Class Action Defense Blog

Second Circuit Holds that CAFA (Class Action Fairness Act) did not Shift Burden of Proving Federal Jurisdiction to Plaintiff and Remands Class Action Case to District Court for Further Proceedings

Plaintiffs filed a putative class action against Blockbuster in New York state court challenging the company's "No Late Fee" program as a deceptive business practice on the grounds that Blockbuster did not adequately inform customers that in order to avoid the late fees the transaction was converted from a video rental to a video sale. Blockbuster, Inc. v. Galeno, 472 F.3d 53, 2006 WL 3775326, *1 (2d Cir. 2006). Defense attorneys removed the action to federal court asserting both general diversity jurisdiction under 28 U.S.C. § 1332(a) and federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id., at *2. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id.; defense attorneys countered that "CAFA had reversed the traditional rule that the party seeking removal to federal court bears the burden of establishing federal jurisdiction," id. The district court agreed with the defense, but its order denying the motion to remand the class action stated not only that "the defendant has met its burden" but also that "the plaintiff has not met [its] burden," id. The Second Circuit held that the district court should not have assigned any burden to the plaintiff, and remanded the action for further proceedings in light of the ambiguity in the lower court's order.

After summarizing CAFA and the appropriate standard of review of an order denying a motion to remand, Galeno, at *3, the Circuit Court addressed whether CAFA "shifted the burden of proof to the remand-requesting plaintiff to show that federal jurisdiction does not exist," id., at *4. The Second Circuit's analysis led it to the same conclusions reached by "[e]very other circuit court that has considered this issue," id., at *5 - viz., that CAFA had not affected the defense burden of establishing federal court removal jurisdiction, id.

Continue reading "Blockbuster v. Galeno-Class Action Defense Cases: Defense Bears Burden Of Establishing Federal Court Jurisdiction Under Class Action Fairness Act (CAFA) Second Circuit Holds" »

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

California Court of Appeal Reports that Decision Reversing in Full Trial Court Judgment Against Bank in Class Action Case has Become Final

The California Court of Appeal for the First Appellate District reported on December 26, 2006 that its decision in Miller v. Bank of America, 144 Cal.App.4th 1301 (Cal.App. 2006), has become final. Miller reversed a billion dollar class action judgment against Bank of America, holding that banks may apply funds from government benefit deposits to cover overdraft fees connected with the same bank account. The Miller decision is summarized in a separate article, and the full text of the opinion may be downloaded from that article.

Posted In: Class Actions In The News

Judicial Panel Agrees Pretrial Coordination Pursuant to 28 U.S.C. § 1407 is Warranted for Class Actions But Rejects Defense and Plaintiff Recommendations for Request for and Grants Defense Motion for Centralization of Three Class Action Lawsuits

After four class action lawsuits concerning vehicle extended warranties were filed against Volkswagen in California, Florida, Illinois, and Pennsylvania, defense and plaintiffs' attorneys filed a joint motion with the Judicial Panel for Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407, to centralize the lawsuits for pretrial purposes in either the Eastern District of Pennsylvania (defense choice) or the Southern District of Illinois (plaintiffs' choice). In re Volkswagen & Audi Warranty Extension Litig., 452 F.Supp.2d 1354, 1355 (Jud.Pan.Mult.Lit. 2006). Based on the briefing and oral argument, the Judicial Panel agreed that pretrial coordination under 28 U.S.C. § 1407, but rejected both of the transferee locations recommended by the parties. With respect to centralization, the Judicial Panel explained that the putative statewide class actions "share factual questions concerning the propriety of Volkswagen's August 2004 warranty extension/reimbursement program regarding the 1.8 liter turbocharged engines installed on approximately 462,000 Volkswagen and Audi brand vehicles," id., and that centralization "is necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings, and conserve the resources of the parties, their counsel and the judiciary," id., at 1356. But the Judicial Panel's transfer order fails to explain why it selected the District of Massachusetts as the appropriate transferee court over the courts proposed by the parties, other than noting that "Judge Joseph Tauro . . . [is] a jurist who has both the time and experience to steer this litigation on a prudent course." Id.

