Class Action Defense Cases-Day v. Check Brokerage: Illinois Federal Court Holds That Class Action Rule 23(a)(1) Numerosity Test Does Not Require Exact Number And Debt Collection Letters Presented Common Questions Of Fact And Law

FDCPA Class Action Certified Over Defense Objection that Range of 100-500 Class Members does not Satisfy Numerosity and that Allegation that Debt Collection Letters Violate Federal Fair Debt Collection Practices Act (FDCPA) Presented Common Questions of Law and Fact Illinois Federal Court Holds

Plaintiff filed a putative class action against Check Brokerage Corp. alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) based on debt collection letters sent by the company. Day v. Check Brokerage Corp., 240 F.R.D. 414, 415 (N.D. Ill. 2007). The class action alleged that defendant’s letters violate the FDCPA in that they are “false, deceptive, or misleading as determined by the unsophisticated consumer standard and therefore in violation of 15 U.S.C. § 1692(e), (e)(2)(A), (e)(5), and (e)(10).” Id., at 416. The class action complaint also alleged that defendant “used unfair or unconscionable means to collect or attempt to collect a debt in violation of 15 U.S.C. § 1692(f) and (f)(1)” and that the notice concerning a consumer’s right to dispute a debt failed to comply with 15 U.S.C. § 1692(g)(a), id. Plaintiff moved the court to certify the litigation as a class action; defense attorneys argued that class action treatment was inappropriate because neither numerosity nor commonality had been met. Id., at 415. The district court disagreed.

The class action complaint was premised upon four debt collection letters defendant sent to plaintiff concerning a $20 debt. Day, at 416. The first letter advised Day that his $20 check had not cleared, that he now owed $65 (which included a “return check charge” of $25 and a “bank charge to merchant” of $20), and that additional fees may be imposed if payment is not made promptly and it was in his “‘best interests to clear this check immediately,’ despite the notification at the end of the letter that Day had thirty days to dispute the validity of the debt.” Id. The second letter “suggest[ed] you give this matter your immediate attention” and quoted Illinois Commercial Code § 3-806 about liability for dishonored checks. Id. The third letter “demand[ed] the $65.40 and stat[ed], ‘WE MUST HAVE YOUR PAYMENT NOW!!’” The letter also warned plaintiff that he could be liable for additional amounts. Id. Finally, the fourth letter stated, “THIS CHECK REMAINS UNPAID! WE ARE, THEREFORE, GOING TO SHOW YOU HOW MUCH IT COULD COST SHOULD IT GO TO LITIGATION.” This letter included reference to warrants for arrest and adverse credit reports, and ended, “Common sense would dictate that this check be paid at this point. THE AMOUNT DUE, INCLUDING THE CHECK AND SERVICE CHARGES TO THIS POINT, IS $65.40.” Id.

Certification of Class Actions Class Action Court Decisions FDCPA Class Actions Uncategorized

Credit Suisse Class Action Defense Case-Credit Suisse v. Billing: Supreme Court Holds Antitrust Class Action Based On Syndicate Conduct In Sale Of IPOs Barred Because “Clearly Incompatible” With Securities Laws

Federal Securities laws Barred Class Action Complaints Alleging Antitrust Violations Because, under Facts of the Case, Securities Laws “Implicitly Precluded” Enforcement of Antitrust Laws United States Supreme Court Holds

Purchasers of initial public offerings (IPOs) filed a class action against various underwriting firms that market and distribute IPOs for antitrust violations alleging that defendants “unlawfully agreed with one another that they would not sell shares of a popular new issue to a buyer unless that buyer committed (1) to buy additional shares of that security later at escalating prices (a practice called ‘laddering’), (2) to pay unusually high commissions on subsequent security purchases from the underwriters, or (3) to purchase from the underwriters other less desirable securities (a practice called ‘tying’).” Credit Suisse Securities (USA) LLC v. Billing, 551 U.S. __ (June 18, 2007) [Slip Opn., at 1]. Defense attorneys argued that the antitrust violations underlying the class action complaint were precluded by the federal securities laws, id., at 4. The district court agreed with the defense arguments and dismissed the class actions, but the Second Circuit reversed and reinstated the class action complaints, id. The U.S. Supreme Court granted certiorari and reversed the Second Circuit, id., at 4; the Supreme Court held that “we must interpret the securities laws as implicitly precluding the application of the antitrust laws to the conduct alleged in this case,” id., at 1.

