CLASS ACTION DEFENSE BLOG
Welcome to Michael J. Hassen's Blog. Here you will find over 2,000 articles related to class actions.
Class Action Against Car Manufacturer was a Catalyst Behind Recall Program thus Entitling Plaintiffs to Attorney Fee Award as “Prevailing Party” under California law New Jersey Federal Court Holds
In March 1994, following consumer complaints, the National Highway Traffic Safety Administration (NHTSA) opened an investigation into whether the Bendix 10 ABS had a safety-related defect warranting a recall. In October 1995 plaintiffs filed a putative class action against DaimlerChrysler for, inter alia, violations of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, alleging that Chrysler vehicles equipped with Bendix 10 ABS were defective. And in April 1996, Chrysler voluntarily recalled vehicles equipped with Bendix 10 ABS, thereby ending the NHTSA’s investigation. Chin v. DaimlerChrysler Corp., 461 F.Supp.2d 279, 281 (D. N.J. 2006). But in March 1996, plaintiffs had amended their class action complaint to allege that Chrysler vehicles equipped with Bendix 9 ABS also were defective, as the product was “largely interchangeable [with the Bendix 10] and suffer[ed] from virtually identical defects.” Id. The NHTSA informed Chrysler in September 1996 that it would begin investigating customer complaints involving the Bendix 9 ABS, and soon thereafter the company voluntarily recalled vehicles equipped with Bendix 9 thereby ending the NHTSA investigation. Id.
Defense attorneys moved to dismiss the amended class action complaint, but the district court denied the motion in March 1997 and the following month Chrysler publicly announced its recall of vehicles with Bendix 9 ABS. Chin, at 281. However, defense attorneys successfully defeated plaintiffs’ effort to certify the lawsuit as a class action: in September 1998, the district court denied plaintiffs motion for class certification on the ground that plaintiffs had failed to demonstrate that common questions of law would predominate over individual issues, as required by Rule 23(b)(3), because the court would be required to apply the laws of 52 jurisdictions if a nationwide class were certified. Id., at 281-82. As the district court observed, “[f]or nearly all intents and purposes, Plaintiffs’ class-action came to an end” with the denial of the motion to certify a class action. Id., at 281.
Class Action Court Decisions Uncategorized
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Entity that Employed Significant Number of Putative Class Members was an Indispensable Party under Rule 19 of the Federal Rules of Civil Procedure and could not be Joined in Class Action Without Destroying Federal Court Diversity Jurisdiction thus Necessitating Dismissal of Class Action Complaint New York Court Holds
Plaintiff filed a putative class action against Clear Channel Communications and Clear Channel Broadcasting for violations of New York’s labor laws, alleging that defendants “made and continue to make unauthorized deductions from the wages of sales representatives for the New York radio stations that Defendants own and operate.” Mattera v. Clear Channel Communications, Inc., 239 F.R.D. 70, 71-72 (S.D.N.Y. 2006). Plaintiff invoked federal court jurisdiction solely on the basis of diversity, id., at 72. Defense attorneys moved to dismiss the class action complaint for failure to join an indispensable party, id.; the thrust of the defense motion was that the class action failed to name Capstar Radio Operating Company (the owner of the two radio stations where plaintiff worked) as a defendant, and that joinder of Capstar would eliminate diversity jurisdiction thereby compelling dismissal of the action, id., at 73. The district court agreed with the defense and dismissed the class action.
Plaintiff was a sales representative, selling advertising spots or on-air time for two of the 1200+ radio stations defendants own and operate. Mattera, at 72. Sales representatives were received biweekly draws against commissions earned on each sale. The commissions were to be “paid one month after the contract for a sale is executed and the advertising spot purchased is aired,.” But if the customer failed to pay for the service within 120 days then there would be a “charge back,” with the entire amount of the commission deducted from the employee’s next paycheck. According to the allegations in the class action complaint, the customer, “typically an advertising agency or corporation with a longstanding relationship with Defendants,” would pay the bill more than 120 days after service, but in such instances defendants would not reverse the charge back. Id.
