Class Action Defense Cases-Hnot v. Willis Group: New York Federal Court Denies Defense Motion To Reconsider Order Certifying Class Action Because New Second Circuit Authority Governing Class Action Certification Had Been Satisfied

Second Circuit Opinion in In re IPO Class Action Enunciating new Standards for Certification of Class Actions Warranted Reconsideration of Order Certifying Class Action but not Decertification of Class Action because new Standards were met New York Federal Court Holds

Female employees filed a labor law class action against Willis Group and its affiliates alleging gender discrimination. Hnot v. Willis Group Holdings Ltd., 241 F.R.D. 204, 206 (S.D.N.Y. 2007). The district court granted plaintiffs’ motion to certify the litigation as a class action, see Hnot v. Willis Group Holdings Ltd., 228 F.R.D. 476 (S.D.N.Y. 2005); defense attorneys sought reconsideration of the class certification order and decertification of the class, arguing that under the Second Circuit opinion in In re Initial Pub. Offering Sec. Litig., 471 F.3d 24 (2d Cir.2006) (In re IPO) — a summary of which may be found here — which issued after the class action had been certified, plaintiffs failed to establish commonality under Rule 23(a), and that class action treatment was “inappropriate under Rule 23(b)(2),” 241 F.R.D. at 206. Specifically, the defense argued that a plaintiff is now required to do more than simply make “some showing” that the elements of Rule 23 have been met, id., at 207. The district court denied the defense motion, concluding that the requirements of Rule 23 had been met and that the lawsuit should properly proceed as a class action.

Plaintiffs filed their putative class action in 2001 “on behalf of a class of high-level female employees…alleging illegal employment discrimination on the basis of sex.” Hnot, at 206. In response to plaintiffs’ motion to certify a class action, defense attorneys argued that Rule 23(a)’s commonality requirement had not been satisfied. Id. Plaintiffs’ responded that “a common policy of vesting regional and local officers with unfettered discretion in making promotion and compensation decisions, result[ed] in discrimination against women in high level positions.” Id. (citation omitted). Each side submitted expert reports, which the district court considered as they pertained to the issue of commonality, id., and ultimately concluded that “plaintiffs’ evidence was ‘certainly adequate to establish that whether or not Willis’s promotion and compensation policies subject class members to discrimination is an issue common to all class members,’” id., at 207 (citing 228 F.R.D. at 483).

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

Class Action Defense Cases-Great Plains Trust v. Union Pacific: Eighth Circuit Affirms Dismissal Of Class Action Agreeing With Defense That Class Action Claims Are Time-Barred

District Court Properly Concluded that Class Action Claims of Debenture Holder Against Issuer for Breach of Contract, Fraud and Unjust Enrichment were Barred by Applicable Limitations Periods Eighth Circuit Holds Plaintiff filed a putative class action against Union Pacific Railroad Company, as successor to the issuer of a debenture, alleging breach of contract, fraud and unjust enrichment for alleging failing to make proper interest payments due plaintiff. Great Plains Trust Co.

Class Action Court Decisions Uncategorized

Class Action Defense Cases- In re Mutual Funds: Maryland Federal Court Grants Defense Motion To Dismiss Class Action Claims As Time-Barred Holding That Publicity Placed Class Action Plaintiffs On Inquiry Notice Of Claims

Class Action Alleging Market Timing Acts in Violation of State and Federal Laws were Time-Barred because Public Complaints, SEC Actions and Guilty Plea Arising out of Market Timing Claims Placed Class Representatives on Inquiry Notice of Basis for Class Action Claims Maryland Federal Court Holds

Investors filed a class action against numerous defendants, ultimately coordinated by the Judicial Panel on Multidistrict Litigation, alleging marketing timing acts in violation of the Securities Act, the Exchange Act, the Investment Company Act and various state laws. In re Mutual Funds Inv. Litig., 478 F.Supp.2d 833, 834 (D. Md. 2007). The class action complaint was attacked by motions to dismiss, which the district court granted as to the Securities Act and the ICA § 48(a) claims, denied as to the Exchange Act claims, and denied without prejudice as to the ICA § 36(b) claim_, id_.; plaintiffs voluntarily dismissed their state law claims, _id._ n.1. Plaintiffs filed a second amended class action complaint that added new defendants and claims, and defense attorneys filed another series of motions to dismiss, _id._, at 834. After reaffirming its prior rulings to the extent applicable, _id._; the district court addressed numerous issues, but we address here only that portion of the court’s holding concerning the statute of limitations defense.

