Class Action Defense Case-Brieger v. Tellabs: Illinois Federal Court Denies Defense Motion For Summary Judgment In ERISA Class Action

General Release Executed by Employees at Termination was Valid Under ERISA but Class Action Claims Fell Within Carve-Out Provision in Release, and Former Plan Participants have Standing to Prosecute Class Action Alleging Breach of Fiduciary Duty Against Plan Administrators Illinois Federal Court Holds

Plaintiffs filed a putative ERISA class action lawsuit against Tellabs alleging breach of fiduciary duty “by permitting investments in Tellabs securities when it was imprudent to do so and by disseminating misleading information to Plan participants about the prudence of investing in Tellabs securities.” Brieger v. Tellabs, 473 F.Supp.2d 878, 880 (N.D. Ill. 2007). Defense attorneys moved for summary judgment on two grounds: (1) the putative members of the class action had executed general releases which barred them from prosecuting the class action complaint, and (2) plaintiffs lacked standing to prosecute the class action because they had cashed out of the Plan. Id., at 883. The district court denied the motion.

Briefly, in December 2000, Tellabs announced a $100 million sales agreement with Sprint, and in January 2001 announced increased sales and expressed optimism about the future. For purposes of the period covered by the class action complaint, in February 2001 Tellabs common stock hit a high of $67 per share. However, the following month Tellabs lowered its revenue and earnings expectations for 2001, and in April 2001 it announced that it would not meet its lowered expectations. “By April 16, 2001, Tellabs stock had declined to $35.50 per share.” Brieger, at 881. The stock recovered to $42 per share in May 2001, but fell to $16 by June 2001 and plunged to under $1 by April 2003. Id., at 881-82. Tellabs implemented workforce reductions, and in exchange for severance benefits each employee executed a general release which provided that the employee released Tellabs – including its “officers, directors, agents, employees, employee benefit plans (and their plan fiduciaries and administrators)” – “from any and all claims of any kind relating to or arising out of Employee’s employment or the termination of that employment with Tellabs, Inc. or any of its subsidiaries or affiliates.” Id., at 882.

Class Action Court Decisions Employment Law Class Actions Uncategorized

FCRA Class Action Defense Cases-Safeco Insurance v. Burr: U.S. Supreme Court Holds Willful Misconduct Under Fair Credit Reporting Act Includes Reckless Disregard But Insurers Did Not Violate FCRA

In Seminal FCRA (Fair Credit Reporting Act) Class Action Cases, Supreme Court Holds (1) “Willful” Failures Under FCRA § 1681n(a) Include Acts of “Reckless Disregard,” (2) “Adverse Action” in Determining Insurance Premiums Includes Setting First-Time Insurance Rates, (3) Review of Credit Report must have Impacted Rate Charged Consumer, and (4) Insurers did not Violate FCRA

Plaintiffs filed two separate putative class action lawsuits against GEICO and Safeco Insurance, respectively, alleging willful failure to give notice of adverse actions under the federal Fair Credit Reporting Act (FCRA) in violation of § 1681m(a). Safeco Ins. Co. of America v. Burr, __ U.S. __, 2007 WL 1582951 (June 4, 2007) [Slip Opn., at 4]. The questions before the United States Supreme Court in the consolidated cases were “whether willful failure covers a violation [of the FCRA] committed in reckless disregard of the notice obligation, and, if so, whether … Safeco and GEICO committed reckless violations.” Id., at 1. The Supreme Court held that a “willful” violation of the FCRA included “reckless disregard,” but that neither GEICO nor Safeco recklessly violated the FCRA, id., at 1-2.

The class action complaints were filed by individuals who purchased car insurance from GEICO and Safeco, each of which rely upon credit reports in setting insurance premiums. Safeco, at 4-5. In these consolidated class actions, defendants allegedly offered plaintiffs auto insurance at rates that were higher than the most favorable rates offered by the companies. Id., at 4. However, the insurers did not send plaintiffs notices of adverse action, id., at 4-5. The FCRA requires that “any person [who] takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report” must provide notice to the consumer. 15 U.S.C. § 1681m(a). For these purposes, an “adverse action” includes “a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for.” § 1681a(k)(1)(B)(i). The Supreme Court explained that these notices “must point out the adverse action, explain how to reach the agency that reported on the consumer’s credit, and tell the consumer that he can get a free copy of the report and dispute its accuracy with the agency.” Safeco, at did not allege actual damages; rather, it sought statutory and punitive damages under § 1681n(a). Id.

