schedule, approved by the Connecticut Insurance Department, provided for both “regular” and “reduced” rates in connection with refinance transactions; specifically, if a homeowner refinances within 10 years “and the premises to be insured are identical and there has been no change in the fee ownership,” then discounted premiums may apply. Lentini, at 296. Plaintiff alleges that he refinanced his mortgage and qualified for a discounted title policy rate but that Fidelity “(a) concealed from the Plaintiff that he qualified for and was entitled to receive the discounted refinance rate and (b) supplied false, misleading, inaccurate and incomplete information about the applicable rate for title insurance by charging the Plaintiff Six Hundred Fifty Dollars ($650.00) for title insurance.” Id. The class action allegations were that all class members qualified for discounted rates and that Fidelity should have known that the class members were eligible to receive reduced rates, but instead Fidelity charged class members the regular rate for their title policies. Id., at 297. Plaintiff alleged that the premiums Fidelity charged class members exceeded the statutorily mandated rates, id.

Continue reading "Fidelity Class Action Defense Case-Lentini v. Fidelity: Connecticut Federal Court Grants Defense Motion To Dismiss Class Action Complaint Claims For Fraud And Unfair Business Practices But Grants Leave To File Amended Class Action Complaint" »

Posted In: Class Action Court Decisions

To aid class action defense attorneys in defending against securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress explained the effect of the PSLRA on existing law in 15 U.S.C. § 78bb, which provides:

§ 78bb. Effect on existing law

(a) Addition of rights and remedies; recovery of actual damages; State securities commissions

Except as provided in subsection (f) of this section, the rights and remedies provided by this chapter shall be in addition to any and all other rights and remedies that may exist at law or in equity; but no person permitted to maintain a suit for damages under the provisions of this chapter shall recover, through satisfaction of judgment in one or more actions, a total amount in excess of his actual damages on account of the act complained of. Except as otherwise specifically provided in this chapter, nothing in this chapter shall affect the jurisdiction of the securities commission (or any agency or officer performing like functions) of any State over any security or any person insofar as it does not conflict with the provisions of this chapter or the rules and regulations thereunder. No State law which prohibits or regulates the making or promoting of wagering or gaming contracts, or the operation of “bucket shops” or other similar or related activities, shall invalidate any put, call, straddle, option, privilege, or other security subject to this chapter, or apply to any activity which is incidental or related to the offer, purchase, sale, exercise, settlement, or closeout of any such security. No provision of State law regarding the offer, sale, or distribution of securities shall apply to any transaction in a security futures product, except that this sentence shall not be construed as limiting any State antifraud law of general applicability.

Continue reading "15 U.S.C. § 78bb—Effect Of The Federal Private Securities Litigation Reform Act (PSLRA) Governing Individual And Class Action Lawsuits For Securities Fraud On Existing Law" »

Posted In: Statutes & Rules

To assist California class action defense attorneys anticipate the claims 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 June 29 – July 5, 2007, during which time 37 new class action lawsuits were filed in these courts. We repeatedly note that employment-based class action lawsuits usually lead the list of new class action filings by a wide margin, but last week new labor law class actions outstripped all other categories of new class action filings by its widest margin since we began reporting these statistics. This week suggests that the "phenomenon" may prove to be a trend, because out of these 37 new class action lawsuits, 22 (60%) involve employment-related claims. Unfair competition law (UCL) class action cases, which include false advertising cases, came in a distant second with 5 new class action lawsuits (14%), followed closely by 4 new securities class action cases (11%).

Posted In: Class Actions In The News

Judicial Panel Grants Plaintiffs’ Requests, Opposed by Defense and Other Plaintiff Lawyers, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Sends Class Actions to District of Rhode Island

