Class Action Defense Blog

Whether Medical Monitoring of Persons who Ingested Vioxx is Available cannot be Determined on “Bare Pleadings” but Requires Development of Evidence, as does Impact on Viability of Class Action due to Absence of Physical Injuries Caused by Vioxx, New Jersey State Court Holds

Plaintiffs filed a putative products liability class action against Merck in New Jersey state court purporting to represent individuals “who had taken the drug Vioxx in any dose for at least six consecutive weeks at any time between May 20, 1999 and September 30, 2004” and alleging damages arising from the use of Vioxx. Sinclair v. Merck & Co., Inc., 913 A.2d 832, 833-34 (N.J.App.Div. 2007). Though plaintiffs did not claim to have suffered any physical injuries from using Vioxx, the class action complaint prayed for the formation of “a court-administered medical screening program, funded by Merck, ‘to provide for and/or reimburse medical and diagnostic tests for each member of the Class to detect [UMIs] and other latent or unrecognized injuries and, if such injuries are detected and diagnosed, to educate Plaintiffs about available treatment strategies.’” Id., at 834. Plaintiffs argued that “the cost of diagnostic testing represented an ascertainable economic loss for which they were entitled to compensation.” Id. Defense attorneys moved to dismiss the class action on the ground that a cause of action for medical monitoring cannot stand; the trial court agreed and granted the motion. Id. The Superior Court of New Jersey, Appellate Division, reversed, holding that the dismissal of the class action complaint “prematurely terminated plaintiffs' opportunity to establish the existence of a legally cognizable claim.” Id.

The sole issue on appeal concerned the viability of plaintiffs' medical monitoring claim. Sinclair, at 834. The trial court had relied upon two opinions: Mauro v. Owens-Corning Fiberglas Corp., 542 A.2d 16 (N.J.App.Div. 1988), aff'd sub. nom., Mauro v. Raymark Indus., Inc., 561 A.2d 257 (N.J. 1989) and Theer v. Philip Carey Co., 611 A.2d 148 (N.J.App.Div. 1992), rev'd, 628 A.2d 724 (N.J. 1993). It concluded that “pure” products liability cases were different from toxic tort claims, and opined that the New Jersey Supreme Court would not extend the availability of medical monitoring as a remedy to the Vioxx class action claims; accordingly, it dismissed the class action complaint in its entirety. Id.

Continue reading "Vioxx Class Action Defense Case-Sinclair v. Merck: New Jersey Appellate Court Reinstates Vioxx Class Action Against Merck For Development Of Evidence Regarding Availability Of Medical Monitoring As Relief" »

Posted In: Class Action Court Decisions

As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations prohibiting kickbacks and unearned fees are set forth in § 3500.14, which provides:

§ 3500.14. Prohibition against kickbacks and unearned fees

(a) Section 8 violation. Any violation of this section is a violation of section 8 of RESPA (12 U.S.C. 2607) and is subject to enforcement as such under § 3500.19.

(b) No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in § 3500.14(g)(1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.

(c) No split of charges except for actual services performed. No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section. The source of the payment does not determine whether or not a service is compensable. Nor may the prohibitions of this Part be avoided by creating an arrangement wherein the purchaser of services splits the fee.

Continue reading "24 CFR § 3500.14— Prohibition Against Kickbacks And Unearned Fees Under Regulation X (Real Estate Settlement Procedures Act-RESPA)" »

Posted In: Statutes & Rules

To aid defense attorneys in anticipating the claims against which they may have to defend in California, we provide weekly, unofficial summaries of the legal categories for new 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. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Employment law class action cases generally top the list, often by a wide margin, and during the past that was particularly true. This report covers the time period from March 16 – March 22, 2007, during which time approximately 59 class action lawsuits were filed in these California state and federal courts. Labor law class action filings accounted for nearly half, with 27 new lawsuits (46%). The only other categories of cases to break the 10% threshold involved unfair competition law (UCL) claims, which include false advertising class action cases, and securities law claims, each of which had 7 new class action filings (12%).