Plaintiffs conceded that any claims based on allegedly fraudulent conduct that occurred prior to July 1999 were time-barred. In re Mutual Funds, at 835. The district court recognized that Fourth Circuit decisional law holds that “Inquiry notice is triggered by evidence of the possibility of fraud, not by complete exposure of the alleged scam.” Id., at 836 (quoting Brumbaugh v. Princeton Partners, 985 F.2d 157, 162 (4th Cir. 1993)). And the court immediately rejected a defense effort to push inquiry notice back to 1999, explaining: “The attempt to place notice inquiry as far back as 1999 because of the shareholder letter and prospectus supplements warning of the risks of market timing is not persuasive, when those same documents indicated that additional steps would be taken to prevent timing and the funds are alleged instead to have concealed from investors specific agreements to permit that very practice.” Id., at 836 n.6.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Motor Fuel: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Lawsuits But Selects District of Kansas As Transferee Court

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Defense Request to Transfer Class Actions to District of New Jersey Twelve putative class action lawsuits were filed in seven federal district courts (four in Missouri, two in Kansas and Oklahoma, and one in California, Kentucky, New Jersey and Tennessee) against more than 100 oil companies, distributors and retailers “relating to the sale of motor fuel at temperatures greater than 60 degrees Fahrenheit.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Lanham Act Class Action Defense Cases-Phoenix v. McDonald’s: District Court Properly Granted Defense Motion To Dismiss Lanham Act Class Action For Lack Of Prudential Standing Eleventh Circuit Holds

As Matter of First Impression in the Circuit, Eleventh Circuit Holds that Fast Food Franchisee Lacked Prudential Standing to Prosecute Lanham Act False Advertising Class Action Against McDonald’s and Affirms Order Granting Defense Motion to Dismiss Class Action Complaint

Plaintiff, a Burger King fast food franchisee, filed a putative class action lawsuit against McDonald’s alleging false advertising in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), arising out of McDonald’s claims in connection with various promotional games (such as Monopoly) that each customer had an equal chance of winning. Phoenix of Broward, Inc. v. McDonald’s Corp., 489 F.3d 1156, 2007 WL 1791886, *1 (11th Cir. 2007). Defense attorneys moved to dismiss the class action complaint on the ground that plaintiff lacked prudential standing to prosecute the putative class action; the district court agreed with the defense and dismissed the class action. Id. On appeal to the Eleventh Circuit, the issue on appeal concerned “the proper test for determining whether a party has prudential standing to bring a false advertising claim under § 43(a) of the Lanham Act,” id.; ultimately, the Circuit Court adopted the Third Circuit test set forth in Conte Bros. Automotive, Inc. v. Quaker State-Slick 50, Inc., 165 F.3d 221, 225 (3d Cir. 1998), and affirmed the dismissal of the class action complaint.

The McDonald’s promotional games at issue ran from 1995 through 2001, and generally allowed customers to win the $1 million grand prize “by obtaining one of the rare $1 million, instant-winner game pieces or by collecting and matching a combination of certain other game pieces.” Phoenix of Broward, at *1. McDonald’s represented that each customer had an equal chance of winning, and “also represented the specific odds of winning certain prizes, including the high-value prizes.” Id. Beginning in April 2000, however, the FBI began investigating these promotional games and “informed McDonald’s that there were problems with the random distribution of its game pieces,” id. Nonetheless, McDonald’s continued to represent that each customer had an equal chance of winning its promotional games, id.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Bendzak v. Midland: Iowa District Circuit Consolidates Class Action Lawsuits Sua Sponte Finding Class Actions Satisfied Requirements Of FRCP Rule 42

Class Action Complaints Warranted Sua Sponte Consolidation under Rule 42 Iowa Federal Court Holds

Plaintiff filed two putative class action lawsuits in Iowa federal court, one against Midland National Life Insurance and the other against American Equity Investment Life Insurance, alleging violations of RICO (Racketeer Influenced and Corrupt Organizations Act), conspiracy and unjust enrichment in that they “knowingly used licensed agents that engaged in unfair, improper, and unlawful sales practices in connection with the solicitation, offering, and sale of deferred annuity products to senior citizens.” Bendzak v. Midland Nat’l Life Ins. Co., 240 F.R.D. 449, 450 (S.D. Iowa 2007). The district court sua sponte ordered the two class actions consolidated, holding that the requirements of FRCP Rule 42 were satisfied, id., but invited defense and plaintiff’s counsel to advise the court if they believed consolidation “would lead to inefficiency, inconvenience, or unfair prejudice to a party,” id., at 451.