Posted In: Multidistrict Litigation, Class Action Court Decisions

California Court Holds that Proposed Class Action Settlement Warranted Court Approval and Grants Defense/Plaintiff Request to Certify Class Action for Purposes of Settlement

Plaintiffs filed a putative class action against DirectRevenue and The Best Offers Network (formerly BetterInternet) arising out of targeted advertising software downloaded onto computers through ActiveX installations that did not require the affirmative consent of computer users. Battaglia v. DirectRevenue, LLC, ___ F.Supp.2d ___, 2006 WL 3654095 (E.D. Cal. December 12, 2006). Defense and plaintiff attorneys moved the federal court to certify the litigation as a class action for purposes of settlement, and to give final approval to a settlement agreement that would result in dismissal of the class action complaint. Id., at *1-*2. Among the many terms of the class action settlement, defendants agreed not to collect personal information about computer users (such as bank account and social security numbers), and to require that users affirmatively state that they had "read and approved" the terms of the End User License Agreement (EULA) under which software would be downloaded by defendants onto computers. Separately, computer users will be advised of the type of pop-up advertisements that may be displayed on their computer, and will be required to separately accept the terms of such ads. Moreover, the "accept" option would not be set as the default for these disclosures. Id., at *2. The district court found that the terms of the proposed class action settlement were fair, reasonable and adequate, and were in the best interests of the class. The court found further that the class representatives and class counsel had "fairly and adequately" represented the interests of the class. Id., at *1.

A complete summary of the terms of the settlement agreement may be found in the district court opinion.

Posted In: Class Action Court Decisions

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress set forth the schedule of information required to be contained in registration statements in 15 U.S.C. § 77aa, which provides as follows:

§ 77aa. Schedule of information required in registration statement

SCHEDULE A

(1) The name under which the issuer is doing or intends to do business;

(2) the name of the State or other sovereign power under which the issuer is organized;

(3) the location of the issuer's principal business office, and if the issuer is a foreign or territorial person, the name and address of its agent in the United States authorized to receive notice;

(4) the names and addresses of the directors or persons performing similar functions, and the chief executive, financial and accounting officers, chosen or to be chosen if the issuer be a corporation, association, trust, or other entity; of all partners, if the issuer be a partnership; and of the issuer, if the issuer be an individual; and of the promoters in the case of a business to be formed, or formed within two years prior to the filing of the registration statement;

(5) the names and addresses of the underwriters;

(6) the names and addresses of all persons, if any, owning of record or beneficially, if known, more than 10 per centum of any class of stock of the issuer, or more than 10 per centum in the aggregate of the outstanding stock of the issuer as of a date within twenty days prior to the filing of the registration statement;

(7) the amount of securities of the issuer held by any person specified in paragraphs (4), (5), and (6) of this schedule, as of a date within twenty days prior to the filing of the registration statement, and, if possible, as of one year prior thereto, and the amount of the securities, for which the registration statement is filed, to which such persons have indicated their intention to subscribe;

(8) the general character of the business actually transacted or to be transacted by the issuer;

(9) a statement of the capitalization of the issuer, including the authorized and outstanding amounts of its capital stock and the proportion thereof paid up, the number and classes of shares in which such capital stock is divided, par value thereof, or if it has no par value, the stated or assigned value thereof, a description of the respective voting rights, preferences, conversion and exchange rights, rights to dividends, profits, or capital of each class, with respect to each other class, including the retirement and liquidation rights or values thereof;

Continue reading "15 U.S.C. § 77aa--Schedule Of Information Required In Registration Statement Under The Securities Act Of 1933" »

Posted In: Statutes & Rules

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress described the general exemptive authority of the Commission in 15 U.S.C. § 77z-3, which provides:

§ 77z-3. General exemptive authority

The Commission, by rule or regulation, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this subchapter or of any rule or regulation issued under subchapter, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

Posted In: Statutes & Rules

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress described the application of safe harbor for forward-looking statements in 15 U.S.C. § 77z-2, which provides:

§ 77z-2. Application of safe harbor for forward-looking statements

(a) Applicability

This section shall apply only to a forward-looking statement made by--

(1) an issuer that, at the time that the statement is made, is subject to the reporting requirements of section 78m(a) or 78o(d) of this title;

(2) a person acting on behalf of such issuer;

(3) an outside reviewer retained by such issuer making a statement on behalf of such issuer; or

(4) an underwriter, with respect to information provided by such issuer or information derived from information provided by the issuer.

