Class Action Defense Blog

Class Action Fairness Act of 2005 (CAFA) did not Shift Burden of Proof of Amount in Controversy Requirements to Plaintiffs in Mass Actions or Class Actions Alabama Court Holds

In 2003, nine property owners filed suit in Alabama state court against eleven defendants asserting various common law based on defendants' discharge of pollutants and demanding as damages in excess of $1 million each. Lowery v. Honeywell Int'l, Inc., 460 F.Supp.2d 1288, 1290-91 (N.D. Ala. 2006). In an amended complaint filed in October 2005, 533 named plaintiffs sought damages against 12 named defendants seeking damages "in an amount of compensatory and punitive damages to be determined by a jury," id., at 1291. The complaint was amended against in March 2006 and June 2006; none of the complaints sought class action status, none of the theories of liability changed, and the indefinite prayer remained the same in the first through third amended complaints. Id. The Third Amended Complaint added as a party-defendant Alabama Power and Filler Products Company, and in July 2006 Alabama Power removed the action to federal court based in part on the Class Action Fairness Act of 2005 (CAFA) on the theory that "the action constitutes a 'mass action', which, under 28 U.S.C. § 1332(d)(11)(B)(i), is removable." Id. Plaintiffs moved to remand the case to state court on the grounds that CAFA did not apply and that defendants had not demonstrated the requisite amount in controversy. In an opinion that contains some surprising legal conclusions but in the author's view reached the correct result, the federal court remanded the action to state court.

The district court noted that the complaint was filed long before CAFA's February 18, 2005 effective date, but the amendment that precipitated removal post-dated CAFA. Lowery, at 1292. The court explained at page1292, "This procedural fact creates two potentially dispositive removability questions: (1) did the filing of the third amended complaint 'commence' a new suit for purposes of CAFA; and (2) if so, did the new suit, by retroactive effect, 'commence' as to all defendants, or only as to [those defendants added by the third amended complaint]." CAFA looks to state law for determining when an action is "commenced," which under Alabama law was the date the original complaint was filed. Id. However, federal law holds that "as to the new defendant, removability is determined as of the date of receipt of service of the amended complaint, not as of the date on which the original suit was filed in state court." Id. (citations and italics omitted). The question, then, is whether Alabama Power properly removed the action. Id., at 1292-93.

Continue reading "CAFA Mass Action Defense Case-Lowery v. Honeywell: Alabama Federal Court Rejects Defense Arguments And Remands Mass Action To State Court Due To Defense Failure To Establish $75,000 Amount In Controversy" »

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

District Court did not Abuse its "Broad Discretion" in Certifying Nationwide Sex Discrimination Class Action Against Wal-Mart Creating "the Largest Certified Class in History" Ninth Circuit Holds

In June 2001, plaintiffs filed a putative class action against Wal-Mart in the San Francisco federal court alleging sex discrimination in the payment of wages and in promotions. In April 2003, plaintiffs moved to certify a nationwide class action on behalf of 1.5 million former and present female employees “employed in a range of Wal-Mart positions - from part-time, entry-level, hourly employees to salaried managers.” Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. February 06, 2007) [Slip Opn., at 1340]. Defense attorneys argued that the requirements of Rule 23 had not been satisfied, stressing in particular several problems inherent in litigating a class of record size. More than a year later, in an 84-page decision handed down in June 2004, the district court rejected all but one of the defense arguments and, save for that one point, certified the class action as requested by plaintiffs. Both sides appealed, but the Ninth Circuit affirmed the district court order in all respects.

Plaintiffs’ motion sought certification of a nationwide class action on behalf of “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” Dukes, at 1340. Wal-Mart stressed the “‘historic’ nature of Plaintiffs’ motion, inasmuch as it concerns a class of approximately 1.5 million women who work or worked in one or more of Wal-Mart’s 3,400 stores in 41 regions at any time since 1998.” Id. The district court recognized Wal-Mart’s concerns but concluded that “while the class size was large, the issues were not unusual.” Id. The Ninth Circuit summarized the district court’s order at page 1341 as follows:

On June 21, 2004, the district court issued an eighty-four-page order granting in part and denying in part Plaintiffs’ motion for class certification. [Citation.] With respect to Plaintiffs’ claims for equal pay, the district court granted Plaintiffs’ motion as to issues of alleged discrimination and all forms of requested relief. With respect to Plaintiffs’ promotion claim, the court’s finding was mixed. The court certified the proposed class as it related to issues of alleged discrimination (including liability for punitive damages) as well as injunctive and declaratory relief. However, the court denied Plaintiffs’ request for certification with respect to backpay because data relating to challenged promotions were not available for all class members.

