New Class Action-Kraft Mounts Defense Against California Class Action Alleging Fraud Based On Sale Of Guacamole Containing Small Percentage Of Avocado

Class Action Alleges Product is “Fake Guacamole” Because it Contains Less than 2% Avocado Exactly what is “guacamole”? That question lies at the center of a new class action lawsuit filed in California last week against Kraft Foods. The lawsuit alleges that Kraft defrauded customers by marketing a dip as “guacamole” when it contained less than 2% avocado. The author predicts an uphill battle for plaintiff’s lawyer, however, in obtaining certification of the lawsuit as a class action.

Class Actions In The News Uncategorized

Class Action Defense Cases- In re Educational Testing: Attorney Fees Awardable To Class Counsel Following Settlement Of Class Action Should Be Determined From A “Benchmark Percentage” Rather Than Lodestar Louisiana Federal Court Holds

Louisiana Federal District Court Rejects Fifth Circuit Lodestar Approach to Determining Attorney Fee Award for Class Action Counsel and Utilizes Percentage Method Instead

Plaintiffs filed putative class action lawsuits against Educational Testing Service (ETS) seeking damages caused by its errors in grading state-required tests for teacher’s licenses; ETS erroneously reported more than 4000 “false failures” (reports that a person failed the licensing exam when in fact, upon re-scoring of the exam, they had passed) and 23,000 “low” pass scores (reports that a person passed but with a lower test score than, upon re-scoring, they had actually been entitled to receive). In re Educational Testing Serv. Praxis Principles of Learning & Teaching: Grades 7-12 Litig., 447 F.Supp.2d 612, 613-14 (E.D. La. 2006). After the Judicial Panel on Multidistrict Litigation centralized the various lawsuits in the federal court for the Eastern District of Louisiana, id., at 614-15, defense attorneys and class counsel reached a proposed $11.1 million settlement and sought certification of a class for purposes of settlement, id., at 615. Class counsel sought an attorney fee award of 40% of the settlement fund, id., at 618; the district court concluded that the amount sought was unreasonable and held that a “benchmark percentage” should be the starting point for attorney fee awards following the settlement of a class action rather than a lodestar.

In analyzing the attorney fee request, the district court recognized that it “must independently analyze the reasonableness of the attorneys’ fees proposed in the settlement agreement.” In re Educational Testing, at 628 (citations omitted). It also recognized the inherent conflict of interest when the attorney fees are paid from a common fund: “In a common fund settlement, in which the plaintiffs’ attorneys are paid out of the settlement proceeds, the interests of the attorneys conflict with those of the class. Put simply, the more money the attorneys get, the less the class gets.” Id. In the Fifth Circuit, district courts are instructed to consider 12 factors, essentially based on a “lodestar” approach, but the Louisiana district court refused to do so. It concluded that such an approach should no longer be followed due to “increasing criticism because of the practical difficulties in applying it” and the “‘inherent incentive to prolong the litigation until sufficient hours have been expended.'” Id., at 628-29 (citations omitted). The court also noted that “the vast majority” of sister circuits have rejected the lodestar method in favor of “the use of the percentage method.” Id., at 629 (citing cases from the First, Second, Third, Sixth, Ninth, Tenth, Eleventh and District of Columbia Circuits).

Class Action Court Decisions Uncategorized

UPS Class Action Defense Case-Bates v. UPS: Ninth Circuit Upholds Refusal To Decertify Class Action And Affirms Class Action Judgment Against UPS Based On ADA Claim, But Agrees With Defense That Unruh Act Violation Must Be Reversed

District Court did not Clearly Err in Finding UPS Violated Federal Americans with Disabilities Act (ADA) by Refusing to Hire Deaf Drivers, But Defense was Correct that Class Action Judgment Based on Violation of California’s Unruh Act Must be Reversed Ninth Circuit Holds

