Class Action Defense Cases-Lao v. Wickes: California Federal Court Holds As Matter Of First Impression That Defense Must Establish Removal Under CAFA (Class Action Fairness Act) And Must Disprove CAFA Exceptions To Jurisdiction

As Matter of First Impression in Ninth Circuit, California District Court Holds that Defense must not only Establish Prima Facie Case for Removal Under Federal Class Action Fairness Act (CAFA) but must Establish Further that CAFA’s Local Controversy and Home-State Rule Exceptions to Removal Jurisdiction do not Apply

Plaintiffs filed a putative class action against their former employer, Wickes Furniture Company, for violations of California’s state labor code, and defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA). Lao v. Wickes Furniture Co., Inc., 455 F.Supp.2d 1045, 1048 (C.D. Cal. 2006). Plaintiffs filed a motion to remand the class action to state court on the ground that it fell within CAFA’s “local controversy” exception or home-state rule provision to federal court jurisdiction. Id. The federal court agreed with the defense that once it established a prima facie case for removal under CAFA, the burden shifted to plaintiffs to demonstrate the applicability of the local controversy or home-state rule. Id., at 1050 et seq. The district court concluded that plaintiffs had met their burden, and remanded the class action to state court.

Plaintiffs worked as commissioned salespersons for Wickes, and filed a state law employment class action on the grounds that they allegedly “regularly performed non-sales (and, hence uncompensated) work, such as attending meetings . . ., cleaning the stores, and researching the prices charged by Wickes’ competitors” Lao, at 1048. The class action complaint alleged further that Wickes improperly stripped salespersons of earned commissions, id. Defendants removed the action to federal court on the basis of CAFA jurisdiction, and plaintiffs’ lawyers filed a motion to remand the action to state court. Id., at 1048-49. Preliminarily, the federal court concluded that defendant had adequately established the requisite $5 million amount in controversy. Id., at 1049-50. Defendants argued that the amount in controversy was $6,000,000, id., and while the district court was “not unsympathetic” to plaintiffs’ claim that this sum was inflated, it found that “some of the blame lies with how plaintiffs drafted their complaint,” id., at 1050.

Certification of Class Actions Class Action Court Decisions Removal & Remand Uncategorized

Parks v. General Motors Class Action Defense Case: South Carolina Federal Court Agrees With GM Defense Team That Class Action Should Not Be Certified Because Car Dealership Failed To Meet Commonality And Predominance Requirements

Court Holds that Affirmative Defenses Preclude Finding of Commonality and Alternatively Finds that Determination of Liability and Damages would Involve Individual Issues of Fact and Law Thereby Defeating Commonality and Predominance Requirements of Rule 23

Plaintiff car dealership filed a putative class action against General Motors seeking injunctive relief and damages arising out of the allegation that GM cleaned a shipment of 2500 vehicles that arrived in the U.S. “covered in a foreign substance” resulting in damage to parts of the vehicles, and then sought to “conceal the extent of the damages from its dealers and the public by making cosmetic repairs and by disposing of the more severely damaged vehicles by auction in Florida.” Parks Auto. Group, Inc. v. General Motors Corp., 237 F.R.D. 567, 569 (D. S.C. 2006). Dealers were not permitted to unilaterally refuse shipment of the repaired vehicles. Moreover, “It is uncontested that GM did not provide a uniform, total repurchasing program for these vehicles. Dealerships were told that any such repurchasing requests would be directed to the regional level on a case by case basis.” Id. Defense attorneys argued that the lawsuit should not be certified as a class action because the complaint did not present common questions of law or fact as required by Rule 23(a)(2). Id., at 570. The district court agreed and denied plaintiff’s motion for class certification. Id., at 573.

The federal court noted that the plaintiff bears the burden of establishing each of the required elements for certification of a class action under Rule 23. Parks, at 570. Plaintiff argued that GM had engaged in a pattern of conduct that was applicable to all class members, id.; but even though the district court recognized that there need only be a single common question of law or fact, id., the court found this argument insufficient to establish commonality. First, the court agreed that GM’s affirmative defenses of accord and satisfaction peculiar to plaintiff defeats commonality, as does its affirmative defenses of release, waiver and comparative negligence as to the remaining putative class members, as the defenses “would require individualized inquiry for each class member.” Id., at 570. As the district court observed, Fourth Circuit case law holds that “where individual affirmative defenses may be asserted against one plaintiff, but not the entire class, class certification is precluded.” Id. As the court explained at page 570, “Although it is difficult to determine with any precision, the court finds that GM’s affirmative defenses are not without merit and would require individualized inquiry in at least some cases. Accordingly, the court finds that class certification would be erroneous.”

