Huber v. Taylor Class Action Defense Case: Third Circuit Reverses Order Granting Defense Motion For Summary Judgment In Malpractice Class Action Against Prior Class Counsel Because District Court’s Choice Of Law Determination Was Flawed

Class Action Plaintiffs’ Failure to Argue Choice of Law in District Court and in Opening Brief did not Waive Issue on Appeal, and District Court Erroneously Granted Defense Summary Judgment Motion and Erroneously Denied Class Certification in Breach of Fiduciary Duty Class Action Against Plaintiffs’ Prior Attorneys Based on its Incorrect Determination of Applicable Choice of Law

Based on a complicated fact pattern, plaintiffs filed a putative class action against some of their prior counsel in an asbestos mass action for breach of fiduciary duty, specifically, the breach of fiduciary duty of undivided loyalty and candor in the settlement of asbestos claims. Huber v. Taylor, ___ F.3d ___, 2006 WL 3071384, *4 (3rd Cir. October 31, 2006). In broad terms, the class action complaint alleged that prior counsel had negotiated settlements in which counsel received as attorney fees a smaller percentage of the payments made to putative class members than they received in fees from other clients in related actions, thus creating the incentive for counsel to negotiate higher settlements in cases in which they would receive a larger contingent fee. _Id._, at *3. Plaintiff’s lawyers sought class certification, which the District Court denied. The parties thereafter filed cross motions for summary judgment; the court agreed with defense attorneys that plaintiffs had failed to demonstrate actual harm – specifically, that the settlements received by plaintiffs would have been more favorable but for the alleged breaches of fiduciary duties – and therefore granted judgment for the defense. _Id._, at *4. The Third Circuit Court of Appeals reversed because the district court erred in its choice of law determination.

The Circuit Court opinion defines the “Northerners” as plaintiffs in asbestos actions filed in Pennsylvania, Ohio and Indiana, Huber, at *1, __and as “Southerners” those plaintiffs in asbestos actions filed in Mississippi and Texas, id., at *2. The class action complaint alleged that “Northerners received payouts that were between 2.5 and 18 times lower than those received by [Southerners],” id. In cases involving Northerners, class counsel had to share their attorney fee award with local counsel but they did not have to utilize local counsel in cases involving Southerners. The Court of Appeal summarized plaintiffs’ arguments at *2 and *3 as follows:

Certification of Class Actions Class Action Court Decisions Uncategorized

In re Vioxx Class Action Defense Cases: Louisiana Federal Court Hands Merck Defense Crucial Victory By Denying Motion To Certify Nationwide Class Action Involving Vioxx

Federal Court Agrees with Defense that Vioxx Class Action Claims Lack Typicality and Fail to Satisfy Predominance and Superiority Requirements of Rule 23(b)

The Vioxx litigation against Merck – consisting of thousands of individual and numerous class action lawsuits filed in state and federal courts – is well known. Merck withdrew Vioxx from the market in September 2004, following clinical reports that Vioxx led to an increased risk of heart attacks and strokes. By that time, however, an estimated 20 million people had used the prescription drug. The individual and class action lawsuits assert various tort and products liability claims against Merck. In February 2005, the Judicial Panel for Multidistrict Litigation transferred the cases to the federal court for the Eastern District of Louisiana, Judge Eldon Fallon, for pretrial proceedings. In re Vioxx Products Liab. Litig., ___ F.Supp.2d ___ (E.D. La. November 22, 2006) [Slip Opn., at 1-2]. Plaintiffs moved for certification of a nationwide class action against Merck; defense attorneys opposed the motion on two grounds: (1) that each claim must be litigated under the substantive law of each class members’ respective state (rather than New Jersey law, as plaintiffs’ claimed) thus defeating commonality of law, and (2) that each claim “involves separate and distinct factual issues.” _Id._, at 6. On November 22, 2006, the district court agreed with Merck’s defense team and refused to certify a nationwide Vioxx class action.

