Class Action Defense Blog

California Court Holds that Disney did not Require Employees to Drive to Work and to Take Shuttle from Parking Lot to Work, So Disney was not Required to Compensate Them for Travel Time Spent Riding Shuttle

A Disney employee filed a putative class action against the company seeking compensation under California state law for travel time based on the theory that certain employees were assigned to a parking lot located one mile from the Disneyland theme park, and Disney provided shuttles to transport them between the parking lot and the park. Overton v. Walt Disney Co., 136 Cal.App.4thh 263 (Cal.App. 2006). The class action defense attorneys argued that the California Supreme Court opinion in Morillion v. Royal Packing Co., 22 Cal.4th 575 (Cal. 2000) – which held that if an employer requires employees to travel in a company vehicle to work then it must compensate the employees for their travel time – did not apply. The defense moved for summary judgment on the grounds that the undisputed evidence established that Disney did not require employees to drive to work (and, in fact, encouraged and offered financial incentives to employees who used alternative means of transportation), and that Disney did not require employees to use the shuttle to travel from the parking lot to the theme park (some employees, for example, would walk or ride a bike). Overton, at 267-68. The trial court granted the defense motion for summary judgment and plaintiff’s lawyer appealed.

Continue reading "Overton v. Walt Disney Company: Disney’s Class Action Defense Prevails – Disney Not Required To Compensate Employees For Time Spent Riding Shuttle From Parking Lot To Theme Park California Court Holds" »

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

Judicial Panel on Multidistrict Litigation (MDL) Grants Defense Motion To Eliminate Duplicative Discovery, Prevent Inconsistent Rulings, and Conserve Resources of Parties and Court in Pretrial Proceedings of Class Action Cases

Three class action lawsuits were filed against H & R Block Mortgage Corp. alleging violations of the FCRA (Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.) in that defendants purportedly “us[ed] consumer reports for purposes of mailing prescreened offers of credit for home loans to plaintiffs and potential class members.” In re H & R Block Mortgage Corp. Prescreening Litigation, ___ F.Supp.2d ___, ___, 2006 WL 1737530 (Jud.Pan.Mult.Lit., June 20, 2006). The class actions had been filed in the Central District of California, the Northern District of Indiana, and the Eastern District of Wisconsin, and the Judicial Panel found that there was overlap among the putative members of each class action because even though the Indiana and Wisconsin class actions were limited to residents of those particular states, the California class action defense confronted a putative nationwide class action. H & R Block’s class action defense team filed a motion under 28 U.S.C. § 1407 for coordination or consolidation of pretrial proceedings of the class actions. On June 20, 2006, the MDL Judicial Panel granted the defense motion – over the objection of the plaintiffs’ attorneys, who argued that “voluntary measures” had been put in place to obviate the need for coordination or consolidation – holding that the class actions would benefit from such treatment:

The three actions contain competing class allegations and involve facts of sufficient intricacy that could spawn challenging procedural questions and pose the risk of inconsistent and/or conflicting judgments. While we applaud every cooperative effort undertaken by parties to any litigation, transfer under Section 1407 has the salutary effect of placing all actions in this docket before a single judge who can formulate a pretrial program that: 1) allows discovery with respect to any non-common issues to proceed concurrently with discovery on common issues . . .; and 2) ensures that pretrial proceedings will be conducted in a streamlined manner leading to the just and expeditious resolution of all actions to the overall benefit of the parties and the judiciary.

In re H & R Block Mortgage Corp., at 2.

Posted In: FCRA Class Actions, Multidistrict Litigation, Class Action Court Decisions

Federal Court Cites Lack of Evidence Employee was Engaged in Interstate Commerce or in Production of Goods for Commerce to Establish Coverage Under Fair Labor Standards Act (FLSA) to Support Overtime Claim

Plaintiff Joseph Thorne appealed a district court order granting All Restoration Service’s defense motion for dismissal under Rule 50 as to Thorne’s overtime pay claims based on alleged violations of FLSA (Fair Labor Standards Act). Thorne v. All Restoration Serv., Inc., 448 F.3d 1264 (11th Cir. 2006). The district court had granted the defense motion on the grounds that “Thorne had not presented evidence at trial that he qualified for either enterprise coverage or individual coverage under the FLSA” because “‘[his] activities were local in nature and really did not affect interstate commerce in general,’” id., at 1265. On appeal Thorne challenged only the finding that he failed to establish individual coverage under FLSA. Individual coverage exists only if an employee “is engaged in commerce or in the production of goods for commerce,” 29 U.S.C. § 207(a)(1) (2005). The Circuit Court affirmed.

