Arbitration Class Action Defense Cases-Dale v. Comcast: Eleventh Circuit Holds Class Action Arbitration Waiver Unenforceable And Reinstates Class Action By Subscribers Against Comcast

Class Action Waiver in Arbitration Provision Substantively Unconscionable “to the Extent it Prohibits the Subscribers from Bringing a Class Action Alleging State Law Claims” and Entire Arbitration Clause Fails Because Class Action Waiver “Cannot be Severed from the Agreement” Eleventh Circuit Holds

Plaintiffs filed a class action against their cable television service provider, Comcast, in Georgia state court alleging that it improperly passed through to customers franchise fees based on estimated revenue instead of the actual franchise fees paid local governments as allowed by the Cable Communications Policy Act of 1984, and that these estimates resulted in overcharges to subscribers. Dale v. Comcast Corp., 498 F.3d 1216, 1217-18 (11th Cir. 2007). Defense attorneys removed the class action to federal court, and then moved to compel arbitration and dismiss the class action complaint based on the mandatory arbitration clause (that included a class action waiver) contained in the subscriber agreements, id., at 1218. The “Mandatory & Binding Arbitration” provision permits either party to elect arbitration and “contains a class action waiver clause prohibiting subscribers from bringing claims on a class action or consolidated basis,” expressly providing that “[a]ll parties to the arbitration must be individually named” and that the parties shall have “no right or authority for any claims to be arbitrated or litigated on a class-action or consolidated basis.” Id. Plaintiffs’ lawyer argued that the class action waiver was unconscionable; the district court disagreed and granted the defense motion to compel arbitration and dismiss the class action complaint. Id. The Eleventh Circuit reversed.

It is well established that the enforceability of an arbitration clause is determined based on state law. Dale, at 1219 n.2. This is true because the Federal Arbitration Act (FAA) requires that federal court look to state law governing contracts generally (not arbitration agreements specifically) to determine the validity and enforceability of an arbitration agreement, id., at 1219 (citation omitted). Accordingly, the issue on appeal was “whether the Arbitration Provision’s class action waiver is unconscionable under Georgia law and thus unenforceable as a matter of law.” Id. Georgia law recognizes both procedural and substantive unconscionability, and the Circuit Court focused on substantive unconscionability of the class action waiver. Id.

Arbitration Class Action Court Decisions Uncategorized

Class Action Defense Cases-Murphy v. Check ‘N Go: California Appellate Court Upholds Trial Court Order That Class Action Waiver Rendered Arbitration Clause Unenforceable

Class Action Waiver Unconscionable and Contractual Provision Requiring Arbitrator to Determine Enforceability of Class Action Waiver and Arbitration Provision also Unconscionable California Court Holds

Plaintiff filed a class action lawsuit against his employer, a payday lending company, for violations of state labor laws alleging “failure to pay…overtime…, accurate itemized wage statements, adequate meal and rest periods, and wages upon termination.” Murphy v. Check ‘N Go of Cal., Inc., ___ Cal.App.4th ___, 67 Cal.Rptr.3d 120, 2007 WL 3016414, *1 (Cal.App. 2007). Defense attorneys moved to compel arbitration and dismiss the class action complaint on the grounds that plaintiff had signed a “Dispute Resolution Agreement” that included an arbitration provision and a class action waiver, _id._ The trial court refused to compel arbitration, concluding that the class action waiver rendered the arbitration agreement unconscionable, _id._ Defense attorneys appealed, contending that the class action waiver is not unconscionable and that whether the class action waiver was unconscionable should be decided by the arbitrator, not by the trial court. _Id._ The Court of Appeal rejected the defense arguments and affirmed the trial court order.

