Toyota Acceleration Class Action Defense Cases–In re Toyota: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In Central District Of California

Judicial Panel Grants One Plaintiff’s Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 in Central District of California, Rejecting Competing Request of Plaintiff in Different Class Action to Centralize Lawsuits in Eastern District of Louisiana Eleven class actions – five in California, three in Louisiana, and one each in the Middle and Southern Districts of Florida and in West Virginia – were filed against various Toyota Motor entities arising out of product defect liability claims: “Each of the actions…asserts economic damages on behalf of certain classes and/or individuals stemming from an alleged defect in certain Toyota vehicles that causes sudden, unintended acceleration.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Arbitration Defense Cases–Stolt-Nielsen v. AnimalFeeds: Supreme Court Holds Federal Arbitration Act (FAA) Requires Agreement To Arbitrate Claims Brought As Class Action

Party to Arbitration Clause Governed b y FAA (Federal Arbitration Act) may not be Compelled to Arbitrate Class Action Claims where Arbitration Clause is Silent on Class Action Arbitration Supreme Court Holds

Plaintiff AnimalFeeds is a company that “supplies raw ingredients, such as fish oil, to animal-feed producers around the world”; “AnimalFeeds ships its goods pursuant to a standard contract known in the maritime trade as a charter party.” Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., ___ U.S. ___ (April 27, 2010) [Slip Opn., at 1]. Defendants are various “shipping companies that serve a large share of the world market for parcel tankers—seagoing vessels with compartments that are separately chartered to customers wishing to ship liquids in small quantities.” _Id._ The charterers – like plaintiff – “typically select the particular charter party that governs their shipments”– not the shipowners. _Id._, at 2. And the contracts here at issue contained an arbitration clause that was silent as to the availability of class action relief in any arbitration, _id._ After a Department of Justice criminal investigation uncovered an illegal price-fixing conspiracy among the defendants, plaintiff filed a class action complaint in federal district court alleging antitrust violations. _Id._, at 2-3. The Judicial Panel on Multidistrict Litigation eventually consolidated the class action with similar class action lawsuits brought by other charterers. _Id._, at 3. The parties agreed that plaintiff must arbitrate the antitrust dispute, and plaintiff served defendants with a demand for class action arbitration in New York. _Id._ Defendants argued that class action relief was unavailable under the arbitration clause because “[a]ll the parties agree that when a contract is silent on an issue there’s been no agreement that has been reached on that issue”; the parties agreed to submit the question of class arbitration to a panel of three arbitrators. _Id._, at 3-4. The arbitrators disagreed and concluded that class action relief could be had under the arbitration clause. _Id._, at 4. Defendants moved the district court to vacate the arbitrators’ award; the district court agreed with defendants that the arbitrators’ decision constituted a “manifest disregard” of federal maritime law and accordingly vacated the award. _Id._, at 4-5. The Second Circuit reversed on the ground that “because [defendants] had cited no authority applying a federal maritime rule of custom and usage against class arbitration, the arbitrators’ decision was not in manifest disregard of federal maritime law.” _Id._, at 5. The Supreme Court granted certiorari “to decide whether imposing class arbitration on parties whose arbitration clauses are ‘silent’ on that issue is consistent with the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq.” _Id._, at 1. The High Court reversed.

Arbitration Class Action Court Decisions Uncategorized

Wal-Mart Class Action Defense Cases–Dukes v. Wal-Mart: Ninth Circuit Court Affirms Class Action Certification Of Largest Labor Law Class Action In U.S. History

Labor Law Class Action Alleging Wal-Mart Discriminates Against Female Employees in Violation of Title VII of the Civil Rights Act of 1964 Properly Certified As Nationwide Class Action by District Court Ninth Circuit Holds

