State Farm Class Action Defense Cases-Kartman v. State Farm: Indiana Federal Court Grants Defense Motion To Compel Production Of Documents Plaintiff’s Counsel Believes Relevant To Class Action Claims

Documents Plaintiff’s Counsel Found on Internet and Intends to Use in Prosecuting Class Action Against State Farm not Protected by Work Product Doctrine Indiana Federal Court Holds

Plaintiff filed a class action lawsuit against State Farm Mutual Automobile Insurance Company; prior to the filing the class action, plaintiff’s lawyer “undertook a comprehensive factual investigation relevant to the claims being asserted,” gathering “numerous documents from publicly available sources, including from Defendant State Farm’s own web sites.” Kartman v. State Farm Mut. Auto. Ins. Co., ___ F.Supp.2d ___, 2007 WL 4561607, *1 (S.D. Ind. December 21, 2007). In order to prepare its defense against the class action claims, defense attorneys requested production of all documents plaintiff obtained from “publicly available sources” prior to filing suit, _id._, at *3. Plaintiff’s lawyer admitted that he “plan[ned] to use these documents ‘for the purpose of cross-examining and impeaching State Farm representatives,’” but refused to produce them on the ground that the documents were protected by the work product doctrine. _Id._, at *1. Defense attorneys filed a motion to compel, _id._, and the district court granted motion.

The federal court explained that plaintiff bore the burden of proving that the documents sought were “prepared in anticipation of litigation.” Kartman, at *1. Plaintiff argued the documents “would necessarily reveal counsel’s mental impressions and litigation strategy”; defense attorneys countered that “Plaintiffs intend to withhold clearly responsive documents from State Farm based upon a temporary invocation of work product protection that Plaintiffs will waive at tactically opportune times.” Id. The district court explained that in order for the work product doctrine to apply, “the material must be documents or other tangible things, must be prepared in anticipation of litigation, and must be prepared by or for a party or his counsel.” Id., at *2. Here, however, the documents were “secured from other sources” and “were not prepared in anticipation of this particular litigation” or “by or for Plaintiff or his counsel in this litigation.” Id. In fact, the district court noted, the documents from State Farm’s web site “were prepared by State Farm with absolutely no thought whatsoever of this particular litigation.” Id., at *3. And while it is true that plaintiff’s lawyer assembled the documents from various public sources, the district court found persuasive the defense argument that “Merely gathering documents from third parties does not gloss the documents with an attorney’s mental impressions any more that simply sharing documents with an attorney stamps the documents with the imprimatur of attorney-client privilege.” Id.

Class Action Court Decisions Uncategorized

Fidelity Class Action Defense Cases-Randleman v. Fidelity National Title: Ohio Federal Court Grants Class Action Treatment Against Title Insurer Alleging Class Action Claims Based On Failure To Give Homeowners Discounted Rates

Class Action Alleging Fidelity Failed to Disclose and Provide Discounted Title Insurance Rates to Homeowners as Part of Refinance Transactions Entitled to Class Action Treatment Ohio Federal Court Holds

Plaintiffs filed a class action lawsuit against their title insurance carrier, Fidelity National Title, alleging that the cost it charged insureds for insurance issued in connection with refinance transactions; specifically, the class action alleged that plaintiffs “have been injured and wronged by defendant’s failure to charge them a lower premium,” as required by Ohio law, “even though they were not named insureds under the title insurance policy.” Randleman v. Fidelity National Title Ins. Co., ___ F.Supp.2d ___ (N.D. Ohio January 31, 2008) [Slip Opn., at 1]. Of course, homeowners typically pay for title insurance, both for themselves and for their lenders, _id._, at 2. Defense attorneys filed a motion to dismiss the class action to the extent it asserted claims for breach of implied-in-fact contract and unjust enrichment, which the district court denied. _See Randleman v. Fidelity National Title Ins. Co._, 465 F.Supp.2d 812, 827 (N.D. Ohio 2007). Plaintiffs then filed a motion to certify the litigation as a class action, _id._ The trial court concluded that the matter may proceed as a class action.

