Class Action Defense Blog

As a resource for attorneys defending against class actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. The statutory provisions concerning jurisdiction of courts and applicable statutes of limitation are set forth in Section 1681m as follows:

§ 1681p. Jurisdiction of courts; limitation of actions

An action to enforce any liability created under this title may be brought in any appropriate United States district court, without regard to the amount in controversy, or in any other court of competent jurisdiction, not later than the earlier of (1) 2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability; or (2) 5 years after the date on which the violation that is the basis for such liability occurs.

Posted In: FCRA Class Actions, Statutes & Rules

As a resource for defense attorneys who defend against class action under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. The article sets forth the statutory provisions covering statutory liability for willful and negligent noncompliance with FCRA, which is contained in Section 1681n and 1681o, respectively:

§ 1681n. Civil liability for willful noncompliance

(a) In general.

Any person who willfully fails to comply with any requirement imposed under this title with respect to any consumer is liable to that consumer in an amount equal to the sum of

(1) (A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; or

(B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

(2) such amount of punitive damages as the court may allow; and

(3) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney' s fees as determined by the court.

(b) Civil liability for knowing noncompliance.

Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose shall be liable to the consumer reporting agency for actual damages sustained by the consumer reporting agency or $1,000, whichever is greater.

(c) Attorney's fees.

Upon a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney' s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

§ 1681o. Civil liability for negligent noncompliance

(a) In general.

Any person who is negligent in failing to comply with any requirement imposed under this title with respect to any consumer is liable to that consumer in an amount equal to the sum of

(1) any actual damages sustained by the consumer as a result of the failure; and

(2) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney' s fees as determined by the court.

(b) Attorney's fees.

On a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney' s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

Posted In: FCRA Class Actions, Statutes & Rules

Ninth Circuit Resolves Several Issues of First Impression Concerning Federal Fair Debt Collection Practices Act (FDCPA), Holding Debtor Can Waive “Cease Communication” Directive, Debt Collectors May Rely on Information Provided by Creditors to Verify Debt, FDCPA is a Strict Liability Statute, and One Act Can Support Multiple Violations

Debtors filed suit against a debt collection agency, its employee and its outside counsel alleging various violations of the federal Fair Debt Collection Practices Act (FDCPA) and Oregon’s Unfair Debt Collection Practices Act. The defense and debtors filed cross-motions for summary judgment; the district court granted the motion brought by the attorney, partially granted the motion brought by the debt collector, and denied the motion brought by the debtors. The Ninth Circuit affirmed in part and reversed in part. Clark v. Capital Credit & Collection Services, Inc., ___ F.3d ___, 2006 WL 2441705 (9th Cir. August 24, 2006). We provide a brief summary of the case, which the Ninth Circuit characterized as “present[ing] a complicated web of problems that has required us to address a litany of issues for which there is a dearth of applicable precedent” and for which it “endeavored to adopt a construction of the FDCPA that recognizes ‘there is room within the [FDCPA] for ethical debt collectors to make occasional unavoidable errors,” Slip Opn., at 10165 (citation omitted).

In an effort to collect a debt, a debt collector sent the debtor a collection notice letter. The debtor disputed the debt and detailed billing problems with the creditor. The debt collector sent a second notice, enclosing an itemized statement from the creditor and claiming that the statement adequately verified the debt. The debtor requested “proper verification” and instructed the debt collector to cease making telephone calls. Slip Opn., at 10143. The debt collector then retained counsel who, in response to a demand for verification of the debt and an end to telephone communications, responded with the same itemized statement previously provided to the debtor. The debtor subsequently called the attorney to discuss the debt, but received a return call from the debt collection agency that “so upset [her] that she was required to obtain therapy.” Id., at 10144. The debtors filed suit.