Posted In: Class Actions In The News

As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning questions or suggestions from public and copies of public guidance documents are set forth in § 3500.13, which provides:

§ 3500.13. Relation to State laws

(a) State laws that are inconsistent with RESPA or this part are preempted to the extent of the inconsistency. However, RESPA and these regulations do not annul, alter, affect, or exempt any person subject to their provisions from complying with the laws of any State with respect to settlement practices, except to the extent of the inconsistency.

(b) Upon request by any person, the Secretary is authorized to determine if inconsistencies with State law exist; in doing so, the Secretary shall consult with appropriate Federal agencies.

(1) The Secretary may not determine that a State law or regulation is inconsistent with any provision of RESPA or this part, if the Secretary determines that such law or regulation gives greater protection to the consumer.

(2) In determining whether provisions of State law or regulations concerning affiliated business arrangements are inconsistent with RESPA or this part, the Secretary may not construe those provisions that impose more stringent limitations on affiliated business arrangements as inconsistent with RESPA so long as they give more protection to consumers and/or competition.

Continue reading "24 CFR § 3500.13—Questions Or Suggestions From Public And Copies Of Public Guidance Documents Under Regulation X (Real Estate Settlement Procedures Act-RESPA)" »

Posted In: Statutes & Rules

Class Action Certification of Slab Case Insurance Claims Against Homeowners’ Insurer Inappropriate Because Individual Proof Issues Exist in Each Case so the Claims Fail to Satisfy the Typicality Requirement for Class Actions Under Rule 23 Mississippi Federal Court Holds

Plaintiff filed a class action against her homeowners insurance carrier, State Farm, alleging that after Hurricane Katrina totally destroyed her home, State Farm had improperly denied coverage “on the grounds that the destruction of the insured property was caused solely by water in the form of storm surge flooding, a peril excluded under the terms of the policy at issue.” Guice v. State Farm Fire & Cas. Co., Civil Action No.1:06CV001 LTS-RHW (S.D. Miss. March 22, 2007) [Slip Opn., at 1]. Plaintiff moved the court to certify a class action against State Farm on behalf of homeowners whose properties fall within the category of “slab cases” – viz., homes where Hurricane Katrina left only the foundation. Id. The district court denied plaintiff’s motion, id., at 2, and plaintiff requested reconsideration of the class action certification issue, id., at 1. The district court denied plaintiff’s motion, reaffirming that the slab cases against State Farm are not appropriate for class action treatment.

The federal court began its analysis by noting that the practical effect of granting plaintiff’s motion would be “entry of judgment as a matter of law for the liability limits application to the ‘slab cases’ under the State Farm homeowners policies that applied to those properties.” Slip Opn., at 1. However, while at the time of the first class action certification motion none of the individual “slab case” lawsuits against State Farm had been tried, the federal court now had the benefit of having presided over three such cases, explaining at page 2:

Continue reading "State Farm/Hurricane Katrina Class Action Defense Cases—Guice v. State Farm: Mississippi Federal Court Rejects Effort To Certify “Slab Case” Class Action Against State Farm Due To Lack Of Typicality" »

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

Fifth Circuit Holds that District Court’s Erroneous Definition of “Deceptive Acts” Resulted in Mistaken Application of Presumption of Reliance in Certifying Class Action Against Banks, Necessitating Reversal of Class Certification Order

After Enron’s collapse in 2001, dozens of class action and individual lawsuits were filed against numerous defendants for violations of Section 10(b) of the Securities Exchange Act of 1924 and Rule 10b-5; more than 30 of these actions were consolidated in the district court for the Southern District of Texas and Regents of the University of California was named lead plaintiff. Regents of the Univ. of Cal. v. Credit Suisse First Boston (USA), Inc., 482 F.3d 372 (5th Cir. 2007) [Slip Opn., at 3]. “Years of discovery have ensued, and tens of millions of documents have been produced.” Id. In 2006, the district court granted plaintiff’s motion to certify the litigation as a class action, id., at 3-4. Defense attorneys sought and received permission from the Fifth Circuit to file an interlocutory appeal, id., at 2; the Circuit Court reversed.

