Discovery Class Action Defense Issues-Qualcomm v. Broadcom: California Federal Court Sanctions Plaintiffs’ Lawyers And Refers Six Lawyers To California State Bar For Disciplinary Proceedings For Withholding Electronic Discovery

Following Trial in Patent Infringement (Not Class Action) Lawsuit, California Federal Court Grants Defense Post-Trial Motion for Sanctions because of Plaintiff’s Misconduct in Intentionally Withholding Relevant Documents and Affirmative Misrepresentations to the Court and Opposing Party

In a decision important in class action and non-class action cases alike, a California federal court imposed sanctions yesterday on plaintiff and 6 of plaintiffs’ lawyers for failing to provide discovery and referred plaintiffs’ lawyers to the California State Bar. Qualcomm Inc. v. Broadcom Corp., ___ F.Supp.2d ___ (S.D.Cal. January 7, 2007) [Slip Opn., at 1-3]. The underlying lawsuit was not a class action but a patent infringement case filed by Qualcomm against Broadcom in October 2005; Broadcom filed a counterclaim in December 2006 and pleaded as an affirmative defense that the patents were not enforceable “due to waiver” and predicated its waiver claim “on Qualcomm’s participation in the Joint Video Team (‘JVT’) in 2002 and early 2003.” _Id._, at 3. Defense attorneys sought discovery concerning the JVT, _id._, but at trial testimony from a Qualcomm witness revealed that certain emails had not been produced as requested, _id._, at 1. At the conclusion of the trial, defense attorneys moved to sanction Qualcomm and its counsel for “fail[ing] to produce tens of thousands of documents that Broadcom had requested in discovery.” _Id._ The district court granted the motion in part, sanctioning Qualcomm and 6 of its lawyers and referring those 6 attorneys to the California State Bar for disciplinary proceedings.

While this case does not involve a class action lawsuit, the lessons to be learned from it are applicable equally to class action and non-class action lawsuits. In summarizing the factual background underlying the motion, the federal court noted that defense attorneys had used “a variety of discovery devices” to obtain information on Qualcomm’s participation in the JVT, including requests for production, interrogatories, and “multiple Rule 30(b)(6) deposition notices.” Slip Opn., at 3-4. The court observed at page 4 that “[o]n their face, Qualcomm’s written discovery responses did not appear unusual,” and provided examples thereof, see id., at 4-5. Qualcomm’s responses to the deposition notices, however, “were more troubling.” Id., at 5. For example, Qualcomm’s “most knowledgeable person” about the JVT was prepared for her deposition by plaintiff’s lawyers, but “Qualcomm did not search her computer for any relevant documents or emails or provide her with any information to review,” and she “testified falsely that Qualcomm had never been involved in the JVT.” Id., at 6 (italics added). After defense attorneys impeached the witness with documents showing Qualcomm’s involvement in the JVT, plaintiff’s lawyers “agreed to provide another Rule 30(b)(6) witness.” Id. Once again, however, Qualcomm failed to search the deponent’s computer for relevant documents and failed to “take any other action to prepare him,” id., and like the first witness, the new deponent “testified falsely that Qualcomm only began participating in the JVT in late 2003,” id. (italics added).

Class Action Court Decisions Uncategorized

Class Action Defense Cases-McCoy v. Superior Court: California Court Holds Class Action Labor Law Claims For Waiting Time Penalties Governed By One-Year Limitations Period And Grants Defense Motion To Strike Certain Class Action Claims

California Appellate Court Holds that Class Action Claims Seeking not Wages but Rather Waiting Time Penalties for Late Payment of Wages are Governed by One-Year Statute of Limitations Thus Supporting Defense Motion to Strike Portions of Class Action Complaint Plaintiff filed a class action against his employer, Kimco Staffing Services, which places temporary employees; the class action complaint alleged that Kimco “fail[ed] to timely pay final wages on completion of temporary work assignments in violation of [California] Labor Code sections 201 and 202.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Wyly v. Milberg Weiss: New York Court Holds Members Of Class Action Are Not “Clients” Entitled To Class Action Plaintiff Counsel’s Files Because Absent Class Members Play Limited Role In Class Action Litigation

Absent Class Members Play Limited Role in Class Action Lawsuits and do not Enjoy Traditional Attorney-Client Relationship with Class Action Counsel, so Absent Class Members must Establish Right to Review Files Maintained by Law Firm Representing Plaintiffs in Class Action on a Case-by-Case Basis New York Court Holds

