MDL Antitrust Class Action Defense Cases–In re New Motor Vehicles: First Circuit Affirms Dismissal Of Class Action Holding Plaintiffs Lacked Standing To Prosecute Claims In Antitrust Class Action Complaint Because They Are “Indirect Purchasers”

Class Action Plaintiff Lessees of Vehicles were “Indirect Purchasers” – not “Direct Purchasers” – within the Meaning of Illinois Brick and therefore Lacked Standing to Prosecute Antitrust Claims in Class Action Complaint First Circuit Holds Plaintiffs, lessees of new cars, filed a class action against various automobile manufacturers alleging violations of the Sherman Act and the Clayton Act; the antitrust class action complaints alleged that “defendant manufacturers conspired to restrict the flow of cheaper Canadian cars into the U.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases–Kimoto v. McDonald’s: California Federal Court Denies Summary Judgment For Employer Because Fact Questions That Defeated Class Action Treatment Also Create Genuine Issues Of Material Fact

Labor Law Class Action Alleging Failure to Provide Meal and Rest Breaks not Entitled to Class Action Treatment but Questions of Fact Defeat Employer’s Motion for Summary Judgment as to Plaintiff’s Individual Claims California Federal Court Holds Plaintiff filed a class action complaint in California state court against her former employer, McDonald’s, on behalf of hourly, non-exempt employees; the class action alleged that she did not receive all of her meal or rest breaks.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Medrazo v. Honda of North Hollywood: California State Court Reverses Denial Of Class Action Certification Holding Trial Court Erred In Considering Merits Of Class Action Claims

Trial Court Erred in Denying Class Action Treatment of Class Action Complaint Alleging Failure of Dealer to Attach Hang Tags to Motorcycles because Whether Defendant Violated Statute may not be Determined at Class Action Certification Stage California State Court Holds

Plaintiffs filed a class action against Honda of North Hollywood, which sells new and used Honda, Suzuki and Yamaha motorcycles, for violations of sections 11712.5 and 24014 of California’s Vehicle Code; specifically, the class action complaint alleged that defendant violated California law by failing to attach a label (or “hang tag”) setting forth the manufacturer’s suggested retail price for the motorcycle and defendant’s added charges. Medrazo v. Honda of North Hollywood, ___ Cal.App.4th ___ (Cal.App. August 21, 2008) [Slip Opn., at 2]. The class action alleged that defendant’s conduct violated California’s Unfair Business Practices Act and its Consumer Legal Remedies Act, and sought injunctive and restitutionary relief, disgorgement of the charges imposed by defendant but not disclosed on the hang tag, and damages under the CLRA. _Id._, at 3. About a year after she filed her class action complaint, plaintiff moved the district court for an order certifying the litigation as a class action, _id._, at 3-4. Defense attorneys opposed class action treatment on several grounds, including that plaintiff purchased a Honda, and therefore could not assert claims on behalf of purchasers of Suzuki or Yamaha motorcycles, and that it did not violate California law with respect to Suzuki or Yamaha motorcycles because “section 11712.5 is violated only when the manufacturer supplies hang[] tags and the dealer fails to attach them, and Suzuki and Yamaha did not supply any hang[] tags.” _Id._, at 5. The trial court denied plaintiff’s motion for class action certification finding that (1) dealers are not obligated to attach hang tags unless they are supplied by the manufacturer, which neither Suzuki or Yamaha provided to defendant, (2) the sales agreement plaintiff signed detailed the dealer-added costs, so “she had notice of those costs before she entered the agreement,” and (3) the class was not ascertainable in that “there is nothing in [defendant’s] records to indicate which motorcycles had hang[] tags attached to them.” _Id._, at 6. The Court of Appeal reversed.

