Class Action Defense Blog

Smokers Duped Into Believing that “Light” Cigarettes were Less Harmful New York Court Holds

As anticipated, Judge Jack Weinstein of the United States District Court for the Eastern District of New York issued his ruling this morning on the plaintiffs’ motion to certify a class action against Philip Morris USA, R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., Ligget Group, American Tobacco Co., Altria Group, and British American Tobacco, in a case that alleged the tobacco companies duped smokers into believing that “light” cigarettes were less harmful to them. Schwab v. Phillip Morris USA, Inc., 449 F.Supp.2d 992 (E.D.N.Y. 2006). The court summarized the theory of the case at page 1018 as follows:

Continue reading "Schwab v. Phillip Morris-Class Action Defense Cases: New York Federal Court Certifies Class Action Against Tobacco Companies For Selling "Light" Cigarettes" »

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

Federal Securities Claims Without Fraud Element Must Still be Pled with Particularity if Nonfraud Securities Claim is Part of Defendant’s Alleged Fraudulent Conduct Under the Exchange Act and Rule 10(b)-5

Plaintiffs filed a putative class action under the Securities Act, 15 U.S.C. § 77a et seq., and the Exchange Act, 15 U.S.C. § 78a et seq., alleging that defendant “employed a fraudulent scheme to control the revenue growth; defense attorneys filed a motion to dismiss for failure to meet the pleading requirements of FRCP Rule 9(b) and the federal Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u-4(b). The federal court granted the motion to dismiss, and required that plaintiffs pay defense costs and fees incurred in connection with the motion to dismiss as a prerequisite to plaintiffs’ filing a motion to amend their class action complaint. Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 1275-76 (11th Cir. 2006). Rather than pay these defense costs, plaintiffs allowed the complaint to be dismissed and then appealed. Id., at 1276.

The Eleventh Circuit first observed that Section 11 of the Securities Act creates “virtually absolute [liability], even for innocent misstatements,” as does Section 12(a)(2); thus, “neither allegations of fraud nor scienter are necessarily part of either of these claims.” Wagner, at 1277. The Circuit Court therefore characterized claims under Sections 11 and 12(a)(2) as “nonfraud” claims, and noted: “The question presented . . . [is] whether there are circumstances when [Rule 9(b)] would require nonfraud securities claims to be pled with particularity.” Id. While noting that sister circuits are split on this issue, the Eleventh Circuit adopted the conclusion of the majority of the circuits that have addressed the question and held “Rule 9(b) applies when the misrepresentation justifying relief under the Securities Act is also alleged to support a claim for Fraud under the Exchange Act and Rule 10(b)-5, id. The Circuit Court explained its holding at page 1278 as follows:

Continue reading "Class Action Defense Cases-Wagner v. First Horizon: Eleventh Circuit Holds As A Matter Of First Impression That If Nonfraud Securities Claim Is Part Of Allegedly Fraudulent Conduct Then It Must Be Pleaded With Particularity" »

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

Speculation Mounts as to Whether Class Action Plaintiff Lawyer William Lerach Also will be Indicted

As the class action plaintiff firm Milberg Weiss Bershad & Schulman and two of its partners, David Bershad and Steven Schulman, moves forward, Molly Selvin of the Los Angeles Times reports that the setting of a trial date has been postponed because of the prospect of additional indictments. The federal court reportedly expressed frustration that the government’s 7-year investigation remains ongoing. Selvin also reports that “many observers believe [the additional indictments] could involve William S. Lerach.” The federal court is expected to set a trial date on November 27.

Molly Selvin’s article, entitled “Judge Delays Trial Date for Milberg Weiss Case,” may be found in the Business Section of the September 21, 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 class actions brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. In addition to the statutory provision discussed earlier concerning disclosure of consumer information to the FBI for counterintelligence purposes, Congress enacted rules governing disclosure of such information to governmental agencies for counterterrorism purposes:

§ 1681v. Disclosures to governmental agencies for counterterrorism purposes

(a) Disclosure.