(b) Exclusions

Except to the extent otherwise specifically provided by rule, regulation, or order of the Commission, this section shall not apply to a forward-looking statement--

(1) that is made with respect to the business or operations of the issuer, if the issuer--

(A) during the 3-year period preceding the date on which the statement was first made--

(i) was convicted of any felony or misdemeanor described in clauses (i) through (iv) of section 78o(b)(4)(B) of this title; or

(ii) has been made the subject of a judicial or administrative decree or order arising out of a governmental action that--

(I) prohibits future violations of the antifraud provisions of the securities laws;

(II) requires that the issuer cease and desist from violating the antifraud provisions of the securities laws; or

(III) determines that the issuer violated the antifraud provisions of the securities laws;

(B) makes the forward-looking statement in connection with an offering of securities by a blank check company;

(C) issues penny stock;

(D) makes the forward-looking statement in connection with a rollup transaction; or

(E) makes the forward-looking statement in connection with a going private transaction; or

(2) that is--

(A) included in a financial statement prepared in accordance with generally accepted accounting principles;

(B) contained in a registration statement of, or otherwise issued by, an investment company;

(C) made in connection with a tender offer;

(D) made in connection with an initial public offering;

(E) made in connection with an offering by, or relating to the operations of, a partnership, limited liability company, or a direct participation investment program; or

(F) made in a disclosure of beneficial ownership in a report required to be filed with the Commission pursuant to section 78m(d) of this title.

Continue reading "15 U.S.C. § 77z-2--Application Of Safe Harbor For Forward-Looking Statements Under The Securities Act Of 1933" »

Posted In: Statutes & Rules

To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly an unofficial summary of 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 of from December 15 - December 21, 2006. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe. Approximately 41 class action lawsuits were filed in these California state and federal courts during that time period - excluding the 16 antitrust class action cases involving British Airways et al. transferred into California by the Judicial Panel on Multidistrict Litigation (MDL), In re International Air Transp. Surcharge Antitrust Litigation, MDL-1793. Eleven (11) of the weekly class action filings (27%) alleged violations of California's unfair competition law (UCL), many based on antitrust price-fixing claims . An identical number (11) of employment law class action claims were filed. The only other category of cases class action defense attorneys will face that met the 10% threshold consisted of class actions alleging violations of the federal Fair and Accurate Credit Transactions Act (FACTA), with 4 new cases (10%) during this time period.

Posted In: Class Actions In The News

Massachusetts Federal Court Agrees with Defense that Class Action Complaint Failed to Prove Damages under EFTA (Electronic Funds Transfer Act) and State Consumer Protection Law Claims Because ATM Users Expressly Consented to Fee Charged and Because Bank of America did not Always Charge Non-Customers the Fee

Plaintiff filed a putative class action in Massachusetts federal court against Bank of America alleging that notices posted by the bank on its ATM machines in California, Maryland, Massachusetts and Rhode Island violated the federal Electronic Funds Transfer Act, 15 U.S.C. § 1693 (EFTA), as well as certain state consumer protection laws. Brown v. Bank of America, N.A., 457 F.Supp.2d 82, 84-85 (D. Mass. 2006). In part, plaintiffs complained that the Bank advised non-customers that it "may" charge them a fee when, in point of fact, it always charged them a fee (and thus should have disclosed that it "will" charge the fee). Defense attorneys moved for summary judgment on the state law claims and for partial summary judgment on the federal law claim. Id. The district court granted the defense motion as to the state law claims, and also agreed with defense attorneys with respect to the "verb choice" argument under the EFTA claim.

The genesis of the class action complaint is that while Bank of America permits its customers to use its ATMs for free "most, but not all, non-customers seeking to withdraw money from a Bank of America ATM must pay a small fee to the bank for the service." Brown, at 84. The Bank gives notice of the fee in two ways. First, it posts decals on each ATM that states, in part, the Bank "may charge a $1.50 fee for a cash withdrawal from your NON-Bank of America account." Id., at 84-85. Second, as part of the on-screen "click-through" process, the Bank requires users to affirmatively consent to the fee. Id., at 85. The class action complaint alleged that the Bank's notice violated federal law because the regulations governing the EFTA require "notice that a fee will be imposed for providing electronic fund transfer services or a balance inquiry" and disclosure of the amount of the fee. Id., at 86 (quoting 12 C.F.R. § 205.16(b) (2005) (Regulation E)). This "improper notice" also underlies the state consumer protection law violations.

