E*Trade Class Action Defense Case-Murray v. E*Trade: Illinois Federal Court Rejects Defense Objections To Motion For Certification Of Class Action Alleging Violations Of Federal Fair Credit Reporting Act (FCRA)

Rule 23 Requirements Met in Class Action Alleging FCRA (Fair Credit Reporting Act) Violations Against E*Trade Illinois Federal Court Holds

Plaintiff filed a class action against ETrade alleging violations of the federal Fair Credit Reporting Act (FCRA) arising out of a solicitation mailer he received stating that he was pre-approved for a home equity loan and stating that “[i]nformation from a consumer credit report was used in connection with this offer.” _Murray v. ETrade Fin, Corp._, 240 F.R.D. 392, 2006 WL 3354039, *1 (N.D. Ill. November 20, 2006). Defense attorneys filed a motion for judgment on the pleadings as to the claim for relief in the class action complaint that E*Trade violated the FCRA’s disclosure requirements; the district court granted the motion agreeing with the defense that no private right of action exists for such violations under 15 U.S.C. § 1681m(d). Id. The court denied defense efforts to obtain dismissal of the balance of the class action complaint. Plaintiff’s lawyer then moved the court to certify the lawsuit as a class action; the court rejected defense arguments in opposition to the motion and granted class action certification, finding that the requirements of Rule 23(a) were met and that the class action satisfied also the requirements of Rule 23(b)(3).

The district court analyzed each of the Rule 23 requirements for certification of a class action, but ” E*Trade refutes only the adequacy of Murray as class representative,” Murray, at *2, so we do not here discuss the court’s analysis supporting its finding that numerosity, commonality and typicality were met. See id., at *2-*4. With respect to the adequacy requirement of Rule 23(a)(4), a district court must examine the adequacy of both the proposed class representative and the proposed class counsel, and determine whether “the representative parties will fairly and adequately protect the interest of the class.” Id., at *5. The court readily concluded that proposed class counsel would adequately represent the class based on the firm’s class action experience, and noted that even E*Trade “praised” its experience. Id.

Certification of Class Actions Class Action Court Decisions FCRA Class Actions Uncategorized

Federal Court Trial Date Of Class Action Law Firm Milberg Weiss Set

As previously reported, class action plaintiff law 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. Prosecutors allege that the class action firm paid people to serve as class representatives and recruited people to purchase stock in anticipation that share prices would fall, thereby positioning itself to play a lead role in any subsequent securities fraud class action lawsuits and, concomitantly, realize greater attorney fees.

Class Actions In The News Uncategorized

Huber v. Taylor Class Action Defense Case: Third Circuit Reverses Order Granting Defense Motion For Summary Judgment In Malpractice Class Action Against Prior Class Counsel Because District Court’s Choice Of Law Determination Was Flawed

Class Action Plaintiffs’ Failure to Argue Choice of Law in District Court and in Opening Brief did not Waive Issue on Appeal, and District Court Erroneously Granted Defense Summary Judgment Motion and Erroneously Denied Class Certification in Breach of Fiduciary Duty Class Action Against Plaintiffs’ Prior Attorneys Based on its Incorrect Determination of Applicable Choice of Law

Based on a complicated fact pattern, plaintiffs filed a putative class action against some of their prior counsel in an asbestos mass action for breach of fiduciary duty, specifically, the breach of fiduciary duty of undivided loyalty and candor in the settlement of asbestos claims. Huber v. Taylor, ___ F.3d ___, 2006 WL 3071384, *4 (3rd Cir. October 31, 2006). In broad terms, the class action complaint alleged that prior counsel had negotiated settlements in which counsel received as attorney fees a smaller percentage of the payments made to putative class members than they received in fees from other clients in related actions, thus creating the incentive for counsel to negotiate higher settlements in cases in which they would receive a larger contingent fee. _Id._, at *3. Plaintiff’s lawyers sought class certification, which the District Court denied. The parties thereafter filed cross motions for summary judgment; the court agreed with defense attorneys that plaintiffs had failed to demonstrate actual harm – specifically, that the settlements received by plaintiffs would have been more favorable but for the alleged breaches of fiduciary duties – and therefore granted judgment for the defense. _Id._, at *4. The Third Circuit Court of Appeals reversed because the district court erred in its choice of law determination.

