CAFA Class Action Defense Cases–Spivey v. Vertrue: Seventh Circuit Reverses Order Remanding Class Action To State Court And Holds Petition Under CAFA For Leave To Appeal May Be Filed More Than 7 Day After Entry Of Order

District Court erred in Remanding Class Action to State Court because Defense Established Removal Jurisdiction under CAFA (Class Action Fairness Act) Seventh Circuit Holds

Plaintiff filed a class action complaint in state court against Vertrue alleging that it improperly billed its customers for unauthorized charges; specifically, the putative class action “proposed to represent a class of persons whose credit cards had been charged without authorization through 22 of Vertrue’s programs.” Spivey v. Vertrue, Inc., 528 F.3d 982, 983 (7th Cir. 2008). Defense attorneys removed the class action to federal court, asserting that federal court jurisdiction existed under the Class Action Fairness Act (CAFA); plaintiff’s lawyer moved to remand the class action to state court, arguing that the amount in controversy did not exceed $5 million. Id. The district court agreed with plaintiff and remanded the class action to state court, id. Defense attorneys petitioned the Seventh Circuit for leave to appeal, as authorized by CAFA. Id. Plaintiff objected on the ground that the petition was untimely – defense attorneys “mailed the petition on the seventh day after the district court’s remand order, and the petition reached [the Circuit Court], and so was ‘filed,’ see Fed. R.App. P. 25(a)(2), on April 18, 2008, the tenth day after the district court’s order.” Id. The Seventh Circuit granted leave to appeal, held that the petition was timely, and reversed.

The Class Action Fairness Act authorizes an appellate court to review a district court order “granting or denying a motion to remand a class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days after entry of the order.” Spivey, at 983 (quoting § 1453(c)(1)). The Seventh Circuit held at page 983 that “[t]he petition was timely under this language” because it was filed “not less than 7 days” following entry of the order remanding the class action to state court. Id. Plaintiff’s lawyer argued that Congress clearly intended to require a petition for review to be filed “not more than 7 days” after the order is entered, and that “not less than 7 days” is patently erroneous. Id. The Circuit Court noted that several courts have noted this ambiguity and yet Congress has not acted, thus suggesting that CAFA says what Congress intended. Id., at 983-84 (citations omitted). It therefore rejected the arguments of treatises and other courts that reading § 1453(c)(1) literally creates an absurdity, id., at 984. Indeed, the Seventh Circuit noted at page 984, “To the extent that our colleagues in other circuits hold that a petition filed within seven days of the district court’s order should be accepted, rather than thrown out with instructions to submit another once a week has passed, we concur. Whether a petition filed within a week after the remand is timely was the question actually presented in those appeals. An affirmative answer tracks Fed. R.App. P. 4(a)(2), which says that a premature notice of appeal remains on file and springs into effect when the decision becomes appealable. It makes sense to use the same approach for a premature permission for leave to appeal.” But on the other hand, no federal court had thrown out a petition as untimely when it complied with the literally language of the statute as that would be fundamentally unfair, id., at 984-85. “Litigants and lawyers always should be safe in relying on a statute’s actual language.” Id., at 985. This is particularly true in this case, the Circuit Court explained, because defense attorneys expressly attempted to avoid the ambiguity in the statute “by straddling the deadline.” Id. Accordingly, the Court held that the petition was timely.

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

Class Action Defense Cases—In re Hannaford Bros.: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiffs Motion To Centralize Class Action Litigation In District of Maine

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Actions to District of Maine Seventeen (17) class actions were filed against Hannaford Bros. and others “aris[ing] from of an intrusion into defendant Hannaford Brothers Co.’s computer network” and “alleg[ing] that as a result of that intrusion, the credit or debit card numbers and related financial information of a large number of consumers were compromised.

Class Action Court Decisions Multidistrict Litigation Uncategorized

SLUSA Class Action Defense Cases–Siepel v. Bank of America: Eighth Circuit Affirms Dismissal Of Class Action Holding SLUSA Preempts Class Action Securities Fraud Claims Against BofA

Class Action Claims Against Bank of America Preempted by SLUSA (Securities Litigation Uniform Standards Act of 1998) Eighth Circuit Holds

