CLASS ACTION DEFENSE BLOG
Welcome to Michael J. Hassen's Blog. Here you will find over 2,000 articles related to class actions.
Trial Court Erred in Certifying Nationwide Class Action Against Merck Arising out of Sale of Vioxx because Class Action Treatment is not Superior to Other Avenues of Redress and because Defense Correctly Argued that Common Questions of Fact or Law do not Predominate New Jersey Supreme Court Holds
Plaintiff – “a joint union-employer Taft-Hartley trust fund” that “acts as a party to benefit contracts, a policy issuer, and a sponsor of health benefit plans that provide prescription drug coverage for its members and beneficiaries” and “is therefore a third-party payor, meaning that it makes payments to pharmaceutical companies for prescription medications for those for whom its benefit plans afford coverage” – filed a putative class action in New Jersey state court against Merck arising out of its manufacture and sale of Vioxx. Int’l Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., Inc., ___ A.2d __, Slip Opn., at 6 (N.J. Sept. 6, 2007). Specifically, the class action complaint alleged that Merck engaged in a “wide-ranging fraudulent marketing scheme” to sell Vioxx, with the class action alleging that Merck “marketed its product as a safer and more effective alternative to other traditional pain medications, thus driving the price of its product substantially higher than the price charged for similar medications.” _Id._, at 6-7. The class action further alleged that Merck continued to make these marketing representations “through an aggressive marketing campaign” after it knew that Vioxx “was neither more effective nor safer than other available products.” _Id._, at 7. Plaintiff filed a motion seeking certification of a nationwide class action against Merck; the trial court rejected defense attorney arguments against class action treatment and granted plaintiff’s motion. _Id._, at 4-5. The New Jersey Supreme Court reversed.
The interest plaintiff had in pursuing a putative nationwide class action is summarized below (see Note). “Central to plaintiff’s class action assertions is its argument that defendant engaged in a fraudulent marketing campaign that induced, or was intended to induce, all third-party payors to accord Vioxx preferred status in their formularies.” Merck, at 12-13. Defense attorneys argued that this “amounts to nothing more than a ‘fraud on the market’ theory that cannot be sustained in accordance with [New Jersey] law.” Id., at 13. The trial court order certifying a nationwide class action was affirmed by the New Jersey Appellate Division, id., at 4-5, but the Supreme Court reversed.
After summarizing New Jersey law on class actions, see Merck, at 14-18, and the findings of the trial court and appellate court on the topics of predominance and superiority, including choice of law, id., at 18-21, the Supreme Court turned to the defense arguments that predominance and superiority were not met, id., at 22. With respect to predominance, the defense conceded that there were “some common questions” in that “[Merck’s] marketing plan and withholding of adverse information did not vary as among potential consumers” and the “facts as they relate to the FDA warning letters or the drug’s eventual withdrawal from the market” were the same. Id., at 22. The Supreme Court explained, however, that in New Jersey the consumer fraud statute does not require a showing of reliance but does require a showing of an “ascertainable loss.” Id., at 23-24. While plaintiff urged the Court to consider generally that Merck’s marketing scheme was the same for all class members, the Supreme Court rejected this limited view of predominance, explaining at pages 26 and 27:
Certification of Class Actions Class Action Court Decisions
Read more...
While the Telephone Consumer Protection Act Prohibits Sending Unsolicited Advertisements via Facsimile, Trial Court Properly Dismissed Class Action Complaint because “Established Business Relationship” Exception Applied California Appellate Court Holds
Plaintiff Catalyst Strategic Design filed a putative class action in California state court against its insurer, Kaiser Foundation Health, alleging violations of the Telephone Consumer Protection Act of 1991 (TCPA) and California’s Unfair Competition Law (UCL) arising out of the insurer faxing an unsolicited advertisement to the company. Catalyst Strategic Design, Inc. v. Kaiser Found. Health Plan, Inc., 153 Cal.App.4th 1328, 1330-31 (Cal.App. 2007). Defense attorneys moved for summary judgment on the ground that it had an “established business relationship” with Catalyst based on their numerous discussions about insurance coverage and, thus, Catalyst is deemed under federal regulations to have consented to receiving the faxed advertisement, id., at 1331. The district court agreed and dismissed the class action. The California Court of Appeal affirmed.