Continue reading "Class Action Defense Issues-Clark v. Capital Credit: Ninth Circuit Affirms In Part And Reverses In Part Federal District Court Judgment In Favor Defense In FDCPA (Fair Debt Collection Practices Act) Case" »

Posted In: FDCPA Class Actions, Class Action Court Decisions

District Court Must Examine Class Action Attorney Fee Awards Closely but not According to a Strict Formula and, so Viewed, Approval of Class Action Settlement was Proper

Plaintiffs filed a federal securities fraud class action against AT&T based on allegedly false statements that artificially inflated stock prices. The defense waged an intense battle for several years but ultimately settled the class action claims for $100 million eight (8) days into a jury trial. The district court approved the settlement, which included payment of attorney fees equal to 21.25% of the settlement proceeds ($21.25 million), and four objectors appealed. The Third Circuit affirmed. In re AT&T Corp. Securities Litig., 455 F.3d 160 (3d Cir. 2006).

The July 20, 2006 opinion details the typical procedure for assessing attorney fees in the Third Circuit, and analyzed each of the factors the district court was required to consider when determining whether to approve a class action settlement. In the Third Circuit, those factors are set forth in Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975), and include:

Continue reading "In re AT&T-Class Action Defense Cases: District Court Did Not Abuse Its Discretion In Approving $21 Million Attorney Fee Award Out Of $100 Million Securities Fraud Class Action Settlement Fund Third Circuit Holds" »

Posted In: Class Action Court Decisions

Court of Appeals Reverses District Court Denial of Motion to Remand Because Defense Failed to Satisfy $75,000 Amount-In-Controversy Requirement Under 28 U.S.C. § 1332, and Holds as Matter of First Impression in Sixth Circuit that Punitive Damages may not be Aggregated to Meet Threshold

After plaintiffs filed a putative class action in state court against several cellular telephone companies arising out of the allegedly false representation that customers “would not be charged for unanswered phone calls or those that generated a busy signal,” and praying for “an unspecified amount of compensatory damages, injunctive relief, restitution, [and] disgorgement,” defense attorneys removed the action to federal court on the basis of diversity jurisdiction. Everett v. Verizon Wireless, Inc., 460 F.3d 818 (6th Cir. 2006). Plaintiffs moved to remand the action to state court on the ground that the defense had not satisfied its burden of establishing that the $75,000 amount-in-controversy requirement, but the district court denied the motion holding that “the size of the disgorgement claim met this threshold.” Id., at 821. Eventually, the federal action involved but a single class representative and a single defendant, and the district court granted a defense motion for summary judgment as to the claims remaining against it. Plaintiff appealed only the district court’s remand order, not the ruling on the merits. Id. The Circuit Court agreed with plaintiff’s argument and reversed.

Continue reading "Everett v. Verizon-Class Action Defense Cases: Defense Failed To Establish Amount In Controversy For Removal Of Class Action To Federal Court Because Neither Disgorgement Nor Punitive Damage Claims May Be Aggregated Sixth Circuit Holds" »

Posted In: Removal & Remand, Class Action Court Decisions

Federal Court Holds Decertification of Class Action Appropriate Where Defense Lacks Financial Ability to Satisfy Claims

Plaintiffs filed a class action against defendants, including The Credit Store, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA); a Texas federal district court certified the class action, but the defense delayed implementation of the certification order by filing a bankruptcy petition. The district court decertified the class action against The Credit Store sua sponte because it lacked the financial ability to satisfy any judgment against it. Barnett v. Experian Information Solutions, Inc., 236 F.R.D. 307 (E.D. Tex. 2006). The district court summarized the allegations against The Credit Store as follows: "The plaintiffs contend that the defendant purchased old debts and changed the date of last activity on the accounts such that they could be reported to credit reporting agencies under the Fair Credit Reporting Act. This gave the debt collectors leverage to collect the obsolete debts." Id., at 308.