As the Circuit Court admitted, the facts of this case are “difficult to detail” so we simply quote the Court’s broad summary: “Plaintiffs allege that defendants Credit Suisse First Boston (“Credit Suisse”), Merrill Lynch & Company, Inc. (“Merrill Lynch”), and Barclays Bank PLC (“Barclays Bank”) (collectively “the banks”) entered into partnerships and transactions that allowed Enron Corporation (“Enron”) to take liabilities off of its books temporarily and to book revenue from the transactions when it was actually incurring debt. The common feature of these transactions is that they allowed Enron to misstate its financial condition; there is no allegation that the banks were fiduciaries of the plaintiffs, that they improperly filed financial reports on Enron’s behalf, or that they engaged in wash sales or other manipulative activities directly in the market for Enron securities.” Slip Opn., at 2. In essence, the class actions alleged that the banks knew Enron executives were manipulating financial information to inflate the company’s stock price to maximize their personal compensation. Id.

In certifying the class action, the district court concluded that a “deceptive act” under Rule 10b-5(c)3 includes participation in a “transaction whose principal purpose and effect is to create a false appearance of revenues,” and that Rule 10b-5(a)’s prohibition of any “scheme . . . to defraud” creates joint and several liability for individuals who commit deceptive acts in furtherance of such a scheme. Slip Opn., at 3. At the Fifth Circuit explained, “The court’s theory of scheme liability considerably simplified finding commonality among the plaintiffs with respect to loss causation. The court stated that ‘a reasonable argument can be made that where a defendant knowingly engaged in a primary violation of the federal securities laws that was in furtherance of a larger scheme, it should be jointly and severally liable for the loss caused by the entire overarching scheme, including conduct of other scheme participants about which it knew nothing.’” Id., at 3-4. The district court also concluded that plaintiffs could rely on “classwide presumptions of reliance for omissions and fraud on the market” because it believed the banks breached a “duty not to engage in a fraudulent ‘scheme,’” and concluded that plaintiffs need not demonstrate market efficiency or reliance to invoke the fraud-on-the market presumption of reliance under Rule 10-5(a) or (c), believing this to be required only for claims under Rule 10-5(b). Id.

Continue reading "Enron Class Action Defense Case-Regents v. Credit Suisse: Certification Of Securities Class Action Seeking $40 Billion Overturned By Fifth Circuit Because Classwide Presumption Of Reliance Did Not Apply" »

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

California State Court Holds that Provision in Class Action Settlement for Cy Près Distribution of Unclaimed and Unredeemed Vouchers to Public Schools did not Violate State Law

In February 1999, plaintiffs filed a putative class action against Microsoft in state court alleging violations of California’s Cartwright Act and Unfair Competition Law based on “‘exclusionary and restrictive practices’ that resulted in software overcharges [for Windows and MS-DOS] passed on to the class members.” In re Microsoft I-V Cases, 135 Cal.App.4th 706, 710 (Cal.App. 2006). Because we focus here on the cy près distribution of unclaimed settlement proceeds, we note only that following a 1999 federal court trial of state and federal antitrust actions, the district court found against Microsoft, see United States v. Microsoft Corp., (D. D.C. 1999) 84 F.Supp.2d 9), and a wave of class action lawsuits against the company followed. Other California class action cases against Microsoft were coordinated with plaintiffs’ class action, and the coordinated cases became the Microsoft I-V Cases. After the court certified the coordinated litigation as a class action, the parties reached a $1.1 billion settlement and presented it to the court for approval. In re Microsoft I-V Cases, at 711. In approving the class action settlement, the trial court rejected the arguments by an objector to the cy près distribution of unclaimed settlement proceeds, and the objector appealed. The Court of Appeal affirmed.

In broad terms, the class action settlement provides for vouchers as direct compensation to members of the class, In re Microsoft I-V Cases, at 711-13. In the event that less than $1.1 billion was claimed, then the agreement provided for cy près distribution of the balance of the settlement proceeds such that Microsoft retained one-third of the unclaimed settlement funds, and two-thirds would be distributed to eligible schools. Id., at 713-14. Similarly, if consumers obtained vouchers but failed to redeem them, then Microsoft would retain one-third of the unused settlement funds, and two-thirds would be distributed to schools. Id., at 714. If schools failed to redeem the vouchers within six years, then they would be given to “other needy organizations in California” upon court approval. Id., at 715.

