TILA Class Action Defense Cases–Andrews v. Chevy Chase: Seventh Circuit Reverses Class Action Certification Of TILA Class Action Against Chevy Chase Bank Holding Rescission Not Available In Class Actions Under TILA

Truth-in-Lending Act (TILA) Class Action Lawsuit Erroneously Granted Class Action Status because TILA does not Permit Rescission as a Class Action Remedy only Damages Seventh Circuit Holds

Plaintiffs filed a putative class action against Chevy Chase Bank for violations of the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq.; the class action complaint alleged that, in connection with its adjustable rate mortgage loans, the Bank failed to make the disclosures required by federal law. Andrews v. Chevy Chase Bank, 545 F.3d 570 (7th Cir. 2008) [Slip Opn., at 3-4]. The class action sought not only statutory damages and attorney fees, but prayed for rescission as well, id., at 4.. The district court granted plaintiffs’ motion for class action certification, see Andrews v. Chevy Chase Bank, FSB, 240 F.R.D. 612 (E.D. Wis. 2007); our summary of that opinion may be found here. The author stated in that summary, “[T]he author notes that the court’s analysis is brief and superficial, and fails to address any of the cases that hold rescission to be unavailable on a class-wide basis. See, e.g., McKenna v. First Horizon Home Loan Corp., 475 F.3d 418, 423 (1st Cir. 2007) (holding that ‘as a matter of law, class certification is not available for rescission claims, direct or declaratory, under the TILA’).” Defense attorneys filed an interlocutory appeal: the Seventh Circuit explained, “we are called on to answer one question: May a class action be certified for claims seeking the remedy of rescission under the Truth in Lending Act (‘TILA’), 15 U.S.C. § 1635? The only two federal appellate courts to have addressed this question have answered ‘no,’ see McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir. 2007); James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727 (5th Cir. 1980), and we agree. TILA’s statutory-damages remedy, § 1640(a)(2), specifically references class actions (by providing a damages cap), but TILA’s rescission remedy, § 1635, omits any reference to class actions. This omission, and the fundamental incompatibility between the statutory-rescission remedy set forth in § 1635 and the class form of action, persuade us as a matter of law that TILA rescission class actions may not be maintained.” Id., at 1-2. Accordingly, the Seventh Circuit reversed.

The Circuit Court noted that because the issue presented in the appeal is “purely legal” – viz., whether class action claims for rescission may be pursued under TILA – the district court order is subject to de novo review, rather than the “abuse of discretion” standard generally employed when reviewing an order granting class action certification. Andrews, at 5. The Seventh Court noted at page 6, “Whether TILA allows claims for rescission to be maintained in a class-action format is an issue of first impression in our circuit, but the First and Fifth Circuits, in addition to California’s court of appeals, have held as a matter of law that rescission class actions are unavailable under TILA.” (Citations omitted.) The problem, in the Circuit Court’s words, was simple: TILA provides borrowers with a right of rescission under certain circumstances: “Debtors may rescind under TILA by midnight of the third business day after the transaction for any reason whatsoever…. Rescinding a loan transaction under TILA ‘“requires unwinding the transaction in its entirety and thus requires returning the borrowers to the position they occupied prior to the loan agreement.”’ Id. (citations omitted). The remedy is considered “purely personal”: “It is intended to operate privately, at least initially, ‘with the creditor and debtor working out the logistics of a given rescission.’” Id., at 7 (citations omitted). Moreover, the rescission remedy provided for in TILA “appears to contemplate only individual proceedings; the personal character of the remedy makes it procedurally and substantively unsuited to deployment in a class action.” Id. (citation omitted). Put simply, “Rescission is a highly individualized remedy as a general matter, and rescission under TILA is no exception. The variations in the transactional ‘unwinding’ process that may arise from one rescission to the next make it an extremely poor fit for the class-action mechanism.” Id.