Continue reading "Barnett v. Experian-Class Action Defense Cases: Texas Court Decertifies Class Action Under Federal Fair Debt Collection Practices Act (FDCPA) Decertified Because Defendant In Bankruptcy" »

Posted In: FDCPA Class Actions, Class Action Court Decisions

Second Circuit Holds that Once District Court Granted Defense Motion to Dismiss Federal Claims that Provided Federal Jurisdiction it Should have Remanded State-Law Class Action Claims to State Court Rather than Dismissing Them with Prejudice

Plaintiffs filed a putative class action against asserting various federal and state-law claims based on allegedly inflated heath care treatment rates. The defense moved to dismiss the class action complaint in its entirety. The district court granted the defense motion, and plaintiffs appealed the dismissal of three of their state-law class action claims arguing that (1) the court should have remanded the claims to state court once it disposed of the federal class action claims, and (2) even if the court should have retained jurisdiction, it erred in dismissing the state-law claims. Kolari v. New York-Presbyterian Hosp., 455 F.3d 118 (2d Cir. 2006). Because the Second Circuit agreed with the first argument advanced by plaintiffs, if did not reach the latter argument. Id., at 119.

Continue reading "Class Action Defense Cases-Kolari v. New York-Presbyterian Hospital: Federal District Court Erred In Exercising Supplemental Jurisdiction And Dismissing Class Action State-Law Claims Second Circuit Holds" »

Posted In: Removal & Remand, Class Action Court Decisions

Judicial Panel on Multidistrict Litigation (MDL) Grants Defense Motion Under § 1407 Motion to Consolidate Cases for Pretrial Purposes Before Class Action Judge even though Court-Approved Partial Settlement of Class Action is Pending

More than two dozen lawsuits – including at least one class action – were filed against Qwest Communications arising out of “alleged financial irregularities in connection with Qwest securities.” Defense attorneys sought to centralize pretrial proceedings under 28 U.S.C. § 1407; plaintiffs’ lawyers in several actions objected. The Judicial Panel on Multidistrict Litigation (MDL) granted the defense motion. In re Qwest Communications Int’l, Inc., Securities & “ERISA” Litig. (No. II), 444 F.Supp.2d 1343 (Jud.Pan.Mult.Lit. 2006). Objecting plaintiffs argued “transfer should be denied because 1) a partial settlement has been approved in class action proceedings in the District of Colorado that have been pending since 2001; 2) alternatives to 1407 transfer were available to address any common discovery matters and to prevent inconsistent pretrial rulings; and/or 3) transfer would be unduly burdensome or otherwise prejudicial.” Id., at 1345. The Panel rejected these claim, explaining at page 1345:

Continue reading "Qwest Class Action Defense Case-In re Qwest Communications: Multidistrict Litigation (MDL) Judicial Panel Grants Defense Motion To Centralize Securities Cases In District Of Colorado Where Class Action Is Pending" »

Posted In: Multidistrict Litigation, Class Action Court Decisions

Georgia Federal District Court Holds that TILA (Truth in Lending Act) and Regulation Z do not Require Disclosure of "Administrative Charges"

A putative class action was filed in state court alleging inter alia that a dental fee payment plan violated the federal Truth in Lending Act (TILA), 15 U.S.C. §§ 1601 et seq., and Regulation Z because the lender kept a portion of the loan proceeds to cover an "administrative charge" rather than forwarding all sums borrowed to the dentist. Jones v. People's Heritage Bank, 433 F.Supp.2d 1328 (S.D. Ga. 2006). The district court agreed with defense attorneys that the terms of the loan were fairly disclosed, and so dismissed the federal TILA claim in the class action complaint and remanded the balance of the action to state court.

Plaintiff required $10,000 in dental work, half of which was covered by insurance. To pay the remaining $5,000, plaintiff elected to finance the dental work through a dental fee plan offered by her dentist through a lender, AmeriFee. The loan contract stated that the $5,000 would be paid to the dentist; AmeriFee, however, kept 7.5% of the loan amount ($375) as an "administrative charge." Plaintiff's class action complaint alleged that the failure to disclose the "administrative charge" for loan transactions violated TILA. Jones, at 1329. Specifically, the class action complaint alleged that this conduct violated state law and constituted a breach of contract, and that it also violated TILA and Reg Z "by failing to disclose and by making a misrepresentation of the amount financed and to whom the amount of the loan was paid." Id., at 1331. In essence, plaintiff argued that her loan amount should have been only $4,625 - the amount the dentist received - and that the $375 administrative fee qualified as a "finance charge," id., at 1333.