Like all other title insurers doing business in Ohio, Fidelity belongs to the Ohio Title Insurance Rating Bureau (OTIRB) and files its insurance rates with the Ohio Superintendent of Insurance. Randleman, at 2. “The OTIRB files a manual of rates with the Ohio Department of Insurance (ODI), setting forth the rates title insurers will charge for policies.” Id. The rates in the manual are binding on title insurers, and the listed rates are mandatory though Ohio law provides for certain discounted rates, id., at 2-3. The class action complaint alleged that plaintiffs refinanced their Ohio home and paid a non-discounted rate for a title policy for their lender, id., at 3. The class action further alleged that plaintiffs had refinanced within the time period that would have qualified them to receive a discounted reissue rate, and that “they were overcharged $213.57.” Id., at 4. Plaintiffs’ class action certification motion argued that Fidelity systematically failed to provide discounts “despite knowledge that particular consumers are entitled to the discounted rate.” Id., at 5. Defense attorneys opposed class action treatment on the ground that “the issue of knowledge of the discount on the part of each individual class member would be determinative, and would require individualized adjudication of ‘as to the knowledge and practices of the particular lender, mortgage broker, agent, and borrower involved in the transaction’…, and thus, individual adjudication of each class member’s claim.” Id. Plaintiffs countered that Fidelity’s non-disclosure or a homeowner’s lack of knowledge is not an element of the causes of action underlying the class certification motion, so individual trials would not be required. Id., at 5-6.

Certification of Class Actions Class Action Court Decisions Uncategorized

Dow Class Action Defense Cases-Henry v. Dow Chemical: Divided Michigan Appellate Court Affirms Class Action Certification Of Toxic Tort Class Action Complaint Arising From Release Of Dioxin At Dow Chemical Plant

On Appeal from Order Granting Class Action Treatment Against Dow Chemical for Damages Allegedly Caused by Dioxin from Dow Plant, Defense Failure to Request or Seek to Introduce Evidence in Opposition to Motion to Certify Class Action Undermines Claim that Trial Court Erred in Failing to Hold Evidentiary Hearing Split Michigan State Court Holds

Plaintiffs filed a class action lawsuit against Dow Chemical alleging toxic tort claims based on the alleged release of dioxin at Dow’s Midland, Michigan, plant. Henry v. Dow Chemical Co., Mich. Ct. App. Case No. 266433 (unpublished) (Mich.App. January 24, 2008) [Slip Opn., at 1]. In part, the class action complaint “presented an issue of first impression” in that plaintiffs sought certification of a class action to create a medical monitoring program funded by Dow, id. In 2003, plaintiffs moved for class action certification, and defense attorneys moved for summary disposition of the medical monitoring claim, id., at 2. The trial court denied the defense motion, but the Michigan Supreme Court reversed reasoning that “[b]ecause plaintiffs do not allege a present injury, plaintiffs do not present a viable negligence claim under Michigan’s common law.” Henry v. The Dow Chemical Co., 701 N.W.2d 684, 473 Mich. 63, 68 (Mich. 2005). On remand, the trial court considered class action treatment of the remaining claims for nuisance, negligence, and public nuisance, Slip Opn., at 3, and granted the motion, id., at 6-7. Defense attorneys appealed and, in an unpublished and divided opinion, the Michigan Court of Appeals affirmed.

The Court of Appeals noted that the sole issue before it was whether the trial court’s order granting class action treatment was “clearly erroneous.” Henry, at 7 (citation omitted). Defense attorneys argued on appeal that individual questions of law or fact will predominate over common questions, and that the trial court erred in concluding otherwise without first holding an evidentiary hearing. Id., at 8. The lead opinion, by Judge Hood, states at page 7 that “in my view, the trial court’s decision with regard to certification of the class was not clearly erroneous.” With respect to the lack of an evidentiary hearing, the court noted that the parties made the strategic decision not to introduce evidence but, rather, to rely on case law in support of, and opposition to, the class action certification motion, id., at 8. Of course, “[w]ithout an evidentiary hearing, there are no factual findings to review,” id., and having made the tactical decision not to request an evidentiary hearing or seek to present testimony in opposition to class certification, the defense could not now be heard to complaint. And with respect to Dow’s arguments that “the properties and the dioxin levels vary,” thus creating predominantly individual questions of fact, the appellate court concluded that (1) under Michigan law, “the trial court is not required to accept the defendant’s assertions and proofs, but looks to the allegations in the complaint,” and (2) the investigation and report of the Michigan Department of Environmental Quality (MDEQ) concluded that certain areas contained excessive amounts of dioxin and that Dow’s Midland facility was the source of the contamination. Id., at 11-12. While Dow argued that another sources of contamination existed, the MDEQ had concluded that the alternate source was not a factor so the trial court’s decision was not clearly erroneous. Id., at 12.

