Ward v. Bank of New York Class Action Defense Case: Offer Of Judgment Rendered Moot Plaintiff’s Fair Labor Standards Act (FLSA) Collective Action Claim New York Federal Court Holds

New York Federal Court Agrees with Defense that FRCP Rule 68 Offer of Judgment Required Dismissal of Plaintiff’s FLSA (Fair Labor Standards Act) Claim and Court Refuses to Exercise Supplemental Jurisdiction Over State Labor Law Class Action Claims

A former hourly employee, Ward, filed a putative class action against her former employer, Bank of New York, alleging violations of the federal Fair Labor Standards Act (FLSA) (as a collective action) and New York labor laws (as a class action) for failure to pay overtime. Ward v. Bank of New York, 455 F.Supp.2d 262, 264 (S.D.N.Y. 2006). An amended complaint named a former assistant manager, Smalls, who alleged additionally that the Bank improperly classified her and others as exempt employees. Id., at 265. The defense made an offer of judgment to Ward for $1000 under FRCP Rule 68, which she rejected. Id. Defense attorneys then moved to dismiss Ward’s claims because the Rule 68 offer rendered her action moot and because no other ” plaintiffs had opted in to the FLSA collective action. Id. The federal court granted the defense motion Ward’s FLSA claim and dismissed her state law class action claims because it refused to exercise jurisdiction over them.

Defense attorneys argued that “Ward’s FLSA claims should be dismissed on the ground that [the Bank’s] Rule 68 offer of judgment moots those claims, and therefore the Court lacks subject matter jurisdiction.” Ward, at 265. The district court agreed. The court held that “[w]hen a defendant offers the maximum recovery available to a plaintiff, the Second Circuit has held that the case is moot and ‘there is no justification for taking the time of the court and the defendant in the pursuit of miniscule individual claims which defendant has more than satisfied.'” Id., at 267 (citations omitted). The same rule applies in FLSA collective actions: unless other plaintiffs opt in to the collective action, the plaintiff “advances only her own individual claims,” which the Rule 68 offer rendered moot Id. The federal court held at page 267 that this was true “even where plaintiff rejects the offer of judgment” (citations omitted). Moreover, “Rule 68 also applies in class actions, where prior to class certification defendant offers plaintiff the maximum amount that plaintiff could recover at trial.” Id., at 268 (citations omitted).

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Masters v. Wilhelmina Model Agency: In Approving Class Action Settlement District Court Should Have Considered Whether To Award Class Members Treble Damages And Based Attorneys Fee Award On Total Funds Second Circuit Holds

Second Circuit Holds that District Court Erred in Failing to Exercise Discretion to Award Class Members Treble Damages in Sherman Act Class Action Settlement and Erred in Calculating Attorneys Fee Award on Percentage of Settlement Funds Claimed by Class Members Rather than on Total Amount of Settlement Proceeds Negotiated by Counsel

Plaintiffs filed a class action against several modeling agencies alleging violations of the federal Sherman Act and of New York state laws for conspiring to “uniformly charge models a commission of 20%” rather than 10% based on a “collusive scheme” to characterize themselves as “managers” and therefore exempt from the 10% cap imposed on “employment agencies” under New York state law. Masters v. Wilhelmina Model Agency, Inc., 473 F.3d 423, 2007 WL 28983, *1 (2d Cir. 2007). After extensive litigation, the district court certified the lawsuit as a class action and, eventually, the parties reached a settlement, id., at *1-*5. The district court approved the proposed settlement, but refused to exercise discretion to award class members treble damages under the Sherman Act based on its belief that under the terms of the settlement it did not have the discretion to do so, id., at *5-*6. The court also awarded attorney fees, but based the award on a percentage of the total funds claimed by class members rather than on the total amount of funds negotiated by plaintiffs’ counsel, id., at *7-*8.. The Second Circuit affirmed in part and reversed in part. We discuss below only those parts of the opinion that reversed the district court.

Plaintiffs argued that it was error for the district court “to award single, rather than treble, damages” and not “to award prejudgment interest” to class members. Masters, at *9. The district court refused plaintiffs’ request for these awards based on its belief “that the unambiguous terms of the Settlement Agreement made no provision for the distributions sought and that it was bound under the circumstances to approve or disapprove the Settlement negotiated by the parties.” Id. In fact, in denying reconsideration, the district court explained that the “four corners” of the 30-page settlement agreement were silent on treble damages or prejudgment interest, and that it refused to award them because “it would have been wrong to do so.” Id., at *11-*12. The Second Circuit disagreed, concluding that the “the District Court was not aware of its discretion, failing to recognize that it was empowered to allocate funds to the members of the class as treble damages.” Id., at *11. The Circuit Court agreed that prejudgment interest could not be awarded because such an award required a finding under the Clayton Act of “bad faith . . . causing a material delay,” id., at *12, but it could have awarded treble damages because of the existence of a cy pres fund and the requirement that such funds be placed to the “next best compensation use,” id. The Court therefore remanded the action to the district court to consider whether to award Excess Funds to class members as treble damages. Id., at *11.