Continue reading "Jones v. People's Heritage Bank-Class Action Defense Cases: Lender's Retention of Portion Of Loan Proceeds As "Administrative Charge" Does Not Violate Federal Truth In Lending Act Georgia Court Holds" »

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

Judicial Panel on Multidistrict Litigation (MDL) Grants Motion To Centralize Litigation for Pretrial Purposes and Selects District Where Manufacturing Facility is Located as Transferee Court

A multitude of lawsuits, including several putative nationwide class action lawsuits, were filed against Bausch & Lomb arising out of its ReNu contact lens solution, which Bausch & Lomb (“B & L”) withdrew from the market after it was associated fungal keratitis (a type of eye infection). Several parties requested that the Judicial Panel on Multidistrict Litigation (MDL) centralize the litigation for pretrial purposes under 28 U.S.C. § 1407. The Panel agreed that such centralization would “serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation” because the action shared factual allegations concerning “i) the development, testing, manufacturing and marketing of Renu with MoistureLoc; and ii) B & L's knowledge concerning Renu with MoistureLoc's alleged adverse effects, in particular, the potential for this product to cause fungal keratitis.” In re Bausch & Lomb Inc. Contact Lens Solution Prods. Liab. Litig., 444 F.Supp.2d 1336, 1338 (Jud.Pan.Mult.Lit. 2006).

In selecting the District of South Carolina as the appropriate transferee court, the Panel noted, “Relevant discovery may be found in this district, inasmuch as B & L has a manufacturing facility located there.” In re Bausch & Lomb, at 1338.

Posted In: Multidistrict Litigation, Class Action Court Decisions

As a resource for defense attorneys who defend against class action under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. The article sets forth the statutory provisions concerning requirements placed on users of consumer reports:

§ 1681m. Requirements on users of consumer reports

(a) Duties of users taking adverse actions on the basis of information contained in consumer reports.

If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall

(1) provide oral, written, or electronic notice of the adverse action to the consumer;

(2) provide to the consumer orally, in writing, or electronically

(A) the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person; and

(B) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken; and

(3) provide to the consumer an oral, written, or electronic notice of the consumer' s right

(A) to obtain, under section 1681j of this title, a free copy of a consumer report on the consumer from the consumer reporting agency referred to in paragraph (2), which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and

(B) to dispute, under section 1681i of this title, with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency.

(b) Adverse Action Based on Information Obtained from Third Parties Other than Consumer Reporting Agencies

(1) In general.

Whenever credit for personal, family, or household purposes involving a consumer is denied or the charge for such credit is increased either wholly or partly because of information obtained from a person other than a consumer reporting agency bearing upon the consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of such information shall, within a reasonable period of time, upon the consumer' s written request for the reasons for such adverse action received within sixty days after learning of such adverse action, disclose the nature of the information to the consumer. The user of such information shall clearly and accurately disclose to the consumer his right to make such written request at the time such adverse action is communicated to the consumer.

(2) Duties of Person Taking Certain Actions Based on Information Provided by Affiliate

(A) Duties, generally.

If a person takes an action described in subparagraph (B) with respect to a consumer, based in whole or in part on information described in subparagraph (C), the person shall

(i) notify the consumer of the action, including a statement that the consumer may obtain the information in accordance with clause (ii); and

(ii) upon a written request from the consumer received within 60 days after transmittal of the notice required by clause (i), disclose to the consumer the nature of the information upon which the action is based by not later than 30 days after receipt of the request.

(B) Action described.

An action referred to in subparagraph (A) is an adverse action described in section 1681a(k)(1)(A) of this title, taken in connection with a transaction initiated by the consumer, or any adverse action described in clause (i) or (ii) of section 1681a(k)(1)(B) of this title.

(C) Information described. Information referred to in subparagraph (A)

(i) except as provided in clause (ii), is information that

(I) is furnished to the person taking the action by a person related by common ownership or affiliated by common corporate control to the person taking the action; and

(II) bears on the credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living of the consumer; and

(ii) does not include

(I) information solely as to transactions or experiences between the consumer and the person furnishing the information; or

(II) information in a consumer report.

