Indictment of Class Action Law Firm and Lawyer Fuels Debate on Prosecution of Corporations

David Bershad and Steven Schulman along with class action plaintiff firm Milberg Weiss Bershad & Schulman LLP, were indicted in mid-May 2006 for paying millions of dollars in kickbacks to clients to serve as plaintiffs. Brooke Masters of The Washington Post reports that the case breaks a familiar trend of corporate defendants cooperating with government prosecutors “such as Computer Associates International Inc., accounting firm KPMG LLP and drugmaker Bristol-Myers Squibb Co.

Class Actions In The News Uncategorized

New Allegations Surface Regarding Indicted Class Action Law Firm and Lawyer

Class action plaintiff firm Milberg Weiss Bershad & Schulman LLP and two of the firm’s top partners,David Bershad and Steven Schulman, were indicted in mid-May 2006 for paying millions of dollars in kickbacks to clients to serve as plaintiffs. Lynnley Browning of the New York Times reports that one of the lead plaintiffs in the class action against accounting firm KPMG claims “that he was offered a financial incentive to serve as plaintiff.

Class Actions In The News Uncategorized

Class Action Defense Cases–Evans v. Walter Industries: Plaintiff Bears Burden Under Class Action Fairness Act of 2005 (CAFA) Of Establishing Local Controversy Exception To Removal of Class Action

CAFA (Class Action Fairness Act of 2005) Places Burden of Proof on Plaintiff to Establish Local Controversy Exception to Removal Eleventh Circuit Holds CAFA contains several provisions that still require judicial interpretation. On May 22, 2006, the Eleventh Circuit considered as a matter of first impression for any Circuit Court of Appeals “the specific question of which party should bear the burden of proof on CAFA’s local controversy exception.” Evans v.

Class Action Court Decisions Class Action Fairness Act (CAFA) Class Actions In The News Removal & Remand Uncategorized

Class Action Firm Indicted for Paying Kickbacks to Clients to Serve as Plaintiffs

Class action plaintiff firm Milberg Weiss Bershad & Schulman LLP learned on May 18, 2006, that it had been indicted by federal prosecutors in Los Angeles for paying more than $11 million in kickbacks to clients to serve as plaintiffs. The 102-page, 20-count criminal indictment also names two of the firm’s top partners, David Bershad and Steven Schulman. Nathan Koppel and Peter Lattman of the Wall Street Journal reported on the fallout from the indictment, including “the Ohio attorney general firing the powerhouse law firm as counsel in a class-action case.

Class Actions In The News Uncategorized

In re Briscoe: MDL (Multidistrict Litigation) And Class Action Defense Cases

District Court Denial of Motion to Remand MDL Actions Involving Opt-Out Class Members Following Class Action Settlement Agreement Does Not Warrant Writ of Mandamus (Mandate) Because Appellate Review Will Provide Adequate Relief, and District Court Ruling on Fraudulent Joinder Upheld Because Statute of Limitations Had Run on Non-diverse Defendants, Third Circuit Holds

Fraudulent joinder is discussed in separate articles which explain a plaintiff may not join a party-defendant for purposes of defeating federal court jurisdiction. MDL (Multidistrict Litigation) topics also are discussed in separate articles which explain that the Judicial Panel for Multidistrict Litigation may transfer litigation pending in multiple courts to a single district court for pretrial proceedings. The MDL cases must be remanded prior to trial, and it is incumbent upon a party to the MDL litigation to file a motion for such remand. On May 15, 2006, in a case brought by individuals who had opted out of a class action settlement agreement, the Third Circuit refused to grant a petition for writ of mandamus to review a district court order denying remand on the grounds that appellate review would be adequate, and the Third Circuit affirmed the district court’s ruling that non-diverse parties had been fraudulently joined to defeat federal court jurisdiction. In re Briscoe, 448 F.3d 201 (3d Cir. 2006).

The underlying has a tortured background. In 1997, Wyeth withdrew two diet drugs from the market – and 18,000 lawsuits followed. The Judicial Panel for Multidistrict Litigation consolidated the actions and transferred them to the Eastern District of Pennsylvania (MDL-1203). After four separate trips to the Third Circuit that “set forth various facets of the background to MDL-1203 and its class action settlement agreement,” the class action settlement was consummated. Briscoe, at 206. More than 14,000 additional lawsuits followed, brought by 30,000-35,000 individuals who had opted out of the class action settlement. The group of 127 lawsuits at issue in Briscoe had been filed in Texas state court between November 2002 and August 2003, had included as named defendants the individual doctors that had prescribed the diet drugs, and had not alleged any federal law claims. Id., at 208-09. Wyeth removed the cases to federal court and the MDL Judicial Panel transferred the cases to the docket of MDL-1203. Id., at 209.