Certification of Class Actions Class Action Court Decisions Uncategorized

Edwards v. City of Long Beach Class Action Defense Case: California Federal Court Denies Defense Motion To Certify Class Action But Grants Collective Action Status Under § 216(b) of the Federal Fair Labor Standards Act (FLSA)

California Court Rejects Defense Arguments Against Collective Action for Alleged Violations of FLSA (Fair Labor Standards Act) but Agrees with Defense that Class Action is not Superior Device for Litigating State Employment Law Claims and Denies Class Action Status to Claims Based on California Labor Code, Over Which it had Supplemental Jurisdiction, as Inconsistent with “Opt-In” Requirements for FLSA Collective Action

Plaintiff, former Long Beach police officer, filed a putative class action against the City of Long Beach for alleged violations of the federal Fair Labor Standards Act (FLSA) and of California’s Labor Code sections 226.7, 512 and 2802 based on the allegations that he was denied meal and rest breaks and was not properly reimbursed for business expenses while a police officer. Edwards v. City of Long Beach, ___ F.R.D. ___ (C.D. Cal. December 15, 2006) [Slip Opn., at 2-3.] The thrust of the class action complaint asserted that while police officers kept track of, and received pay for, overtime hours worked, no policy or procedure existed for officers to record or report missed meal and rest periods. _Id._, at 2-3. Further, while officers were required to have clean and functional uniforms and equipment, the City did not reimburse class members for the costs incurred in maintaining those items. _Id._, at 3. Plaintiff filed two motions in the district court: one requested certification of the lawsuit as a class action under Rule 23, _id._, at 7, which defense attorneys opposed on the grounds that the numerosity, commonality and typicality requirements are not met, a class action will not benefit the class, and other alternatives exist rather than class action litigation, _id._, at 8; the second sought certification of a collective action under 29 U.S.C. § 216(b), _id._, at 1, which defense attorneys opposed by focusing on the differences in job duties between the plaintiff and other class members, _id._, at 6. The district court refused to certify a class action under Rule 23, but granted the motion to certify a collective “opt-in” action under § 216(b), _id._, at 1.

In granting the motion to certify a collective action (in essence an “opt-in” class action) under § 216(b) of the FLSA, the federal court explained that “employees wishing to join the suit must ‘opt-in’ by filing a written consent with the court” or else they are not bound by any judgment or settlement. Edwards, at 4. In a majority of jurisdictions, certifying such a collective action requires a two-step process: “the first step is for the court to decide, ‘based primarily on the pleadings and any affidavits submitted by the parties, whether the potential class should be given notice of the action,'” id., at 5 (citations omitted); the court found that the “lenient standard” required to overcome this hurdle had been met. Id., at 5-7. The second step in the process is a motion by defense attorneys to decertify the class action, id., at 7; but the district court explained that it does not address that issue until after the opt-in time period has passed, id. The court rejected defense arguments that a collective action was inappropriate because of the differences in job duties between the plaintiff and other class members, id., at 6, explaining that – even though the defense had presented a “detailed analysis” of those differences, together with a “detailed discussion” of the differences in claims that potential class members may assert – the defense arguments were “better suited for motion to decertify the § 216(b) collective action,” id., at 7.

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

Class Action Defense Cases-Smith v. Illinois Central Railroad: Illinois Supreme Court Agrees With Defense That Class Action Status Should Not Have Granted In Lawsuit Arising From Train Derailment

Factual and Legal Issues Arising from Train Derailment Would Require Individual Minitrials Thereby Rendering Class Action Treatment Inappropriate Illinois Supreme Court Holds

Plaintiffs filed a class action in Illinois state court against Illinois Central Railroad seeking damages allegedly caused by the derailment of a train in Tamaroa, Illinois. Smith v. Illinois Central RR Co., ___ N.E.2d ___, 2006 WL 3491683 (Ill. November 30, 2006) [Slip Opn., at 1.]. The trial court granted plaintiffs’ request to certify the lawsuit as a class action; the appellate court rejected defense arguments and affirmed. _Id._ The Illinois Supreme Court, however, granted the defense leave to appeal and reversed the lower courts. _Id._, at 1-2. The High Court agreed with defense attorneys that common issues of law and fact do not predominate, thus rendering the lawsuit unsuitable for class action treatment. “Proof of proximate causation and damages will be highly individualized and will consume the bulk of the time at trial.” _Id._, at 14.