Class Action Court Decisions Class Action Fairness Act (CAFA) Employment Law Class Actions Uncategorized
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Voluntary Payment Doctrine did not Apply where Plaintiff Could only get Copies of Hospital Records through Service Company and Plaintiff is an Adequate Class Representative if her Agent Requests and Pays for Hospital Records Illinois Court Holds
Plaintiff filed a putative class action against Smart Corporation, a company which contracted with hospitals to place its own employees on site to retrieve and copy hospital medical records for patients, alleging that it overcharged hospital patients for such services in violation of common law, Illinois’ Inspection of Hospital Records Act and Consumer Fraud and Deceptive Business Practices Act, and claiming also unjust enrichment. Ramirez v. Smart Corp., ___ Ill.App.3d ___ (Ill.App. February 16, 2007). Plaintiff’s lawyer sought class certification, and defense attorneys moved for summary judgment. Slip Opn., at 1-2. The trial court granted the defense motion and denied class certification.
Plaintiff had suffered an injury and received treatment at a hospital. As part of her workers compensation claim, plaintiff’s lawyer sought her hospital records. Smart retrieved and copied the records – consisting of 6 pages – and sent a bill for $34.78 itemized as follows: a basic fee of $15 and a $1 per page copy fee bringing the total photocopy charge to $21, a retrieval/search fee of $10, and shipping/handling fee of $3.78. Ramirez, at 2. Plaintiff’s law firm paid the bill before plaintiff reviewed it. Id., at 3. The trial court denied class certification and granted the defense motion for summary judgment. The court refused to certify a class action because it found plaintiff to be an inadequate class representative in that her lawyer had reviewed and paid the bill, not the plaintiff. Id., at 4. The court granted summary judgment in favor of the defense holding that plaintiff’s claims were barred by the voluntary payment doctrine, and additionally finding that the charges were not deceptive or unfair within the meaning of the Consumer Fraud Act and that plaintiff could not seek damages under the Hospital Records Act because that statute allows a patient to compel production of hospital records. Id.
Certification of Class Actions Class Action Court Decisions Uncategorized
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Judicial Panel Grants Unopposed Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 but Agrees with Defense Attorneys and Non-Moving Plaintiffs that Class Actions Should be Centralized in Southern District of California Six class action lawsuits were filed against Morgan Stanley in Connecticut, Illinois, New Jersey, New York and Texas federal courts alleging violations of the federal Fair Labor Standards Act (FLSA) by misclassifying certain employees as exempt from overtime pay and/or by assessing improper deductions against employee compensation.
Class Action Court Decisions Multidistrict Litigation Uncategorized
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Whether Lender Violated TILA, RESPA or State’s Consumer Loan Act Irrelevant to Determination of Class Certification Motion because Plaintiffs Adequately Alleged such Violations Washington Federal Court Holds
Plaintiffs filed a class action against their lender NovaStar Mortgage for violations of Washington’s Consumer Protection Act (CPA) alleging that it failed to disclose it paid mortgage brokers a yield spread premium (YSP) in connection with their loans; the class action complaint was premised on NovaStar’s purported failure to provide written disclosures required by the federal Real Estate Settlement Procedures Act (RESPA), the federal Truth in Lending Act (TILA), Washington’s Consumer Loan Act (CLA), and the plaintiffs’ deeds. Pierce v. NovaStar Mortgage, Inc., 238 F.R.D. 624, 625 (W.D. Wash. 2006). In response to plaintiffs’ first motion to certify the lawsuit as a class action, the district court agreed with defense attorneys that plaintiffs had failed to demonstrate numerosity or typicality as required by Rule 23(a) and also failed to establish the predominance and superiority elements required by Rule 23(b); it therefore denied the motion, but did so without prejudice. Id. On plaintiffs’ renewed motion for class certification, the court rejected defense objections and granted the motion.
By way of background, to establish a violation of the CPA one must prove “(1) an unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) that impacts the public interest; (4) and causes injury to the plaintiff in his or her business or property; and (5) such injury is causally linked to the unfair or deceptive act.” Pierce, at 626 (citation omitted). A plaintiff may satisfy the first two elements by proving that the act in question is a per se unfair trade practice: “A per se unfair trade practice exists when, by statute, the Legislature declares an unfair or *627 deceptive act in trade or commerce and the statute has been violated.” Id., at 626-27 (citations omitted). Under Washington law, “[a] violation of the CLA . . . is explicitly deemed a violation of the first and second elements of the CPA,” id., at 627 (citation omitted). In denying the first motion for class certification, the district court believed that “verbal disclosures and independent knowledge of the YSP were relevant to determining whether NovaStar violated the CPA.” Id., at 626. Plaintiffs’ lawyers disagreed, arguing in the renewed motion that “verbal disclosures are irrelevant to class certification because they seek to establish a per se violation of the Consumer Protection Act by proving that NovaStar violation the Consumer Loan Act.” Id.