Class Action Court Decisions Class Actions In The News Multidistrict Litigation Removal & Remand Uncategorized

Class Action Defense Cases–Prime Care of Northeast Kansas v. Humana Insurance: Tenth Circuit Rules On Removal Of Class Action Under CAFA (Class Action Fairness Act)

CAFA (Class Action Fairness Act of 2005) Allows Removal of Suit Filed Prior to CAFA’s Effective Date by Defendant Added to Suit by Amendment After CAFA’s Effective Date Tenth Circuit Holds On May 12, 2006, the Court of Appeals for the Tenth Circuit considered as a matter of first impression the question of “whether CAFA permits the removal of a class action filed before the Act’s effective date if the removing defendant was first added by amendment after the effective date.

Class Action Court Decisions Class Action Fairness Act (CAFA) Class Actions In The News Removal & Remand Uncategorized

California Class Action Cases–Supreme Court To Review Gentry v. Superior Court Which Enforced Class Action Waiver In Arbitration Clause

California Supreme Court Grants Review in Gentry Case In a prior article, we discussed the California appellate court opinion enforcing a pre-employment arbitration agreement containing a class action waiver. Gentry v. Superior Court, 135 Cal.App.4th944 (Cal.App. 2006). On April 26, 2006, the California Supreme Court granted review of Gentry. Under California law, the decision cannot be cited during the pendency of the appeal.

Arbitration Class Actions In The News Uncategorized

Best Buy v. Superior Court: Class Action Lawyer Permitted, Over Defense Objection, Precertification Discovery To Identify Substitute Class Action Representative California Court Holds

Plaintiff Lawyer, not Allowed to be Class Counsel and Class Representative, Rewarded with Discovery to Find New Class Action Plaintiffs

Class action case law in California “prohibits a lawyer from serving both as class representative and as counsel for the class, ” Best Buy Stores, L.P. v. Superior Court, 137 Cal.App.4th 772, 774 (Cal.App. 2006) (citing Apple Computer, Inc. v. Superior Court, 126 Cal.App.4th 1253 (Cal.App. 2005). On February 6, 2004, a plaintiff’s lawyer sought to do just that, filing a putative class action to his own name against Best Buy for alleged violations of the CLRA (Consumer Legal Remedies Act, California Civil Code §§ 1750 et seq.), unfair competition, unjust enrichment based on the theory that the “restocking fee” Best Buy charged for returned merchandise was illegal. Best Buy, at 774. Defense attorneys moved to dismiss the case, and the trial court issued an order to show cause why the motion should not be granted. Id.

The plaintiff lawyer requested that the court compel Best Buy (through a third party) to send a letter to a sampling of members of the putative class so that he could find a new class representative: the trial court granted the motion. Best Buy, at 775. Best Buy filed a petition for writ of mandate in the California Court of Appeal. The defense opposed this class action discovery order as a form of “illegal solicitation”; the appellate court disagreed with this characterization. Id., at 777. The Court agreed, however, that the privacy rights of Best Buy customers needed additional protection. Accordingly, at page 778 it held as follows:

Class Action Court Decisions Class Actions In The News Uncategorized

Merrill Lynch v. Dabit Class Action Defense Case

SLUSA (Securities Litigation Uniform Standards Act) and Pre-emption

SLUSA (Securities Litigation Uniform Standards Act) was enacted by Congress in 1998 to affect sweeping changes to federal securities laws class actions. SLUSA addresses numerous federal securities laws class actions issues including pleading, class representation, discovery, liability, attorney fee awards, expenses and more. SLUSA also sought to pre-empt state law securities class action litigation, but the Circuit Courts disagreed on the breadth of that pre-emption.

In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, __ U.S. ___, 126 S.Ct. 1503 (2006), the United States Supreme Court issued its opinion. This opinion addresses whether the Securities Litigation Uniform Standards Act (SLUSA) “only pre-empts state-law class-action claims brought by plaintiffs who have a private remedy under federal law,” as the Second Circuit held in Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25 (2005), or whether SLUSA “also pre-empts state-law class-action claims for which federal law provides no private remedy,” as the Seventh Circuit held in Kircher v. Putnam Funds Trust, 403 F.3d 478 (7th Cir. 2005). The Supreme Court agreed with the Seventh Circuit, holding that SLUSA’s pre-emption provision was intended to be read broadly, and pre-empted state-law class-action claims brought not only by purchasers and sellers of securities, but also by holders of securities. As so read, SLUSA pre-empted state-law claims alleging the fraudulent manipulation of stock prices.

Class Action Court Decisions Class Actions In The News PSLRA/SLUSA Class Actions Uncategorized

California Class Action Defense Cases–Gentry v. Superior Court: Class Action Waiver In Employment Contract’s Arbitration Provision Held Enforceable

California Court Upholds Arbitration Clause With Class Action Waiver In Employment Agreement On January 19, 2006, the California Court of Appeal for the Second District, Division 5, addressed “the enforceability of a pre-employment arbitration agreement containing a class action waiver.” Gentry v. Superior Court, 135 Cal.App.4th944, 37 Cal.Rptr.3d 790, 791 (Cal.App. 2006). In 1995, while employed by Circuit City, Gentry received an “Associate Issue Resolution Package” and a copy of the company’s “Dispute Resolution Rules and Procedures” setting forth various procedures for resolving employment-related disputes.

Arbitration Class Action Court Decisions Class Actions In The News Employment Law Class Actions Topics of Interest Uncategorized