Class Action Defense Blog

In order to assist class action defense attorneys who defends against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for public availability of information in 15 U.S.C. § 78x, which provides as follows:

§ 78x. Public availability of information

(a) “Records” defined

For purposes of section 552 of title 5 the term “records” includes all applications, statements, reports, contracts, correspondence, notices, and other documents filed with or otherwise obtained by the Commission pursuant to this chapter or otherwise.

(b) Disclosure or personal use

It shall be unlawful for any member, officer, or employee of the Commission to disclose to any person other than a member, officer, or employee of the Commission, or to use for personal benefit, any information contained in any application, statement, report, contract, correspondence, notice, or other document filed with or otherwise obtained by the Commission

(1) in contravention of the rules and regulations of the Commission under section 552 of title 5, or

(2) in circumstances where the Commission has determined pursuant to such rules to accord confidential treatment to such information.

Continue reading "15 U.S.C. § 78x—Public Availability Of Information Pursuant To The Private Securities Litigation Reform Act (PSLRA)" »

Posted In: Statutes & Rules

California class action defense attorneys will face a substantial number of new class action claims based the latest court filings this past week. To allow the class action defense lawyer to anticipate claims against which she or he may have to defend, we provide weekly, unofficial summaries of the legal categories for class actions 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. This report covers the time period from May 25 – May 31, 2007, and while labor law class action cases have been logging an impressive streak of heading up the list of new class action filings, this past week ADA (Americans with Disabilities Act) class actions claimed the top spot. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 50 class action lawsuits were filed in these California state and federal courts during that time period, of which 17 (34%) new class action suits involve ADA claims. Employment law class action lawsuits came in a close second, with 16 new filings (32%). The third place category consists of six (6) new unfair business practice class action lawsuits, which include claims of false advertising.

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 Agrees with Plaintiffs’ Request to Transfer Class Actions to Middle District of Florida

Eight nationwide and statewide class action lawsuits were filed against Imagitas arising out of “the propriety of Imagitas’s performance of certain contracts involving the departments of motor vehicles of six states” alleging that the company violated the federal Drivers’ Privacy Protection Act, 18 U.S.C. §§ 2721 et seq. In re Imagitas, Inc., Drivers’ Privacy Protection Act Litig., 486 F.Supp.2d 1371 (Jud.Pan.Mult.Lit. May 8, 2007) [Slip Opn., at 1-2]. 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 Ohio; while some class action plaintiffs favored centralization and others opposed it, all responding plaintiffs argued that if the motion was granted then the class action should be transferred to the Middle District of Florida. Id., at 1. The Judicial Panel rejected objections to coordination of the class actions, explaining that the lawsuits involve “competing class allegations and involve allegations that could spawn challenging procedural questions and pose the risk of inconsistent and/or conflicting rulings.” Id., at 2. Accordingly, the Judicial Panel granted the defense motion to centralize the class actions, but rejected the proposed transferee court; rather, the Panel agreed with the class action plaintiffs that the Middle District of Florida was the appropriate court because “it “was the first action filed, [and] is relatively more procedurally advanced than the other actions." Id.

Download PDF file of In re Imagitas Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

Discriminatory Employment Practice Acts that occur Prior to EEOC Charging Period are Time-Barred even if the Discriminatory Acts had “Continuing Effects” During the EEOC Charging Period Supreme Court Holds

In a case that will have substantial impact of Title VII class action lawsuits, a divided Supreme Court held that the limitations period on a Title VII pay discrimination claim begins to run when the discriminatory act occurs. Ledbetter v. Goodyear Tire & Rubber Co., Inc., __ U.S. __, 2007 WL 1528298, *2 (May 29, 2007). Plaintiff had worked for Goodyear for almost 20 years, from 1979 to 1998, and received or was denied raises based on performance evaluations by her supervisors, id., at *3. Plaintiff filed a questionnaire with the Equal Employment Opportunity Commission (EEOC) in March 1998 alleging sex discrimination, and in July filed a formal charge with the EEOC. Id. In November 1998, after taking early retirement, plaintiff filed suit against Goodyear asserting several claims, including a Title VII pay discrimination allegation. Id. The Supreme Court summarized the district court proceedings at page *3 as follows:

The District Court granted summary judgment in favor of Goodyear on several of Ledbetter’s claims, including her Equal Pay Act claim, but allowed others, including her Title VII pay discrimination claim, to proceed to trial. In support of this latter claim, Ledbetter introduced evidence that during the course of her employment several supervisors had given her poor evaluations because of her sex, that as a result of these evaluations her pay was not increased as much as it would have been if she had been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment. Toward the end of her time with Goodyear, she was being paid significantly less than any of her male colleagues. Goodyear maintained that the evaluations had been nondiscriminatory, but the jury found for Ledbetter and awarded her backpay and damages.

Continue reading "Class Action Defense Issues-Ledbetter v. Goodyear: Divided Supreme Court Holds Statute Of Limitations For Title VII Pay Discrimination Claims Begins To Run When Discriminatory Act Occurs" »

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

Federal Court Refuses to Exercise Supplemental Jurisdiction over State Law Wage and Hour Class Action Claims Because of Substantial Variance in State Laws and Conflict with FLSA (Fair Labor Standards Act) Opt-In Provision

Employees filed a putative class action in Connecticut federal court against Metropolitan Property alleging that the employer failed to pay overtime in violation of the federal Fair Labor Standards Act (FLSA) and Connecticut state labor laws. Neary v. Metropolitan Prop. & Cas. Ins. Co., 472 F.Supp.2d 247, 248 (D. Conn. 2007). The class action complaint included causes of action for a class action claim under FRCP Rule 23(b)(3) “for violation of state wage and hour laws ‘in each state in which each [p]laintiff worked’ (Count 4),” as well as “a class action claim under [FRCP Rule 23(b)(1)] for violation of state wage and hour laws ‘of the various states in which [p]laintiffs worked’ (Count 5).” Id. Defense attorneys moved to dismiss these class action claims on the grounds that the state law opt-out claims presented an irreconcilable conflict with the FLSA’s opt-in requirement. Id., at 249. The district court agreed.

Plaintiff’s class action complaint alleged that defendant insures vehicles nationwide and engaged in the practice of classifying field adjusters, field appraisers and outside adjusters as exempt from overtime in violation of the FLSA “and the wage and hour laws of the various states in which [p]laintiffs performed work for [d]efendant.” Neary, at 249. Plaintiff purported to bring the class action on behalf of a nationwide class alleging that certification was appropriate under Rule 23(b)(3). Id., at 249-50. The defense moved to dismiss Counts 4 and 5 of the class action complaint “pursuant to the Rules Enabling Act, 28 U.S.C. § 2072(b), on the basis that the class action procedures in Rule 23 irreconcilably conflict with Section 216(b) of the FLSA which expressly limits the scope of representative lawsuits seeking overtime pay to individuals who affirmative opt-in to the action.” Id., at 250. The district court granted the defense motion, but not for the reasons advanced.

Continue reading "Class Action Defense Cases-Neary v. Metropolitan Property: Connecticut Federal Court Grants Defense Motion In FLSA Class Action To Dismiss Class Action Claims Based On State Wage And Hour Laws" »

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

Federal Court Rejects Defense Constitutional Objection to Certification of Class Action and Holds Rule 23(b)(3) Predominance Test Satisfied in Class Action Premised on Minnesota Consumer Fraud Laws and Common Law for Unjust Enrichment because Minnesota’s Contacts with Non-Resident Class Members were Significant Enough to Permit Application of Minnesota Law to all Class Action Claims

