Class Action Defense Cases-In re Tyco: New Hampshire Federal Court Approves Class Action Settlement And Awards Class Counsel Record $464 Million For Prosecuting Securities Fraud Class Action Lawsuit

Proposed $3.2 Billion Settlement Of Securities Fraud Class Action Fair, Reasonable and Adequate, and Request By Class Action Plaintiffs’ Counsel for $464 Million Fee Award Reasonable New Hampshire Federal Court Holds

Plaintiffs filed a securities fraud class action lawsuit against Tyco International, its former auditor, PricewaterhouseCoopers, and five individual defendants; the gravamen of the class action was that defendants “misrepresented the value of multiple companies that Tyco acquired and misreported Tyco’s own financial condition in ways that artificially inflated the value of Tyco stock,” thereby permitting the individual defendants “to reap enormous profits by looting the company through a combination of unreported bonuses, forgiven loans, excessive fees, and insider trading.” In re Tyco Int’l, Ltd., ___ F.Supp.2d ___, 2007 WL 4462593, *1 (D. N.H. December 19, 2007). The district court granted plaintiffs’ motion for class action treatment, and the parties eventually negotiated and sought district court approval of a proposed $3.2 billion settlement of the class action. _Id._ Specifically, the terms of the class action settlement requires that Tyco pay $2.975 billion in cash, plus interest, and that PricewaterhouseCoopers pay $225 million in cash, plus interest, _id._, at *5. The district court stated at page *5: “Tyco’s payment will be the largest cash payment ever made by a corporate defendant in the history of securities litigation. [PricewaterhouseCoopers’] payment will be the second-largest auditor settlement in securities class action history. In all, the proposed settlement is the third largest securities class action recovery in history, behind only Enron and WorldCom.” As part of the motion for approval of the class action settlement, plaintiffs’ lawyers sought an attorney fee award of 14.5% of the $3.2 billion settlement, _id._, at *1, together with almost $29 million in costs, _id._, at *14. The district court approved the class action settlement and awarded the attorney fees requested.

We do not here discuss the district court’s analysis of the proposed settlement, or its conclusion that the terms of the class action settlement were fair, reasonable and adequate. See Tyco, at *7-*11. We do note, however, that the court stated it would be “difficult to overstate the complexity of this case,” id., at *8, and that the case was “risky…for both sides,” id., at *9. The court further highlighted the expense involved, noting that more than 488,000 hours of attorney time had been devoted to prosecution of the class action, id., at *10. The court’s analysis and rejection of the various objections to the proposed settlement may be found at pages *11-*14. The attorney fee award bears mention because it represents the single largest attorney fee award in class action history.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases-In re Dynamic Random Access Memory: California Federal Court Grants Motion To Dismiss Certain Antitrust Class Action Claims Finding Plaintiffs Lack Antitrust Standing

Antitrust Class Action Complaint Failed to Adequately Establish Antitrust Injury thus Warranting Dismissal of Certain Antitrust Claims in Class Action Complaint for Lack of Standing California Federal Holds

Plaintiffs filed a class action lawsuit against various defendants for allegedly conspiring to artificially inflate and fix the prices of dynamic random access memory (DRAM) in the market: plaintiffs are indirect purchasers of DRAM, and filed the class action on behalf of other indirect purchasers; the class action named as defendants foreign corporations, or U.S. subsidiaries of foreign corporations, that manufacture and sell DRAM in the U.S. In re Dynamic Random Access Memory (DRAM) Antitrust Litig., ___ F.Supp.2d ___ (N.D. Cal. January 29, 2008) [Slip Opn., at 1-2]. Defense challenges to the class action led to the filing of a second amended class action complaint, and defense attorneys moved to dismiss certain claims therein. _Id._ The district court granted the motion in part and denied the motion in part.__