Continue reading "Microsoft Class Action Defense Case-In re Microsoft I-V Cases: California Appellate Court Affirms Cy Près Provision Of $1 Billion Class Action Settlement" »

Posted In: Class Action Court Decisions

Ninth Circuit Holds that Amendment of Class Action Cross-Complaint did not “Commence” New Action for Purposes of Removal under CAFA (Class Action Fairness Act of 2005), and that CAFA would not Avail a Plaintiff/Cross-Defendant Because CAFA Permits only a “Defendant” to Remove a Class Action to Federal Court

In December 2004, Progressive West Insurance Company filed a breach of contract lawsuit against its insured in California state court; on February 17, 2005 – the day before the effective date of the Class Action Fairness Act of 2005 (CAFA) – the insured filed a cross-complaint alleging violations of California’s Unfair Competition Law (UCL) and seeking to prosecute the cross-complaint as a class action. Progressive West Ins. Co. v. Preciado, 479 F.3d 1014 (9th Cir. March 6, 2007) [Slip Opn., 2]. The initial class action allegations were deficient, and in August 2006 the trial court granted plaintiff leave to amend the cross-complaint to assert the necessary allegations for a class action. Id. Progressive responded by removing the class action to federal court on the basis of CAFA, id.; the federal court remanded the class action to state court and the Ninth Circuit granted Progressive’s request for leave to appeal, id., at 3. The Court of Appeals affirmed the district court order, holding that CAFA did not confer federal court jurisdiction over the putative class action.

Urging the Ninth Circuit to follow the Seventh Circuit opinion in Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805 (7th Cir. 2005), Progressive argued that CAFA governed the class action complaint because under California’s “relation back” doctrine the “amended cross-complaint commenced a new action because it substantially changed the nature of the action from an individual action to a representative [class] action.” Slip Opn., at 4-5. The Ninth Circuit declined the invitation. The appellate court reaffirmed that a class action is “commenced” for purposes of removal under CAFA “when a suit becomes ‘a cognizable legal action in state court’ under ‘[a] state’s own laws and rules of procedure.’” Id., at 4 (citation omitted). California law deems an action “commenced” as of the date the complaint, or cross-complaint, is filed with the court, id. (citations omitted). Under California law, then, the class action complaint against Progressive “commenced” for purposes of CAFA on February 15, 2005 – the date the initial cross-complaint was filed. Id.

Continue reading "CAFA Class Action Defense Cases-Progressive West v. Preciado: Class Action Fairness Act Of 2005 (CAFA) Does Not Permit Cross-Defendant To Remove Class Action Cross-Complaint Ninth Circuit Holds" »

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

Under California Law, Class Action is not “Commenced” under Class Action Fairness Act of 2005 (CAFA) by Amending Complaint to Name Doe Defendant Ninth Circuit Holds

In August 2004, plaintiff Ball filed a class action in California state court against various Capital One entities alleging that certain provisions of defendants’ credit card contracts constituted unlawful business practices. McAtee v. Capital One, F.S.B., ___ F.3d ___ (9th Cir. March 16, 2007) [Slip Opn., 2-3]. Three months later, California voters passed Proposition 64 which necessitated that a plaintiff must have suffered actual injury in order to have standing to bring a claim under California’s Unfair Competition Law (UCL), and this new requirement applied to cases pending at the time of its passage. Id., at 3. In May 2005, the trial court precluded Ball from pursuing her claims against the named Capital One defendants; an amended complaint was filed naming McAtee as the new party-plaintiff. Id. Defense attorneys removed the class action to federal court on the basis of the Class Action Fairness Act of 2005 (CAFA), which became effective February 18, 2005, arguing that the substitution of plaintiffs constituted the commencement of a “new action” within the meaning of CAFA, id., at 3-4. The federal court remanded the action, holding that the class action had been commenced in August 2004 when Ball filed the original class action complaint, id., at 4. Following remand, McAtee amended the complaint to add Capital One Bank as a party-defendant and dismissing the original Capital One entities as defendants; defense attorneys again removed the class action to federal court under CAFA, and the federal court again granted plaintiff’s motion for remand. Id. The Ninth Circuit granted defendant’s petition for appeal and affirmed the remand order.