With respect to the failure of Suzuki and Yamaha to supply hang tags, plaintiff argued that California law prohibited defendant from selling motorcycles without hang tags regardless of whether they have been supplied by the manufacturer. Medrazo, at 8. Defense attorneys argued that the statute expressly limits defendant’s obligation to hang tags “furnished by the manufacturer,” id. (citation and italics omitted). Plaintiff countered that resolution of this legal issue was premature at the class action certification stage of the litigation, and the appellate court agreed. Id., at 8-9. (The author finds the court’s reasoning to be wanting: The parties should not be required to prolong litigation, taxing the resources of the parties and the courts, when a legal ruling would resolve an issue central to the litigation. Simply adding the words “class action” to the caption of a complaint should not serve as a talisman to preclude trial courts from making legal rulings that, sooner or later, must be made. In this case, it was not possible for the defense to file a demurrer to the class action complaint because the class action alleged that Suzuki and Yamaha supplied hang tags that defendant failed to attach to its motorcycles. Because the trial court may properly consider evidence in ruling on a motion for class action certification, defense attorneys provided evidence that no such hang tags had been provided; plaintiff had no evidence to the contrary. The legal issue was proper for resolution, and the Court of Appeal should have addressed whether the trial court properly interpreted section 24014, an issue it left unresolved. See id., at 9 n.4.)

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Kimoto v. McDonald’s: California Federal Court Grants Defense Motion To Deny Class Action Certification Of Labor Law Class Action Holding Employers Need Not Ensure That Employees Take Meal And Rest Breaks

Class Action Complaint Alleging Failure to Provide Meal and Rest Breaks not Entitled to Class Action Treatment because Employers need only “Offer” or “Authorize” Employees to Take Meal and Rest Breaks but need not Ensure that Employees Take Them California Federal Court Holds

Plaintiff filed a class action complaint in California state court against her former employer, McDonald’s, on behalf of hourly, non-exempt employees; the class action alleged that she did not receive all of her meal or rest breaks. Kimoto v. McDonald’s Corp., ___ F.Supp.2d ___ (C.D. Cal. August 19, 2008) [Slip Opn., at 1-2]. Defense attorneys removed the class action to federal court, _id._, at 1-2. Defense attorneys filed a motion to deny class action treatment; plaintiff’s lawyers filed a cross-motion for class certification. _Id._, at 2. Defense attorneys advanced several grounds for denying class action certification, including that plaintiff could not establish Rule 23(a)’s typicality or adequacy of representation requirements for her meal and rest period claims, that she could not establish Rule 23(b)(3)’s commonality and superiority requirements for her meal period, rest period, wage statement and overtime claims, that she lacks standing to pursue the wage statement claims, and that she is barred from seeking class action treatment because of her failure to seek class certification within the 90-day requirements of the court’s Local Rules or at an “early practicable time” within the meaning of Rule 23. _Id._, at 4. The district court denied class action certification both as untimely and on the merits.

With respect to the timing of plaintiff’s motion to certify the litigation as a class action, the district court found that plaintiff failed to comply with Rule 23(c)(1)(A)’s mandate to seek class certification at “an early practicable time after a person sues or is sued as a class representative.” Kimoto, at 4. Specifically, the motion was not filed until August 14, 2008 – a full month after the discovery cut-off date, and only two months before trial. Id. In fact, plaintiff waited until “the last date to file a motion of any kind in this action.” Id. The fact that the district court permitted plaintiff to file the motion as late as she did was not dispositive: As the federal court found at page 4, “Given that trial is just two months away, the Court does not find this to be ‘an early practicable time’ under Rule 23(c)(1)(A).” This is particularly true in light of the fact that the parties had previously requested permission of the court to have the motion on class certification heard as late as August 4, but the court denied the motion on the ground that such a late hearing date would be inappropriate. Id., at 4.

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

Class Action Defense Cases–In re ConAgra: Georgia Federal Court Denies Class Certification Motion Holding Proposed Products Liability Class Action Lacked Typicality And Failed Predominance And Superiority Test

Class Action Seeking Economic and Personal Injury Damages Resulting from Sale of Contaminated Peanut Butter not Entitled to Class Action Certification because Rule 23(a)’s Typicality Test and Rule 23(b)(3)’s Predominance/Superiority Test not Satisfied Georgia Federal Court Holds

Numerous individual and class action lawsuits were filed against ConAgra arising out of peanut butter contaminated with Salmonella. The Judicial Panel on Multidistrict Litigation consolidated the various individual and class action lawsuits in the Northern District of Georgia, after which a master class action complaint was filed that sought to represent two nationwide classes: (1) purchasers of peanut butter “rendered unusable and valueless” by ConAgra’s recall, and (2) consumers of contaminated peanut butter who suffered personal injury. by the February 14, 2007 recall of such peanut butter.” In re ConAgra Peanut Butter Products Liab. Litig., ___ F.Supp.2d ___ (N.D. Ga. July 22, 2008) [Slip Opn., at 3-4]. The class action complaint sought to recover damages under an “unjust enrichment” theory with respect to the first class, and personal injury damages as to the second class. _Id._, at 4. Plaintiffs moved the district court to certify the litigation as a class action; the district court denied the motion. _Id._, at 1.