The district court held that consolidation was warranted because the two class actions involved common issues of law and fact, explaining at page 450:

Class Action Court Decisions Uncategorized

Class Action Defense Cases–Du Bouse v. Bayer: Illinois Appellate Court Dismisses Appeal From Class Action Certification Order For Lack Of Jurisdiction Because Defense Failure To Monitor Court Docket Did Not Expand Jurisdictional Appeal Period

30-Day Time Period for Appealing Court Orders Granting or Denying Class Action Treatment is Jurisdictional and Cannot be Evaded by Trial Court Nunc Pro Tunc Order Deeming Order Entered on a Later Date Illinois State Appellate Court Holds

Plaintiff filed a consumer fraud class action in Illinois state court against Bayer AG and others alleging common law fraud and violations of the Consumer Fraud and Deceptive Business Practices Act. De Bouse v. Bayer AG, ___ N.E.2d __ (June 11, 2007) [Slip Opn., at 1]. After granting plaintiff’s motion to certify the lawsuit as a class action, defense attorneys moved for summary judgment, _id._ The trial court denied the motion but certified three questions for appellate review, _id._ Defense attorneys then sought leave to appeal the class certification order, and the appellate court consolidated the two appeals, _id._, at 1-2. Plaintiffs moved to dismiss the appeal for lack of jurisdiction, _id._, at 2; the appellate court granted the motion.

The appellate court explained that the class certification hearing was held in July 2005 and taken under submission. On September 1, 2005, the court granted class action status, and the order was filed the following day. Du Bouse, at 2. “There is no indication that the order was served personally or by mail on counsel of record.” Id. The parties appeared in court on September 27 and December 29, 2005, in connection with the summary judgment motion, and on January 11, 2006 for purposes of a status conference, id., at 2-3. It was not until January 25, 2006, that defense attorneys moved “to vacate or amend the class certification order nunc pro tunc on the grounds that they had not received notice of the entry of the order granting class certification, that the circuit court clerk failed to serve a copy of the order on all parties and failed to note any service in the file…, and that they made diligent efforts to monitor the court file once the motion had been taken under advisement by the court.” Id., at 3. Defense attorneys argued that they had been monitoring the court file but first learned of the class certification order on January 11, 2006, and that the failure to serve notice of the order “severely prejudiced” defendants’ right to appeal. Id. The trial court agreed and granted motion, ordering the class certification order be deemed filed as of January 11, 2006, id., at 3-4. Defendants sought leave to appeal the class certification order on February 10, 2006, id., at 4.

Class Action Court Decisions Uncategorized

TILA Class Action Defense Cases-Andrews v. Chevy Chase: Wisconsin Federal Court Certifies Lawsuit As Class Action And Holds Lender Violated TILA And That Class Action Complaint May Seek Rescission And Attorney Fees

Class Action Requirements of FRCP Rule 23 Satisfied in Class Action Complaint Allegation Violations of federal Truth in Lending Act (TILA), Bank’s TILA-Mandated Disclosure Statements Failed Adequately to Inform Borrowers of Loan Payment Schedule and Interest Rate, and Class Action Plaintiffs may seek Rescission and Attorney Fees, but not Statutory Damages, Wisconsin Federal Court Holds

Plaintiffs filed a putative class action against Chevy Chase Bank for violations of the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., in that the Bank allegedly failed to make the requisite disclosures in connection with adjustable rate mortgage loans. Andrews v. Chevy Chase Bank, FSB, 240 F.R.D. 612, 614 (E.D. Wis. 2007). Defense and plaintiffs’ counsel filed cross-motions for summary judgment, and plaintiffs moved the court to certify the litigation as a class action; the district court granted in part and denied in part each of the summary judgment motions, and granted class action status to the TILA complaint.

Plaintiffs secured a loan from Chevy Chase bank in June 2004 to refinance their Wisconsin home. Andrews, at 614. The Bank’s initial disclosures included a handbook on adjustable rate mortgages (ARMs), an ARM disclosure and a preliminary disclosure statement as required by TILA, id., at 615. Additional disclosures were provided at closing, including an Adjustable Rate Note (ARN), a Truth in Lending Disclosure Statement (TILDS) and an Adjustable Rate Rider (ARR), id. The class action complaint alleged that plaintiffs’ believed the interest rate and payments “were fixed for five years and became variable thereafter”; in fact, the payment was fixed but the interest rate was not. Id. As the district court explained at page 615, “The loan carried a discounted or ‘teaser’ interest rate of 1.950 percent, but that rate applied only to the first monthly payment, after which the interest rate increased every month according to a formula. As the interest rate increased, an ever increasing portion of the minimum monthly payment of $701.21 was needed to cover interest, and the minimum payment itself soon became insufficient to cover accrued interest.” The class action complaint alleged that the Bank’s disclosures failed to comply with TILA.