Certification of Class Actions Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

Class Action Defense Cases–Owner-Operator v. Landstar: Eleventh Circuit Reverses Judgment In Favor Of Defense But Affirms Decertification Of Class Action Status

District Court Certified Class Action but Subsequently Decertified Class Action as to Damages because of “Unique and Individualized Proof” Required by Class Action Allegations Eleventh Circuit Holds

The Owner-Operator Independent Drivers Association, which “represents truck owners and truck drivers who enter into lease agreements to provide equipment and services to haul freight in interstate commerce for Landstar System,” a U.S. Department of Transportation-approved motor carrier, filed a class action complaint against Landstar and others alleging defendants violated the federal Truth in Leasing regulations; specifically, the class action alleged that defendants “fail[ed] to disclose in their lease agreements that banking fee charges would be deducted from compensation paid to the truck owners and drivers” and “fail[ed] to provide documentation regarding the computation of charge-back items including pricing information submitted by Qualcomm.” Owner-Operator Independent Drivers Assn., Inc. v. Landstar System, Inc.., ___ F.3d ___, 2008 WL 4058042, *1 (11th Cir. 2008). The class action “sought damages and equitable relief, including restitution, disgorgement of Landstar’s profits, and injunctive relief.” _Id._, at *2. Defense attorneys moved to the complaint on the ground that the two-year statute of limitations had run the class action claims; the district court denied the motion, ruling that a four-year limitations period applied. _Id._, at *3. Eventually, the district court granted plaintiff’s motion to certify the litigation as a class action, _id._ The court noted, however, that “not all aspects of this case present common issues” and specifically stated that “if these common questions are resolved in favor of the putative class, the issue of damages will be unique and subject to individualized proof.” _Id._ The parties waved their right to a jury trial, _id._, and the district court ruled that “[the] only claims remaining in this action are those regarding injunctive relief, damages sustained, and attorney’s fees,” _id._, at *4. On the first day of trial, the district court granted defendant’s motion to decertify the class as to damages, explaining that “issues regarding damages sustained by individual members of the Class would require unique and individualized proof.” _Id._, at *4. However, the class action was not decertified with respect to the complaint’s prayer for injunctive relief. _Id._ Ultimately, the district court entered judgment in favor of Landstar on the issue of damages, and entered judgment as a matter of law in favor of Landstar. _Id._, at *5-*6. Plaintiff appealed seven of the district court’s rulings, _id._, at *6; defense attorneys filed a cross-appeal. The Eleventh Circuit affirmed in part and reversed in part.

We do not discuss the specific factual allegations leveled against Landstar. See Landstar, at *1-*3. For our purposes, the Circuit Court’s discussion of the class action certification issues is paramount. In this regard, based on its ruling that plaintiff had to prove actual damages, the district court decertified the class action. Id., at *16. The district court reasoned that “decertification is appropriate because the determination of the remaining issue of damages in this case on a class-wide basis is unfeasible, unmanageable, and would not be superior to individual actions.” Id. The Eleventh Circuit noted that there are “‘extreme cases in which computation of each individual’s damages will be so complex, fact-specific, and difficult that the burden on the court system would be simply intolerable…but we emphasize that such cases rarely, if ever, come along.’” Id. (citation omitted). The Circuit Court concluded that plaintiff “failed to establish that actual damages can be easily calculated for all class members, [so] the District Court did not abuse its discretion in decertifying the class for actual damages.” Id., at *17.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Medrazo v. Honda of North Hollywood: California State Court Reverses Denial Of Class Action Certification Holding Trial Court Erred In Considering Merits Of Class Action Claims

Trial Court Erred in Denying Class Action Treatment of Class Action Complaint Alleging Failure of Dealer to Attach Hang Tags to Motorcycles because Whether Defendant Violated Statute may not be Determined at Class Action Certification Stage California State Court Holds