Plaintiffs filed a class action against Allianz Life Insurance alleging consumer fraud claims arising out of the marketing of certain annuity products to senior citizens. Mooney v. Allianz Life Ins. Co., __ F.Supp.2d __ (D. Minn. May 10, 2007) [Slip Opn., at 2]. Plaintiffs moved for certification of a class action; defense attorneys objected in part on the grounds that predominance did not exist under Rule 23(b)(3) because of choice-of-law and conflicts-of-law issues. Id. The district court denied class action treatment, concluding that “because Plaintiffs had not performed the conflicts-of-law and choice-of-law analyses required by the Eighth Circuit’s opinion in In re St. Jude Medical, Inc., 425 F.3d 1116, 1120-21 (8th Cir. 2005), the Court was unable to determine whether class-wide questions of law predominate, or whether class-wide treatment is superior to other means of resolving this controversy.” Id. The court otherwise found that all of the class action requirements of Rule 23(a) had been met, id. Plaintiffs and defense filed supplemental briefing on the predominance issue, and the federal court certified a class action as requested.

Rule 23(b)(3) requires that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.” Plaintiffs argued that this test was met because Minnesota’s consumer fraud statutes and common law regarding unjust enrichment constitutionally may be applied to the claims of each class member; defense attorneys countered that “the law of each class member’s home state must be applied and therefore individualized questions of law predominate.” Mooney, at 3. According to the defense, applying Minnesota law to the claims of out-of-state residents is unconstitutional; alternatively, the defense argued that Minnesota’s choice of law rules required that the claims of each class member be examined under the laws of the states in which the class members lived. Id. The district court rejected the defense arguments and granted class certification.

Continue reading "Class Action Defense Cases-Mooney v. Allianz Life: Minnesota Court Certifies Class Action Holding Class Action Premised On State Consumer Fraud Laws And Common Law Unjust Enrichment Could Be Applied To Non-Resident Class Members" »

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

In a prior article, we reported that the United States District Court for the Southern District of New York had granted plaintiffs’ motion to certify a securities class action against French company Vivendi and two of its individual officers – that article may be found here. The court’s Revised Memorandum Opinion and Order may be found at In re Vivendi Universal, S.A. Sec. Litig., 242 F.R.D. 76 (S.D.N.Y. 2007). A copy of the district court’s revised opinion and order granting class action treatment is provided.

Download PDF file of In re Vivendi Universal

Posted In: Class Actions In The News

As Matter of First Impression, California Appellate Court Holds that Department of Insurance Interpretation of Statute was not Entitled to Deference and that Trial Court Erred in Holding that Interest Charged by Insurer for Installment Payments Was a “Premium” Required to be Disclosed Under California law

Plaintiff filed a putative class action against her insurer, Interinsurance Exchange of the Automobile Club (IEAC) alleging violations of California law in that the insurer failed to advise her of the fees associated with paying her insurance premium in installments rather than in one lump sum. Interinsurance Exch. of the Auto. Club v. Superior Court, ___ Cal.App.4th ___, 56 Cal.Rptr.3d 421, 423 (Cal.App. March 26, 2007). Defense and plaintiff attorneys moved for summary judgment; the trial court granted plaintiff’s motion and denied the defense motion, id. Defense attorneys filed a petition for writ of mandate with the Court of Appeal and the appellate court reversed, holding that a “premium” within the meaning of the applicable California law “does not include charges imposed for making payments of the annual premium in installments” and, accordingly, IEAC did not violate California law and was entitled to summary judgment against plaintiff’s class action complaint. Id. Defense attorneys filed a petition for writ relief with the Court of Appeal; the appellate court accepted the case in part because it presented an issue of first impression, and ultimately reversed the trial court.