The antitrust class action lawsuits arose from the following facts. As part of an IPO, underwriters “will typically form a syndicate to help market the shares,” which in turn estimates market demand and recommends offering price and number of shares for the offering. Credit Suisse, at 2. The syndicate then commits to purchase from the company all of the newly issued shares on a date certain for a fixed price; the price reflects “[the] price the syndicate will charge investors when it resells the shares,” but the syndicate’s actual purchase price reflects a discount that “amounts to the syndicate’s commission.” Id. In other words, the syndicate purchases the shares at a discounted price, and then resells them at the agreed upon fixed price, id., at 3. From this, class actions were filed alleging that defendant underwriters “abused” the syndication practice “by agreeing among themselves to impose harmful conditions upon potential investors,” id.; the Supreme Court added that these were “conditions that the investors apparently were willing to accept in order to obtain an allocation of new shares that were in high demand,” id. These conditions included entering into laddering agreements, tying agreements and paying excessive commissions, thereby “artificially inflat[ing] the share prices of the securities in question,” id., at 4.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

FACTA Class Action Defense Cases-Spikings v. Cost Plus: Certification Of Class Action Rejected For Technical Violation Of Fair And Accurate Credit Transactions Act Because Class Action Treatment Would Subject Defendant To Disproportionate Liability

Rule 23(b)(3) Superiority Class Action Requirement not met Where Financial Impact on Defendant for Technical Violation of FACTA (Fair and Accurate Credit Transactions Act) would be Disproportionate to any Harm to the Class California Federal Court Holds

Within hours of purchasing an item at Cost Plus with her credit card, plaintiff filed a putative class action alleging a technical violation of the federal Fair and Accurate Credit Transactions Act (FACTA) in that her receipt truncated her credit card number but failed to omit the expiration date of the card. Spikings v. Cost Plus, Inc., Case No. CV-06-8125-JFW (C.D. Cal. May 25, 2007) [Slip Opn., at 1-2]. Plaintiff filed a motion for certification of class action treatment; defense attorneys objected arguing in part that the prerequisite Rule 23(b)(3) finding of superiority did not exist thus barring class action certification. Id., at 2. The district court agreed with the defense and refused to certify the litigation as a class action.

FACTA requires that no more than the last 5 digits of a credit card number be shown on customer receipts, and that the expiration date of the credit card not be disclosed on the receipt. 15 U.S.C. § 1681c(g). Plaintiff purchased an item at Cost Plus on December 19, 2006, and within four (4) business hours filed her putative class action complaint. Spikings, at 2. Plaintiff served the class action complaint on December 26, 2006, defendant deleted the expiration date from credit card receipts in all but three of its stores by January 11, 2007, and completed the process of deleting the expiration date from all customer credit card receipts by January 29, 2007. Id. Nonetheless, plaintiff pursued the class action, alleging that defendant’s violation of FACTA was “willful” within the meaning of 15 U.S.C. § 1681n, thus entitling the class to statutory damages of $100-$1000 per violation, as well as punitive damages and attorney fees. Id. Plaintiff also moved the court to certify the litigation as a class action, id., at 1.

Certification of Class Actions Class Action Court Decisions FCRA Class Actions Uncategorized

FACTA Class Action Defense Cases-Soualian v. International Coffee & Tea: California Federal Court Denies Plaintiff’s Motion To Certify Class Action In Fair And Accurate Credit Transactions Act (FACTA) Suit

Putative Class Action Alleging FACTA Violation for Inclusion of Credit Card Expiration Date on Customer Receipts did not Warrant Class Action Treatment Because Rule 23(b)(3) Superiority Requirement not Satisfied California Federal Court Holds, Particularly as Defendant’s Act in Correcting the Violation Immediately on Receipt of Plaintiff’s Complaint Established its Good Faith and “Nullified Any Deterrence Benefit”

Plaintiff filed a putative class action against International Coffee & Tea alleging that it violated the Fair and Accurate Credit Transactions Act (FACTA) because it provided customers with credit card receipts that included the last five digits of the credit card and the card’s expiration date. Soualian v. International Coffee & Tea, LLC, Slip Opn., at 1 (C.D. Cal. June 11, 2007). Plaintiff filed a motion to certify the litigation as a class action; defense attorneys objected that Rule 23(b)(3)’ superiority test had not been met. Id. The district court agreed and refused to permit the litigation to proceed as a class action.