Plaintiffs filed a class action against Honda of North Hollywood, which sells new and used Honda, Suzuki and Yamaha motorcycles, for violations of sections 11712.5 and 24014 of California’s Vehicle Code; specifically, the class action complaint alleged that defendant violated California law by failing to attach a label (or “hang tag”) setting forth the manufacturer’s suggested retail price for the motorcycle and defendant’s added charges. Medrazo v. Honda of North Hollywood, ___ Cal.App.4th ___ (Cal.App. August 21, 2008) [Slip Opn., at 2]. The class action alleged that defendant’s conduct violated California’s Unfair Business Practices Act and its Consumer Legal Remedies Act, and sought injunctive and restitutionary relief, disgorgement of the charges imposed by defendant but not disclosed on the hang tag, and damages under the CLRA. _Id._, at 3. About a year after she filed her class action complaint, plaintiff moved the district court for an order certifying the litigation as a class action, _id._, at 3-4. Defense attorneys opposed class action treatment on several grounds, including that plaintiff purchased a Honda, and therefore could not assert claims on behalf of purchasers of Suzuki or Yamaha motorcycles, and that it did not violate California law with respect to Suzuki or Yamaha motorcycles because “section 11712.5 is violated only when the manufacturer supplies hang[] tags and the dealer fails to attach them, and Suzuki and Yamaha did not supply any hang[] tags.” _Id._, at 5. The trial court denied plaintiff’s motion for class action certification finding that (1) dealers are not obligated to attach hang tags unless they are supplied by the manufacturer, which neither Suzuki or Yamaha provided to defendant, (2) the sales agreement plaintiff signed detailed the dealer-added costs, so “she had notice of those costs before she entered the agreement,” and (3) the class was not ascertainable in that “there is nothing in [defendant’s] records to indicate which motorcycles had hang[] tags attached to them.” _Id._, at 6. The Court of Appeal reversed.

With respect to the failure of Suzuki and Yamaha to supply hang tags, plaintiff argued that California law prohibited defendant from selling motorcycles without hang tags regardless of whether they have been supplied by the manufacturer. Medrazo, at 8. Defense attorneys argued that the statute expressly limits defendant’s obligation to hang tags “furnished by the manufacturer,” id. (citation and italics omitted). Plaintiff countered that resolution of this legal issue was premature at the class action certification stage of the litigation, and the appellate court agreed. Id., at 8-9. (The author finds the court’s reasoning to be wanting: The parties should not be required to prolong litigation, taxing the resources of the parties and the courts, when a legal ruling would resolve an issue central to the litigation. Simply adding the words “class action” to the caption of a complaint should not serve as a talisman to preclude trial courts from making legal rulings that, sooner or later, must be made. In this case, it was not possible for the defense to file a demurrer to the class action complaint because the class action alleged that Suzuki and Yamaha supplied hang tags that defendant failed to attach to its motorcycles. Because the trial court may properly consider evidence in ruling on a motion for class action certification, defense attorneys provided evidence that no such hang tags had been provided; plaintiff had no evidence to the contrary. The legal issue was proper for resolution, and the Court of Appeal should have addressed whether the trial court properly interpreted section 24014, an issue it left unresolved. See id., at 9 n.4.)

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Kimoto v. McDonald’s: California Federal Court Grants Defense Motion To Deny Class Action Certification Of Labor Law Class Action Holding Employers Need Not Ensure That Employees Take Meal And Rest Breaks

Class Action Complaint Alleging Failure to Provide Meal and Rest Breaks not Entitled to Class Action Treatment because Employers need only “Offer” or “Authorize” Employees to Take Meal and Rest Breaks but need not Ensure that Employees Take Them California Federal Court Holds

Plaintiff filed a class action complaint in California state court against her former employer, McDonald’s, on behalf of hourly, non-exempt employees; the class action alleged that she did not receive all of her meal or rest breaks. Kimoto v. McDonald’s Corp., ___ F.Supp.2d ___ (C.D. Cal. August 19, 2008) [Slip Opn., at 1-2]. Defense attorneys removed the class action to federal court, _id._, at 1-2. Defense attorneys filed a motion to deny class action treatment; plaintiff’s lawyers filed a cross-motion for class certification. _Id._, at 2. Defense attorneys advanced several grounds for denying class action certification, including that plaintiff could not establish Rule 23(a)’s typicality or adequacy of representation requirements for her meal and rest period claims, that she could not establish Rule 23(b)(3)’s commonality and superiority requirements for her meal period, rest period, wage statement and overtime claims, that she lacks standing to pursue the wage statement claims, and that she is barred from seeking class action treatment because of her failure to seek class certification within the 90-day requirements of the court’s Local Rules or at an “early practicable time” within the meaning of Rule 23. _Id._, at 4. The district court denied class action certification both as untimely and on the merits.