Thirteen (13) class action lawsuits were filed in 13 different courts located in 11 different states against various defendants, including C.R. Bard and its wholly-owned subsidiary Davol (common defendants in all class actions) and Surgical Sense and WCO Medical Products (defendants in only one class action), asserting products liability claims allegedly caused by defects in various models of hernia patches manufactured and sold by Bard, Davol or Surgical Sense. In re Kugel Mesh Hernia Patch Products Liab. Litig., ___ F.Supp.2d ___, 2007 WL 1853819, *1 (Jud.Pan.Mult.Lit. June 22, 2007). Plaintiffs’ lawyers in the Alabama and Rhode Island actions moved the Judicial Panel for Multidistrict Litigation (MDL) an order centralizing the class actions for pretrial purposes pursuant to 28 U.S.C. § 1407, each requesting transfer to the district court in which their action already was pending, id. The Tennessee plaintiffs opposed pretrial coordination entirely, while the Arkansas plaintiffs supported centralization only as to those class actions that contained certain claims but otherwise opposed centralization, id. All defense attorneys opposed centralization, alternatively arguing for transfer to Arkansas or Missouri, id. Other plaintiffs in various districts supported transfer to various districts and under various circumstances, providing the Judicial Panel with no consensus from which to work, id. The Judicial Panel granted the motion to centralize the class actions over the objection of defense and certain plaintiff lawyers, finding that “all actions involve common questions of fact” in that they “share factual questions concerning such matters as the design, manufacture, safety, testing, marketing and performance” of hernia patches manufacture and sold by Bard, Davol and Surgical Sense, id.

The Judicial Panel summarized defense arguments in opposition to centralization of the class action lawsuits as follows: “common facts do not predominate among the actions, as the actions involve different models of hernia patches and allege various types of defects; the number of pending actions does not warrant centralization; alternatives to centralization are available; and the pending actions differ substantially in the causes of action pleaded, and thus the evidence required. Additionally, the parties to the Western District of Arkansas action argue that the hernia patch at issue in that action was manufactured and distributed by a different, unrelated company. Plaintiffs to the Arkansas actions argue that two types of actions should not be included in MDL-1842 proceedings: (1) those actions that do not allege that the recoil ring is defective; and (2) those actions that arise from a procedure, or the installation of a hernia patch, that may create a higher risk of infection in the patient.” In re Kugel Mesh, at *2. The Panel rejected these arguments, explaining that “Section 1407 does not require a complete identity or even a majority of common factual or legal issues as a prerequisite to transfer.” Id. The Panel further explained at *2,

Continue reading "Class Action Defense Cases-In re Kugel Mesh: Judicial Panel On Multidistrict Litigation (MDL) Rejects Defense Opposition To Centralization Of Class Action Lawsuits And Selects District of Rhode Island As Transferee Court" »

Posted In: Multidistrict Litigation, Class Action Court Decisions

Class Action Claims were Time-Barred because Duplicate Property Tax Payments are still Properly Deemed “Tax Payments,” Class Action Plaintiff’s Argument to the Contrary Notwithstanding, so Trial Court did not Err in Granting Defense Motion to Dismiss Class Action Complaint

Plaintiffs filed a putative class action in Illinois state court seeking the return of overpaid property taxes; specifically, the class action complaint alleged that plaintiffs “had made duplicate real estate tax installment payments” and that the State of Illinois “refused to refund a duplicate real estate tax payment when the refund was requested more than five years after the duplicate payment was made.” Alvarez v. Pappas, ___ N.E.2d __, Slip Opn., at 2 (Ill.App. June 4, 2007). The thrust of the lawsuit was that the State “had no authority to collect, deposit, or disburse to tax districts any duplicate payments of real estate taxes,”, id., at 2-3; defense attorneys countered that the statute of limitations had run on plaintiffs’ claims thus necessitating that the class action be dismissed, id., at 1. The trial court agreed and dismissed the class action complaint as time-barred; the Illinois appellate court affirmed.

By way of background, the appellate court explained that the Cook County treasurer collects property taxes by sending out estimated tax bills by January 31, and final tax bills by June 30. Alvarez, at 1-2. The class action complaint alleged that the Alvarez plaintiffs received a property tax bill for their first installment of their 1989 taxes, and that their bank paid this installment out of an escrow account but that Alvarez also paid the property tax bill directly. Id., at 3. Alvarez allegedly made additional duplicate payments as well, id. Beginning with his second property tax installment for 1998, plaintiff Douglas also allegedly made duplicate tax payments, id., at 4. The Dratt plaintiffs also allege that they made duplicate property tax payments beginning with the second installment for 1998, id. Finally, the class action alleges that duplicate property tax payments were made on property owned by plaintiff Nazon beginning in 1994 or 1995. Id.

