Class Action Defense Blog

David Lazarus of the San Francisco Chronicle reports today on the confusion millions of Verizon customers are experiencing in deciphering precisely what the new disclosures are in their wireless phone contract after receiving "a voluminous - and optional - 'customer agreement pursuant to lawsuit settlement.'" But they are not alone: according to Lazarus, a Verizon spokeswoman "admit[s] that finding the revised language can be tough." Verizon is quoted as saying, "If it's confusing, this is what we were ordered to do by the court." The situation is not helped by the fact that there is "no indication as to what's new in the contract or what the ramifications of accepting it might be." The situation is further complicated by the fact that Verizon implemented many of the "new" changes in November of 2003, in anticipation of the approval of a settlement agreement that contained those terms. According to Verizon, then, the "vast majority" of Verizon's 53 million customers are "already under contracts that contain these [new] disclosures." Mr. Lazarus's article, "Verizon Contract Still Murky," may be found in today's business section of the San Francisco Chronicle.

Posted In: Class Actions In The News

California Supreme Court Denies Petition for Review and Request to Depublish Appellate Court Opinion in Best Buy v. Superior Court

In a post dated April 11, 2006, we summarized a then-recent California appellate decision in a class action against Best Buy that permitted the plaintiff-lawyer to conduct discovery for the purpose of finding substitute plaintiffs to serve as class representatives. See Best Buy Stores, L.P. v. Superior Court, 137 Cal.App.4th 772 (Cal.App. 2006). Best Buy filed a petition for review with the California Supreme Court on April 21, 2006. On July 12, 2006, the California Supreme Court denied the petition for review and further denied Best Buy's request that the appellate opinion be depublished.

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

While Congress enacted the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in 1978 for the purpose of establishing certain that ethical guidelines for the collection of consumer debts, and to provide debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts, it did not intend to foreclose States from enacting laws concerning debt collection practices. Several states, such as California, have enacted such laws, and defense attorneys must frequently defend against class actions filed under such State laws. Congress expressed its intent not to preempt State laws - “except to the extent that those laws are inconsistent” with the FDCPA - in § 1692n, set forth below. Congress also provided that the Federal Trade Commission debt collection practices from State laws or regulations under the provisions of § 1692o, also set forth below.

§ 1692n. Relation to State laws

This subchapter does not annul, alter, or affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this subchapter if the protection such law affords any consumer is greater than the protection provided by this subchapter.

§ 1692o. Exemption for State regulation

The Commission shall by regulation exempt from the requirements of this subchapter any class of debt collection practices within any State if the Commission determines that under the law of that State that class of debt collection practices is subject to requirements substantially similar to those imposed by this subchapter, and that there is adequate provision for enforcement.

Posted In: FDCPA Class Actions, Statutes & Rules

Congress enacted the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in 1978 for the purpose of establishing certain that ethical guidelines for the collection of consumer debts, and to provide debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. Congress also authorized the Federal Trade Commission to commence administrative actions against debt collectors for violations of the FDCPA, and charged the Commission with an obligation to report to Congress annually on FDCPA matters. The specific statutory language concerning these reports is as follows:

§ 1692m. Reports to Congress by the Commission; views of other Federal agencies

(a) Not later than one year after the effective date of this subchapter and at one-year intervals thereafter, the Commission shall make reports to the Congress concerning the administration of its functions under this subchapter, including such recommendations as the Commission deems necessary or appropriate. In addition, each report of the Commission shall include its assessment of the extent to which compliance with this subchapter is being achieved and a summary of the enforcement actions taken by the Commission under section 1692l of this title.

(b) In the exercise of its functions under this subchapter, the Commission may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 1692l of this title.