Plaintiffs filed a class action against Wal-Mart alleging violations of Title VII of the Civil Rights Act of 1964; specifically, the class action complaint alleged that Wal-Mart discriminates against its female employees. Dukes v. Wal-Mart Stores, Inc., ___ F.3d ___ (9th Cir. April 26, 2010) [Slip Opn., at 6137, 6146]. According to the allegations underlying the class action complaint (originally filed in 2004), Wal-Mart discriminated against women employees in violation of Title VII of the 1964 Civil Rights Act because “women employed in Wal-Mart stores: (1) are paid less than men in comparable positions, despite having higher performance ratings and greater seniority; and (2) receive fewer—and wait longer for—promotions to in-store management positions than men.” _Id._, at 6147. The class action complaint sought to represent a nationwide class on the grounds “that Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.” _Id._ The proposed class included “women employed in a range of Wal-Mart positions, from part-time entry-level hourly employees to salaried managers.” _Id._ Plaintiffs’ counsel moved the district court to certify the litigation as a class action, defined as “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998 who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” _Id._, at 6148. Defense attorneys opposed class certification and stressed that the proposed class would consist of as many as 1.5 million current and former employees who worked at 3,400 stores in 41 regions. _Id._, at 6148 and n.3. The district court granted the motion and certified the litigation as a class action, _id._, at 6146-47. The Ninth Circuit affirmed. The Circuit Court opinion is quite lengthy, so we simply “hit the highlights” in this article. Defense attorneys may contact the author of the Blog for a more detailed discussion of the case.

The Ninth Circuit spent a considerable amount of time discussing the standard governing district court consideration of class certification under Rule 23 and clarified the “proper standard of Rule 23 adjudication.” See Dukes, at 6149-83. This analysis includes a discussion, and rejection, of the dissent’s “significant proof” standard. See id., at 6177-83. The Circuit Court then turned to the merits of the Rule 23 analysis, beginning with Rule 23(a)(1)’s numerosity requirement, which was not contested given the enormous size of the class. Id., at 6185. The Court also found that Wal-Mart had not waived its right to object to Rule 23(a)(3)’s typicality requirement, see id., at 6209-10, but concluded that the district court did not err in finding that the named-plaintiffs’ claims were sufficiently typical of those of the class: “Even though individual employees in different stores with different managers may have received different levels of pay or may have been denied promotion or promoted at different rates, because the discrimination they claim to have suffered occurred through alleged common practices—e.g., excessively subjective decision making in a corporate culture of uniformity and gender stereotyping—the district court did not abuse its discretion by finding that their claims are sufficiently typical to satisfy Rule 23(a)(3).” Id., at 6210. Moreover, “because all female employees faced the same alleged discrimination, the lack of a class representative for each management category does not undermine Plaintiffs’ certification goal.” Id., at 6211. And the Ninth Circuit found no difficulty in finding that the adequacy of representation test in Rule 23(a)(4) had been met. Id., at 6212.

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

Countrywide Class Action Defense Cases–Greenwich Financial v. Countrywide: Second Circuit Court Dismisses Appeal From Order Remanding Class Action To State Court Holding CAFA Exception Precluded Appellate Review

District Court Order Remanding Class Action to State Court Must be Dismissed because Class Action Fairness Act did not Authorize Appellate Review of Specific Facts of the Case Second Circuit Holds

Plaintiffs, the “holders of certificates issued by the trusts,” filed a putative class action in New York state court against various Countrywide Financial entities seeking a declaratory judgment that, under the terms of Pooling and Servicing Agreements between plaintiffs and defendants, Defendant Countrywide Servicing is required to repurchase the certain loans from the plaintiff-trusts “at a price equal to their unpaid principal plus any accrued interest.” Greenwich Financial Services Distressed Mortgage Fund 3 LLC v. Countrywide Financial Corp., ___ F.3d ___, 2010 WL 1541628, *1, *2 (2d Cir. April 20, 2010). Defense attorneys removed the class action to federal court pursuant to the Class Action Fairness Act (CAFA), _id._, at *1. Plaintiffs moved to remand the class action to state court on the grounds that “while CAFA extended federal jurisdiction for most class actions meeting certain monetary and diversity requirements, it did not apply to this action because the statute exempted suits involving claims that ‘relate[d] to the rights, duties[,] … and obligations relating to or created by or pursuant to any security.’” _Id._ (quoting 28 U.S.C. § 1332(d)(9)(C)). The district court agreed and remanded the class action to state court, _id._ Defendants appealed the remand order. The Second Circuit dismissed the appeal, concluding that it lacked jurisdiction to consider it.