Class Action Court Decisions FCRA Class Actions Uncategorized

FCRA Class Action Defense Cases-Gillespie v. Equifax: Seventh Circuit Reverses Summary Judgment In Favor Of Defense In FCRA Class Action Holding Disclosures Were Accurate But Not Clear

As Matter of First Impression, Seventh Circuit Holds that FCRA (Fair Credit Reporting Act) Requires Consumer Reporting Agency to do More than Make Accurate Disclosures because Statute Requires that Disclosures also be “Clear”

Plaintiffs filed a putative class action against credit reporting agency Equifax Information Services alleging violations of the federal Fair Credit Reporting Act (FCRA). Gillespie v. Equifax Information Services, LLC, 484 F.3d 938, 939 (7th Cir. 2007). The class action complaint asserted that Equifax’s disclosures failed to comply with the FCRA; specifically, the class action complaint alleged that consumers could not properly calculate the date by which negative credit information must be removed from their reports. Id. Defense attorneys moved for summary judgment on the grounds that the information it provided to consumers was clear and accurate. The district court agreed and granted summary judgment in favor of the defense; based on this ruling, the court found it unnecessary to address plaintiffs’ motion to certify the lawsuit as a class action. The Seventh Circuit reversed.

Plaintiff Heather Gillespie opened a credit account with Direct Merchants Bank in 1999 and defaulted on the account in 2001; plaintiff Angela Cinson opened an account with Sears in 1993 and defaulted on the account in 1996 or 1997. Gillespie, at 939. The delinquent accounts were sold to a collection agency, and information on the delinquencies made it to the Equifax credit files of each plaintiff, id. In 2004, each plaintiff requested their credit file from Equifax and Equifax complied. Gillespie, at 939. Plaintiffs objected to the “Date of Last Activity” entry in their credit files. Id. The court explained at page 939 the manner in which the field is completed:

Class Action Court Decisions FCRA Class Actions Uncategorized

Class Action Defense Cases-Sanford v. MemberWorks: Ninth Circuit Holds District Court Erred In Failing To Determine Existence of Membership Contract Prior To Compelling Arbitration But Correctly Dismissed Class Action Complaint Against Co-Defendants

District Court must Resolve Issues Regarding Existence of Contract before Compelling Arbitration and Dismissing Class Action Allegations, but Class Action Complaint Against Co-Defendant Properly Dismissed Ninth Circuit Holds

Plaintiff filed a putative class action in federal court against MemberWorks and West Telemarketing alleging she was charged a membership fee for joining the “Essentials program” – a service that, for an annual fee, offers members a 20% discount at certain retailers – in violation of 39 U.S.C. § 3009 (prohibiting mailing unordered merchandise) and various state laws because she had not heard of, and did not join, the program. Sanford v. MemberWorks, 483 F.3d 956, 958-59 (9th Cir. 2007). Defense attorneys for MemberWorks moved to compel arbitration based on a clause in the membership agreement and to strike the class action allegations; defense attorneys for West joined in the motion to compel arbitration. Id., at 959. Plaintiff objected to the arbitration demand on the ground that she never enrolled in the Essentials program, id. The district court granted the motion to compel arbitration as to MemberWorks, holding that a determination as to the enforceability of the contract as a whole must be made by the arbitrator; but the court denied the motion as to West because it was not in privity with plaintiff, and instead dismissed the class action complaint as to West because West had not mailed plaintiff any merchandise that she had not ordered and because the court refused to exercise supplemental jurisdiction over the state law class action claims – namely, conversion, unjust enrichment and fraud – against West. Id. The Ninth Circuit affirmed the dismissal of the class action complaint as against West, but reversed the district court order compelling arbitration and reinstated the class action allegations as against MemberWorks.