Plaintiffs, beneficiaries of trust accounts at Bank of America, filed a class action against the Bank and other defendants alleging violations of federal securities law; the class action complaint also asserted state-law claims for unjust enrichment and breach of fiduciary duty, asserting that federal court jurisdiction existed under the Class Action Fairness Act (CAFA). Siepel v. Bank of America, N.A., 526 F.3d 1122, 1124 (8th Cir. 2008). The allegations underlying the class action were that the Bank decided to “implement[] a plan to consolidate the trust management activities of other banks it had acquired” and led class members to believe that “their assets were being managed on an individualized basis, when in fact the assets were being invested in shares of the Nations Funds mutual fund, managed by an investment company substantially owned by the Bank.” Id. The class action alleged further that “higher-yielding and better-managed mutual funds were available in the marketplace,” but the Bank directed customers to Nations Funds for the Bank’s economic benefit and that the Bank accomplished this by sending “misleading letters” to trustees and beneficiaries that, in part, threatened “adverse tax consequences” if they went elsewhere. Id. Defense attorneys moved to dismiss the federal claims on the merits, and moved to dismiss the state-law claims as preempted by SLUSA (Securities Litigation Uniform Standards Act of 1998). Id. In part, the defense argued that the class action should be dismissed on the grounds of judge shopping because plaintiffs’ counsel “had already filed at least five class actions in various jurisdictions seeking redress for the same alleged injuries.” Id., at 1125. The district court granted the defense motion in its entirety, and denied plaintiffs’ request for leave to file an amended class action complaint. Id., at 1125. The Eighth Circuit affirmed.

The class action argued that the Bank failed to disclose “conflicts of interest, higher expenses, and increased tax liability” that would result from using Nations Funds, and plaintiffs argued on appeal that SLUSA did not preempt their class action’s state-law claims that a trustee breaches its fiduciary duty “by failing to disclose conflicts of interest in its selection of nationally-traded investment securities.” Siepel, at 1124. SLUSA “expressly preempts all ‘covered’ state-law class actions that allege: (1) an untrue statement or omission of a material fact, or (2) use of a manipulative or deceptive device or contrivance, ‘in connection with the purchase or sale of a covered security.’” Id., at 1126 (citations omitted). The district court had held that SLUSA preempted the state law claims because the alleged misrepresentations were made “in connection with the purchase or sale of a covered security,” and that the alleged misrepresentations were “central to the Plaintiffs’ state-law claims.” Id., at 1125. The Eighth Circuit easily concluded that the class action was a “covered class action” within the meaning of SLUSA, and that the alleged misrepresentations concern a “covered security” within the meaning of SLUSA. Id., at 1126. The issue on appeal, then, was “whether the alleged misrepresentations and omissions were ‘in connection with’ the purchase or sale of securities.” Id.

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

FDCPA Class Action Defense Cases–Camacho v. Bridgeport Financial: Ninth Circuit Vacates Fee Awarded FDCPA Class Action Plaintiff Lawyers Due To District Court’s Failure To Explain Hourly Rate Utilized And Failure To Use Lodestar To Award Fees-On-Fees

Following Class Action Settlement Providing for Award of Reasonable Attorney Fees to Plaintiff’s Lawyers in FDCPA Class Action, District Court Failed to Explain Why $200 per hour was Reasonable for the Relevant Community and Failed to Determine Lodestar for Fees-on-Fees Request, thus Requiring that Fee Award be Vacated and Matter Remanded for Further Proceedings Ninth Circuit Holds

Plaintiff debtor filed a putative class action against Bridgeport Financial, a debt collector, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA); the class action complaint alleged that defendant “misrepresented the rights of consumers in its initial collection letter by requiring her to dispute her debt in writing.” Camacho v. Bridgeport Financial, Inc., _\_F.3d __ (9th Cir. April 22, 2008) [Slip Opn., at 4242-43]. The district court granted class action certification of a statewide class, and the parties entered into a Class Action Settlement Agreement that the district court ultimately approved. Id., at 4243. The Ninth Circuit opinion identifies but a single benefit provided by the class action settlement for the 7,000 class members – a cy pres award of $341.50; the agreement provided that the named plaintiff receive $1,000 in actual and statutory damages. Id. The Class Action Settlement Agreement provided further that plaintiffs’ three law firms could file a motion for attorney fees and costs if the parties could not agree on the amount of such an award, id. Plaintiff’s lawyers sought almost $170,000 in attorney fees and costs, reflecting hourly rates ranging from $425 to $500 for the attorneys, and $115 to $200 for law clerks, id., at 4243-44. The district court found the hours spent by plaintiff’s lawyers to be reasonable, but reduced the reasonable hourly rate to $200 for all attorneys and awarded a flat fee of $500 for the motion seeking fees and costs, which the court found to be “virtually identical to the materials these attorneys have submitted in other cases.” Id., at 4245-46. In the end, the district court awarded approximately $77,000 in fees and costs, id., at 4246. The lawyers appealed, and the Ninth Circuit reversed and remanded for further proceedings.