On appeal, Wal-Mart focused its attack on three points: (1) that the commonality and typicality requirements of Rule 23(a) had not been satisfied, (2) that the class action complaint primarily sought monetary relief thus barring certification under Rule 23(b)(2), and (3) that the district court order prejudiced its ability to respond to individual claims. Dukes, at 1341. Plaintiffs, in turn, argued that the district court erred in limiting backpay relief. Id. The Ninth Circuit held that the district court did not abuse its discretion in certifying the nationwide class.

Continue reading "Dukes v. Wal-Mart Class Action Defense Case: Ninth Circuit Upholds Certification Of Nationwide Sex Discrimination Class Action Creating Largest Class Ever Agreeing With District Court That Class Action Was Nonetheless Manageable" »

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

Class Action Complaint Adequately Alleges Breach of Contract and Violation Florida’s Deceptive and Unfair Trade Practices Act where Hospital Charges Uninsured Patients Significantly More for Services than it Charges Insured Patients Florida Federal Court Holds

Plaintiffs filed a putative securities class action against Mercy Hospital for breach of contract, unjust enrichment, breach of duty of good faith and fair dealing, and violation of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA), alleging that the hospital routinely overcharged uninsured patients for care. Colomar v. Mercy Hospital, Inc., 461 F.Supp.2d 1265, 1267 (S.D. Fla. 2007). Defense attorneys moved to dismiss the class action under Rule 12(b)(6); the district court granted the motion as to the unjust enrichment and breach of good faith and fair dealing claims, and granted the motion as to the FDUTPA claim for relief to the extent that it alleged deceptiveness by the hospital. Id. The district court requested additional briefing as to the breach of contract claim and as to the FDUTPA claim to the extent it alleged unfairness in the hospital’s billing practices, both of which were premised on allegations of “unreasonable pricing” of hospital services for uninsured patients. Id. The district court held that “[having] reviewed the [complaint] in a light most favorable to Plaintiff and drawn all reasonable inferences therefrom in Plaintiff’s favor, . . . the allegations of unreasonable pricing in the [complaint] meet Plaintiff’s burden of pleading claims for breach of contract and violation of FDUTPA.” Id.

The thrust of plaintiff’s complaint is that the bill she received as an uninsured patient for Mercy Hospital’s services “was inflated and unfair when compared to the rates charged to, and accepted from, patients with insurance or patients covered by Medicaid or Medicare.” Colomar, at 1268. Plaintiff originally argued that “differential pricing alone was sufficient to constitute a breach of contract because Florida law requires the amount of an open pricing contract to be reasonable”; the district court agreed that the amount must be reasonable but held that “Florida law requires more than mere allegations of differential pricing to establish unreasonableness.” Id. (citation omitted). In response, plaintiff amended her complaint to include the following details: “(1) Plaintiff was charged nearly $12,863 for medical services, while the actual costs of the services were only $2,098; (2) CHE hospitals (of which Mercy belongs) generally charge uninsured patients rates at 370% of Medicare reimbursement rates; (3) Mercy in particular charges uninsured patients rates at 450% of Medicare reimbursement rates; (4) CHE hospitals rank among the top 13% of all hospitals nationwide in charges (including both for-profit and non-profit hospitals); (5) CHE's cost-to-charge ratio is 394%, meaning that on average CHE hospitals charge almost four times their costs to uninsured patients; (6) CHE hospitals rank in the top 10% of hospitals nationwide in terms of cost-to-charge ratio.” Id.

Continue reading "Class Action Defense Cases-Colomar v. Mercy Hospital: Florida Federal Court Denies Defense Motion To Dismiss Unfair Trade Practice Class Action Based On Allegations That Hospital Charges Uninsured Patients More Than Insured Patients For The Same Services" »

Posted In: Class Action Court Decisions

On February 5, 2007, San Francisco's sweeping Paid Sick Leave Ordinance ("PSL") will take effect. The PSL Ordinance (Chapter 12W) was approved by 60% of San Francisco voters in the November election. San Francisco employers who do not comply with the PSL Ordinance will face stiff penalties and possible civil lawsuits with attorneys' fees recoverable.