Continue reading "Brown v. Bank of America Class Action Defense Case: Defense Entitled To Summary Judgment On Electronic Funds Transfer Act (EFTA) And State Consumer Protection Law Class Action Claims Massachusetts Federal Court Holds" »

Posted In: Class Action Court Decisions

Eleventh Circuit Joins Sister Circuits in Holding that Knowingly Hiring Illegal Aliens to Lower Labor Costs Satisfies RICO Class Action Claims at Pleading Stage But Agrees with Defense that State Law Unjust Enrichment Claims Must be Dismissed

A class action alleging federal and state RICO (Racketeer Influenced and Corrupt Organizations Act) violations was filed in Georgia federal court by current and former hourly employees against Mohawk Industries - "the second largest carpet and rug manufacturer in the United States . . . [with] over 30,000 employees" - alleging that it knowingly hired and harbored illegal aliens in order to lower labor costs and to discourage workers' compensation claims. Williams v. Mohawk Industries, Inc., 465 F.3d 1277, 1280, 1282 (11th Cir. 2006). The defense filed a 12(b)(6) motion to dismiss, which the federal court granted in part. Id., at 1280-81. Specifically, the district court denied the defense motion to dismiss the federal and state RICO class action claims, as well as the state law unjust enrichment claim based on the payment of lower wages to legal workers because of the availability of illegal workers willing to work for less money. Id., at 1282. But the court granted the defense motion to dismiss the unjust enrichment class action claim that was based on the alleged discouragement of workers' compensation filings. Id. The Eleventh Circuit granted plaintiffs' request for interlocutory review and, after a circuitous route, affirmed in part and reversed in part.

The class action complaint alleged that Mohawk intentionally hired illegal aliens in violation of federal law, transported them to Mohawk's facilities and provided them with living accommodations "in an effort to keep labor costs as low as possible." Williams, at 1281-82. The complaint further alleged that Mohawk engaged in affirmative steps to conceal the illegal workers from law enforcement. Id., at 1282. This practice permitted Mohawk to reduce wages paid to legal workers thereby "sav[ing] substantial sums of money," id. The complaint alleged further, "Mohawk knows that illegal workers are less likely to file worker's-compensation claims, and, therefore, Mohawk is able to save additional monies." Id. Defense attorneys filed a motion to dismiss; as noted above, the district court denied the motion as to the RICO claims, and as to the lower wages-unjust enrichment claim, but granted the motion to dismiss as to the workers' compensation unjust enrichment claim on the grounds that the plaintiffs lacked standing to assert the claim.

Continue reading "Williams v. Mohawk Industries Class Action Defense Case: Class Action RICO Claims Cognizable For Allegedly Willful Hiring Of Illegal Workers But That State Law Unjust Enrichment Claims Fail Eleventh Circuit Holds" »

Posted In: Class Action Court Decisions

Circuit Court of Appeal Agrees Federal District Court Lacked Jurisdiction Over Section 1982 Class Action Claims But Holds it Should Have Dismissed Claims Without Prejudice and Further Holds that Consumer Protection Class Action Claims Based on State Law - Over Which the Court had Supplemental Jurisdiction - Were Adequately Pleaded for Purposes of Motion to Dismiss

A total of ten (10) class action lawsuits were filed against various corporations "seeking monetary relief under both federal and state law for harms stemming from the enslavement of black people in America." In re African-American Slave Descendants Litig., ___ F.3d ___, 2006 WL 3615027 (7th Cir. December 13, 2006) [Slip Opn., at 1]. The Judicial Panel for Multidistrict Litigation (MDL) transferred the actions to the Northern District of Illinois for pretrial purposes pursuant to 28 U.S.C. § 1407, , where all plaintiffs but one filed a consolidated class action complaint. Id., at 1-2. Defense attorneys moved to dismiss the class action complaints; the district court granted the motion to dismiss based on the political-question doctrine, lack of standing and thus lack of federal jurisdiction, the expiration of the statutes of limitation, and failure to state a claim. Id., at 5. Surprisingly, the Seventh Circuit reversed.