Merck secured FDA approval for the sale of the prescription drug Vioxx in May 1999 for relief of pain caused by osteoarthritis, rheumatoid arthritis, menstrual pain, and migraine headaches. In re Vioxx, at 1. Following centralization by the Judicial Panel, the Plaintiffs Steering Committee filed a Master Class Action Complaint alleging that Vioxx was defective, that Merck misrepresented its safety in that it knew or should have known that Vioxx was unsafe, and that Vioxx caused medical problems, injury and death. Id., at 4. In December 2005, plaintiffs moved to certify a nationwide class action under Rule 23(b)(3) consisting of all U.S. residents who used Vioxx and who claim personal injuries or assert wrongful death claims arising from such use, id. Merck opposed the motion on the grounds summarized above, see id., at 6.

Certification of Class Actions Class Action Court Decisions Uncategorized

FLSA Class Action Defense Cases-Choimbol v. Fairfield Resorts: Virginia Federal Court Conditionally Certifies Class Action Under Fair Labor Standards Act (FLSA) Holding Only “Minimal Evidence” Required To Support Class Action Treatment

FLSA Class Action Certification within Court’s Discretion Even if Supported by only “Minimal Evidence” Virginia Federal Court Holds and Conditionally Certifies Class Action Subject to Defense Motion for Decertification Following Discovery

Plaintiffs filed a class action against their employers (see Note) alleging failure to pay overtime in violation of the federal Fair Labor Standards Act (FLSA). Choimbol v. Fairfield Resorts, Inc., 475 F.Supp.2d 557, 558 (E.D. Va. 2006). Plaintiffs moved the court to certify the lawsuit as a class action; defense attorneys objected on the grounds that plaintiffs were not “similarly situated” to the class and had introduced no evidence that defendant Fairfield Resorts was a “joint employer” of plaintiffs or members of the putative class. The district court rejected defense arguments and conditionally certified a class action, holding that it had authority to grant the motion for class action treatment based on “minimal evidence” subject to a subsequent motion by defense attorneys for decertification of the class action.

The facts underlying the class action complaint are rather complicated but the salient facts are these, found at pages 559 through 561 of the district court’s opinion: Fairfield Resorts operates timeshares including Kingsgate, Governor’s Green and Patriot Place timeshare locations in Virginia. Fairfield contracted with Sandulyak and Nunnery to hire immigrants to provide laundry, housekeeping and grounds maintenance services at certain properties in Virginia. Sandulyak (doing business as Carolina Janitorial) provides regional immigrant labor, and is “commonly owned, staffed and operated” by national immigrant providers Ambassador Hospitality and Proline Management. Fairfield’s contract with Ambassador provided that the immigrant laborers would be employees and Carolina Janitorial and that Fairfield had no right to supervise, direct or control the laborers. In practice, however, Sandulyak failed to supervise the laborers, Carolina Janitorial did not have a manager at the properties, and Sandulyak only visited the properties once every 1-3 months. Rather, for more than a year responsibility for supervision and day-to-day control over the laborers fell to Nunnery, who had negotiated the agreement with Ambassador “in the name and on behalf of Fairfield.”

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

NovaStar Class Action Defense Case-Pierce v. NovaStar Mortgage: Washington Federal Court Certifies RESPA/TILA Class Action Over Defense Objection That YSP (Yield Spread Premium) Need Not Be Disclosed In Writing

Lawsuit Alleging Violations of Federal Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) Based on Failure to Provide Written Disclosure of YSPs (Yield Spread Premiums) Allowed to Proceed as Class Action