Plaintiff filed a putative class action in California federal court against United Parcel Service alleging violations of the federal Americans with Disabilities Act (ADA), and California’s Fair Employment and Housing Act (FEHA) and Unruh Civil Rights Act (Unruh Act) because it “categorically exclude[s] individuals from employment positions as ‘package-car drivers’ because they cannot pass a United States Department of Transportation (DOT) hearing standard that does not apply to the vehicles in question.” Bates v. United Parcel Serv., Inc., 465 F.3d 1069, 1073 (9th Cir. 2006). The district court certified the lawsuit as a class action. After a bifurcated trial, the district court ruled against the defense and found that UPS violated the ADA, the FEHA and the Unruh Act. On appeal, defense attorneys argued that “(1) Bates did not establish that any class members are ‘qualified’; (2) UPS satisfied its burden under the business necessity defense of the ADA; (3) the plaintiff class should be decertified; (4) the court’s injunction was an abuse of discretion; and (5) UPS did not violate the FEHA or the Unruh Act.” Id. The Ninth Circuit affirmed the judgment as to the ADA claim, reversed the judgment as to the Unruh Act, and refused to reach the FEHA claim finding it unnecessary in light of the fact that affirmance of the ADA claim “is sufficient grounds for affirming the injunction.” Id., at 1093 n.25.

Applicants for positions as UPS package drivers must, inter alia, pass the same physical exam that the United States Department of Transportation requires of prospective drivers of commercial vehicles, which includes a “forced whisper” test of the applicants’ hearing. Bates, at 1074. However, the DOT only requires a physical exam of those who will be driving vehicles with a gross weight in excess of 10,000 pounds. UPS, on the other hand, required the exam of all applicants, including the thousands of drivers operating vehicles weighing from 7100 to 9300 pounds. Id., at 1075. The class conceded that UPS may require the physical exam of who drive DOT-regulated vehicles, but argued that its blanket exclusion of deaf applicants violated state and federal laws. Id. The district court ruled in favor of the class, holding in part that UPS had failed to establish a business necessity defense to its actions. Id.

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

Yet Again Labor Law Class Action Filings Again Top Weekly Class Action Filings List But Public Accommodation/ADA Class Action Lawsuits Run Close Second In California State And Federal Courts

As has been a pattern, class action defense attorneys in California will continue to confront more labor law class action cases than any other category. However, the class action filings have seen another spike in public accommodation/ADA (Americans with Disabilities Act) cases these past two weeks. 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

Class Action Defense News-Class Action Law Firm Lerach Ordered To Pay Defense Attorney Fees For Maintaining Frivolous Lawsuit

Judge Grants Defense Motion for Attorney Fees Against Plaintiffs’ Law Firm Following Successful Defense of Class Action Lawsuit Floyd Norris of the New York Times reports that federal district court judge Melinda Harmon awarded the defense in an Enron-related class action attorney fees against plaintiff class-action law firm Lerach, Coughlin, Stoia, Geller, Rudman & Robbins for maintaining class action claims against Alliance Capital, a money management firm, after it was apparent that the claims had no merit.

Class Actions In The News PSLRA/SLUSA Class Actions Uncategorized

CAFA Class Action Defense CAFA Case-Morgan v. Gay: Class Action Fairness Act (CAFA) Must Be Read As Intended Rather Than Literally Third Circuit Holds

Third Circuit Joins 11th and 9th Circuits in Holding that “Not Less Than 7 Days” in § 1453(c) of CAFA (Class Action Fairness Act of 2005) Must be Read as “Not More Than 7 Days”

Plaintiffs filed a putative class action in New Jersey state court. Defense attorneys removed the action to federal court under the Class Action Fairness Act of 2005 (CAFA), but the district court granted plaintiffs’ remand motion on the ground that it lacked removal jurisdiction. Seven days later defense attorneys filed a petition with the Third Circuit for leave to appeal pursuant to 28 U.S.C. § 1453(c), which provides that the circuit court may accept such appeals “if application is made to the court of appeals not less than 7 days after entry of the order.” Morgan v. Gay, 466 F.3d 276, 277 (3rd Cir. 2006) (quoting § 1453(c)(1)). As a matter of first impression, the Third Circuit considered whether § 1453(c)(1) “should be interpreted by this Court to mean ‘not more than 7 days after entry of the order.'” Id. Like sister circuits, the Court of Appeals held that the statute should be read as Congress intended rather than honoring the strict language of a plainly typographical error. The Circuit Court summarized at page 277: “Because the uncontested legislative intent behind § 1453(c) was to impose a seven-day deadline for appeals, we conclude that the statute as written contains a typographical error and should be read to mean ‘not more than 7 days.'”