Certification of Class Actions Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

Removal Class Action Defense Cases- Levitanksy v. FIA: Ohio Federal Court Holds That Putative Class Action Stated Breach Of Contract Claim Warranting Remand Of Class Action Complaint To State Court

Class Action Complaint Alleging Fees Charged were in Excess of Contractually Agreed Amount did not Constitute Challenge to Interest Rate and so National Bank Act did not Completely Preempt Claims in Putative Class Action Ohio Federal Court Holds

Plaintiff filed a putative class action in Ohio state court against credit card company FIA Card Services alleging that it collected cash advance fees in excess of the maximum allowed under its cash advance agreements. Levitanksy v. FIA Card Services, N.A., 492 F.Supp.2d 758, 760 (N.D. Ohio 2007). Defense attorneys removed the action to federal court on the basis of National Bank Act, alleging that the class action complaint challenged the interest rate charged to customers and that usury claims are completely preempted under the NBA, id., at 760-61; plaintiff filed a motion to remand the class action to state court on the ground that the class action alleged only state-law breach of contract claims, id., at 759. The district court granted plaintiff’s motion, holding that the National Bank Act did not completely preempt the claims set forth in the class action complaint.

Plaintiff’s class action seeks to represent all individuals who entered into cash advance agreements with FIA, setting forth as common class allegations that FIA “extended one or more promotional offers for balance transfers and cash advance checks where the transaction fees would be limited to 3% of each advance” and that the FIA contracts “stipulated that the maximum allowable transaction fee was $75,” but that FIA charged cash advance fees in excess of that agreed amount. Levitansky, at 760. Defense attorneys removed the class action complaint to federal court under the National Bank Act; plaintiff filed a motion to remand the class action on the ground that the complaint set forth a state-law breach of contract claim. Id.

Class Action Court Decisions Removal & Remand Uncategorized

Class Action Defense Cases-Payday v. Findwhat.Com: New York Federal Court Grants Defense Motion In Click-Fraud Class Action To Dismiss Unjust Enrichment, Negligence And Civil Conspiracy Claims But Denies Motion As To Breach Of Contract Claim

Click-Fraud Class Action Stated Claim for Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing, but Under New York Law Remaining Claims in Class Action Complaint Fail

Plaintiff, an advertising customer, filed a putative class action against Findwhat.com, an Internet search engine operator, and Advertising.com, an Internet advertising provider, alleging that defendants “engaged in ‘click fraud’ by employing individuals and ‘robot’ computer programs (commonly called ‘bots’) to click on Payday’s hyperlinked advertisements and thereby caused Payday to incur inflated charges under its agreement with Findwhat.” Payday Advance Plus, Inc. v. Findwhat.Com, Inc., 478 F.Supp.,2d 496, 499 (S.D.N.Y. 2007). The class action complaint alleged causes of action for breach of contract, unjust enrichment, negligence and conspiracy, as well as two claims based on an alleged joint venture. Id. The defense moved to dismiss the class action complaint for failure to state a claim, id. The district court granted the defense motion as to most of the claims in the complaint, but refused to dismiss the class action claims alleging breach of contract.

Plaintiff contracted with Findwhat to provide Internet advertising services. Findwhat offers advertising services in connection with its Internet search engine, and utilizes a “pay-per-click” formula for charging its customers: “Under this formula, an advertising customer bids on one or more keywords which, when entered into Findwhat’s search engine by Internet users, will return a hyperlink . . . to the advertising customer’s web site alongside the search results returned by the search engine.” Payday, at 500. Each time an Internet user clicks on a customer’s link, a fee is charged ranging from 50 cents per click to more than $100 per click for “the most sought-after keywords.” Id. Defendant Advertising developed “ClickTracker,” a software program that tracks and measures Internet sales. Id., at 501. According to the class action complaint, Findwhat and Advertising entered into a business relationship to split revenue from their Internet advertising activities, and then conspired to artificially inflate the price of popular keywords. Id. Additionally, plaintiff alleged that Findwhat hired people to click on advertising links in order to increase revenue at the cost of the customer, and that Advertising used computer programs to “click continuously and systematically” on customer links in order to increase revenue. Id.

The class action complaint named only Findwhat as a defendant on the breach of contract claim, and alleged that the Findwhat contract only permitted a charge for “the actual click through advertising from actual consumers” but that Findwhat charged for “advertising and/or services that were not generated from potential consumers, but from individuals, ‘robot’ programs and other software employed by the Defendants solely designed to increase traffic to Plaintiff’s website and drive up revenue.” Payday, at 502. Defense attorneys disagreed, arguing that the terms of the contract are not as restrictive as plaintiff claims, id. Under New York law, the court resolved the contract interpretation issue as a matter of law, id. However, plaintiff never signed the contract relied upon by Findwhat and refused to acknowledge that the terms of the unsigned agreement proffered by Findwhat was the “actual agreement of the parties”: “Because there has been no agreement on the language that reflects the contract terms, and because there is a reasonable dispute as to the meaning of the terms relating to the ‘clicks’ for which Payday owed payments, the Court cannot find as a matter of law that the contract is unambiguous.” Id.

Class Action Court Decisions Uncategorized