All employers in San Francisco will be required to provide paid sick leave to all full-time, part-time and even temporary employees who work in San Francisco. Under the PSL Ordinance, employees accrue one hour of paid sick leave for every 30 hours worked (about 9 days per year for a full-time, non-exempt employee). Those employed as of February 5, 2007 will begin accruing paid sick leave as of that date. Those employed after February 5, 2007 will begin accruing paid sick leave 90 days into their employment. Employers may cap maximum accruals at 40 hours if they employ fewer than 10 employees and at 72 hours if they employ 10 or more employees. Unlike vacation benefits, paid sick leave does not need to be paid out when employees leave their employers.

Beginning February 5, 2007, employers must post the City's official notice of the PSL Ordinance in a conspicuous location in English, Spanish, Chinese and any other languages spoken by at least 5% of an employer's workforce in San Francisco. Under the PSL Ordinance, paid sick leave may be used to care for family members ("kin care"), which is more broadly defined than California's Labor Code and includes relatives such as siblings and grandparents. In addition, employees who do not have a spouse or registered domestic partner may once a year designate a person for whom the employee may use paid sick leave. Further, unlike current California law, an employee may use the entire amount of their sick leave for kin care.

Continue reading "San Francisco's Paid Sick Leave Ordinance To Take Effect On February 5, 2007" »

Posted In: Class Actions In The News, Employment Law Class Actions

Second Circuit Holds that District Court Properly Granted Defense Motion to Dismiss Securities Class Action Against Outside Accountant Because (1) Claims fell Outside Class Period, (2) Accountant is under no Duty to Correct Financial Statement for which it Provided no Public Opinion, and (3) Plaintiffs’ Failed to Adequately Allege Loss Causation

Plaintiffs filed a putative securities class action against Deloitte & Touche in its capacity as outside accountant for Warnaco Group for violations of Section 10(b) of the Securities Exchange Act of 1924 and Rule 10b-5 alleging that Deloitte misstated Warnaco’s financial condition and breached its duty to correct previous misstatements once it learned that they were inaccurate. Lattanzio v. Deloitte & Touche LLP, 476 F.3d 147, 2007 WL 259877, *1 (2d Cir. January 31, 2007). Defense attorneys moved to dismiss the class action under Rule 12(b)(6). The district court granted the motion finding that “[i] Deloitte was not liable for Warnaco’s quarterly statements, which it did not audit; [ii] Deloitte had no duty during the class period to correct statements or misstatements made by Deloitte prior to the class period; and [iii] Plaintiffs inadequately alleged loss causation in connection with the statements that Deloitte made during the class period.” Id. On appeal, the Second Circuit affirmed the “thorough and well-reasoned opinion” of the district court. Id.

Deloitte began serving as Warnaco’s outside accountant in November 1999. Plaintiffs filed this class action after Warnaco declared bankruptcy in June 11, 2001 seeking to represent those who purchased Warnaco’s common stock from August 15, 2000 through June 8, 2001 (defined as “the Class Period”). Lattanzio, at *1. The class action complaint alleged that Warnaco’s 1999 Form 10-K (filed in March 2000) overstated total shareholder equity by $30 million, and that in February 2000 Deloitte learned of $26 million of this sum but did not correct Warnaco’s financial statements until March 2001. Id. Deloitte allegedly learned of the additional $4 million mistake “sometime in fall 2000” but did not correct the financial statements until August 2001 (by which time Warnaco was in bankruptcy). Id., at *2. The complaint also complained that the three quarterly statements Warnaco filed during the Class Period contained material misstatements; Deloitte did not audit these statements but “reviewed” them as required by federal law and, allegedly, learned of the errors but failed to correct them. Id. Finally, the complaint alleged that Warnaco’s 2000 Form 10-K contained material misstatements Id., at *3. However, Deloitte’s audit opinion expressed a “going concern” that the company “was not in compliance with certain covenants of its long-term debt agreements” and that the company “was a working capital deficiency as of December 30, 2000” which “raise substantial doubt about its ability to continue as a going concern.” Id. As noted above, the district court granted the defense Rule 12(b)(6) motion and dismissed the class action complaint.

Continue reading "Deloitte & Touche Class Action Defense Case-Lattanzio v. Deloitte: Second Circuit Affirms Dismissal of Securities Class Action Against Outside Accountant" »

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

For class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we make the text of RESPA available here. Congress clarified the affect of RESPA on state laws and provided for determining whether state laws were inconsistent with federal laws in 12 U.S.C. § 2616, which provides as follows:

§ 2616. State laws unaffected; inconsistent Federal and State provisions

This chapter does not annul, alter, or affect, or exempt any person subject to the provisions of this chapter from complying with, the laws of any State with respect to settlement practices, except to the extent that those laws are inconsistent with any provision of this chapter, and then only to the extent of the inconsistency. The Secretary is authorized to determine whether such inconsistencies exist. The Secretary may not determine that any State law is inconsistent with any provision of this chapter if the Secretary determines that such law gives greater protection to the consumer. In making these determinations the Secretary shall consult with the appropriate Federal agencies.