In connection with a motion seeking court approval of a proposed class action settlement, Sam Wyly, an absent class member in the consolidated class action lawsuits, petitioned the trial court for discovery of the law firms representing the plaintiffs in the class actions. Wyly v. Milberg Weiss Bershad & Schulman, LLP, 2007 N.Y. Slip Opn 10506, *1-*2 (N.Y.App. December 27, 2007). The class action complaints had been filed against Computer Associates International (CA) alleging violations of federal securities laws; after numerous class actions had been filed, the law firms of Milberg Weiss Bershad & Schulman, Stull Stull & Brody, and Schiffrin Barroway Topaz & Kessler were appointed as co-lead counsel for plaintiffs and the various class action lawsuits were consolidated for settlement. Id., at *2. A federal court approved the class action settlement in December 2003, id. In October 2004, Wyly advised Milberg Weiss that he believed the class action settlement had been obtained fraudulently by CA based, in part, on “a report in The Wall Street Journal which stated that CA’s outside counsel had in its possession 23 boxes of undisclosed documents demonstrating that CA’s employees, including its general counsel, had engaged in securities fraud.” Id. Milberg Weiss responded that it would not move to reopen the judgment so Wyly filed such a motion himself, id. As part of his motion, Wyly sought the class action plaintiff law firms’ “discovery materials and work product related to the CA actions based upon the attorney-client relationship that existed between himself, as a class member, and [the law firms] as co-lead counsel.” Id., at *2-*3. The trial court granted the discovery request, but the appellate court reversed.

Wyly purchased almost 1,000,000 shares of CA stock, Wyly, at *2, so he held a significant interest in the class action litigation even though he was not a named plaintiff. As part of his motion to reopen the class action lawsuits, Wyly sought access to class counsel’s files “pursuant to their attorney-client relationship.” Id., at *3. (Wyly also sought and obtained discovery of the 23 boxes referenced in The Wall Street Journal, but that is not part of this discussion.) The class counsel law firms refused to permit discovery, and Wyly initiated special proceedings to obtain access to the files on the grounds that he “‘enjoys all privileges and rights pursuant to the attorney-client relationship between [the law firms] and Settlement Class members,’ including the right to access ‘attorney work product that was received, created, or maintained for the benefit of the entire Settlement Class.’” Id. The trial court agreed, relying on Matter of Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn, 91 N.Y.2d (N.Y. 1997). Id., at *4.

Class Action Court Decisions Uncategorized

Circuit City Class Action Defense Cases-In re Circuit City: Judicial Panel On Multidistrict Litigation (MDL) Denies Plaintiff Motion To Centralize Class Action Lawsuits And Permits Class Action Litigation To Proceed Separately

Judicial Panel Denies Plaintiff Request, Objected to by Defense Attorneys and Other Plaintiff’s Counsel, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 because Only Three Class Actions were Pending, Issues were not “Sufficiently Complex and/or Numerous” to Warrant Centralization, and Alternatives Existed to Minimize Risk of Duplicative Discovery or Inconsistent Pretrial Rulings Three class action lawsuits were filed against Circuit City (one in California, one in Florida and one in New York) arising out of defendants’ business practices in charging restocking fees; California plaintiff’s lawyer filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class actions pursuant to 28 U.

Class Action Court Decisions Multidistrict Litigation Uncategorized

FDCPA Class Action Defense Cases-Kalish v. Karp: New York Federal Court Grants Class Action Treatment To Fair Debt Collection Practices Act (FDCPA) Class Action Against Law Firm Despite De Minimis Recovery And Class Counsel’s Limited Success

Plaintiff’s Motion for Class Action Certification of FDCPA (Fair Debt Collection Practices Act) Class Action Against Law Firm Granted by New York Federal Court because the “Win-Loss” Record of Plaintiff’s Counsel did not Defeat his Adequacy to Serve as Class Counsel and because a De Minimis Recovery of $2.50 per Class Member did not Defeat Superiority

Plaintiff filed a class action lawsuit against the law firm of Karp & Kalamotousakis, LLP alleging that it violated the federal Fair Debt Collection Practices Act (FDCPA). Kalish v. Karp & Kalamotousakis, LLP, ___ F.R.D. ___, 2007 WL 4048559, *1 (S.D.N.Y. November 13, 2007). The class action complaint alleged that the law firm violated the FDCPA “by sending a form letter that incorrectly informed her that she could only dispute a debt owed to Defendant in writing.” _Id._ Plaintiff’s counsel sought class action certification; defense attorneys did not dispute liability on the FDCPA claim but challenged both the adequacy of counsel and the superiority of class action treatment. _Id._ The district court rejected the defense arguments and certified the litigation as a class action.