The Circuit Court noted that under the terms of the Class Action Settlement Agreement defendant “agreed to pay reasonable and necessary attorneys’ fees and costs.” Camacho, at 4247. The Court stated that the FDCPA “makes an award of fees mandatory.” Id. The Ninth Circuit explained that the district court’s order would be reversed only for clear error, id., at 4246 (citation omitted), and that and that district courts are required to use the “lodestar” method for determining the amount of attorney fees to be awarded, id, at 4247 (citations omitted). The lodestar takes the reasonable hourly rate and multiplies it by the reasonable number of hours incurred by counsel, id.; because the district court found that the hours spent by plaintiff’s lawyers were reasonable, the only issue was whether the district abused its discretion in reducing the hourly rate for plaintiff’s lawyers to $200 per hour. Id., at 4247-48.

Class Action Court Decisions FDCPA Class Actions Uncategorized

FAA Class Action Defense Cases–Kaltwasser v. Cingular Wireless: California Federal Court Refuses To Enforce Class Action Arbitration Wavier Or Arbitration Clause In Wireless Service Agreement Holding It Unconscionable Under California Law

Defense Motion to Compel Individual Arbitration of Class Action Claims under Wireless Service Contract Denied because Arbitration Agreement, which Included Class Action Waiver, was Unconscionable California Federal Court Holds

Plaintiff filed a putative class action against Cingular Wireless alleging violations of the California’s Business and Professions Code and Consumer Legal Remedies Act, and for breach of contract; specifically, the class action complaint alleged that plaintiff signed up for wireless service with Cingular, and renewed his service based “on advertising that identified Cingular as the wireless service with the fewest dropped calls,” but that this representation is untrue. Kaltwasser v. Cingular Wireless LLC, 543 F.Supp.2d 1124, 1126-27 (N.D. Cal. 2008). Defense attorneys moved to compel arbitration pursuant to the Federal Arbitration Act (FAA). Id. The arbitration clause in plaintiff’s wireless service contract provided that the parties “agree to arbitrate all disputes and claims arising out of or relating to this Agreement for Equipment or services between Cingular and you” and contained a class action waiver. Id., at 1127. Cingular modified the arbitration clause so as to state in part, “Cingular and you agree to arbitrate all disputes and claims between us. This agreement to arbitrate is intended to be broadly interpreted. It includes, but is not limited to: claims arising out of or relating to any aspect of the relationship between us …; claims that arose before this or any prior Agreement (including, but not limited to, claims relating to advertising); claims that are currently the subject of purported class action litigation in which you are not a member of a certified class; and claims that may arise after the termination of this agreement.” Id. The district court denied the motion.

The district court began its analysis by observing that the FAA applies “to all written contracts involving interstate or foreign commerce” and was “enacted to overcome longstanding judicial reluctance to enforce agreements to arbitrate.” Kaltwasser, at 1127. On the other hand, the FAA does not “entirely displace[]” state law. Id., at 1128. The court recognized that the FAA governed the dispute, so the question is whether the contract was enforceable under state law. Id. The first question was one of choice of law. The contract defined the governing law as that of “the state of your billing address”; but plaintiff’s address was in California when he entered into the contract and in Virginia when he filed suit. Id., at 1128. The district court held that California law governed the contract. Id., at 1128-30.

Arbitration Class Action Court Decisions Uncategorized

Securities Fraud Class Action Defense Cases–In re Savient Pharmaceuticals: Third Circuit Affirms Dismissal Of Securities Class Action Holding Class Action Complaint Failed To Allege Scienter With Requisite Specificity

District Court did not Err in Dismissing Securities Class Action Without Leave to Amend because Second Amended Class Action Complaint Failed to Adequately Plead Scienter Third Circuit Holds Plaintiff filed a putative class action against Bio-Technology General Corp. (now known as Savient Pharmaceuticals) and three of its officers and directors for violations of federal securities laws by allegedly “making false and misleading statements about the corporation’s financial performance in 1999, 2000, and 2001.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Dell Class Action Defense Cases–Fiser v. Dell: New Mexico Supreme Court Reverses Trial Court Order In Class Action Staying Class Action Lawsuit And Compelling Plaintiff To Arbitration His Individual Claim Holding Class Action Waiver Unenforceable

Trial Court Order in Unfair Business Practice Class Action Against Dell Granting Defense Motion to Stay Class Action and Compel Plaintiff to Arbitration his Individual Claim must be Reversed because New Mexico’s “Fundamental Public Policy” Requires use of Class Action Device in Small Claims Matters New Mexico Supreme Court Holds