FACTA provides that “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last five digits of the card number of the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1). Plaintiff’s putative class action sought to represent “the class of individuals who made purchases at Defendant’s stores…and who received receipts on which Defendant printed more than the last five digits of the person’s credit card or debit card number, or on which Defendant printed the expiration date of the person’s credit or debit card.” Soualian, at 1. The district court outlined the elements required for class certification under Rule 23(a), but focused its analysis on whether Rule 23(b)(3) had been satisfied, id.

Certification of Class Actions Class Action Court Decisions FCRA Class Actions Uncategorized

Class Action Defense Cases-Hollins v. Debt Relief: Nebraska Federal Court Denies Defense Motion To Compel Arbitration Of RICO Class Action Holding Arbitration Clause Unenforceable

Class Action Defense Effort to Compel Arbitration Based on Provision in Contract Executed by Plaintiff Rejected by District Court because Arbitration Clause Held to be Unconscionable

Plaintiffs filed a putative class action against Debt Relief of America (DRA) in Nebraska federal court alleging that DRA – a company that offers “to help consumers eliminate their debt by negotiating reduced payoffs in settlement of the debts” – engaged in acts of fraud and charged excessive and undisclosed fees in violation of Racketeer Influenced and Corrupt Organizations Act (RICO) and Nebraska’s Consumer Protection Act and Deceptive Trade Practices Act. Hollins v. Debt Relief of Am., 479 F.Supp.2d 1099, 1103 (D. Neb. 2007). Defense attorneys moved to compel arbitration under a Client Negotiation Agreement executed by plaintiff in Nebraska; the Agreement includes an arbitration clause and a Texas choice-of-law provision. Id. The district court denied the defense motion, holding that the arbitration clause was procedurally and substantively unconscionable.

Plaintiff responded to an advertisement by DRA to assist in reducing debt; he admits signing the Agreement but claims that he did not notice the arbitration clause, that it was “buried in the fine print of an illegible fax,” and that DRA did not point out the arbitration provision before he executed the Agreement. Hollins, at 1103. The class action complaint alleged that plaintiff paid DRA almost $5000 based on its “promise[] to manage his debts,” but that the company “never took any action to assist [him] or contact his creditors.” Id. The complaint further alleged DRA advised him to “ignore[] his creditors,” that his accounts were sent to collection, and that “he filed bankruptcy because of DRA’s alleged misrepresentations.” Id. Plaintiff’s purported class action seeks to represent “all Nebraska residents who paid any amount for DRA’s debt relief services,” id.

Arbitration Class Action Court Decisions Uncategorized

Class Action Defense Cases-Doiron v. Conseco Health: Louisiana Federal Court Agrees With Defense That Rule 23(b)(1) and (b)(2) Class Action Could Not Be Certified But Certifies Class Action Against Health Insurer Under Rule 23(b)(3)

Allegedly Wrongful Denial of Insurance Policy Benefits Satisfies Commonality and Typicality Requirements for Class Action Treatment, and While Rule 23(b)(1) and (b)(2) Classes Would not be Certified, Louisiana Federal Court Holds that Rule 23(b)(3) Class Action Treatment was Warranted

Plaintiff filed a breach of contract class action against her health insurer arising out of the denial of insurance benefits allegedly due and owing under a cancer insurance policy. Doiron v. Conseco Health Ins. Co., 240 F.R.D. 247, 249 (M.D. La. 2007). The class action complaint alleged that the cancer policy required the insurer to pay benefits directly to the insured if certain terms and conditions of the policy were met. Id. Plaintiff’s husband was diagnosed with cancer in March 2001 and underwent treatment, but he died in December 2001. Plaintiff submitted documentation to the insurer, but it only paid a portion of the insured’s claim. Id. Plaintiff filed as a putative class action on the grounds that “she, and the members of the Sub-Classes she seeks to represent, were and will continue to be denied claims for benefits for certain charges they commonly and typically incurr(ed), and which claims Conseco consistently deny(ied), for their radiation treatment and/or chemotherapy treatment.” Id. Plaintiff moved the court to certify the lawsuit as a class action; defense attorneys objected to class action treatment insisting that case-by-case inquiries would be required, thus defeating commonality and typicality, and that none of the subparts of Rule 23(b) could be satisfied. The district court concluded that Rule 23(a) had been satisfied, and that a Rule 23(b)(3) class could be certified.