The Circuit Court opinion defines the “Northerners” as plaintiffs in asbestos actions filed in Pennsylvania, Ohio and Indiana, Huber, at *1, __and as “Southerners” those plaintiffs in asbestos actions filed in Mississippi and Texas, id., at *2. The class action complaint alleged that “Northerners received payouts that were between 2.5 and 18 times lower than those received by [Southerners],” id. In cases involving Northerners, class counsel had to share their attorney fee award with local counsel but they did not have to utilize local counsel in cases involving Southerners. The Court of Appeal summarized plaintiffs’ arguments at *2 and *3 as follows:

Certification of Class Actions Class Action Court Decisions Uncategorized

Philip Morris Defense Team Solidifies Victory In Illinois Class Action Against Tobacco Giant

The New York Times reports on the decision of the United States Supreme Court to let stand the decision of the Illinois Supreme Court that reversed a $10 billion judgment against Philip Morris. The judgment against Philip Morris had been entered in a class action that alleged smokers “were misled about the health risks of ‘light’ cigarettes.” The Illinois Supreme Court reversed the judgment, agreeing with defense attorneys that a statutory exemption for conduct authorized by a governmental regulatory agency applied because “the Federal Trade Commission had endorsed the ‘light’ and ‘low tar’ descriptions in settlements with other cigarette makers.

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Philip Morris Class Action Defense Case-Price v. Philip Morris: U.S. Supreme Court Denies Petition For Writ Of Certiorari

Illinois Supreme Court Decision Reversing Billion Dollar Class Action Award Against Tobacco Giant Now Final The Philip Morris defense team secured victory in the Illinois class action involving the sale of “light” cigarettes today when the United States Supreme Court denied the petition for writ of certiorari filed plaintiffs’ attorneys. Price v. Philip Morris Inc., ___ U.S. ___, 2006 WL 2843774 (November 27, 2006). The class action originated in 2000, when plaintiffs filed a class action lawsuit in Illinois state court alleging violations of the Consumer Fraud Act and the Deceptive Practices Act based on the packaging, marketing, promotion and sale of “light” cigarettes as having less tar and nicotine than “regular” cigarettes.

Class Action Court Decisions Uncategorized

Sears Class Action Defense Case-Santamarina v. Sears: Seventh Circuits Holds Class Action Not Removable By Defense Because Under California Law Amendments To Class Action Complaint Related Back To Original Filing

Error in Refusing to Remand Class Action is not Jurisdictional Error but Defense Improperly Removed Class Action under CAFA (Class Action Fairness Act of 2005) Because Amendments to Complaint Related Back Original Filing Which Predated CAFA’s Effective Date

In January 2005, prior to the effect date of the Class Action Fairness Act of 2005 (CAFA), plaintiff filed a barebones class action in California state court against Sears alleging false representations that certain Craftsman tools are made in the U.S. when they are manufactured abroad. Santamarina v. Sears, Roebuck & Co., 466 F.3d 570, 571 (7th Cir. 2006). Defense attorneys demurred, and plaintiff’s lawyer filed an amended complaint after CAFA became effective. The defense then removed the class action to federal court arguing that the amended complaint did not relate back and was therefore removable under CAFA. The California federal court denied plaintiff’s motion for remand and plaintiff did not appeal that ruling. However, after the Judicial Panel on Multidistrict Litigation (MDL) transferred the case to Illinois, plaintiff asked the district court to reconsider the California court’s ruling. The Illinois federal court held that the defense removal had been improper and remanded the class action to California state court. Id. Sears appealed, and the Seventh Circuit Court of Appeals affirmed.

Sears first argued that the Illinois federal court should not have reconsidered the ruling of the California federal court. Santamarina, at 571-72. The Seventh Circuit disagreed, explaining that a court has inherent power to reconsider prior rulings in the same lawsuit, even the rulings of a different judge, “if there is a compelling reason, such as a change in, or clarification of, law that makes clear that the earlier ruling was erroneous.” Id., at 572. The Circuit Court reasoned at page 572, “Not to reconsider in such circumstances would condemn the parties to the unedifying prospect of continued litigation when they knew that a possibly critical ruling was in error and, unless it became moot in the course of the proceedings, would compel a reversal of the final judgment at the end of the case.” The Court of Appeals was critical of plaintiff’s delay in seeking reconsideration “almost 15 months since the case was removed to the federal court and 13 months since it was transferred to Chicago,” but held that “some latitude” was warranted because the class action was removed and remand denied “only a few months after the promulgation of the Class Action Fairness Act.” Id.

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

In re Vioxx Class Action Defense Cases: Louisiana Federal Court Hands Merck Defense Crucial Victory By Denying Motion To Certify Nationwide Class Action Involving Vioxx

Federal Court Agrees with Defense that Vioxx Class Action Claims Lack Typicality and Fail to Satisfy Predominance and Superiority Requirements of Rule 23(b)