With respect to the adequacy of plaintiff’s lawyer to serve as class counsel, the district court explained that while prior Second Circuit authority directed district courts to consider whether proposed class counsel was “qualified, experienced and generally able” to handle the class action, Kalish, at *1, under the 2003 Amendments to Rule 23, and specifically Rule 23(g), “the court must consider: (a) the work counsel has done in identifying or investigating potential claims in the action, (b) counsel’s experience in handling class actions, other complex litigation, and claims of the type asserted in the action, (c) counsel’s knowledge of the applicable law, and (d) the resources counsel will commit to representing the class,” and may consider as well “any other matter pertinent to counsel’s ability to fairly and adequately represent the interests of the class,” id. n.4. So viewed, the federal court found the defense argument against plaintiff’s counsel wanting because it “mistakenly conflates ‘qualified’ with ‘successful’ and thereupon undertakes a detailed description of some of [counsel’s] losses in court.” Id., at *2. The court found counsel’s “win-loss” record immaterial to a determination of his qualifications because “Rule 23 requires only that class counsel have experience in the particular type of law at issue or that she have demonstrated her competence in other ways, such as through the quality of her submissions to the court.” Id. (citation omitted). The court concluded that counsel was adequate to represent the class, id.

Certification of Class Actions Class Action Court Decisions Uncategorized

UPS Class Action Defense Case-Bates v. UPS: Ninth Circuit En Banc Reverses Panel Opinion Refusal To Decertify Class Action And Affirms Class Action Judgment Against UPS Based On ADA Claim, But Reaffirms That Unruh Act Violation Must Be Reversed

Following Panel Opinion Holding that District Court did not Clearly Err in Finding UPS Violated Federal Americans with Disabilities Act (ADA) by Refusing to Hire Deaf Drivers but that Defense was Correct that Class Action Judgment Based on Violation of California’s Unruh Act Must be Reversed, Ninth Circuit En Banc Overrules Prior Ninth Circuit Authority and Remands Class Action for Further Proceedings on ADA Claim

Plaintiff filed a putative class action in California federal court against United Parcel Service alleging violations of the federal Americans with Disabilities Act (ADA), and California’s Fair Employment and Housing Act (FEHA) and Unruh Civil Rights Act (Unruh Act) because it “categorically exclude[s] individuals from employment positions as ‘package-car drivers’ because they cannot pass a United States Department of Transportation (DOT) hearing standard that does not apply to the vehicles in question.” Bates v. United Parcel Serv., Inc., 465 F.3d 1069, 1073 (9th Cir. 2007) (Bates I). The district court certified the lawsuit as a class action. After a bifurcated trial, the district court ruled against the defense and found that UPS violated the ADA, the FEHA and the Unruh Act. On appeal, defense attorneys argued that “(1) Bates did not establish that any class members are ‘qualified’; (2) UPS satisfied its burden under the business necessity defense of the ADA; (3) the plaintiff class should be decertified; (4) the court’s injunction was an abuse of discretion; and (5) UPS did not violate the FEHA or the Unruh Act.” Id. The Ninth Circuit originally affirmed the judgment as to the ADA claim, reversed the judgment as to the Unruh Act, and refused to reach the FEHA claim finding it unnecessary in light of the fact that affirmance of the ADA claim “is sufficient grounds for affirming the injunction.” Id., at 1093 n.25. Defense attorneys sought and obtained rehearing en banc “to consider the contours of a claim that an employer’s safety qualification standard discriminates against otherwise ‘qualified’ persons with disabilities…, and the showing required of an employer to successfully assert the business necessity defense to use of such qualification under 42 U.S.C. § 12113(a),” Bates v. United Parcel Serv., Inc., ___ F.3d ___ (9th Cir. December 28, 2007) _Bates II_ [Slip Opn., at 16891], and the Ninth Circuit reversed the Panel opinion.

The gravamen of the class action complaint was summarized in our article discussing the original Ninth Circuit opinion, which may be found here . In brief, applicants for positions as UPS package drivers must, inter alia, pass the same physical exam that the United States Department of Transportation requires of prospective drivers of commercial vehicles, which includes a “forced whisper” test of the applicants’ hearing. Bates II, at 16892-93. However, the DOT only requires a physical exam of those who will be driving vehicles with a gross weight in excess of 10,000 pounds. UPS, on the other hand, required the exam of all applicants, including the thousands of drivers operating vehicles weighing from 7100 to 9300 pounds. Id., at 16893. The class conceded that UPS may require the physical exam of who drive DOT-regulated vehicles, but argued that its blanket exclusion of deaf applicants violated state and federal laws. Bates I, at 1075. The district court ruled in favor of the class, holding in part that UPS had failed to establish a business necessity defense to its actions. Id.