As a matter of first impression in the Ninth Circuit, the Court of Appeals addressed “whether substitution of a named defendant for a Doe defendant in a California state court action commences a civil action against the new named defendant within the meaning of CAFA.” Slip Opn., at 4-5. The question of when an action is “commenced” for purposes of removal under CAFA turns on state law, id., at 7-8. In this regard, the Ninth Circuit rejected the approach taken by some other federal courts that relies, at least in part, on state-law relation back doctrine. Id., at 8-9. The appellate court explained that “[w]hen the ultimate question before the court is whether to dismiss an action for lack of timeliness, it makes sense to apply the relationship back doctrine, for in such cases the very survival of the action is at issue.” Id., at 9. But the consequences are far less severe when the issue is commencement for purposes of jurisdiction only: “The case will be allowed to go forward, in some forum, whether CAFA applies or not. If CAFA applies, the action may go forward in federal court if a defendant files a timely motion for removal. If CAFA does not apply, the action must go forward in state court unless there is some other basis for removal to federal court.” Id., at 10. For this reason, the relation back doctrine simply does not apply to a determination of whether a class action filed in state court may be removed under CAFA: the Ninth Circuit “simply look[s] to the date on which the original complaint in the action was filed.” Id., at 11.

Continue reading "CAFA Class Action Defense Cases-McAtee v. Capital One: Ninth Circuit Holds That Naming Doe Defendant Does Not Commence New Action For Purposes Of Class Action Fairness Act Of 2005 (CAFA)" »

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

As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations restricting fees charged by lenders in connection with federally-related mortgage loans are set forth in § 3500.12, which provides:

§ 3500.12. No fee

No fee shall be imposed or charge made upon any other person, as a part of settlement costs or otherwise, by a lender in connection with a federally related mortgage loan made by it (or a loan for the purchase of a manufactured home), or by a servicer (as that term is defined under 12 U.S.C. 2605(i)(2)) for or on account of the preparation and distribution of the HUD-1 or HUD-1A settlement statement, escrow account statements required pursuant to section 10 of RESPA (12 U.S.C. 2609), or statements required by the Truth in Lending Act, 15 U.S.C. 1601 et seq.

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 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. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Typically, labor law class action cases lead the list of new filings by a wide margin, and this past week is no exception. This report covers the time period from March 9 – March 15, 2007. Approximately 45 class action lawsuits were filed in these California state and federal courts during that time period, 17 of which involve labor law claims (38%). Unfair competition law (UCL) claims, which include false advertising class action cases, came in second with 8 new filings (18%). The only other category of cases to break the 10% threshold involved antitrust class action lawsuits with 7 new filings (16%).

Posted In: Class Actions In The News

For class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The regulations concerning the mailing of documents are set forth in § 3500.11, which provides:

§ 3500.11. Mailing

The provisions of this part requiring or permitting mailing of documents shall be deemed to be satisfied by placing the document in the mail (whether or not received by the addressee) addressed to the addresses stated in the loan application or in other information submitted to or obtained by the lender at the time of loan application or submitted or obtained by the lender or settlement agent, except that a revised address shall be used where the lender or settlement agent has been expressly informed in writing of a change in address.

Posted In: Statutes & Rules

Judicial Panel Agrees with Plaintiffs and Defense that Class Action Cases Warranted Pretrial Coordination Pursuant to 28 U.S.C. § 1407, Rejecting Arguments of Sole Plaintiff's Lawyer in Opposition to Request