Posted In: FDCPA Class Actions, Statutes & Rules

Illinois Appellate Court Holds Defense Motion to Dismiss Class Action Should Have Been Granted Because Plaintiffs Lack Standing To Allege Wrongful Dishonor Of Check and Because Federal National Bank Act Preempts Illinois State Law Regarding Fees Charged to Negotiate Checks for Non-Customers

On July 5, 2006, an Illinois appellate court issued a surprising opinion in favor of the defense in a class action case. Illinois follows the rule that courts with interlocutory appeal/certified question procedures usually follow: “Th[e] court’s examination of an interlocutory appeal is usually limited to the questions certified by the trial court and, as with all questions of law, is a de novo review.” Kronemeyer v. U.S. Bank Nat’l Ass’n, ___ Ill.App.3d __ (Ill.App. 2006) (citation omitted) [Slip Opn., at 2]. Rarely do courts deviate from this general rule but the Kronemeyer appellate court did just that, sidestepping one of the questions certified for appeal, addressing a question that had not been certified for appeal, and reversing the trial court’s order denying the defense motion to dismiss the class action.

Plaintiffs filed a putative nationwide class action alleging that U.S. Bank “regularly charges a fee of $10 to persons who do not have accounts at U.S. Bank and who present for payment checks drawn by its depositors,” and pleading state law causes of action. The defense filed a motion to dismiss the class action on the grounds, inter alia, that plaintiffs lacked standing to prosecute the “wrongful dishonor” claim, and that the claims were preempted by federal National Bank Act, 12 U.S.C. § 93a (2000), and the regulations and regulation interpretations issued by the Office of the Comptroller of the Currency (OCC). Slip Opn., at 2. The trial court denied the motion to dismiss, id., but certified for interlocutory appeal two questions: “(1) whether the plaintiffs’ claims are preempted under the National Bank Act . . . and the regulations and regulatory interpretations issued thereunder by the [OCC] and (2) whether the circuit court has jurisdiction to review whether the OCC correctly interpreted its own regulation or whether that review lies within the exclusive jurisdiction of the federal courts pursuant to the Administrative Procedures Act,” id., at 1 (citations omitted).

Continue reading "Kronemeyer v. U.S. Bank: Class Action Alleging Bank Wrongfully Charged Fee To Negotiate Checks Preempted By Federal National Bank Act Illinois Court Holds" »

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

California Appellate Court Agrees With Defense And Dismisses Lawsuit Against Lender Based on Federal Preemption: Class Action Defense Issues

WFS Financial and its subsidiary are federal savings associations that operate under the federal HOLA (Home Owners' Loan Act), 12 U.S.C. §§ 1461 et seq. A car dealer assigned WFS a motor vehicle loan and the borrower defaulted: "WFS repossessed the vehicle, gave notice of its intent to dispose of the vehicle by private sale, sold the vehicle, and filed suit against [the borrower]for the deficiency between the sale price and remaining balance due, including various costs and fees." WFS Financial, Inc. v. Superior Court, 140 Cal.App.4th 637, 44 Cal.Rptr.3d 561 (Cal.App. 2006). The borrower cross-complained, alleging that WFS failed to comply with California's Rees-Levering Automobile Sales Finance Act, California Civil Code, §§ 2981 et seq., and included an unfair business practice claim under California Unfair Competition Law (UCL), California Business & Professions Code, §§ 17200 et seq., based on the alleged violations of Rees-Levering. Id., at 563-64. In defense, WFS demurred, arguing that HOLA preempted Rees-Levering. The trial court disagree and overruled the demurrer, and WFS sought a petition for writ of mandate from the California Court of Appeal.. Id., at 564.

Before agreeing with the defense, the appellate court set forth a detailed summary of HOLA, the Federal Home Loan Bank Board (FHLBB) that originally regulated federal savings and loan associations, and FHLBB's replacement by the Office of Thrift Supervision (OTS). Id., at 565-68. The Court highlighted evidence from numerous sources that Congress intended HOLA to preempt state laws and regulations, concluding:

Continue reading "WFS Financial v. Superior Court: Federal Home Owners' Loan Act (HOLA) Preempts California Automobile Sales Finance Act California Court Holds" »

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

Defense Opts to Settle Rather Than Take First Case to Trial

Christian Berthelsen of the Los Angeles Times reports today that defense attorneys for the University of California at Irvine have settled what "would have been the first lawsuit to go to jury trial" arising out of its Willed Body Program: a class action defense must still be mounted, and dozens of individual lawsuits remain pending. The lawsuit alleged that rather than using bodies donated to the University for research, body parts were sold. Berthelsen reports that a University investigation into the Willed Body Program - precipitated by numerous complaints - revealed that 320 of the 441 cadavers researched "could not be identified or tracked." A defense lawyer is quoted as saying that the University is "happy to resolve the matter": whether this settlement presages settlement of the class action or other individual claims remains to be seen.