Certification of Class Actions Class Action Court Decisions Uncategorized

Katrina Class Action Defense Cases-In re Katrina: Louisiana Federal Court Dismisses Class Action Complaint Against Government Finding Class Action Claims Based On Levee System Failure During Hurricane Katrina Barred By Governmental Immunity

Class Action Claims Against Federal Government Arising out of Failed Levee System Fell Within Immunity Afforded by Flood Control Act thus Warranting Dismissal of Class Action Complaint as to Government Louisiana Federal Court Holds

Plaintiffs filed a class action complaint against various defendants, including the U.S. Army Corps of Engineers, arising out of the “catastrophic failures of the levee system surrounding New Orleans and its vicinity” as a result of Hurricane Katrina, centering on the “breaches and failures that occurred at the three ‘outfall canals’ and the floodwalls constructed thereon.” In re Katrina Canal Breaches Consolidated Litig., ___ F.Supp.2d ___ (E.D. La. January 30, 2008) [Slip Opn., at 1-2]. The canals at issue in the class action “serve as conduits for the drainage of excess water from the streets of New Orleans during rain events, [but] these same canals become channels for incoming storm surge creating increased risk of flooding caused by Lake Pontchartrain hurricane driven water.” _Id._, at 2. Defense attorneys for the federal government moved to dismiss the class action claims against it, _id._, at 1, and in ruling on the motion the district court relied on an “exhaustive report” prepared by the U.S. Army Corps of Engineers that, in the court’s words, “provides detailed time lines and discussions concerning what proved to be a fifty-year exercise in ineptitude and gross economic and technological mismanagement,” _id._, at 3 n.2.

As to the U.S. Army Corps of Engineers, plaintiffs’ 73-page class action complaint, brought under the Federal Tort Claims Act, alleged that the Corps “had the legal responsibility and duty to these plaintiffs to cause, allow, and/or conduct the aforesaid dredging activity in a manner that would not compromise the safety of the canal’s levee/flood wall system” but that the Corps “(1) negligently failed to follow federal regulations and its own engineering standards and procedures , in regard to the issuance of a permit to dredge the 17th Street Canal…; (2) violated federal law to the extent [that] the River & Harbors Act prohibits the granting of a dredging permit that is contrary to the public interest…; (3) violated of federal regulations…for failing to properly balance the benefits of the requested dredging against the reasonably foreseeable harm, including possible harm related to detrimental effects on flood Control…; [and] (4) negligently issued a dredging permit which cased and allowed changes to occur in the 17th Street Canal Bottom, leading to subsurface and soil destabilization of the canal levee….” In re Katrina, at 19-20. Defense attorneys moved to dismiss the class action claims against the U.S. “based on § 702c immunity granted under the Flood Control Act of 1928 [(FCA)] and the discretionary function exception with respect to allegations of the negligent granting of the dredging permit of the 17th St. Canal.” Id., at 21.