The event itself was uncontested: the FDA issued a warning concerning ConAgra’s peanut butter in February 2007, and by May 2007, the Center for Disease Control had confirmed that 628 people in 48 states had been infected by Salmonella-tainted peanut butter, and more than 70 people required hospitalization. In re ConAgra, at 1-2. ConAgra recalled all of the potentially-contaminated products. Testing revealed that less than 2% of the jars contained Salmonella, but ConAgra “offered full refunds to all purchasers of recalled peanut butter.” Id., at 3. The district court noted that the recall “received a lot of publicity” and that there was “widespread participation in the refund program.” Id. Specifically, by January 2008 ConAgra had “refunded $2,984,308.68 directly to consumers, representing 941,302 jars of peanut butter” and had “reimbursed retailers $30,665,293.00 for inventory that was in the retailers’ possession at the time of the recall or for product returned to the retailers by customers.” Id.

Certification of Class Actions Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases—In re Municipal Mortgage: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In District of Maryland

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Class Action Plaintiffs, and Transfers Actions to District of Maryland Thirteen (13) class actions – 8 in Maryland and 5 in New York – were filed against Municipal Mortgage & Equity and others alleging that defendants “made materially false and misleading statements in press releases, investor conference calls and regulatory filings which ultimately had a negative impact in 2008 on [the company’s] common stock.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Mobil Oil Class Action Defense Cases–Weber v. Mobil Oil: Oklahoma State Court Certifies Class Action Against Mobil Oil Holding Plaintiffs Satisfied Requirements For Class Action Treatment Under Oklahoma Law

Class Action Complaint Against Mobil Oil Alleging Defendants Improperly Deducted Costs and/or Expenses from Mineral Rights Payments to Royalty Owners Satisfies State’s Class Action Requirements Oklahoma State Court Holds Plaintiffs filed a class action against various Mobil Oil and Exxon Mobil entities; the class action complaint alleged that defendants had represented to the class that oil royalty payments would be free and clear of any operating or investment costs, but that under the “Fiske Formula” utilized by defendants to calculate payments to class members, defendants deducted from payments to the class certain operating or investment costs.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Fleming v. Newby: Fifth Circuit Affirms Finding That Plaintiffs’ Lawyer Engaged In Sanctionable Conduct But Vacates Award Of Sanctions In Light Of Class Action Settlement

Discovery Sanctions Imposed in Securities Fraud Class Action After Parties Entered into Class Action Settlement and Informed District Court that Sanctions should not be Imposed must be Vacated because Parties may “Bargain Away the Right to Receive Compensatory Sanctions” Fifth Circuit Holds

Various individual and class action lawsuits alleging were filed against former outside directors of Enron following its collapse; some of those individual and class actions, alleging securities fraud violations, were consolidated in the Southern District of Texas. Fleming & Associates v. Newby & Tittle., 529 F.3d 631, 635 (5th Cir. 2008). The coordinated, consolidated class action plaintiffs were represented by Fleming & Associates L.L.P. Id. During the course of the litigation, a discovery battle emerged concerning one of plaintiffs’ expert witnesses, Curtis Verschoor, who had prepared a 165-page report that plaintiffs filed timely pursuant to the court’s discovery order; the report, however, was amended the day before the expert’s deposition raising objections both as to its timeliness and plaintiffs’ failure to post notice of the new report. Id., Verschoor’s deposition testimony concerning the report, whether it had been amended, who made the amendments and the nature of the amendments proved to be inconsistent with the document itself. Id., at 635-36. Ultimately, the court sanctioned plaintiffs’ counsel but denied a defense request to exclude the expert’s testimony because it concluded that the changes to the report were not material, id., at 636. Plaintiffs’ counsel sought reconsideration of the order and opposed defendants’ fee request, but the parties settled the litigation before the sanctions issue had been resolved. Id. Defendants notified the court that they were no longer entitled to sanctions against plaintiffs’ counsel because of the class action settlement reached by the parties, id., at 636 n.1. Nonetheless, the court considered the application and awarded defendants $15,000 in attorney fees and costs, id. On appeal, the Fifth Circuit affirmed the initial order awarding sanctions, but vacated the order requiring plaintiffs’ counsel to pay $15,000 on the ground that the class action settlement rendered the application moot.