Class Action Court Decisions Uncategorized

Saab v. Home Depot-Class Action Defense Cases: Class Action Fairness Act (CAFA) Does Not Permit Appellate Review Of Federal Court Order Denying Motion To Remand Action Removed On Grounds Of Diversity Jurisdiction Eighth Circuit Holds

Eighth Circuit Holds that CAFA (Class Action Fairness Act) Authorizes Appellate Review of Remand Orders Only Where Removal was Based on CAFA so Circuit Court could not Review Denial of Motion to Remand Class Action Removed on Grounds of Diversity Jurisdiction

Plaintiff filed a putative class action against Home Depot in Missouri state court, and defense attorneys removed the action to federal court on the grounds of diversity jurisdiction under 28 U.S.C. § 1332(a). Plaintiff filed a motion to remand the class action to state court, but the motion was denied. Plaintiff then asked the Eighth Circuit to accept an appeal of the district court’s order, arguing that CAFA (Class Action Fairness Act) authorizes appellate review of remand orders in all class action cases. Saab v. Home Depot U.S.A., Inc., 469 F.3d 758, 759 (8th Cir. 2006). Defense attorneys had not sought to remove the class action under CAFA, and “made no assertion of jurisdiction under CAFA,” id., at 759 n.2. Nonetheless, plaintiff argued that CAFA should be read “expansively” so as “to give federal courts of appeal the jurisdiction to review the grant or denial of a motion to remand any class action.” Id. The Eighth Circuit disagreed.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Class Action Defense Cases-Lao v. Wickes: California Federal Court Holds As Matter Of First Impression That Defense Must Establish Removal Under CAFA (Class Action Fairness Act) And Must Disprove CAFA Exceptions To Jurisdiction

As Matter of First Impression in Ninth Circuit, California District Court Holds that Defense must not only Establish Prima Facie Case for Removal Under Federal Class Action Fairness Act (CAFA) but must Establish Further that CAFA’s Local Controversy and Home-State Rule Exceptions to Removal Jurisdiction do not Apply

Plaintiffs filed a putative class action against their former employer, Wickes Furniture Company, for violations of California’s state labor code, and defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA). Lao v. Wickes Furniture Co., Inc., 455 F.Supp.2d 1045, 1048 (C.D. Cal. 2006). Plaintiffs filed a motion to remand the class action to state court on the ground that it fell within CAFA’s “local controversy” exception or home-state rule provision to federal court jurisdiction. Id. The federal court agreed with the defense that once it established a prima facie case for removal under CAFA, the burden shifted to plaintiffs to demonstrate the applicability of the local controversy or home-state rule. Id., at 1050 et seq. The district court concluded that plaintiffs had met their burden, and remanded the class action to state court.

Plaintiffs worked as commissioned salespersons for Wickes, and filed a state law employment class action on the grounds that they allegedly “regularly performed non-sales (and, hence uncompensated) work, such as attending meetings . . ., cleaning the stores, and researching the prices charged by Wickes’ competitors” Lao, at 1048. The class action complaint alleged further that Wickes improperly stripped salespersons of earned commissions, id. Defendants removed the action to federal court on the basis of CAFA jurisdiction, and plaintiffs’ lawyers filed a motion to remand the action to state court. Id., at 1048-49. Preliminarily, the federal court concluded that defendant had adequately established the requisite $5 million amount in controversy. Id., at 1049-50. Defendants argued that the amount in controversy was $6,000,000, id., and while the district court was “not unsympathetic” to plaintiffs’ claim that this sum was inflated, it found that “some of the blame lies with how plaintiffs drafted their complaint,” id., at 1050.

Certification of Class Actions Class Action Court Decisions Removal & Remand Uncategorized

Class Action Defense Cases-Eakins v. Pella: North Carolina Federal Court Holds Once Defense Establishes Prima Facie Case For Removal Under Class Action Fairness Act (CAFA) Burden Shifts To Plaintiff To Prove Exception To Removal Jurisdiction

District Court Holds as Matter of First Impression in Fourth Circuit that CAFA Shifts Burden of Proof to Establish Local Controversy Exception to Removal Jurisdiction and Denies Motion to Remand

Plaintiff filed a putative class action in North Carolina state court against Pella Corporation, a window manufacturer, for unfair business practices and products liability based on the allegation that the blazing system utilized on defendants’ windows was defective, leading to water damage following rain. The defense removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA). Eakins v. Pella Corp., 455 F.Supp.2d 450, 451 (E.D. N.C. 2006). Plaintiffs filed a motion to remand the class action to state court on the ground that it fell within CAFA’s “local controversy” to federal court jurisdiction. Id. The district court agreed with defense attorneys that plaintiff bore the burden of establishing the applicability of the local controversy exception, and denied the motion for remand.