In August 2001, Catalyst Strategic Design contacted Kaiser regarding health insurance for its employees, and provided Kaiser with its fax number so that it could receive written information on Kaiser’s health plans; however, Catalyst did not sign up for insurance coverage with Kaiser at that time. Catalyst, at 1330. “Over the next year and a half, Kaiser contacted Catalyst about a dozen times by phone and in writing, including faxes, to discuss Kaiser’s on-going individual coverage of Catalyst’s president and in the hope of selling coverage to the company’s employees”; in January 2003, Catalyst told Kaiser it no longer intended to buy insurance coverage for its employees, but it did not tell Kaiser to stop contacting it about insurance. Id., at 1331. In May 2004, Kaiser faxed a one-page ad to Catalyst about various health plans: in response, Catalyst filed a class action lawsuit alleging violations of the TCPA, which generally prohibits faxing unsolicited advertisements. Id. The class action complaint also alleged violations of California’s UCL, id.. Based on these facts, defense attorneys argued that Kaiser was entitled to send the fax to Catalyst because they had an “established business relationship” within the meaning of the federal regulations governing the TCPA, id. The district court agreed and dismissed the class action complaint. Id.
Class Action Court Decisions Uncategorized
Read more...
District Court Erred in Awarding Attorney Fees Against Defendant for Removing Class Action Under CAFA (Class Action Fairness Act of 2005) Because even though Basis for Removal was Flawed – that Class Action was “Commenced” when Removed rather than when Filed – Defense had Objectively Reasonable Grounds for its Interpretation of the Statute Seventh Circuit Holds
In an effort to avoid removal to federal court, plaintiffs filed a putative class action in Illinois state court on February 17, 2005: the class action alleged violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act in that defendant Pfizer misrepresented the health risks of using Celebrex and Bextra, and charged more than fair market value for these drugs. Lott v. Pfizer, Inc., 492 F.3d 789, 790-91 (7th Cir. 2007). Defense attorneys removed the class action to federal court on the basis of CAFA, id., at 790, arguing that the action “commenced” when defense attorneys removed the class action to federal court, id., at 791. The district court remanded the class action to state court on the ground that CAFA applied only to class actions filed after CAFA’s effective date, and awarded attorney fees and costs against Pfizer. Id. The defense appealed the award of fees and the Seventh Circuit reversed.
We do not here discuss the unsuccessful arguments made by the defense in support of removal, both under CAFA and under traditional diversity jurisdiction: suffice it to say that the district court remanded the class action to state court based on its conclusion that it lacked subject matter jurisdiction and that the requirements for diversity jurisdiction had not been met – a decision affirmed by the Seventh Circuit in Pfizer, Inc. v. Lott, 417 F.3d 725, 727 (7th Cir.2005), which held that for purposes of CAFA jurisdiction a class action was “commenced” when it was “filed” not when it was “removed,” and that Pfizer had not established diversity jurisdiction. We address here the defense appeal from the award of attorney fees against Pfizer.
Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized
Read more...
Judicial Panel Grants Defense Request, Opposed by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees to Transfer Class Actions to Central District of California as Requested by Defense Two class action lawsuits were filed against Charlotte Russe alleging violations of the federal Fair and Accurate Credit Transactions Act (FACTA) by failing to block certain credit and debit card information from customer receipts. In re Charlotte Russe, Inc.
Class Action Court Decisions FCRA Class Actions Multidistrict Litigation Uncategorized
Read more...
While Defense Failed to Timely Remove Class Action to Federal Court Thereby Necessitating Remand of the Class Action Complaint to State Court, the Class Action Claims are Precluded by SLUSA (Securities Litigation Uniform Standards Act) thus Entitling Defense to Judgment in State Court Illinois District Court Holds
Plaintiff filed a putative class action in Illinois state court against securities brokerage firm Citigroup, as successor in interest to Salomon Smith Barney, seeking damages because it allegedly “disseminated misleading research concerning the value of shares in certain Internet and telecommunications companies, thereby inducing Smith Barney customers like [plaintiff] to hold the shares.” Disher v. Citigroup Global Markets, Inc., 487 F.Supp.2d 1009, 1012 (S.D. Ill. 2007). Defense attorneys removed the class action federal court under the Securities Litigation Uniform Standards Act (SLUSA), but the district court remanded the matter to state court, id. On appeal, the Seventh Circuit reversed, holding that SLUSA applied and required dismissal of the class action complaint, id., at 1012-13 (see Disher v. Citigroup Global Markets, Inc., 419 F.3d 649 (7th Cir. 2005)). The Supreme Court granted certiorari and reversed, holding that district court remand orders of class actions removed under SLUSA are not reviewable on appeal, see Disher v. Citigroup Global Markets, Inc., ___ U.S. ___, 126 S.Ct. 2964 (2006), causing the class action to wind its way back to state court, _id._, at 1013. Once there, defense attorneys again removed the class action to federal court, and the plaintiff again sought remand, _id._ The district court granted the motion finding “procedural defects in removal,” _id._, at 1012, but essentially hands defense victory on the merits by holding that the class action claims are barred by SLUSA and declaring that holding to be law of the case.