The Circuit Court explained that appeal turned on a provision in CAFA that “bars appellate review of orders remanding securities class actions to state court.” Greenwich Financial, at *1. By way of background, the defendants originate and service residential home loans. Id. Defendant Countrywide Home Loans raised money to finance the loans by selling mortgages in securitization transactions “to specially created trusts, which received payment of interest and principal from mortgage borrowers.” Id. The trusts then “sold certificates to investors,” which entitled the owners to repayment of their principal and to interest payments, id. Defendant Countrywide Servicing administered the loans under Pooling and Servicing Agreements (PSAs). Id. Defendants Countrywide Home Loans and Countrywide Servicing, together with various other entities, were parties to the PSAs; however, the holders of the certificates and Defendant Countrywide Financial were not. Id. According to the allegations underlying the class action, in 2008, the attorneys general of seven states filed lawsuits against various Countrywide entities alleging predatory lending; specifically, “The states alleged that Countrywide engaged in deceptive sales practices, charged unlawful fees, and made loans it had no reasonable basis to think could be repaid.” Id., at *2. Countrywide eventually entered into a single settlement agreement resolving the multi-state litigation, which required Countrywide “to modify the terms of many of the mortgages owned by the trusts and administered by Countrywide Servicing on behalf of the trusts.” Id. Under the terms of the settlement, some homeowners “would make smaller payments of interest and principal to the trusts, thereby decreasing the value of the certificates.” Id.

Class Action Court Decisions Class Action Fairness Act (CAFA) PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–Murray v. Fidelity National Financial: Fifth Circuit Court Affirms Dismissal Of Class Action Complaint Holding Plaintiffs’ Claims Mooted By Tender During Pendency Of Rule 15(a)(2) Motion

Class Action Complaint Properly Dismissed on Grounds that Tender by Defendant Made Prior to Court Ruling on Motion to Amend Complaint to Add New Party-Plaintiffs because Plaintiffs could have Filed Separate Lawsuit or Filed Original Lawsuit to Avoid Risk of Mootness Fifth Circuit Holds A putative class action was filed against Ticor Title, Chicago Title and others, alleging that Ticor “had overcharged them to record documents related to their residential real estate closings and that the other Defendants were also liable under theories of vicarious liability.

Class Action Court Decisions Uncategorized

Class Action Defense Cases–In re Schering-Plough: New Jersey Federal Court Approves Class Action Settlement Where Only Monetary Benefit Was Payment Of Attorney Fees And Costs

Class Action Settlement of Lawsuits Challenging Merger of Schering-Plough and Merck Warranted Approval where Terms Required Declaratory Relief for Class in the Form of Additional Disclosures by Schering-Plough Prior to Shareholder Vote on Proposed Merger and Payment of $3.6 Million to Class Counsel in Attorney Fees and Costs New Jersey Federal Court Holds Following the announcement of a planned merger, various plaintiffs filed several class action lawsuits in New Jersey state and federal courts against Schering-Plough and its Board of Directors seeking to block the company’s merger with Merck.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Aetna Class Action Defense Cases–Allison v. Aetna: Pennsylvania Federal Court Dismisses Class Action Holding Plaintiff Failed To Establish Standing Because Alleged Injury Too Speculative

Class Action Complaint Premised on Risk of Identity Theft Failed to Adequately Allege Injury in Fact and, Accordingly, Must be Dismissed for Lack of Standing Pennsylvania Federal Court Holds

Plaintiff filed a putative class action against Aetna in federal court, asserting jurisdiction under the Class Action Fairness Act (CAFA), arising out of “an alleged security breach of Defendant’s online job application database”; specifically, the class action complaint alleged that plaintiff (who had worked for Aetna previously) applied online for a position with Aetna and, as part of the application, “uploaded his personal information as well as his resume” and subsequently learned that Aetna’s job application website had been hacked. Allison v. Aetna, Inc., ___ F.Supp.2d ___ (E.D. Pa. March 8, 2010) [Slip Opn., at 1-2]. According to the allegations underlying the class action complaint, Aetna “tout[ed] the security measures that [it] employed to protect such information against accidental or unauthorized access or disclosure.” _Id._, at 1. The website contained email addresses, Social Security numbers, and personal contact information of people to whom Aetna had extended job offers. _Id._.at 2. Aetna disclosed that the email addresses had been stolen but that it did not know whether any other information had been compromised, _id._ Additionally, Aetna could not confirm that plaintiff’s email address had been stolen, and the class action complaint did not allege that plaintiff had received any phishing email or that there was “any other sort of misuse of the database information or his information specifically.” _Id._, at 2-3. In response to the intrusion, Aetna “offered Plaintiff credit monitoring assistance and identity theft insurance.” _Id._, at 3. Instead, plaintiff filed his putative class action, alleging that Aetna’s data security system was inadequate and asserted causes of action “for negligence, breach of implied contract, breach of express contract, negligent misrepresentation, and invasion of privacy.” _Id._, at 3-4. Defense attorneys moved to dismiss the class action, _id._, at 4. The district court granted the motion, concluding that plaintiff had failed to establish an injury in fact.