Plaintiff purchased by telephone Tae-Bo fitness tapes through West Telemarketing. Sanford, at 958. Sales agents were instructed to read purchasers a script at the conclusion of the transaction stating that, with the purchaser’s consent, they would be sent a “risk-free 30-day membership” in the Essentials program, and that the $72 annual fee would be billed to their credit card if membership was not canceled within 30 days. Id. Plaintiff denied hearing the script or agreeing to the trial membership; MemberWorks’ records showed that plaintiff enrolled in the program and received a membership kit that included a membership agreement containing an arbitration clause. Id., at 958-59. Plaintiff did not cancel the membership so a $72 fee was charged to her card, and the next year a renewal fee of $84 was billed to her card. Id., at 959. Plaintiff disputed the renewal fee and MemberWorks reversed the charge, id. Plaintiff then filed her putative class action against MemberWorks and West.

Arbitration Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Imagitas: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Selects Middle District Of Florida As Transferee Court

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Agrees with Plaintiffs’ Request to Transfer Class Actions to Middle District of Florida Eight nationwide and statewide class action lawsuits were filed against Imagitas arising out of “the propriety of Imagitas’s performance of certain contracts involving the departments of motor vehicles of six states” alleging that the company violated the federal Drivers’ Privacy Protection Act, 18 U.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Issues-Ledbetter v. Goodyear: Divided Supreme Court Holds Statute Of Limitations For Title VII Pay Discrimination Claims Begins To Run When Discriminatory Act Occurs

Discriminatory Employment Practice Acts that occur Prior to EEOC Charging Period are Time-Barred even if the Discriminatory Acts had “Continuing Effects” During the EEOC Charging Period Supreme Court Holds

In a case that will have substantial impact of Title VII class action lawsuits, a divided Supreme Court held that the limitations period on a Title VII pay discrimination claim begins to run when the discriminatory act occurs. Ledbetter v. Goodyear Tire & Rubber Co., Inc., __ U.S. __, 2007 WL 1528298, *2 (May 29, 2007). Plaintiff had worked for Goodyear for almost 20 years, from 1979 to 1998, and received or was denied raises based on performance evaluations by her supervisors, id., at *3. Plaintiff filed a questionnaire with the Equal Employment Opportunity Commission (EEOC) in March 1998 alleging sex discrimination, and in July filed a formal charge with the EEOC. Id. In November 1998, after taking early retirement, plaintiff filed suit against Goodyear asserting several claims, including a Title VII pay discrimination allegation. Id. The Supreme Court summarized the district court proceedings at page *3 as follows:

The District Court granted summary judgment in favor of Goodyear on several of Ledbetter’s claims, including her Equal Pay Act claim, but allowed others, including her Title VII pay discrimination claim, to proceed to trial. In support of this latter claim, Ledbetter introduced evidence that during the course of her employment several supervisors had given her poor evaluations because of her sex, that as a result of these evaluations her pay was not increased as much as it would have been if she had been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment. Toward the end of her time with Goodyear, she was being paid significantly less than any of her male colleagues. Goodyear maintained that the evaluations had been nondiscriminatory, but the jury found for Ledbetter and awarded her backpay and damages.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Neary v. Metropolitan Property: Connecticut Federal Court Grants Defense Motion In FLSA Class Action To Dismiss Class Action Claims Based On State Wage And Hour Laws

Federal Court Refuses to Exercise Supplemental Jurisdiction over State Law Wage and Hour Class Action Claims Because of Substantial Variance in State Laws and Conflict with FLSA (Fair Labor Standards Act) Opt-In Provision

Employees filed a putative class action in Connecticut federal court against Metropolitan Property alleging that the employer failed to pay overtime in violation of the federal Fair Labor Standards Act (FLSA) and Connecticut state labor laws. Neary v. Metropolitan Prop. & Cas. Ins. Co., 472 F.Supp.2d 247, 248 (D. Conn. 2007). The class action complaint included causes of action for a class action claim under FRCP Rule 23(b)(3) “for violation of state wage and hour laws ‘in each state in which each [p]laintiff worked’ (Count 4),” as well as “a class action claim under [FRCP Rule 23(b)(1)] for violation of state wage and hour laws ‘of the various states in which [p]laintiffs worked’ (Count 5).” Id. Defense attorneys moved to dismiss these class action claims on the grounds that the state law opt-out claims presented an irreconcilable conflict with the FLSA’s opt-in requirement. Id., at 249. The district court agreed.

