CAFA Class Action Defense Cases–Rynearson v. Motricity: Washington Federal Court Remands Class Action Complaint To State Court Holding Defense Failed To Establish Amount In Controversy Under CAFA

Motion to Remand Class Action to State Court Granted because $5 Million Amount in Controversy Required by Class Action Fairness Act (CAFA) not Established because “Cost” of Complying with Possible Injunction not Sufficient to Support Removal Jurisdiction Washington Federal Court Holds Plaintiff, a citizen of Florida, filed a class action in Washington state court against Motricity, a Delaware corporation with its principle place of business in Washington; the class action complaint alleged that Motricity, which “represents providers of mobile content in dealing with wireless carriers whose networks and billing services the providers use” and “receives a fee per content transaction billed to cellular telephone users,” violated the Washington Consumer Protection Act by “placing unauthorized charges for mobile content on customers’ bills.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Class Action Defense Cases–Williams v. Mohawk Industries: Eleventh Circuit Reverses Denial Of Class Action Treatment Of RICO Complaint And Remands For Further Consideration Of Class Action Certification

Class Action Complaint Alleging Violations of State and Federal RICO laws based on Employer’s Conspiracy to Hire Illegal Workers and Depress Wages of Legal Workers Satisfied Rule 23(a)’s Commonality and Typicality Class Action Requirements, and Requires Further Analysis by District Court as to Whether Rule 23(b)(3)’s Class Action Requirements had been Met Eleventh Circuit Holds

Plaintiffs filed a class action against their employer, Mohawk Industries, alleging labor law violations; specifically, the class action complaint asserted that defendant conspired with various temporary employment agencies to hire illegal aliens and depress wages. Williams v. Mohawk Industries, Inc., ___ F.3d ___ (11th Cir. May 28, 2009) [Slip Opn., at 2-3]. According to the allegations underlying the class action, defendant’s activities violated state and federal racketeering laws, and defendant was “unjustly enriched by its criminal activities,” _id._, at 3. Defense attorneys moved to dismiss the class action, ultimately resulting in a circuit court opinion that held the class action’s unjust enrichment claims failed but the class actions state and federal racketeering claims survived. _Id._, at 3-4. Plaintiffs’ lawyers moved to certify the litigation as a class action, _id._, at 5; the district court denied class action treatment because it found that the commonality and typicality requirements for class action certification had not been met, _id._, at 7. The district court also denied plaintiffs’ motion because it found that Rule 23(b)’s requirements for class action certification had not been met. _See id._, at 8-9. Plaintiffs’ appealed and the Eleventh Circuit reversed.

In denying class action certification, the district court found that commonality did not exist because defendant’s operations were “extremely decentralized,” contradicting the idea of “one grand conspiracy to employ illegal workers.” Williams, at 8. Also, plaintiffs claims were not typical because one of them never worked at a facility that used with temporary workers and because each of them “worked at only a handful” of defendant’s locations. Id. As for Rule 23(b)(2), the federal court found that the prayer for monetary relief was not merely incidental to their demand for injunctive relief, id., and that Rule 23(b)(3) had not been met because common issues did not predominate and because a class action was not the superior means of redress, in part because class action treatment would present an “unmanageable number of individual legal and factual issues,” id., at 8-9.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Simon-Whelan v. The Andy Warhol Foundation: New York Federal Court Denies Motion To Dismiss Class Action Alleging Antitrust Violations In Authentication Of Warhol Works Of Art

Class Action Complaint Alleging Various Defendants Conspired to Wrongfully Deny Authenticity of Warhol Paintings Survives Defense Motion to Dismiss New York Federal Court Holds