Posted In: Statutes & Rules

As a resource for the class action defense lawyer who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we make the text of the statute available here. Congress clarified that RESPA does not affect the validity or enforceability of contracts for the sale of real property or of federally-related mortgage loans in 12 U.S.C. § 2615, which states:

§ 2615. Contracts and liens; validity

Nothing in this chapter shall affect the validity or enforceability of any sale or contract for the sale of real property or any loan, loan agreement, mortgage, or lien made or arising in connection with a federally related mortgage loan.

Posted In: Statutes & Rules

Over Defense Objection Judicial Panel Grants Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Transfers Class Action Lawsuits to Central District of California Despite Settlement of Action Pending in that District

Three class action lawsuits were filed naming Banc of America Investment Services, Quick & Reilly, Fleet National Bank and/or Fleet Investment Services for alleged violations of the federal Fair Labor Standards Act (FLSA) and/or state labor laws alleging the failure to pay overtime to individuals who worked as securities brokers or broker trainees. In re Banc of America Investment Services, Inc., Overtime Pay Litig., 466 F.Supp.2d 1353, 1353-54 (Jud. Pan.Mult.Lit. December 19, 2006). The plaintiffs in the Northern District of California and the Eastern District of New York class action moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 to centralize the lawsuits for pretrial purposes in the Southern District of New York. Id. Defense attorneys opposed centralization or, alternatively, requested transfer to the Central District of California; plaintiffs in the Central District of California also opposed centralization but, like the defense, requested transfer to the Central District of California if the motion is granted. Id. The Judicial Panel rejected opposition arguments that centralization was unwarranted because one of the actions (interestingly, the one pending in the Central District of California) was settled or nearly settled, and selected the Central District of California as the appropriate transferee court. Id.

The Panel explained that "Regardless of whether [other] actions have settled, there remains two federal actions and a potential tag-along action pending in three federal districts." In re Banc of America, at 1354. The "salutary" goals of pretrial coordination are still served, even if only two federal actions remain. The Panel also selected the Central District of California, even though the class action there pending may settle, because it "is where the first-filed action (in which plaintiffs claim to have reached a nationwide settlement) is pending" and because all defendants and the plaintiffs in that district support transfer to that location. Id.

Download PDF file of In re Banc of America Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

Yet again California class action defense attorneys will face more new employment class action claims than any other category. In an effort to assist class action 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. Employment law cases routinely lead the list and usually do so by a wide margin. This past week was no exception. This report covers the time period from January 25 – January 31, 2007. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 39 class action lawsuits were filed in these California state and federal courts during that time period, of which 18 (46%) involved labor law claims. The only other category of cases to meet the 10% threshold was public accommodation/ADA class action lawsuits with 5 new cases (13%).

Posted In: Class Actions In The News

Judicial Panel Grants Unopposed Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Agrees with Defense that Eastern District of Missouri is Appropriate Transferee Court

Several class actions were filed against Bayer CropScience and others on behalf of rice farmers asserting various causes or action arising out of "the contamination of commercial rice stocks with LLRice 601, a variety of genetically modified rice." In re LLRice 601Contamination Litig., 466 F.Supp.2d 1351, 1351-52 (Jud. Pan.Mult.Lit. December 19, 2006). The class action complaints were "brought on behalf of nationwide, multistate [and] statewide classes of rice farmers." Id. Pursuant to 28 U.S.C. § 1407, the plaintiffs in one of the class actions moved the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Eastern District of Arkansas; while no one objected to centralization, the parties could not agree on the appropriate transferee court and defense attorneys for "the common defendant" supported transfer to the Eastern District of Missouri. Id. The Judicial Panel agreed with that centralization was warranted and concurred with the defense recommendation that the actions be transferred to the Eastern District of Missouri. Id., at 1352. The Panel explained that the Eastern District of Missouri "enjoys the support of the common defendant and several plaintiffs." Id.