The federal court found the law clear that “the party requesting removal to federal court has the burden of proving that such removal is warranted,” but in cases of class actions removed to federal court under the Class Action Fairness Act of 2005, “[l]ess clear is which party bears the burden of proving an exception to CAFA requires remand.” Eakins, at 452. Because this was a matter of first impression in the Fourth Circuit, the district court relied on decisions out of the Fifth, Seventh and Eleventh Circuits which “have held that once the removing party proves the prima facie case for removal, the burden shifts to the plaintiff to prove that the local controversy exception should apply.” Id. (citations omitted). The district court found “no reason to depart” from those cases, and held that plaintiff had the burden of establishing that the class action should be remanded to state court by virtue of the local controversy exception. Id.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Class Action Defense Cases-DiTolla v. Doral Dental: Second Circuit Holds Class Action Fairness Act (CAFA) 60-Day Deadline For Issuing Opinion Runs From Grant Of Permission To Appeal And That Removing Party Bears Burden Of Proving Jurisdiction

Court Holds as Matter of First Impression in Second Circuit that CAFA does not Modify Burden of Proof to Establish Removal Jurisdiction, and Affirms Remand of Class Action to State Court because Defense Failed to Establish Requisite Amount in Controversy

Plaintiff filed a putative class action against the third party administrator of a pool funded by Medicaid and Medicare, seeking ‘”an accounting of all amounts by which the Pool has been funded and reduced”; defense attorneys estimated this amount to be $40 million (though the complaint was silent as to the amount), and argued that plaintiff had placed that entire amount at issue. The defense removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA), but the district court remanded the action to state court. DiTolla v. Doral Dental IPA of New York, LLC, 469 F.3d 271, 272-73 (2d Cir. 2006). On appeal, defense attorneys argued that the $5 million “amount in controversy” test was satisfied. Id., at 273. The Second Circuit disagreed.

Preliminarily, the Second Circuit considered the statutory requirement that, absent an extension of time under 28 U.S.C. § 1453(c)(3), the appellate court issue an opinion within 60 days of the granting of an appeal from an order granting or denying remand. DiTolla, at 274. Under 28 U.S.C. § 1453(c)(4), the appeal is deemed denied if a final judgment is not issued within that 60-day window. In DiTolla, defense attorneys sought permission to appeal in May 2006, and permission was granted in July 2006. The defense team filed their brief on August 17, 2006, and a month later, on September 21, 2006, the parties stipulated to extend time for issuance of a opinion. Id. Plaintiff argued that the appeal was “filed” in May, and that the Circuit Court therefore lacked authority to grant permission to appeal because that order came 66 days after the “filing” of the appeal. Id. The Second Circuit disagreed, holding at page 274: “We reject this interpretation . . . and hold that the ‘filing’ of the appeal for CAFA purposes occurs on the date in which this Court issues an order granting permission to appeal.” The Court observed at page 275 that its interpretation is consistent with case law out of the Fifth, Seventh, Ninth and Eleventh Circuits.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Parks v. General Motors Class Action Defense Case: South Carolina Federal Court Agrees With GM Defense Team That Class Action Should Not Be Certified Because Car Dealership Failed To Meet Commonality And Predominance Requirements

Court Holds that Affirmative Defenses Preclude Finding of Commonality and Alternatively Finds that Determination of Liability and Damages would Involve Individual Issues of Fact and Law Thereby Defeating Commonality and Predominance Requirements of Rule 23

Plaintiff car dealership filed a putative class action against General Motors seeking injunctive relief and damages arising out of the allegation that GM cleaned a shipment of 2500 vehicles that arrived in the U.S. “covered in a foreign substance” resulting in damage to parts of the vehicles, and then sought to “conceal the extent of the damages from its dealers and the public by making cosmetic repairs and by disposing of the more severely damaged vehicles by auction in Florida.” Parks Auto. Group, Inc. v. General Motors Corp., 237 F.R.D. 567, 569 (D. S.C. 2006). Dealers were not permitted to unilaterally refuse shipment of the repaired vehicles. Moreover, “It is uncontested that GM did not provide a uniform, total repurchasing program for these vehicles. Dealerships were told that any such repurchasing requests would be directed to the regional level on a case by case basis.” Id. Defense attorneys argued that the lawsuit should not be certified as a class action because the complaint did not present common questions of law or fact as required by Rule 23(a)(2). Id., at 570. The district court agreed and denied plaintiff’s motion for class certification. Id., at 573.