Plaintiffs filed a class action against NovaStar Mortgage alleging violations of Washington’s Consumer Protection Act (CPA) based on the lender’s failure to disclose in writing the payment of yield spread premiums (YSPs) in violation of the federal Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA), and Washington’s Consumer Loan Act (CLA). Pierce v. NovaStar Mortgage, Inc., ___ F.Supp.2d ___ (W.D. Wash. October 31, 2006) [Slip Opn., at 1-2]. The district court denied plaintiffs’ first motion to certify a class, agreeing with defense counsel that plaintiffs had not demonstrated numerosity or typicality under Rule 23(a) and had failed to establish the predominance and superiority elements of Rule 23(b). _Id._, at 2. Defense attorneys opposed class certification largely on the ground that YSPs were not required to be disclosed in writing; the federal court agreed, holding that “verbal disclosures and independent knowledge of the YSP were relevant” in evaluating whether NovaStar violated RESPA, TILA or CLA, _id._ However, in connection with a renewed motion to certify the lawsuit as a class action, the court rejected that defense argument and granted plaintiffs’ motion.

In considering the renewed motion for class certification, the district court stated that class certification turned on “whether verbal disclosures are legally relevant” to the CPA claims. Slip Opn., at 3. Plaintiffs argued that verbal disclosures were irrelevant because the lender was required to disclose YSPs in writing under the CLA, and because violations of the CLA are per se violations of the CPA. Id., at 2. Defense attorneys argued that the CLA does not require written disclosure of YSPs. Id., at 4. While the federal court found that plaintiffs had not cited any provision of the CLA requiring lenders to disclose YSPs, it determined that this was irrelevant, explaining at page 5:

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

Class Action Defense Cases-Otto v. Pocono Health: Federal Court Grants Defense Motion To Dismiss State Law Overtime Class Action Claims As Incompatible With Federal Overtime Class Action Claims Because Of Conflict Between Opt-In/Opt-Out Requirements

Pennsylvania Federal Court Agrees With Defense that Fair Labor Standard Act (FLSA) Opt-In Requirement for Overtime Class Actions is “Inherently Incompatible” with Rule 23 Opt-Out Requirement for State Law Overtime Class Action Cases Mandating Dismissal of State Claims Former employees filed a putative class action in Pennsylvania federal court against Pocono Health System and Pocono Medical Center alleging violations of the federal Fair Labor Standard Act (FLSA), and of Pennsylvania’s Minimum Wage Act and Wage Payment and Collection Law, because defendants paid overtime on an “8 and 80” plan, requiring overtime if employees work more than 8 hours in a day or more than 80 hours over a two-week period.

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

Class Action Defense Cases-Aguiar v. Cintas: Trial Court Erred In Failing To Consider Use Of Subclasses In Labor Law Class Action California Court Holds

California Court Reverses Order Denying Class Certification in Employment Law Class Action Because Bases for Trial Court’s Decision Could be Resolved Through Use of Subclasses

Plaintiffs, individuals and the international workers’ union UNITE, filed a putative employment law class action against Cintas for alleged violations of the Los Angeles Living Wage Ordinance (LWO), which “prescrib[es] a minimum level of compensation be paid to employees of private firms who work on service contracts benefiting the City” – as well as sick leave, vacation, etc. – provided that the employees worked on a service contract for at last 20 hours during the month. The LWO does not apply to employees who did not work on a service contract, or who worked on a service contract for less than 20 hours, during the month. Aguiar v. Cintas Corp. No. 2, ___ Cal.App.4th ___, 2006 WL 2744773, *1-*2 (Cal.App. September 27, 2006). The LWO requires employers awarded service contracts to provide the City with “forms listing all subcontractors and employees working on the agreement and notify each current employee, and each new employee at the time of hire, of his or her rights under the LWO.” _Id._, at *2. Defense attorneys opposed certification of the lawsuit as a class action. The trial court agreed with the defense that class action treatment was inappropriate because the class was not ascertainable, the class lacked community of interest, and class action treatment was not the superior method to resolve the dispute. _Id._, at *1. The Court of Appeal reversed.