By way of background, the district court explained at page 2 that in August 2006, defense attorneys moved for judgment on the pleadings with respect to the original class action complaint, and in June 2007, the court granted the motion in part in an order that enunciated “two overarching conclusions”: (1) that “under the standing test enunciated in Assoc. Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983)(‘AGC’), plaintiffs lacked antitrust standing to assert their claims under both the California Cartwright Act and 13 state antitrust statutes, for all claims based on purchases of products in which DRAM is a component,” and “further granted defendants’ motion for lack of standing with respect to 3 more state antitrust statutes, regardless whether those claims were based on purchases of non-component DRAM, or products in which DRAM is a component”; and (2) that the class action claims “under various states’ consumer protection statutes failed, on grounds that the claims were untimely, had procedural deficiencies, or else failed to state a valid claim for relief.” The district court granted plaintiffs’ leave to amend, “but only as to three specific state laws – South Dakota, New York, and Rhode Island.” In re DRAM, at 2. Plaintiffs did so, but then sought leave to further amend the class action complaint believing they could overcome the concerns expressed by the court in its June 2007 order; defense attorneys opposed the motion on the ground of futility, but the court granted leave to amend and a second amended class action complaint was filed. Id., at 2-3. Defense attorneys moved to dismiss certain claims therein, id., at 3.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Peregrine Systems: Judicial Panel On Multidistrict Litigation (MDL) Grants Joint Defense/Plaintiff Motion To Centralize Class Action Litigation In Southern District of California

Judicial Panel Grants Defense Request for Pretrial Coordination of 35 Class Action and Individual Lawsuits Pursuant to 28 U.S.C. § 1407, Joined by Sole Plaintiff Outside California, and Transfers Actions to Southern District of California Thirty-five (35) individual and class action lawsuits (34 in California and 1 in New Jersey) were filed against various defendants, including Arthur Andersen, “arising out of alleged misrepresentations or omissions relating to improper accounting practices at Peregrine Systems, Inc.

Class Action Court Decisions Multidistrict Litigation Uncategorized

UCL Class Action Defense Cases-Hall v. Time: California State Court Affirms Dismissal Of Class Action Complaint Concluding Plaintiff Lacked Standing Under Unfair Competition Law (UCL) To Prosecute Class Action Claims

Class Action Plaintiff must Suffer Loss of Money or Property to have Standing to Prosecute UCL (Unfair Competition Law) Class Action and must Establish Causal Connection Between Alleged Loss and Defendants Conduct California State Court Holds

Plaintiff filed a putative action lawsuit against various Time Inc. entities for violations of Californias unfair competition law (UCL) by allegedly tricking people into buying books as part of a free trial period program. Hall v. Time Inc., 158 Cal.App.4th 847, 70 Cal.Rptr.3d 466, 467 (Cal.App. January 28, 2008). The gravamen of the class action was that Time engaged in a scheme by which it induced consumers to purchase books by offering a free preview period during which the consumer had 21 days in which to review the book and return it to Time with no obligation to buy. Id. The class action complaint alleged that after the consumer reviews the book pursuant to an ostensible no obligation free trial basis, Time employs a scheme to obtain immediate payment from the consumer throughmisleading and deceitful tactics. Id. Defense attorneys moved to dismiss the class action on the ground that plaintiff did not suffer an injury in fact and thus lacked standing to prosecute the class action; the trial court agreed and dismissed the class action complaint. Id. The Court of Appeal affirmed.

Plaintiff alleged that he ordered a book from Time. Hall, at 468. The class action alleged that Time sent a bill with the book that encouraged him to pay for the book immediately but made clear that he was under no obligation to do so and that he had 21 days to return the book at Times expense, id., at 467-68. Plaintiff admits he kept the book and did not pay for it. Id., at 468. According to the allegations in the class action complaint, after the trial period ended Time began sending bills to plaintiff demanding payment; when plaintiff failed to pay, the matter was referred to collection. Id. Ultimately, plaintiff paid for the book and then filed the class action complaint alleging that Time had engaged in an ongoing, unfair and/or fraudulent and/or unlawful business practice by sending invoices before the expiration of the free trial period to obtain immediate payment for the book requested. Id. The trial court granted Times motion to dismiss the class action for lack of standing, finding that plaintiff got the book that he asked for, at the price he asked for it, and the payment schedule he wanted. Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

CAFA Class Action Defense Cases-Toller v. Sagamore: Arkansas Federal Court Delays Ruling On Motion To Remand Class Action Against Insurer Pending Additional Evidence Of Amount In Controversy For Removal Under Class Action Fairness Act (CAFA)