Continue reading "Class Action Defense Cases-Alvarez v. Pappas: Illinois Appellate Court Holds Class Action Properly Dismissed Because Claims To Recover Duplicate Property Tax Payments Are Subject To Five Year Statute Of Limitations" »

Posted In: Class Action Court Decisions

Florida Federal Court Reaffirms Prior Ruling that Lawsuits by Quasi-Governmental Agency on Behalf of Military Personnel Against Financial Institutions for Pension Fund Losses Constituted “Covered Class Actions” Within the Meaning of SLUSA (Securities Litigation Uniform Standards Act)

Plaintiff, a quasi-governmental agency that manages pension funds for armed forces personnel, filed a putative class action in Florida state court against Lehman Brothers alleging violations of various Florida state laws. Instituto de Prevision Militar v. Lehman Bros., Inc., 485 F.Supp.2d 1340, 1342 n.1 (S.D. Fla. 2007). The district court sua sponte held that the federal Securities Litigation Uniform Standards Act (SLUSA) preempted plaintiff’s claims and dismissed the class action complaint with leave to amend. Plaintiff sought reconsideration on the ground, inter alia, that the lawsuit was not a “covered class action” within the meaning of SLUSA; the district court denied reconsideration.

“Plaintiff Instituto de Prevision Militar … is a quasi-governmental agency of the Republic of Guatemala that, inter alia, manages the pension funds for members of the Guatemalan Armed Forces.” Instituto, at 1342. In July 2001, plaintiff was solicited by Pension Fund of America (PFA) to deposit pension funds with Lehman Brothers in a retirement trust account; believing PFA was the agent of Lehman (it was not), plaintiff invested more than $28 million in PFA through Lehman, id. Plaintiff alleges that PFA was “carrying out an embezzlement and money laundering scheme,” and this formed the basis of a lawsuit it filed against PFA in November 2002. Id. Through that action, plaintiff obtained an order compelling Lehman to liquidate its account, but the funds thus obtained were insufficient to cover its investment so plaintiff filed suit against Lehman, id., at 1342-43. Plaintiff also filed a putative class action against Merrill Lynch, and the district court consolidated the three cases for discovery purposes. Id., at 1343.

Continue reading "SLUSA Class Action Defense Cases-Instituto v. Lehman Brothers: Pension Manager Lawsuits Constituted “Covered Class Action” Under Securities Litigation Uniform Standards Act Florida Federal Court Holds" »

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

Second Circuit Opinion in In re IPO Class Action Enunciating new Standards for Certification of Class Actions Warranted Reconsideration of Order Certifying Class Action but not Decertification of Class Action because new Standards were met New York Federal Court Holds

Female employees filed a labor law class action against Willis Group and its affiliates alleging gender discrimination. Hnot v. Willis Group Holdings Ltd., 241 F.R.D. 204, 206 (S.D.N.Y. 2007). The district court granted plaintiffs’ motion to certify the litigation as a class action, see Hnot v. Willis Group Holdings Ltd., 228 F.R.D. 476 (S.D.N.Y. 2005); defense attorneys sought reconsideration of the class certification order and decertification of the class, arguing that under the Second Circuit opinion in In re Initial Pub. Offering Sec. Litig., 471 F.3d 24 (2d Cir.2006) (In re IPO) -- a summary of which may be found here -- which issued after the class action had been certified, plaintiffs failed to establish commonality under Rule 23(a), and that class action treatment was “inappropriate under Rule 23(b)(2),” 241 F.R.D. at 206. Specifically, the defense argued that a plaintiff is now required to do more than simply make “some showing” that the elements of Rule 23 have been met, id., at 207. The district court denied the defense motion, concluding that the requirements of Rule 23 had been met and that the lawsuit should properly proceed as a class action.

Plaintiffs filed their putative class action in 2001 “on behalf of a class of high-level female employees…alleging illegal employment discrimination on the basis of sex.” Hnot, at 206. In response to plaintiffs’ motion to certify a class action, defense attorneys argued that Rule 23(a)’s commonality requirement had not been satisfied. Id. Plaintiffs’ responded that “a common policy of vesting regional and local officers with unfettered discretion in making promotion and compensation decisions, result[ed] in discrimination against women in high level positions.” Id. (citation omitted). Each side submitted expert reports, which the district court considered as they pertained to the issue of commonality, id., and ultimately concluded that “plaintiffs' evidence was ‘certainly adequate to establish that whether or not Willis's promotion and compensation policies subject class members to discrimination is an issue common to all class members,’” id., at 207 (citing 228 F.R.D. at 483).