Plaintiff spent 7 years as a “salaried retail manager” for defendant; her class action complaint alleged that defendant misclassified salaried retail managers as exempt employees and thus failed to pay overtime, failed to provide accurate wage statements, failed to provide required meal and rest periods, and failed to provide wages due on termination. Murphy, at *1. The class action complaint alleged that every employee had to sign the arbitration agreement, which covered “all claims arising from or relating to plaintiff’s employment,” including any claim that the arbitration agreement was “substantively or procedurally unconscionable.” Id. As noted above, the arbitration agreement contained a class action waiver, requiring that any dispute be maintained as an individual action only, id. Defense attorneys moved to dismiss the class action complaint and compel arbitration, arguing in part that the agreement expressly vests in the arbitrator the power to decide whether the class action waiver is unconscionable. Id., at *2. The Court of Appeal summarized the trial court’s order at page *2 as follows: “the court determined that : (1) it had the power to rule on the unconscionability issues; (2) the parties’ agreement…was a contract of adhesion; (3) the agreement’s class action waiver was substantively unconscionable under Discover Bank v. Superior Court (2005) 36 Cal.4th 148…; (4) the agreement’s provisions for arbitration of unconscionability issues and pre-existing claims were also substantively unconscionable; and (5) the unconscionability terms would not be severed from the agreement.”

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

FDCPA Class Action Defense Cases-Evory v. RJM Acquisitions: Seventh Circuit Consolidates Class Action And Individual Lawsuits To Resolve Nine Difficult FDCPA Questions With Direct Impact On FDCPA Class Actions

Using Consolidated Individual and Class Action Lawsuits Alleging Various Violations of the Federal Fair Debt Collection Practices Act (FDCPA), Seventh Circuit Resolves Nine Issues of Recurring Concern Including Debt Collection Communications with Lawyers for Consumers

The Seventh Circuit consolidated for decision four class action and individual lawsuits brought under the federal Fair Debt Collection Practices Act (FDCPA) “that present nine questions…, several of which have engendered considerable controversy at the circuit level and even some circuit splits.” Evory v. RJM Acquisitions Funding LLC, ___ F.3d ___ [Slip Opn., at 3] (7th Cir. October 23, 2007). Two of the consolidated cases were filed as putative class action lawsuits, but the issues addressed by the Seventh Circuit frequently arise in FDCPA class action litigation. The nine questions are: (1) the FDCPA notice requirements apply if the consumer is represented by legal counsel; (2) whether the FDCPA prohibition against “harassing, deceptive, and unfair practices in debt collection” applies to communications with a debtor’s lawyer and, if so, (3) whether the applicable standard for determining if such a violation occurred is the same if made to a lawyer as if made to the debtor; (4) whether the FDCPA prohibits debt collectors from including settlement offers in a debt collection letter and, if not _per se_ unlawful, (5) whether it matters if the offer is made to a lawyer rather than directly to a debtor; (6) whether a safe harbor exists for debt collectors accused of violating § 1692e based on settlement offers and, if so, (7) the evidence required to establish that a settlement offer violates that statute; and finally, (8) “[w]hether the determination that a representation is or is not false, deceptive, or misleading under section 1692 is always to be treated as a matter of law,” and, if not, (9) whether the court may nonetheless dismiss a claim under § 1692e “on the ground that the challenged representation was, as a matter of law, not false or misleading.” _Id._, at 3-4.

The Seventh Circuit held as follows. First, that the notice requirements apply regardless of whether the debtor is represented by counsel because it would be “odd if the fact that a consumer was represented excused the debt collector from having to convey to the consumer the information to which the statute entitles him.” Evory, at 6. Second, that while lawyers are “less likely to be deceived,” the FDCPA prohibits debt collectors from using “any unfair or unconscionable means to collect or attempt to collect any debt” and there is no reason to “immuniz[e] practices forbidden by the statute when they are directed against a consumer’s lawyer.” Id., at 7. However, the Circuit Court held that the standard generally applicable for determining violations of the FDCPA – viz., whether the representation would mislead an “unsophisticated consumer” – does not apply to communications with lawyers, id., at 7-8; rather, the Seventh Circuit held “that a representation by a debt collector that would be unlikely to deceive a competent lawyer, even if he is not a specialist in consumer debt law, should not be actionable,” id., at 9. But this is not true for statements that are false or misleading, because “[a] false claim of fact…may be as difficult for a lawyer to see through as a consumer.” Id., at 9. Representations that are false or misleading – that is, where the lawyer “might be unable to discover the falsity of the representation without an investigation that he might be unable, depending on his client’s resources, to undertake” – are actionable irrespective of whether they are made to the debtor or to the debtor’s counsel. Id., at 9-10.