Certification of Class Actions Class Action Court Decisions Uncategorized

Tyson Class Action Defense Case-Trollinger v. Tyson: Tennessee Federal Court Grants Motion To Certify Class Action Alleging Violations Of Federal Racketeer Influence and Corrupt Organizations Act (RICO)

Federal Court Rejects Defense Arguments Against Class Certification of RICO Class Action Complaint Finding that Generalized Evidence Exists to Prove or Disprove the Class Claims and that Methodologies Exist to Calculate Damages

Plaintiffs filed a class action complaint in Tennessee federal court against poultry company Tyson Foods for violations of the federal Racketeer Influence and Corrupt Organizations Act (RICO) predicated on Tyson’s alleged harboring and hiring of illegal aliens in violation of federal law. Trollinger v. Tyson Foods, Inc., ___ F.Supp.2d ___, 2006 WL 2924938 (E.D. Tenn. October 10, 2006) [Slip Opn., at 2]. The complaint alleged that Tyson knowingly employed a substantial number of illegal immigrants and that in so doing “saved . . . large sums of money by driving down wages at the chicken processing plants below what wages would be if the [program] were not in existence.” _Id._, at 3. Following substantial litigation, including motions for summary judgment and judgment on the pleadings, plaintiffs filed a motion for class certification under Rule 23(a) and Rule 23(b)(3), _id._, at 6. The district court granted the motion.

While the district court discussed the requirements for a class action set forth in Rule 23(a), Tyson, at 6-14, the court noted, “It is not at all clear Tyson contests these prerequisites,” id., at 8. Moreover, defense attorneys did not challenge each of the four separate elements considered under Rule 23(b)(3); rather, “Defendants’ only challenges to Plaintiffs’ motion are in respect to Rule 23(b)’s requirements of manageability and predominance.” Id. Thus, while the federal court discussed each of the elements of Rule 23(b)(3), id., at 14-20, it observed that defense attorneys did not address whether class members will have a strong interest in controlling their claims, id., at 15, whether other litigation exists by or against class members, id., or the desirability of concentrating the litigation “in this forum,” id., at 15-16.

Certification of Class Actions Class Action Court Decisions Uncategorized

Alvarez v. May Department Stores-Class Action Defense Cases: California Court Holds That Demurrer To Class Action Allegations Is Proper And Defense Theory Of Collateral Estoppel Properly Applied In Sustaining Demurrer To Overtime Class Action Claims

California Trial Court Properly Applied Collateral Estoppel Principles in Ruling on Demurrer to Class Action Allegations Because Denial of Class Certification in Separate Lawsuit Binds Absent Putative Members of Class

Plaintiffs’ lawyer filed three class action complaints against May Department Stores in various California superior courts that alleged, in part, class action claims for failure to pay overtime to area sales managers: the 1997 Gorman case filed in Los Angeles; the 1999 Duran case filed in San Bernardino; and the 2003 Alvarez case filed in Los Angeles. Alvarez v. May Dept. Stores Co., ___ Cal.App.4th ___, 49 Cal.Rptr.3d 892, 2006 WL 2874907 (Cal.App. October 11, 2006) [Slip Opn., at 3-4.]. In the _Alvarez_ lawsuit, defense attorneys demurred to the class action allegations on the ground of collateral estoppel; the trial court agreed that the doctrine applied and sustained the demurrer to the class action claims without leave to amend. Plaintiffs argued on appeal “that the doctrine of collateral estoppel is inapplicable to an order denying class certification in another lawsuit brought by other plaintiffs because absent putative class members are not bound prior to the certification of a class”; the appellate court rejected this argument and affirmed. _Id._, at 2.

The appellate court briefly summarized the history of the Gorman and Duran litigation, explaining that the trial court denied class action status in Gorman because “plaintiffs had failed to demonstrate a community of interest or an ascertainable class and that the proposed class representatives were unsuitable because they had unsatisfactory employment histories,” Alvarez, at 3, and that trial court order denying class action status in Duran was affirmed on appeal because the interests of the class members were dissimilar and “[c]ommon questions of fact could not predominate,” id., at 4. In Alvarez, defendant demurred “on the grounds that an order denying class certification of the same class was issued in Duran and thus [plaintiffs] were barred from relitigating the issue under the doctrine of collateral estoppel.” Id.

