Employment Law Class Action Cases Again Lead Weekly California Filings Facing Defense Attorneys

To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly an unofficial summary of legal categories for 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. This report covers the time period from October 20 – October 26, 2006. We include only those categories that boast 10% or more of the class action filings during the relevant timeframe.

Class Actions In The News Uncategorized

15 U.S.C. § 77g–Information Required In Registration Statements 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. While the statutory provisions for the registration of securities is contained in 15 U.S.C. § 77f, Congress set forth the information that must be contained in a registration statement in 15 U.S.C. § 77g. That statute provides:

§ 77g. Information required in registration statement

(a) The registration statement, when relating to a security other than a security issued by a foreign government, or political subdivision thereof, shall contain the information, and be accompanied by the documents, specified in Schedule A of section 77aa of this title, and when relating to a security issued by a foreign government, or political subdivision thereof, shall contain the information, and be accompanied by the documents, specified in Schedule B of section 77aa of this title; except that the Commission may by rules or regulations provide that any such information or document need not be included in respect of any class of issuers or securities if it finds that the requirement of such information or document is inapplicable to such class and that disclosure fully adequate for the protection of investors is otherwise required to be included within the registration statement. If any accountant, engineer, or appraiser, or any person whose profession gives authority to a statement made by him, is named as having prepared or certified any part of the registration statement, or is named as having prepared or certified a report or valuation for use in connection with the registration statement, the written consent of such person shall be filed with the registration statement. If any such person is named as having prepared or certified a report or valuation (other than a public official document or statement) which is used in connection with the registration statement, but is not named as having prepared or certified such report or valuation for use in connection with the registration statement, the written consent of such person shall be filed with the registration statement unless the Commission dispenses with such filing as impracticable or as involving undue hardship on the person filing the registration statement. Any such registration statement shall contain such other information, and be accompanied by such other documents, as the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors.

Statutes & Rules Uncategorized

Tmesys v. Eufaula-Class Action Defense Cases: Circuit Court Has Jurisdiction To Review District Court Order Remanding Class Action To State Court Based On Finding That CAFA (Class Action Fairness Act) Does Not Apply Eleventh Circuit Holds

As a Matter of First Impression, Eleventh Circuit Holds that Jurisdiction Exists to Review District Court Order Based on Finding that Class Action Fairness Act of 2005 (CAFA) does not Apply and Agrees with District Court Decision to Remand Class Action to State Court Plaintiff filed a putative class action in Alabama state court against health insurer alleging breach of contract. Defense attorneys removed the action to federal court based on the Class Action Fairness Act of 2005 (CAFA).

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

Kim v. Citigroup-Class Action Defense Cases: Forfeiture Aspect Of Capital Accumulation Plan Did Not Violate State’s Wage Act Illinois Court Holds

Trial Court Erred in Finding that Employees Voluntary Participation in a Capital Accumulation Plan Violated Illinois Wage Act Because of Two-Year Forfeiture Period

Plaintiff filed a class action against Citigroup, Travelers Group, Primerica Financial Services, Salomon Smith Barney Holdings and Salomon Smith Barney alleging that a voluntary capital accumulation plan (CAP), whereby a portion of employee compensation and wages were paid in the form of restricted stock, violated Illinois labor laws because the CAP contained a two-year forfeiture period. Kim v. Citigroup, Inc., ___ N.E.2d ___, 2006 WL 2796362 (Ill.App. September 29, 2006). Plaintiff argued that the forfeiture of a portion of the stock upon termination of employment violated the Illinois Wage Payment and Collection Act (“the Act’), which requires that employees be paid all earned wages upon termination of employment. Defense attorneys argued that the CAP program is for the benefit of employees and does not violate state law. The trial court sided with plaintiff, but the appellate court reversed.

Plaintiff was a financial consultant for Salomon Smith Barney with responsibility for managing $30-$40 million in assets. He voluntarily agreed to participate in the CAP, which he believed to be “an innovative and attractive savings vehicle.” Slip Opn., at 2. Plaintiff elected to have 10% of his compensation paid in the form of restricted stock, which allowed him to receive Citigroup stock at a 25% discount subject to a two-year vesting period. Id., at 2-3. When plaintiff left to join UBS Paine Webber, Salomon Smith Barney kept the unvested shares of his CAP stock, which represented approximately $18,000 in earned wages. Id., at 3.

