CLASS ACTION DEFENSE BLOG
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After Denying Motion to Certify Class Action on Grounds that Named Plaintiff would be an Inadequate Class Representative, New York District Court Denies Plaintiff’s Lawyer Leave to Conduct Discovery to Identify New Class Representative and Dismisses Class Action Because Subject Matter Jurisdiction Under Class Action Fairness Act of 2005 (CAFA) no Longer Existed
Plaintiff filed a putative class action against Philips Electronics alleging design defects in certain television models that caused them to require repair after the expiration of the express warranty period; federal court jurisdiction existed solely because of the Class Action Fairness Act (CAFA). Falcon v. Philips Electronics North Am. Corp., 489 F.Supp.2d 367,368 (S.D.N.Y. 2007). Plaintiff moved the district court for an order certifying the litigation as a class action; the district court denied the motion, agreeing with defense attorneys that plaintiff was not an adequate representative of the class. Id. Plaintiff’s lawyers then sought further discovery in an effort to find an adequate representative of the class, id. The district court denied the motion and dismissed the class action for lack of jurisdiction.
The district court order refusing to certify a class action turned on the fact that the sole named plaintiff “could not be an adequate class representative, because, among other problems, she did not actually purchase the television in question and because after receiving it, she subsequently discarded it.” Falcon, at 368. Plaintiff’s lawyer sought discovery of the names of customers who complained about the television models identified in the class action complaint “in the hope that that will lead to identification of an adequate class representative.” Id. The district court refused to reopen discovery so plaintiff’s lawyer could go “fishing” for a new class representative, explaining at page 369:
Certification of Class Actions Class Action Court Decisions Class Action Fairness Act (CAFA) Uncategorized
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Class Action Complaint Alleging Damages from Sale of CCA-Treated Wood did not Warrant Class Action Treatment as Defense Showed Individual Defenses and Individual Damage Analyses would Predominate over Fact Questions Common to Class Illinois Court Holds
Plaintiffs filed a putative class action in Illinois state court against Home Depot alleging violations of the state’s unfair and deceptive business practices statutes arising out of its sale of outdoor products made with wood treated with chromate copper arsenate (CCA) on the theory that “all CCA-treated wood is defective because it leaches toxic chemicals, such as arsenic and chromium VI to the surface of the wood and to nearby soil.” Kitzes v. Home Depot, U.S.A., Inc., 872 N.E.2d 53, Slip Opn., at 1 (Ill.App. June 28, 2007). Plaintiffs’ moved the trial court to certify the litigation as a class action; defense attorneys opposed class action treatment. The appellate court affirmed.
The class action complaint alleged that Home Depot misrepresented that CCA-treated wood was safe for outdoor use. Kitzes, at 1-2. Plaintiffs’ class action certification motion was supported by an expert declaration claiming “a reasonably high degree of scientific certainty that CCA-treated wood used in outdoor settings leaches arsenic to the surface of the wood and the surrounding soil, regardless of factors such as use, location, age and sealant history (except for very recently sealed surfaces),” and an expert declaration that “proposed methodology for calculating the removal and replacement costs associated with pressure-treated lumber in residential settings in multiple states.” Id., at 2. Among the pieces of evidence submitted against class action treatment, defense attorneys introduced plaintiffs’ deposition testimony (1) that they still used the CCA-treated wood deck, and had wood replaced and treated several times, (2) that no one told them that the CCA-treated wood deck diminished the value of their property, and (3) that they had a fence built with wood that had been treated with arsenic. Id., at 2-3. Defense attorneys also submitted press releases from the Environmental Protection Agency concerning the industry’s decision to stop using CCA-treated wood, and stating:
Certification of Class Actions Class Action Court Decisions Uncategorized
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As Matter of First Impression, Second Circuit Holds that American Pipe Tolling Applies to Putative Class Members of Class Action who File Individual Lawsuits Prior to Decision on Class Action Certification
Prior to the filing of putative class action lawsuits and within one year after plaintiffs discovered “the untrue statement or the omission,” see 15 U.S.C. § 77m, certain pension funds filed individual lawsuits against underwriters of WorldCom bonds under Section 11 of the federal Securities Act of 1933 alleging that they had purchased bonds based on registration statements that contained false and misleading information. In re WorldCom Sec. Litig., ___ F.3d ___, 2007 WL 2127874, *1 (2d Cir. July 26, 2007). Numerous putative class action lawsuits also were filed against WorldCom and its bond underwriters, including Caboto-Gruppo Intensa and Caboto Holdings Sim, and these alleged _inter alia_ violations of Section 11, _id._ After the expiration of the one-year limitations period, the pension funds amended the individual complaints to add Caboto as party-defendants, _id._ Caboto defense attorneys moved to dismiss the individual actions as time-barred; plaintiffs countered that the class actions tolled the running of the statute of limitations. _Id._ The district court granted the defense motion, ruling that the class action complaints did not toll the limitations period because plaintiffs had filed suit before a decision on class certification in the class action lawsuits. _Id._ The Second Circuit reversed.