Berthelsen's article, entitled "Family Cadaver Lawsuit is Settled," may be found in the California Metro section of the July 11, 2006 Los Angeles Times.

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

When Congress enacted the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., in 1978, it provided not only for private rights of action by debtors against debt collectors, it also provided for administrative enforcement by the Federal Trade Commission. While defense against a class action is certainly a concern for debt collectors, the lawyer advising debt collectors does well to keep in mind and advise the client as to the administrative proceedings that may be brought to bear. As a resource to the class action defense lawyer, we set forth the text of the administrative enforcement provision of the FDCPA:

§ 1692l. Administrative enforcement

(a) Federal Trade Commission

Compliance with this subchapter shall be enforced by the Commission, except to the extent that enforcement of the requirements imposed under this subchapter is specifically committed to another agency under subsection (b) of this section. For purpose of the exercise by the Commission of its functions and powers under the Federal Trade Commission Act [15 U.S.C.A. § 41 et seq.], a violation of this subchapter shall be deemed an unfair or deceptive act or practice in violation of that Act. All of the functions and powers of the Commission under the Federal Trade Commission Act are available to the Commission to enforce compliance by any person with this subchapter, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests in the Federal Trade Commission Act, including the power to enforce the provisions of this subchapter in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.

(b) Applicable provisions of law

Compliance with any requirements imposed under this subchapter shall be enforced under--

(1) section 8 of the Federal Deposit Insurance Act [12 U.S.C.A. § 1818], in the case of--

(A) national banks, and Federal branches and Federal agencies of foreign banks, by the Office of the Comptroller of the Currency;

(B) member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25(a) [FN1] of the Federal Reserve Act [12 U.S.C.A. § § 601 et seq., 611 et seq.], by the Board of Governors of the Federal Reserve System; and

(C) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation;

(2) section 8 of the Federal Deposit Insurance Act [12 U.S.C.A. § 1818], by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;

(3) the Federal Credit Union Act [12 U.S.C.A. § 1751 et seq.], by the National Credit Union Administration Board with respect to any Federal credit union;

(4) subtitle IV of Title 49, by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;

(5) part A of subtitle VII of Title 49, by the Secretary of Transportation with respect to any air carrier or any foreign air carrier subject to that part; and

(6) the Packers and Stockyards Act, 1921 [7 U.S.C.A. § 181 et seq.] (except as provided in section 406 of that Act [7 U.S.C.A. § § 226, 227]), by the Secretary of Agriculture with respect to any activities subject to that Act.

The terms used in paragraph (1) that are not defined in this subchapter or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

(c) Agency powers

For the purpose of the exercise by any agency referred to in subsection (b) of this section of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this subchapter shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b) of this section, each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this subchapter any other authority conferred on it by law, except as provided in subsection (d) of this section.

(d) Rules and regulations

Neither the Commission nor any other agency referred to in subsection (b) of this section may promulgate trade regulation rules or other regulations with respect to the collection of debts by debt collectors as defined in this subchapter.

Posted In: FDCPA Class Actions, Statutes & Rules

California Appellate Court Holds that Defense in Class Action Gave Up Control of Funds for Payment of Damages Satisfying Payment of Judgment and Ending Obligation to Pay Postjudgment Interest

Employees filed an overtime pay class action against Farmers Insurance Exchange, ultimately resulting in a jury verdict against the defense totaling nearly $90,000,000 for unpaid time-and-a-half and double-time. The trial court awarded prejudgment interest in the class action, and approved a plan for distribution of the funds to the class members. The trial court eventually issued an order establishing the unpaid balance owing as of August 16, 2004, to be approximately $158,000,000 plus post-judgment interest accruing daily. Farmers paid $120,000,000 into an interest-bearing account “held in the names of class counsel and a court-appointed claims administrator”; the balance was due by March 10, 2005, and interest continued to accrue on the unpaid balance. Bell v. Farmers Ins. Exch., 137 Cal.App.4th 835, 837 (Cal.App. 2006).