Class Action Court Decisions Employment Law Class Actions Uncategorized

FedEx Class Action Defense Case-Moody v. Federal Express: Illinois Appellate Court Affirms Judgment In Favor Of Defense Against Class Action Alleging Breach Of Contract Because Class Action Complaint Sought Remedy Outside Scope Of Contract

Defense Attorneys Successfully Defeat Class Action Alleging State Law Breach of Contract Claim Because Contract Set Forth Exclusive Remedies in Event of Breach and Class Action Complaint Sought a Different Remedy

Plaintiff filed a one-count nationwide class action in state court against FedEx alleging that it breached the terms of its shipping contract with customers because it charged higher rates for express delivery service but failed to deliver the packages on time. Moody v. Federal Express Corp., ___ N.E.2d ___, 2006 WL 3012854 (Ill.App. October 19, 2006) [Slip Opn., at 2]. Plaintiff paid $41.31 to send a package on January 22, 2002 by “FedEx Priority Overnight, Next Business Morning” expecting the package to be delivered by 8:00 a.m. the following morning; instead, the package was delivered two days later at 9:00 a.m. _Id._ Defense attorneys moved for summary judgment on the grounds that the relief sought in the class action violated the federal Airline Deregulation Act, 49 U.S.C. § 41713(b)(1), “because it sought a remedy outside the four corners of the contract.” _Id._ The trial court agreed that the claims were preempted and dismissed the class action; the Illinois Appellate Court affirmed on straight contract grounds without reaching the federal preemption issue.

Class Action Court Decisions Uncategorized

Hood v. Santa Barbara Bank-Class Action Defense Cases: Trial Court Improperly Granted Defense Motion To Dismiss Class Action Alleging CLRA, UCL And FDCPA Violations Because Class Action Claims Were Not Preempted By Federal Law California Court Holds

California Appellate Court Split Opinion Rejects Defense Federal Preemption Arguments and Reverses Order Dismissing Class Action

Plaintiffs filed a putative class action in California state court against a bank alleging conversion, and violations of California’s Consumers Legal Remedies Act (CLRA), Unfair Competition Law (UCL), Fair Debt Collection Practices Act (FDCPA) based on the bank’s “wrongful” release of tax refund monies to a third party creditor bank. Hood v. Santa Barbara Bank & Trust, 143 Cal.App.4th 526, 49 Cal.Rptr.3d 369, 373 (Cal.App. 2006). Defense attorneys cross-complained against several other banks, and the banks filed motions for judgment on the pleadings on the ground of federal preemption. Id., at 375. The trial court granted the motions, concluding that the “visitorial powers” regulation, the deposit-taking regulation and the non-real estate lending regulation adopted by the Office of the Comptroller of the Currency (OCC) expressly preempted plaintiffs’ class action claims. Id., at 375-76. By a 2-1 vote, the California Court of Appeal reversed.

Class Action Court Decisions Uncategorized

Jackson v. Midland Credit-Class Action Defense Cases: Illinois Federal Court Grants Defense Motion For Summary Judgment Holding Debt Collection Letter Did Not Violate Federal Fair Debt Collection Practices Act (FDCPA)

Federal Court Rejects Class Action Claim that Offer to Settle Debt for 50% of Current Balance Due Violates Fair Debt Collection Practices Act (FDCPA)

Plaintiffs filed a consolidated class action complaint against Midland Credit Management, a debt collector that purchases debts from third-party creditors, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq. Midland sent letters attempting to collect outstanding debts; the class action complaint alleged that the letters violated the FDCPA because they contain false and misleading information. Defense attorneys filed a motion for summary, and plaintiffs followed with a cross-motion for summary judgment. The federal district court agreed with defense attorneys that the collection letters did not violate the FDCPA and granted summary judgment in favor of Midland and against the class action plaintiffs. Jackson v. Midland Credit Management, Inc., 445 F.Supp.2d 1015, 1017 (N.D. Ill. 2006).

Preliminarily, the district court noted that the Seventh Circuit “evaluates FDCPA claims through the eyes of an ‘unsophisticated debtor’” – it does not employ the “least sophisticated debtor” test adopted by some sister circuits. Jackson, at 1018-19. The court explained at page 1018 that, under this test,

“The unsophisticated debtor is regarded as ‘uninformed, naive, or trusting,’ but nonetheless is considered to have a ‘rudimentary knowledge about the financial world and is capable of making basic logical deductions and inferences.’” (Citations omitted.)