The Seventh Circuit summarized that "[t]he suits are a series of mostly identical class actions on behalf of all Americans descended from slaves with whom one or more of the defendants or their corporate predecessors may have been directly or indirectly involved." Slip Opn., at 3. The Circuit Court further summarized the class action allegations as follows: "The defendants are companies or the successors to companies that provided services, such as transportation, finance, and insurance, to slaveowners. At least two of the defendants were slaveowners; the predecessor of one of the bank defendants once accepted 13,000 slaves as collateral on loans and ended up owning ,1250 of them when the borrowers defaulted, and the predecessor of another defendant ended up owning 346 slaves, also as a consequence of a borrower's default. Even before the Thirteenth Amendment, slavery was illegal in the northern states, and the complaint charges that the defendants were violating the laws of those states in transacting with slaveowners. It also claims there were occasional enslavements long after the passage of the Thirteenth Amendment and that some of the defendants were complicit in those too. By way of relief, the complaint seeks disgorgement to the class members of the profits that the defendants obtained from their dealings with slaveowners." Id., at 4.

Continue reading "Class Action Defense Cases-In re African-American Slave Descendants: Seventh Circuit Affirms Dismissal Of Class Action Alleging Corporate Complicity With Slavery But Reinstates Consumer Protection State Law Class Action Claims" »

Posted In: Class Action Court Decisions

California Court Rejects Defense Arguments Against Collective Action for Alleged Violations of FLSA (Fair Labor Standards Act) but Agrees with Defense that Class Action is not Superior Device for Litigating State Employment Law Claims and Denies Class Action Status to Claims Based on California Labor Code, Over Which it had Supplemental Jurisdiction, as Inconsistent with "Opt-In" Requirements for FLSA Collective Action

Plaintiff, former Long Beach police officer, filed a putative class action against the City of Long Beach for alleged violations of the federal Fair Labor Standards Act (FLSA) and of California's Labor Code sections 226.7, 512 and 2802 based on the allegations that he was denied meal and rest breaks and was not properly reimbursed for business expenses while a police officer. Edwards v. City of Long Beach, ___ F.R.D. ___ (C.D. Cal. December 15, 2006) [Slip Opn., at 2-3.] The thrust of the class action complaint asserted that while police officers kept track of, and received pay for, overtime hours worked, no policy or procedure existed for officers to record or report missed meal and rest periods. Id., at 2-3. Further, while officers were required to have clean and functional uniforms and equipment, the City did not reimburse class members for the costs incurred in maintaining those items. Id., at 3. Plaintiff filed two motions in the district court: one requested certification of the lawsuit as a class action under Rule 23, id., at 7, which defense attorneys opposed on the grounds that the numerosity, commonality and typicality requirements are not met, a class action will not benefit the class, and other alternatives exist rather than class action litigation, id., at 8; the second sought certification of a collective action under 29 U.S.C. § 216(b), id., at 1, which defense attorneys opposed by focusing on the differences in job duties between the plaintiff and other class members, id., at 6. The district court refused to certify a class action under Rule 23, but granted the motion to certify a collective "opt-in" action under § 216(b), id., at 1.

In granting the motion to certify a collective action (in essence an "opt-in" class action) under § 216(b) of the FLSA, the federal court explained that "employees wishing to join the suit must 'opt-in' by filing a written consent with the court" or else they are not bound by any judgment or settlement. Edwards, at 4. In a majority of jurisdictions, certifying such a collective action requires a two-step process: "the first step is for the court to decide, 'based primarily on the pleadings and any affidavits submitted by the parties, whether the potential class should be given notice of the action,'" id., at 5 (citations omitted); the court found that the "lenient standard" required to overcome this hurdle had been met. Id., at 5-7. The second step in the process is a motion by defense attorneys to decertify the class action, id., at 7; but the district court explained that it does not address that issue until after the opt-in time period has passed, id. The court rejected defense arguments that a collective action was inappropriate because of the differences in job duties between the plaintiff and other class members, id., at 6, explaining that - even though the defense had presented a "detailed analysis" of those differences, together with a "detailed discussion" of the differences in claims that potential class members may assert - the defense arguments were "better suited for motion to decertify the § 216(b) collective action," id., at 7.

Continue reading "Edwards v. City of Long Beach Class Action Defense Case: California Federal Court Denies Defense Motion To Certify Class Action But Grants Collective Action Status Under § 216(b) of the Federal Fair Labor Standards Act (FLSA)" »

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

To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly an unofficial summary of 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 of from December 8 - December 14, 2006. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe. Approximately 43 class action lawsuits were filed in these California state and federal courts during that time period - excluding the dozen antitrust class action cases involving British Airways et al. transferred into California by the Judicial Panel on Multidistrict Litigation (MDL). Sixteen (16) of the weekly class action filings (37%) alleged antitrust price-fixing claims, many of which were filed as violations of California's unfair competition law (UCL). Labor law class action claims, which typically lead the list of new filings, came in second during this time period with 9 new class actions (21%). The only other category of cases to break the 10% threshold consisted of alleged violations of California's Song-Beverly Consumer Protection Act: class action defense attorneys will face 5 new cases involving that area of law, which represents approximately 12% of the class actions filed during this time period.