The federal court noted that the plaintiff bears the burden of establishing each of the required elements for certification of a class action under Rule 23. Parks, at 570. Plaintiff argued that GM had engaged in a pattern of conduct that was applicable to all class members, id.; but even though the district court recognized that there need only be a single common question of law or fact, id., the court found this argument insufficient to establish commonality. First, the court agreed that GM’s affirmative defenses of accord and satisfaction peculiar to plaintiff defeats commonality, as does its affirmative defenses of release, waiver and comparative negligence as to the remaining putative class members, as the defenses “would require individualized inquiry for each class member.” Id., at 570. As the district court observed, Fourth Circuit case law holds that “where individual affirmative defenses may be asserted against one plaintiff, but not the entire class, class certification is precluded.” Id. As the court explained at page 570, “Although it is difficult to determine with any precision, the court finds that GM’s affirmative defenses are not without merit and would require individualized inquiry in at least some cases. Accordingly, the court finds that class certification would be erroneous.”

Certification of Class Actions Class Action Court Decisions Uncategorized

Main Drug v. Aetna-Class Action Defense Cases: Alabama Federal Court Holds That Burden Of Proving Federal Court Jurisdiction Under Class Action Fairness Act (CAFA) Remains With Defense And That Burden Was Met

CAFA (Class Action Fairness Act) did not Shift Burden of Proving Federal Jurisdiction to Plaintiff but Defense Established Requisite Amount In Controversy so Alabama Federal Court Denies Motion to Remand Class Action to State Court Plaintiff, a pharmacy, filed a putative class action against insurance/pharmacy benefit management companies for misrepresentation, breach of contract, unjust enrichment and conspiracy, alleging that defendants failed to reimburse pharmacies “according to an agreed-upon formula for brand name prescriptions dispensed to Defendants’ insureds.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Blockbuster v. Galeno-Class Action Defense Cases: Defense Bears Burden Of Establishing Federal Court Jurisdiction Under Class Action Fairness Act (CAFA) Second Circuit Holds

Second Circuit Holds that CAFA (Class Action Fairness Act) did not Shift Burden of Proving Federal Jurisdiction to Plaintiff and Remands Class Action Case to District Court for Further Proceedings

Plaintiffs filed a putative class action against Blockbuster in New York state court challenging the company’s “No Late Fee” program as a deceptive business practice on the grounds that Blockbuster did not adequately inform customers that in order to avoid the late fees the transaction was converted from a video rental to a video sale. Blockbuster, Inc. v. Galeno, 472 F.3d 53, 2006 WL 3775326, *1 (2d Cir. 2006). Defense attorneys removed the action to federal court asserting both general diversity jurisdiction under 28 U.S.C. § 1332(a) and federal court jurisdiction under the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1332(d). Id., at *2. Plaintiffs moved to remand the class action to state court, arguing that the defense had not established the requisite $5 million amount-in-controversy, id.; defense attorneys countered that “CAFA had reversed the traditional rule that the party seeking removal to federal court bears the burden of establishing federal jurisdiction,” id. The district court agreed with the defense, but its order denying the motion to remand the class action stated not only that “the defendant has met its burden” but also that “the plaintiff has not met [its] burden,” id. The Second Circuit held that the district court should not have assigned any burden to the plaintiff, and remanded the action for further proceedings in light of the ambiguity in the lower court’s order.

After summarizing CAFA and the appropriate standard of review of an order denying a motion to remand, Galeno, at *3, the Circuit Court addressed whether CAFA “shifted the burden of proof to the remand-requesting plaintiff to show that federal jurisdiction does not exist,” id., at *4. The Second Circuit’s analysis led it to the same conclusions reached by “[e]very other circuit court that has considered this issue,” id., at *5 – viz., that CAFA had not affected the defense burden of establishing federal court removal jurisdiction, id.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

Class Action Defense Cases-In re Volkswagen/Audi Warranty: Judicial Panel On Multidistrict Litigation (MDL) Grants Joint Defense/Plaintiff Motion To Centralize Class Action Litigation But Selects District Of Massachusetts As Transferee Court

Judicial Panel Agrees Pretrial Coordination Pursuant to 28 U.S.C. § 1407 is Warranted for Class Actions But Rejects Defense and Plaintiff Recommendations for Request for and Grants Defense Motion for Centralization of Three Class Action Lawsuits After four class action lawsuits concerning vehicle extended warranties were filed against Volkswagen in California, Florida, Illinois, and Pennsylvania, defense and plaintiffs’ attorneys filed a joint motion with the Judicial Panel for Multidistrict Litigation (MDL) pursuant to 28 U.

Class Action Court Decisions Multidistrict Litigation Uncategorized