First, the Court rejected Thorne’s claim that regular use of his employer’s credit cards in the course and scope of employment means that he “engaged in interstate commerce.” First, the Circuit Court explained that the statute requires an activity that constitutes interstate commerce, not an activity that “merely affect[s]” interstate commerce. Thorne, at 1266 (citing McLeod v. Threlkeld, 319 U.S. 491, 497, 63 S.Ct. 1248 (1968)). All Thorne alleged was that he made purchases with the credit cards; he could not even establish whether the credit card bills came from out of state. Id., at 1266-67.

Continue reading "Class Action Defense and Employment Law Issues–Thorne v. All Restoration: FLSA (Fair Labor Standards Act) Overtime Claim Rejected By Eleventh Circuit" »

Posted In: Employment Law Class Actions, 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 - entered pleas of not guilty in a California federal court yesterday. As explained by Molly Selvin of the Los Angeles Times, "Prosecutors said the 'paid plaintiffs' were recruited to buy stocks in anticipation that they would fall in value, positioning themselves and Milberg Weiss to take the lead in securities-fraud cases and collect extra fees." Selvin also reports that, according to federal prosecutors, more indictments are likely to follow.

A New York Times article by Cindy Chang notes that two others tied to the alleged scheme - Seymour M. Lazar, "accused of serving as a paid plaintiff," and Paul T. Selzer, a lawyer "accused of helping launder the payments" to the paid plaintiffs - also entered not guilty pleas. Chang notes that Milberg Weiss continues to lose lawyers "and has been removed as lead counsel by a handful of large institutional investors in high-profile cases."

But Selvin reports that the news is not all bad for Milberg Weiss, as the class action plaintiffs' law firm continues to secure appointments to serve as lead counsel in class action lawsuits, suggesting the firm "might survive its current legal troubles." Molly Selvin's article, entitled "Milberg Enters Not Guilty Plea," may be found in the Business section of the July 18, 2006 edition of the Los Angeles Times. Cindy Chang's article, entitled "Law Firm and 4 Figures in Payments Case Enter Pleas," may be found in Section C. of the July 18, 2006 edition of the New York Times.

Posted In: Class Actions In The News

California Appellate Court Confirms that One Who, as a Nonrepresentative Class Member, Repeatedly Objects to Class Action Settlements may be Deemed a Vexatious Litigant, But Reverses Court Designation for Lack of Evidence

Based on a request that came not from the class action defense but from the class action plaintiffs’ attorneys, a California trial court declared a lawyer, Ernest M. Thayer, a vexatious litigant, see California Code Civ. Proc., §§ 391-391.7, “based on his history of filing objections to class action settlements . . . in which he was a member of the plaintiff class or represented a member of such a class.” In re Natural Gas Anti-Trust Cases I, II, II & IV, 137 Cal.App.4th 387, 390 (Cal.App. 2006). The Court of Appeal agreed that one who engages in conduct that falls within the scope of California’s vexatious litigant statutes is not insulated from being declared a vexatious litigant by virtue of his or her role in a class action as a nonrepresentative class member. Id.

The Court began its analysis with the definition of a vexatious litigant, and then addressed each subsection of the applicable statute in turn. Under California Code of Civil Procedure section 391(b), “a vexatious litigant is a person who does any of the following:

Continue reading "Class Action Defense Issues--In re Natural Gas: Objecting Class Members To Class Action Settlements Not Exempt From Being Declared Vexatious Litigants California Court Holds" »

Posted In: Class Action Court Decisions

"Vitamins Class Action" Defense Attorneys and Plaintiffs' Lawyer Present Proposed $30.5 Settlement to Court

On July 17, 2006, the parties involved in Amsterdam's first cartel class action appeared in court to seek approval of a $30.5 million settlement after a 7-year legal battle. The "vitamins class action' named Roche, BASF and Aventis and alleged unfair competition price fixing from 1989-1999 for vitamins A, B2, B5, C, E, and beta carotene. Reportedly the Australian Federal Court permitted the case to proceed as a class action in 2002. The victims of the price fixing scheme - which involved vitamins used for animal nutrition - allegedly lost market share or paid inflated prices.