While plaintiffs raised two arguments on appeal, the Fifth Circuit considered only the claim that sanctions were moot because the class action settlement “stripped the district court of jurisdiction to impose compensatory sanctions, requiring mandatory vacatur.” Fleming, at 637. Plaintiffs argued that the sanctions order was not final and appealable because the magistrate had not yet determined the amount of sanctions, id. The Fifth Circuit recognized that, under its opinion in Williams v. Ezell, 531 F.2d 1261 (5th Cir.1976), a court order granting a party attorney fees is not a final order if the court defers the question of the amount of the fees. Id. As the Circuit Court explained at page 637, “ If the instant case was moot before the district court’s final judgment on the sanctions order, that final order is subject to mandatory vacatur.” (Citation omitted.) On the other hand, the Fifth Circuit recognized that a district court has the power to imposed sanctions “designed to enforce its own rules, even after that court no longer has jurisdiction over the substance of a case,” because the purpose of such an award is not to reimburse a party for its fees or costs but, rather, “‘to punish a party who has already violated the court’s rules.’” Id., at 637-38 (citation omitted).

Class Action Court Decisions Uncategorized

SLUSA Class Action Defense Cases–In re Enron: Fifth Circuit Affirms Dismissal Of Class Action Lawsuits Holding SLUSA Preempts Securities Fraud Class Action Claims Originally Filed In State Court Were Covered Class Actions

Class Action Claims Preempted by SLUSA (Securities Litigation Uniform Standards Act of 1998) because Ten Class Actions had been Litigated as a Single Proceeding by Plaintiffs’ Common Counsel Fifth Circuit Holds

Numerous class action complaints were filed against various defendants following the collapse of Enron; ten of those class action complaints, which filed by former Enron investors against various financial institutions, certain former members of Enron’s management, and Arthur Anderson (Enron’s former accounting firm) and certain Arthur Anderson partners, but not against Enron itself, were consolidated into the action now at issue. In re Enron Corp. Securities, Derivative & ERISA Litig., ___ F.3d ___, 2008 WL 2689248, *1 (5th Cir. 2008). Most of the class actions had been filed in state court, but they were removed to federal court based on Enron’s bankruptcy filing on the ground that they were “‘related to’ bankruptcy jurisdiction,” and the class actions were later consolidated in the Southern District of Texas by order of the Judicial Panel on Multidistrict Litigation. _Id._, at *3. The class actions “allege virtually identical state law claims for fraud, fraud on the market, civil conspiracy, aiding and abetting, negligent misrepresentation, negligence, violations of the Texas Business and Commerce Code, and violations of the Texas Securities Act.” _Id._ Defense attorneys moved to dismiss the class action complaints as preempted by SLUSA (Securities Litigation Uniform Standards Act of 1998). _Id._, at *1. The district court granted the defense motion and dismissed all of the class action claims, _id._, at *3. In dismissing the class actions, the district court denied class action plaintiffs leave to amend because it found that amendment would be futile. _Id._ Plaintiffs appealed, arguing that the district court lacked jurisdiction to enter the order dismissing the class action complaints and, alternatively, that the class actions that had been removed to federal court were not “covered class actions” within the meaning of SLUSA; the Fifth Circuit affirmed.