Class Action Court Decisions FDCPA Class Actions Uncategorized

Class Action Defense Cases-In re TJX: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In District of Kansas

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Rejects Plaintiffs’ Requests to Transfer Class Actions to California, Illinois, Massachusetts or Nevada Six class action lawsuits were filed against The TJX Companies alleging violations of the Fair and Accurate Credit Transactions Act (FACTA). In re The TJX Cos., Inc., Fair & Acc. Credit Trans. Act (FACTA) Litig., ___ F.Supp.2d ___, 2007 WL 2602045, *1 (Jud.

Class Action Court Decisions Multidistrict Litigation Uncategorized

UPS Class Action Defense Cases-Barber v. United Parcel Services: Alabama Federal Court Grants Defense Motion For Judgment On The Pleadings In Breach Of Contract Class Action Based On FAAAA Preemption And Statute Of Limitations

Injunctive Relief Claims in Class Action Alleging Breach of Contract for Shipping Services Preempted by Federal Aviation Administration Authorization Act (FAAAA) and Contract Claims Time-Barred under Interstate Commerce Act Alabama Federal Court Holds

Plaintiff Barber Auto Sales filed a putative class action against United Parcel Services for breach of contract, alleging that it overcharged customers for shipping services. Barber Auto Sales, Inc. v. United Parcel Services, Inc., 494 F.Supp.2d 1290, 1291 (N.D. Ala. 2007). Defense attorneys moved for judgment on the pleadings, arguing that the Federal Aviation Administration Authorization Act (FAAAA) preempted the class action claim for equitable relief, and that the breach of contract claims were time-barred under the Interstate Commerce Act. The district court granted the defense motion and dismissed the class action.

Barber and UPS entered into a shipping contract under which the rates charged by UPS would vary “based upon a number of factors including the level of service provided and the weight and size of the shipment.” Barber, at 1291. The contract also provided that UPS would charge the greater of the “actual weight” or the “dimensional weight.” Id. Because the contract permitted plaintiff to “self-select” the “level of service and weights and sizes of the packages it ships and by which it is charged for UPS services,” UPS was permitted to audit the shipments to insure that plaintiff was not under- or over-charged. Id. Further, the contract required plaintiff to dispute any shipping charges within 180 days of its receipt of the relevant invoice. Id., at 1291-92.

Plaintiff’s class action complaint alleged that UPS breached the terms of the shipping contract by manipulating the audit process “so that it could improperly invoice plaintiff increased shipping charges based on false dimensions.” Barber, at 1292. The putative class action sought “(1) monetary damages for breach of contract, (2) an order voiding all contracts ‘to the extent that [UPS] assessed improper increased shipping charge corrections’ on packages; and (3) an injunction prohibiting UPS from assessing improper shipping charges and requiring UPS to conform its practices to comply with the terms and conditions and courses of dealing between the parties.” Id.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Georgia-Pacific v. Carter: Arkansas Supreme Court Reverses Certification Of Nuisance Class Action Against Georgia-Pacific Holding That Common Issues Did Not Predominate So Class Action Treatment Was Inappropriate

Class Action Complaint Asserting Toxic-Torts Mass Action by Property Owners for Private Nuisance did not Warrant Class Action Certification because Individual Issues would Necessarily Predominate over Common Issues of Fact or Law Arkansas Supreme Court Holds

