Newell v. State Farm: California Court Denies Class Certification In Homeowners’ Putative UCL (Unfair Competition Law) Class Action Against Insurer

Class Action Defense Attorneys Prevail on Demurrer Challenging Class Action Allegations – California Court Holds Plaintiffs’ Lawyer Could not Establish “Community of Interest” (Commonality) California homeowners filed a putative class action against their homeowners’ insurance carriers, Farmers Insurance Exchange and Mid-Century Insurance Exchange (collectively “Farmers”) and State Farm General Insurance, asserting claims for declaratory relief, breach of contract, bad faith, and unfair competition (UCL) based on the allegation that they “were wrongfully denied policy benefits for damage caused to their homes by the Northridge earthquake.

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California Court Agrees With Defense: Holds Both Class Action Plaintiff And Class Members Must Have Suffered Injury In Fact, And Both Must Have Standing Which Requires Detrimental Reliance On Allegedly False Advertising, In Order To Warrant Certification

Pfizer v. Superior Court: Proposition 64 Requires Class Action Representatives and Class Members Satisfy Injury in Fact and District Court Exercise of Discretion to Select Class Action Attorneys Best Able to Represent Absent Class Members is Generally Not Subject to Appellate Review: Class Action Defense Issues

California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code, §§ 17200 et seq., and false advertising statute, id., §§ 17500 et seq., were altered fundamentally by the passage of voter-initiate Proposition 64 in November 2004. In January 2005, a putative class action lawsuit was filed in California state court against Pfizer under California’s UCL and false advertising law (FAL) on the ground that it had “marketed Listerine in a misleading manner by indicating the use of Listerine can replace the use of dental floss in reducing plaque and gingivitis.” Pfizer, Inc. v. Superior Court, ___ Cal.App.4th ___ (Cal.App. July 11, 2006), Slip Opn., at 2. (Prior to Proposition 64, UCL claims were brought as “representative actions”; Proposition 64 amended the UCL and FAL so as to require plaintiffs in such actions to satisfy the requirements for class action lawsuits. _See_ Bus. & Prof., Code, §§ 17203 [UCL], 17535 [FAL].) The trial court certified class action status, describing the class as “all persons who purchased Listerine, in California, from June 2004 through January 7, 2005.” _Id._ The defense filed a petition for writ of mandate, and the appellate court reversed.

In seeking class certification, plaintiff claimed inter alia that his claims were “typical” of the class; the defense disagreed. Pfizer argued that individual issues would predominate over common questions of fact (as detailed in the “Note” below). Slip Opn., at 7. Nonetheless, the trial court certified “a broad class, on an opt-opt basis,” though it noted that whether Proposition 64 amended the standing requirements for class members in UCL class actions is “an open issue.” Id., at 7-8. After carefully analyzing the issue, the California appellate court held that the standing requirements for UCL class actions had been amended by Proposition 64: “Proposition 64 now prohibits any person, other than the Attorney General or local public prosecutors from bringing a lawsuit under the UCL or the FAL unless the person has suffered injury and lost money or property as a result of such violations.” Slip Opn., at 11 (citation omitted).

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

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

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

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

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Class Action Defense Cases: Federal Claims Court Certifies Class Action By Nurse Care Managers Against VHA For Failure To Pay Overtime: Defense of Class Actions Issues

Despite “Significant Differences” Between Rule 23 and RCFC 23 (Rules of the United States Court of Federal Claims), and Despite Rarity of Class Action Certification, Class Actions Are Not Disfavored in Court of Federal Claims On March 31, 2006, a United States Court of Federal Claims certified a class action under Rules of the United States Court of Federal Claims (RCFC) 23. Filosa v. United States, 70 Fed.Cl. 609 (2006). Though RCFC 23 “is modeled largely” on class action certification under Rule 23, “‘there are significant differences.

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Class Action Defense Cases: Appointment Of Experienced Class Action Lawyer, Instead Of Plaintiffs’ Lawyer, To Represent Absent Members in Class Actions Not Appealable Second Circuit Holds

District Court Exercise of Discretion to Select Class Action Attorneys Best Able to Represent Absent Class Members is Generally Not Subject to Appellate Review Class action defense attorneys may attack the adequate representation requirement of Rule 23 by challenging the qualifications, experience and ability of the plaintiff’s lawyer to represent the interests of absent class members. Because the role of lead plaintiff lawyer in class action cases directly impacts attorneys’ fees, it is not a minor matter.

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Class Action Certification Under Rule 23 Part III: Defense of Class Actions

Class Certification Under Rule 23 – Part III

The Categories of Rule 23(b)

In addition to establishing the Rule 23(a) requirements of numerosity, commonality and typicality, and demonstrating that the class members will be adequately represented, a plaintiff must meet also the provisions of Rule 23(b). Green v. Occidental Petroleum Corp., 541 F.2d 1335, 1339 (9th Cir. 1976) (“In order for an action to be maintained as a class action under Fed.R.Civ.P. 23, the four requirements of rule 23(a) must be met, as well as the requirements of at least one of the subdivisions of rule 23(b).”).