Continue reading "Class Action Defense Cases-Hnot v. Willis Group: New York Federal Court Denies Defense Motion To Reconsider Order Certifying Class Action Because New Second Circuit Authority Governing Class Action Certification Had Been Satisfied" »

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

District Court Properly Concluded that Class Action Claims of Debenture Holder Against Issuer for Breach of Contract, Fraud and Unjust Enrichment were Barred by Applicable Limitations Periods Eighth Circuit Holds

Plaintiff filed a putative class action against Union Pacific Railroad Company, as successor to the issuer of a debenture, alleging breach of contract, fraud and unjust enrichment for alleging failing to make proper interest payments due plaintiff. Great Plains Trust Co. v. Union Pac. R.R. Co., 492 F.3d 986, 989-90 (8th Cir. 2007). Defense attorneys moved to dismiss the class action complaint on the ground that each of the class action claims was time-barred; the district court agreed with the defense and dismissed the class action. Id., at 990. The Eighth Circuit affirmed, holding that Kansas law applied and that the two-year (fraud), three-year (unjust enrichment) and five-year (breach of contract) limitations periods had expired prior to the filing of the class action complaint.

Because the opinion turns exclusively on its analysis of statutes of limitation under Kansas law, we do not here summarize the opinion in any greater detail. The text of the Eighth Circuit opinion may be found here.

Posted In: Class Action Court Decisions

Class Action Alleging Market Timing Acts in Violation of State and Federal Laws were Time-Barred because Public Complaints, SEC Actions and Guilty Plea Arising out of Market Timing Claims Placed Class Representatives on Inquiry Notice of Basis for Class Action Claims Maryland Federal Court Holds

Investors filed a class action against numerous defendants, ultimately coordinated by the Judicial Panel on Multidistrict Litigation, alleging marketing timing acts in violation of the Securities Act, the Exchange Act, the Investment Company Act and various state laws. In re Mutual Funds Inv. Litig., 478 F.Supp.2d 833, 834 (D. Md. 2007). The class action complaint was attacked by motions to dismiss, which the district court granted as to the Securities Act and the ICA § 48(a) claims, denied as to the Exchange Act claims, and denied without prejudice as to the ICA § 36(b) claim, id.; plaintiffs voluntarily dismissed their state law claims, id. n.1. Plaintiffs filed a second amended class action complaint that added new defendants and claims, and defense attorneys filed another series of motions to dismiss, id., at 834. After reaffirming its prior rulings to the extent applicable, id.; the district court addressed numerous issues, but we address here only that portion of the court’s holding concerning the statute of limitations defense.

Plaintiffs conceded that any claims based on allegedly fraudulent conduct that occurred prior to July 1999 were time-barred. In re Mutual Funds, at 835. The district court recognized that Fourth Circuit decisional law holds that “Inquiry notice is triggered by evidence of the possibility of fraud, not by complete exposure of the alleged scam.” Id., at 836 (quoting Brumbaugh v. Princeton Partners, 985 F.2d 157, 162 (4th Cir. 1993)). And the court immediately rejected a defense effort to push inquiry notice back to 1999, explaining: “The attempt to place notice inquiry as far back as 1999 because of the shareholder letter and prospectus supplements warning of the risks of market timing is not persuasive, when those same documents indicated that additional steps would be taken to prevent timing and the funds are alleged instead to have concealed from investors specific agreements to permit that very practice.” Id., at 836 n.6.

Continue reading "Class Action Defense Cases- In re Mutual Funds: Maryland Federal Court Grants Defense Motion To Dismiss Class Action Claims As Time-Barred Holding That Publicity Placed Class Action Plaintiffs On Inquiry Notice Of Claims" »

Posted In: Class Action Court Decisions

To assist class action defense attorneys who defend against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress set forth special provisions relating to statutes of limitation for private causes of action for individual and class actions under the Private Securities Litigation Reform Act in 15 U.S.C. § 78aa-1, which states:

§ 78aa–1. Special provision relating to statute of limitations on private causes of action

(a) Effect on pending causes of action

The limitation period for any private civil action implied under section 78j (b) of this title that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.

(b) Effect on dismissed causes of action

Any private civil action implied under section 78j (b) of this title that was commenced on or before June 19, 1991—

(1) which was dismissed as time barred subsequent to June 19, 1991, and

(2) which would have been timely filed under the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991,

shall be reinstated on motion by the plaintiff not later than 60 days after December 19, 1991.