Class Action Court Decisions Uncategorized

GM Class Action Defense Cases-In re General Motors: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Western District of Washington

Judicial Panel Grants Defense Request, Ultimately Joined by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Class Actions to Western District of Washington Three products liability class action lawsuits were filed in California, Oregon and Washington against various defendants, including General Motors Corp., arising out of the allegation that the speedometers in certain GM pick-ups and sport utility vehicles registered inaccurately and that GM “failed to disclose and/or fraudulently concealed this alleged defect.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases-Sonnier v. State Farm: Fifth Circuit Affirms Dismissal Of Class Action Complaint Against Automobile Insurance Company Because Allegations In Class Action Failed To State Claim For Failure To Inspect Seatbelts After Accidents

Class Action Alleging Auto Insurer Breached Insurance Contract by Failing to Pay for Seatbelt Inspections Following Accidents Properly Dismissed Fifth Circuit Holds

Plaintiffs filed a class action lawsuit against their automobile insurance carrier alleging that it was “contractually obligated to provide an extensive seatbelts inspection” following auto accidents. Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F. 3d 673, 2007 WL 4260892, *1 (5th Cir. 2007). The class action complaint does not challenge State Farm’s payment of repair costs as estimated by the body shops that inspect the insured vehicles after accidents; rather, it alleged that the manufacturer and a trade group recommend inspecting seatbelts and their locking mechanisms following any accident. Id. The class action further alleged that if “a body shop deems such an inspection unnecessary and does not list it on the estimate, then State Farm will not cover the cost of the seatbelt inspection.” Id. However, plaintiffs “refused to allege that there is in fact anything wrong with the seatbelt (or even that there seemed to be something wrong).” Id., at *3 n.2. Defense attorneys moved to dismiss the class action for failure to state a claim, noting that plaintiffs “do not allege that their seatbelts were harmed in any way during or after the collisions”; the district court granted the motion because “based on the contractual agreement to repair, if there is no complaint of a failure, there is nothing to repair.” Id., at *1. The Fifth Circuit affirmed.

The Circuit Court summarized plaintiffs’ theory on appeal as “arguing that the term ‘cost of repair’ necessarily includes the cost of the seatbelts inspection because in order to repair something, one must first inspect to determine what is in need of repair.” Sonnier, at *1. The Court disagreed. Interpreting the policy language under Louisiana law, the Fifth Circuit found unambiguous that State Farm’s contractual obligations were limited to loss or damage, and that the cost of repair or replacement was, under the facts of this case, based on “an estimate written based upon the prevailing competitive price.” Id., at *2. The Circuit Court concisely explained its rationale for rejecting plaintiffs’ theory as follows: “State Farm is obligated to pay for loss or damage to [plaintiffs’] vehicles based upon a written estimate. In creating estimates, body shops conduct an inspection, list the items in need of repair, and determine the amount State Farm owes ‘based upon the prevailing competitive price.’ [Plaintiffs’] argument that an estimate must necessarily include an extensive seatbelts inspection finds no support in the policy language. There is no policy language describing State Farm’s duty to conduct or pay for automobile inspections. State Farm’s duty is to pay for loss or damage to Appellants’ vehicles, measured by the cost of repair. That obligation was fulfilled in this case, and [plaintiffs] do not further identify anything broken that needs to be fixed.” Id.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Montgomery v. Bank of America: California Federal Court Dismisses Class Action Complaint Holding National Bank Act (NBA) Preempts Class Action Claims Challenging Nonsufficient Funds/Overdraft Fees

UCL Class Action Against Bank Challenging Overdraft Fees Fails because National Bank Act (NBA) Preempted Class Action Claims Under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) California Federal Court Holds, but Grants Plaintiff 20 Days’ Leave to Amend Class Action Complaint

Plaintiff filed a putative class action in California state court against Bank of America alleging violations of California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA) arising out of the Bank’s failure to disclose its Nonsufficient Funds/Overdraft Fees policy (NSF/OD fees policy). Montgomery v. Bank of America Corp., 515 F.Supp.2d 1106, 1108 (C.D. Cal. 2007). The thrust of plaintiff’s class action was that the Bank charged NSF/OD fees “on a sliding scale per overdraft[ that is] overly harsh, unjustified, and bear no relation to the actual damages incurred by the bank and are therefore in breach of California contract law,” and that the Bank’s NSF/OD fee agreements “are contracts of adhesion and unconscionable” due to their failure to accurately disclose the fees that may be assessed. Id., at 1111. Defense attorneys removed the class action to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA), id., at 1108. In the face of a defense motion for judgment on the pleadings, plaintiff filed an amended class action complaint; defense attorneys moved to dismiss the amended complaint. Id. The only ground addressed by the district court was whether the class action claims were “preempted by regulations promulgated by the Office of the Comptroller of the Currency (‘OCC’) pursuant to the National Bank Act (‘NBA’).” Id., at 1109. Because the district court found that the claims were preempted, it granted the defense motion and dismissed the class action complaint.

