Class Action Defense Cases-Dare v. Knox County: Maine Federal Court Rejects Plaintiff/Defense Motion For Approval Of Class Action Settlement Requiring Class Members Be Afforded A Second Chance To Opt Out

Changed Circumstances Surrounding Proposed Class Action Settlement Requires Class Members Receive Another Opportunity to Request Exclusion from Settlement Maine Federal Court Holds

Plaintiff filed a class action against Knox County challenging the jail’s policy to strip search arrestees at the Knox County Jail; after the district court certified the lawsuit as a class action, defense and plaintiff attorneys reached a proposed settlement and requested court approval. Dare v. Knox County, 457 F.Supp.2d 52, 52-53 (D. Me. 2006). Ironically, the parties could not agree on the terms of the proposed settlement, and the terms submitted by the defense attorneys differed from the terms submitted by the plaintiff’s lawyer. Once the parties agreed upon the language of the proposed settlement, the district court rejected the proposal.

The federal court found that, given the circumstances of the case, class members must be afforded an additional opportunity to opt out as provided by Rule 23(e)(3) of the Federal Rules of Civil Procedure. Dare, at 53. Rule 23(e) gives the district court discretion to give class members a “second opportunity to opt out,” and the Advisory Committee’s Note identifies “changes in the information available to class members since expiration of the first opportunity to request exclusion” as a basis for exercising that discretion. Id. The district court found this to be an appropriate case for a second chance based on several factors, explaining at page 53:

Class Action Court Decisions Uncategorized

Defense Loses Labor Law Class Action Against Chinese Daily News As Federal Jury Awards Employees $2.5 Million In Damages

Molly Selvin of the Los Angeles Times reports that a jury sitting in Los Angeles federal court awarded $2,500,000 to current and former employees of the Chinese Daily News, the largest Chinese-language newspaper in the United States, for violations of state and federal labor laws. The jury reportedly found that the newspaper failed to pay its employees overtime, or to allow meal and rest periods. Ms. Selvin notes that the class action lawsuit is “part of a wave of litigation that has produced multimillion-dollar settlements and verdicts in recent years.

Class Actions In The News Uncategorized

12 U.S.C. § 2607—Prohibition Against Kickbacks And Unearned Fees Under The Real Estate Settlement Procedures Act (RESPA)

As a resource for the class action defense lawyer who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of RESPA. Congress prohibited kickbacks and unearned fees purpose in 12 U.S.C. § 2607, which provides as follows:

§ 2607. Prohibition against kickbacks and unearned fees

(a) Business referrals

No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.

(b) Splitting charges

No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.

(c) Fees, salaries, compensation, or other payments

Nothing in this section shall be construed as prohibiting (1) the payment of a fee (A) to attorneys at law for services actually rendered or (B) by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance or (C) by a lender to its duly appointed agent for services actually performed in the making of a loan, (2) the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed, (3) payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers, (4) affiliated business arrangements so long as (A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred (i) in the case of a face-to-face referral or a referral made in writing or by electronic media, at or before the time of the referral (and compliance with this requirement in such case may be evidenced by a notation in a written, electronic, or similar system of records maintained in the regular course of business); (ii) in the case of a referral made by telephone, within 3 business days after the referral by telephone, (and in such case an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within 3 business days shall be made to the person being referred during the telephone referral); or (iii) in the case of a referral by a lender (including a referral by a lender to an affiliated lender), at the time the estimates required under section 2604(c) of this title are provided (notwithstanding clause (i) or (ii)); and any required written receipt of such disclosure (without regard to the manner of the disclosure under clause (i), (ii), or (iii)) may be obtained at the closing or settlement (except that a person making a face-to-face referral who provides the written disclosure at or before the time of the referral shall attempt to obtain any required written receipt of such disclosure at such time and if the person being referred chooses not to acknowledge the receipt of the disclosure at that time, that fact shall be noted in the written, electronic, or similar system of records maintained in the regular course of business by the person making the referral), (B) such person is not required to use any particular provider of settlement services, and (C) the only thing of value that is received from the arrangement, other than the payments permitted under this subsection, is a return on the ownership interest or franchise relationship, or (5) such other payments or classes of payments or other transfers as are specified in regulations prescribed by the Secretary, after consultation with the Attorney General, the Secretary of Veterans Affairs, the Federal Home Loan Bank Board, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Secretary of Agriculture. For purposes of the preceding sentence, the following shall not be considered a violation of clause (4)(B): (i) any arrangement that requires a buyer, borrower, or seller to pay for the services of an attorney, credit reporting agency, or real estate appraiser chosen by the lender to represent the lender’s interest in a real estate transaction, or (ii) any arrangement where an attorney or law firm represents a client in a real estate transaction and issues or arranges for the issuance of a policy of title insurance in the transaction directly as agent or through a separate corporate title insurance agency that may be established by that attorney or law firm and operated as an adjunct to his or its law practice.

Statutes & Rules Uncategorized

Employment Class Action Filings Again Top List But Surge In Federal Fair And Accurate Credit Reporting Act (FACTA) Class Action Cases Run A Close Second In Weekly Class Action Filings In California State And Federal Courts

Class action defense attorneys in California will again 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) have surged. 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

12 U.S.C. § 2606—Transactions Exempted By Congress From The Real Estate Settlement Procedures Act (RESPA)

As a resource for the class action defense lawyer who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of RESPA. Congress identified those transactions that are exempt from RESPA in 12 U.S.C. § 2606, which provides as follows: § 2606. Exempted transactions (a) In general This chapter does not apply to credit transactions involving extensions of credit– (1) primarily for business, commercial, or agricultural purposes; or

Statutes & Rules Uncategorized

San Francisco Federal Court Certifies Class Action Against Costco In Lawsuit Alleging Gender Discrimination In The Promotion Of Female Employees

On January 11, 2007, federal district court judge Marilyn Hall Patel granted class action status to a lawsuit brought against Costco Wholesale on behalf of female employees. The lawsuit alleges that Costco discriminates against women in its promotion practices, and alleges that less than 16% of Costco’s general managers are women. The class representatives include two women who worked for Costco more than 20 years, one becoming a warehouse receiving manager and one an assistant manager, and who claim they were passed over for promotion to general manager because of their gender.