In Motion for Remand of Class Action Against Insurer for Failure to Provide No-Fault Insurance, both Plaintiff and Defense Failed to Present Admissible Evidence of Amount in Controversy so Court had Insufficient Evidence to Determine Whether Removal Jurisdiction Existed Under CAFA (Class Action Fairness Act) Arkansas Federal Court Holds

Plaintiff filed a putative class action in Arkansas state court against her automobile insurance carrier, Sagamore Insurance, alleging various breaches of the terms of the auto policy. Toller v. Sagamore Ins. Co., 514 F.Supp.2d 1111, 1113-14 (E.D. Ark. 2007). The class action complaint alleged that Sagamore “has consistently issued automobile liability insurance policies without providing no-fault coverages or obtaining waivers of such coverage as required by Arkansas law.” Id., at 1114. Defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA); plaintiff’s lawyer moved to remand the class action on the ground that removal jurisdiction did not exist under CAFA because the requisite amount in controversy had not been established. Id. The district court found that it lacked sufficient evidence from either side to rule on the remand motion and, accordingly, held the motion in abeyance pending receipt of such evidence.

Plaintiff’s class action alleged that Sagamore issued her an automobile insurance policy without providing her no-fault coverage and without obtaining from her a waiver of such coverage in writing. Toller, at 1114. Following a car accident in which she suffered $48,000 in medical costs, Toller filed her lawsuit alleging that Sagamore wrongly denied her claim. The class action complaint provided no further information regarding alleged damages, and plaintiff did not limit her damages to an amount under $75,000. Id. The relief sought in the complaint includes attorney fees, penalties for breach of contract, and declaratory and injunctive relief, but the class action provides that “the amount in controversy will not exceed the sum or value of $4,999,999, and she specifically waives any amount of compensatory damages, restitution, interest, costs, and attorneys’ fees above that amount.” Id. Defense attorneys removed the class action to federal court alleging both diversity jurisdiction and CAFA removal jurisdiction: we do not discuss here the district court’s conclusion that the requirements for diversity jurisdiction had not been met, see id., at 1116-18; rather, we discuss here solely removal jurisdiction under CAFA, and Sagamore’s argument “that this case is a class action, that the class has more than 100 members, that the amount in controversy exceeds $5,000,000, and that minimal diversity exists, so this Court has jurisdiction pursuant to the Class Action Fairness Act, codified at 28 U.S.C. § 1332(d),” id., at 1114.

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

Subprime Securities Law Class Action Defense Cases-Gold v. Morrice: California Federal Court Grants Motion To Dismiss Class Action Claims But Gives Plaintiffs Leave To File Amended Class Action Complaint

Securities Class Action Complaint Failed to Adequately Articulate Factual Bases for Claims Necessitating Dismissal but with Leave to Amend California Federal Court Holds

Various plaintiffs filed a class action lawsuit against New Century. and various officers and directors aris[ing] from the collapse of New Century Financial Corporation in the wake of the subprime mortgage crisis, and allegations of securities law violations that drastically reduced the value of stocked owned by shareholders. Gold v. Morrice, ___ F.Supp.2d ___ (C.D. Cal. January 31, 2008) [Slip Opn., at 1]. In September 2007, lead plaintiff (New York Teachers Retirement System) filed a consolidated class action complaint; defense attorneys moved to dismiss various class action claims, _id._ The class action was filed after New Centurys stock dropped 97% following several disclosures regarding errors in its previously reported financial statements, _id._, at 2. Specifically, the class action complaint alleged violations of Section 11 and Section 12(a) of the Securities Act, as well as securities fraud claims under Section 10(b) and Section 20(a) of the Exchange Act against the individually-named defendants, _id._ The district court granted the motion to dismiss but with leave to file an amended class action complaint.