After noting that Congress did not expressly preempt state laws in this area, _Montgomery_¸ at 1109, the district court turned to whether “field preemption” existed or whether the court could “imply preemption” to the class action claims, id., at 1109-10. It noted that “The National Bank Act of 1864 was enacted to protect national banks against intrusive regulation by the States.” Id., at 1110 (citations omitted). And under established case law, “state attempts to control the conduct of national banks are void if they conflict with federal law, frustrate the purposes of the [NBA], or impair the efficiency of national banks to discharge their duties.” Id. (citation omitted). Defense attorneys argued that the claims in the class action complaint were preempted by 12 C.F.R. § 7.4002, which expressly authorizes banks to “impose charges and fees” as described therein. Id., at 1111. Under the Bank’s theory, because federal regulations authorize banks to charge fees, federal law occupies the field and “it is up to the OCC, not private plaintiffs, to determine whether a bank has properly weighed the discretionary factors set forth in Section 7.4002 when setting the fee amounts.” Id., at 1112. Plaintiff’s lawyer countered that preemption is disfavored, particularly as it concerns the “historic police powers of the States” to protect consumers. Id., at 1112-13 (quoting Smiley v. Citibank, 11 Cal.4th 138, 148 (Cal. 1995), aff’d, 517 U.S. 735). Plaintiff also argued that the class action’s “failure to disclose” allegations are not preempted by the NBA, id., at 1113.

Class Action Court Decisions Uncategorized

ADEA Class Action Defense Cases-Breen v. Peters: District of Columbia Federal Court Denies Motion To Add 20 New Plaintiffs To ADEA Class Action And Denies Former Plaintiff’s Motion To Rejoin Class Action

Motion to Intervene in Class Action under Age Discrimination in Employment Act (ADEA) Denied because of Failure to Comply with Statutory Deadline for Filing Notice of Intent to Sue and Former Plaintiff’s Motion to Rejoin Class Action Fails as Time-Barred District of Columbia District Court Holds

Plaintiffs, air traffic controllers, filed a putative class action against their federal employer alleging violations of the Age Discrimination in Employment Act (ADEA), following a February 2005 work force reduction that would, and did, result in their termination in October 2005. Breen v. Peters, 529 F.Supp.2d 24, 2008 WL 62626, *1 (D.D.C. 2008). Plaintiffs bypassed the administrative complaint process, provided the requisite 30-day notice of intent to sue, see 29 U.S.C. § 633a(d), and in March 2005 filed the class action. Id. Plaintiffs subsequently moved to join 20 individuals as named plaintiffs, and the 20 individuals simultaneously moved for leave to intervene; additionally, one plaintiff dismissed from the class action at his request, filed a motion to be reinstated as a party plaintiff. Id. Oddly, the class action complaint defined an 834-person class by name, attaching as an exhibit a list of each of the individuals on whose behalf the putative class action had been filed. Over the course of the litigation, some class members were added and others were dismissed; however, the 20 individuals seeking leave to intervene were never part of the putative class. Id. Defense attorneys opposed each of these motions, id. The district court denied the motions.