Rule 23(b) provides:

An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:

(1) the prosecution of separate actions by or against individual members of the class would create a risk of

(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or

(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.

The requirements of Rule 23 are mandatory. Thus, class certification requires that the prospective class representative satisfy the elements set forth in Rule 23(a), and demonstrate also that the provisions of Rule 23(b) are met. General Telephone Co. of Southwest v. Falcon, 457 U.S. 152, 102 S.Ct. 2364 (1982) (reversing class certification for failure to analyze Rule 23 requirements).

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Certification of Class Actions Under Rule 23 Part II: Class Action Defense Issues

Defending Class Actions: Certification Under Rule 23 Part II

The Prerequisites of Rule 23(a)

In defending a class action, the single most important motion facing a defendant is the plaintiff’s motion to certify a class. Rule 23(a) requires that the plaintiff demonstrate numerosity, commonality and typicality, and that the class members will be adequately represented, and must additionally demonstrate that the action satisfies Rule23(b).

The requirements of Rule 23 are mandatory. Thus, class certification requires that the prospective class representative satisfy the elements set forth in Rule 23(a), as well as the elements of Rule 23(b) (discussed in a separate article) be met. General Telephone Co. of Southwest v. Falcon, 457 U.S. 152, 102 S.Ct. 2364 (1982) (reversing class certification for failure to analyze Rule 23 requirements).

Rule 23(a) of the Federal Rules of Civil Procedure provides:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Satisfying Rule 23(a)

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Experian v. Superior Court: Successful Defense of Class Certification Bars Letter to Potential Class Action Members Informing Them Of Their Possible Legal Rights California Court Holds

After a California state court denied a motion for class certification in a putative class action brought under the Consumer Credit Reporting Agencies Act (CCRAA), California Civil Code §§ 1785.1 et seq., plaintiff’s lawyer convinced the trial judge to allow communication by letter with potential class members that advised them of their potential legal rights against the defendant in the class action and sought their cooperation in pursuing the plaintiff’s damage claim in her lawsuit.

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New York Times Reports Class Action Law Firm And Lawyer Paid “Serial Plaintiff” $1 Million To Serve As Plaintiff

The news continues to go from bad to worse for class action law firm Milberg Weiss and its lawyers indicted on May 18, 2006, on charges that it paid more than $11 million in kickbacks to clients to serve as plaintiffs. According to Julie Creswell and Jonathan Glater of the New York Times, one such plaintiff, Howard J. Vogel, admits in a plea bargain with federal prosecutors that “he and relatives were linchpins in [a] long-running arrangement” that helped class action law firm Milberg Weiss “reap hundreds of millions of dollars as counsel in securities lawsuits.

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Class Action Defense Cases–Lindsay v. GEICO: District Court Erred In Refusing To Exercise Supplemental Jurisdiction Over State Law Claimants Who Did Not Opt In to FLSA Class Action

Certification of Class Actions and Supplemental Jurisdiction – District Court Improperly Denied Class Certification of State Law Claimants Who Did Not Opt In to Federal Class Action Under FLSA (Fair Labor Standards Act) D.C. Circuit Holds

The FLSA (Fair Labor Standards Act) requires that potential class members affirmatively opt in to class actions based on the overtime pay provision. See 29 U.S.C. §§ 207, 216(b). Certain class actions under Federal Rules of Civil Procedure Rule 23, however, require that potential class members opt out of class action cases. See Fed.R.Civ.Proc., Rule 23(b)(3), (c)(2)(B). On May 26, 2006, the D.C. Circuit Court of Appeals held as a matter of first impression that the district court erred in refusing to exercise supplemental jurisdiction over the claim of, and in denying class action certification to, those state law class action claimants who did not also opt in to a FLSA overtime class action. Lindsay v. Government Employees Ins. Co., 448 F.3d 416 (D.C. Cir. 2006).

Plaintiffs filed a putative class action alleging that GEICO willfully misclassified certain employees as “administrative” in order to avoid paying them overtime in violation of FLSA, 29 U.S.C. § 207(a), and sought certification to pursue an opt in class action under FLSA. Lindsay, at 418. Plaintiffs also alleged that GEICO’s conduct violated New York’s Minimum Wage Act, N.Y. Labor Law, §§ 650 et seq., and sought certification to pursue an opt out class action pursuant to Rule 23. Id. As the D.C. Circuit summarized at page 418:

The district court denied certification of the state law class, concluding that the FLSA class certification procedure requiring all class members to affirmatively opt in precluded it from exercising supplemental jurisdiction over those state law claimants who did not affirmatively join the FLSA claim. We disagree and therefore reverse the order denying certification and remand to the district court.

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