CLASS ACTION DEFENSE BLOG
Welcome to Michael J. Hassen's Blog. Here you will find over 2,000 articles related to class actions.
Allegations in Securities Fraud Class Action Complaint Failed to Satisfy Heightened Pleadings Requirements Imposed by PSLRA (Private Securities Litigation Reform Act) But Plaintiffs Are Entitled To Leave To Amend Georgia Court Holds
In September 2005,, plaintiffs filed a putative securities fraud class action under the Securities Exchange Act of 1934 against Spectrum Brands (formerly known as Rayovac) and individual defendants – including its Chief Executive Officer and Chief Financial Officer/Executive Vice President – on behalf of purchasers of persons who purchased Spectrum Brands’s common stock between November 11, 2004, and November 13, 2005 alleging that defendants’ conduct “artificially affected the value of Spectrum Brands’s stock” through the practice of “channel-stuffing.” In re Spectrum Brands, Inc. Sec. Litig., 461 F.Supp.2d 1297, 1300-01 (N.D. Ga. 2006). Plaintiffs amended the complaint in February 2006, and defense attorneys moved to dismiss, id., at 1300. The district court granted the motion, finding that the class action complaint failed to plead securities fraud with sufficient particularity as required by the federal Private Securities Litigation Reform Act (PSLRA).
Channel-stuffing refers to the act of persuading customers to purchase more inventory than they presently require – a practice the Eleventh Circuit recognizes “is not fraudulent per se.” Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006). The practice, however, causes a company to realize as revenue monies that would otherwise be received later, assuming that the customer did not decide to switch suppliers. In re Spectrum Brands, at 1301. The class action complaint alleged Spectrum “engaged in aggressive channel-stuffing during the fourth quarter of 2004 and the first quarter of 2005, which allowed Spectrum Brands’s performance in the battery market to appear better than it should have and caused an artificial spike in the company’s stock price.” Id. As the district court summarized at page 1301, the class action hinged on the theory that “[company] statements of strong battery sales growth and positive earnings guidances were misleading because Defendants concealed that battery sales reported during the Class Period were generated at the expense of sales in future quarters.” The complaint asserts senior management engaged in channel-stuffing for the purpose of artificially inflating the company’s stock price. Id., at 1301-02.
Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized
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Seventh Circuit Holds that Certification of Class Action Properly Denied Because Putative Class Included Members who Suffered no Damage and Because Plaintiff’s Claims were not Typical of the Class
Plaintiff filed a putative class action against Coca Cola in Illinois state court for violating the state’s Consumer Fraud and Deceptive Practices Act and for unjust enrichment on the theory that “Coke tricked consumers into believing that fountain Diet Coke and bottled Diet Coke have the same ingredients” when in fact the company used different sweeteners in the drinks. Oshana v. Coca-Cola Co., 472 F.3d 506, 509 (7th Cir. 2006). According to plaintiff, Coke used only aspartame in the bottled drinks, but combined aspartame with saccharin in its fountain drinks. Id. Defense attorneys removed the class action to federal court and defeated plaintiff’s motion for class certification. The defense then tendered a judgment of $650 to plaintiff, which plaintiff accepted with the provisos that she be permitted to challenge on appeal whether the action had been proper removed and whether her motion to certify a class action had been properly denied. Id. The Seventh Circuit affirmed both rulings of the district court.
Plaintiff purported to bring this action on behalf of “.All individuals who purchased for consumption and not resale fountain Diet Coke in . . . Illinois from March 12, 1999, through the date of entry of an order certifying the class.” Oshana, at 510. Her class action complaint hinged on the allegation that “Coke began advertising in 1984 that Diet Coke would be sweetened with 100% NutraSweet® brand aspartame, leading consumers to believe that all forms of Diet Coke would follow that formula, even though fountain Diet Coke continued to use saccharin.” Id., at 509. While plaintiff disclaimed any right to individual damages in excess of $75,000, she steadfastly refused defense requests that she “admit she would not individually seek an award of attorneys’ fees over $75,000; punitive damages over $75,000; a combined award of compensatory and punitive damages and attorneys’ fees over $75,000; or a combined award of disgorgement, attorneys’ fees, and punitive damages over $75,000.” Id. Accordingly, Coca Cola removed the putative class action to federal court asserting a good faith belief that the amount in controversy exceeded $75,000; the district court denied plaintiff’s motion to remand the action to state court concluding that plaintiff’s damages could exceed $75,000, particularly in light of her refusal to “admit otherwise.” Id., at 509-10.
Class Action Court Decisions Removal & Remand Uncategorized
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As is generally the case, class action defense attorneys in California will confront more labor law class action cases than any other category, but the number of class action lawsuits alleging violations of the federal Fair and Accurate Credit Reporting Act (FACTA) continue to surge. In an effort to assist class action defense attorneys in anticipating the claims against which they may have to defend, we provide weekly, unofficial summaries of the legal categories for new class actions filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas.