Plaintiffs filed a class action lawsuit in Arkansas state court against Georgia-Pacific and the City of Crossett seeking “damages and injunctive relief arising out of vapors, gasses, odors, and other forms of hazardous, noxious, toxic and/or harmful substances and contamination issued and emitted from the industrial wastewater treatment system that the defendants…have operated throughout the West Crossett community over a period of many years, and which harmful substances and contamination have migrated through the air to and into the property, homes and persons of the plaintiffs, where such substances and contamination have occasioned injury, harm and inconvenience.” Georgia-Pacific Corp. v. Carter, ___ S.W.3d ___ [Slip Opn., at 2] (Ark. October 11, 2007). The class action complaint alleged theories of negligence, gross negligence, nuisance, trespass, strict liability and damages, additionally sought injunctive relief. _Id._ Plaintiffs moved for class action certification of a class of property owners; defense attorneys argued class action treatment was not warranted in part because common issues did not predominate over individual issues and a class action was not the superior means of resolving the dispute. _Id._, at 1-2. The circuit court “certified for class-action treatment ‘the plaintiffs’ private nuisance claims against G.P.’” but “held in abeyance” whether to certify a class action against the City. _Id._, at 2-3. Defense attorneys appealed. The Arkansas Supreme Court reversed, holding that class action treatment was inappropriate.

The Arkansas Supreme Court noted that “in order for a class-action suit to be certified, the party seeking certification must establish each of the following six factors: (1) numerosity; (2) commonality; (3) predominance[;] (4) typicality; (5) superiority; and (6) adequacy.” Georgia-Pacific, at 6 (citation omitted). The Court disagreed with defense arguments that the circuit court failed to consider the predominance requirement, holding that it “specifically found” that predominance had been met. Id., at 6-7. It agreed, however, that class action certification was inappropriate. Arkansas “distinguish[es] between class actions involving mass-tort claims and toxic-tort claims,” id., at 8; “mass-tort actions present unique certification problems because they generally involve numerous individual issues as to the defendant’s conduct, causation, and damages,” id., at 9. These concerns are not as significant when the injuries arise from a “single, catastrophic event” – what the Arkansas Supreme Court described as a “mass-accident” case, as opposed to injuries that arise from “a series of events occurring over a considerable length of time and under different circumstances,” which the Court described as “toxic-tort or products-liability” cases, id., at 9.

Certification of Class Actions Class Action Court Decisions Uncategorized

FedEx Class Action Defense Cases-In re FedEx Ground: Indiana Federal Court Certifies Kansas Class Action Under Rule 23(b)(3) And Nationwide ERISA Class Action Under Rule 23(b)(2) In Labor Law Class Action By Drivers Against FedEx

Kansas Class Representatives in Labor Law Class Action by Drivers Against FedEx Adequately Established Rule 23(b)(3) State-Wide Class Action for Misclassification of Drivers under Kansas Labor Laws and for Common Law Claims Against FedEx, and Rule 23(b)(2) Nationwide Class Action for Denial of ERISA Benefits Indiana Federal Court Holds

In 2005, the Judicial Panel on Multidistrict Litigation transferred numerous class action lawsuits to the Northern District of Indiana pursuant to 28 U.S.C. § 1407; ultimately, the MDL docket included 56 class action lawsuits filed in 30 states alleging that FedEx improperly classified drivers as independent contractors rather than employees and thus failed to pay wages due under state and federal wage statutes and failed to pay benefits due under ERISA. In re FedEx Ground Package Sys., Inc., Employment Prac. Litig., ___ F.Supp.2d ___ [Slip Opn., at 1-2] (N.D. Ind. October 15, 2007). The Kansas plaintiffs moved the federal court to certify a class action on their behalf, as well as a nationwide class action on behalf of the ERISA class, _id._, at 1. Defense attorneys opposed class action treatment, and submitted three expert reports purporting to show (1) “that FedEx Ground workers prefer to be independent contractors by a 52% to 20% margin,” _id._, at 8, (2) “that FedEx Ground delivery drivers are operating a business,” _id._, at 15, and (3) that the workers are independent contractors because there are “important variations in the contractors’ work,” _id._, at 20. Plaintiffs objected to the federal court considering these expert reports in deciding whether to certify a class action, and moved to strike the reports under Federal Rule of Evidence 702. _Id._, at 1-2. The district court denied plaintiffs’ motion to strike, but agreed that class action treatment was warranted.