Just before the first distribution payment was made to class members, Farmers asked the court to amend the distribution method in order to avoid certain unanticipated tax issues. Bell, at 838. Plaintiffs’ lawyer objected to the proposal, and requested that Farmers be ordered to pay additional post-judgment interest; the trial court denied plaintiffs’ request and plaintiffs appealed. Id. “[Farmers] argues that the judgment was satisfied when it deposited funds into the trust account held in the name of class counsel and the claims administrator; plaintiffs maintain that the judgment was satisfied when actual payment was made to the class members.” Id., at 839. The appellate court agreed with the defense: “[W]e note that the damages fund was held in an account in the name of the claims administrator and class counsel. By placing funds in such an account, [Farmers] clearly relinquished control over the damages fund and entrusted it to payment of the judgment.” Id., at 840 (italics in original). The court found, contrary to plaintiffs’ claim, that “there was ‘no string attached by which the money [could] be yanked back.’” Id., at 841. Accordingly, the trial court order was affirmed.

Posted In: Class Action Court Decisions

California District Court Rejects Defense Rule 12(b)(6) Motion to Dismiss Class Action and Holds, as Matter of First Impression, that Insured is Entitled to Recover Lawyer Fees and Costs to be Made Whole

Liability insurers may pay a first party claim and then seek reimbursement from the third-party tortfeasor either by (1) joining in and/or financing the insured’s action against the responsible party, or (2) waiting until the insured prevails in a lawsuit against the third party and then demanding reimbursement. Kathleen Chong filed a putative class action against State Farm Mutual Automobile Insurance Company alleging that it violates California’s make-whole rule waiting until the insured prevails in a lawsuit against the third party and then demanding reimbursement in full, regardless of the amount of the insured’s recovery. Defense attorneys filed a motion to dismiss the class action under Rule 12(b)(6), and the motion was denied. Chong v. State Farm Mut. Auto. Ins. Co., 428 F.Supp.2d 1136 (S.D. Cal. 2006),

The facts underlying the class action representative’s claim are as follows. Chong had first party medical insurance limits of $5,000; she was injured in a car accident, and State Farm paid her $5,000. Chong then filed suit against the driver of the other car; State Farm knew about the lawsuit but did not participate in it and did not fund it. Ultimately, Chong spent $28,000 in litigation costs and settled the case for $65,000. State Farm then demanded reimbursement of the $5,000 it paid under the policy. Chong, at 1138. Plaintiff filed a class action against State Farm, alleging that it acted improperly because “her net recovery after taking into account her attorney fees and costs was far below the amount she needed to make her whole.” Id.

The defense motion to dismiss argued that California has not adopted a “blanket make whole rule” and that “no California case . . . has ever held that a policyholder’s payment of attorney fees to secure a damage recovery from a third party means the policyholder has not bee made whole and that the carrier is therefore not entitled to reimbursement.” Chong, at 1139. The District Court disagreed. First, it concisely summarized California law on the make-whole rule:

Continue reading "Chong v. State Farm: Class Action Alleging Insurer’s Violation of California’s Make-Whole Rule Survives Defense Motion To Dismiss Federal District Court Holds" »

Posted In: Class Action Court Decisions

Plaintiff Class Action Lawyers Again Set Sights On Pharmaceutical Giant, Still in Defense Mode on Vioxx

Los Angeles Times reporter Molly Selvin believes pharmaceutical giant Merck & Co. is seeing the beginning of a new wave of class action litigation. Merck is already dealing with the near-daily filing of class action lawsuits involving pain reliever Vioxx. See, e.g., International Union of Operating Engineers Local #68 Welfare Fund v. Merck & Co., Inc., 894 A.2d 1136 (N.J.Super.A.D. 2006) (affirming certification of class action). Now, Molly Selvin reports, it is also "fielding the first of what could be another wave of lawsuits involving Fosamax, its second-biggest seller."