Notwithstanding section 1681b of this title or any other provision of this title, a consumer reporting agency shall furnish a consumer report of a consumer and all other information in a consumer' s file to a government agency authorized to conduct investigations of, or intelligence or counterintelligence activities or analysis related to, international terrorism when presented with a written certification by such government agency that such information is necessary for the agency' s conduct or such investigation, activity or analysis.

(b) Form of certification.

The certification described in subsection (a) shall be signed by a supervisory official designated by the head of a Federal agency or an officer of a Federal agency whose appointment to office is required to be made by the President, by and with the advice and consent of the Senate.

(c) Confidentiality.

No consumer reporting agency, or officer, employee, or agent of such consumer reporting agency, shall disclose to any person, or specify in any consumer report, that a government agency has sought or obtained access to information under subsection (a).

(d) Rule of construction.

Nothing in section 1681u of this title shall be construed to limit the authority of the Director of the Federal Bureau of Investigation under this section.

(e) Safe harbor.

Notwithstanding any other provision of this title, any consumer reporting agency or agent or employee thereof making disclosure of consumer reports or other information pursuant to this section in good-faith reliance upon a certification of a governmental agency pursuant to the provisions of this section shall not be liable to any person for such disclosure under this subchapter, the constitution of any State, or any law or regulation of any State or any political subdivision of any State.

Posted In: FCRA Class Actions, Statutes & Rules

Class action defense attorneys in California will be confronting a new wave of public accommodation/ADA (Americans with Disabilities Act) cases, supplanting new labor law class actions by a substantial margin. 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, but this past week showed a startling increase in the overall number of class action filings and the number of class actions alleging public accommodation/Americans with Disabilities Act (ADA) claims.

This report covers the time period from September 15 - September 21, 2006. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 71 class action lawsuits were filed in these California state and federal courts during that time period, of which 42 – almost 60% – involved public accommodation/ADA claims. The second place category consists of 14 new employment law class action filings (20%).

Posted In: Class Actions In The News

As a resource for class action defense attorneys who defend against class actions brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. Congress enacted special rules governing the disclosure of consumer information to the FBI for purposes of counterintelligence, as set forth in Section 1681u which provides:

§ 1681u. Disclosures to FBI for counterintelligence purposes

(a) Identity of financial institutions.

Notwithstanding section 1681b of this title or any other provision of this title, a consumer reporting agency shall furnish to the Federal Bureau of Investigation the names and addresses of all financial institutions (as that term is defined in section 3401 of Title 12) at which a consumer maintains or has maintained an account, to the extent that information is in the files of the agency, when presented with a written request for that information, signed by the Director of the Federal Bureau of Investigation, or the Director' s designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge of a Bureau field office designated by the Director, which certifies compliance with this section. The Director or the Director's designee may make such a certification only if the Director or the Director's designee has determined in writing, that such information is sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States.

(b) Identifying information.

Notwithstanding the provisions of section 1681b of this title or any other provision of this title, a consumer reporting agency shall furnish identifying information respecting a consumer, limited to name, address, former addresses, places of employment, or former places of employment, to the Federal Bureau of Investigation when presented with a written request, signed by the Director or the Director's designee, which certifies compliance with this subsection. The Director or the Director' s designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge of a Bureau field office designated by the Director may make such a certification only if the Director or the Director' s designee has determined in writing that such information is sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States.