Download PDF file of In re LLRice 601

Posted In: Multidistrict Litigation, Class Action Court Decisions

California Court Holds that if Class Representative Plaintiff is not and Never was Member of Class then Trial Court Abuses it Discretion if it Permits Precertification Discovery for the Purpose of Identifying Class Member Willing to Serve as Plaintiff

Plaintiff filed a putative class action against his title insurer (First American Title Insurance) and his lender (Wilmington Finance) alleging that "title insurers in the State of California are paying money for referral business from lenders," that "[the] payments to lenders are rewards for channeling business to them," and that "[t]hese kickbacks may be disguised as payments for bogus reinsurance which is purchased from captive insurers operated by the firms sending business to the title insurers." First American Title Ins. Co. v. Superior Court, 146 Cal.App.4th 1564 (Cal.App. 2007) [Slip Opn., at 4]. Plaintiff brought the class action on behalf of those persons who "paid in whole or in part for a title insurance policy [from First American] which provided coverage for property located in the State of California . . . [f]or whom part of the premium paid for the title insurance policy was received by Wilmington Finance," id., at 5. As it turned out, plaintiff was not a member of the class he proposed to represent, and no such scheme existed involving Wilmington Finance; accordingly, he propounded discovery on First American for the purpose of identifying someone willing to serve as class representative so the class action could proceed. Id., at 8. Defense attorneys objected on the ground that "[plaintiff] was never a member of the class alleged in his complaint, and therefore lacked standing to obtain discovery to locate a proper class representative." Id., at 11. The trial court ultimately rejected the arguments of defense attorneys and granted plaintiff's motion. The Court of Appeal granted First American's petition for writ of mandate and directed the trial court to disallow the precertification discovery requested. Id., at 13.

Plaintiff purchased a home in February 2004. He claims the seller's agent and the escrow company insisted that First American issue title insurance on the property, and he suspected that the escrow company or First American paid a kickback to the seller's agent. Slip Opn., at 2. In November 2004, Colorado's Division of Insurance "uncovered a reinsurance kickback scheme" under which "certain homebuilders, lenders and realtors formed their own reinsurance companies, known as 'captive insurers'" and then referred business to title companies that agreed to "reinsure" the policies through the captive insurer. Id., at 3. In essence, "the reinsurance agreement was simply a way for the title insurer to transfer funds to the captive insurer as a payment for the referral of customers." Id. California's Department of Insurance initiated its own investigation in January 2005, one month before Colorado reached a settlement with First American. Id. A few days after the announcement that Colorado and First American had reached a settlement, plaintiff filed suit. Id.

Continue reading "First American Title Class Action Defense Case-California Court Bars Plaintiff's Attorney From Conducting "Fishing Expedition" Discovery To Find Prospective Client" »

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

Injunctive Relief Obtained Against Defense in ADA Class Action Inadequate to Support Attorney Fee Award Illinois Court Holds

Plaintiffs filed a class action against their employer, Rent-A-Center, alleging violations of the federal Americans with Disabilities Act (ADA) arising out of the employer's requirement that applicants take a psychological test in order to obtain management positions. Karraker v. Rent-A-Center, Inc., 431 F.Supp.2d 883, 885 (C.D. Ill. 2006). Specifically, the class action complaint alleged, "[Rent-A-Center] required all employees or outside applicants seeking management positions to submit to a battery of nine separate written tests. This battery of tests was commonly referred to as the Management Test. One of the individual exams included in the Management Test was the Minnesota Multiphasic Personality Inventory (MMPI). The MMPI is a psychological test used by psychologists to diagnose and treat individuals with abnormal psychological symptoms and personality traits." Id. The district court ultimately certified a class defined as "All past and present employees of Defendant RAC in Illinois who took the APT Management Test." Id. Defense attorneys prevailed on a motion for summary judgment as to all but a single wrongful termination claim. Id., at 886. On appeal, the Seventh Circuit generally affirmed the judgment in favor of the defense, but remanded the matter "so summary judgment could be entered in favor of Plaintiffs on their claim that the MMPI is a medical examination under the ADA." Karraker, at 886. The district court entered that order and, pursuant to plaintiffs' request, the defense agreed to destroy all test results obtained through the APT Management Test. Id. Defense attorneys then moved for summary judgment on the wrongful termination claim. The district court granted the defense motion, thereby resolving the balance of the class action lawsuit. Id.