In 2002, plaintiff obtained car insurance from IEAC with an annual premium of $1049, and in 2002 and 2003 she paid the premium in one lump sum. IEAC, at 423. Her renewal statement for 2004 reflected an annual premium of $986 (after a $63 discount), and provided plaintiff the option of paying the premium in one lump sum or in 9 installments “subject to additional charges for interest at a rate of 17.99 percent per year and requiring payment of only the first installment of $53.60,” id. Plaintiff understood the notice and “understood an election to pay the annual premium in installments would subject her to interest charges”; nonetheless, she “elected to pay the annual premium in installments rather than in one lump sum.” Id. The following year plaintiff received another renewal notice, this one reflecting an annual premium of $846, and again providing her with “the option of paying the $846 annual net premium in either one lump sum or nine monthly installments, subject to additional charges for interest at a rate of 18 percent per year and requiring payment initially of only the first installment of $34.48.” Id., at 424. Plaintiff again selected the installment option, id.

Continue reading "Class Action Defense Cases-Interinsurance v. Superior Court: Defense Entitled To Judgment In Class Action Because Interest Charged On Installment Payments For Auto Policy Was Not A "Premium" Under California Law" »

Posted In: Class Action Court Decisions

Defense Motion to Dismiss Class Action Allegations Based on Foreign Conduct Granted because no Evidence of "Direct, Substantial and Foreseeable Effect on U.S. Commerce" as Required by Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) Delaware District Court Holds

After Advanced Micro Devices (AMD) filed suit Intel alleging Sherman Act antitrust claims and violations of California’s unfair competition laws, several class action lawsuits were filed and ultimately consolidated with the AMD lawsuit. In re Intel Corp. Microprocessor Antitrust Litig., 476 F.Supp.2d 452, 453 (D. Del. 2007). The first amended class action complaint alleged that Intel “engaged in anticompetitive conduct in the United States which has resulted in Intel obtaining an unlawful world-wide monopoly over the x86 microprocessor market” thereby increasing the cost of the x86 to consumers. Id., at 453-54. In addition to Sherman Act claims, the class action complaint included claims under the laws of 20 states for antitrust/restraint of trade, and 23 states for unfair competition/consumer protection, and prayed for injunctive relief, monetary damages (including punitive and treble damages), disgorgement of profits, and establishment of a constructive trust. Id., at 454. Defense attorneys moved to dismiss plaintiffs’ “foreign conduct claims” under Rule 12(b)(1) for lack of subject matter jurisdiction, id.; the district court granted the defense motion.

By way of background, AMD’s complaint against Intel included foreign conduct allegations that on Intel’s motion the district court dismissed for lack of jurisdiction. In re Intel, at 455. The class action complaint similarly included allegations of foreign conduct: the class plaintiffs “allege that the weakening of AMD in the market resulted in Intel charging higher prices overseas to third parties for microprocessors who then installed these higher priced Intel chips into computers that were eventually sold in the United States Market, which in turn led to higher retail prices for those computers in the United States.” Id. Intel argued that the foreign conduct theory in the class action complaint is even more attenuated than the claim the Court struck from AMD's Complaint and, accordingly, the foreign conduct claims should be dismissed for lack of jurisdiction under the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA). Id. Specifically, FTAIA requires evidence of a “direct, substantial and foreseeable effect on U.S. commerce” and Intel argued that the class action complaint failed to include any such evidence. Id.

Continue reading "Class Action Defense Cases-In re Intel: Delaware Federal Court Holds Sherman Act Class Action Claims Premised On Foreign Conduct Barred By Foreign Trade Antitrust Improvements Act (FTAIA)" »

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). For purposes of private securities class actions, Congress set forth rules, regulations and orders, and provisions governing annual reports, in 15 U.S.C. § 78w, which provides:

§ 78w. Rules, regulations, and orders; annual reports

(a) Power to make rules and regulations; considerations; public disclosure

(1) The Commission, the Board of Governors of the Federal Reserve System, and the other agencies enumerated in section 78c (a)(34) of this title shall each have power to make such rules and regulations as may be necessary or appropriate to implement the provisions of this chapter for which they are responsible or for the execution of the functions vested in them by this chapter, and may for such purposes classify persons, securities, transactions, statements, applications, reports, and other matters within their respective jurisdictions, and prescribe greater, lesser, or different requirements for different classes thereof. No provision of this chapter imposing any liability shall apply to any act done or omitted in good faith in conformity with a rule, regulation, or order of the Commission, the Board of Governors of the Federal Reserve System, other agency enumerated in section 78c (a)(34) of this title, or any self-regulatory organization, notwithstanding that such rule, regulation, or order may thereafter be amended or rescinded or determined by judicial or other authority to be invalid for any reason.

Continue reading "15 U.S.C. § 78w—Rules, Regulations, Orders And Annual Reports Under The Private Securities Litigation Reform Act (PSLRA)" »

Posted In: Statutes & Rules

As a resource to California 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 past week, only 36 new class action cases were filed in these courts. True to the norm, more labor law class action lawsuits were filed than any other category in the weekly class action filings. This report covers the time period from May 18 – May 24, 2007, during which time 17 new employment-related class action cases (47%) were filed in the California state and federal courts listed above. Four securities fraud class action lawsuits were filed, accounting for 11% of the new class actions. No other category met the 10% threshold.

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 but Rejects Moving Plaintiff's Request to Transfer Class Actions to Southern District of Iowa

Class action lawsuits were filed in Iowa and California federal courts against Midland National Life Insurance Company alleging deceptive marketing and sale of annuities to seniors. In re Midland Nat’l Life Ins. Co. Annuity Sales Prac. Litig., 484 F.Supp.2d 1355, 1356 (Jud.Pan.Mult.Lit. May, 2 2007). Plaintiff’s lawyer in the Iowa class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Southern District of Iowa; defense attorneys agreed that pretrial coordination of the class actions was appropriate and agreed with the proposed transferee court. Id. The California plaintiffs did not oppose centralization of the class action lawsuits but argued that the cases should be transferred to the Central District of California. Id. The Judicial Panel granted the motion to centralize the class actions, and concluded that while either of the federal court would be an appropriate transferee court, the class action litigation should be centralized in the Central District of California “because the California action appears to be slightly broader and somewhat more procedurally advanced than the Iowa action.” Id.

Download PDF file of In re Midland National Life Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

Sherman Act § 1 Class Action Complaint Must Allege Agreement not Merely Parallel Conduct Supreme Court Holds

Plaintiffs filed a putative class action against various “Baby Bells” defendants alleging violations of the § 1 of the Sherman Act, which prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations.” Bell Atlantic Corp. v. Twombly, __ U.S. __, 127 S.Ct. 1955, 2007 WL 1461066, *4 (May 21, 2007). Defense attorneys moved to dismiss the class action on the grounds that defendants were acting in their economic self-interest and that evidence of “parallel behavior” among them is insufficient to establish a conspiracy in violation of the Sherman Act, id., at *5. The district court agreed and granted the defense motion to dismiss, but the Second Circuit reversed. The Supreme Court “granted certiorari to address the proper standard for pleading an antitrust conspiracy through allegations of parallel conduct.” Id., at *6. The Supreme Court explained at page *4, “The question in this putative class action is whether a § 1 complaint can survive a motion to dismiss when it alleges that major telecommunications providers engaged in certain parallel conduct unfavorable to competition, absent some factual context suggesting agreement, as distinct from identical, independent action. We hold that such a complaint should be dismissed.”