With respect to the 20 individuals, defense attorneys argued that they should be denied leave to join the class, either as named plaintiffs or by intervention, because they failed to comply with the statutory filing deadlines for bringing an ADEA claim. Plaintiffs’ conceded this point, but argued, in essence, that since there were more than 800 members of the putative class, what’s another 20? Breen, at *1. The federal court found unpersuasive the argument that the 20 should be permitted to piggy-back on the timely claims filed by or on behalf of the members of the putative class: The ADEA expressly requires that notice of intent to sue be filed with the Equal Employment Opportunity Commission within 180 days of the allegedly unlawful act, see 29 U.S.C. § 633a(d), and while this deadline is not jurisdictional and may, under appropriate circumstances, be deemed tolled, “a court should use its equitable power to toll a statutory deadline only in extraordinary and carefully circumscribed circumstances.” Id., at *2. As the moving parties, the 20 individuals bore the burden of persuaded the district court that the statutory deadline had been equitably tolled, but they failed to meet that burden, id. Indeed, they offered no facts in support of their motion but, rather, “argue[d] that they should be treated as having vicariously met the statutory filing deadline, because several hundred plaintiffs in the case did provide timely notice to the defendants of their intent to sue under the ADEA in compliance with 29 U.S.C. § 633a(d).” Id. They argued defendants would not be prejudiced by adding 20 more class members, but they did not counter the argument that they simply sat on their rights as the statutory deadline passed, id. Accordingly, the district court refused the motions seeking to add the 20 individuals to the class action. Id., at *3.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Mills v. Foremost: Eleventh Circuit Reverses District Court Dismissal Of Class Action Complaint Alleging Underpayment Of Policy Benefits Holding Plaintiffs Possess Standing And Should Be Allowed To Conduct Discovery

District Court Erred in Holding Plaintiffs Lacked Standing to Prosecute Class Action Complaint and in Ruling on Suitability of Complaint for Class Action Treatment at the Pleading Stage of the Litigation Eleventh Circuit Holds

Plaintiffs filed a class action lawsuit in Florida state court against their mobile home owner’s insurance carrier, Foremost Insurance, for underpayment of damages caused by hurricanes, and defense attorneys removed the class action to federal court. Mills v. Foremost Ins. Co., 511 F.3d 1300, 2008 WL 45806, *1 (11th Cir. 2008). The class action complaint alleged that plaintiffs tendered a claim to Foremost for hurricane damages, but that “Foremost failed to compensate the Millses for contractors’ overhead and profit charges, and for state and local sales taxes on materials, incurred by the Millses in having their hurricane-damaged property repaired or replaced.” Id. The Eleventh Circuit referred to these unpaid items as “Withheld Payments,” see id. n.2. Before either side filed a motion concerning class action certification, defense attorneys moved to dismiss the class action on the ground “that class action treatment was inappropriate because common legal or factual questions would not predominate over individual issues.” Id. The district court granted the motion to dismiss on the ground that plaintiffs lacked standing to prosecute the class action claims, id. Plaintiffs appealed dismissal of the class action, and the Eleventh Circuit reversed.

The district court dismissed the class action based on its conclusion that, in order to have standing to prosecute the class action, plaintiffs had to satisfy three “preconditions” set forth in the insurance policy: “(1) they must complete the repairs or replacement of the damaged property; (2) they must actually incur overhead, profit, and sales tax in connection with the repairs or replacement; and (3) they must make a further claim for any ‘additional costs’ (including overhead, profit, and sales tax) incurred in repairing or replacing the damaged property.” Mills, at *1. Because the class action complaint sought damages for Withheld Payments, the district court reasoned that plaintiffs themselves would not be entitled to such damages unless they met these preconditions. Because plaintiffs “failed to allege that they had completed the repairs or replacement and made a claim for such repair or replacement costs,” the district court held that they lacked standing to prosecute the complaint either individually or as a class action. Id. The district court further held that class action treatment would be inappropriate because “the individual inquiry of the facts surrounding the property damage claims of thousands of Foremost policy holders under thousands of separate insurance policies would predominate and overwhelm any common issue.” Id., at *2. Accordingly, it granted the defense 12(b)(6) motion to dismiss the class action complaint, id.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re American Home Mortgage: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Eastern District Of New York

Judicial Panel Grants Defense Request, Over Plaintiffs’ Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees With Defense that Eastern District of New York is Appropriate Transferee Court Nineteen (19) class action lawsuits – 18 in New York and one in Florida – were filed against American Home Mortgage Investment Corp. and various other defendants, including Citigroup Capital Markets, alleging violations of federal securities laws.

Class Action Court Decisions Multidistrict Litigation Uncategorized