The district court explained that the class action complaint was light on facts. The complaint “details the various ways in which Sensitive Information can be exploited, the dangers of identity theft, and the costs and inconvenience it causes its victims”; however, the “only allegation of actual misuse relates solely to the phishing emails that were sent to others.” Allison, at 3-4. The complaint also outlines various steps taken by putative class members, largely centered on monitoring identity theft, and concludes that class members “face a significant risk of identity theft” and that he, personally, suffered anxiety, emotional distress, and loss of privacy. Id., at 4. In analyzing the motion to dismiss, the federal court began by noting that Article III jurisdiction requires plaintiff establish standing to prosecute the class action and, specifically, that he establish “an injury in fact . . . ; a causal connection between the injury and the conduct complained of; and substantial likelihood of remedy – rather than mere speculation – that the requested relief will remedy the alleged injury in fact.” Id., at 4-5 (citation omitted). Moreover, “[t]he assumption of truth does not apply . . . to legal conclusions couched as factual allegations or to ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.’” Id., at 6 (citation omitted).

Class Action Court Decisions Class Action Fairness Act (CAFA) Uncategorized

Wells Fargo Class Action Defense Cases–Martinez v. Wells Fargo: Ninth Circuit Court Affirms Dismissal Of Class Action Holding RESPA and UCL Claims Preempted By National Bank Act

Class Action Alleging Violations of Federal Real Estate Settlement Procedures Act (RESPA) and California’s Unfair Competition Law (UCL) Properly Dismissed by District Court because Class Action Claims were Preempted by National Bank Act Ninth Circuit Holds

Plaintiffs filed a putative class action against Wells Fargo alleging violations of the federal Real Estate Settlement Procedures Act (RESPA) and California’s Unfair Competition Law (UCL); specifically, the class action complaint alleged that Wells Fargo violated RESPA’s prohibition against “unearned fees” by “overcharging” its customers, and that “Wells Fargo’s conduct was ‘unfair,’ ‘fraudulent’ and ‘illegal,’ all in violation of the UCL.” Martinez v. Wells Fargo Home Mortgage, Inc., ___ F.3d ___ (9th Cir. March 9, 2010) [Slip Opn., at 3763, 3767]. According to the allegations underlying the class action complaint, Wells Fargo charged plaintiffs an $800 underwriting fee in connection with refinancing their home loan. _Id._, at 3767. The class action alleges that the fee violated was excessive “because it was not reasonably related to Wells Fargo’s actual costs of performing the underwriting,” _id._, at 3767-68. Plaintiffs earlier sought to intervene in a New York lawsuit that contained identical claims; but the federal court denied intervention and dismissed the class action, and “the Second Circuit affirmed in part and remanded, holding that RESPA Section 8(b) clearly and unambiguously does not apply to excessive fees charged by a lender.” _Id._, at 3768. The essence of the present class action complaint was that “Wells Fargo marked up certain charges and overcharged for services in connection with mortgage loans, in violation of federal and state law.” _Id._ Defense attorneys moved to dismiss the class action, and the district court granted the motion on the grounds that RESPA does not apply to “overcharge” claims and that the class action’s UCL claims were preempted by the National Bank Act and “failed to identify an underlying illegal predicate act.” _Id._, at 3768-69. Plaintiffs appealed, and the Ninth Circuit affirmed.