The class action was precipitated by actions initiated by the European Commission alleging a worldwide antitrust conspiracy to fix prices that included not only Roche, BASF and Aventis, but Solvay Pharmaceuticals, Merck, Daiichi Pharmaceutical, Eisai, Takeda Chemical Industries, Lonza, Kongo Chemical, Sumitomo Chemical, Sumika Fine Chemicals and Tanabe Saiyaku as well. The EU began its investigation in May 1999, and concluded that 13 companies had participated in cartels aimed at eliminating competition in vitamin markets involving vitamin A, B1, B2, B5, B6, C, D3, E, Biotin (H), Folic Acid (M), beta carotene and carotinoids. On November 21, 2001, the EU ended its investigation into what its antitrust chief called the "most damaging series of cartels the commission has ever investigated" by fining eight (8) companies a combined total of more than 855 million euros. (It did not fine the last five companies listed because the statute of limitations had run.)

Note: The plaintiffs' lawyer reportedly believes that settlement of this class action - if approved - will impact an antitrust class action she has filed against Amcor alleging price fixing of cardboard boxes. Earlier this month, Amcor filed a cross-claim against rival Visy, seeking to bring it into the class action. News reports state that Visy intends to vigorously fight the charges.

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

California Federal Court Grants Summary Judgment in Favor of Wolpoff & Abramson and Client MBNA, and Issues Order to Show Cause re Rule 11 Sanctions Against Plaintiff

The law firm of Wolpoff & Abramson LLP is no stranger to litigation: it routinely prosecutes debt collection actions on behalf of national retail and banking clients; and it has been named in many individual and class action lawsuits by people upset at the Wolpoff firm’s efforts to collect on delinquent accounts. According to a lawyer at Wolpoff & Abramson, the law firm aggressively defends lawsuits filed against it, and statistically it appears to do a very good job in presenting its defense. The most recent court ruling concerning the firm comes out of a California federal court, which granted the defense motions for summary judgment. Gorman v. Wolpoff & Abramson, ___ F.Supp.2d ___, 2006 WL 1728915 (N.D. Cal. June 23, 2006). The action was filed by a lawyer (John Gorman) against MNBA and its attorneys, the Wolpoff firm, asserting causes of action under the federal Fair Credit Reporting Act (FCRA), the federal Fair Debt Collection Practices Act (FDCPA), and libel. (The claims under California state law that existed in Gorman’s original complaint were dismissed without leave to amend in response to an earlier defense motion. See Gorman v. Wolpoff & Abramson, 370 F.Supp.2d 1005, 1010-11 (N.D. Cal. 2005).)

Gorman’s action was precipitated by a contested credit card charge of roughly $760 that MBNA initially removed but then reposted. The federal court found that Gorman stopped making payments to MBNA in May 2003, “but then deliberately charged thousands of dollars more on his MBNA credit card” and then in August 2003 demanded that MBNA write off “the entirety of his balance of over $5000.” Instead, MBNA retained Wolpoff to file a debt collection suit against Gorman.

Continue reading "Class Action Defense Issues--Gorman v. Wolpoff & Abramson: Law Firm Again Prevails In Action Alleging Violations of FCRA (Fair Credit Reporting Act) and FDCPA (Fair Debt Collection Practices Act)" »

Posted In: FCRA Class Actions, FDCPA Class Actions, Class Action Court Decisions

Separate articles summarize news reports and the criminal complaint involving the federal indictment of class action law firm Milberg Weiss, Bershad & Schulman and two of its partners for allegedly paying people $11 million in kickbacks to serve as class representatives in shareholder lawsuits. According to Friday’s edition of the San Jose Mercury news, “Prosecutors allege that the secret kickback arrangement often allowed the firm to be among the first to file lawsuits against major corporations on behalf of shareholders. The indictment alleges that the lawsuits generated $216 million in attorneys' fees.” The criminal indictment includes charges of money laundering, filing false tax returns, racketeering and conspiracy.