Briefly, WorldCom falsified financial records to paint an inaccurate picture of the company’s profitability, but in 2002 “the scheme collapsed.” In re WorldCom, at *2. A class action complaint was filed against WorldCom in April 2002, and numerous other class actions soon followed. More than 120 individual lawsuits also were filed against the company, all of which were removed to federal court based on WorldCom’s petition for bankruptcy protection. Id. By May 2003, the individual actions had been consolidated with the class action complaints, id. In October 2003, the district court certified a class action against WorldCom alleging securities violations; that class action complaint included Section 11 claims against Caboto and other bond underwriters. Id., at *3. In analyzing Caboto’s motion to dismiss the class action and individual claims, the district court found that the statute of limitations began to run no later than June 25, 2002, but that Caboto and certain other bond underwriters were not named as defendants until September 24, 2003 – three months after the expiration of the one year limitations period. Id., at *4.
Certification of Class Actions Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized
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District Court Properly Denied Class Certification Motion on Grounds of Unmanageability because Literally Thousands of Individual Evidentiary Hearings would be Required Seventh Circuit Holds
Plaintiff filed a putative class action in Illinois federal court against State Farm alleging that it failed to pay insureds $10 as required by its insurance policies when car repairs render the insured’s vehicle unusable for at least one day but the insured does not rent a car during the repair period. Pastor v. State Farm Mut. Auto. Ins. Co., 487 F.3d 1042, 1043 (7th Cir. 2007). Defense attorneys argued against certification of a class action, and the district court agreed; plaintiff thereafter accepted an offer of judgment, and appealed the denial of class certification. Id. The Seventh Circuit affirmed, holding that class action treatment was not appropriate because common issues did not predominate over individual issues.
Plaintiff’s car windshield was damaged in an accident 11 years ago. Pastor, at 1044. Her auto insurer, State Farm, paid for the repairs, which were completed in about one hour, but it did not pay her an additional $10 pursuant to a provision in her policy that required State Farm to “pay you $10 per day if you do not rent a car while your car is not usable.” Id. The policy states that the “per day” entitlement period begins at the time of the accident or “if your car can run, when you leave it at the shop for agreed repairs,” and ends when the repairs are complete. Id. Plaintiff did not rent a car for the one-hour repair period and did not ask State Farm for the extra $10, but the class action complaint alleges that the insurer was contractually obligated “to notify her that she was entitled to the money,” id. The Circuit Court was harsh in its characterization of plaintiff’s claim, stating “there is nothing in the policy to suggest that upon receipt of a claim seeking reimbursement of one cost (the cost of repairing the windshield) the insurer must determine and inform the insured of any additional entitlement that the policy might confer on her, just in case its customers don’t bother to read their insurance policies when they file claims under them.” Id. Despite this problem, just before the expiration of the 10-year statute of limitations period, plaintiff filed a putative class action in Illinois federal court seeking to represent all State Farm insureds who “received payments for claims for damage to their vehicles, did not rent a car, yet did not receive any payment pursuant to the $10 a day clause.” Id.
Certification of Class Actions Class Action Court Decisions Uncategorized
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Plaintiff in FLSA Class Action Must Make “Some Factual Showing” that Similarly-Situated Requirement is met in order to Obtain Conditional Certification of Class Action Treatment Delaware Federal Court Holds
Plaintiff filed a labor law class action against TruGreen – a lawn and landscaping company that hires non-immigrants for seasonal work under the federal H-2B visa program – alleging violations of the federal Fair Labor Standards Act (FLSA) and various state law claims. Villanueve-Bazaldua v. TruGreen Ltd. Partners, 479 F.Supp.2d 411, 413 (D. Del. 2007). Plaintiff moved to conditionally certify a class action; defense attorneys objected to class certification on the ground that plaintiff was not “similarly situated” to the putative class members and that, in any event, the company was not legally required to reimburse the expenses underlying the class action claims. The district court agreed with the defense and refused to certify an FLSA class action.