In February 2003, the derailment in Southern Illinois of a train carrying various chemicals led to the mandatory evacuation of at least 1000 people. Slip Opn., at 2. Shortly thereafter, the railroad instituted a claims process through which it compensated individuals and businesses for alleged losses caused by the derailment and evacuation; in return, the railroad received written releases of liability from all known claims. Id. In June 2003, plaintiffs initiated a class action seeking (as detailed in the Note below) damages for injuries resulting from the derailment and evacuation. Id., at 2-3. The circuit court rejected defense arguments against certification of the lawsuit as a class action, and granted plaintiffs’ motion. Id., at 3. Before the appellate court, defense attorneys advanced several arguments including, (a) mass tort actions are not proper for class action treatment “because such actions would trigger an unworkable array of fact-intensive, claimant-specific questions that would inevitably result in numerous minitrials that defy class treatment”; (b) commonality does not exist as common questions of fact and law do not predominate; (c) the class definition was overly broad and would require individualized analyses to determine membership. Id., at 4-5. The appellate court, over a dissent, rejected each argument and affirmed the judgment authorizing class certification.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Initial Public Offering: Significant Defense Victory As Second Circuit Holds Federal Court Erred In Certifying Securities Class Action Against Wall Street Banks Arising Out Of Internet IPOs

Second Circuit Clarifies Standard of Proof for Certification of Class Action Under Rule 23 and Holds that IPOs are not “Efficient Markets” in Handing Defense Victory on Appeal

Beginning in 2001, hundreds of class action lawsuits were filed against Wall Street banks alleging violations of federal securities laws in connection with the initial public offerings of certain Internet companies. In re Initial Public Offering Securities Litig., 471 F.3d 24, 2006 WL 3499937, *1 (2nd Cir. December 5, 2006). Following the consolidation of 310 of the class action lawsuits, plaintiffs’ lawyers moved for class certification in six “focus cases.” Id., at *3. Defense attorneys objected to certification of a class action arguing primarily that individual issues predominate over common ones; the district court granted the motion finding that plaintiffs had made “some showing” of the elements required under Rule 23 to warrant certification, id., at *3-*5. The Second Circuit reversed, agreeing with defense attorneys that plaintiffs had not satisfied the requirements of Rule 23 and further that they could not satisfy those requirements.

The class action complaints alleged that underwriters, issuers and individual officers of the issuing companies defrauded investors through “tie-in arrangements, undisclosed compensation, and analyst manipulation” in connection with the IPOs of certain Internet companies, id., at *2. In certifying a class action, the district court perceived conflicting guidance in Supreme Court authority concerning the proper standard of proof required to warrant class action certification. Specifically, Supreme Court authority requires a “rigorous analysis” that may require the court to “probe behind the pleadings,” but a court may not “conduct a preliminary inquiry into the merits of a suit.” Id., at *4 (citations omitted). The district court rejected Fourth Circuit and Seventh Circuit authority requiring plaintiffs to “establish the requirements of Rule 23 by a preponderance of the evidence, even if resolving those issues requires a ‘preliminary inquiry into the merits . . ., or ‘overlap with issues on the merits.'” Id. (citations omitted). The court instead crafted an amorphous “some showing” test and, applying that new standard, concluded that plaintiffs had met their burden of proof. Id., at *4-*5.