The San Jose Mercury News reported Friday that bail had been set for class action plaintiff lawyer David J. Bershad at $3.5 million, and for his partner Steven G. Schulman at $2 million. It was reportedly their first appearance in federal court; they are scheduled to return to court on Monday to enter pleas. The Associated Press report, entitled “Million Dollars Bail Set for Lawyers Indicted in Kickback Case,” may be found in the July 14, 2006 edition of the San Jose Mercury News.

Posted In: Class Actions In The News

Identities of Putative Class Members in Wage and Hour/Overtime Pay Class Action Who Contact Plaintiffs' Lawyer in Response to Precertification Letter Protected from Disclosure to Class Action Defense Attorneys by Right to Privacy

On May 15, 2006, a California appellate court addressed a discovery issue arising out of a putative class action filed against Tenet Healthcare on behalf of hourly employees alleging failure to provide meal and rest breaks and failure to pay overtime. Tien v. Superior Court, 139 Cal.App.4th 528 (Cal.App. 2006). During the precertification discovery proceedings, plaintiffs' lawyer asked for the identity and contact information of every class member in the putative class action. In response to obvious privacy concerns, the parties eventually agreed to a procedure whereby a neutral letter was sent to a randomly selected group of approximately 6% of the class members, advising them of the lawsuit and inviting them to contact plaintiffs' lawyer if they wanted more information. Id., at 532-334. The letter expressly stated, "You are not required to call anyone regarding this lawsuit unless you personally wish to do so. If you do elect to call, please be assured that doing so will not have any negative effect on your employment with any Tenet-related facility." Id., at 533 (bold in original). Tenet's class action defense attorneys later sought to discover the names of the people who contacted plaintiffs' lawyer in response to the letter; plaintiffs sought a protective order on several grounds, including the class members' right to privacy. The trial court ordered the information provided to defense attorneys concluding that the privacy rights "were outweighed by Tenet's right to the discovery." Id., at 534.

Eventually, the matter ended up before the California Court of Appeal on a petition for writ of mandate. The appellate court held that the information sought by Tenet was relevant, Tien, at 535-36, and that it was not protected from disclosure by the attorney work product doctrine, id., at 536, or the attorney-client privilege, id., at 536-38. The Court held, however, that disclosure of the identities of the class members who contacted plaintiffs' lawyer would violate their right to privacy. Id., at 539.

Continue reading "Tien v. Superior Court (Tenet Healthcare): Class Action Defense Prohibited From Discovering Names Of Putative Class Members in Employment Law Case Who Contacted Plaintiffs' Lawyer Due To Class Members' Privacy Rights California Court Holds" »

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

On July 13, 2006, Merck’s defense team convinced a New Jersey jury that it was not responsible for the 68-year-old plaintiff’s heart attack – securing an important victory in advance of potential trials in the class action cases that have been filed in Vioxx cases. By our count, Merck has taken 6 Vioxx cases to trial (all against individuals): it has prevailed in three (3), it has lost two (2), and it “split” the sixth (the case involved two plaintiffs; Merck won as to one of the plaintiffs and lost as to the other). Merck’s class action defense has focused on the unique factual questions presented by each individual claim – a defense strengthened by the wide range of jury verdicts and jury findings.

NOTE: Vioxx has been off the market since September of 2004, following a study that found a statistical connection between long-term use of Vioxx and increased incidence of strokes and heart attacks.

Posted In: Class Actions In The News

The State of New York must mount a class action defense to a lawsuit seeking damages for illnesses caused by contaminated water at a water park run by New York’s Department of Parks, Recreation, and Historical Preservation. New York’s Seneca Lake Park's Sprayground was closed in August 2005 after tests revealed that its water tanks were contaminated with cryptosporidiosis, one of many types of recreational water illnesses. The tests were run after the Health Department received more than 100 complaints from people who fell ill after visiting the water park. A lawsuit filed in response to the incident received court approval this week to proceed as a class action.