Plaintiff filed a class action against the Andy Warhol Foundation for the Visual Arts (a not-for-profit charitable trust), the Estate of Andy Warhol (which was valued at $400 million and which originally owned 100,000 Warhol works of art), Vincent Fremont (the exclusive sales agent for the Foundation’s Warhol paintings) individually and in his capacity as Successor Executor of the Estate, Vincent Fremont Enterprises and the Andy Warhol Authentication Board (a not-for profit corporation responsible for authenticating the works of Andy Warhol) alleging inter alia violations of state and federal antitrust laws; the class action complaint asserted that defendants conspired to control the market for Warhol works. Simon-Whelan v. The Andy Warhol Foundation for the Visual Arts, Inc., ___ F.Supp.2d ___ (S.D.N.Y. May 26, 2009) [Slip Opn., at 1-2]. According to the allegations underlying the amended class action complaint, The Foundation and the Board (the “central actors in the conspiracy”) have “complete control over the authentication of Warhol artwork by virtue of the Board’s status as sole recognized authentication authority for Warhol works and the Foundation’s publication of an official catalogue of Warhol works,” and “the Board has denied the authenticity of works that were previously owned by the Estate and stamped with serial numbers from the Estate…, routinely denies the authenticity of a certain percentage of Warhols, particularly when several from the same series are submitted…, has denied authentication as a means of retaliation…, has approached owners of Warhols to ‘lure’ them into submitting their works for authentication…, and changes its authentication policies when the change suits the Board’s financial interests….” _Id._, at 3. In essence, the class action alleges that defendants “use their control over the authentication methods to create a scarcity in the market for Warhol artwork and inflate the value of the Warhol works in the Foundation’s possession.” _Id._, at 3-4. Defense attorneys moved to dismiss the class action complaint. _Id._, at 2. The district court granted the motion in part and denied the motion in part.

The class action complaint alleged that in 1989, plaintiff purchased a Warhol painting (later entitled “Double Denied”) for $195,000. Simon-Whelan, at 4. Plaintiff claims Warhol created the work in 1965, and that the Foundation and the Estate previously had authenticated the work. Id., at 4-5. In July 2001, plaintiff offered to sell the painting, id., at 5. Defendants “repeatedly urged” him to submit the painting to the Board, and represented to a prospective buyer that it “would not stand by the prior authentications” unless the painting was first submitted to the Board. Id. Plaintiff submitted the painting to the Board in December 2001; the Board denied that it was authenticate but plaintiff was told he could “resubmit the painting with additional documentation.” Id. “Plaintiff spent more than a year documenting the painting’s origin and history and resubmitted the painting with additional documentation in February 2003.” Id. The painting was again denied, id. Plaintiff alleges that the Board “fraudulently denied the authenticity” of the painting, id., at 5-6. The class action complaint alleged that, because of the denials,” Plaintiff was unable to sell any of the Warhols that he owned without first submitting them to the Board and that he was ultimately forced to sell his Warhols through third-parties at a fraction of the price.” Id., at 6.

Class Action Court Decisions Uncategorized

Class Action Defense Cases—In re Satyam: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In Southern District Of New York

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Other Class Action Plaintiffs or by Common Defendants, and Transfers Actions to Southern District of New York Six class actions – one in California and five in New York – were filed against Orleans Homebuilders and OHB Homes alleging violations of federal securities laws; specifically, the class action complaints “arise from a purported massive financial scandal involving common defendant Satyam Computer Services, Ltd.

Class Action Court Decisions Multidistrict Litigation PSLRA/SLUSA Class Actions Uncategorized

Securities Fraud Class Action Defense Cases–In re Zumiez: Washington Federal Court Dismisses Securities Fraud Class Action Holding Allegations In Class Action Complaint Insufficient Under PSLRA

Allegations in Securities Fraud Class Action Failed to Meet Heightened Pleading Requirements under Private Securities Litigation Reform Act (PSLRA) Warranting Dismissal with Prejudice of Class Action Complaint Washington Federal Court Holds Plaintiffs filed a class action against Zumiez and three individual defendants alleging violations of federal securities laws; the class action complaint asserted that defendants “engaged in a scheme to defraud shareholders by making materially false and misleading statements by making false and misleading statements and engaging in insider trading.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–In re DC Water & Sewer: District Of Columbia Circuit Denies Permission To Appeal Class Action Certification Order As “Blatantly Untimely” And Criticizes Defendant And Defense Counsel For Filing Petition