After discussing the general rules governing removal, including the burden placed on the party seeking removal to establish federal jurisdiction and the general rule that removal must be sought within 30 days of service of the initial pleading, see Disher, at 1014-15, the district court turned to whether an amended pleading created a basis to support defense removal of the class action, id., at 1015. Defense attorneys “point[ed] to numerous purported orders or other papers supposedly authorizing removal of the claims” in the class action complaint, id., but the district court found each pleading insufficient to support the delayed filing of the notice of removal including (1) that the motions and orders filed in state court authorized removal, see id., at 1015-17; (2) that plaintiff’s amended class action complaint did not trigger a right of removal because even though “the claims alleged in both [plaintiff’s] original complaint and his amended complaint are precluded by SLUSA,” id., at 1018, the fact remained that the defense failed to timely file its notice of removal and the amended class action complaint did not revive the right to remove because it did not alter the basic nature of the allegations, id., at 1019-22; and (3) that the appellate proceedings did not authorize removal of the action to federal court, id., at 1022. Accordingly, the federal court remanded the putative class action to state court, id., at 1023-24.
But while the district court denied the defense effort to maintain the class action federal court, it nonetheless handed the defense a victory on the merits. The federal court concluded at pages 1022 and 1023,
Class Action Court Decisions PSLRA/SLUSA Class Actions Removal & Remand Uncategorized
Read more...
Where Class Action Asserted Claims Under Both Agricultural Worker Protection Act (AWPA) and Fair Labor Standards Act (FLSA), District Court did not Abuse its Discretion in Certifying AWPA “Opt-Out” Class Action After Conditionally Certifying FLSA “Opt-In” Class Action Eleventh Circuit Holds
Plaintiffs, migrant workers hired under the H2-B non-immigrant visa program, filed a class action in Georgia federal court against Eller & Sons Trees alleging violations of the Migrant and Seasonal Agricultural Worker Protection Act (AWPA) and the Fair Labor Standards Act (FLSA). De Leon-Granados v. Eller & Sons Trees, Inc., ___ F.3d ___, 2007 WL 2456206, *1 (11th Cir. August 31, 2007). Plaintiffs sought class action treatment of their AWPA claims, but the district court denied the motion without prejudice; plaintiffs also sought preliminary certification of a class action under the FLSA, which the district court granted. _Id._ After conducting additional discovery, and after receiving only 5 “opt-in” requests from among the 1800 notices sent under the FLSA class action, plaintiffs again sought certification of a class action for the AWPA claims. _Id._ The district court granted the motion and certified a Rule 23(b)(3) “opt out” class action under the AWPA, _id._ Specifically, the district court certified a class action on behalf of more than 1,500 migrant workers admitted to the United States under the H-2B temporary foreign worker visa program, and sub-class of migrant workers who pledged collateral with Eller & Sons’ agents in order to obtain employment. _Id._, at *2. Defense attorneys filed an interlocutory appeal but the Eleventh Circuit affirmed, holding that the district court did not abuse its discretion in granting plaintiffs’ motion for class action treatment.
Eller & Sons is a small Georgia company that provides reforestation and forestry services; most of its employees plant trees throughout the southern U.S. from December through February. Eller hires people from Guatemala, Honduras and Mexico under the H2-B non-immigrant visa program, and is required to pay hourly wages as determined by the State Workforce Agency (SWA). De Leon-Granados, at *1. The class action complaint alleges that Eller was to pay an average hourly rate of $8.32, well above the federal minimum wage rate, but that it failed to do so. Id. The defense objected to class action treatment, arguing that a collective action under the FLSA would be a superior method of addressing the AWPA claims, but the district court disagreed. Id., at *2. The district court further found that plaintiffs had satisfied the requirements for class actions under Rule 23, id. The appellate court reviewed that ruling for abuse of discretion, id.
Defense attorneys first argued that the AWPA claims were premised on violations of the FLSA and “must therefore be adjudicated as an opt-in collective action under 29 U.S.C. § 216(b) instead of an opt-out Rule 23(b)(3) class action.” De Leon-Granados, at *2-*3. Under the FLSA, class members must affirmatively elect to “opt in” to the class action, but under Rule 23(b)(3) “all qualifying class members become party-plaintiffs unless they opt out of the action.” Id., at *3 (citations omitted). After rejecting defense claims that “the workers’ AWPA claims are truly FLSA claims in disguise,” the Eleventh Court concluded that the statutory language of the AWPA indicates Congressional intent to allow such claims to be brought as Rule 23 class actions. Id. The Circuit Court concluded at page *3, “If Congress intended § 216(b) to be the exclusive remedy for violations of the AWPA’s wage payment provisions, it would have also said so.” It therefore held that the district court did not abuse its discretion in certifying an AWPA class action, id. (The author notes that there is case law holding that it is improper to certify “opt in” and “opt out” classes as part of the same action, but it does not appear that defense attorneys asserted this objection.)
Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized
Read more...
Absence of Ability to Recover Attorney Fees Rendered Class Action Waiver and Arbitration Clause Unconscionable Because it would Effectively Insulate Company from Liability for Small-Value Claims Eleventh Circuit Holds
Plaintiffs filed a class action lawsuit in Georgia federal court against their cable television provider, Comcast, alleging violations of the federal Cable Communications Policy Act of 1984 (Cable Act), 47 U.S.C. § 521 et seq., by miscalculating the “pass-through” franchise fees charged customers. Dale v. Comcast Corp., 498 F.3d 1216, 2007 WL 2471222, *1 (11th Cir. 2007). Defense attorneys moved to dismiss the class the action and compel arbitration based on the arbitration clause contained in the subscriber agreements; the district court granted the motion and dismissed the class action. Id. The Eleventh Circuit reversed, concluding the arbitration agreement and class action waiver provision to be unenforceable.
Defense attorneys argued that the class action had to be dismissed because in 2004, either in the “welcome kit” given new subscribers or with the December invoice of existing subscribers, each customer received a “Policies and Procedures” notice that contained a mandatory arbitration clause. Dale, at *1. The arbitration clause contained a class action waiver provision, id., and “Comcast argued the subscribers accepted the Arbitration Provision, including the class action waiver, by their continued subscription to Comcast’s services after receiving the notices,” id., at *2. Plaintiffs argued that the damages suffered by the class in this case were $0.66 every three months, or a total of $10.56 over the four-year class period, and so the class action waiver was substantively unconscionable because “if Comcast’s class action waiver is held valid, they will effectively be denied any remedy.” Id., at *3. Plaintiffs also challenged the arbitration fee structure imposed under the subscriber agreement, which placed on subscribers the financial burden of attorney fees and all costs incurred in the arbitration other than the filing fee and arbitrator’s costs. Id. The district court rejected plaintiffs’ argument that the class action waiver was unconscionable, dismissed the class action, and compelled arbitration of the dispute. Id., at *2.
Arbitration Class Action Court Decisions Uncategorized
Read more...
District Court Erred in Granting Defense Motion to Dismiss Class Action Challenging Advertising of “Light” and “Low Tar” as Expressly Preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA) First Circuit Holds
Plaintiffs filed a class action against Philip Morris and others violations of the state’s unfair and deceptive business practices statutes arising out of its design, marketing and sale of “light” and “low tar” cigarettes, which plaintiffs argued suggested that they were “safer” – i.e., lower in tar and nicotine – than regular cigarettes. Good v. Altria Group, Inc., ___ F.3d ___, Slip Opn., at 2-3 (1st Cir. August 31, 2007). Defense attorneys moved the federal court for summary judgment on the ground that the claims in the class action complaint were preempted by the Federal Cigarette Labeling and Advertising Act (FCLAA), _id._, at 2. The district court agreed the dismissed the class action, but the First Circuit reversed, concluding that the class action claims were not preempted.
Plaintiffs alleged that they had smoked for 15 years. Good, at 2. The class action apparently did not contest that under the “Cambridge Filter Method” test conducted using a machine that “smoked” cigarettes and collected tar and nicotine for weighing, less tar and nicotine was drawn into the filter using “light” or “low tar” cigarettes. Id., at 3. Rather, plaintiffs alleged that a smoker “engages in unconscious behavior that essentially negate” the benefits sought to be achieved by the cigarette filter design, id. The class action claimed that defendants knew of this “compensation” effect yet marketed “light” cigarettes with an intent to deceive smokers into believing that the cigarettes were less harmful, id., at 4. Defense attorneys argued that the FCLAA expressly preempted the class action claims, id., at 5. Alternatively, the defense argued that the class action claims were implicitly preempted by “the efforts of Congress and the [Federal Trade Commission] for 40 years to implement to a national, uniform policy of informing the public about the health risks of smoking,” id. Finally, the defense argued that the state law claims in the class action complaint, brought under the Maine Unfair Trade Practices Act, id. The thrust of Philip Morris’ argument was the FTC’s “comprehensive, nationwide program regulating the disclosure of tar and nicotine yields,” id., at 5, and that tobacco companies have been complying with FTC pronouncements concerning tar and nicotine content of cigarettes, id., at 5-8. Accordingly, the class action constituted, in effect, “a challenge to the FTC’s regulatory scheme,” id., at 8. The district court agreed and dismissed the class action finding that it was expressly preempted by the FCLAA, id., at 8-9.