Continue reading "15 U.S.C. § 1681m – Requirements on Users of Consumer Reports: Statutory Language of the FCRA (Fair Credit Reporting Act) for the Class Action Defense Lawyer" »

Posted In: FCRA Class Actions, Statutes & Rules

Circuit Court Affirms District Court Order Granting Defense Motion to Dismiss ERISA Class Action Complaint Because Plaintiff Failed to Exhaust Administrative Remedies

An employee filed a putative ERISA class action on behalf of his employer’s health insurance plan against the Pharmacy Benefits Manager alleging breach of fiduciary duties for profiting from “undisclosed discounts, rebates, coupons and other forms of compensation from drug companies and pharmacies.” The district court granted the defense motion to dismiss the class action with prejudice because plaintiff failed to exhaust his administrative remedies, and the Eleventh Circuit affirmed. Bickley v. Caremark RX, Inc., 461 F.3d 1325 (11th Cir. 2006).

The Circuit Court summarized the allegations in plaintiff’s class action complaint at page 1328 as follows:

Continue reading "Class Action Defense Cases-Bickley v. Caremark: ERISA Class Action Plaintiff Properly Required To Exhaust Administrative Remedies Eleventh Circuit Holds" »

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

Federal District Court Denies Motion for Reconsideration of Order Denying Motion to Remand Class Action to State Court Because Defense Established Jurisdiction Under Class Action Fairness Act (CAFA).

Plaintiff filed a putative antitrust class action against Intel Corporation in state court, which the defense removed to federal court under CAFA (Class Action Fairness Act). The district court denied plaintiff’s motion to remand the class action to state court, and plaintiff moved for reconsideration. In re Intel Corp. Microprocessor Antitrust Litig., 436 F.Supp.2d 687 (D. Del. 2006). The district court explained that it refused to remand the lawsuit to state court because the defense “had carried its burden of proving that federal jurisdiction exists” because the defense “carr[ied] its burden of setting out the amount in controversy” and plaintiff did not “establish to a legal certainty that the amount in controversy was less than the statutorily required $5,000,000.” Id., at 688. Plaintiff’s motion for reconsideration argued that the district court erred by (1) failing to consider his evidence concerning the amount in controversy, and (2) accepting Intel’s estimate which was based on the cost of the computer as a whole rather than the cost of the microprocessor itself. Id., at 689. The district court denied plaintiff’s motion.

Continue reading "In re Intel-Class Action Defense Cases: Defense Keeps Class Action Removed Under CAFA (Class Action Fairness Act) In Federal Court Because Amount In Controversy Exceeds $5 Million" »

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

As a resource for defense attorneys who defend against class action under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. The article sets forth the statutory provisions concerning public record information and restrictions on investigative consumer reports, contained in Sections 1681k and 1681l, respectively:

§ 1681k. Public record information for employment purposes

(a) In general.

A consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer' s ability to obtain employment shall

(1) at the time such public record information is reported to the user of such consumer report, notify the consumer of the fact that public record information is being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported; or

(2) maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer' s ability to obtain employment is reported it is complete and up to date. For purposes of this paragraph, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item at the time of the report is reported.

(b) Exemption for national security investigations.

Subsection (a) does not apply in the case of an agency or department of the United States Government that seeks to obtain and use a consumer report for employment purposes, if the head of the agency or department makes a written finding as prescribed under section 1681b(b)(4)(A) of this title.

§ 1681l. Restrictions on investigative consumer reports

Whenever a consumer reporting agency prepares an investigative consumer report, no adverse information in the consumer report (other than information which is a matter of public record) may be included in a subsequent consumer report unless such adverse information has been verified in the process of making such subsequent consumer report, or the adverse information was received within the three-month period preceding the date the subsequent report is furnished.