Class Actions In The News Uncategorized
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As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The definitions used in Regulation X are set forth in § 3500.2, which provides:
§ 3500.2. Definitions
(a) Statutory terms. All terms defined in RESPA (12 U.S.C. 2602) are used in accordance with their statutory meaning unless otherwise defined in paragraph (b) of this section or elsewhere in this part.
(b) Other terms. As used in this part:
Application means the submission of a borrower’s financial information in anticipation of a credit decision, whether written or computer-generated, relating to a federally related mortgage loan. If the submission does not state or identify a specific property, the submission is an application for a prequalification and not an application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to an application for a federally related mortgage loan.
Business day means a day on which the offices of the business entity are open to the public for carrying on substantially all of the entity’s business functions.
Dealer means, in the case of property improvement loans, a seller, contractor, or supplier of goods or services. In the case of manufactured home loans, “dealer” means one who engages in the business of manufactured home retail sales.
Statutes & Rules Uncategorized
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As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of the statute. Congress described the authority granted to the Secretary of the Department of Housing and Urban Development (HUD) under RESPA in 12 U.S.C. § 2617, which provides:
§ 2617. Authority of Secretary
(a) Issuance of regulations; exemptions
The Secretary is authorized to prescribe such rules and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of this chapter.
(b) Liability for acts done in good faith in conformity with rule, regulation, or interpretation
No provision of this chapter or the laws of any State imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Secretary or the Attorney General, notwithstanding that after such act or omission has occurred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.
Statutes & Rules Uncategorized
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Judicial Panel Holds Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 Warranted and Concurs with View of Some Plaintiff and Defense Attorneys that Eastern District of Pennsylvania is Appropriate Transferee Court Six federal antitrust securities class action lawsuits were filed in Alabama, California, Illinois and Pennsylvania against several defendants “aris[ing] out of allegations that certain conduct by the pharmacy benefit manager (PBM) defendants-including the negotiation of rates for the sale of prescription drugs by retail pharmacies-violated the federal antitrust laws.
Class Action Court Decisions Multidistrict Litigation Uncategorized
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Judicial Panel Agrees with Defense that Pretrial Coordination Pursuant to 28 U.S.C. § 1407 is Warranted for Two State Labor Law Class Action Lawsuits Two class action lawsuits were filed against Terminix in the Central and Northern Districts of California alleging violations of state labor laws for failure to pay overtime to pest control technicians and for misclassifying the class members as exempt employees.. In re Terminix Employment Practices Litig., 466 F.
Class Action Court Decisions Multidistrict Litigation Uncategorized
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Class Action Fairness Act of 2005 (CAFA) did not Shift Burden of Proof of Amount in Controversy Requirements to Plaintiffs in Mass Actions or Class Actions Alabama Court Holds
In 2003, nine property owners filed suit in Alabama state court against eleven defendants asserting various common law based on defendants’ discharge of pollutants and demanding as damages in excess of $1 million each. Lowery v. Honeywell Int’l, Inc., 460 F.Supp.2d 1288, 1290-91 (N.D. Ala. 2006). In an amended complaint filed in October 2005, 533 named plaintiffs sought damages against 12 named defendants seeking damages “in an amount of compensatory and punitive damages to be determined by a jury,” id., at 1291. The complaint was amended against in March 2006 and June 2006; none of the complaints sought class action status, none of the theories of liability changed, and the indefinite prayer remained the same in the first through third amended complaints. Id. The Third Amended Complaint added as a party-defendant Alabama Power and Filler Products Company, and in July 2006 Alabama Power removed the action to federal court based in part on the Class Action Fairness Act of 2005 (CAFA) on the theory that “the action constitutes a ‘mass action’, which, under 28 U.S.C. § 1332(d)(11)(B)(i), is removable.” Id. Plaintiffs moved to remand the case to state court on the grounds that CAFA did not apply and that defendants had not demonstrated the requisite amount in controversy. In an opinion that contains some surprising legal conclusions but in the author’s view reached the correct result, the federal court remanded the action to state court.
The district court noted that the complaint was filed long before CAFA’s February 18, 2005 effective date, but the amendment that precipitated removal post-dated CAFA. Lowery, at 1292. The court explained at page1292, “This procedural fact creates two potentially dispositive removability questions: (1) did the filing of the third amended complaint ‘commence’ a new suit for purposes of CAFA; and (2) if so, did the new suit, by retroactive effect, ‘commence’ as to all defendants, or only as to [those defendants added by the third amended complaint].” CAFA looks to state law for determining when an action is “commenced,” which under Alabama law was the date the original complaint was filed. Id. However, federal law holds that “as to the new defendant, removability is determined as of the date of receipt of service of the amended complaint, not as of the date on which the original suit was filed in state court.” Id. (citations and italics omitted). The question, then, is whether Alabama Power properly removed the action. Id., at 1292-93.
Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized
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District Court did not Abuse its “Broad Discretion” in Certifying Nationwide Sex Discrimination Class Action Against Wal-Mart Creating “the Largest Certified Class in History” Ninth Circuit Holds
In June 2001, plaintiffs filed a putative class action against Wal-Mart in the San Francisco federal court alleging sex discrimination in the payment of wages and in promotions. In April 2003, plaintiffs moved to certify a nationwide class action on behalf of 1.5 million former and present female employees “employed in a range of Wal-Mart positions – from part-time, entry-level, hourly employees to salaried managers.” Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. February 06, 2007) [Slip Opn., at 1340]. Defense attorneys argued that the requirements of Rule 23 had not been satisfied, stressing in particular several problems inherent in litigating a class of record size. More than a year later, in an 84-page decision handed down in June 2004, the district court rejected all but one of the defense arguments and, save for that one point, certified the class action as requested by plaintiffs. Both sides appealed, but the Ninth Circuit affirmed the district court order in all respects.
Plaintiffs’ motion sought certification of a nationwide class action on behalf of “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” Dukes, at 1340. Wal-Mart stressed the “‘historic’ nature of Plaintiffs’ motion, inasmuch as it concerns a class of approximately 1.5 million women who work or worked in one or more of Wal-Mart’s 3,400 stores in 41 regions at any time since 1998.” Id. The district court recognized Wal-Mart’s concerns but concluded that “while the class size was large, the issues were not unusual.” Id. The Ninth Circuit summarized the district court’s order at page 1341 as follows:
On June 21, 2004, the district court issued an eighty-four-page order granting in part and denying in part Plaintiffs’ motion for class certification. [Citation.] With respect to Plaintiffs’ claims for equal pay, the district court granted Plaintiffs’ motion as to issues of alleged discrimination and all forms of requested relief. With respect to Plaintiffs’ promotion claim, the court’s finding was mixed. The court certified the proposed class as it related to issues of alleged discrimination (including liability for punitive damages) as well as injunctive and declaratory relief. However, the court denied Plaintiffs’ request for certification with respect to backpay because data relating to challenged promotions were not available for all class members.
On appeal, Wal-Mart focused its attack on three points: (1) that the commonality and typicality requirements of Rule 23(a) had not been satisfied, (2) that the class action complaint primarily sought monetary relief thus barring certification under Rule 23(b)(2), and (3) that the district court order prejudiced its ability to respond to individual claims. Dukes, at 1341. Plaintiffs, in turn, argued that the district court erred in limiting backpay relief. Id. The Ninth Circuit held that the district court did not abuse its discretion in certifying the nationwide class.
Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized
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Class Action Complaint Adequately Alleges Breach of Contract and Violation Florida’s Deceptive and Unfair Trade Practices Act where Hospital Charges Uninsured Patients Significantly More for Services than it Charges Insured Patients Florida Federal Court Holds
Plaintiffs filed a putative securities class action against Mercy Hospital for breach of contract, unjust enrichment, breach of duty of good faith and fair dealing, and violation of Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA), alleging that the hospital routinely overcharged uninsured patients for care. Colomar v. Mercy Hospital, Inc., 461 F.Supp.2d 1265, 1267 (S.D. Fla. 2007). Defense attorneys moved to dismiss the class action under Rule 12(b)(6); the district court granted the motion as to the unjust enrichment and breach of good faith and fair dealing claims, and granted the motion as to the FDUTPA claim for relief to the extent that it alleged deceptiveness by the hospital. Id. The district court requested additional briefing as to the breach of contract claim and as to the FDUTPA claim to the extent it alleged unfairness in the hospital’s billing practices, both of which were premised on allegations of “unreasonable pricing” of hospital services for uninsured patients. Id. The district court held that “[having] reviewed the [complaint] in a light most favorable to Plaintiff and drawn all reasonable inferences therefrom in Plaintiff’s favor, . . . the allegations of unreasonable pricing in the [complaint] meet Plaintiff’s burden of pleading claims for breach of contract and violation of FDUTPA.” Id.
The thrust of plaintiff’s complaint is that the bill she received as an uninsured patient for Mercy Hospital’s services “was inflated and unfair when compared to the rates charged to, and accepted from, patients with insurance or patients covered by Medicaid or Medicare.” Colomar, at 1268. Plaintiff originally argued that “differential pricing alone was sufficient to constitute a breach of contract because Florida law requires the amount of an open pricing contract to be reasonable”; the district court agreed that the amount must be reasonable but held that “Florida law requires more than mere allegations of differential pricing to establish unreasonableness.” Id. (citation omitted). In response, plaintiff amended her complaint to include the following details: “(1) Plaintiff was charged nearly $12,863 for medical services, while the actual costs of the services were only $2,098; (2) CHE hospitals (of which Mercy belongs) generally charge uninsured patients rates at 370% of Medicare reimbursement rates; (3) Mercy in particular charges uninsured patients rates at 450% of Medicare reimbursement rates; (4) CHE hospitals rank among the top 13% of all hospitals nationwide in charges (including both for-profit and non-profit hospitals); (5) CHE’s cost-to-charge ratio is 394%, meaning that on average CHE hospitals charge almost four times their costs to uninsured patients; (6) CHE hospitals rank in the top 10% of hospitals nationwide in terms of cost-to-charge ratio.” Id.
Class Action Court Decisions Uncategorized
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