Class Actions In The News Uncategorized

Konig v. U-Haul Class Action Defense Case: California Court Denies Defense Motion To Compel Arbitration Under Agreement Barring Class Action Lawsuits Holding Arbitration Clause Unconscionable

California Court Holds that Arbitration Clause Barring Class Action Lawsuits in Contract Governed by Federal Arbitration Act (FAA) is Enforceable Because Not Substantively Unconscionable

Plaintiff filed a putative class action against his former employer in California state court for unfair business practices and violations of the state labor laws alleging that U-Haul misclassifies employees, fails to pay them overtime, and fails to provide meal and rest breaks. Konig v. U-Haul Co. of California, ___ Cal.App.4th ___, 52 Cal.Rptr.3d 244, 246 (Cal.App. December 19, 2006). Defense attorneys moved to compel arbitration and to dismiss the class action allegations based on an arbitration clause governed by the Federal Arbitration Act (FAA) under which employees “waive any right to join or consolidate claims in arbitration with others or to make claims in arbitration as a representative or as a member of a class or in a private attorney general capacity,” _id._, at 247. (The arbitration policy and its class-action waiver provision are quoted in pertinent part in the Note below.) The trial court granted the defense motions, finding that the class action waiver was not substantively unconscionable because plaintiff had not demonstrated that the litigation governed by the arbitration clause involved “predictably . . . small amounts.”

The procedural posture of the case is interesting. In November 2005, the defense moved to compel arbitration and to dismiss the class action claims. Konig, at 247. At oral argument, “the trial court requested supplemental briefing on class action waivers in the employment context,” id., at 248. In January 2006, the Court of Appeal issued its opinion in Gentry v. Superior Court, 135 Cal.App.4th 944 (Cal.App. 2006), affirming a trial court order that enforced an arbitration clause containing a class action waiver. In March 2006, the trial court relied on Gentry in finding U-Haul’s arbitration clause enforceable, unaware that the California Supreme Court would grant review of Gentry the following month, rendering the case noncitable under California law. Id. As the Court of Appeal explained at page 248, “the trial court ruled that plaintiff did not prove that there were predictably [small] amounts of damages plus a negative impact on his ability to pursue his statutory claims such that the arbitration agreement was substantively unconscionable.” In so ruling, the trial court relied on the fact that plaintiff admitted his personal damage claim exceeded $25,000, id., at 246-47. The trial court dismissed the class action claims and compelled arbitration as to the balance of the complaint.

Arbitration Class Action Court Decisions Uncategorized

Jimenez v. Domino’s Pizza-Class Action Defense Cases: California Federal Court Agrees With Defense That Putative Labor Law Class Action Fails To Satisfy Requirements Of Rule 23 And Denies Plaintiffs’ Motion For Class Certification

California Federal Court Holds that Evidence Presented in Connection with Plaintiffs’ Motion for Certification of Class Action Established that Individual Questions as to Whether Employees were Misclassified Predominate over Common Questions of Fact, Thus Rendering Litigation Unsuitable for Class Action Treatment

Plaintiffs filed a putative class action in California state court against their former employer, Domino’s Pizza, for violations of California’s labor laws and unfair competition laws alleging failure to pay overtime and to provide rest and meal periods to its general managers by misclassifying them as exempt employees. Plaintiffs assert they were not exempt because most of their work consisted of making pizzas and cleaning stores, and that only about 20% of their workday was spent “performing their actual general manager duties.” Jimenez v. Domino’s Pizza, Inc., 238 F.R.D. 241, 245-46 (C.D. Cal. 2006). The defense removed the action to federal court, id., at 246, and plaintiffs moved the court to certify the lawsuit as a class action. The district court first addressed the requirements of Rule 23(a). Id., at 247. The court found that each of Rule 23(a)’s prerequisites – numerosity, commonality, typicality, and adequacy of representation – had been satisfied. Id., at 247-49. However, the district court agreed with defense attorneys that plaintiffs had not established the elements required by Rule 23(b), and so denied the motion.

Plaintiffs asserted that the putative class action satisfied each prong of Rule 23(b), so the court addressed each in turn., Jimenez, at 249. With respect to Rule 23(b)(1), the district court agreed with defense attorneys that plaintiffs misperceived the statute’s purpose. Rule 23(b)(1) authorizing class action treatment when separate lawsuits “create a risk of imposing incompatible standards of conduct on the defendant,” id. In this case, while it is possible that different courts may reach different conclusions in separate lawsuits as to whether a particular general manager is exempt or non-exempt, the fact remained that Domino’s “would not be incapable of fulfilling various judgments,” so certification under Rule 23(b)(1). Id., at 250.

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

MARK YOUR CALENDARS – CLASS ACTION DEFENSE CONFERENCE COMING TO SAN FRANCISCO

The American Conference Institute is sponsoring a two-day seminar on defending consumer fraud litigation. The conference will be held in San Francisco on May 21 and 22, 2007, and several class action topics will be on the agenda. The details are still being finalized so information on the conference is not yet available at ACI’s website. We will periodically post reminders and updates on the conference, as it promises to be well worthwhile.

Class Actions In The News Uncategorized

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