The district court explained that the Kansas plaintiffs challenged the FedEx practice “of labeling its Ground and Home Delivery division drivers as independent contractors.” FedEx, at 22. According to the class action allegations, “the FedEx Operating Agreement signed by all FedEx drivers actually reserves to FedEx the right to exercise pervasive control over the method, manner, and means of the drivers’ work,” including “the drivers’ appearance and behavior, their pay and rates charged to customers, the vehicle they use and its appearance, their route and the number of packages they deliver each day, their delivery methods and mode of customer service, their hours of work, and their opportunity to increase their earnings.” Id., at 22-23. Class action treatment is further warranted, plaintiff argued, because “FedEx has a categorical policy of classifying its drivers as independent contractors” and because putative members of the proposed class action “share the same job title, signed the same nonnegotiable Operating Agreement, are paid under the same compensation formula, wear the same uniform, drive FedEx approved trucks bearing the FedEx logo, work exclusively for FedEx, and are all similarly integrated into FedEx’s operations.” Id., at 23. The class action sought rescission of the operating agreement and a declaration that defendant’s practices violated Kansas labor laws, id., at 30. Defense attorneys argued against class action treatment by arguing that numerous individualized factual inquiries exist, id., at 23.

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

Class Action Defense Cases-Asher v. Baxter International: Seventh Circuit Dismisses Appeal From Court Order Refusing To Certify Class Action As Untimely

Rule 23(f) Requires Plaintiffs Seek Interlocutory Review from First Denial of Motion for Class Action Certification because 10-Day Window for Appeal does not Commence with Every Denial of such a Motion First Seventh Circuit Holds

Plaintiffs filed six securities fraud class action lawsuits against Baxter International. Asher v. Baxter Int’l Inc., 505 F.3d 736 [Slip Opn., at 1] (7th Cir. 2007). The district court granted a defense motion to dismiss the consolidated class action lawsuits based on the “safe harbor” provision for forecasts and other forward-looking statements created by the Private Securities Litigation Reform Act of 1995 (PSLRA), id., but the Seventh Circuit reversed, holding that the district court erred in dismissing the class action complaint based on the allegations in the complaint. See Asher v. Baxter Int’l Inc., 377 F.3d 727 (7th Cir. 2004). It was the Seventh Circuit’s expectation “that discovery sufficient to make a prompt decision about the safe harbor would follow [the] opinion, for the safe harbor is supposed to be applied at an early stage.” Asher, at 2. Instead, the litigation devolved into “extended wrangling about who should be the ‘lead plaintiff’ under the 1995 Act, and thus which law firm would control the plaintiffs’ side of the litigation.” Id. In the face of the infighting, “the district court eventually held that none of the persons proposed as lead plaintiffs is satisfactory and that the suit therefore cannot proceed as a class action.” Id. The motions panel for the Seventh Circuit permitted plaintiffs to file an interlocutory appeal under FRCP Rule 23(f) from the denial of class action treatment, id., but the Circuit Court dismissed the appeal as untimely, id., at 10.