Following the divestiture of AT&T’s local telephone service in 1984, regional telephone monopolies known as “Baby Bells” or “Incumbent Local Exchange Carriers” (ILECs) arose to provide local phone service but they were excluded from providing long-distance service. Twombly, at *4. In 1996, Congress enacted the Telecommunications Act of 1996 that permitted competition for local telephone service and authorized ILECs to enter the long-distance market, id. Plaintiffs’ class action complaint named BellSouth Corp., Qwest Communications, SBC Communications and Verizon, and alleged that these ILECs control at least 90% of the local telephone service market in the 48 contiguous states. Id., at *4 n.1. In essence, plaintiffs allege that defendants must have conspired in violation of § 1 of the Sherman Act, and that this conspiracy may be “inferred from the ILECs’ common failure ‘meaningfully [to] pursu[e]’ ‘attractive business opportunit[ies]’ in contiguous markets where they possessed ‘substantial competitive advantages.’” Id., at *5. The gravamen of the class action complaint was as follows:

Continue reading "Class Action Defense Cases-Bell Atlantic v. Twombly: Supreme Circuit Holds Allegations Of Parallel Conduct Unfavorable To Competition Insufficient To Survive Motion To Dismiss Absent Facts Evidencing Agreement Rather Than Identical Independent Action" »

Posted In: Class Action Court Decisions

Political Question Doctrine does not Preclude Court from Considering Class Action Alleging that Oil Industry Activities Dredging Marshlands Increased Hurricane Damage but Class Action Claims Fail to State Claims Under Louisiana Law Federal Court Holds

Two class actions - subsequently consolidated by the district court because they “raise[d] identical issues of law and fact,” leading to the filing of an joint amended class action complaint - were filed against various oil and gas companies following Hurricane Katrina and Hurricane Rita seeking to hold defendants “accountable for their activities that the plaintiffs allege contributed significantly to the storms' destructive impact in south Louisiana”; the class action alleged that defendants’ activities damaged marshlands “thereby weakening a protective barrier against hurricanes and exposing Louisianans to the prospect of greater harm from these storms.” Barasich v. Columbia Gulf Transmission Co., 467 F.Supp.2d 676, 678 (E.D. La. 2006). Defense attorneys moved to dismiss the class action complaint under Rule 12(b)(6) on the grounds that the claims involved political questions and therefore were nonjusticiable, and for failure to state a claim, id., at 680. The federal court rejected defense arguments that the class action claims were not justiciable, but granted the motion to dismiss the complaint for failure to state a claim.

The theory underlying the class action is (1) Louisiana’s coastal marshlands protect the state from hurricane damage, (2) defendants’ oil producing and transmission activities included dredging canals through these marshlands, destroying millions of acres of marshlands thereby “depriving inland communities . . . of their natural protection from hurricane winds and accompanying storm surge.” Barasich, at 679. The second amended class action complaint alleges “class members suffered personal injury and/or death, property damage, and the loss of the wetlands' value as storm protection” and prayed for “all damages reasonable in the premises, including restoration.” Id., at 679-80. Defense attorneys moved to dismiss the class action complaint on two grounds: “1) the subject matter of plaintiffs' action is nonjusticiable because it concerns a political question, and 2) plaintiffs do not state a claim upon which relief may be granted because they cannot prove the requisite elements for recovery as a matter of law under any available theory.” Id., at 680.

Continue reading "Class Action Defense Cases-Barasich v. Columbia Gulf: Louisiana Federal Court Grants Defense Motion To Dismiss Class Action Alleging Defendants Damaged Marshlands Thus Contributing To Hurricane Damage" »

Posted In: Class Action Court Decisions

California Appellate Court Holds that Class Action Plaintiff cannot be Compelled to Arbitrate Claims Simply Because Class Members Signed Arbitration Agreements, as that Fact is not Relevant Until Motion to Certify Class Action, and in any Event Injunctive Relief Claims were not Subject to Arbitration

Plaintiff filed a putative class action against Southern California University for Professional Studies (SCUPS) alleging violations of California’s Consumer Legal Remedies Act (CLRA) and Unfair Competition Law (UCL) for failing to refund prepaid tuitions to its students. Lee v. Southern Cal. Univ. for Prof. Studies, 148 Cal.App.4th 782, 784 (Cal.App. 2007). Defense attorneys moved to compel arbitration, arguing that even though the class action representative was not directly subject to arbitration, 408 of the 519 putative class members had signed enrollment agreements with arbitration clauses and plaintiff, as their representative, was therefore bound to arbitrate her claims. Id., at 785. The trial court disagreed, denying the defense motion to compel arbitration of the putative class action. SCUPS appealed, and the appellate court affirmed.