With respect to the timing of plaintiff’s motion to certify the litigation as a class action, the district court found that plaintiff failed to comply with Rule 23(c)(1)(A)’s mandate to seek class certification at “an early practicable time after a person sues or is sued as a class representative.” Kimoto, at 4. Specifically, the motion was not filed until August 14, 2008 – a full month after the discovery cut-off date, and only two months before trial. Id. In fact, plaintiff waited until “the last date to file a motion of any kind in this action.” Id. The fact that the district court permitted plaintiff to file the motion as late as she did was not dispositive: As the federal court found at page 4, “Given that trial is just two months away, the Court does not find this to be ‘an early practicable time’ under Rule 23(c)(1)(A).” This is particularly true in light of the fact that the parties had previously requested permission of the court to have the motion on class certification heard as late as August 4, but the court denied the motion on the ground that such a late hearing date would be inappropriate. Id., at 4.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–In re ConAgra: Georgia Federal Court Denies Class Certification Motion Holding Proposed Products Liability Class Action Lacked Typicality And Failed Predominance And Superiority Test

Class Action Seeking Economic and Personal Injury Damages Resulting from Sale of Contaminated Peanut Butter not Entitled to Class Action Certification because Rule 23(a)’s Typicality Test and Rule 23(b)(3)’s Predominance/Superiority Test not Satisfied Georgia Federal Court Holds

Numerous individual and class action lawsuits were filed against ConAgra arising out of peanut butter contaminated with Salmonella. The Judicial Panel on Multidistrict Litigation consolidated the various individual and class action lawsuits in the Northern District of Georgia, after which a master class action complaint was filed that sought to represent two nationwide classes: (1) purchasers of peanut butter “rendered unusable and valueless” by ConAgra’s recall, and (2) consumers of contaminated peanut butter who suffered personal injury. by the February 14, 2007 recall of such peanut butter.” In re ConAgra Peanut Butter Products Liab. Litig., ___ F.Supp.2d ___ (N.D. Ga. July 22, 2008) [Slip Opn., at 3-4]. The class action complaint sought to recover damages under an “unjust enrichment” theory with respect to the first class, and personal injury damages as to the second class. _Id._, at 4. Plaintiffs moved the district court to certify the litigation as a class action; the district court denied the motion. _Id._, at 1.

The event itself was uncontested: the FDA issued a warning concerning ConAgra’s peanut butter in February 2007, and by May 2007, the Center for Disease Control had confirmed that 628 people in 48 states had been infected by Salmonella-tainted peanut butter, and more than 70 people required hospitalization. In re ConAgra, at 1-2. ConAgra recalled all of the potentially-contaminated products. Testing revealed that less than 2% of the jars contained Salmonella, but ConAgra “offered full refunds to all purchasers of recalled peanut butter.” Id., at 3. The district court noted that the recall “received a lot of publicity” and that there was “widespread participation in the refund program.” Id. Specifically, by January 2008 ConAgra had “refunded $2,984,308.68 directly to consumers, representing 941,302 jars of peanut butter” and had “reimbursed retailers $30,665,293.00 for inventory that was in the retailers’ possession at the time of the recall or for product returned to the retailers by customers.” Id.

Certification of Class Actions Class Action Court Decisions Multidistrict Litigation Uncategorized

Mobil Oil Class Action Defense Cases–Weber v. Mobil Oil: Oklahoma State Court Certifies Class Action Against Mobil Oil Holding Plaintiffs Satisfied Requirements For Class Action Treatment Under Oklahoma Law

Class Action Complaint Against Mobil Oil Alleging Defendants Improperly Deducted Costs and/or Expenses from Mineral Rights Payments to Royalty Owners Satisfies State’s Class Action Requirements Oklahoma State Court Holds Plaintiffs filed a class action against various Mobil Oil and Exxon Mobil entities; the class action complaint alleged that defendants had represented to the class that oil royalty payments would be free and clear of any operating or investment costs, but that under the “Fiske Formula” utilized by defendants to calculate payments to class members, defendants deducted from payments to the class certain operating or investment costs.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–In re Genetically Modified Rice: Missouri Federal Court Denies Class Action Certification of Class Action Complaint Seeking Damages By Producers For Contamination Of Rice