With respect to numerosity, defense conceded that the class consisted of at least 200 members, and the district court observed that in the Fifth Circuit a class of 100-150 members is generally deemed sufficient to satisfy the numerosity requirement; accordingly, the court found that Rule 239(a)(1) had been satisfied. Doiron, at 251.

Certification of Class Actions Class Action Court Decisions Uncategorized

Watson v. Philip Morris-Class Action Defense Issues: U.S. Supreme Court Rejects Tobacco Company Argument That Heavily Regulated Industry Falls Within Scope of Federal Officer Removal Statute

In Decision with Significant Impact on Defense of Class Action Lawsuits, U.S. Supreme Court Holds that Private Party cannot Remove Lawsuit to Federal Court under Federal Officer Removal Statute Merely because it Complies with Federal Laws

Plaintiffs filed a suit in Arkansas state court against Philip Morris alleging violations of the state’s unfair and deceptive business practices statutes arising out of its marketing of “light” cigarettes, which plaintiffs argued suggested that they were “safer” – i.e., lower in tar and nicotine – than regular cigarettes. Watson v. Philip Morris Cos., Inc., 551 U.S. __, 127 S.Ct. 2301 [Slip Opn., at 1-2] (2007). Defense attorneys removed the action to federal court on the basis of the federal officer removal statute, which the district court agreed authorized removal, id., at 2. The Supreme Court explained that the district court reasoned the lawsuit “attacked Philip Morris’ use of the Government’s method of testing cigarettes” and that plaintiffs “had sued Philip Morris for ‘act[s]’ taken ‘under’ the Federal Trade Commission, a federal agency (staffed by federal ‘officer[s]’).” Id. The district court certified the question for interlocutory review, and the Eighth Circuit affirmed “emphasiz[ing] the FTC’s detailed supervision of the cigarette testing process” and relying upon cases authorizing removal “by heavily supervised Government contractors.” Id., at 2-3. The Eighth Circuit held that Philip Morris was “acting under” the FTC with respect to its marketing of “light” cigarettes, thus authorizing removal. Id., at 3. The Supreme Court granted certiorari and reversed.

The federal officer removal statute, 28 U.S.C. § 1442(a)(1), permits removal of suits brought against the “United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, sued in an official or individual capacity for any act under color of such office” (italics added). The Supreme Court recognized that the phrase “acting under” are “broad” and that “the statute must be ‘liberally construed,’” but added that “broad language is not limitless.” Watson, at 3 (citations omitted). The High Court’s analysis of the legislative history led it to conclude that the Congressional intent was to cover persons “aiding or assisting” federal officers in the performance of their duties, or acting directly “under or by authority of any such officer.” Id., at 3-7. So viewed, the Supreme Court held that the words “acting under” in the federal officer removal statute must be a reference to “a relationship that involves ‘acting in a certain capacity, considered in relation to one holding a superior position or office.’” Id., at 7. “In our view, the help or assistance necessary to bring a private person within the scope of the statute does not include simply complying with the law.” Id., at 8 (italics in original).

Class Action Court Decisions Removal & Remand Uncategorized

Class Action Defense Cases-Belaire-West v. Superior Court: California Appellate Court Subordinates Employees’ Privacy Rights To Class Action Plaintiff’s Request For Their Personal Contact Information

Court Expands Holding in Pioneer Electronics to Employer-Employee Relationship and Essentially Grants Class Action Plaintiffs Unrestricted Access to Personal Contact Information of Putative Class Members Prior to Certification of Class Action and Without any Showing of Likelihood that Class Action will be Certified

Plaintiffs filed a labor law class action against their former employer, Belaire-West Landscaping, alleging wage and hour violations. Belaire-West Landscape, Inc. v. Superior Court, __ Cal.App.4th __, 57 Cal.Rptr.3d 197, 198 (Cal.App. 2007). Prior to certification of the litigation as a class action, plaintiffs moved to compel Belaire to produce the names and addresses of all current and former employees; defense attorneys objected on the grounds of the absent class members’ right to privacy under the California Constitution. Id. The trial court granted the motion, and approved a proposed notice to putative class members that required them to affirmatively object in writing to the production of their contact information to plaintiffs, id. The defense sought a writ of mandate, and the Court of Appeal issued an order to show cause why the letter to absent class members should not require an “opt-in privacy notice procedure,” id., at 199-200. Ultimately, the appellate court denied the writ, holding that “the opt-out notice adequately protects the privacy rights of the current and former employees involved.” Id., at 199.