Continue reading "15 U.S.C. § 1681u – Disclosures to FBI for Counterintelligence Purposes: Statutory Provisions for the Class Action Defense Lawyer Who Defends Class Actions Brought Under the FCRA (Fair Credit Reporting Act) " »

Posted In: FCRA Class Actions, Statutes & Rules

California Court Holds as Matter of First Impression that RESPA Prohibits Lender from Marking Up Costs of Another Provider's Services Without Providing Additional Services of its Own

Plaintiffs filed a putative class action lawsuit against Washington Mutual Bank in California state court alleging inter alia violations of California’s unfair competition laws (UCL), Consumers Legal Remedies Act (CLRA), and breach of contract. “The basis of all causes of action was defendants’ overcharging plaintiffs for underwriting, tax services, and wire transfer fees in conjunction with home loans. Defendants charged plaintiffs more for these services than defendants paid the service providers.” McKell v. Washington Mutual Bank, ___ Cal.App.4th ___, 2006 WL 2664130 (Cal.App. September 18, 2006) [Slip Opn., at 2]. Plaintiffs’ UCL claim was premised upon alleged violations of the California Residential Mortgage Lending Act (CRMLA) and the federal Real Estate Settlement Procedures Act (RESPA) and Regulations X, among other state and federal laws. Slip Opn., at 5. The trial court granted a defense motion to dismiss the class action complaint, presumably on the ground that the claims “turn on the alleged existence of an agreement requiring Washington Mutual to charge no more than pass-through costs for underwriting, tax services, and wire transfers,” id., at 3, which plaintiffs could not do. The California Court of Appeal affirmed in part and reversed in part. We do not here discuss those aspects of the trial court’s ruling that the divided appellate court opinion affirmed. Rather, we focus on the Court of Appeal’s holdings that plaintiffs had adequately pleaded UCL and breach of contract claims.

The appellate court first held that the trial court did not err “in requiring plaintiffs to plead a factual basis for implying an agreement by [the Bank] to charge only pass-though costs,” Slip Opn., at 8. But in analyzing the UCL claims, the Court of Appeal explained at page 10,

Continue reading "McKell v. Washington Mutual-Class Action Defense Cases: Defense Motion To Dismiss Class Action Improperly Granted As To Breach of Contract And UCL Claims Based On Federal RESPA Violations California Court Holds" »

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

Illinois Federal Court Grants in Part Motion to Certify Class Action but Dismisses FCRA § 1681m Disclosure Violation Claim

Plaintiffs filed a class action against Home Loan Center alleging that it violated the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., by accessing their credit. Cavin v. Home Loan Center, Inc., 236 F.R.D. 387 (N.D. Ill. 2006). The plaintiffs’ lawyer filed a motion for class certification, together with a motion to compel discovery; defense lawyers argued inter alia that FCRA does not permit private rights of action for alleged violations of the disclosure requirements imposed by FCRA § 1681m. The district court granted in part and denied in part both motions. The court also dismissed plaintiffs’ § 1681m claim, agreeing with defense attorneys that no such claim could be maintained.

The lawsuit arose out of three letters sent to plaintiffs by Home Loan Center concerning a “‘prescreened’ offer of credit [that] is based on information in your credit report indicating that you meet certain criteria.” Unless authorized by the consumer, the FCRA prohibits credit reporting agencies from disclosing consumer information unless “the request is in connection with a ‘firm offer of credit.’” Cavin, at 390 (citing 15 U.S.C. § 1681b(c)(1)(B)). Plaintiffs alleged that the letters were not “firm offers of credit” and, accordingly, the lender violated § 1681n, and they alleged further that the letters violated the disclosure requirements contained in § 1681m. Id. Plaintiffs sought certification of a class action under Rule 23(b)(3), which the district court granted for reasons summarized in the Note below.

Continue reading "Cavin v. Home Loan Center-Class Action Defense Cases: Federal Fair Credit Reporting Act (FCRA) Prohibits Private Right Of Action For Violations Of § 1681m’s Disclosure Requirement Illinois District Court Holds" »

Posted In: FCRA Class Actions, Class Action Court Decisions

Maine Federal Court Denies Joint Motion for “Preliminary Approval” of Proposed Settlement of Class Action Finding that it Lacked Authority Under Rule 23 to Grant the Motion or to Make a “Preliminary Fairness Determination”