The class action complaint alleged that he was “recruited” in Mexico and that TruGreen promised to pay him $11.34 per regular hour and $17.01 per overtime hour to work for the company, and that in reliance on these promises, plaintiff incurred the expense of obtaining an H-2B visa and of traveling to and from the U.S. TruGreen, at 413. “These expenses included the cost of obtaining a Mexican passport, a $100 visa application fee, a $100 visa issuance fee, a $6 border crossing fee, a $155 administrative fee paid to TruGreen’s agent for processing the visa paperwork, and transportation expenses from the point of recruitment to the place of work in the United States.” Id. According to the class action allegations, these expenses constituted “de facto deductions from the first and last weeks of their wages, causing them to earn less than the wages required by the FLSA.” Id., at 413-14. Plaintiff argued that class action treatment was appropriate because Arriaga v. Florida Pacific Farms, 305 F.3d 1228 (11th Cir. 2002), holds that “visa and transportation costs incurred by foreign visa workers are de facto wage deductions from the workers’ first and last weeks’ wages for purposes of the FLSA” and because “all of TruGreen’s H-2B workers present the same claim that the FLSA requires reimbursement of those costs up to the mandated FLSA wage level,” id., at 414. Defense attorneys opposed conditional certification of a class action arguing that (1) it is not required to bear the visa and transportation costs of its H-2B employees, (2) plaintiff is not “similarly situated” to the putative class members because TruGreen provided him with transportation back to Mexico, and (3) “certain H-2B workers did receive compensation for various incidentals arising from their temporary employment.” Id.
Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized
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Plaintiffs in Class Action/FLSA Collective Action Alleging Labor Law Violations Adequately Supported Motion for Conditional Certification under FLSA of Putative Class Including Non-New York Employees, but Limits Class to Telemarketers Rather than All Hourly Employees
Two plaintiffs filed a class action and FLSA (Fair Labor Standards Act) collective action lawsuit against telemarketing service provider Sutherland Global – which operated 9 call centers in New York, one in California and one in Virginia – alleging various state and federal labor law violations, after which 38 former telemarketing agents sought court approval to “opt in” to the class action/FLSA lawsuit as named plaintiffs. Sherrill v. Sutherland Global Servs., Inc., 487 F.Supp.2d 344, 346-47 (W.D.N.Y. 2007). Plaintiffs moved the court to conditionally certify an FLSA collective action and to provide notice to putative class members of their right to opt in, id., at 346. Defense attorneys did not oppose the motion, but requested the right to approve the notice, asked the federal court to limit the scope of the proposed class, and asked the federal court to set an “opt-in” deadline, id., at 351. The defense also requested that plaintiffs’ lawyer remove “inaccurate statements” from counsel’s website, but plaintiffs “voluntarily agreed to make the necessary corrections” rendering the issue moot, id. at 351 n.4. The district court granted plaintiff’s motion in part, agreeing with defense attorneys that notice should be sent only to current and former telemarketing agents rather than all Sutherland hourly employees, and
The class action/FLSA complaint alleged three labor law violations. First, that Sutherland’s timekeeping system automatically deducted 60 minutes for lunch from each employee’s daily pay, regardless of whether the employee took a lunch break or worked during part of their lunch break. Sherrill, at 347. The complaint further alleged that the workload and the pressure to meet performance goals required that telemarketing agents frequently work during lunch periods, and as part of their motion, plaintiffs submitted declarations supporting these allegations, id. Second, the class action alleged that Sutherland required its telemarketers to work “off the clock” by arriving 15-30 minutes before their scheduled shift but encouraging them not to “log on” until at or near their scheduled start time. Id. Finally, plaintiffs alleged – and in their motion introduced evidence supporting – that Sutherland improperly excluded commissions and bonuses in calculating its employees’ appropriate overtime rates, using instead the “regular rate of pay” for each employee “result[ing] in application of a lower overtime rate than would apply were commissions and bonuses properly included in the rate of pay,” id., at 348.
Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized
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“Concept of Interest of Common Reliance” Applies to Class Action Alleging Violations of CLRA (Consumers Legal Remedies Act) and UCL (Unfair Competition Law) and Supports Certification of Class Action California Appellate Court Holds
Plaintiff filed a putative class action in California state court against Monier alleging violations of the state’s Consumers Legal Remedies Act (CLRA) and Unfair Competition Law (UCL) arising out of its “failure to disclose that the color composition of its roof tiles would erode away, leaving bare concrete, well before the end of the tiles’ represented 50-year life.” McAdams v. Monier, Inc., 151 Cal.App.4th 667, 60 Cal.Rptr.3d 111, 112-13 (Cal.App. 2007), reh’g den. and opn. mod. (June 25, 2007). The class action complaint alleged that Monier warranted its roof tiles for 50 years, and represented that it had a permanent color glaze and required no care. McAdams, at 113. The class action claims were based on the allegation that, contrary to the above, Monier knew that the tiles lose their color “well in advance of their warranted 50-year useful life,” id. Plaintiff sought to prosecute a class action on behalf of a “CLRA” class, consisting of all people who own homes with Monier tile roofs or who paid to replace or repair such tiles, and an “ownership” class, consisting of people who own buildings other than homes with Monier tile roofs or who paid to replace or repair such tiles. Id., at 113-14. In denying plaintiff’s class certification motion, the trial court explained that each class member would be required to prove actual reliance, raising individual fact issues as to the particular representations relied on and the damage suffered, and that plaintiff claims were not “typical” of class because he purchased his tiles through a third party distributor rather than through Monier directly. Id., at 114. Plaintiff appealed, and the appellate court reversed.
The Court of Appeal first addressed class action certification under the CLRA, which is governed by Civil Code section 1781. The appellate court readily concluded that the class action complaint sufficiently alleged a violation of the CLRA, McAdams, at 115, the issue was whether the trial court correctly determined that individual issues predominated. The appellate court found, “The class action is based on a single, specific, alleged material misrepresentation: Monier knew but failed to disclose that its color roof tiles would erode to bare concrete long before the life span of the tiles was up.” Id. With respect to the trial court’s conclusion that class members must individually prove reliance and consequent damage, thus defeating commonality as required by section 1781(b)(2), the appellate court recognized the CLRA requires a plaintiff show both that the defendant’s statements were deceptive and that the representations caused them damage, id., at 116 (citation omitted), but held that under the facts of this case reliance by members of the putative class could be “inferred” based on the allegation that “Monier made a single, material misrepresentation to class members that consisted of a failure to disclose a particular fact regarding its roof tiles” when Monier allegedly knew “that the color composition of its roof tiles would erode to bare concrete well before the end of the tiles’ represented 50-year life.” Id., at 117. The appellate court found that, if these allegations were true, the failure to make the requisite disclosure “would have been material to any reasonable person who purchased tiles in light of the 50- year/lifetime representation, or the permanent color representation, or the maintenance-free representation” so as to “permit an inference of common reliance among the class on the material misrepresentation comprising the alleged failure to disclose.” Id. The Court of Appeal further held that this conclusion meant plaintiff did not have to purchase his tiles directly from Monier in order to prosecute a CLRA class action claim against it on behalf of the class. See id., at 118-19.
Certification of Class Actions Class Action Court Decisions Uncategorized
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As Matter Of First Impression, 10-Day Deadline for Seeking Interlocutory Review of Court Order Refusing to Certify Class Action is Jurisdictional and District Court Cannot “Extend” Deadline by Vacating and Reentering its Order Eleventh Circuit Holds
Plaintiffs filed a putative class action against their employer, BellSouth, alleging a “pattern and practice of racial discrimination in promotions and compensation.” Defense attorneys opposed plaintiff’s motion to certify the lawsuit as a class action, and on September 19, 2006, the district court entered its order denying class certification. Jenkins v. BellSouth Corp., ___ F.3d ___, 2007 WL 1881294, *1 (11th Cir. July 2, 2007). On October 3, plaintiffs sought reconsideration of the order denying class action treatment, but on November 7 the court denied that request. _Id._ On November 24 plaintiffs asked the Eleventh Circuit for permission under FRCP Rule 23(f) to proceed with an interlocutory appeal of the class action certification order, but the Circuit Court dismissed the petition as untimely. _Id._ In response, plaintiffs asked the district court to “vacate and reenter” the order denying reconsideration, pleading that its petition in the Circuit Court was due November 22 (the day before Thanksgiving), that it attempted on November 21 to file its petition by overnight delivery, and that the package was delivered November 24 (the day after Thanksgiving). _Id._ The district court granted plaintiffs’ motion on March 5, 2007; specifically, the court “vacated its order of November 7, 2006, and reentered an identical order,” _id._ Plaintiffs filed their second Rule 23(f) petition on March 14, 2007, _id._
The Eleventh Circuit stated that the issue presented had not been addressed previously in the circuit, explaining at page *1: “This petition presents an issue of first impression: whether a district court has the authority to circumvent the ten-day deadline for obtaining interlocutory review of an order denying class certification by vacating and reentering that order, after the aggrieved parties filed and this Court dismissed an untimely petition for an interlocutory appeal.” The Circuit Court held that “the district court lacked the authority to circumvent the ten-day deadline provided in Rule 23(f) by vacating and reentering its earlier order” and, accordingly, that plaintiffs’ petition was untimely, id. Accordingly, the Court dismissed the petition for lack of jurisdiction.