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

15 U.S.C. § 77t–Injunctions And Prosecution Of Offenses Under The Securities Act Of 1933

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress provided for injunctions and prosecution of violations of the Act in 15 U.S.C. § 77t, which provides:

§ 77t. Injunctions and prosecution of offenses

(a) Investigation of violations

Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, have been or are about to be violated, it may, in its discretion, either require or permit such person to file with it a statement in writing, under oath, or otherwise, as to all the facts and circumstances concerning the subject matter which it believes to be in the public interest to investigate, and may investigate such facts.

(b) Action for injunction or criminal prosecution in district court

Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute a violation of the provisions of this subchapter, or of any rule or regulation prescribed under authority thereof, the Commission may, in its discretion, bring an action in any district court of the United States, or United States court of any Territory, to enjoin such acts or practices, and upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General who may, in his discretion, institute the necessary criminal proceedings under this subchapter. Any such criminal proceeding may be brought either in the district wherein the transmittal of the prospectus or security complained of begins, or in the district wherein such prospectus or security is received.

Statutes & Rules Uncategorized

15 U.S.C. § 77s–Special Powers Of Commission Under The Securities Act Of 1933

As a resource for the class action defense lawyer who defends against securities class actions, we provide the text of the Securities Act of 1933. Congress described the special powers afforded to the Commission in 15 U.S.C. § 77s, which provides:

§ 77s. Special powers of Commission

(a) The Commission shall have authority from time to time to make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this subchapter, including rules and regulations governing registration statements and prospectuses for various classes of securities and issuers, and defining accounting, technical, and trade terms used in this subchapter. Among other things, the Commission shall have authority, for the purposes of this subchapter, to prescribe the form or forms in which required information shall be set forth, the items or details to be shown in the balance sheet and earning statement, and the methods to be followed in the preparation of accounts, in the appraisal or valuation of assets and liabilities, in the determination of depreciation and depletion, in the differentiation of recurring and nonrecurring income, in the differentiation of investment and operating income, and in the preparation, where the Commission deems it necessary or desirable, of consolidated balance sheets or income accounts of any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer. The rules and regulations of the Commission shall be effective upon publication in the manner which the Commission shall prescribe. No provision of this subchapter imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the Commission, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or be determined by judicial or other authority to be invalid for any reason.

Statutes & Rules Uncategorized

Class Action Defense Issues–Fair and Accurate Credit Transactions Act

Class Action Defense Attorneys Urged to Advise Clients about FACTA Requirements The Fair and Accurate Credit Transactions Act (FACTA), enacted by Congress to amend the Fair Credit Reporting Act, will become effective in only a matter of days. FACTA requires that credit card receipts provided to customers be modified so that the credit card number shown on the receipt is truncated and so that the expiration date is omitted. Defense attorneys and in-house counsel are encouraged to ensure compliance with FACTA; the author predicts class action lawsuits will be filed alleging FACTA violations within months of its effective date.

Class Actions In The News FCRA Class Actions Uncategorized

Class Action Defense Cases- In re Electrical Carbon: Class Members Who Opt Out Of Class Action Settlement May Rejoin Class With Court Approval New Jersey Federal Court Holds

In Case of First Impression New Jersey Federal Court Permits Class Members Who Opted Out of Initial Proposed Class Action Settlement to Rejoin Class for Amended Class Action Settlement Finding it in the Best Interests of the Class Plaintiffs filed putative class action lawsuits against several defendants alleging a conspiracy to fix prices of electrical carbon products in violation of the Sherman Act following the investigation and criminal prosecution of various entities by the United States Department of Justice.

Certification of Class Actions Class Action Court Decisions Uncategorized