In connection with class action lawsuits against General Motors, Toyota, and other car companies, transferred to the District of Maine by the Judicial Panel on Multidistrict Litigation for pretrial purposes, the defense and plaintiff attorneys in the Toyota lawsuit requested that the federal court preliminarily approve a proposed settlement of the class action. In re New Motor Vehicles Canadian Export Antitrust Litig., 236 F.R.D. 53, 55 (D. Maine 2006). The district court denied the request, holding that “Rule 23 does not provide for ‘preliminary approval’ or a ‘preliminary fairness determination.’” Id. The court acknowledged that the Complex Litigation Manual uses that phrase to describe “what a court does in deciding to order notice to the class of a settlement,” but explained that while “it makes sense for a judge to say that a particular settlement has no chance of approval . . . there is criticism of calling this ‘preliminary approval.’” Id., at 55-56 (citations omitted).

Continue reading "Class Action Defense Cases-In re New Motor Vehicles: Federal Court Lacks Authority To Give “Preliminary Approval” To Proposed Settlement Of Class Action Maine District Court Holds" »

Posted In: Class Action Court Decisions

Defense attorneys frequently face class action lawsuits alleging violations of the federal Fair Debt Collection Practices Act (FDCPA), which prohibits abusive, deceptive or otherwise improper debt collection practices by third-party debt collectors. At the same time, however, the FDCPA permits reasonable efforts to collect legitimate debts. The Federal Trade Commission is one of several federal agencies with enforcement obligations under the FDCPA. The FTC has primary enforcement responsibility under the FDCPA, and it is charged with preparing an annual report for Congress summarizing its administrative and enforcement actions it during the prior year. The report also summarizes consumer complaints concerning debt collection practices. The FTC’s 2006 Annual Report to Congress is now published.

Posted In: FDCPA Class Actions

Carrier’s Contract Limited Liability for Late Package Deliveries to Another Free Delivery Justify Trial Court Order Granting Defense Motion for Summary Judgment in Putative Class Action

Plaintiff filed a putative class action against Airborne Express for failing to deliver packages on time, and sought as damages the difference between the value of the service he requested and the value of the service he received. Hicks v. Airborne Express, Inc., ___ N.E.2d ___, 2006 WL 2105657 (Ill.App. July 25, 2006). The defense moved for summary judgment on the grounds that the contract limited the customers’ damages for the carrier’s breach of its promise to deliver a package on time to another delivery free of charge, and that Airborne had provided plaintiff with that remedy. Slip Opn., at 2-3. The trial court agreed with the defense, “finding that the parties had agreed to an exclusive remedy, i.e., another Flight-Ready envelope, for Airborne’s breach of the contract to deliver [plaintiff’s] package by noon the next day.” Id., at 3. The appellate court affirmed.

Continue reading "Airborne Express Class Action Defense Case-Hicks v. Airborne Express: Illinois Appellate Court Affirms Summary Judgment In Favor Of Defense In Breach Of Contract Class Action" »

Posted In: Class Action Court Decisions

After Trial Court Held that Illinois Law Applies to Unfair Business Practice Class Action Against Intel and Certified Only a Statewide Class. Appellate Court Reversed and Held California Law Applies and Nationwide Class Should Have Been Certified

Purchasers of computers run by Intel’s Pentium 4 processors filed a nationwide class action in Illinois state court alleging claims for unfair business practices under California law and Illinois law based on the allegation that, contrary to its billion dollar marketing campaign, the Pentium 4 performed no better than the Pentium III. Barbara’s Sales, Inc. v. Intel Corp., __ N.E.2d __ (Ill.App. July 25, 2006). Defense attorneys opposed class certification in part on the grounds that Illinois law applied thus barring the two claims based on California law - one under California’s Consumer Legal Remedies Act (CLRA) and one under California’s Unfair Competition Law (UCL). The trial court agreed that Illinois law applied and denied class certification on the California-law claims. The trial court also found that Illinois law “could not be applied to a nationwide class action” and so certified only a statewide class under the Illinois Consumer Fraud and Deceptive Business Practices Act claim. Slip Opn., at 4-5. The appellate court reversed, rejecting defense arguments that California law should not be applied.