Class Action Claims by Rice Growers Seeking Damages Arising from Contamination of U.S. Rice Supply by Non-Approved Genetically Modified Strains of Rice not Appropriate for Class Action Treatment because Substantial Differences in Individual Damages and Proof of Damages Defeat Rule 23(b)(3) Requirement for Predominance and Superiority Missouri Federal Court Holds

Various class action lawsuits were filed against Bayer CropScience and others seeking to recover for damages allegedly when “the defendants contaminated the U.S. rice supply with non-approved genetically modified strains of rice, thereby affecting the market price for plaintiffs’ crops.” The class action complaints were filed after the U.S. Department of Agriculture announced, in August 2006, that trace amounts of a rice seed developed by Bayer CropScience and “designed to be resistant to a Bayer herbicide, Liberty Link,” had been found in the U.S. rice supply. In re Genetically Modified Rice Litig., 251F.R.D 392 (E.D. Mo. 2008) [Slip Opn., at 1-2]. (The rice strain at issue in the class actions “is now deregulated by USDA, [but] at the time of the contamination it was not approved for human consumption.” Id., at 2.) The Judicial Panel on Multidistrict Litigation consolidated the class actions for pretrial purposes in the Eastern District of Missouri, and plaintiffs’ filed a master consolidated class action complaint. Id., at 1. “The plaintiffs in the master consolidated class action complaint are rice producers from five U.S. states where rice is grown and harvested: Arkansas, Louisiana, Mississippi, Missouri and Texas.” Id., at 3.Plaintiffs’ lawyers moved for class action certification; defense attorneys opposed class action treatment on the grounds that individual issues predominate over common issues. Id., at 1. The district court agreed that class action treatment was not warranted, concluding that class action certification was “inappropriate…because plaintiffs’ varying claims for damages are not amenable to class-wide adjudication.” Id.

According to the master class action complaint, world-wide reaction to the announcement directly affected the market for U.S. long grain rice: Japan barred further imports of such rice, the European Union required that all U.S. rice be “tested and certified as free of genetically-modified traits,” and several other countries – including Russia, Canada, the Philippines, Taiwan and Iraq – “imposed restrictions on U.S. rice imports.” In re Genetically Modified Rice, at 2-3. The class action alleged that “the U.S. market price for rice dropped dramatically as a result of Bayer’s contamination of the rice supply.” Id., at 3. The U.S. produces 13% of the world’s rice and exports nearly half of its rice, id. The class action relies on the market price for rice as listed on the Chicago Board of Trade (CBOT) for the period of August 18-23, 2006 to support its claim that the “dramatic price drop” is attributable to the announcement concerning the discovery of the contaminated rice. Id., at 4. The class action alleged further that economic harm continued beyond August 2006, id.

Certification of Class Actions Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Settlement Cases–In re Grand Theft Auto: New York Federal Court Decertifies Class Action Holding Proposed Settlement Class In Nationwide Consumer Protection Law Class Action Lacked “Cohesiveness” Required By Rule 23(b)(3)

Certification of Putative Class Action for Purposes of Settlement Required Satisfaction of Rule 23 Class Action Requirements, and Class Proposed for Settlement of Nationwide Class Action Failed to Meet Rule 23(b)(3)’s Predominance Test Requiring Decertification of Class Action New York Federal Court Holds