The Ninth Circuit first held that the district court properly dismissed the class action’s RESPA claim because the statute does not apply to overcharge claims: “The language of Section 8(b) prohibits only the practice of giving or accepting money where no service whatsoever is performed in exchange for that money: ‘No person shall give and no person shall accept . . . any charge made or received . . . other than for services actually performed.’ 12 U.S.C. § 2607(b) (emphasis added). By negative implication, Section 8(b) cannot be read to prohibit charging fees, excessive or otherwise, when those fees are for services that were actually performed.” Martinez, at 3770 (footnote omitted). This was a matter of first impression in the Ninth Circuit, but the Court followed the holdings of the Second, Third and Eleventh Circuits in reaching this conclusion. Id., at 3771-72 (citing Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49 (2d Cir. 2004); Santiago v. GMAC Mortgage Group, Inc., 417 F.3d 384 (3d Cir. 2005); Friedman v. Mkt. St. Mortgage, 520 F.3d 1289 (11th Cir. 2008)).

Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

Class Action Defense Cases–Shady Grove v. Allstate: Divided Supreme Court Reverses Dismissal Of Class Action Holding New York Law Barring Class Actions Seeking Penalties Falls To Rule 23

District Court Erred in Dismissing Class Action Based on New York law Barring Class Actions that Seek Penalties or Statutory Damages because the Statute is Incompatible with Rule 23’s Mandate Allowing Class Action Certification if Requirements are Met Supreme Court Holds

Plaintiff, a medical care provider, filed a class action in New York federal court against Allstate Insurance; the class action complaint alleged that plaintiff provided medical care to an Allstate insured and accepted an assignment of the insured’s rights to benefits of her Allstate policy, and that Allstate paid benefits under the policy “but not on time, and it refused to pay the statutory interest that accrued on the overdue benefits (at two percent per month).” Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., ___ U.S. ___, 130 S.Ct.1431, 2010 WL 1222272, *3 (March 31, 2010). (The class action asserted federal court jurisdiction under the Class Action Fairness Act (CAFA), _id._ n.3.) According to the allegations underlying the class action complaint, “Allstate routinely refuses to pay interest on overdue benefits” so plaintiff “sought relief on behalf of itself and a class of all others to whom Allstate owes interest.” _Id._ Defense attorneys moved to dismiss the class action for lack of jurisdiction on the grounds that New York law, § 901(b), prohibits class actions which seek only to recover “penalties” as damages. _Id._ Defense attorneys moved to dismiss the class action complaint, _id._ The district court granted the motion, concluding that statutory interest constituted a “penalty” under § 901(b), and dismissed the class action. _See_ 466 F.Supp.2d 467 (2006). On appeal, the Second Circuit held that no conflict existed between § 901(b) and Rule 23 because they address different issues; accordingly, the Circuit Court affirmed the dismissal of the class action. _See_ 549 F.3d 137 (2008). The Supreme Court granted certiorari and, in a sharply divided decision, reversed.

The Supreme Court explained, “New York law prohibits class actions in suits seeking penalties or statutory minimum damages.” Shady Grove, at *3 and n.1 (citing N.Y. Civ. Prac. Law Ann. § 901(b) (West 2006) [“Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.”]). The issue before the Court was “whether this precludes a federal district court sitting in diversity from entertaining a class action under [Rule 23].” Id. The High Court explained the framework for its analysis as follows: “We must first determine whether Rule 23 answers the question in dispute…. If it does, it governs-New York’s law notwithstanding-unless it exceeds statutory authorization or Congress’s rulemaking power…. We do not wade into Erie‘s murky waters unless the federal rule is inapplicable or invalid….” Id., at *4 (citations omitted).

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases–Jones v. DirecTV: Georgia Federal Court Denies Motion To Compel Arbitration Holding Class Action Waiver In Arbitration Clause Rendered It Unconscionable

Class Action Challenging Monthly Fees Imposed by Satellite TV Provider not Subject to Arbitration on Individual Basis because Class Action Waiver in Arbitration Provision was Unenforceable Georgia Federal Court Holds Plaintiff filed a putative class action in a Georgia federal court against his satellite television provider, DirecTV, alleging breach of contract and unjust enrichment, and seeking an accounting as well as injunctive and declaratory; specifically, the class action complaint alleged that DirecTV “collect[ed] excessive ‘tax’ charges and improperly billed lease fees” in connection with the satellite television service, and sought to prohibit it from collecting or billing customers “for taxes in excess of those actually due and owing.

Arbitration Class Action Court Decisions Uncategorized