Because the court’s analysis requires an understanding of the specific language used in Midland’s letters, we provide the quoted language, including the emphasis in the original letters, as set forth by the district court at page 1017:

Class Action Court Decisions FDCPA Class Actions Uncategorized

Tyson Class Action Defense Case-Trollinger v. Tyson: Tennessee Federal Court Grants Motion To Certify Class Action Alleging Violations Of Federal Racketeer Influence and Corrupt Organizations Act (RICO)

Federal Court Rejects Defense Arguments Against Class Certification of RICO Class Action Complaint Finding that Generalized Evidence Exists to Prove or Disprove the Class Claims and that Methodologies Exist to Calculate Damages

Plaintiffs filed a class action complaint in Tennessee federal court against poultry company Tyson Foods for violations of the federal Racketeer Influence and Corrupt Organizations Act (RICO) predicated on Tyson’s alleged harboring and hiring of illegal aliens in violation of federal law. Trollinger v. Tyson Foods, Inc., ___ F.Supp.2d ___, 2006 WL 2924938 (E.D. Tenn. October 10, 2006) [Slip Opn., at 2]. The complaint alleged that Tyson knowingly employed a substantial number of illegal immigrants and that in so doing “saved . . . large sums of money by driving down wages at the chicken processing plants below what wages would be if the [program] were not in existence.” _Id._, at 3. Following substantial litigation, including motions for summary judgment and judgment on the pleadings, plaintiffs filed a motion for class certification under Rule 23(a) and Rule 23(b)(3), _id._, at 6. The district court granted the motion.

While the district court discussed the requirements for a class action set forth in Rule 23(a), Tyson, at 6-14, the court noted, “It is not at all clear Tyson contests these prerequisites,” id., at 8. Moreover, defense attorneys did not challenge each of the four separate elements considered under Rule 23(b)(3); rather, “Defendants’ only challenges to Plaintiffs’ motion are in respect to Rule 23(b)’s requirements of manageability and predominance.” Id. Thus, while the federal court discussed each of the elements of Rule 23(b)(3), id., at 14-20, it observed that defense attorneys did not address whether class members will have a strong interest in controlling their claims, id., at 15, whether other litigation exists by or against class members, id., or the desirability of concentrating the litigation “in this forum,” id., at 15-16.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Issues–Fair and Accurate Credit Transactions Act (FACTA)

Class Action Defense Attorneys Urged to Advise Clients about FACTA Requirements As we previously noted, the Fair and Accurate Credit Transactions Act (FACTA) is scheduled to take effect in December, 2006. Congress requires that credit card receipts provided to customers be modified so that the information contained on them no longer serves as a ready source for credit card fraud or identity theft. Under FACTA, the credit card number shown on the customer copy of the credit card receipt must be truncated and the expiration date must be omitted.

Class Actions In The News FCRA Class Actions Uncategorized

Baez v. Wagner & Hunt-Class Action Defense Cases: In Class Action Against Debt Collector Florida Federal Court Holds That Law Firm’s Collection Letter Violated Fair Debt Collection Practices Act (FDCPA)

In Case of First Impression Florida District Court Holds that Collection Letter Sent by Law Firm Violated Federal Fair Debt Collection Practices Act (FDCPA) Because it Told Debtor that Validity of Debt could be Disputed Only in Writing

Plaintiff opened an American Express Centurion credit card account. American Express retained a law firm to collect amounts owed on the account. The law firm sent a “Dunning letter” that stated, in pertinent part, that the debtor had to “notify this office in writing within thirty days after receiving this notice that you dispute the validity of the debt.” Baez v. Wagner & Hunt, P.A., 442 F.Supp.2d 1273, 1274 (S.D. Fla. 2006) (italics added by court). Plaintiff filed a class action against the law firm alleging that the collection letter violated Section 1692g of the federal Fair Debt Collection Practices Act (FDCPA) by requiring that the validity of the debt be disputed in writing, and defense attorneys moved to dismiss the complaint. Id., at 1274-75. The basis of the lawsuit is that Section 1692g(a)(3) requires that a debt collection letter notify the debtor that the debt will be assumed valid unless the debtor disputes the validity of the debt within 30 days. Sections 1692g(a)(4) and (a)(5), however, reference written notifications from the debtor disputing the debt. Defendant argued that its Dunning letter simply “provided [plaintiff] with additional guidance for disputing the debt and avoided confusion by reconciling the notification requirement in subsection (a)(3) with the writing requirement contained in subsections (a)(4) and (a)(5).” Baez, at 1275-76. The district court disagreed.

Class Action Court Decisions FDCPA Class Actions Uncategorized