Continue reading "Intel Class Action Defense Case-Barbara's Sales v. Intel: California Law Applies To Unfair Business Practice Class Action Against Intel And Nationwide Class Should Have Been Certified Illinois Court Holds" »

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

As a resource for the class action defense lawyer who defends against class actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. Congress provided for the relation to State laws in Section 1681t as follows:

§ 1681t. Relation to State laws

(a) In general.

Except as provided in subsections (b) and (c), this title does not annul, alter, affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency.

(b) General exceptions.

No requirement or prohibition may be imposed under the laws of any State

(1) with respect to any subject matter regulated under

(A) subsection (c) or (e) of section 1681b of this title, relating to the prescreening of consumer reports;

(B) section 1681i of this title, relating to the time by which a consumer reporting agency must take any action, including the provision of notification to a consumer or other person, in any procedure related to the disputed accuracy of information in a consumer' s file, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996;

(C) subsections (a) and (b) of section 1681m of this title, relating to the duties of a person who takes any adverse action with respect to a consumer;

(D) section 1681m(d) of this title, relating to the duties of persons who use a consumer report of a consumer in connection with any credit or insurance transaction that is not initiated by the consumer and that consists of a firm offer of credit or insurance;

(E) section 1681c of this title, relating to information contained in consumer reports, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996;

(F) section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply

(i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996); or

(ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996);

(G) section 1681g(e) of this title, relating to information available to victims under section 1681g(e) of this title;

Continue reading "15 U.S.C. § 1681t – Relation to State Laws: Statutory Provisions for Defense Attorneys Who Defend Class Actions Brought Under the FCRA (Fair Credit Reporting Act)" »

Posted In: FCRA Class Actions, Statutes & Rules

As a resource for class action defense attorneys who defend against class actions brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. Congress specifically addressed the issue of the sharing of consumer information among affiliates, providing as follows in Section 1681s-3:

§ 1681s-3. Affiliate sharing

(a) Special Rule for Solicitation for Purposes of Marketing

(1) Notice.

Any person that receives from another person related to it by common ownership or affiliated by corporate control a communication of information that would be a consumer report, but for clauses (i), (ii), and (iii) of section 1681a(d)(2)(A) of this title, may not use the information to make a solicitation for marketing purposes to a consumer about its products or services, unless—

(A) it is clearly and conspicuously disclosed to the consumer that the information may be communicated among such persons for purposes of making such solicitations to the consumer; and

(B) the consumer is provided an opportunity and a simple method to prohibit the making of such solicitations to the consumer by such person.

(2) Consumer Choice

(A) In general.

The notice required under paragraph (1) shall allow the consumer the opportunity to prohibit all solicitations referred to in such paragraph, and may allow the consumer to choose from different options when electing to prohibit the sending of such solicitations, including options regarding the types of entities and information covered, and which methods of delivering solicitations the consumer elects to prohibit.

(B) Format.

Notwithstanding subparagraph (A), the notice required under paragraph (1) shall be clear, conspicuous, and concise, and any method provided under paragraph (1)(B) shall be simple. The regulations prescribed to implement this section shall provide specific guidance regarding how to comply with such standards.

(3) Duration

(A) In general.

The election of a consumer pursuant to paragraph (1)(B) to prohibit the making of solicitations shall be effective for at least 5 years, beginning on the date on which the person receives the election of the consumer, unless the consumer requests that such election be revoked.

(B) Notice upon expiration of effective period.

At such time as the election of a consumer pursuant to paragraph (1)(B) is no longer effective, a person may not use information that the person receives in the manner described in paragraph (1) to make any solicitation for marketing purposes to the consumer, unless the consumer receives a notice and an opportunity, using a simple method, to extend the opt-out for another period of at least 5 years, pursuant to the procedures described in paragraph (1).