Certification of Class Actions Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Mitchell-Tracey v. United General: Class Action Defense Case–Maryland Federal Court Rejects Defense Opposition And Certifies Class Action By Mortgagors Against Title Insurers For Alleged Overcharging

District Court Certifies Class Action Against Title Insurers for Allegedly Charging Premiums in Excess of State-Approved Rates

Plaintiffs filed a class action against First American Title and United General Title in Maryland state court alleging that, in connection with refinances, the insurers charged higher premiums than permitted by law. Defense attorneys removed the class action to federal court, and plaintiffs moved for class certification of two classes, one involving First American customers and one involving United General customers. Mitchell-Tracey v. United General Title Ins. Co., 237 F.R.D. 551, 553-55 (D. Md. 2006). The defense vigorously opposed class certification on four grounds, which the district court summarized as follows: (1) records do not exist by which plaintiffs could prove class membership, liability or damages; (2) specific fact questions present in each affected transaction will predominate over individual issues; (3) the calculation of monetary damages for class members will be “highly individualized and is neither typical nor common among all class members”; and (4) the parties will be unable to identify class members because the necessary records are “in the possession of hundreds of independent title insurance agents and the task of compiling such information to adequately determine class membership is virtually impossible.” Id., at 555. The court disagreed with defense arguments and certified the matter to proceed as a class action, concluding that “Application of the principles embodied in Rule 23 to the circumstances of this case compels the conclusion that the class action device is wholly appropriate.” Id., at 556.

As is common, Maryland law requires title insurers to file with the state information concerning rates and premiums to be charged in connection with the issuance of title insurance policies, and to charge only those rates approved by the state. Mitchell-Tracey, at 553 (citations omitted). Though not required by Maryland law, First American and United General also filed with the state discounted “reissue rates,” applicable if borrowers meet certain conditions. Id., at 554. The class action complaint alleged that defendants charged fees in excess of the reissue rates filed with and approved by the state, and sought declaratory relief and monetary damages. Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

UPS Class Action Defense Case-Bates v. UPS: Ninth Circuit Upholds Refusal To Decertify Class Action And Affirms Class Action Judgment Against UPS Based On ADA Claim, But Agrees With Defense That Unruh Act Violation Must Be Reversed

District Court did not Clearly Err in Finding UPS Violated Federal Americans with Disabilities Act (ADA) by Refusing to Hire Deaf Drivers, But Defense was Correct that Class Action Judgment Based on Violation of California’s Unruh Act Must be Reversed Ninth Circuit Holds

Plaintiff filed a putative class action in California federal court against United Parcel Service alleging violations of the federal Americans with Disabilities Act (ADA), and California’s Fair Employment and Housing Act (FEHA) and Unruh Civil Rights Act (Unruh Act) because it “categorically exclude[s] individuals from employment positions as ‘package-car drivers’ because they cannot pass a United States Department of Transportation (DOT) hearing standard that does not apply to the vehicles in question.” Bates v. United Parcel Serv., Inc., 465 F.3d 1069, 1073 (9th Cir. 2006). The district court certified the lawsuit as a class action. After a bifurcated trial, the district court ruled against the defense and found that UPS violated the ADA, the FEHA and the Unruh Act. On appeal, defense attorneys argued that “(1) Bates did not establish that any class members are ‘qualified’; (2) UPS satisfied its burden under the business necessity defense of the ADA; (3) the plaintiff class should be decertified; (4) the court’s injunction was an abuse of discretion; and (5) UPS did not violate the FEHA or the Unruh Act.” Id. The Ninth Circuit affirmed the judgment as to the ADA claim, reversed the judgment as to the Unruh Act, and refused to reach the FEHA claim finding it unnecessary in light of the fact that affirmance of the ADA claim “is sufficient grounds for affirming the injunction.” Id., at 1093 n.25.

Applicants for positions as UPS package drivers must, inter alia, pass the same physical exam that the United States Department of Transportation requires of prospective drivers of commercial vehicles, which includes a “forced whisper” test of the applicants’ hearing. Bates, at 1074. However, the DOT only requires a physical exam of those who will be driving vehicles with a gross weight in excess of 10,000 pounds. UPS, on the other hand, required the exam of all applicants, including the thousands of drivers operating vehicles weighing from 7100 to 9300 pounds. Id., at 1075. The class conceded that UPS may require the physical exam of who drive DOT-regulated vehicles, but argued that its blanket exclusion of deaf applicants violated state and federal laws. Id. The district court ruled in favor of the class, holding in part that UPS had failed to establish a business necessity defense to its actions. Id.