Preliminarily, the Court of Appeal quickly disposed of the claim that class certification issues may not be resolved by demurrer, holding that “[t]rial courts properly and routinely decide the issue of class certification on demurrer.” Alvarez, at 5-6 (italics added).

Certification of Class Actions Class Action Court Decisions Uncategorized

Dunbar v. Albertson’s-Class Action Defense Cases: Certification Of Employment Class Action Seeking Overtime Pay On Theory That Employer Misclassified Employees As Exempt Properly Denied California Court Holds

California Trial Court Properly Engaged in “Weighing Process” to Determine Commonality of Class Action Claims and Correctly Refused to Certify Class Action Because Individual Issues would Predominate

Plaintiff, a grocery manager at Albertson’s, filed a putative class action seeking overtime compensation on the theory that Albertson’s erroneously classified him as an exempt executive employee. Defense attorneys objected to certification of the class action on the grounds that individualized issues of liability and damages would predominate. Dunbar v. Albertson’s, Inc., 141 Cal.App.4th 1422, 1424-25 (Cal.App. 2006). The trial court agreed with the defense, and refused to certify the lawsuit as a class action. The appellate court affirmed.

Plaintiff’s motion for class certification consisted of more than 60 virtually identical declarations of grocery managers stating that the great majority of their work time was spent in the allegedly non-managerial tasks of walking the floor to verify that inventory was properly stocked, stocking shelves, organizing the stock room, unloading new merchandise, responding to customer questions, cashiering, putting price tags on items, checking inventory, and doing routine paperwork. Dunbar, at 1424-25. In opposition, defense attorneys submitted excerpts of deposition testimony from plaintiff’s declarants, and filed 79 declarations of grocery managers – many of whom had executed declarations for the plaintiff – that described “in varied terms their allegedly executive work at different stores.” Id., at 1425. “This evidence was accompanied by a chart outlining how the deposition testimony and counter-declarations differed from the declarations plaintiff submitted. Defendant also presented statistics on the varying amounts of time plaintiff’s declarants spent working cash registers each week during the period from July 2004 through April 2005.” Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

Exxon Mobil Class Action Defense Case-Steering Committee v. Exxon Mobil: District Court Properly Refused To Certify Class Action Based On Personal Injuries Arising From Chemical Fire Fifth Circuit Holds

Louisiana Federal Court did not Abuse its Discretion in Refusing to Certify Class Action Against Exxon Because Individual Issues Predominated over Common Issues and Superiority Requirement was not Met

In 1994, smoke from an oil fire at an Exxon Mobil chemical plant drifted into neighboring communities: “Hundreds of suits were filed against Exxon Mobil, alleging various causes of action including personal injury, personal discomfort and annoyance, emotional distress resulting from knowledge of exposure to hazardous substances, fear of future unauthorized exposures, and economic harm including damage to business and property, among others.” Steering Committee v. Exxon Mobil Corp., 461 F.3d 598, 600 (5th Cir. 2006). The lawsuits were consolidated in a Louisiana federal court, and plaintiffs proposed that the action proceed as a class action and moved for class certification. Defense attorneys opposed the motion, and filed summary judgment motions as to certain categories of claims against Exxon. Id. The district court first decided the summary judgment motions, granting summary judgment “on all claims for physical injuries and non-intentional emotional distress brought by individual plaintiffs who were located outside the geographic area that the air modeling experts agreed was affected by the [smoke] plume,” and “on all claims for intentional infliction of emotional distress.” Id., at 600-01. The court then denied the motion to proceed as a class action, concluding that plaintiffs failed to establish typicality or adequacy of representation under Rule 23(a), and predominance and superiority under Rule 23(b)(3). Id., at 601. The Fifth Circuit affirmed.

Certification of Class Actions Class Action Court Decisions Uncategorized