NOTE: In broad terms, recreational water illnesses – caused by germs such as cryptosporidiosis, E. coli and giardia – are contracted through contact with contaminated water. The National Center for Disease Control and Prevention reports that incidents of such illnesses have been steadily on the rise, and estimates that roughly 19,000 people suffered from such illnesses between 1984 and 2002. While diarrhea is the most common recreational water illness symptom, the responsible germs can also cause ear and eye infections, skin infections and respiratory problems. While cryptosporidiosis is highly contagious, the National Center for Disease Control and Prevention reports that healthy people generally recover without the necessity of medical treatment. No deaths have been attributed to the Sprayground outbreak.

Posted In: Class Actions In The News

Restaurants’ Class Action Defense Fails to Prevent Class Certification in Meal and Rest Breaks Lawsuit

The Los Angeles Times reports today that a California court has certified a class action against the operator of restaurant chains Chili’s and Romano’s Macaroni Grill alleging failure to provide employee meal and rest periods required by California state law. According to the report, Judge Patricia Cowett of the San Diego Superior Court certified the class action on behalf of both current and former employees. The article maintains that, according to the plaintiffs’ lawyer, the class action that may cover as many as 63,000 class members.

The article, entitled “Brinker Faces Class Action over Meal Breaks,” may be found in the Business Section of the July 15, 2006 Los Angeles Times.

Posted In: Class Actions In The News

Fair Debt Collection Practices Act Requires Affirmative Action, Fair Credit Reporting Act Does Not Apply to Commercial Activity,

On July 10, 2006, a federal appellate court consolidated two appeals and (1) agreed with eBay's defense team that eBay was not subject to the federal FDCPA (Fair Debt Collection Practices Act) or the federal FCRA (Fair Credit Reporting Act), and (2) affirmed that eBay compliance with a subpoena for records did not violate the federal ECPA (Electronic Communications Privacy Act) or the federal SCA (Stored Communications Act): it therefore affirmed the dismissals entered in both underlying lawsuits. McCready v. eBay, Inc., ___ F.3d ___, 2006 WL 1881142 (7th Cir. 2006). For clarity, we address the two lawsuits separately. The first lawsuit arose from the fact that plaintiff utilized eBay's services to operate an online business through which he would buy and sell goods. Several eBay users became unhappy with their business dealings with plaintiff; they used eBay's "Feedback Forum" to explain their dissatisfaction, and several of them notified eBay of their complaints. eBay told plaintiff of the complaints and explained that his accounts would be suspended if the complaints were not resolved. Ultimately, eBay suspended plaintiff's accounts but offered to reinstate them if he reimbursed monies to the claimants. "Rather than make good on his sales, [plaintiff] embarked on retaliatory litigation," Slip Opn., at 2, and a summary of that litigation is described in the Note below. Relevant here, plaintiff filed a federal court complaint against eBay alleging violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., the Electronic Fund Transfers Act (EFTA), 15 U.S.C. §§ 1693 et seq., Title 11 of the U.S. Bankruptcy Code, and nine (9) state law claims. Id., at 3. The district court granted the defense motion to dismiss the FDCPA and FCRA claims, and declined to exercise supplemental jurisdiction over the state law claims; the parties stipulated to dismissal with prejudice of the bankruptcy claim. Id., at 4.

With respect to the FDCPA claim, the Seventh Circuit observed that eBay simply suspended plaintiff's accounts until he resolved the outstanding fraud complaints and never threatened to take collection against him; the Court held that such conduct could not be deemed an attempt to "collect" a debt. McCready, at 8. With respect to the FCRA claim, plaintiff asserted that eBay's "Feedback Forum" constituted a "consumer report, id., at 9. The Court quickly dispatched this claim on several grounds:

Continue reading "Class Action Defense Cases–McCready v. eBay: eBay Not A Debt Collector Under Federal FDCPA Or Reporting Agency Under Federal FCRA, And eBay Lawfully Produced Documents Pursuant To Subpoena, Seventh Circuit Holds" »

Posted In: FCRA Class Actions, FDCPA 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 July 7 - July 13, 2006. We include only those categories with 10% or more of the class action filings during the relevant timeframe. Approximately 24 class action lawsuits were filed in these California state and federal courts during that time period, of which 12 (50%) involved employment law claims. During this time period, the only other significant group of class action filings involved various claims of unfair business practices: class action defense attorneys will face 5 new cases involving that area of law, which represents approximately 21% of the class actions filed this past week.