We have previously reported on the recent opinion by the California Supreme Court in Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360 (Cal. 2007) – that summary, and the text of the Court’s opinion, may be found here. In brief, Pioneer approved of the type of notice at issue in Belaire-West because the class members already had taken the step of affirmatively contacting the defendant and providing their contact information for the express purpose of having someone contact them to redress their concerns. The Court of Appeal summarized the Pioneer decision as holding that “under the circumstances presented, an opt-out notice was sufficient to protect the privacy rights of the DVD purchasers.” Belaire-West, at 200 (citation omitted). The question is whether the facts of Belaire-West are similar to “the circumstances presented” in Pioneer.

The appellate court recognized the significant differences between the cases. For example, the Court of Appeal stated that the Supreme Court “focused on the fact that the consumers in question had voluntarily disclosed their contact information to Pioneer in seeking redress of their grievances concerning a Pioneer DVD player,” Belaire-West, at 200-01, and at page 201 quoted the Supreme Court’s reasoning as follows:

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Berenson v. National Financial: First Circuit Dismisses Interlocutory Appeal In Class Action For Lack Of Jurisdiction

Federal Arbitration Act (FAA) Provision Allowing Appeals from Orders Denying Petitions to Compel Arbitration Inapplicable Where District Court Granted Defense Motions Dismissing Class Action Allegations in Putative Class Action Complaint and then Granted Defense Motion Compelling Arbitration

Plaintiffs filed a putative class action in the District of Columbia federal court against their broker, National Financial Services and Fidelity Brokerage Services (both subsidiaries of Fidelity Investments), alleging violations of the federal Electronic Funds Transfer Act (EFTA) and various state laws arising out of Fidelity’s failure to pay customers interest on the “float” of their funds from date they requested electronic transfer of funds to the date the funds were in fact transferred. Berenson v. National Fin. Servs. LLC, 485 F.3d 35, 36 (1st Cir. 2007). The class action complaint alleged that plaintiffs opened an account with Fidelity in the 1980s, id. The Fidelity account agreement contained an arbitration clause requiring arbitration of “all controversies” but forbidding either party in a putative class action from seeking to compel arbitration unless (1) class action treatment is denied, (2) the class action is decertified, or (3) the court excludes the customer from participating in the class action, id., at 37-38. After the class action complaint was transferred to the Massachusetts federal court, id., at 37 n.3, defense attorneys filed a series of motions attacking the pleadings and the class action allegations but “reserved the right to compel arbitration if class certification is denied,” id., at 38. Ultimately defense attorneys succeeded in defeating the class action allegations and moved to compel arbitration of the plaintiffs’ non-class claims. After the district court compelled arbitration, Fidelity sought appellate review of the court’s order granting summary judgment; the First Circuit dismissed the interlocutory appeal for lack of jurisdiction.

Plaintiffs began using the company’s electronic bill payment service in the mid-1980s, but after a period of time Fidelity contracted out this service and in 2000 entered into an agreement with CheckFree to handle the bill payment service using the “good funds” method, which the First Circuit summarized at page 37 as follows:

Arbitration Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Pilgrim’s Pride: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation And Selects Western District of Arkansas As Transferee Court

Judicial Panel Grants Defense Request, Unopposed by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Elects to Transfer Class Actions to Western District of Arkansas Five class action lawsuits (two in Alabama, and one in Arkansas, Tennessee and Texas) were filed against Pilgrim’s Pride by current and former employees alleging violations of the federal Fair Labor Standards Act (FLSA). In re Pilgrim’s Pride Fair Labor Standards Act Litig.

Class Action Court Decisions Multidistrict Litigation Uncategorized