Continue reading "Class Action Defense Cases-Lee v. Southern California: Class Action Plaintiff In Putative CLRA/UCL Class Action Not Bound By Arbitration Agreements Signed By Class Members California Court Holds" »

Posted In: Arbitration, Class Action Court Decisions

To Invoke Presumption of Reliance in Securities Fraud Class Action Based on Fraud on the Market Doctrine, Plaintiff must Establish Loss Causation at Time of Motion to Certify Class Action Fifth Circuit Holds

Plaintiffs filed a securities fraud class action against telecommunications provider Allegiance Telecom and others alleging violations of section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 based on an inaccurate statement concerning the number of line installations during the first three quarters of 2001 and a drop in stock price following a restated line count announced during the fourth quarter of that year. Oscar Private Equity Inv. v. Allegiance Telecom, Inc., 487 F.3d 261, 2007 WL 1430225, *1 (5th Cir. May 16, 2007). Plaintiffs’ lawyer moved to certify the litigation as a class action, advancing a “fraud on the market” theory to establish reliance by class members; defense attorneys objected to class action treatment, arguing that the restatement was not the cause of a drop in the stock price, id. The district court relied on the “fraud on the market” theory, rejected defense arguments, and certified a class action as requested. Id. The Fifth Circuit granted the defense leave to file an interlocutory appeal and reversed. The Circuit Court summarized its holding as follows: “We vacate the certification order and remand, persuaded that the class certified fails for wont of any showing that the market reacted to the corrective disclosure. Given the lethal force of certifying a class of purchasers of securities enabled by the fraud-on-the-market doctrine, we now in fairness insist that such a certification be supported by a showing of loss causation that targets the corrective disclosure appearing among other negative disclosures made at the same time.” Id. (italics added).

The details of the events that precipitated the filing of the class action complaint are set forth in the Note, below. The Fifth Circuit explained: “This dispute turns on whether the certification order properly relied upon the fraud-on-the-market theory. This theory permits a trial court to presume that each class member has satisfied the reliance element of their 10b-5 claim. Without this presumption, questions of individual reliance would predominate, and the proposed class would fail. Oscar, at *2 (footnotes omitted) (italics added). Under the fraud on the market theory, “Reliance is presumed if the plaintiffs can show that ‘(1) the defendant made public material misrepresentations, (2) the defendant's shares were traded in an efficient market, and (3) the plaintiffs traded shares between the time the misrepresentations were made and the time the truth was revealed.’” Id. (citation omitted). In the Fifth Circuit, it is insufficient for a plaintiff to show that defendant made a material misstatement; rather, “proof that the misstatement actually moved the market” is required, id., at *3. The Circuit Court explained at page *3:

Continue reading "Class Action Defense Cases-Oscar v. Allegiance: Fifth Circuit Holds That Loss Causation Must Be Established To Certify Securities Fraud Class Action And Criticizes Efficient Market Theory" »

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

To aid 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 commission hearings as part of the PSLRA in 15 U.S.C. § 78v, which provides as follows:

§ 78v. Hearings by Commission

Hearings may be public and may be held before the Commission, any member or members thereof, or any officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.

Posted In: Statutes & Rules

In order to assist California defense attorneys in anticipating the claims against which they may 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 past week, only 30 new class action cases were filed in these courts. Predictably, more employment-related class action lawsuits were filed than any other category in the weekly class action filings. This report covers the time period from May 11 – May 17, 2007, during which time 11 new class action cases (37%) were filed in the California state and federal courts listed above. Seven securities fraud class action lawsuits were filed, accounting for 23% of the new class actions. The only other categories to break the 10% threshold were unfair business practices class action cases, which include false advertising claims, and fraud class action cases, each of which had 3 new cases filed (10%).