Five class action lawsuits (Connecticut, Illinois, Massachusetts, Missouri and Wisconsin) were filed against CitiFinancial Services and others alleging that certain prescreened mailings from Citifinancial violated the federal Fair Credit Reporting Act (FCRA) because defendants improperly used consumer reports for purposes of mailing prescreened offers of credit for loans to plaintiffs and potential class members. In re CitiFinancial Servs. Inc. Prescreened Offer Litig., ___ F.Supp.2d ___, 2007 WL 549358, *1 (Jud.Pan.Mult.Lit. February 15, 2007). Plaintiffs’ lawyers in the Connecticut and Illinois class actions moved the Judicial Panel filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the five class action lawsuits pursuant to 28 U.S.C. § 1407 in the Northern District of Illinois. Defense attorneys for the common defendant (CitiFinancial) and plaintiff’s lawyer in the Massachusetts class action supported the motion; the Wisconsin plaintiff opposed centralization. Id. The Judicial Panel granted the motion to centralize the class actions and agreed that the Northern District of Illinois was the appropriate transferee court. Id., at *2.

The Judicial Panel rejected the objection that the classes and issues of fact in the five class actions did not overlap, explaining at page *1:

Regardless of any differences among the actions, they raise common factual questions regarding Citifinancial's prescreening practices. Transfer 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, In re Joseph F. Smith Patent Litigation, 407 F.Supp. 1403, 1404 (J.P.M.L. 1976); 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.

Download PDF file of In re CitiFinancial Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

Class Action Lawsuits did not Warrant Pretrial Coordination Pursuant to 28 U.S.C. § 1407 Judicial Panel on Multidistrict Litigation (MDL) Holds

Three class action lawsuits were filed in California and Pennsylvania against various defendants involving crankshaft products liability. Defense attorneys for some of the defendants moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 to centralize the lawsuits for pretrial purposes in the Eastern District of Pennsylvania; plaintiffs in all class actions opposed pretrial coordination. In re Lycoming Crankshaft Prods. Liab. Litig., 473 F.Supp.2d 1380, 1380-81 (Jud. Pan.Mult.Lit. 2007). The Panel denied the defense motion, concluding that centralization of the class action cases was not warranted. The Panel explained, "This docket contains only three actions (two of which have been consolidated before the same judge) pending in two districts, and no overlap exists between the putative classes in the Pennsylvania actions and the California action. The proponents of centralization have failed to persuade us that any common questions of fact and law are sufficiently complex and/or numerous to justify Section 1407 transfer in this docket at this time. Alternatives to transfer exist that can minimize whatever possibilities there might be of duplicative discovery and/or inconsistent pretrial rulings." Id., at 1381 (citations omitted).

Posted In: Multidistrict Litigation, Class Action Court Decisions

Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 in the Easter District of Pennsylvania

Eight class action lawsuits were filed against CertainTeed Corp. and other defendants advancing negligence and products liability based on alleged defects in roofing shingles manufactured, warranted, and distributed by CertainTeed. In re CertainTeed Corp. Roofing Shingle Prods. Liab. Litig., ___ F.Supp.2d ___, 2007 WL 549356, *1 (Jud.Pan.Mult.Lit. February 15, 2007). Plaintiff's lawyer in one of the Pennsylvania class actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.S.C. § 1407 in the Eastern District of Pennsylvania; defense attorneys for the common defendant (CertainTeed) supported the motion. Id. The Judicial Panel reasoned that “Centralization under Section 1407 is necessary in order to eliminate duplicative discovery; prevent inconsistent pretrial rulings, particularly with respect to issues of class certification; and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also found that the Eastern District of Pennsylvania “stands out as an appropriate transferee forum” in light of the “agreement of all moving and responding parties to transfer,” id. Additionally, CertainTeed is headquartered in that district, as is its business unit responsible for the roofing shingles in question. Id.

Download PDF file of In re CertainTeed Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

Indictment of Milberg Weiss Warranted Removal of Firm as Vice-Chair of Plaintiffs’ Executive Committee in Antitrust Class Action Maine Federal Court Holds