We do not summarize the facts surrounding the rise and fall of Enron. See In re Enron, at *2 and Newby v. Enron Corp., 394 F.3d 296, 299 (5th Cir. 2004). The issues on appeal were (1) whether the district court had jurisdiction over the class actions, and (2) whether the class action claims were preempted by SLUSA. In re Enron, at *3. We do not here discuss the bankruptcy jurisdiction issue; the Fifth Circuit’s analysis, leading to its conclusion that bankruptcy jurisdiction did exist, may be found at pages *3 through *6 of the Circuit Court’s opinion. With respect to the SLUSA preemption issue, plaintiffs’ argued that “for preemption purposes, SLUSA’s definition of a ‘covered class action’ should be applied only at the time a state action is removed to federal court, not after a federal court issues a consolidation order.” Id., at *6. As a backdrop to is legal analysis, the Circuit Court provided a summary of the “evolution of federal securities law,” including the Private Securities Litigation Reform Act (PSLRA). See id., at *7-*8. This summary including the language in SLUSA that “[n]o covered class action based upon the statutory or common law of any State or subdivision thereof may be maintained in any State or Federal court by any private party,” see id., at *8 (citation omitted) (italics added by court). The central issue was whether the class actions were “covered class actions” within the meaning of SLUSA.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–Fellner v. Tri-Union Seafoods: Third Circuit Reinstates Class Action Holding FDA Regulations Did Not Preempt Class Action’s State Law Claims Alleging Failure To Warn Of Mercury In Tuna

Class Action Claims Against Tri-Union Seafoods (dba Chicken of the Sea) not Preempted by FDA Regulations or Opinions Expressed by FDA Commissioner in Letter to State Attorney General Third Circuit Holds

Plaintiff filed a class action lawsuit in New Jersey state court against Tri-Union Seafoods, doing business as Chicken of the Sea, “seeking damages for harm she allegedly sustained as a result of her consumption of methylmercury and other harmful compounds contained in Tri-Union’s tuna fish products.” Fellner v. Tri-Union Seafoods, LLC, ___ F.3d ___ (3rd Cir. August 19, 2008) [Slip Opn, at 3]. Specifically, the class action complaint alleged that defendant’s tuna products contained chemicals that could cause mercury poisoning and that plaintiff suffered mercury poisoning from consuming defendant’s tuna, and alleged negligence and violations of New Jersey’s Products Liability Act based on defendant’s alleged “failure to warn of the risks incurred in consuming its products.” _Id._, at 3-4. Defense attorneys removed the class action to federal court and then filed a motion to dismiss the class action complaint on the ground that the regulatory actions of the Food and Drug Administration preempt the class action’s claims. _Id._, at 3. In part, the defense relied on a letter sent by the FDA Commissioner to California’s Attorney General in connection with a 2004 “Proposition 65” lawsuit (_see_ Cal. Health & Safety Code § 25249.6) that the State of California brought against Tri-Union and other defendants and that sought an injunction and civil penalties based on for defendants’ “failure to warn consumers that their tuna products contain dangerous mercury compounds.” _Id._, at 4. The Commissioner’s letter opinion that the State’s lawsuit was preempted by prior regulatory actions taken by the FDA. _Id._ The letter stated in part that the State’s lawsuit would “frustrate the [FDA’s] carefully considered federal approach” to the issue of mercury in fish. _Id._, at 5 (citing _People v. Tri-Union Seafoods_, 2006 WL 1544377 (Cal. Super. Ct. May 12, 2006)). The California court ultimately ruled that the State’s lawsuit was preempted. _Id._, at 5. (citation omitted). The New Jersey district court granted defendant’s motion to dismiss the class action, also ruling that the class action claims “are preempted by the FDA’s ‘regulatory approach’ to the risks posed by mercury compounds in tuna fish.” _Id._, at 3. The Third Circuit reversed.

The Circuit Court explained that “[t]he sole question presented in this appeal is whether [plaintiff’s] state claim for damages is preempted by federal law.” Fellner, at 6. In support of the district court’s ruling, defense attorneys advanced three preemption arguments: “(1) that the FDA has adopted a ‘pervasive regulatory approach’ – embodied in the FDA’s Advisory, backgrounder and internal enforcement guideline – with which Fellner’s state lawsuit actually conflicts; (2) that the FDA has ‘reject[ed] the use of warning labels’ in favor of a more ‘nuanced’ approach – that is, that the FDA has reached a decision that warnings should not be regulated, a decision which preempts the state from entertaining a claim based on a duty to warn theory; and (3) that the FDA would have rejected any warning as ‘misbranding,’ a determination which preempts Fellner’s failure-to-warn claim.” Id., at 6-7. After reviewing the doctrine of federal preemption, the Third Circuit explained that defendant does not assert either express preemption or field preemption, and that “[i]f preemption exists in this case it must be conflict preemption. Id., at 8-9. This issue, as in all preemption cases, turns on Congressional intent, id., at 9 (citation omitted).

Class Action Court Decisions Uncategorized