Certification of Class Actions Class Action Court Decisions RESPA/TILA Class Actions Uncategorized
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Plaintiffs in Securities Fraud Class were on Inquiry Notice of Claims Against Company thus Rendering Class Action Complaint Barred by Statute of Limitations New York Court Holds
Several securities fraud class action lawsuits were filed in federal courts against MBIA and various individual defendants alleging that certain financial statements contained materially misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. The actions were consolidated in the Southern District of New York, and defense attorneys moved to dismiss on the grounds that claims were time barred and that the allegations in the class action complaints failed to satisfy the heightened pleading requirements for securities fraud cases. In re MBIA Inc. Securities Litig., ___ F.Supp.2d ___, 2007 WL 473708 (S.D.N.Y. February 13, 2007) [Slip Opn., at 1-2]. The district court concluded that the class action claims were barred by the applicable statute of limitations and dismissed the complaint.
The class action complaint alleges that in 1998 MBIA – which is in the “primary business [of] selling financial guarantee insurance to public finance and structured finance clients” – entered into retroactive reinsurance agreements to protect itself against an anticipated $170 million loss in order to avoid a downgrade of its AAA rating. MBIA, at 3-4. According to the complaint, MBIA entered into a series of side agreements with the reinsurance companies that were not publicly disclosed for the purpose of inducing the reinsurers to cover the $170 million loss; under these side agreements, “MBIA promised to transfer insurance policies on the highest rated bonds in its portfolio, along with the associated premiums, to the Reinsurers over a period of six years.” Id., at 4-5. The complaint also alleged that MBIA improperly booked these premiums as income rather than as loans. MBIA’s disclosures of these transactions painted a positive picture for the company, see id., at 5-6; however, in the months following MBIA’s disclosures, several published reports explained the trade-offs realized through the deals, some viewing the strategy as “the bond insurance equivalent to Houdini” and others viewing it as “innovative,” id., at 6-7. And in 2002, a 66-page research report by Gotham Partners on MBIA detailed credit concerns involving the company’s guarantee portfolio, which MBIA immediately criticized in a press release that “contained no factual discussion of the transactions related by the [research] report.” Id., at 8-10.
Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized
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In Multifaceted Action Against Several Defendants, Illinois Court Grants Ernst & Young’s Defense Motion to Dismiss, Grants Timmis Law Firm/Lawyers Defense Motion to Compel Arbitration, and Grants Deutsche Bank Defense Motion for Stay
Plaintiffs filed a putative class action in Illinois state court against various lawyers, accountants, and bankers with whom they had consulted in connection with minimizing tax liability arising from the sale of their respective companies because the IRS subsequently determined that the tax saving strategy recommended to plaintiffs was “illegal” and they “ended up losing hundreds of thousands of dollars in the transactions.” Olson v. Jenkens & Gilchrist, 461 F.Supp.2d 710, 714 (N.D. Ill. 2006). Defense attorneys removed the action to federal court. Certain defendants then moved to dismiss the class action complaint, and other defendants moved to compel arbitration under a clause governed by the Federal Arbitration Act (FAA), and still other defendants moved for a stay of proceedings, id. The district court granted the defense motions.
The tax strategy recommended to plaintiffs involved digital option contracts, sometimes called Currency Options Bring Reward Alternatives (COBRA). Olson, at 714-15. We do not summarize here the convoluted and complicated fact pattern underlying the class action complaint. Suffice it to say that plaintiffs were persuaded by some of the law firm defendants to use digital options as a tax shelter in connection with the sale of their companies, the IRS subsequently determined such tax shelters to be illegal, and that plaintiffs suffered substantial damages as a result. The law firm defendants also allegedly advised plaintiffs not to participate in an IRS amnesty program and, even after the IRS determination, defendants failed to “retract, modify, or qualify their advice that the tax strategy was legal.” Id., at 716.
