Federal Court Sua Sponte Removes Milberg Weiss From Steering Committee Of Class Action Transferred To Minnesota District Court By Multidistrict Litigation (MDL) Panel—Class Action Defense Issues

Federal Court Holds Lawyer’s Failure to Disclose Investigation and Duty Court Owes Transferee Plaintiffs Requires Removal from Plaintiffs’ Steering Committee and Notice to, and Consent of, Lawyer’s Individual Clients

Product liability actions – filed against Medtronic, Inc., concerning its implantable defibrillator – were transferred to a Minnesota federal court by the Multidistrict Litigation (MDL) Panel. Mitchell Breit, a partner in the New York office of Milberg Weiss Bershad & Schulman, was selected to serve on the Plaintiffs’ Steering Committee. Following the indictment of Milberg Weiss, the district court judge sua sponte initiated a telephone conference to discuss Breit’s continued involvement on the committee. In re Medtronic, Inc. Implantable Defibrillator Prod. Liab. Litig., 434 F.Supp.2d 729 (D. Minn. 2006). Lead counsel and Breit requested that he be allowed to continue to serve; the court rejected their pleas “finding that it is in the best interest of the transferee plaintiffs that Mr. Breit and the Milberg Weiss firm be severed from the service” on the committee. Id., at 730.

The federal court reasoned a transferee judge “bears a particularly heavy burden to protect the transferee plaintiffs,” in addition to and separate from the duty attorneys owe their clients. Further, in selecting attorneys to serve on the steering committee, the Court directly investigated the ethics of every lawyer who offered to serve on it: “It asked each attorney seeking appointment to the [steering committee] to submit a letter touching his/her own ethics, and the ethical competence of his/her firm or professional association.” Id., at 730. The court noted with dissatisfaction that Briet’s December 2005 submittal failed to disclose the criminal investigation of the Milberg Weiss firm or its partners, and said nothing of the potential criminal charges until the federal criminal indictment issued. Id. Breit’s May 30, 2005 letter to the Court – sent in response to the Court’s sua sponte inquiry – failed to explain why the criminal investigation “was never disclosed to this Court until the indictment was handed up.” Id., at 731. The district court found this unacceptable, explaining at page 731:

Class Action Court Decisions Class Actions In The News Multidistrict Litigation Uncategorized

American Express Class Action Defense Case-Slayton v. American Express: Second Circuit Adopts De Novo Review Of Relation Back Rulings Under FRCP Rule 15 In Vacating Judgment In Favor Of Class Action Defense

District Court Granted Defense Motion to Dismiss Securities Fraud Class Action Lawsuit, Seeking Damages Under § 10(b) and § 20(a) of the Securities Exchange Act of 1934 and Common Law Fraud, but Second Circuit Reversed

A class action securities fraud lawsuit was filed against American Express and its subsidiaries, and against individual corporate officers of those companies (“Amex”), arising from high-risk junk bond investments and allegedly false statements concerning the profitability of those investments. Plaintiffs’ lawyer filed an amended class action complaint adding two causes of action; defense attorneys moved to dismiss the new claims as time-barred and the original claims on the merits. The district court granted the defense motion, finding that the new claims did not “relate back” to the filing of the original complaint, and that the original claims failed on the merits because plaintiffs had not adequately pleaded the requisite scienter. The Second Circuit reversed and remanded. Slayton v. American Express Co., 460 F.3d 215 (2d Cir. 2006).

Class Action Court Decisions Uncategorized

Skirchak v. Dynamics Research-Class Action Defense Cases: Employer’s Dispute Resolution Program Barring Class Action Claims For Alleged Violations Of Federal Fair Labor Standards Act (FLSA) Unconscionable Massachusetts District Court Holds

Federal District Court Refuses Defense Motion to Dismiss Class Action and Enforce Arbitration Agreement Holding FAA (Federal Arbitration Act) Provision Barring Class Action FLSA Claims Unconscionable Under Specific Facts of Case

Employees filed a putative class action alleging violations of the federal Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq., for failure to pay overtime. The defense filed a motion to dismiss the class action complaint and to enforce a enforce the company’s “dispute resolution program” governed by the Federal Arbitration Act (FAA) which, in part, barred class actions. Skirchak v. Dynamics Research Corp., Inc., 432 F.Supp.2d 175 (D. Mass. 2006). (This class action defense has been raised in other cases discussed in separate articles.) The district court denied the defense motion, applying the well-settled rule that FAA agreements are subject to the standard defenses available in contract actions, including fraud, duress and unconscionability. Skirchak, at 178 (citing Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652 (1996)).