Fosamax is an osteoporosis drug. As Selvin explains, "Reports in the last few years have linked Fosamax and similar drugs, known as bisphosphonates, to a serious side effect in which the jawbone partially crumbles and dies." The actual rate of incidence of this side effect, known as "osteonecrosis," is quite small; in fact, according to Merck, clinical trials involving 17,000 patients revealed no evidence of osteonecrosis. Further, no one appears to dispute the substantial benefit the drug provides for the vast majority of its users. Selvin states "Fosamax is probably the best-known brand-name drug for preventing hip fractures and deteriorating bones that often destroy the quality of life for older women." But that hasn't dented the advertising campaign being waged by plaintiff class action attorneys. Merck's defense to these class action lawsuits will be interesting to follow, particularly since Merck reports that the Fosamax label was revised in July 2005 to warn about the risk of osteonecrosis.

Selvin's article, entitled "Lawyers Gear Up To Attack Fosamax," may be found in the July 10, 2006 edition of the Los Angeles Times.

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

The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., enacted by Congress in 1978, establishes certain that ethical guidelines for the collection of consumer debts, and provides debtors with a means for challenging payoff demands and determining the validity and accuracy of asserted debts. As class action defense attorneys know, the FDCPA has generated numerous class actions. The FDCPA expressly provides private rights of action and for the recovery statutory damages as well as actual damages. The FDCPA also expressly provides for class action recoveries. As a resource to the class action defense lawyer, we quote below the statutory provision of the FDCPA concerning civil liability:

§ 1692k. Civil liability

(a) Amount of damages

Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of--

(1) any actual damage sustained by such person as a result of such failure;

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.

(b) Factors considered by court

In determining the amount of liability in any action under subsection (a) of this section, the court shall consider, among other relevant factors--

(1) in any individual action under subsection (a)(2)(A) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or

(2) in any class action under subsection (a)(2)(B) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector's noncompliance was intentional.

(c) Intent

A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) Jurisdiction

An action to enforce any liability created by this subchapter 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, within one year from the date on which the violation occurs.

(e) Advisory opinions of Commission

No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Commission, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

Posted In: FDCPA Class Actions, Statutes & Rules

To Defeat Federal Fair Debt Collection Practices Act Class Actions, Defense Lawyer Must Satisfy “Least Sophisticated Debtor” or “Unsophisticated Debtor” Standard

Class action lawsuits alleging violations of the Fair Debt Collection Practices Act (FDCPA) are commonplace. The class action defense lawyer frequently must defend against claims that the initial letter from the debt collector to the consumer failed to give the information required by 15 U.S.C. § 1692g. We discuss here the two main approaches taken by federal courts in determining whether such a violation occurred: the “least sophisticated debtor” standard, and the “unsophisticated debtor” standard.

We begin with the “least sophisticated debtor” approach because it is the most widely accepted. At least 6 courts have adopted this objective standard. See Greco v. Trauner, Cohen & Thomas, L.L.P., 412 F.3d 360, 365-66 (2d Cir. 2005); Wilson v. Quadramed Corp., 225 F.3d 350, 354-55 (3d Cir. 2000); United States v. National Fin. Serv., Inc., 98 F.3d 131, 136 (4th Cir. 1996); Smith v. Computer Credit, Inc., 167 F.3d 1052, 1054 (6th Cir. 1999); Terran v. Kaplan, 109 F.3d 1428, 1431-32 (9th Cir. 1997); Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1174-75 (11th Cir.1985). The least sophisticated debtor testis “lower than simply examining whether particular language would deceive or mislead a reasonable debtor.” Swanson v. Southern Oregon Credit Serv., Inc., 869 F.3d 1222, 1227 (9th Cir. 1998). Put another way, “The basic purpose of the least-sophisticated-consumer standard is to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd.” Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir. 1993). But while this standard “protects naïve consumers,” Wilson, at 354, it also “prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and presuming a basic level of understanding and willingness to read with care.” National Financial Services, at 136 (citation omitted).