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

CAFA Class Action Defense CAFA Case-Morgan v. Gay: Class Action Fairness Act (CAFA) Must Be Read As Intended Rather Than Literally Third Circuit Holds

Third Circuit Joins 11th and 9th Circuits in Holding that “Not Less Than 7 Days” in § 1453(c) of CAFA (Class Action Fairness Act of 2005) Must be Read as “Not More Than 7 Days”

Plaintiffs filed a putative class action in New Jersey state court. Defense attorneys removed the action to federal court under the Class Action Fairness Act of 2005 (CAFA), but the district court granted plaintiffs’ remand motion on the ground that it lacked removal jurisdiction. Seven days later defense attorneys filed a petition with the Third Circuit for leave to appeal pursuant to 28 U.S.C. § 1453(c), which provides that the circuit court may accept such appeals “if application is made to the court of appeals not less than 7 days after entry of the order.” Morgan v. Gay, 466 F.3d 276, 277 (3rd Cir. 2006) (quoting § 1453(c)(1)). As a matter of first impression, the Third Circuit considered whether § 1453(c)(1) “should be interpreted by this Court to mean ‘not more than 7 days after entry of the order.'” Id. Like sister circuits, the Court of Appeals held that the statute should be read as Congress intended rather than honoring the strict language of a plainly typographical error. The Circuit Court summarized at page 277: “Because the uncontested legislative intent behind § 1453(c) was to impose a seven-day deadline for appeals, we conclude that the statute as written contains a typographical error and should be read to mean ‘not more than 7 days.'”

Certification of Class Actions Class Action Court Decisions Removal & Remand Uncategorized

Class Action Defense Cases- In re Electrical Carbon: Class Members Who Opt Out Of Class Action Settlement May Rejoin Class With Court Approval New Jersey Federal Court Holds

In Case of First Impression New Jersey Federal Court Permits Class Members Who Opted Out of Initial Proposed Class Action Settlement to Rejoin Class for Amended Class Action Settlement Finding it in the Best Interests of the Class Plaintiffs filed putative class action lawsuits against several defendants alleging a conspiracy to fix prices of electrical carbon products in violation of the Sherman Act following the investigation and criminal prosecution of various entities by the United States Department of Justice.

Certification of Class Actions Class Action Court Decisions Uncategorized

E*Trade Class Action Defense Case-Murray v. E*Trade: Illinois Federal Court Rejects Defense Objections To Motion For Certification Of Class Action Alleging Violations Of Federal Fair Credit Reporting Act (FCRA)

Rule 23 Requirements Met in Class Action Alleging FCRA (Fair Credit Reporting Act) Violations Against E*Trade Illinois Federal Court Holds

Plaintiff filed a class action against ETrade alleging violations of the federal Fair Credit Reporting Act (FCRA) arising out of a solicitation mailer he received stating that he was pre-approved for a home equity loan and stating that “[i]nformation from a consumer credit report was used in connection with this offer.” _Murray v. ETrade Fin, Corp._, 240 F.R.D. 392, 2006 WL 3354039, *1 (N.D. Ill. November 20, 2006). Defense attorneys filed a motion for judgment on the pleadings as to the claim for relief in the class action complaint that E*Trade violated the FCRA’s disclosure requirements; the district court granted the motion agreeing with the defense that no private right of action exists for such violations under 15 U.S.C. § 1681m(d). Id. The court denied defense efforts to obtain dismissal of the balance of the class action complaint. Plaintiff’s lawyer then moved the court to certify the lawsuit as a class action; the court rejected defense arguments in opposition to the motion and granted class action certification, finding that the requirements of Rule 23(a) were met and that the class action satisfied also the requirements of Rule 23(b)(3).

The district court analyzed each of the Rule 23 requirements for certification of a class action, but ” E*Trade refutes only the adequacy of Murray as class representative,” Murray, at *2, so we do not here discuss the court’s analysis supporting its finding that numerosity, commonality and typicality were met. See id., at *2-*4. With respect to the adequacy requirement of Rule 23(a)(4), a district court must examine the adequacy of both the proposed class representative and the proposed class counsel, and determine whether “the representative parties will fairly and adequately protect the interest of the class.” Id., at *5. The court readily concluded that proposed class counsel would adequately represent the class based on the firm’s class action experience, and noted that even E*Trade “praised” its experience. Id.

Certification of Class Actions Class Action Court Decisions FCRA Class Actions Uncategorized