Plaintiff filed a putative class action lawsuit in New Mexico state court against Dell Computer alleging inter alia violations of the state’s unfair business practices laws and false advertising; the class action alleged that Dell “systematically misrepresents the memory size of its computers.” Fiser v. Dell Computer Corp., ___ P.3d ___ (N.M. June 27, 2008) [Slip Opn., at 3]. The class action further alleged that the monetary damage suffered by each class member was only $10-$20, _id._ Defense attorneys moved the trial court to stay the class action and to compel arbitration under the Federal Arbitration Act (FAA) of the plaintiff’s individual claim; the defense motion was premised on the fact that plaintiff purchased his computer online and that the “terms and conditions” applicable to such Dell website purchases required purchasers to individually arbitration their claims and precluded them pursuing a class action. _Id._, at 3-4. The trial court granted the defense motion, ruling that plaintiff was bound by the arbitration clause and the class action waiver. _Id._, at 4. The Court of Appeals affirmed, and plaintiff petitioned the New Mexico Supreme Court for a writ of certiorari. _Id._ The Supreme Court reversed, holding that “the class action ban is contrary to fundamental New Mexico public policy,” _id._

Preliminarily, the Supreme Court addressed the question of whether New Mexico or Texas law applied. Fiser, at 4. The Court explained at page 4, “The threshold question in determining the validity of the class action ban is which state’s law must be applied to this potentially multi-state class action that was filed in New Mexico by a New Mexico resident against a defendant that maintains its principal place of business in Texas for damages relating to a contract that contains a choice-of-law clause directing that Texas law be applied.” The resolution of this issue was crucial because “[a]pplication of Texas law to the instant matter would likely require enforcing the class action ban.” Id., at 5. New Mexico law would respect the choice-of-law clause, and apply Texas law, “[u]nless enforcement of the class action ban would run afoul of fundamental New Mexico public policy,” id. The Supreme Court held that “[t]he class action device is critical to enforcement of consumer rights in New Mexico.” Id., at 6. The Court recognized that the state’s Uniform Arbitration Act – which “declares that arbitration clauses that require consumers to decline participation in class actions are unenforceable and voidable,” id., at 6 – “may be preempted by the FAA,” id., at 7. However, it also explained that “the class action functions as a gatekeeper to relief when the cost of bringing a single claim is greater than the damages alleged.” Id., at 7-8. Thus, “a contractual provision that purports to ban class actions for small claims implicates not just the opportunity for a class action but the more fundamental right to a meaningful remedy for one’s claims.” Id., at 8. Under the circumstances of this putative class action, the New Mexico Supreme Court found that, because plaintiff’s actual damages were no more than $20, denying class action relief would “essentially foreclose[] the possibility that Plaintiff may obtain any relief.” Fiser, at 8. And because “New Mexico’s fundamental public policy requires that consumers with small claims have a mechanism for dispute resolution via the class action,” applying Texas law would run contrary to this public policy so New Mexico law governed the dispute. Id., at 9.

Arbitration Class Action Court Decisions Uncategorized

Class Action Defense Cases—In re Virgin Mobile IPO: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Transfers Class Actions To New Jersey

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Over Objection of Plaintiff’s Lawyers in New Jersey Class Action, but Transfers Class Actions to the District of New Jersey Four class actions – one in New Jersey and three in New York – were filed against various defendants arising out of the allegation that “Virgin Mobile distributed a materially false and misleading registration statement and prospectus in connection with Virgin Mobile’s initial public offering.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases—In re Nissan: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Middle District of Tennessee

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 Agrees to Transfers Class Actions to Middle District of Tennessee Five class actions were filed in five different federal district courts against Nissan North America and others alleging that defendants “violated the Federal Odometer Act by similarly altering the odometers in Nissan and Infiniti vehicles to inflate the mileage driven.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases—In re Merrill Lynch: Judicial Panel On Multidistrict Litigation (MDL) Grants Unopposed Defense Motion To Centralize Individual And Class Action Litigation In Southern District Of New York

Judicial Panel Grants Defense Motion for Pretrial Coordination of Individual and Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Individual and Class Action Plaintiffs and Supported by Some Responding Individual and Class Action Plaintiffs, and Transfers Actions to Southern District of New York Eighteen (18) individual and class action lawsuits were filed (1 in New Jersey and 17 in New York) against Merrill Lynch and other defendants “arising from Merrill Lynch’s conduct and representations regarding its investments in collateralized debt obligations secured by subprime mortgage debt.

Class Action Court Decisions Multidistrict Litigation Uncategorized