Continue reading "Summary of Judicial Consideration of Federal FDCPA Claims Based on Debt Collection Letters: Defense of Class Action Issues" »

Posted In: FDCPA Class Actions

On June 27, 2006, U.S. Surgeon General Richard H. Carmona released a mammoth report on secondhand cigarette smoke that is likely to benefit the class action plaintiff lawyers far more than the children the report seeks to protect. The report - entitled, "The Health Consequences of Involuntary Exposure to Tobacco Smoke" - spans more than 700 hundreds pages with exhibits, and provides a comprehensive analysis of the health risks associated with "passive" smoking, or in the words of the report, "involuntary smoking." Those risks are substantial, increasing the risk of developing heart disease and lung cancer by an estimated 25-30% and 20-30%, respectively. The risk to infants and children are even more substantial, and is now known to be a cause of SIDS (sudden infant death syndrome), respiratory problems, including asthma, and ear infections in that group. And the risks are unavoidable: the Surgeon General concludes that there is no "risk-free" level of exposure to secondhand smoke; even brief exposure immediately effects the cardiovascular system adversely.

California state and federal court class action defense attorneys should anticipate that the report is likely to lead to class action test cases, particularly in light of California's act of becoming the first state to declare secondhand smoke a "toxic air contaminant." On January 26, 2006, the California Environmental Protection Agency announced, "Today the California Air Resources Board (ARB) identified environmental tobacco smoke (ETS), or second-hand smoke, as a Toxic Air Contaminant (TAC). ETS is now formally identified as an airborne toxic substance that may cause and/or contribute to death or serious illness. ARB's action to list ETS as a TAC was based on a comprehensive report on exposure and health effects of ETS." Now that the U.S. Surgeon General has announced that there is no safe level for exposure to secondhand smoke, and has confirmed in a comprehensive report the health risks associated with exposure to secondhand smoke, class action plaintiff lawyers are likely to test the waters on new and novel theories.

In part this prediction is based on experience: California class action plaintiff lawyers have already threatened to sue banks, property managers and property owners for "wrongfully" exposing customers to the secondhand smoke of other customers while using or standing in line to use bank ATM machines, as well as near entrances to banks. The California Attorney General has weighed on that subject, warning at least one plaintiffs' lawyer to consider carefully before filing such a lawsuit. The author predicts that it will not be long before a plaintiffs' lawyer seeks to use the Surgeon General's report as the foundation in a class action lawsuit. As a class action defense attorney, the author sincerely hopes that he is wrong. Only time will tell.

Posted In: Class Actions In The News, Topics of Interest

For the California federal and state defense lawyer, we again provide an unofficial summary of recent class action filings in California, in the hope that it will assist California class action defense attorneys anticipate claims against which they may have to defend. The following is a summary of legal categories for class actions filed in California state and federal courts from June 30 - July 6, 2006, in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that boast 10% or more of the class action filings during the relevant timeframe. Approximately 32 class action lawsuits were filed in California during that time period, of which 8 involved employment law claims (25%). Class action defense attorneys also will face 6 new antitrust cases (19%), of which 4 are additional “dog pile” lawsuits against British Airways for alleged price fixing, and an additional 4 of the class action filings (13%) alleged unfair business practices.

Posted In: Class Actions In The News

The federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., has spawned numerous class action lawsuits, presenting defense attorneys with a wide array of claims. As a resource to the class action defense lawyer, we quote below the statutory provision of the FDCPA concerning deceptive forms:

§ 1692j. Furnishing certain deceptive forms

(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 1692k of this title for failure to comply with a provision of this subchapter.