Posted In: Statutes & Rules

As a resource to defense attorneys who defend against class action claims 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 June 22 – June 28, 2007, and during that time 34 new class action lawsuits were filed in these courts. Labor law class action lawsuits usually lead the list of new class action filings, often by a wide margin, but never before, during the period for which we have been providing these statistics, by as wide a margin as this past week. Out of these 34 new class action lawsuits, 21 involved employment-related claims, representing almost 62% of the total number of new class actions for the relevant time period. Unfair competition law (UCL) class action cases, which include false advertising cases, represented the only other category of class actions to break the 10% threshold, with six (6) new class action filings (18%).

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 Transfer Class Actions to District of New Jersey

Twelve putative class action lawsuits were filed in seven federal district courts (four in Missouri, two in Kansas and Oklahoma, and one in California, Kentucky, New Jersey and Tennessee) against more than 100 oil companies, distributors and retailers “relating to the sale of motor fuel at temperatures greater than 60 degrees Fahrenheit.” In re Motor Fuel Temperature Sales Prac. Litig., 493 F.Supp.2d 1365, 2007 WL 1806043, *1 (Jud.Pan.Mult.Lit. 2007). Defense attorneys for three oil companies 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 New Jersey. All plaintiff lawyers agreed that pretrial coordination was appropriate, as did dozens of additional defense attorneys, but they could not agree upon the appropriate transferee court, “variously support[ing] selection of the Northern District of California, the Southern District of Florida, the District of Kansas, the Western District of Missouri, the District of New Jersey, the Western District of Oklahoma or the Middle District of Tennessee as transferee district.” Id. Defense attorneys for two oil companies opposed centralization at all, but alternatively argued that the class actions should be transferred to the District of New Jersey, id.

The Judicial Panel granted the defense motion to centralize the class action lawsuits, rejecting “the arguments of the two opposing defendants that the lack of identity among the defendants in these actions warrants a different result.” In re Motor Fuel, at *1. However, the Panel selected the District of Kansas because “no district stands out as the geographic focal point for this nationwide docket” and, accordingly, the Judicial Panel selected “a transferee judge with the time and experience to steer this litigation on a prudent course and sitting in a district with the capacity to handle this litigation.” Id., at *2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

As Matter of First Impression in the Circuit, Eleventh Circuit Holds that Fast Food Franchisee Lacked Prudential Standing to Prosecute Lanham Act False Advertising Class Action Against McDonald’s and Affirms Order Granting Defense Motion to Dismiss Class Action Complaint

Plaintiff, a Burger King fast food franchisee, filed a putative class action lawsuit against McDonald’s alleging false advertising in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), arising out of McDonald’s claims in connection with various promotional games (such as Monopoly) that each customer had an equal chance of winning. Phoenix of Broward, Inc. v. McDonald's Corp., 489 F.3d 1156, 2007 WL 1791886, *1 (11th Cir. 2007). Defense attorneys moved to dismiss the class action complaint on the ground that plaintiff lacked prudential standing to prosecute the putative class action; the district court agreed with the defense and dismissed the class action. Id. On appeal to the Eleventh Circuit, the issue on appeal concerned “the proper test for determining whether a party has prudential standing to bring a false advertising claim under § 43(a) of the Lanham Act,” id.; ultimately, the Circuit Court adopted the Third Circuit test set forth in Conte Bros. Automotive, Inc. v. Quaker State-Slick 50, Inc., 165 F.3d 221, 225 (3d Cir. 1998), and affirmed the dismissal of the class action complaint.

The McDonald’s promotional games at issue ran from 1995 through 2001, and generally allowed customers to win the $1 million grand prize “by obtaining one of the rare $1 million, instant-winner game pieces or by collecting and matching a combination of certain other game pieces.” Phoenix of Broward, at *1. McDonald’s represented that each customer had an equal chance of winning, and “also represented the specific odds of winning certain prizes, including the high-value prizes.” Id. Beginning in April 2000, however, the FBI began investigating these promotional games and “informed McDonald's that there were problems with the random distribution of its game pieces,” id. Nonetheless, McDonald's continued to represent that each customer had an equal chance of winning its promotional games, id.