Plaintiffs' lawyer then filed a petition seeking an award of $267,000 in attorney fees. Karraker, at 886. The district court recognized that the ADA permits a court to award reasonable attorney fees to the prevailing party, see 42 U.S.C. § 12205, but held that plaintiffs did not qualify as the prevailing party under the following definition set forth at page 886:

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Continue reading "Rent-A-Center Class Action Defense Case-Karraker v. Rent-A-Center: Illinois Federal Court Denies Plaintiff Lawyer's Request For Attorney Fees Finding Relief Obtained In ADA Class Action To Be De Minimis" »

Posted In: Class Action Court Decisions

California Federal Court Holds that Plaintiffs Satisfied Rule 23 Requirements for Certification of Class Action Alleging Gender Discrimination in Promotion and Management Practices by Costco

Plaintiff filed a class action against their employer for violations of Title VII of the Civil Rights Act of 1964 and California's Fair Employment and Housing Act alleging "that Costco’s promotion system has a disparate impact on female employees, that Costco’s management discriminates against women in promotions, and that defendant has retaliated against persons seeking redress for discrimination." Ellis v. Costco Wholesale Corp., ___ F.Supp.2d ___, 2007 WL 127800-, *1 (N.D. Cal. January 11, 2007). Plaintiffs' lawyer moved the federal court to certify a nationwide class action on behalf of at least 700 women; defense attorneys opposed the motion and moved to strike the declarations of plaintiffs' experts in support of the motion. Id., at *4, *7. The defense also argued against class action treatment on the grounds that plaintiffs failed to exhaust administrative remedies, id., at *5, and lacked standing, id., at *6. The district court rejected defense arguments and certified a nationwide class action as requested by plaintiffs.

Plaintiffs sought certification of a nationwide class action on behalf of "current and former female employees who have been denied promotion to GM [General Manager] or AGM [Assistant General Manager] or denied Senior Staff jobs important to AGM promotion since January 3, 2002." Ellis, at *5. The district court first addressed the procedural objections raised by defense attorneys . The administrative remedies defense was premised on the argument that plaintiffs' EEOC claim was limited to discriminatory practices in promotion to general manager positions. Id.. Plaintiffs disagreed, and argued that even if it had been limited to GM claims that their other claims were "reasonably related to the allegations in the EEOC charge." Id. The district court agreed, noting that Ninth Circuit case law instructs courts "to construe the EEOC charge 'with utmost liberality.'" Id. (citation omitted). Plaintiffs' EEOC claim provided adequate notice to Costco of the claims asserted in the class action complaint. Id. With respect to Costco's standing arguments, the district court held (1) that former employees may seek injunctive relief on behalf of current employees, because "[t]o hold that employees must continue to work in jobs where they face discrimination in order to challenge discrimination would pervert Article III's injury-in-fact requirement," Ellis, at *6, and (2) that a current AGM may seek injunctive relief on behalf of women denied promotion to AGM and that it would not "delve into the merits" of the discrimination claims at the class certification stage, id.

Continue reading "Costco Class Action Defense Case-Ellis v. Costco: California Federal Court Rejects Defense Arguments And Certifies Class Action Alleging Sex Discrimination" »

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

California Supreme Court Rejects Privacy Rights Arguments of Pioneer Electronics' Defense Attorneys that Consumers Who Contacted Company and Complained about Product Defects Must Thereafter Affirmatively Consent to Release of Contact Information to Attorney Prosecuting Putative Class Action Involving the Same Product Defects In Consumers' Complaints

Plaintiff filed a putative class action against Pioneer Electronics alleging defects in DVD player, seeking to represent "persons who purchased the same model of allegedly defective DVD player." Pioneer Electronics v. Superior Court, 40 Cal.4th 360 (Cal. 2007) [Slip Opn., at 2]. During discovery, Pioneer revealed that it had received 700 - 800 consumer complaints concerning the same DVD player. Id. Plaintiff demanded the addresses and telephone numbers of the consumers who had complained; Pioneer objected asserting the right to privacy protected by the California Constitution. Id. (citing Cal. Const., Art. I, § 1). Ultimately the trial court ordered that a letter be sent to the complaining consumers advising them that their contact information would be disclosed to plaintiff's attorney unless they affirmatively objected to such disclosure. Id., at 4. The California Court of Appeal reversed, granting Pioneer's petition for writ of mandate to compel the trial court to vacate its order and require that consumers affirmatively consent to the release of their contact information. Id., at 4-5. The California Supreme Court reversed the decision of the appellate court, reinstating the trial court's order.

The Supreme Court framed the issue as follows: "Does a complaining purchaser possess a right to privacy protecting him or her from unsolicited contact by a class action plaintiff seeking relief from the vendor to whom the purchaser's complaint was sent?" Slip Opn., at 4. The Court noted that the decision of the Court of Appeal "would place the burden on the discovery proponent to obtain written authorization from each person whose privacy was to be invaded." Id., at 9. In contrast, plaintiff's attorney argued that "consumers who initially contacted Pioneer to express dissatisfaction with its product have a reduced expectation of privacy or confidentiality in the contact information they freely offered to Pioneer for the purpose, presumably, of allowing further communication regarding their complaints." Id., at 6. The Supreme Court agreed, holding that "[r]evealing names, addresses and contact information on persons who have already complained about their Pioneer DVD players would not be particularly sensitive or intrusive." Id., at 13.