Class Action Court Decisions Employment Law Class Actions Uncategorized

UCL Class Action Defense Cases-Ticconi v. Blue Shield: California Court Reverses Denial Of Class Action Motion Holding Trial Court Erred In Refusing Class Action Treatment Based on Equitable Defenses To Unfair Competition Law (UCL) Claims Against Insurer

Denial of Class Action Certification Motion Improper in Class Action Case Against Insurer Alleging Violations of State Unfair Competition Law (UCL) because Equitable Defenses of Fraud and Unclean Hands cannot be used to Defeat UCL Claims so Individual Issues Related to such Defenses will not Predominate over Common Issues California Appellate Court Holds

Plaintiff filed a putative class action complaint against his health insurer, Blue Shield of California, alleging inter alia that Blue Shield violated California’s unfair competition law (UCL) and state insurance code “by failing to attach his application to or endorse it on the insurance policy when issued, and later rescinding the policy on the ground he had made misrepresentations in that application.” Ticconi v. Blue Shield of Cal. Life & Health Ins. Co., 157 Cal.App.4th 707, 68 Cal.Rptr.3d 785, 788-89 (Cal.App. 2007). Plaintiff moved the trial court for class action treatment; defense attorneys opposed the class action certification motion on the ground the individual issues related to Blue Shield’s fraud and unclean hands defenses would predominate over common issues. Id., at 789. The trial court agreed with defense counsel and refused to grant class action status. Id. The Court of Appeal reversed, holding that the trial court abused its discretion in denying the class action certification motion because “[e]quitable defenses cannot be used to defeat a UCL cause of action and Blue Shield Life may not raise the defense of fraud based on statements that insureds made in an application for insurance where the application had been neither attached to nor endorsed on the policy when issued,” id. (citations omitted).

According to the class action complaint, plaintiff applied for a short-term health and accidental death insurance policy from Blue Shield. Ticconi, at 789. The application completed by plaintiff “was neither attached to the policy nor endorsed onto it when the policy was issued.” Id. Blue Shield issued the policy, and plaintiff paid the premiums as required, id. During the policy period, plaintiff’s health care bills exceeded $100,000, but upon receiving the bills Blue Shield refused payment and rescinded the policy on the ground that plaintiff “made material misrepresentations in his application for insurance about the condition of his health.” Id. Plaintiff denied this claim, insisting that he “answered truthfully all health questions posed on the policy application” and that “a reasonable investigation would have shown this.” Id. The class action further alleged that Blue Shield violated California law because it failed to attach or endorse a copy of his application to the policy, and Insurance Code section 10113 forbids incorporation of the application by reference, and that even if his statements were false, plaintiff “not bound by any statement made therein because that document had not been attached to or endorsed on the policy when issued.” Id., at 789-90. Plaintiff filed his lawsuit as a class action alleging that Blue Shield similarly “had rescinded a large number of policies that did not have the applications attached to or endorsed on the policies” in violation of Insurance Code sections 10113 and 10381.5, and that as such the rescissions represented an unlawful business practice under the UCL. Id., at 790.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-Wernikoff v. Health Care Service: Illinois Appellate Court Reverses Order Decertifying Class Action But Affirms Summary Judgment As To Plaintiff’s Claims Thus Requiring Appointment Of New Class Representative

In Class Action Lawsuit Alleging Fraud, Trial Court Abused its Discretion in Decertifying Class Action because Subsequent Discovery did not Amount to “Changed Circumstances” Necessary to Support Decertification of Class Action, but Summary Judgment in Favor of Defense Properly Granted because Class Action Representative could not Establish Reliance thus Requiring Appointment of New Class Representative Illinois Appellate Court Holds

Plaintiff filed a class action lawsuit against her insurer, Health Care Service Corporation (dba BlueCross BlueShield of Illinois), alleging common law fraud and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act arising out of the company’s allegedly fraudulent business practices in the setting and revising of its policyholders’ premium rates. Wernikoff v. Health Care Serv. Corp., 877 N.E.2d 11, 13-14 (Ill.App. 2007). Specifically, the class action complaint alleged that defendant “failed to disclose to policyholders the option of reapplying as a new policyholder and, if approved, paying the new business rate premium.” Id., at 14. Plaintiff filed a class action certification motion in 2003, which the trial court granted, id., at 13. In 2006, after the case had been reassigned to a new judge, defense attorneys moved to decertify the class action and for summary judgment; the trial court granted both motions. Id., at 14. The appellate court reversed the order decertifying the class action, but affirmed the order granting summary judgment.