Posted In: FDCPA Class Actions, Statutes & Rules

Successful Appellate Defense of Class Action Case Still Permits Individual Lawsuits to be Filed, and Florida Supreme Court Holds that Several Jury Findings Against the Tobacco Companies Still Stand

In a tremendous victory for the tobacco industry defense, the Florida Supreme Court decertified a class action and set aside a $145 billion punitive damage award as excessive. Engle v. Liggett Group, ___ So.2d ___, Case No. SC03-1856 (July 6, 2006). A nationwide class action had been certified almost a dozen years ago - on October 31, 1994 - on behalf of smokers and their survivors seeking compensatory and punitive damages for injuries allegedly caused by smoking. survivors, who have suffered, presently suffer or who have died from diseases and medical conditions caused by their addiction to cigarettes that contain nicotine." Slip Opn., at 7. Following an interlocutory appeal filed by the defense, the Florida Court of Appeal affirmed class certification but reduced the scope of the class action to "Florida citizens and residents." See R.J. Reynolds Tobacco Co. v. Engle, 672 So.2d 39, 42 (Fla.App. 1996). The ensuing trial resulted in a jury verdict awarding the named plaintiffs a total of $12.7 million dollars in compensatory damages, and the entire class $145 billion in punitive damages. Slip Opn., at 9.

With respect to the punitive damage award, the Supreme Court held that the trial court's procedure was fatally flawed. The trial proceeded as follows: Phase I - consisting of the trial on the class action claims for liability and entitlement to punitive damages; Phase II-A - consisting of the trial on the individual class representative's claims for compensatory damages; and Phase II-B - consisting of a jury trial on the total award of punitive damages payable to the class as a whole. Slip Opn., at 8-9. Phase III (not yet held) would involve the selection a new juries "to decide the individual liability and compensatory damages claims for each class member," following which "the trial court would divide the punitive damages previously determined equally among any successful class members." Id., at 10. The Supreme Court rejected this procedure, as well as the size of the award, explaining at page 19:

Continue reading "Engle v. Liggett Group: Defense Persuades Florida Supreme Court To Decertify Class Action Against Tobacco Company And Set Aside $145 Billion Punitive Damage Award As Excessive" »

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

Class action defense attorneys know that the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., is used frequently by a plaintiff’s lawyer to bring a class action against a debt collector for violating the FDCPA’s terms. The FDCPA, however, also includes provisions for lawsuits brought by debt collectors. Specifically, § 1692i addresses the venue for such lawsuits. It provides:

§ 1692i. Legal actions by debt collectors

(a) Venue

Any debt collector who brings any legal action on a debt against any consumer shall--

(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity--

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

(b) Authorization of actions

Nothing in this subchapter shall be construed to authorize the bringing of legal actions by debt collectors.

Posted In: FDCPA Class Actions, Statutes & Rules

California Federal Court Finds Letter Referring to Debtor as “Customer” and to Debt Collector as “Account Representative,” and Offering to “Help” Resolve Debt, Not Misleading Under Fair Debt Collection Practices Act, But Allegation That Debt Collector Sought to Recover Excess Interest Sufficient to Survive Motion to Dismiss

In January 2006, a putative class action was filed in California federal court against Arrow Financial Services alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (FDCPA), and its California equivalent, California Civil Code, §§1788 et seq. Hapin v. Arrow Fin. Serv., 428 F.Supp.2d 1057, 1059 (N.D. Cal. 2006). Plaintiff’s lawyer asserted that the debt collector letter from Arrow was “false, deceptive, and misleading” in that it (1) described plaintiff as a “customer,” (2) characterized the debt collector as an “account representative,” and (3) offered to “‘help Plaintiff regain his financial future . . . [and] by the false . . . characterization of debt as helping “regain his financial future.”’” Id. The complaint also alleged that Arrow sought to collect excessive interest, id. Defense attorneys filed a motion to dismiss the class action complaint, which the California federal court granted in part and denied in part.

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

Class action defense attorneys know that many provisions of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., form the basis of class actions, other provisions do not appear to be controversial. For example, even if a plaintiff’s lawyer has argued a violation of § 1692h, concerning multiple debts, it appears that it has not yet generated any appellate decisions. The statutory language of the FDCPA concerning multiple debts is as follows:

§ 1692h. Multiple debts

If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer's directions.

Posted In: FDCPA Class Actions, Statutes & Rules