The Seventh Circuit explained at page 2 that the purpose of designating “lead plaintiffs” in class actions is “to counteract the dominance of lawyers over class-action suits.” Asher, at 2 (italics added). Specifically, “[T]he district judge should select a representative with a financial stake large enough to make monitoring of counsel worthwhile, and with the time and skills needed to make monitoring productive. The idea is that securities suits then will proceed in the interest of investors rather than the lawyers who appoint themselves to prosecute these actions.” Id. (italics added). (The Circuit Court’s observation and criticism may have been influenced by the criminal indictment of several securities fraud class action plaintiff lawyers – including Melvyn Weiss, David Bershad, Steven Schulman and William Lerach – most of whom have pleaded guilty to paying illegal kickbacks to individuals to serve as “lead plaintiffs” in securities fraud class action lawsuits.) According to the Seventh Circuit, “The principal substantive questions on appeal are (a) whether the City of Fayetteville Firemen’s Pension and Relief Fund (‘the Fund’) is unsuitable as a lead plaintiff because it learned about Baxter International’s supposed wrongs from a securities lawyer rather than from a business executive, and (b) whether ‘no one’ can be the answer to the question ‘who is the best representative of investors’? Perhaps, when all potential lead plaintiffs have shortcomings, the district judge must choose the least bad of a mediocre lot; after all, the 1995 statute refers to ‘the most adequate plaintiff’ among many, without setting a floor.” Asher, at 2 (italics added). While a district court may ensure “minimum standards of adequacy” under “adequacy” test of Rule 23(a)(4), in this case the lower court never made such an inquiry. Id., at 2-3.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Depo-Provera: Judicial Panel On Multidistrict Litigation (MDL) Denies Plaintiff’s Motion To Centralize Class Action Litigation

Judicial Panel Agrees with Defense that Pretrial Coordination of Individual Lawsuits with Class Action not Warranted Three lawsuits – two by individuals filed in California and one putative class action filed in New Jersey – were brought against Pfizer advancing products liability claims. In re Depo-Provera Products Liab. Litig., 499 F.Supp.2d 1348, 1348-49 (Jud.Pan.Mult.Lit. 2007). Plaintiffs’ lawyers in the two California actions filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization with the class action pursuant to 28 U.

Class Action Court Decisions Multidistrict Litigation Uncategorized

FACTA Class Action Defense Cases-Ehrheart v. Lifetime Brands: Pennsylvania Federal Court Denies Defense Motion To Dismiss FACTA Class Action Because Class Action Complaint Adequately Alleged Injury And Willful Misconduct

Allegations in Class Action Complaint that Defendant had been “Repeatedly Informed” of FACTA’s Requirements but Failed to Timely Comply Sufficient to Establish “Willful” Violation of FACTA so as Defeat Rule 12(b)(6) Motion to Dismiss Pennsylvania Federal Court Holds

Plaintiff filed a class action against Lifetime Brands for violating the federal Fair and Accurate Credit Transactions Act (FACTA). Ehrheart v. Lifetime Brands, Inc., 498 F.Supp. 753, 754 (E.D. Pa. 2007). The class action complaint alleged that defendant “willfully” failed to redact credit card information from electronically printed customer receipts, id. Defense attorneys moved to dismiss the class action for failure to state a claim, arguing that plaintiff had not pleaded injury in fact and that defendant had not acted willfully, id. The district court disagreed with the defense and denied the motion, holding that the class action complaint adequately pleaded claims under FACTA.

Recognizing that it was entitled to consider exhibits to the class action complaint in ruling upon the defense Rule 12(b)(6) motion, and that it need not accept as true “bald allegations” or “legal conclusions,” Ehrheart, at 755, the district court first held that a claim under FACTA does not require proof of identity theft. The class action alleged that defendant gave plaintiff credit or debit card receipts that violated FACTA because they contained more than the last five digits of card and/.or the expiration date of her credit card. Id. That is all that is required: “FACTA does not require that a plaintiff have suffered actual monetary damages in order to sue for violation of the Act” but, rather, provides for statutory damages irrespective of whether any actual injury is suffered. Id., at 755-56. Accordingly, the court rejected defense arguments challenging the class action complaint for failure to allege actual injury.

Class Action Court Decisions FCRA Class Actions Uncategorized