Plaintiff’s class action complaint alleged that defendant insures vehicles nationwide and engaged in the practice of classifying field adjusters, field appraisers and outside adjusters as exempt from overtime in violation of the FLSA “and the wage and hour laws of the various states in which [p]laintiffs performed work for [d]efendant.” Neary, at 249. Plaintiff purported to bring the class action on behalf of a nationwide class alleging that certification was appropriate under Rule 23(b)(3). Id., at 249-50. The defense moved to dismiss Counts 4 and 5 of the class action complaint “pursuant to the Rules Enabling Act, 28 U.S.C. § 2072(b), on the basis that the class action procedures in Rule 23 irreconcilably conflict with Section 216(b) of the FLSA which expressly limits the scope of representative lawsuits seeking overtime pay to individuals who affirmative opt-in to the action.” Id., at 250. The district court granted the defense motion, but not for the reasons advanced.

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

Class Action Defense Cases-Mooney v. Allianz Life: Minnesota Court Certifies Class Action Holding Class Action Premised On State Consumer Fraud Laws And Common Law Unjust Enrichment Could Be Applied To Non-Resident Class Members

Federal Court Rejects Defense Constitutional Objection to Certification of Class Action and Holds Rule 23(b)(3) Predominance Test Satisfied in Class Action Premised on Minnesota Consumer Fraud Laws and Common Law for Unjust Enrichment because Minnesota’s Contacts with Non-Resident Class Members were Significant Enough to Permit Application of Minnesota Law to all Class Action Claims

Plaintiffs filed a class action against Allianz Life Insurance alleging consumer fraud claims arising out of the marketing of certain annuity products to senior citizens. Mooney v. Allianz Life Ins. Co., __ F.Supp.2d __ (D. Minn. May 10, 2007) [Slip Opn., at 2]. Plaintiffs moved for certification of a class action; defense attorneys objected in part on the grounds that predominance did not exist under Rule 23(b)(3) because of choice-of-law and conflicts-of-law issues. Id. The district court denied class action treatment, concluding that “because Plaintiffs had not performed the conflicts-of-law and choice-of-law analyses required by the Eighth Circuit’s opinion in In re St. Jude Medical, Inc., 425 F.3d 1116, 1120-21 (8th Cir. 2005), the Court was unable to determine whether class-wide questions of law predominate, or whether class-wide treatment is superior to other means of resolving this controversy.” Id. The court otherwise found that all of the class action requirements of Rule 23(a) had been met, id. Plaintiffs and defense filed supplemental briefing on the predominance issue, and the federal court certified a class action as requested.

Rule 23(b)(3) requires that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.” Plaintiffs argued that this test was met because Minnesota’s consumer fraud statutes and common law regarding unjust enrichment constitutionally may be applied to the claims of each class member; defense attorneys countered that “the law of each class member’s home state must be applied and therefore individualized questions of law predominate.” Mooney, at 3. According to the defense, applying Minnesota law to the claims of out-of-state residents is unconstitutional; alternatively, the defense argued that Minnesota’s choice of law rules required that the claims of each class member be examined under the laws of the states in which the class members lived. Id. The district court rejected the defense arguments and granted class certification.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-Interinsurance v. Superior Court: Defense Entitled To Judgment In Class Action Because Interest Charged On Installment Payments For Auto Policy Was Not A “Premium” Under California Law

As Matter of First Impression, California Appellate Court Holds that Department of Insurance Interpretation of Statute was not Entitled to Deference and that Trial Court Erred in Holding that Interest Charged by Insurer for Installment Payments Was a “Premium” Required to be Disclosed Under California law