Certification of Class Actions Class Action Court Decisions Uncategorized
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Distributors of Dietary Supplements were not Adequate Class Representatives in Class Action Against Manufacturer Because Goal of Class is Disgorgement of Profits but Putative Class Representatives’ Self-Interest would be to Retain Profits Realized from Drug Sales
Plaintiffs filed a putative class action against Neways and others alleging inter alia unfair competition arising out of the sale of a dietary supplement without a prescription. Seastrom v. Neways, Inc., 149 Cal.App.4th 1496, 1499 (Cal.App. 2007). Defendant manufactured and distributed an oral spray called BioGevity as an anti-aging dietary supplement. Id. BioGevity contained HGH, which cannot be sold without a prescription, but defendant did not require a prescription to purchase the product, id. The class action complaint alleged that Neways and its independent distributors engaged in a pyramid sales scheme in which distributors could purchase BioGevity for $59-$66 per bottle, with a suggested retail price of $84.35-$94.40, and “keep the difference between the wholesale and retail prices on products they sold directly, and to commissions on the sale of products by distributors under them in the pyramid scheme.” Id. The putative class action alleged that some distributors had upwards of 8,800 “downline” distributors in the “pyramid” and made millions of dollars off the pyramid scheme, id. The court denied the motion of two distributors, acting as putative class representatives, to certify the lawsuit as a class action, and the Court of Appeal affirmed.
Following an investigation by the U.S. Attorney’s Office into Neways’ sale of BioGevity without prescriptions, “In September 2003 Neways pleaded guilty to knowingly selling approximately 100,000 bottles of a product that contained HGH in violation of [federal law] and to criminal forfeiture under sections 333(e)(3) and 853(a)(1).” Seastrom, at 1499-1500. The company also paid $1.75 million as part of a stipulated fine and forfeiture of profits from the sale of BioGevity; in return, the federal government agreed not to prosecute Neways distributors. Id., at 1500. In June 2003, just before Neways resolved the U.S. Attorney’s investigation, an unfair competition lawsuit was filed against Neways by a Marc Lewis. Id. However, because Lewis had never purchased BioGevity, he lacked standing to prosecute the class action after California voters enacted Proposition 64, id.
Certification of Class Actions Class Action Court Decisions Uncategorized
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Second Circuit Opinion in In re IPO Class Action Enunciating new Standards for Certification of Class Actions Warranted Reconsideration of Order Certifying Class Action but not Decertification of Class Action because new Standards were met New York Federal Court Holds
Female employees filed a labor law class action against Willis Group and its affiliates alleging gender discrimination. Hnot v. Willis Group Holdings Ltd., 241 F.R.D. 204, 206 (S.D.N.Y. 2007). The district court granted plaintiffs’ motion to certify the litigation as a class action, see Hnot v. Willis Group Holdings Ltd., 228 F.R.D. 476 (S.D.N.Y. 2005); defense attorneys sought reconsideration of the class certification order and decertification of the class, arguing that under the Second Circuit opinion in In re Initial Pub. Offering Sec. Litig., 471 F.3d 24 (2d Cir.2006) (In re IPO) — a summary of which may be found here — which issued after the class action had been certified, plaintiffs failed to establish commonality under Rule 23(a), and that class action treatment was “inappropriate under Rule 23(b)(2),” 241 F.R.D. at 206. Specifically, the defense argued that a plaintiff is now required to do more than simply make “some showing” that the elements of Rule 23 have been met, id., at 207. The district court denied the defense motion, concluding that the requirements of Rule 23 had been met and that the lawsuit should properly proceed as a class action.
Plaintiffs filed their putative class action in 2001 “on behalf of a class of high-level female employees…alleging illegal employment discrimination on the basis of sex.” Hnot, at 206. In response to plaintiffs’ motion to certify a class action, defense attorneys argued that Rule 23(a)’s commonality requirement had not been satisfied. Id. Plaintiffs’ responded that “a common policy of vesting regional and local officers with unfettered discretion in making promotion and compensation decisions, result[ed] in discrimination against women in high level positions.” Id. (citation omitted). Each side submitted expert reports, which the district court considered as they pertained to the issue of commonality, id., and ultimately concluded that “plaintiffs’ evidence was ‘certainly adequate to establish that whether or not Willis’s promotion and compensation policies subject class members to discrimination is an issue common to all class members,’” id., at 207 (citing 228 F.R.D. at 483).
Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized
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