Posted In: Class Actions In The News

Factual and Legal Issues Arising from Train Derailment Would Require Individual Minitrials Thereby Rendering Class Action Treatment Inappropriate Illinois Supreme Court Holds

Plaintiffs filed a class action in Illinois state court against Illinois Central Railroad seeking damages allegedly caused by the derailment of a train in Tamaroa, Illinois. Smith v. Illinois Central RR Co., ___ N.E.2d ___, 2006 WL 3491683 (Ill. November 30, 2006) [Slip Opn., at 1.]. The trial court granted plaintiffs' request to certify the lawsuit as a class action; the appellate court rejected defense arguments and affirmed. Id. The Illinois Supreme Court, however, granted the defense leave to appeal and reversed the lower courts. Id., at 1-2. The High Court agreed with defense attorneys that common issues of law and fact do not predominate, thus rendering the lawsuit unsuitable for class action treatment. "Proof of proximate causation and damages will be highly individualized and will consume the bulk of the time at trial." Id., at 14.

In February 2003, the derailment in Southern Illinois of a train carrying various chemicals led to the mandatory evacuation of at least 1000 people. Slip Opn., at 2. Shortly thereafter, the railroad instituted a claims process through which it compensated individuals and businesses for alleged losses caused by the derailment and evacuation; in return, the railroad received written releases of liability from all known claims. Id. In June 2003, plaintiffs initiated a class action seeking (as detailed in the Note below) damages for injuries resulting from the derailment and evacuation. Id., at 2-3. The circuit court rejected defense arguments against certification of the lawsuit as a class action, and granted plaintiffs' motion. Id., at 3. Before the appellate court, defense attorneys advanced several arguments including, (a) mass tort actions are not proper for class action treatment "because such actions would trigger an unworkable array of fact-intensive, claimant-specific questions that would inevitably result in numerous minitrials that defy class treatment"; (b) commonality does not exist as common questions of fact and law do not predominate; (c) the class definition was overly broad and would require individualized analyses to determine membership. Id., at 4-5. The appellate court, over a dissent, rejected each argument and affirmed the judgment authorizing class certification.

Continue reading "Class Action Defense Cases-Smith v. Illinois Central Railroad: Illinois Supreme Court Agrees With Defense That Class Action Status Should Not Have Granted In Lawsuit Arising From Train Derailment" »

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

The New York Times reports that Merck's defense team has won another Vioxx case, this time in Alabama state court. The lawsuit, filed by a 57-yearold man, blamed Vioxx for a mild heart attack the man suffered. The defense argued that plaintiff was a high risk for a heart attack because he suffered from "diabetes, high blood pressure, high cholesterol and was overweight." Jurors attributed the defense victory to the fact that the plaintiff "had too many health problems before his heart attack to blame Vioxx." Merck still faces more than 27,000 individual lawsuits involving Vioxx, and hundreds of putative class action lawsuits.

The article, entitled "Merck Wins Suit In Alabama Over The Painkiller Vioxx," may be found in Section C. of the December 16, 2006, edition of the New York Times.

Posted In: Class Actions In The News

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress set forth the statutory provisions for private securities litigation in 15 U.S.C. § 77z-1, which provides:

§ 77z-1. Private securities litigation

(a) Private class actions

(1) In general

The provisions of this subsection shall apply to each private action arising under this subchapter that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure.

(2) Certification filed with complaint

(A) In general

Each plaintiff seeking to serve as a representative party on behalf of a class shall provide a sworn certification, which shall be personally signed by such plaintiff and filed with the complaint, that--

(i) states that the plaintiff has reviewed the complaint and authorized its filing;

(ii) states that the plaintiff did not purchase the security that is the subject of the complaint at the direction of plaintiff's counsel or in order to participate in any private action arising under this subchapter;

(iii) states that the plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at deposition and trial, if necessary;

(iv) sets forth all of the transactions of the plaintiff in the security that is the subject of the complaint during the class period specified in the complaint;

(v) identifies any other action under this subchapter, filed during the 3-year period preceding the date on which the certification is signed by the plaintiff, in which the plaintiff has sought to serve, or served, as a representative party on behalf of a class; and

(vi) states that the plaintiff will not accept any payment for serving as a representative party on behalf of a class beyond the plaintiff's pro rata share of any recovery, except as ordered or approved by the court in accordance with paragraph (4).