Petition under Rule 23(f) for Permission to Appeal Class Action Certification Order Untimely and that Defendant and its Counsel “Would File – and Attempt to Justify – such a Blatantly Untimely Petition” is “Troubling” District of Columbia Circuit Holds Plaintiff filed a class action against DC Water and Sewer Authority (WA SA) alleging violations of the Civil Rights Act of 1964; the class action complaint asserted that WASA engaged in acts of discrimination in the hiring and promotion of employees.

Certification of Class Actions Class Action Court Decisions Uncategorized

WaMu Class Action Defense Cases–In re Washington Mutual: Washington Federal Court Dismisses Majority Of Securities Fraud Class Action Claims Finding 400-Page 1000-Paragraph Class Action Complaint Lacked Specificity

Sheer Size of Class Action Complaint for Securities Fraud Violations did not Defeat Motions to Dismiss because Class Action Allegations were “Verbose” but “Disordered” and Required “More Definite Statement” Washington Federal Court Holds

Three class action complaints were filed against dozens of defendants alleging securities fraud in connection with Washington Mutual home lending business; specifically, the class actions alleged violations of §§ 10(b) and 20(a) of the 1934 Securities and Exchange Act and Rule 10b-5 promulgated under § 10(b), and under §§ 11, 12(a)(2) and 15 of the 1933 Securities Act. The class actions were consolidated by the Judicial Panel on Multidistrict Litigation, lead plaintiff appointed, and a consolidated class action complaint filed. Among the more than three dozen defendants named in the consolidated class action were officers and directors, including outside directors, underwriters and investment banks, and accounting firms. In re Washington Mutual, Inc. Securities, Derivative & ERISA Litig., ___ F.Supp.2d ___ (W.D. Wash. May 15, 2009) [Slip Opn., at 1-3, 5]. The consolidated class action complaint was enormous, containing almost 400 pages (without exhibits), more than 1000 paragraphs, and citations to 89 confidential witnesses, _id._, at 5. The first 300 pages of the complaint consist of factual allegations of improper activity that claimed “(1) deliberate and secret efforts to decrease the efficacy of WaMu’s risk management policies…; (2) corruption of WaMu’s appraisal process…; (3) abandonment of appropriate underwriting standards for WaMu loans…; and (4) misrepresentation of financial results….” _Id._ Defense attorneys for various defendants filed five motions to dismiss the class action claims, _id._, at 1-2. And if plaintiffs believed that size alone would be sufficient to defeat a motion to dismiss, then they were mistaken: in the end, the district largely granted the motion to dismiss concluding that Counts One, Two and Three required “a more definite statement of the grounds for their claims,” and that Counts Four, Five and Six should be dismissed with respect to “claims regarding WaMu’s August 2006, September 2006, and December 2007 securities offerings.” _Id._, at 2. (The federal court denied the motion to dismiss Counts Four, Five and Six to the extent they concerned WaMu’s October 2007 securities offering. _Id._)

We summarize only briefly the federal court’s 33-page opinion. It is worth noting that the district court characterized the massive class action complaint as a “verbose and disordered pleading,” and concluded that it “failed to organize and clearly identify allegations in support of each element of the 10(b) claims against each defendant” even though more than 280 page of the complaint were directed toward these claims. In re WaMu, at 8. Relying on the heightened pleading requirements established by the Private Securities Litigation Reform Act (PSLRA) which requires that “a plaintiff alleging securities fraud must ‘plead with particularity both falsity and scienter,’” id., at 15 (citation omitted), the district court found “Remarkably, Plaintiffs make no effort to connect a particular statement made by any defendant with allegations as to why that statement was false or misleading or with allegations of facts giving rise to a strong inference of scienter,” id., at 17. The federal court also observed at page 17, “The first 300 pages of the Complaint fail to organize and identify the allegations supporting securities fraud as to each defendant, contain no useful cross-references or paragraph citations to connect the relevant allegations, and appear to include numerous irrelevant allegations, thereby depriving Defendants of proper notice of the grounds for the 10(b) claims against them.”