Posted In: Class Actions In The News

Judicial Panel Grants Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 in the Northern District of California, Rejecting Request of Separately Moving and Non-Moving Plaintiffs to Transfer Class Actions to Alternative Districts

Twenty federal antitrust class action lawsuits were filed in four different states against various defendants alleging a “conspiracy to fix the price of thin film transistor-liquid crystal display (TFT-LCD) panels, which are used in computer monitors, flat panel television sets, and other electronic devices”; the majority of these class actions – 13 of the 20 – were filed in the Northern District of California, and three of the class actions were filed in the District of New Jersey. In re TFT-LCD (Flat Panel) Antitrust Litig., 483 F.Supp.2d 1353, 1353 (Jud.Pan.Mult.Lit. 2007). Plaintiffs’ lawyers in 8 of the Northern District of California class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 requesting centralization of the class action litigation in that district; however, plaintiff’s lawyer in one of the New Jersey cases moved the Panel for centralization in that district. Id. None of the parties opposed pretrial coordination of the class action lawsuits, but they did not agree on the appropriate transferee court. As the Panel summarized, “The majority support selection of the Northern District of California as transferee forum, while others urge the Panel to choose the District of New Jersey, the Southern District of New York, or the Western District of Washington.” The Judicial Panel granted the motion to centralize the class actions and concluded that the Northern District of California is the appropriate transferee court because "over 50 of the actions of which the Panel has been notified have been brought in that district, and it appears to be somewhat more conveniently located for the significant number of Asia-based defendants." Id., at 1354.

Download PDF file of In re TFT-LCD (Flat Panel) Antitrust Litigation Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

District Court Erred in Dismissing Employment Class Action and Compelling Arbitration Because “Take it or Leave it” Option was Procedurally Unconscionable Despite 3-Months’ Notice of Arbitration Clause and Limitations Period for Asserting Claims Against Employer was Substantively Unconscionable Ninth Circuit Holds

In February 2004, plaintiff, a paralegal at O’Melveny & Myers until July 2003, filed a class action against her former employer alleging violations of the federal Fair Labor Standards Act (FLSA) and California state laws for failing to pay overtime and failing to provide meal and rest periods. Davis v. O’Melveny & Myers, ___ F.3d ___ (9th Cir. May 14, 2007) [Slip Opn., at 5605-07]. The district court granted the defense motion to dismiss the class action and compel arbitration based on a Dispute Resolution Program that had been distributed to employees via interoffice mail and via the office intranet site. Id., at 5606. The class action alleged, in part, that the DRP was unconscionable and enforceable, id., at 5607. On appeal, the Ninth Circuit stated that whether the class action claims fell within the scope of the DRP was not in dispute; the issue, rather, was whether the arbitration provision was enforceable. Id., at 5608.

Preliminarily, the Ninth Circuit held that “the question of whether O’Melveny’s arbitration agreement is unconscionable is for a court to decide” rather than an arbitrator. Davis, at 5610 (citations omitted). It then addressed whether the arbitration clause was procedurally and substantively unconscionable, as required under California law, id., at 5611 (citations omitted). The Court of Appeals had little difficulty finding the provision procedurally unconscionable, holding that it was prepared by a “sophisticated employer - a national and international law firm, no less” and that, even though the arbitration clause was not hidden and employees were not taken by surprise, “in a very real sense the DRP was ‘take it or leave it.’” Id., at 5611-12. The only way for an employee to “opt out” of the arbitration provision was to leave the company, and California and Ninth Circuit decisional law disapproves of such provisions in employment agreements. Id., at 5612-13 (citations omitted).

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