The Vioxx litigation against Merck – consisting of thousands of individual and numerous class action lawsuits filed in state and federal courts – is well known. Merck withdrew Vioxx from the market in September 2004, following clinical reports that Vioxx led to an increased risk of heart attacks and strokes. By that time, however, an estimated 20 million people had used the prescription drug. The individual and class action lawsuits assert various tort and products liability claims against Merck. In February 2005, the Judicial Panel for Multidistrict Litigation transferred the cases to the federal court for the Eastern District of Louisiana, Judge Eldon Fallon, for pretrial proceedings. In re Vioxx Products Liab. Litig., ___ F.Supp.2d ___ (E.D. La. November 22, 2006) [Slip Opn., at 1-2]. Plaintiffs moved for certification of a nationwide class action against Merck; defense attorneys opposed the motion on two grounds: (1) that each claim must be litigated under the substantive law of each class members’ respective state (rather than New Jersey law, as plaintiffs’ claimed) thus defeating commonality of law, and (2) that each claim “involves separate and distinct factual issues.” _Id._, at 6. On November 22, 2006, the district court agreed with Merck’s defense team and refused to certify a nationwide Vioxx class action.

Merck secured FDA approval for the sale of the prescription drug Vioxx in May 1999 for relief of pain caused by osteoarthritis, rheumatoid arthritis, menstrual pain, and migraine headaches. In re Vioxx, at 1. Following centralization by the Judicial Panel, the Plaintiffs Steering Committee filed a Master Class Action Complaint alleging that Vioxx was defective, that Merck misrepresented its safety in that it knew or should have known that Vioxx was unsafe, and that Vioxx caused medical problems, injury and death. Id., at 4. In December 2005, plaintiffs moved to certify a nationwide class action under Rule 23(b)(3) consisting of all U.S. residents who used Vioxx and who claim personal injuries or assert wrongful death claims arising from such use, id. Merck opposed the motion on the grounds summarized above, see id., at 6.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-IBM Defense Attorneys Seeks Court Approval Of $65 Million Settlement In Federal Fair Labor Standards Act (FLSA) Overtime Class Action

The Los Angeles Times reports that IBM has reached a tentative agreement to pay $65 million in settlement of a class action lawsuit filed in California federal court that alleged it had improperly denied overtime pay to 32,000 workers. According to the article, “The case involved workers classified as ‘technical services professional and information technology specialists.’ IBM considered them professionals exempt from overtime laws detailed in the Fair Labor Standards Act and state labor laws.

Class Actions In The News Uncategorized

15 U.S.C. § 77r-1–Preemption Of State Law 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 preemption of state laws in 15 U.S.C. § 77r-1, which provides:

§ 77r-1. Preemption of State law

(a) Authority to purchase, hold, and invest in securities; securities considered as obligations of United States

(1) Any person, trust, corporation, partnership, association, business trust, or business entity created pursuant to or existing under the laws of the United States or any State shall be authorized to purchase, hold, and invest in securities that are–

(A) offered and sold pursuant to section 77d(5) of this title,

(B) mortgage related securities (as that term is defined in section 78c(a)(41) of this title),

(C) small business related securities (as defined in section 78c(a)(53) of this title), or

(D) securities issued or guaranteed by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association,

to the same extent that such person, trust, corporation, partnership, association, business trust, or business entity is authorized under any applicable law to purchase, hold or invest in obligations issued by or guaranteed as to principal and interest by the United States or any agency or instrumentality thereof.

(2) Where State law limits the purchase, holding, or investment in obligations issued by the United States by such a person, trust, corporation, partnership, association, business trust, or business entity, such securities that are–

(A) offered and sold pursuant to section 77d(5) of this title,

(B) mortgage related securities (as that term is defined in section 78c(a)(41) of this title),

(C) small business related securities (as defined in section 78c(a)(53) of this title), or

(D) securities issued or guaranteed by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association,

shall be considered to be obligations issued by the United States for purposes of the limitation.

Statutes & Rules Uncategorized

15 U.S.C. § 77r–Exemption From State Regulation Of Securities 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. In 15 U.S.C. § 77r, Congress provided for the exemption of securities offerings from State regulation as follows:

§ 77r. Exemption from State regulation of securities offerings

(a) Scope of exemption

Except as otherwise provided in this section, no law, rule, regulation, or order, or other administrative action of any State or any political subdivision thereof–

(1) requiring, or with respect to, registration or qualification of securities, or registration or qualification of securities transactions, shall directly or indirectly apply to a security that–

(A) is a covered security; or

(B) will be a covered security upon completion of the transaction;

(2) shall directly or indirectly prohibit, limit, or impose any conditions upon the use of–

(A) with respect to a covered security described in subsection (b) of this section, any offering document that is prepared by or on behalf of the issuer; or

(B) any proxy statement, report to shareholders, or other disclosure document relating to a covered security or the issuer thereof that is required to be and is filed with the Commission or any national securities organization registered under section 78o-3 of this title, except that this subparagraph does not apply to the laws, rules, regulations, or orders, or other administrative actions of the State of incorporation of the issuer; or

(3) shall directly or indirectly prohibit, limit, or impose conditions, based on the merits of such offering or issuer, upon the offer or sale of any security described in paragraph (1).

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