Continue reading "Pioneer Electronics Class Action Case-California Supreme Court Holds Consumers Who Have Complained Of Product Defects Need Not Affirmatively Consent To Release Of Contact Information To Plaintiff's Attorney Prosecuting Class Action Based On Those Defects" »

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 RESPA. Congress provided for the jurisdiction of courts and for statutes of limitation for private rights of action under RESPA in 12 U.S.C. § 2614, which provides:

§ 2614. Jurisdiction of courts; limitations

Any action pursuant to the provisions of section 2605, 2607, or 2608 of this title may be brought in the United States district court or in any other court of competent jurisdiction, for the district in which the property involved is located, or where the violation is alleged to have occurred, within 3 years in the case of a violation of section 2605 of this title and 1 year in the case of a violation of section 2607 or 2608 of this title from the date of the occurrence of the violation, except that actions brought by the Secretary, the Attorney General of any State, or the insurance commissioner of any State may be brought within 3 years from the date of the occurrence of the violation.

NOTE: Sections 2611, 2612 and 2613 were repealed in 1996.

Posted In: Statutes & Rules

For those class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide here the text of the statute as a resource. RESPA prohibits lenders from charging borrowers certain fees in 12 U.S.C. § 2610, which provides as follows:

§ 2610. Prohibition of fees for preparation of truth-in-lending, uniform settlement, and escrow account statements

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 mobile home), or by a servicer (as the term is defined under section 2605(i) of this title), for or on account of the preparation and submission by such lender or servicer of the statement or statements required (in connection with such loan) by sections 2603 and 2609(c) of this title or by the Truth in Lending Act.

Posted In: Statutes & Rules

Defense attorneys in California faced the familiar wave of employment law class action cases last week, but FACTA (Fair and Accurate Credit Transaction Act) cases ran a close second. In an effort to assist class action 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. Employment law cases routinely lead the list and usually do so by a wide margin, but this past week class action lawsuits alleging FACTA violations gave labor law class actions a run for their money. This report covers the time period from January 19 – January 25, 2007. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 52 class action lawsuits were filed in these California state and federal courts during that time period, 13 of which (25%) involved employment law claims. The area of law with the second most class action filings during that time period involved Fair Credit Reporting Act/Fair And Accurate Credit Transactions Act cases with 12 new filings (23%). Public accommodation/ADA class action lawsuits came in third with 9 new filings (17%). In a surprisingly balanced week for California class action filings, two other groups of class action claims passed the 10% threshold. Six new price fixing/antitrust class actions were filed (12%), as well as 5 new unfair competition (UCL) class actions (10%).

Posted In: Class Actions In The News

Judicial Panel Rejects Defense Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 in the Southern District of New York and Agrees with Plaintiffs that Central District of California is Appropriate Court

Several class action lawsuits were filed in New York, Florida, Illinois, Minnesota and Pennsylvania against Wachovia Corp., Wachovia Securities, First Union Securities and/or Prudential Equity Group alleging violations of the federal Fair Labor Standards Act (FLSA) and/or state labor laws for failure to pay overtime to securities brokers. In re Wachovia Securities, LLC, Wage & Hour Litig., 469 F.Supp.2d 1346, 1347 (Jud.Pan.Mult.Lit. 2006). Pursuant to 28 U.S.C. § 1407, plaintiffs filed a motion with the Judicial Panel on Multidistrict Litigation (MDL) to centralize the lawsuits for pretrial purposes in the Northern District of Illinois; defense attorneys agreed that pretrial coordination was warranted under 28 U.S.C. § 1407 but requested transfer to the Southern District of New York. Id. Eleven (11) potentially related "tag-along" actions were filed, including six in the Central District of California, id. n.1, and all plaintiffs concurred that the Central District of California would be an appropriate forum for the litigation, id. The Panel agreed with the parties that centralization was warranted but rejected the forum requested by defense attorneys, selecting the Central District of California as the appropriate transferee court. Id.