Several state and federal antitrust class action lawsuits were filed against most of the major automobile manufacturers and distributors. In June 2003, the class actions were transferred to federal district court for the District of Maine by the Judicial Panel on Multidistrict Litigation. To assist in managing the complex class action litigation, in November 2003 the district court approved a Plaintiffs’ Executive Committee consisting of nine law firms, and appointed Milberg Weiss Bershad & Schulman as vice-chair. In re New Motor Vehicles Canadian Export Antitrust Litig., 466 F.Supp.2d 364, 366 (D. Me. 2006). Extensive law and motion practice followed, leading to the court certifying a class action as to one of the claims and to two proposed settlements (one for $35 million and one for $700,000), id., at 365-66. In May 2006, a Los Angeles federal grand jury indicted Milberg Weiss and two of its named partners (David Bershad and Steven Schulman) charging that the class action law firm “has engaged in a kickback scheme, illegally paying millions of dollars to certain individuals to represent them as named plaintiffs and thereby achieve the role of lead counsel in class action lawsuits” and seeking criminal forfeiture of hundreds of millions of dollars, id., at 365. Due to the fiduciary duties owed to class members, the district court sua sponte raised the issue of whether Milberg Weiss should continue to serve in a “leadership role,” id., at 365-66. Defense attorneys thereafter moved to disqualify Milberg Weiss from serving on the Executive Committee and from further participation in the class action litigation; the district court removed Milberg Weiss from the Executive Committee “even though the Indictment does not refer to activity in this civil litigation and neither of the two partners actively participating in this litigation has been accused of any misconduct,” but did not grant the request to exclude the firm entirely id., at 366.

Continue reading "Milberg Weiss Class Action Defense Case-In re New Motor Vehicles: Federal Court Removes Milberg Weiss As Lead Counsel In Multimillion Dollar Antitrust Class Action Litigation" »

Posted In: Class Action Court Decisions

CPLR 901(b) Precludes Antitrust Class Action Lawsuits Because Treble Damages Award Under the Donnelly Act is a Penalty New York Court of Appeals Holds

Plaintiff filed a putative class action against various defendants seeking damages under New York’s antitrust statute (the Donnelly Act) and deceptive practices statute, and an unjust enrichment theory, alleging that defendants overcharged tire manufacturers for chemicals used in the processing of rubber for tires. Based on the Donnelly Act, the class action complaint prayed for treble damages, costs and attorney fees. Sperry v. Crompton Corp., ___ N.E.2d ___, 2007 WL 527726 (N.Y. February 22, 2007) [Slip Opn., at 2-3.]. Defense attorneys moved to dismiss the class action. The trial court granted the motion, holding that “CPLR 901(b), which precludes a class action to collect a penalty unless specifically authorized by statute, barred the Donnelly Act claim.” Id., at 3. The lower court dismissed the remaining counts on grounds not relevant here. The New York Court of Appeals affirmed.

Plaintiff argued that a treble damages award under the Donnelly Act did not constitute a penalty within the meaning of CPLR 901(b), citing both New York law and federal case law that treble damages in antitrust actions “are primarily remedial in nature.” Sperry, at 3-4. The Court of Appeals disagreed. The High Court found it “evident” that the Legislature intended the penalty exception in CPLR 901(b) to preclude class action relief “where individual plaintiffs were afforded sufficient economic encouragement to institute actions (through statutory provisions awarding something beyond or unrelated to actual damages), unless a statute expressly authorized the option of class action status.” Id., at 9. The Court explained at page 9, “This means sense, given that class actions are designed in large part to incentivize plaintiffs to sue when the economic benefit would otherwise be too small, particularly when taking into account the court costs and attorneys’ fees typically incurred.”

Continue reading "Class Action Defense Cases-Sperry v. Crompton: New York Law Precludes Class Action Lawsuits That Seek To Collect Penalties Unless Expressly Allowed By Statute" »

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

California Appellate Court Affirms Summary Judgment in Favor of Defense Because no Evidence Supported Class Action Allegations that County Program Discriminated Against Women or Affected Women Disproportionately to Men

Plaintiff filed a putative class action against the County of Los Angeles alleging that it violated the federal Equal Pay Act because it paid female lawyers employed under the County’s “Auxiliary Legal Services” program (ALS) less than it paid male lawyers serving as County Counsel. Hall v. County of Los Angeles, ___ Cal.App..4th ___, 2007 WL 529963, *1 (Cal.App. February 22, 2007). Defense attorneys moved for summary judgment; the trial court granted the defense motion and the California Court of Appeal affirmed. The appellate court held that “the wage disparity between ALS and County Counsel was based on an acceptable business reason, which is a recognized ‘factor other than sex.’” Id., at *4 (citation omitted).