Continue reading "15 U.S.C. § 1681s-3 – Affiliate Sharing: Statutory Provisions for Attorneys who Defend Class Action Brought Under the FCRA (Fair Credit Reporting Act)" »

Posted In: FCRA Class Actions, Statutes & Rules

California class action defense attorneys once again confront more public accommodation lawsuits than employment law claims. In an effort to assist class action defense attorneys to anticipate claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. Thus far, employment law cases have led the list each week since we began making these reports. This week, however, class action complaints involving public accommodation/Americans with Disabilities Act (ADA) cases lead the list. This report covers the time period from September 8 - September 14, 2006. We include only those categories that include 10% or more of the class action filings during the relevant timeframe. Approximately 47 class action lawsuits were filed in these California state and federal courts during that time period, of which 15 involved public accommodation/ADA claims (32%). The second place category consists of 14 new employment law class action filings (30%).

Posted In: Class Actions In The News

Resolving Issue of First Impression, Ninth Circuit Affirms Order Granting Defense Motion to Dismiss ECPA Class Action Alleging “Secondary Liability” Claims Under Federal Electronic Communications Privacy Act

DirecTV filed suit against an individual in Canada to enjoin the pirating of its satellite digital television signal and, in the course of that litigation, obtained a court order permitting it to seize evidence related to piracy activities that was accessed, recorded and processed by a third party, ICG. The order provided for the information “to be held in the ‘custody of [DirecTV’s] solicitors pending the trial” and for the appointment of an “independent solicitor”; DirecTV instructed, however, that all information was to be held by the independent solicitor rather than its own lawyers. After the Canadian action was completed, DirecTV filed suit in the United States against Lawrence Freeman, alleging that he engaged in “the distribution of illegal signal theft devices.” After the parties entered into a settlement and release of that lawsuit, Freeman filed a putative class action against DirecTV and ICG for allegedly violating the federal Electronic Communications Privacy Act (ECPA), 18 U.S.C. §§ 2702 and 2707. Freeman v. DirecTV, Inc., 457 F.3d 1001, 1002-03 (9th Cir. 2006). Defense attorneys moved to dismiss the action on three grounds; the federal district court granted the motion on the ground that “that 18 U.S.C. § 2702 does not provide a basis for asserting conspiracy and aiding and abetting claims.” Id., at 1004. The Ninth Circuit affirmed, summarizing at page 1009:

Continue reading "Freeman v. DirecTV-Class Action Defense Cases: Federal Electronic Communications Privacy Act (ECPA) Does Not Provide Private Right Of Action For Secondary Liability Claims Ninth Circuit Holds" »

Posted In: Class Action Court Decisions

Unopposed Defense Motion to Centralization of Individual and Class Action Lawsuits Based on Book “A Million Little Pieces” Granted

Following the disclosure of false information in James Frey’s book A Million Little Pieces¸ and the filing of at least a dozen individual and class action lawsuits alleging “various state statutory and common law claims, such as negligence, consumer fraud, breach of contract, and unjust enrichment,” defense attorneys for Random House and Doubleday moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 for an order centralizing for pretrial purposes all pending and tag-along lawsuits in the Southern District of New York. In re “A Million Little Pieces” Litig., 435 F.Supp.2d 1336, 1337-38 (Jud.Pan.Mult.Lit. 2006). Centralization was unopposed, though the plaintiffs did not agree on the appropriate transferee court. The Judicial Panel granted the motion, noting that the lawsuits “share allegations” including “that the book contained material fabrications” and “that advertisements and marketing concerning the book were false and misleading, inasmuch as the book was marketed as a work on nonfiction.” Id., at 1337-38. The Panel agreed with defense attorneys that the Southern District of New York was an appropriate transferee court. Id., at 1338.