In granting the defense Rule 12(b)(6) motion as to the class actions Securities Act claims, the district court concluded that the complaint lacks clarity in articulating the grounds for its claims and attributes this failure to a lack of organization and somewhat unclear presentation of the allegations. Gold, at 6. The court noted, for example, that despite many detailed factual allegations and underlined statements from stock offering documents, press releases, or other communications, the court ha[d] difficulty in determining whether Plaintiffs have stated a claim because the class action complaint either lacks facts to support that the statements are false or misleading or provides those facts in a different paragraph without guidance for cross-reference. Id. For guidance, recommended that the class action complaint be clear and concise in identifying false statements and articulating the factual allegations supporting an inference that the statement is false or misleading and directed plaintiffs to attach a chart to the complaint set[ting] forth for each claim ([i]) the alleged false or misleading statements, including the source of the statement in a registration statement where a required element of the claim; (ii) the supporting factual allegations; and (iii) the ultimate conclusion. Id., at 7.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

CAFA Class Action Defense Cases-Main Drug v. Aetna: Eleventh Circuit Dismisses For Lack Of Jurisdiction Appeal From District Court Refusing To Remand Class Action Removed Under Class Action Fairness Act (CAFA)

Failure to Timely Seek Permission to Appeal Denial of Motion to Remand Class Action Complaints Removed to Federal Court under CAFA (Class Action Fairness Act) Required Dismissal of Appeals for Lack of Jurisdiction Eleventh Circuit Holds

Plaintiff, a pharmacy, filed a putative class action against insurance/pharmacy benefit management companies for misrepresentation, breach of contract, unjust enrichment and conspiracy, alleging that defendants failed to reimburse pharmacies “according to an agreed-upon formula for brand name prescriptions dispensed to Defendants’ insureds.” Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 455 F.Supp.2d 1323, 1324 (M.D. Ala. 2006). Defense attorneys removed the action to federal court asserting, inter alia, federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id. The district court held that even under CAFA the defense bears the burden of establishing removal jurisdiction, but concluded that the defense had satisfied the amount in controversy requirement. Our summary of that district court order may be found here. Plaintiffs filed notices of appeal with the Eleventh Circuit; the Circuit Court dismissed the appeals for lack of jurisdiction. Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., 475 F.3d 1228 (11th Cir. 2007).

The Eleventh Circuit noted the two consolidated class action lawsuits had been filed prior to CAFA’s effective date but the clerk of the court did not issue the summons until after CAFA’s effective date. Defense attorneys removed the class actions to federal court, and plaintiffs’ lawyers filed motions to remand arguing that the class action complaints had been filed before CAFA went into effect. The district court denied the motion. Main Drug, at 1229. Plaintiffs appealed the denial of the motion to remand within seven (7) days of the district court order, but never sought permission to appeal pursuant to Rule 5. Id. The Circuit Court explained at pages 1229 and 1230,

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

FLSA Class Action Defense Cases-Spoerle v. Kraft Foods: Wisconsin Federal Court Denies Defense Summary Judgment Motion In FLSA Class Action Seeking Compensation For Donning And Doffing Protective Equipment

Defense Motion for Summary Judgment Arguing that Class Action Claims Seeking Compensation under Federal Fair Labor Standards Act (FLSA) for Time Spent Donning and Doffing Safety Gear Required by Employer Denied for Failure to Establish as a Matter of Law that Class Action Claims Fell Within Exception to FLSA Compensation Requirement Wisconsin Federal Court Holds

Plaintiffs filed a class action lawsuit against their employer, Kraft Foods, alleging violations of the federal Fair Labor Standards Act (FLSA) and state law for time spent in donning and doffing safety and sanitation equipment as part of their jobs at a meat processing plant. Spoerle v. Kraft Foods Global, Inc., 527 F.Supp.2d 860, 2007 WL 4564094, *1 (W.D. Wis. 2007). Defense attorneys moved for summary judgment arguing that the class action claims fell within the Portal-to-Portal Act exception, that the allegations in the class action complaint did not constitute “changing clothes” within the meaning of the FLSA, and that in any event the class action claims fell within the FLSA’s “de minimis” exception. Id. (While such dispositive motions are generally inappropriate prior to the court’s ruling on a class action certification motion, plaintiffs stipulated that they would not seek class action treatment until the court ruled on the summary judgment motion, id.) Except as explained in the Note, below, the district court denied the defense motion because it could not find as a matter of law “that the donning and doffing of the equipment at issue in this case is excluded from the protections of the FLSA,” id.