Posted In: FCRA Class Actions, Statutes & Rules

Judicial Panel on Multidistrict Litigation (MDL) Grants Motions by Defense and Plaintiffs to Centralize Class Action Antitrust Cases under 28 U.S.C. § 1407 for Pretrial Purposes

Several class action lawsuits were filed against Sony BMG Music Entertainment, Sony Corporation of America, Bertelsmann Music Group, Bertelsmann, Inc., Universal Music Group, Time Warner, Warner Music Group and EMI Music North America alleging “that the various defendants illegally conspired to artificially fix or maintain the prices of digitally formatted music offered for sale on the internet in violation of 1) Section 1 of the Sherman Act, 15 U.S.C. § 1, 2) various states' antitrust and consumer protection statutes, and/or 3) state common law such as unjust enrichment.” In re Digital Music Antitrust Litig., ___ F.Supp.2d ___, 2006 WL 2422644 (Jud.Pan.Mult.Lit., August 16, 2006), Slip Opn., at 2. Pursuant to 28 U.S.C. § 1407, the defense filed a motion with Judicial Panel on Multidistrict Litigation (MDL) seeking centralization of the lawsuits for pretrial purposes in the Southern District of New York; the plaintiffs’ lawyer for an action pending the Southern District of New York filed a motion with the Judicial Panel seeking the same order. Other plaintiff attorneys sought transfer to the Northern District of California. Id., at 1.

The Panel granted the motions to centralize the actions under 28 U.S.C. § 1407, and agreed that the Southern District of New York was the appropriate transferee court: “Most defendants are headquartered in the Southern District of New York, and some relevant witnesses and documents may be located there. Moreover, this district enjoys the support of the defendants as well as some plaintiffs in this litigation.” In re Digital Music, at 2.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Judicial Panel on Multidistrict Litigation (MDL) Grants Motion To Centralize Litigation in Federal Fair Labor Standards Act (FLSA) Overtime Case for Pretrial Purposes Over Defense Objection

Current and former employees filed a "collective" action against Cintas Corp. in the Northern District of California alleging failure to pay overtime in violation of the federal Fair Labor Standards Act (FLSA) (the Veliz action) involving 2,000 plaintiffs. Cintas (as plaintiff) filed 70 actions against approximately 1800 of the Veliz plaintiffs to compel arbitration. The Veliz plaintiffs moved the Judicial Panel on Multidistrict Litigation (MDL) pursuant to 28 U.S.C. § 1407 to centralize the actions for pretrial purposes; the defense objected arguing, in part, that the lawsuits it had filed were not "civil actions" and were therefore outside the jurisdiction of the Panel. The Panel disagreed: "In order to effectuate the statutory objectives, transfer under Section 1407 should contemplate the broadest sweep of the term, 'civil action.'" In re Cintas Corp. Overtime Pay Arbitration Litig., 444 F.Supp.2d 1353, 1355 (Jud.Pan.Mult.Lit. 2006). One reason the Panel ordered centralization was because courts in each of the 71 lawsuits would be required to interpret identical contractual arbitration clauses and determine whether to compel arbitration. Id. The Panel selected the Northern District of California as the appropriate transferee court "because i) the district is where the first filed and significantly more advanced action is pending before a judge already well versed in the issues presented by the litigation; and ii) all parties are in agreement that if the litigation is centralized, the California district should be selected as transferee forum." Id.

Posted In: Multidistrict Litigation, Class Action Court Decisions

Judicial Panel on Multidistrict Litigation (MDL) Grants § 1407 Motion to Centralize Pretrial Proceedings for Putative Nationwide Class Actions in District Where Defense Corporate Headquarters is Located

Six lawsuits, including five putative nationwide class action cases, were filed against McDonald’s which – though alleging various theories of liability – were all based on the central allegation that McDonald’s “misled the public regarding the presence of gluten, wheat or dairy derivatives in its french fries.” A motion was filed with the Judicial Panel on Multidistrict Litigation (MDL) to consolidate pretrial proceedings under 28 U.S.C. § 1407, and all parties agreed that the Northern District of Illinois was the appropriate transferee district. The Panel agreed, finding: “The Northern District of Illinois is a likely source of relevant documents and witnesses, inasmuch as McDonald's headquarters is located there.” In re McDonald’s French Fries Litig., 444 F.Supp.2d 1342, 1343 (Jud.Pan.Mult.Lit. 2006).