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–Baum v. AstraZeneca: Pennsylvania Federal Court Grants Defense Summary Judgment Motion In Labor Law Class Action Holding Plaintiff Properly Classified As Exempt From Overtime Pay

Labor Law Class Action Challenging Defendant’s Classification of Pharmaceutical Sales Representatives as Exempt from Overtime Laws Dismissed on Defense Motion for Summary Judgment because Plaintiff Fell within Outside Sales Exemption Pennsylvania Federal Court Holds Plaintiff, a pharmaceutical sales representative, filed a class action in Pennsylvania state court against her employer, AstraZeneca, alleging labor law violations; the class action complaint asserted that defendant improperly classified her as “exempt” and failed to pay her overtime required by Pennsylvania law.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases—In re Aetna: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In District Of New Jersey

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Opposed by Plaintiffs in One of the Class Actions, and Transfers Actions to District of New Jersey Two class actions – one in Connecticut and one in New Jersey – were filed against Aetna and affiliated entities, and other defendants (including Ingenix and its parent UnitedHealth Group), challenging Aetna’s “policies and practices for reimbursing its plan members’ visits to health care providers that are not part of the Aetna network,” that is, to “nonparticipating” or “out-of-network” providers.

Class Action Court Decisions Multidistrict Litigation Uncategorized

FDCPA Class Action Defense Cases–Lemire v. Wolpoff & Abramson: Connecticut Federal Court Grants Class Action Treatment To FDCPA Class Action Against Law Firm

Class Action Against Law Firm Alleging Violations of Debt Collection Laws Warranted Class Action Treatment over Defense Challenge to Adequacy of Representation based on Claim that Class Action was Filed by “Professional Plaintiff” and over Challenge to Superiority Prong of Rule 23(b)(3) Class Action Certification Test based on Negative Net Worth of Defendant and FDCPA’s 1% Net Worth Cap on Liability Connecticut Federal Court Holds

Plaintiff filed a class action against the law firm of Wolpoff & Abramson alleging violations of the federal Fair Debt Collection Practices Act (FDCPA). Lemire v. Wolpoff & Abramson, LLP, 256 F.R.D. 321, 2009 WL 827764, *1 (D.Conn. 2009). According to the allegations underlying the class action, Wolpoff’s communication with Connecticut consumers violated state law and therefore a per se violation of the FDCPA, id. Wolpoff argued that a violation of Connecticut debt collection law is not a per se violation of the FDCPA. Id. Plaintiff moved the district court to certify the litigation as a class action, id. The district court granted plaintiff’s motion and granted class action treatment.

After summarizing the well known rules for class action certification under Rule 23, see Lemire, at *2, the court turned to the merits of the motion. Wolpoff conceded that the numerosity test of Rule 23(a)(1) had been met, id., at *3. But as to commonality, Wolpoff argued that each collection letter sent to a Connecticut resident would have to be “analyzed individually to determine whether it contains actionable language” because different letters were sent to consumers who were represented by counsel than those who were unrepresented. Id. The federal court found, however, that the letters were similar in material respects and that the differences go to the merits of the class action claims. Id., at *3-*4. Given the “common content of Wolpoff’s letters” sent directly to consumers, the commonality test had been met. Id., at *4. And the letters to the attorneys were sufficiently similar to warrant class action treatment, and even if different could be addressed by dividing the group into two classes. Id., at *5. And the typicality test was satisfied because Wolpoff “failed to identify any unique ‘claims or defenses,’” id., at *6.

Class Action Court Decisions FDCPA Class Actions Uncategorized