The district court stated at page 1, “This case presents a straightforward question: does the Fair Labor Standards Act, 29 U.S.C. §§ 201-219, require defendant Kraft Foods Global, Inc., to pay its employees for time they spend putting on and taking off items of safety and sanitation equipment that defendant’s policies and federal law require the employees to wear?” Kraft operates a meat processing plant in Wisconsin and requires employees to use time clocks “typically [located] right outside the ‘production area’” to track their time. Spoerle, at *1. Federal law, as well as company policy, requires employees wear safety and sanitation equipment in the production area, which “includes a hard hat or bump cap, steel-toed shoes or sanitation boots, ear plugs, hairnet and beard net, safety glasses, a freezer coat (if necessary), gloves, plastic gloves, paper frock or plastic apron, sleeves, slickers (for employees that work in wet areas) or a cotton frock (employees may choose to wear cotton pants and a shirt instead, which the parties refer to as ‘career clothes’).” Id. Failure to wear the required equipment may lead to discipline, id. The gravamen of the class action is that some of these items – all of which are owned by the employer and stored at the plant – must be put on before clocking in, id., at *2. The court noted that “The current collective bargaining agreement between plaintiffs and defendant does not guarantee compensation for the time spent donning and doffing personal protective equipment,” id., and noted further that Kraft did not dispute that such conduct was “work,” id., at *3; rather, the defense argued that the conduct falls within an exception.

Class Action Court Decisions Employment Law Class Actions Uncategorized

FLSA Class Action Defense Cases-In re KFC: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Fair Labor Standards Act Class Action Litigation In District Of Minnesota

Judicial Panel Grants Defense Request, Over Plaintiffs’ Objections, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees With Defense that District of Minnesota is Appropriate Transferee Court Twenty-eight class action lawsuits were filed in 27 districts against various defendants, including KFC Corp. alleging violations of the federal Fair Labor Standards Act (FLSA) for failure to pay assistant managers overtime pay. In re KFC Corp. Fair Labor Standards Act Litig.

Class Action Court Decisions Employment Law Class Actions Multidistrict Litigation Uncategorized

Class Action Defense Cases-Hubbard v. Potter: Federal Magistrate Grants Defense Motion To End Pre-Certification Discovery In Labor Law Class Action But Denies As Untimely Defense Motion To Designate Rebuttal Expert

Plaintiffs in Labor Law Class Action Failed to Establish that Defense Failed to Properly Respond to Pre-Certification Discovery and Defense failed to Establish Good Cause for Untimely Designation of Rebuttal Expert District of Columbia Federal Magistrate Holds

Plaintiffs, five deaf employees of the United States Postal Service (USPS), filed a putative class action alleging that they were “denied a qualified sign language interpreter at safety meetings and mandatory work meetings” and that this “prevented from performing their duties safely, which they contend is an essential function of their job.” Hubbard v. Potter, 247 F.R.D 27, 2008 WL 43867, *1 (D.D.C. 2008). Plaintiffs alleged that a class action could be certified under either Rule 23(b)(2) or (b)(3), and sought pre-certification discovery to support a motion for class action certification. Id. Defense attorneys moved to terminate pre-certification discovery and for leave to designate a rebuttal expert witness, id. The federal magistrate granted the first motion but denied the second.

With respect to their first motion, defense attorneys argued that plaintiffs had been given sufficient time to conduct the discovery necessary to file for class action certification, and that further discovery was inappropriate pre-certification because “Plaintiffs either (a) have the evidence they need for class certification and are attempting to collect that which they need for trial on the merits, or (b) have failed in their attempts to meet the class certification requirements following this Court’s dismissal of their first class complaint and are trying to squeeze every last document out of the Postal Service in a vain attempt to piece together a plausible class certification theory for their second amended complaint.” Hubbard, at *1. Plaintiffs’ opposition “raised legitimate concerns regarding the discovery that has been thus far produced by defendant,” characterizing USPS’s discovery responses as “grossly insufficient and manifestly incomplete.” Id.

Class Action Court Decisions Employment Law Class Actions Uncategorized