Posted In: Multidistrict Litigation, Class Action Court Decisions

Class action plaintiff firm Milberg Weiss Bershad & Schulman LLP and two of the firm's top partners, David Bershad and Steven Schulman - indicted in mid-May 2006 for paying millions of dollars in kickbacks to clients to serve as plaintiffs - continues to top-notch trial lawyers. The latest to leave, according to Julie Creswell of the New York Times, is Patricia Hynes, who joined Milberg Weiss in 1982. Ms. Hynes' decision is particularly intriguing because she moves from representing class action plaintiffs to defense work at Allen & Overy.

Creswell notes, "Milberg Weiss has struggled to keep lawyers, clients and crucial cases after a federal grand jury in Los Angeles indicted the firm and two of its name partners in May on criminal charges involving $11.3 million in illegal secret payments that were made to individuals who served as plaintiffs in more than 150 lawsuits over several years." The exodus has caused Milberg Weiss to close its offices in Boca Raton, Florida and in Washington, and Creswell reports that an office is Delaware will soon follow.

Julie Creswell's article, entitled "Another Prominent Lawyer Departs From Milberg Weiss," may be found in Section C. of today's edition of the New York Times.

Posted In: Class Actions In The News

Massachusetts Federal Court Denies Defense Motion to Dismiss "Marginal" Claims at Pleading Stage

Circuit City customers brought a putative class action asserting various state law claims arising out of the allegedly premature termination of product warranties, and the defense filed a motion to dismiss. Schacter v. Circuit City Stores, Inc., 433 F.Supp.2d 140 (D. Mass. 2006). Specifically, plaintiffs purchased a telephone from Circuit City, together with an additional two-year warranty from Circuit City; the telephone failed and the store gave them a gift card for the full amount of the purchase price, including taxes. The store did not give them any credit for the "unused" portion of their two-year warranty because reimbursement or replacement terminated the warranty. Id., at 142. Plaintiffs' class action complaint alleged breach of contract, promissory estoppel, unjust enrichment, conversion, and violation of the Massachusetts Consumer Protection Act. Id., at 141. Defense attorneys moved to dismiss the complaint. The district court summarized the positions of the defense and plaintiffs at page 143 as follows:

Continue reading "Schacter v. Circuit City-Class Action Defense Cases: Massachusetts Federal Court Denies Defense Motion To Dismiss Class Action Arising From Allegedly Premature Termination Of Product Warranty Plan" »

Posted In: Class Action Court Decisions

Judicial Panel on Multidistrict Litigation (MDL) Grants § 1407 Motion Over Defense Objection Finding Centralization Particularly Helpful With Respect to Class Certification Issues Presented by Numerous Putative Nationwide Class Actions

Numerous lawsuits – almost all of them putative nationwide class action cases – were filed against H & R Block, Inc., H & R Block Financial Advisors, Inc. and H & R Block Tax Services, Inc. alleging that the manner in which they marketed and sold defendants’ Express Individual Retirement Account product breached fiduciary duties owed their clients. A motion to consolidate pretrial proceedings under 28 U.S.C. § 1407 was filed; the defense opposed the motion to centralize the actions. The Judicial Panel on Multidistrict Litigation (MDL) granted the motion over the defense objection, finding that centralize “will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation.” In re H & R Block, Inc., Express IRA Marketing Litig., 444 F.Supp.2d 1339, 1340 (Jud.Pan.Mult.Lit. 2006). In fact, the Panel believed that such centralization was required “in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings (particularly with respect to the issue of class certification), and conserve the resources of the parties, their counsel and the judiciary.” Id. (italics added). Accordingly, the Panel transferred the cases to the Western District of Missouri, noting that most of the lawsuits were pending in that district and that it was the location of H & R Block’s corporate headquarters. Id., at 1341.

Posted In: Multidistrict Litigation, Class Action Court Decisions