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

Class Action Defense Attorneys Agree With Plaintiffs’ Lawyer’s Assessment of Case

A lawsuit by Paul and Julie Leonard against Nationwide is the first lawsuit against a liability insurer for home damage caused by Hurricane Katrina to go to trial, according to today’s New York Times. The article by Joseph Treaster details the difference between insurance claims arising out of Katrina for wind damage (generally covered) and flood damage (generally excluded from coverage). Treaster also reports that many homeowners claim their insurance agent told them not to buy flood insurance because “it wasn’t necessary.” But while Hurricane Katrina affected tens of thousands of people, the plaintiffs’ lawyer, an experienced class action attorney, elected to bring the Leonards’ claim on their behalf only “because it could take years to receive court certification for a class action.” But plaintiffs’ lawyer is quoted as saying, “Time is of the essence. These people need the insurance money to rebuild.” Class action defense attorneys agree that the case would not have made it to trial this quickly if plaintiffs’ lawyer had pursued a class action. As one class action defense attorney opined, “The case most likely still would be winding its way through precertification discovery if it had been brought as a class action. Both the plaintiffs’ lawyer and the defense attorneys would be required in a class action to conduct broader discovery, looking into issues of numerosity, commonality, typicality and adequacy of the plaintiffs to serve as class representatives.”

By focusing on the issues surrounding the claims of the plaintiffs only, plaintiffs’ lawyer eliminated the risk of his case getting bogged down in precertification discovery, and the class certification hearing that would follow. Based on his experience with class actions, plaintiffs’ lawyer undoubtedly knew also that he avoided possible writ proceedings that would have further delayed the trial date. In short, plaintiffs’ counsel demonstrated that an experienced class action attorney knows when to avoid filing class actions.

Treaster’s article, entitled “Katrina Victims Say Agents Advised Against Flood Coverage,” may be found in Section C of the July 14, 2006 edition of the New York Times.

Posted In: Class Actions In The News

The "Order or Other Paper" Exception to the 30-Day Period to Remove a State Court Action to Federal Court is not Satisfied By New Appellate Law

We have discussed that class action defense often benefits from removal of the case to federal court, and that the Class Action Fairness Act of 2005 (CAFA) greatly expanded access to federal courts in class action cases, in separate articles. If CAFA does not apply, then removal of cases to federal court generally is governed by 28 U.S.C. § 1446, also discussed in prior articles related to class action defense. Broadly speaking, the defense must remove a case to federal court within 30 days of receipt of the complaint or "a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable," 28 U.S.C. § 1446(b) (italics added). This 30-day time period is "mandatory" but not "jurisdictional." Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir. 1980); Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1046 (2d Cir. 1991). On May 9, 2006, an Illinois federal district court considered whether a recent Seventh Circuit opinion constituted an "order or other paper" from which federal jurisdiction "may first be ascertained." G.M. Sign, Inc. v. Global Shop Solutions, Inc., 430 F.Supp.2d 826 (N.D. Ill. 2006).

Plaintiff filed suit a putative class action against Global Shop Solutions in Illinois state court for alleged violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA), which the then-existing weight of authority held "vests exclusive jurisdiction in state courts for private actions under the TCPA," though the Seventh Circuit Court of Appeal had not yet addressed the issue. G.M. Sign, at 827-28 and n.1. In fact, a week Global Shop had been served, an Illinois federal district court remanded a similar TCPA action to state court "holding that the TCPA conferred exclusive [jurisdiction] on the state courts." Id., at 827 (citing Brill v. Countrywide Home Loans, Inc., 2005 WL 2230193 (N.D. Ill. 2005)). After the time for removal had passed, the Seventh Circuit reversed Brill and held that TCPA claims may be brought in federal court both under federal question jurisdiction and under diversity jurisdiction. Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 451 (7th Cir. 2005). Global Shop removed its class action lawsuit to federal court 32 days after the issuance of Brill.