Addressing the order decertifying the class action, the appellate court explained that “an order setting aside an earlier determination of class certification would be proper if clearly changed circumstances or more complete discovery warranted it, rather than mere feelings of error regarding the original certification order.” Wernikoff, at 14 (citing Barliant v. Follett Corp., 74 Ill.2d 226, 231 (Ill. 1978)). An order decertifying a class action is reviewed for abuse of discretion. Id., at 14-15 (citation omitted). Plaintiff argued that the trial court abused its discretion because there were no “changed circumstances” and because the additional discovery did not warrant decertification; defense attorneys countered that more than 24 additional depositions had been taken and that the circumstances had changed. Id., at 15. “Specifically, defendant points to plaintiff’s second deposition, which occurred after the class was certified, in which plaintiff admitted that he knew about the option to reapply to receive the new business rate but chose not to do so for several years. Defendant also points to the fact that the depositions of many policyholders revealed that not all policyholders relied on the ‘standard written materials’ but relied on the statements made in oral communications with defendant’s customer service representatives.” Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

ERISA Class Action Defense Cases-In re RadioShack: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize ERISA Class Action Litigation In Northern District of Texas

Judicial Panel Grants Defense Request, Over Objection of Certain Plaintiffs, for Pretrial Coordination of ERISA Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Concurs with Defense Request to Transfer Class Actions to Northern District of Texas Four class action lawsuits – there in the Northern District of Texas and one in the Eastern District of Texas – were filed against RadioShack and other defendants alleging breach of fiduciary duties under the federal Employee Retirement Income Security Act (ERISA).

Class Action Court Decisions Employment Law Class Actions Multidistrict Litigation Uncategorized

CAFA Class Action Defense Cases-Weber v. Mobil Oil: Tenth Circuit Dismisses Appeal Of Order Remanding Class Action To State Court Holding Class Action Fairness Act (CAFA) Did Not Afford Jurisdiction To Consider Appeal

Order Granting Intervention to New Party Plaintiffs did not “Commence” Class Action for Purposes of Removal Jurisdiction under CAFA (Class Action Fairness Act of 2005) Tenth Circuit Holds

Plaintiffs, owners of royalty interests filed a class action lawsuit in Oklahoma state court against Mobil Oil and Mobil Exploration & Producing, North America: The class action complaint, filed in May 2001, “sought damages for breach of contract, breach of plan unitization, conversion, fraud, breach of fiduciary duties, and for a violation of the Oklahoma Production Revenue Standards Act.” Weber v. Mobil Oil Corp., 506 F.3d 1311, 1312 (10th Cir. 2007). The class action complaint was amended in December 2004 to add Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. as party-defendants, id., at 1313. In September 2005, defense attorneys removed the putative class action to federal court under the Class Action Fairness Act of 2005 (CAFA ). Id. The federal court remanded the class action to state court, and defense attorneys sought leave to appeal the remand order. Id. The Tenth Circuit denied the request, concluding that the class action did not fall within the scope of CAFA and, accordingly, that it lacked jurisdiction to consider the appeal.

As a preliminary matter, the Tenth Circuit noted that the parties agreed that the class action was properly removed to federal court if the Class Action Fairness Act applied. Weber, at 1314 n.4. The original complaint was filed in 2001, but in October 2004 other members of the putative class filed a “similar, though not identical, class action in federal district court against the same two defendants.” Id., at 1313. The federal court class action defined the class more broadly than the state court class action, and it additionally sought certain damages not requested in the state court complaint. Id. In December 2004, the state court class action complaint was amended to add Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. as defendants, neither of which was ever named in the federal court class action. Id. In September 2005, plaintiffs in the federal and state court actions agreed that the class action pending in federal court would be voluntarily dismissed and a petition for leave to intervene filed in the state court class action, id. As part of the intervention motion, the plaintiff-intervenors “sought to assert class claims under its expanded class definition and to assert the additional claims for damages and equitable relief it raised in its federal petition.” Id. The state court granted the motion for intervention, but restricted the intervenors to the claims and class definition asserted in the then-pending state court complaint, id. Based on the granting of the motion for intervention, defense attorneys for Mobil Exploration & Producing, U.S. and Mobil Natural Gas, Inc. removed the class action to federal court, arguing that CAFA provided removal jurisdiction; plaintiffs moved to remand the class action to state court on the ground that CAFA did not apply, and the district court ordered remand. Id.

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