Continue reading "Lanham Act Class Action Defense Cases-Phoenix v. McDonald's: District Court Properly Granted Defense Motion To Dismiss Lanham Act Class Action For Lack Of Prudential Standing Eleventh Circuit Holds" »

Posted In: Class Action Court Decisions

Class Action Complaints Warranted Sua Sponte Consolidation under Rule 42 Iowa Federal Court Holds

Plaintiff filed two putative class action lawsuits in Iowa federal court, one against Midland National Life Insurance and the other against American Equity Investment Life Insurance, alleging violations of RICO (Racketeer Influenced and Corrupt Organizations Act), conspiracy and unjust enrichment in that they “knowingly used licensed agents that engaged in unfair, improper, and unlawful sales practices in connection with the solicitation, offering, and sale of deferred annuity products to senior citizens.” Bendzak v. Midland Nat’l Life Ins. Co., 240 F.R.D. 449, 450 (S.D. Iowa 2007). The district court sua sponte ordered the two class actions consolidated, holding that the requirements of FRCP Rule 42 were satisfied, id., but invited defense and plaintiff’s counsel to advise the court if they believed consolidation “would lead to inefficiency, inconvenience, or unfair prejudice to a party,” id., at 451.

The district court held that consolidation was warranted because the two class actions involved common issues of law and fact, explaining at page 450:

Continue reading "Class Action Defense Cases-Bendzak v. Midland: Iowa District Circuit Consolidates Class Action Lawsuits Sua Sponte Finding Class Actions Satisfied Requirements Of FRCP Rule 42" »

Posted In: Class Action Court Decisions

30-Day Time Period for Appealing Court Orders Granting or Denying Class Action Treatment is Jurisdictional and Cannot be Evaded by Trial Court Nunc Pro Tunc Order Deeming Order Entered on a Later Date Illinois State Appellate Court Holds

Plaintiff filed a consumer fraud class action in Illinois state court against Bayer AG and others alleging common law fraud and violations of the Consumer Fraud and Deceptive Business Practices Act. De Bouse v. Bayer AG, ___ N.E.2d __ (June 11, 2007) [Slip Opn., at 1]. After granting plaintiff’s motion to certify the lawsuit as a class action, defense attorneys moved for summary judgment, id. The trial court denied the motion but certified three questions for appellate review, id. Defense attorneys then sought leave to appeal the class certification order, and the appellate court consolidated the two appeals, id., at 1-2. Plaintiffs moved to dismiss the appeal for lack of jurisdiction, id., at 2; the appellate court granted the motion.

The appellate court explained that the class certification hearing was held in July 2005 and taken under submission. On September 1, 2005, the court granted class action status, and the order was filed the following day. Du Bouse, at 2. “There is no indication that the order was served personally or by mail on counsel of record.” Id. The parties appeared in court on September 27 and December 29, 2005, in connection with the summary judgment motion, and on January 11, 2006 for purposes of a status conference, id., at 2-3. It was not until January 25, 2006, that defense attorneys moved “to vacate or amend the class certification order nunc pro tunc on the grounds that they had not received notice of the entry of the order granting class certification, that the circuit court clerk failed to serve a copy of the order on all parties and failed to note any service in the file…, and that they made diligent efforts to monitor the court file once the motion had been taken under advisement by the court.” Id., at 3. Defense attorneys argued that they had been monitoring the court file but first learned of the class certification order on January 11, 2006, and that the failure to serve notice of the order "severely prejudiced" defendants’ right to appeal. Id. The trial court agreed and granted motion, ordering the class certification order be deemed filed as of January 11, 2006, id., at 3-4. Defendants sought leave to appeal the class certification order on February 10, 2006, id., at 4.

Continue reading "Class Action Defense Cases--Du Bouse v. Bayer: Illinois Appellate Court Dismisses Appeal From Class Action Certification Order For Lack Of Jurisdiction Because Defense Failure To Monitor Court Docket Did Not Expand Jurisdictional Appeal Period" »

Posted In: Class Action Court Decisions

Class Action Requirements of FRCP Rule 23 Satisfied in Class Action Complaint Allegation Violations of federal Truth in Lending Act (TILA), Bank’s TILA-Mandated Disclosure Statements Failed Adequately to Inform Borrowers of Loan Payment Schedule and Interest Rate, and Class Action Plaintiffs may seek Rescission and Attorney Fees, but not Statutory Damages, Wisconsin Federal Court Holds

Plaintiffs filed a putative class action against Chevy Chase Bank for violations of the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., in that the Bank allegedly failed to make the requisite disclosures in connection with adjustable rate mortgage loans. Andrews v. Chevy Chase Bank, FSB, 240 F.R.D. 612, 614 (E.D. Wis. 2007). Defense and plaintiffs’ counsel filed cross-motions for summary judgment, and plaintiffs moved the court to certify the litigation as a class action; the district court granted in part and denied in part each of the summary judgment motions, and granted class action status to the TILA complaint.