NOTE: We summarize this order for the purpose of noting that soon after the actions were centralized the parties reached a proposed settlement for resolution of the litigation. The author believes that this is one of the main benefits of centralization under 28 U.S.C. § 1407 - the defense is far more likely to agree to a settlement when it will dispose of all pending litigation rather than trying to reach piecemeal resolutions in various lawsuits, particularly when the settlement reached in one lawsuit may be used as a floor for settlement discussions by plaintiffs’ attorneys in the other lawsuits.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Melanie Warner and Colin Moynihan report a New York federal court is considering whether to certify as a class action a federal RICO (Racketeer Influenced Corrupt Organizations Act) lawsuit that alleges tobacco companies “deceived smokers for years about the safety of light cigarettes” by making smokers think that they were “safer or less addicting.” Defense attorneys strenuously opposed the motion, reportedly arguing differences in the reasons people smoke - such as “that many people smoked light cigarettes because they liked the taste, not for health reasons or as part of an attempt to quit smoking” - and differences in the ways people smoked rendered the case unsuitable for treatment as a class action. Warner and Moynihan state that the federal court questioned plaintiffs’ attorneys about the size of the class (which plaintiffs’ lawyers estimate to be in the tens of millions given that the sale of light cigarettes accounts for 45% of the market) and the method by which they estimated damages to be in excess of $20 billion.

While many similar cases have proved unsuccessful, the New York federal judge will be considering the motion in the wake of the detailed 1,600-page opinion last month by District of Columbia federal judge Gladys Kessler, “who found that cigarette companies engaged in decades of fraud and racketeering, including misleading smokers and concealing information about the health risks of light cigarettes.” The article describes Judge Kessler’s opinion as “a searing indictment of conduct by tobacco companies over the last 40 years.”

The article by Melanie Warner and Colin Moynihan, entitled “Judge Weighs New Trial Against Tobacco Companies,” may be found in Section C of the September 14, 2006 edition of the New York Times.

Posted In: Class Actions In The News

Maryland Federal Court Grants Defense Motion to Dismiss Class Action Despite Plaintiffs’ Attempt to Plead Around Securities Litigation Uniform Standards Act of 1998 (SLUSA)

Plaintiffs filed putative class action lawsuits in Illinois state court alleging state law causes of action carefully pleaded “to avoid the preemptive scope of the Securities Litigation Uniform Standards Act” and focusing on the theory “that the defendants negligently breached state common law duties” by using “stale” mutual fund prices - that is, mutual fund prices not based on “the most recent market information.” In re Mutual Funds Investment Litig., 437 F.Supp.2d 439, 440 (D. Md. 2006). Defense attorneys removed the action to federal court, and the Judicial Panel on Multidistrict Litigation transferred the cases to Judge Motz of the Maryland district court. After the defense moved to dismiss the case as preempted by SLUSA, “plaintiffs filed amended complaints . . . that eliminate any explicit mention of misrepresentation and deception, and that plead only one cause of action: common law negligence.” Id., at 442.

Continue reading "Class Action Defense Cases-In re Mutual Funds: Federal District Court Grants Defense Motion To Dismiss Class Action Because “Plaintiffs’ Artful Attempt At Avoiding SLUSA Preemption Ultimately Fails”" »

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

Becky Yerak of the Chicago Tribune reports that a federal district court has denied a request to certify a class action of Mississippi policyholders against Allstate Insurance Company arising out of the handling of Hurricane Katrina claims, agreeing with defense attorneys that "each contract is a separate transaction" and that "[t]he storm was vastly different in its effect depending on the specific geographic location of each particular home." Yerak notes that less than a month ago another Mississippi federal court denies a motion for class-action certification in a lawsuit against State Farm Fire & Casualty Company by its policyholders arising out of the Hurricane Katrina claims. Plaintiffs' lawyer in the Allstate case told Yerak that he will seek rehearing of the ruling and then file an appeal.

Becky Yerak's article, entitled "Katrina ruling favors Allstate: No class-action status for Mississippi claims," may be found in the Business section of the September 12, 2006 edition of the Chicago Tribune.

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