In 2005, four class action lawsuits were filed against Take-Two Interactive Software and its wholly-owned subsidiary, Rockstar Games; the complaints sought nationwide class action status and alleged, inter alia, violations of the consumer protection statutes of each state and the District of Columbia based on the “inclusion of an interactive, sexual minigame…in their premier product, Grand Theft Auto: San Andreas.” In re Grand Theft Auto Video Game Consumer Litig. (No. II), ___ F.Supp.2d ___ (S.D.N.Y. July 30, 2008) [Slip Opn., at 1]. The Judicial Panel on Multidistrict Litigation coordinated the various class action lawsuits, together with tag-along class action complaints, in the Southern District of New York. _Id._, at 2. Soon thereafter, the court appointed lead counsel for the putative class and a consolidated, amended class action complaint was filed. _Id._, at 2-3. The amended class action alleged that defendants marketed and sold Grand Theft Auto with an improper “content rating,” which they obtained by “withholding pertinent information from the entity charged with assigning content ratings to video games, the Entertainment Software Ratings Board”; specifically, the class action complaint charged that defendants failed to disclose that Grand Theft Auto “contained the Sex Minigame…, a game-within-the-game that allowed players to control the protagonist’s movements as he engaged in various sexual acts” and that purchasers could access the Sex Minigame through what came to be known as the “Hot Coffee Mod.” _Id._, at 3. Defense attorneys moved to dismiss the class action to the extent it advanced claims “under the laws of states where the named plaintiffs did not purchase” the game; the district court denied the motion, holding that a determination of whether to certify the litigation as a class action “was logically antecedent to the standing issues raised therein.” _Id._, at 4. Plaintiffs thereafter moved the federal court to certify the litigation as a nationwide class action; defense attorneys opposed class action treatment, “challenging the propriety of a nationwide class action that asserts claims under the disparate laws of the fifty states.” _Id._, at 4-5. Before the court ruled on that motion, the parties negotiated a settlement of the class action claims, _id._, at 5. In December 2007, the federal court conditionally certified a nationwide class action for settlement purposes and gave preliminary approval to a settlement of the class action, _id._, at 1, 5-6. However, in light of the Second Circuit Court of Appeal’s subsequent opinion in _McLaughlin v. American Tobacco Co._, 522 F.3d 215 (2d Cir. 2008), the district court decertified the settlement class. _Id._ (A summary of the _McLaughlin_ opinion may be found here.)

We cut to the chase of the district court’s 58-page opinion. The district court correctly noted that even for purposes of settlement, the plaintiffs were required to meet the class action criteria set forth in Rule 23(a) – viz., numerosity, commonality, typicality and adequacy of representation – as well as, in this case, Rule 23(b)(3). In re Grand Theft Auto, at 9-10. This latter requirement means that plaintiffs “must show that ‘questions of law or fact common to [Settlement Class] members predominate over any questions affecting only individual members,’ and that the class action ‘is superior to other available methods for fairly and efficiently adjudicating the controversy.’” Id., at 10 (quoting Fed. R. Civ. P. Rule 23(b)(3)). While the proposed settlement is relevant, it goes merely to whether class action treatment would create manageability problems, id. “Trial-manageability issues aside, however, the ‘requirements [of Rule 23(a) and (b)] should not be watered down by virtue of the fact that the settlement is fair or equitable.’” Id. (quoting Denney v. Deutsche Bank AG, 443 F.3d 253, 270 (2d Cir. 2006)).

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Parra v. Bashas’: Ninth Circuit Reverses Denial Of Class Action Treatment Of Labor Law Class Action’s Pay Discrimination Claim And Remands For Consideration Of Remaining Class Action Factors

District Court Erred in Finding Lack of Commonality Among Proposed Class in Labor Law Class Action Alleging Pay Discrimination Ninth Circuit Holds but Remands Class Action to District Court for Further Consideration because Lower Court had not Addressed Remaining Rule 23 Class Action Requirements

Plaintiffs, current and former Hispanic employees Bashas’, filed a putative class action against Bashas’ alleging violations of Title VII of the 1964 Civil Rights Act; specifically, the class action alleged that Bashas’ discriminated against members of the putative class on the basis of their national origin in that their “pay and working conditions [were] based on their national origin.” Parra v. Bashas’, Inc., ___ F.3d ___ (9th Cir. July 29, 2008) [Slip Opn., at 9636]. According to the class action complaint, Bashas’ operates 150 grocery stores under the trade names of Bashas’, A.J.’s Fine Foods and Food City, _id._, at 9637. The demographics of both the patrons and the employees differ substantially; for example, 15% of the Bashas’ and A.J.’s workforce is Hispanic, but 75% of the Food City workforce is Hispanic. _Id._ The class action alleged that, while the clientele differed, the employee job requirements at the three stores were “practically indistinguishable,” and that in 2003 Bashas’ implemented a program to equalize the pay scales at the stores over a period of time. _Id._ The class action complaint further alleged that the pay discrepancies ranged from $300-$6000 per year, with Hispanic employees generally receiving less pay than employees at Bashas’ and A.J.’s, _id._ Plaintiffs moved the district court to certify the litigation as a class action; the federal court granted class action treatment with respect to the “working conditions” claim, but ruled that plaintiffs had failed to adequately establish commonality to support class action treatment of the “pay discrimination” claim. _Id._, at 9636. The Ninth Circuit granted plaintiffs’ request for leave to appeal the district court’s order, _id._, at 9638, and reversed.