Plaintiffs secured a loan from Chevy Chase bank in June 2004 to refinance their Wisconsin home. Andrews, at 614. The Bank’s initial disclosures included a handbook on adjustable rate mortgages (ARMs), an ARM disclosure and a preliminary disclosure statement as required by TILA, id., at 615. Additional disclosures were provided at closing, including an Adjustable Rate Note (ARN), a Truth in Lending Disclosure Statement (TILDS) and an Adjustable Rate Rider (ARR), id. The class action complaint alleged that plaintiffs’ believed the interest rate and payments “were fixed for five years and became variable thereafter”; in fact, the payment was fixed but the interest rate was not. Id. As the district court explained at page 615, “The loan carried a discounted or ‘teaser’ interest rate of 1.950 percent, but that rate applied only to the first monthly payment, after which the interest rate increased every month according to a formula. As the interest rate increased, an ever increasing portion of the minimum monthly payment of $701.21 was needed to cover interest, and the minimum payment itself soon became insufficient to cover accrued interest.” The class action complaint alleged that the Bank’s disclosures failed to comply with TILA.

Continue reading "TILA Class Action Defense Cases-Andrews v. Chevy Chase: Wisconsin Federal Court Certifies Lawsuit As Class Action And Holds Lender Violated TILA And That Class Action Complaint May Seek Rescission And Attorney Fees" »

Posted In: Certification of Class Actions, Class Action Court Decisions, RESPA/TILA Class Actions

As a resource for the class action defense lawyer who defends against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for jurisdiction over offenses and lawsuits of private securities class action litigation in 15 U.S.C. § 78aa, which provides as follows:

§ 78aa. Jurisdiction of offenses and suits

The district courts of the United States and the United States courts of any Territory or other place subject to the jurisdiction of the United States shall have exclusive jurisdiction of violations of this chapter or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by this chapter or the rules and regulations thereunder. Any criminal proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by this chapter or rules and regulations thereunder, or to enjoin any violation of such chapter or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. Judgments and decrees so rendered shall be subject to review as provided in sections 1254, 1291, 1292, and 1294 of title 28. No costs shall be assessed for or against the Commission in any proceeding under this chapter brought by or against it in the Supreme Court or such other courts.

Posted In: Statutes & Rules

Class Action Complaint Alleging Fees Charged were in Excess of Contractually Agreed Amount did not Constitute Challenge to Interest Rate and so National Bank Act did not Completely Preempt Claims in Putative Class Action Ohio Federal Court Holds

Plaintiff filed a putative class action in Ohio state court against credit card company FIA Card Services alleging that it collected cash advance fees in excess of the maximum allowed under its cash advance agreements. Levitanksy v. FIA Card Services, N.A., 492 F.Supp.2d 758, 760 (N.D. Ohio 2007). Defense attorneys removed the action to federal court on the basis of National Bank Act, alleging that the class action complaint challenged the interest rate charged to customers and that usury claims are completely preempted under the NBA, id., at 760-61; plaintiff filed a motion to remand the class action to state court on the ground that the class action alleged only state-law breach of contract claims, id., at 759. The district court granted plaintiff’s motion, holding that the National Bank Act did not completely preempt the claims set forth in the class action complaint.

Plaintiff’s class action seeks to represent all individuals who entered into cash advance agreements with FIA, setting forth as common class allegations that FIA “extended one or more promotional offers for balance transfers and cash advance checks where the transaction fees would be limited to 3% of each advance” and that the FIA contracts “stipulated that the maximum allowable transaction fee was $75,” but that FIA charged cash advance fees in excess of that agreed amount. Levitansky, at 760. Defense attorneys removed the class action complaint to federal court under the National Bank Act; plaintiff filed a motion to remand the class action on the ground that the complaint set forth a state-law breach of contract claim. Id.

Continue reading "Removal Class Action Defense Cases- Levitanksy v. FIA: Ohio Federal Court Holds That Putative Class Action Stated Breach Of Contract Claim Warranting Remand Of Class Action Complaint To State Court" »

Posted In: Removal & Remand, Class Action Court Decisions