Ernst & Young moved to dismiss the 10 claims against it, which included claims for fraud, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Illinois Consumer Fraud Act), conspiracy, declaratory relief, and breach of the duty of good faith and fair dealing. The district court granted the motion finding that the class action complaint alleged only that Ernst & Young was involved “in the initial creation of the COBRA tax strategy in 1999”: plaintiffs “[did] not allege that [Ernst & Young] provided any professional services to Plaintiffs; received any fees from Plaintiffs directly or as a result of any transaction Plaintiffs engaged in; communicated with Plaintiffs in any way; or had any relationship with Plaintiffs whatsoever. While the Complaint does allege that [Ernst & Young] had a relationship with Jenkens and Deutsche Bank, Plaintiffs do not allege that relationship led to any damages to Plaintiffs.” Olson, at 718. Accordingly, the district court dismissed the class action claims against Ernst & Young, but did so without prejudice. Id.
Arbitration Class Action Court Decisions Uncategorized
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California Court Surprisingly Holds that Under Certain Circumstances Plaintiffs need not be Members of Class to Serve as Class Representatives and that, as Matter of First Impression, Rescission Under TILA (Truth-in-Lending Act) is a Personal Remedy Unsuitable for Class Action Treatment
Plaintiffs filed a putative class-action lawsuit against their lender alleging inter alia violations of the federal Truth In Lending Act (TILA) arising from the lender’s failure to disclose certain closing fees charged in connection with refinance loans. LaLiberte v. Pacific Merc. Bank, 147 Cal.App.4th 1. 53 Cal.Rptr.3d 745, 746 (Cal.App. 2007). Defense attorneys demurred to the class-action complaint on the ground that the class allegations failed to establish commonality; the trial court agreed but granted plaintiffs leave to amend. After extensive motion practice, plaintiffs filed a third amended class-action complaint seeking to represent a single class of borrowers who obtained loans after November 20, 2002. Id., at 746-47. Defense attorneys again demurred, this time on the ground that because the putative class representatives secured their loans in April 2002, they were not members of the class they sought to represent. Id., at 747. The trial court agreed, and sustained the demurred to the class action allegations without leave to amend. Id. as a matter of first impression, the California appellate court affirmed the trial court’s order, holding that rescission under TILA was not suitable for class action treatment.
Under California law, “An order sustaining demurs to class action allegations ‘is appealable to the extent that it prevents further proceedings as a class action.’” LaLiberte, at 747 (citation omitted). In this case, two standards of review apply on appeal. The first involves the independent judgment exercised by an appellate court in reviewing an order sustaining a demurrer; the second involves whether the trial court abused its discretion in denying leave to amend. Id., at 747-48 (citations omitted). The trial court had relied upon Payne v. United California Bank, 23 Cal.App.3d 850 (Cal.App. 1972), in support of its conclusion that plaintiffs lacked standing to sue on behalf of the proposed class because they were never members of that class. See id., at 748. The Court of Appeal disagreed, holding that La Sala v. American Sav. & Loan Ass’n, 5 Cal.3d 864 (Cal. 1971), was more on point. Id.
Certification of Class Actions Class Action Court Decisions RESPA/TILA Class Actions Uncategorized
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Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Plaintiff’s Request to Transfer Class Actions to District of Delaware Three federal securities class action lawsuits (two in Delaware and one in Illinois) were filed against JP Morgan Chase alleging fraudulent misrepresentations relating to its merger in 2004 with Bank One Corp. In re JP Morgan Chase & Co.
Class Action Court Decisions Multidistrict Litigation Uncategorized
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Judicial Panel Rejects Opposition to Defense Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Grants Defense Motion for Centralization of Three Class Action Lawsuits Numerous class action lawsuits were filed against several defendants alleging “that plaintiffs suffered injuries resulting from their use of Tile Perfect Stand ‘n Seal “Spray-On” Grout Sealer.” In re Stand ‘N Seal Products Liab. Litig., 469 F.Supp.2d 1351, 1351 (Jud. Pan.Mult.Lit. January 5, 2007).
Class Action Court Decisions Multidistrict Litigation Uncategorized
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