Continue reading "15 U.S.C. § 77z-1--Private Securities Litigation Under The Securities Act Of 1933" »

Posted In: Statutes & Rules

John O'Dell of the Los Angeles Times reports that Farmers Insurance has settled a class action lawsuit filed in Southern California that alleged the company required the use of substandard metal replacement parts to repair vehicles damaged in a crash. The settlement reportedly requires Farmers Insurance to pay class members between $20 and $40 for each substandard part used in a vehicle repair, together with $17 million in legal fees.

Mr. O'Dell's article, entitled "Farmers Insurance To Settle Suit Over Repairs," may be found in the Business section of the December 16, 2006, edition of the Los Angeles Times.

Posted In: Class Actions In The News

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress provided for the jurisdiction of other governmental agencies over securities and for the severability of the provisions of the Act in 15 U.S.C. § 77y and § 77z, respectively, which provide:

§ 77y. Jurisdiction of other Government agencies over securities

Nothing in this subchapter shall relieve any person from submitting to the respective supervisory units of the Government of the United States information, reports, or other documents that may be required by any provision of law.

§ 77z. Separability

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

Posted In: Statutes & Rules

Judicial Panel Rejects Defense Opposition to Motion for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Grants Motion for Centralization of Class Action Lawsuits in the Southern District of New York

After 19 products liability lawsuits - many of them class action proceedings - were filed against various pharmaceutical companies arising out of the use of Fosamax, a prescription drug manufactured by Merck and used in the treatment of osteoporosis, several plaintiffs' lawyers (apparently supported by plaintiffs in all pending actions) moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407, to centralize the lawsuits for pretrial purposes in either the Southern District of New York or the Middle District of Tennessee. In re Fosamax Products Liab. Litig., 444 F.Supp.2d 1347, 1348 (Jud. Pan.Mult.Lit. 2006). Defense attorneys opposed the motion. Merck's defense team argued that the lawsuits were pending "in a limited number of federal districts, which are capable of managing the litigation without multidistrict proceedings" and that "voluntary alternative coordinating efforts are preferable to Section 1407 transfer." Id., at 1349. The Judicial Panel rejected these arguments, as it routinely has in the past, explaining that centralization "will offer the benefit of placing all actions in this docket before a single judge who can structure pretrial proceedings to consider all parties' legitimate discovery needs, in addition to ensuring that common parties and witnesses are not subjected to discovery demands that duplicate activity that will occur or has already occurred in other actions." Id.

With respect to the merits of the motion, the Judicial Panel found that the litigation presented "complex common factual questions concerning, among other things, 1) the development, testing, manufacturing and marketing of Fosamax, and 2) Merck's knowledge concerning the drug's alleged adverse effects, in particular, osteonecrosis of the jaw." In re Fosamax, at 1349. However, the Panel also held that "claims involving prescription drugs other than Fosamax do not share sufficient questions of fact with claims relating to Fosamax to warrant inclusion of the former claims in MDL-1789 proceedings." Id. The Judicial Panel concluded that the Southern District of New York would be the appropriate transferee court, id., at 1349-50, but excluded therefrom prescription drugs (such as Actonel) other than Fosamax.

NOTE: Based on its conclusion that Actonel should be treated separately from Fosamax, the Judicial Panel ordered that "this docket, originally named MDL-1789--In re Fosamax and Actonel Products Liability Litigation, is renamed as follows: MDL-1789--In re Fosamax Products Liability Litigation." Id., at 1350.

Posted In: Multidistrict Litigation, Class Action Court Decisions

On December 12, 2006, the Sacramento Superior Court gave final approval to a proposed class action settlement, bringing to a close the defense of a statewide class action against Sutter Health. The class action, reportedly covering hundreds of thousands of uninsured patients over a six-year period, alleged that Sutter Health and its affiliated California hospitals charged excessive prices to uninsured patients – allegations that the defense vehemently denied. Under the settlement, uninsured patients may be entitled to receive 25% to 45% discounts off of their Sutter Health-affiliated hospital bills. The complete terms of the settlement are wide-ranging, covering items such as future discount billing through modified debt collection practices.

Posted In: Class Actions In The News