Download PDF file of In re Wachovia Securities Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

Judicial Panel Rejects Defense Opposition to Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Grants Motion for Centralization of Three Class Action Lawsuits

Class action lawsuits were filed in California, Wisconsin and the District of Columbia, in addition to an action filed in the Court of Federal Claims, against the federal government and others seeking "reimbursement of the communications excise tax on long-distance telephone service, where the charge for such service was not based on the distance of the telephone call." In re Long-Distance Telephone Serv. Fed. Excise Tax Refund Litig., 469 F.Supp.2d 1348, 1349 (Jud.Pan.Mult.Lit. 2006). The Wisconsin plaintiff moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407, to centralize the lawsuits for pretrial purposes in the Easter District of Wisconsin; the California plaintiffs supported centralization but argued for transfer to the District of the District of Columbia or the Central District of California. Id. Plaintiffs in the District of Columbia and in the Federal Claims court opposed the motion, as did the United States. The Panel concluded that, save for a "single California state law claim brought against [a] telecommunication provider," centralization was warranted. Id. The Panel further concluded that the District of the District of Columbia was the appropriate transferee court. Id.

NOTE: As noted above, the motion for centralization implicated an action pending in the Court of Federal Claims. The Panel noted that previously it "has never reached the issue of whether Section 1407 authorizes transfer of a Court of Federal Claims action," but concluded that it "sees no need to resolve that issue here." In re Long-Distance Telephone, at 1349. Instead, the Panel encouraged "voluntary cooperation between the Court of Federal Claims and the transferee court" but "[left] the degree and manner of such cooperation to the joint discretion of the respective judges." Id.

Download PDF file of In re Long-Distance Telephone Transfer Order

Posted In: Multidistrict Litigation, Class Action Court Decisions

Mortgage-Offer Mailer Constituted a "Firm Offer of Credit" Under the FCRA (Fair Credit Reporting Act) Warranting Summary Judgment in Favor of Defense Illinois Federal Court Holds

Plaintiffs filed a class action against Home Loan Center for alleged violations of the federal Fair Credit Reporting Act (FCRA) alleging that impermissibly accessed credit reports for purposes of mailing out "pre-approval" mortgage flyers, three of which were mailed to plaintiffs. Cavin v. Home Loan Center Inc., 469 F.Supp.2d 561, 2007 WL 92509, *1 (N.D. Ill. 2007). Plaintiffs did not respond to the loan offers. Id., at *2. Defense and plaintiffs attorneys filed cross-motions for summary judgment; defense attorneys argued that the mailers constituted "firm offers of credit" under the FCRA thus entitling Home Loan Center to obtain the credit reports; plaintiffs argued that mailers did not constitute firm offers because they are too vague. Id., at *3. The district court granted the defense motion, denied the plaintiffs' motion, and entered judgment in favor of Home Loan Center on the class action complaint.

We do not summarize here all of the language contained in the mailers or the details of the loan program at issue. Class action defense attorneys facing FCRA claims should review the opinion in its entirety in order to understand its full scope. Briefly, the mailers advertised a "SmartLoan" program and stated "This 'prescreened' offer of credit is based on information in your credit report indicating that you meet certain criteria." Cavin, at *1. The mailers set forth "sample loan payments for loans ranging from $100,000 to $600,000." Id. The reverse side of the mailers stated, "This offer may not be extended if, after responding to this offer, you do not meet the criteria used in the selection process. Further, HomeLoanCenter.com will verify income and employment, review credit, and analyze debt and your equity position in the subject property prior to final loan approval." Id. Additionally, the mailers stated, "This advertisement does not constitute an offer to enter into an interest rate and/or discount prior agreement." Id. The mailers were not firm commitments to make a loan, expressly stating "Not all applicants will be approved."

Id., at *2.

In ruling on the cross-motions for summary judgment, the federal court observed that the parties did not dispute whether Home Loan Center had "express permission to access [plaintiffs'] credit reports," Cavin, at *2. The class action turned "on whether the SmartLoan mailers constituted a 'firm offer of credit'" under the FCRA. Id. Plaintiffs urged that the mailers were "vague and totally lacking in terms," failed to "inform the consumer what is being offered," and failed to disclose that the mortgage is a negative amortization loan. Id., at *2-*3. The defense countered that the mailers "offered a valuable and popular home mortgage loan worth hundreds of thousands of dollars" and that any missing terms were because mortgage loans "have features and terms that cannot be fixed in advance based solely upon data obtained from prescreening programs." Id., at *3. Defense attorneys also argued that plaintiffs could not prove actual damages because they never sought or obtained a loan based on the mailers.Id.

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Posted In: FCRA Class Actions, Class Action Court Decisions