Class Action Court Decisions Uncategorized
Read more...
Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Rejecting Objection by one Group of Plaintiffs, and Concurs with Request to Transfer Class Actions to District of New Jersey Four putative class action lawsuits were filed (two in California, one in New Jersey and one in Washington) against various Vonage entities challenging defendants’ marketing and sales practices with respect to its internet telephone services, including its “one free month” trial period.
Class Action Court Decisions Multidistrict Litigation Uncategorized
Read more...
Class Action Waiver Rendered Arbitration Clause Unconscionable “Notwithstanding the Availability of Market Alternatives” and Federal Arbitration Act (FAA) does not Preempt California State Court Holding that Class Action Waivers are Unconscionable under California Law
Plaintiffs filed a putative class action in California state court against T-Mobile alleging violations of the state’s unfair business practices statute arising out of the early termination fees charged cellular telephone service customers and the sale of “locked” cellular phones that customers cannot use if they switch to another carrier. Gatton v. T-Mobile USA, Inc., 152 Cal.App.4th 571, 61 Cal.Rptr.3d 344, 346 (Cal.App. 2007). The trial court denied a defense motion to compel arbitration pursuant to the service agreement’s arbitration clause, which included a class action waiver, id., at 346-47. The California Court of Appeal affirmed, holding that “the class action waiver rendered the arbitration provision unenforceable” and that the Federal Arbitration Act (FAA) did not “preempt[] any rule that class action waivers are unconscionable under California law.” Id., at 347. The appellate court therefore affirmed the trial court order, which permitted plaintiffs to prosecute the putative class action in state court. The appellate court’s discussion of the FAA’s impact on class action waivers is contained in a portion of the court’s opinion that, pursuant to California Rules of Court, is not published and therefore many not cited; accordingly, we summarize here only that part of the opinion holding that the class action waiver rendered the arbitration clause unenforceable.
Plaintiffs signed cellular telephone service agreements with T-Mobile, acknowledging that they had “received and reviewed the T-Mobile Terms and Conditions” and that “ All disputes are subject to mandatory arbitration in accordance with paragraph 3 of the Terms and Conditions.” Gatton, at 347. The introductory paragraph of the Terms and Conditions advised people to “carefully read these Terms and Conditions” and to “NOT USE THIS SERVICE OR YOUR UNIT” if they are unwilling to agree to be bound by the provisions contained therein. Id. Section 3 of the Terms and Conditions, entitled “Mandatory Arbitration; Dispute Resolution,” precluded customers from seeking class action relief, id., and the appellate court summarized at pages 347 and 348 that “The terms and conditions incorporated into each of the plaintiff’s agreements included a mandatory arbitration clause including a class action waiver.” The contract required each party to pay for their own attorney fees, and for customers to pay $25 toward the arbitrator’s fee (save for claims of less than $25, in which case T-Mobile would pay for the arbitrator’s fee). Id., at 348, n.3.
With respect to the early termination fees underlying the class action allegations of certain plaintiffs, the class action complaint alleged that customers who terminate service prior to the expiration of the service contract are required to pay approximately $200 per telephone, and that this fee is also charged if T-Mobile cancels the contract for nonpayment or other reasons. Gatton, at 348. According to the class action complaint, the early termination fee is the same “whether the contract has been in effect for several weeks or several months,” and this “flat-fee early termination penalty constitutes an unlawful penalty under Civil Code section 1671, subdivision (d), is unlawful under the unfair competition law [(UCL)] (Bus. & Prof. Code, § 17200 et seq.), and is unconscionable under the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.).” Id., at 348-49 (footnote omitted). With respect to the class action’s claims concerning handset, the complaint charges that it is unlawful require prevent customers to purchase a new phone if they switch service providers. Id., at 349. The class action alleged that T-Mobile locked the SIM card so that the phone could not be programmed to operate on the service network of a competitor, and that the SIM can be unlocked simply by entering a numerical code, id. The class action complaint alleges that T-Mobile falsely represents that its phones “are not compatible with and will not work with other wireless networks” in violation of the UCL and the CLRA. Id. The complaint further alleges that locking the SIM “makes it impossible or impracticable for subscribers to switch cell phone service providers without purchasing a new handset.” Id.
Arbitration Class Action Court Decisions Uncategorized
Read more...