The Circuit Court focused solely on the district court’s conclusion that plaintiffs “failed to establish commonality among the proposed class members for their pay discrimination claim.” Parra, at 9639. To find commonality under Ninth Circuit authority, “‘[t]he existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies.’” Id., at 9640 (citations omitted). The Court noted at page 9641 that “the district court found past pay disparities for similar jobs at Bashas’, Inc.’s three brand stores,” and that it “noted there significant conclusions conceded by Bashas’, Inc.” – (1) that a higher percentage of its employees work for Food City, (2) that during the relevant time period the pay scale at Food City was lower than at Bashas’ and A.J.’s, and (3) that Hispanic employees were paid a lower hourly rate for similar jobs. The district court found these facts insufficient because ”pay disparities no longer existed at the time the order [denying class action certification] was written.” Id., at 9641. This ruling was error, because the court also should have considered “evidence of past pay disparities and discrimination common to the Hispanic workers at Food City.” Id.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–In re Scrap Metal: Sixth Circuit Affirms $34 Million Class Action Judgment In Antitrust Class Action Case Holding District Court Properly Certified Litigation As A Class Action

Jury Verdict in Antitrust Class Action Affirmed because Plaintiffs Satisfied Rule 23(b)(3) Predominance Requirement for Class Action Certification and because Notice to Absent Class Members was Adequate Sixth Circuit Holds

In 2002, plaintiffs filed a class action against various defendants, including Columbia Iron and Metal Company, alleging violations of federal antitrust laws. The class action complaint sought to represent the interests of plaintiffs and “a class of industrial scrap-generating companies in Northeastern Ohio.” In re Scrap Metal Antitrust Litig., 527 F.3d 517, 523 (6th Cir. 2008). According to the class action, plaintiffs sell unprocessed scrap metal, generated as a byproduct of their manufacturing, to brokers and dealers, “who then haul, clean, sort, and process the scrap before selling it to end users, such as steel mills.” Defendants allegedly violated the Sherman Act by “agreeing not to compete with one another, submitting rigged bids, setting prices for the purchase of unprocessed scrap metal, and imposing financial penalties on co-conspirators for disobeying allocation agreements.” Id. In March 2004, the district court certified the litigation as a class action, id., at 523-24. In 2005, Columbia’s defense attorneys moved to decertify the class on the grounds that notice to the class was inadequate, but the district court denied the motion. Id., at 524. A jury awarded plaintiffs more than $20 million, including $11.5 million against Columbia which the district court trebled, pursuant to 15 U.S.C. § 15(a). Id., at 524. Columbia appealed the jury verdict; the Sixth Circuit affirmed.

The Circuit Court explained at page 523, “The movement of unprocessed scrap from generators to dealers generally works as follows: The dealers submit bids to the generators for the purchase of unprocessed scrap during a specified time period at a set price. In setting their bid price, dealers consult various trade publications, which report the prevailing prices that dealers can expect to charge users for the scrap after they have processed it. To ensure that they turn a profit, dealers set their bid price for the unprocessed scrap below the amount they will ultimately charge the users for the processed scrap. If the bid is accepted by the scrap generator, the generator and the dealer enter into a contract at the bid price for the bid period.” As noted above, the class action complaint alleged that defendants conspired to deflate the prices they paid for scrap metal. Defense attorneys raised several arguments, but we focus only on the claim that the district court should not have permitted the litigation to proceed as a class action. Specifically, Columbia argued that the district court erred in certifying a class action because the “predominance” test of Rule 23(b)(3) had not been satisfied as “damages could not be calculated on a class-wide basis.” Id., at 535. Columbia also challenged the notice given to absent class members on the ground that it failed to adequately inform them of “the binding effect of a class judgment.” Id., at 536.

Certification of Class Actions Class Action Court Decisions Uncategorized