In 1984, in order to address a dramatic increase in juvenile court cases, the County formed ALS to supplement the legal services provided by County Counsel. The ALS attorneys were independent contractors, and by the express terms of their contracts they were employees of ALS, not the County. Hall, at *1. ALS was intended to allow the County to realize cost savings by hiring additional attorneys on “as needed” basis “without increasing the number of permanent classified County employees.” Id. “Similarly situated male and female lawyers at ALS were treated the same in terms of salary and benefits, and similarly situated male and female lawyers at County Counsel were treated the same in terms of salary and benefits.” Id., at *2. The class action complaint alleged, however, that there were more female lawyers at ALS than at County Counsel, and that female lawyers at ALS were not paid comparably with male lawyers at County Counsel. Id.

Continue reading "Class Action Defense Cases-Hall v. County of Los Angeles: Defense Properly Granted Summary Judgment In Sex Discrimination Labor Law Class Action Against County California Court Holds" »

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

As Matter of First Impression, Class Action Treatment for Rescission Claims Under TILA (Truth in Lending Act) is not Proper First Circuit Holds

Plaintiffs filed a putative class action in Massachusetts federal court against First Horizon Home Loan alleging that it violated the federal Truth in Lending Act (TILA) and its state law equivalent, the Massachusetts Consumer Credit Cost Disclosure Act (MCCCDA) by failing to accurately disclose to borrowers their statutory rescission rights. McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 420 (1st Cir. 2007). Plaintiffs moved for class certification; defense attorneys objected that class action treatment was inappropriate. Id. The district court certified a class that included borrowers who had refinanced or paid off their loan with First Horizon, id., at 420-21. The First Circuit granted a defense request for interlocutory review of “an appeal that requires us to explore, for the first time, the crossroads at which class-action rules intersect with the rescission provisions of [TILA] and [MCCCDA].” Id., at 420. The Circuit Court concluded that “the district court lacked the authority to certify a class of residential borrowers who might potentially be eligible for rescissionary relief.” Id.

The First Circuit began by summarizing TILA’s and the MCCCDA’s statutory scheme, McKenna, at 421-22, and noted that while the class action complaint sought rescissionary relief under the MCCCDA, the parties agreed that “TILA supplies the applicable rules of decision,” id., at 422. The Circuit Court then addressed the “flagship claim” of defense attorneys that “as a matter of law, class actions for rescission are unavailable under the TILA,” id. The Court noted that central issue before it – “whether TILA claims focused on rescission are maintainable in a class-action format” – is a matter of first impression in the First Circuit. Id., at 423. The Fifth Circuit, however, has held that “rescission class actions are not maintainable under the TILA.” Id. (citing James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727, 731 (5th Cir. 1980)). The theory behind this line of cases is that “rescission claims, unlike damages claims, are not subject to any aggregate statutory cap and, therefore, rescission class actions, if permitted, could easily render a creditor insolvent.” Id. (citation omitted). The First Circuit recognized that some district courts have certified TILA class actions seeking rescission, but followed James based on its conclusion that “Congress did not intend rescission suits to receive class-action treatment.” Id. The Circuit Court’s statutory intent analysis is well worth reading. See id., at 423-27.

Download PDF file of McKenna v. First Horizon Home Loan

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

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 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. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Generally, more employment law class action cases are filed than any other category of cases, often leading other class action filings by a wide margin. This week, however, antitrust class action cases seized the top spot, while new labor law class actions fell to second.

This report covers the time period from March 1 – March 8, 2007. Approximately 58 class action lawsuits were filed in these California state and federal courts during that time period, of which 17 (29%) involved federal antitrust claims. There were 14 new employment law class action filings (24%). Claims under the federal Fair Credit Reporting Act (FCRA) came in third with 9 new filings (16%), almost all of which involved claims under the Fair and Accurate Credit Transactions Act (FACTA). The only other category of cases to break the 10% threshold involved unfair competition claims, which include claims for false advertising, with 8 new filings (14%).

Posted In: Class Actions In The News