Continue reading "Class Action Defense Issues–G.M. Sign v. Global Shop: New Case Law Does Not Constitute "Order Or Other Paper" Permitting Removal Of Class Action To Federal Court After 30-Day Period Has Lapsed Illinois Court Holds" »

Posted In: Removal & Remand, Class Action Court Decisions

California Appellate Court Holds that Federal Fair Labor Standards Act (FLSA) May Serve as Unlawful Act for California Unfair Competition Claim, and Triable Issues of Fact Exist As to Overtime Pay Claim and Unlawful Deductions for Cancelled Subscriptions Claim

Employees who worked as telemarketers selling newspaper subscriptions filed a class action in California state court "alleging claims under the California Labor Code for overtime pay, unlawful commission deductions, and waiting penalties, and for unfair competition pursuant to [California Business & Professions Code] section 17200." Harris v. Investor's Business Daily, 138 Cal.App.4th 28, 31 (Cal.App. 2006). The claims were based on a compensation system whereby employees "were compensated on the basis of a point system which rewarded them for selling longer subscriptions, winning daily contests, and meeting weekly sales goals" but they were "subject to a 'chargeback' - a deduction from points earned on a sale if the customer cancelled the subscription within 16 weeks." Id. To ensure that it complied with state and federal laws, the compensation system provided that employees would be paid no less than the prevailing minimum wage. Id. The complaint was later amended to a add a claim that alleged violations of the federal FLSA (Fair Labor Standards Act, 29 U.S.C. § 207(a)(1)) as the predicate for a new section 17200 violation. Id., at 32. The defense demurrer to the new 17200 cause of action was sustained without leave to amend, and the defense summary adjudication motion as to the balance of the class action claims was granted. Id.

The appellate court first addressed the FLSA-based 17200 claim. The defense had argued that FLSA preempted the claim "because traditional opt-out class actions are available under the California law, while, under FLSA, class members must opt in." Harris, at 32. Relying upon several unpublished federal court decisions, id., at 34-36, the appellate court concluded that FLSA did not preempt section 17200, and that the purpose behind the federal "opt-in" requirement - "to protect employers from facing 'financial ruin' and prevent employees from receiving 'windfall payments, including liquidated damages'" - is not implicated by a section 17200 claim "limited to restitution." Id., at 33-34.

Continue reading "Harris v. Investor's Business Daily: California Class Action By Telemarketing Employees Not Preempted By Federal FLSA (Fair Labor Standards Act) California Court Holds" »

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

In Case of First Impression for Federal Courts in Fifth Circuit, Court Joins Sister Circuits in Holding that Fair Labor Standards Act (FLSA) Does not Cover Prisoners Working at Prison

On July 7, 2006, the Fifth Circuit Court of Appeals considered the appeal of a prison inmate from a federal district court judgment dismissing his action as frivolous. Loving v. Johnson, ___ F.3d ___, 2006 WL 1868320 (5th Cir. 2006). The prisoner filed suit claiming that under the federal Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (FLSA), he was entitled to receive minimum wage for working in the prison laundry. The federal appeals court noted that "until today, we have not expressly stated whether there is any FLSA employment relationship between the prison and its inmates working in and for the prison." Slip Opn., at 2. The Circuit Court adopted the reasoning of a recent opinion out of the Seventh Circuit and quickly disposed of Loving's claim, holding that "a prisoner doing work in or for the prison is not an 'employee' under the FLSA," id., at 3:

People are not imprisoned for the purpose of enabling them to earn a living. The prison pays for their keep. If it puts them to work, it is to offset some of the cost of keeping them, or to keep them out of mischief, or to ease their transition to the world outside, or to equip them with skills and habits that will make them less likely to return to crime outside. None of these goals is compatible with federal regulation of their wages and hours. The reason the FLSA contains no express exception for prisoners is probably that the idea was too outlandish to occur to anyone when the legislation was under consideration by Congress.

Slip Opn., at 3 (quoting Bennett v. Frank, 395 F.3d 409, 409-10 (7th Cir. 2005) (additional citations omitted).

NOTE: As Loving notes, prisoners have not uniformly lost these types of cases. The Fifth Circuit has held, for example, that prisoners who work outside the prison for private firms are "employees" within the meaning of FLSA (at least if they are not sentenced to hard labor), Watson v. Graves, 909 F.2d 1549, 1556 (5th Cir. 1990), but that prisoners who work inside the prison for private firms are not be covered by FLSA, Alexander v. Sara, Inc., 721 F.2d 149, 150 (5th Cir. 1983). The Fifth Circuit has also held "that a jailer was not the FLSA employer of an inmate working in a work-release program for a private employer outside the jail," Loving, at 2 (citing Reimonenq v. Foti, 72 F.3d 472, 475-76 (5th Cir. 1996).