Plaintiff filed a putative class action against her insurer, Interinsurance Exchange of the Automobile Club (IEAC) alleging violations of California law in that the insurer failed to advise her of the fees associated with paying her insurance premium in installments rather than in one lump sum. Interinsurance Exch. of the Auto. Club v. Superior Court, ___ Cal.App.4th ___, 56 Cal.Rptr.3d 421, 423 (Cal.App. March 26, 2007). Defense and plaintiff attorneys moved for summary judgment; the trial court granted plaintiff’s motion and denied the defense motion, _id._ Defense attorneys filed a petition for writ of mandate with the Court of Appeal and the appellate court reversed, holding that a “premium” within the meaning of the applicable California law “does not include charges imposed for making payments of the annual premium in installments” and, accordingly, IEAC did not violate California law and was entitled to summary judgment against plaintiff’s class action complaint. _Id._ Defense attorneys filed a petition for writ relief with the Court of Appeal; the appellate court accepted the case in part because it presented an issue of first impression, and ultimately reversed the trial court.

In 2002, plaintiff obtained car insurance from IEAC with an annual premium of $1049, and in 2002 and 2003 she paid the premium in one lump sum. IEAC, at 423. Her renewal statement for 2004 reflected an annual premium of $986 (after a $63 discount), and provided plaintiff the option of paying the premium in one lump sum or in 9 installments “subject to additional charges for interest at a rate of 17.99 percent per year and requiring payment of only the first installment of $53.60,” id. Plaintiff understood the notice and “understood an election to pay the annual premium in installments would subject her to interest charges”; nonetheless, she “elected to pay the annual premium in installments rather than in one lump sum.” Id. The following year plaintiff received another renewal notice, this one reflecting an annual premium of $846, and again providing her with “the option of paying the $846 annual net premium in either one lump sum or nine monthly installments, subject to additional charges for interest at a rate of 18 percent per year and requiring payment initially of only the first installment of $34.48.” Id., at 424. Plaintiff again selected the installment option, id.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Intel: Delaware Federal Court Holds Sherman Act Class Action Claims Premised On Foreign Conduct Barred By Foreign Trade Antitrust Improvements Act (FTAIA)

Defense Motion to Dismiss Class Action Allegations Based on Foreign Conduct Granted because no Evidence of “Direct, Substantial and Foreseeable Effect on U.S. Commerce” as Required by Foreign Trade Antitrust Improvements Act of 1982 (FTAIA) Delaware District Court Holds

After Advanced Micro Devices (AMD) filed suit Intel alleging Sherman Act antitrust claims and violations of California’s unfair competition laws, several class action lawsuits were filed and ultimately consolidated with the AMD lawsuit. In re Intel Corp. Microprocessor Antitrust Litig., 476 F.Supp.2d 452, 453 (D. Del. 2007). The first amended class action complaint alleged that Intel “engaged in anticompetitive conduct in the United States which has resulted in Intel obtaining an unlawful world-wide monopoly over the x86 microprocessor market” thereby increasing the cost of the x86 to consumers. Id., at 453-54. In addition to Sherman Act claims, the class action complaint included claims under the laws of 20 states for antitrust/restraint of trade, and 23 states for unfair competition/consumer protection, and prayed for injunctive relief, monetary damages (including punitive and treble damages), disgorgement of profits, and establishment of a constructive trust. Id., at 454. Defense attorneys moved to dismiss plaintiffs’ “foreign conduct claims” under Rule 12(b)(1) for lack of subject matter jurisdiction, id.; the district court granted the defense motion.

By way of background, AMD’s complaint against Intel included foreign conduct allegations that on Intel’s motion the district court dismissed for lack of jurisdiction. In re Intel, at 455. The class action complaint similarly included allegations of foreign conduct: the class plaintiffs “allege that the weakening of AMD in the market resulted in Intel charging higher prices overseas to third parties for microprocessors who then installed these higher priced Intel chips into computers that were eventually sold in the United States Market, which in turn led to higher retail prices for those computers in the United States.” Id. Intel argued that the foreign conduct theory in the class action complaint is even more attenuated than the claim the Court struck from AMD’s Complaint and, accordingly, the foreign conduct claims should be dismissed for lack of jurisdiction under the Foreign Trade Antitrust Improvements Act of 1982 (FTAIA). Id. Specifically, FTAIA requires evidence of a “direct, substantial and foreseeable effect on U.S. commerce” and Intel argued that the class action complaint failed to include any such evidence. Id.

Class Action Court Decisions Uncategorized