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

Pfizer v. Superior Court: Proposition 64 Requires Class Action Representatives and Class Members Satisfy Injury in Fact and District Court Exercise of Discretion to Select Class Action Attorneys Best Able to Represent Absent Class Members is Generally Not Subject to Appellate Review: Class Action Defense Issues

California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code, §§ 17200 et seq., and false advertising statute, id., §§ 17500 et seq., were altered fundamentally by the passage of voter-initiate Proposition 64 in November 2004. In January 2005, a putative class action lawsuit was filed in California state court against Pfizer under California’s UCL and false advertising law (FAL) on the ground that it had “marketed Listerine in a misleading manner by indicating the use of Listerine can replace the use of dental floss in reducing plaque and gingivitis.” Pfizer, Inc. v. Superior Court, ___ Cal.App.4th ___ (Cal.App. July 11, 2006), Slip Opn., at 2. (Prior to Proposition 64, UCL claims were brought as “representative actions”; Proposition 64 amended the UCL and FAL so as to require plaintiffs in such actions to satisfy the requirements for class action lawsuits. See Bus. & Prof., Code, §§ 17203 [UCL], 17535 [FAL].) The trial court certified class action status, describing the class as “all persons who purchased Listerine, in California, from June 2004 through January 7, 2005.” Id. The defense filed a petition for writ of mandate, and the appellate court reversed.

In seeking class certification, plaintiff claimed inter alia that his claims were “typical” of the class; the defense disagreed. Pfizer argued that individual issues would predominate over common questions of fact (as detailed in the “Note” below). Slip Opn., at 7. Nonetheless, the trial court certified “a broad class, on an opt-opt basis,” though it noted that whether Proposition 64 amended the standing requirements for class members in UCL class actions is “an open issue.” Id., at 7-8. After carefully analyzing the issue, the California appellate court held that the standing requirements for UCL class actions had been amended by Proposition 64: “Proposition 64 now prohibits any person, other than the Attorney General or local public prosecutors from bringing a lawsuit under the UCL or the FAL unless the person has suffered injury and lost money or property as a result of such violations.” Slip Opn., at 11 (citation omitted).

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

Class Action District Court Judge's Hostility to Interior Department Makes Him Incapable of Rendering Fair and Impartial Rulings

Federal and state courts are understandably loathe to recuse judges for claims of bias, but on July 11, 2006, in a class action that has been pending for a decade, the United States Court of Appeals for the District of Columbia "reluctantly" granted a federal defense motion to do just that. Cobell v. Kempthorne, ___ F.3d ___, 2006 WL 1889150 (D.C. Cir. 2006). The class action originated in 1996, when five Indians sued the federal government for breach of fiduciary duties in its capacity as trustee of Indian lands by "destroy[ing] critical records, fail[ing] to account to trust beneficiaries, and either los[ing] trust assets or convert[ing] them to government use." Slip Opn., at 2. By the lawsuit, plaintiffs sought "'to force the government to abide by its duty to render an accurate accounting' of the assets held in Individual Indian Money (IIM) trust accounts." Slip Opn., at 2-3 (quoting Cobell v. Babbitt, 91 F.Supp.2d 1, 6-7 (D.D.C. 1999) ("Cobell V")). The case was certified as a class action in 1997, plaintiffs prevailed at trial, and in 1999 the district court ordered the federal government to "come into compliance with their duties." Slip Opn., at 3 (quoting Cobell v. Norton, 240 F.3d 1081,1094 (D.C. Cir. 2001) ("Cobell VI")). The lower court retained jurisdiction over the action and required status reports from the federal government quarterly summarizing its progress. Id. In 2001, the D.C. Circuit "generally affirm[ed] the judgment, but cautioned the district court "'to be mindful of the limits of its jurisdiction' and therefore to refrain from unduly interfering with Interior’s 'conduct in preparing an accounting.'" Slip Opn., at 3 (quoting Cobell VI, at 1110).

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