The court first addressed the language of FLSA itself, and acknowledged that Congress did not expressly guarantee the right to file class actions for FLSA claims. Skirchak, at 179 (citing Kuehner v. Dickinson & Co., 84 F.3d 316, 319-20 (9th Cir.1996)). But the court believed that the fact FLSA provides for collective actions, see 29 U.S.C. § 216, meant that Congress “implicitly” intended to allow such class actions, Skirchak, at 179.

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Wang v. Chinese Daily News: Class Action Reporters Owed Overtime Under Federal FLSA And Defense Vacation “Buy Back” Policy Violated State Law And Required Payment At Employees’ Hourly Rate Of Pay California Court Holds

Federal District Court Rejects Defense to Class Action Claims Under Fair Labor Standards Act (FLSA) and State Law Claims, and Grants Summary Judgment in Favor of Class

News reporters filed in California federal court a class action against their employer that alleged numerous violations of federal and state labor laws, as well as California Business and Professions Code §§ 17200 et seq. (unfair competition). Wang v. Chinese Daily News, Inc., ___ F.Supp.2d ___, 2006 WL 1663638 (C.D. Cal. June 7, 2006). The parties filed cross-motions for summary judgment; the court denied the defense motion and granted the plaintiffs’ motion. In so doing, the court _inter alia_ rejected the defense argument that the reporters were exempt under the FLSA’s “creative professional exemption,” and ruled against the defense on the applicable statute of limitations governing California Labor Code § 226.7 claims (meal and rest periods). The opinion is quite detailed; this article discusses only some of the court’s holdings.

The employer had a policy that allowed vacation time to accrue and to carryover into following years, provided that “accumulated vacation days cannot exceed 30 days” and that “[m]oney shall be paid for unused vacation days exceeding 30 days at $64 per day ” Slip Opn., at 3. California law permits employers to adopt “no additional accrual” policies, so the question before the federal court was whether $64 per day was lawful or whether the employer was required to “buy back” the vacation time at the employees’ hourly rate of pay. The court concluded that this question turned on whether the “unused vacation days” should be deemed “vested” or “accrued.” Id., at 4. The court suggested that if the employer had followed its vacation policy then it would have been lawful; however, the evidence before the court established that employees routinely accrued upwards of 70 days of vacation and held that the in “actual practice,” then, the employer treated the vacation time as “accrued.” Id., at 5. Accordingly, the employer was required to buy back the vacation days at the employees’ hourly rate of pay. Id., at 6.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Smith v. Superior Court: Employee Is “Discharged” Under California Labor Laws Not Only By Involuntary Termination But also By Completion Of Specific Assignment

California Supreme Court Rejects Class Action Defense Argument that Employees were not Discharged by Completion of Job Assignment for Which They were Hired

A class action was filed on behalf of models that worked specific projects but were not paid immediately after the projects ended. Defense attorneys argued that the employees were not “discharged” within the meaning of California Labor Code § 201 because they were not fired or otherwise involuntarily terminated. Smith v. Superior Court, 39 Cal.4th 77, 45 Cal.Rptr.3d 394 (Cal. July 10, 2006). Plaintiff was hired as a “hair model” – an audience watched a stylist color and style her hair, she walked the runway, and she remained until defendant told her that she could leave. Plaintiff was to be paid $500, but defendant waited more than two months to pay her the money owed. Plaintiff filed a class action complaint alleging various causes of action, including violations of California Labor Code §§ 201 and 203. Slip Opn., at 2.

Section 201 of the Labor Code provides that if an employer “discharges” an employee, wages earned and unpaid at the time of discharge are due and payable immediately. Under section 203, an employer’s willful failure to pay wages to a “discharged” employee in accordance with section 203 subjects the employer to penalties. Slip Opn., at 1.

Class Action Court Decisions Employment Law Class Actions Uncategorized

15 U.S.C. § 1681e – Compliance Procedures: Statutory Language for the Defense Lawyer of Class Action Lawsuits Under the FCRA (Fair Credit Reporting Act)

As a resource for class action defense attorneys defending against class actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FDCPA. This article sets forth for the compliance procedures of the FCRA:

§ 1681e. Compliance procedures

(a) Identity and purposes of credit users.

Every consumer reporting agency shall maintain reasonable procedures designed to avoid violations of section 1681c of this title and to limit the furnishing of consumer reports to the purposes listed under section 1681b of this title. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that the information will be used for no other purpose. Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by such prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report to any person if it has reasonable grounds for believing that the consumer report will not be used for a purpose listed in section 1681b of this title.

(b) Accuracy of report.

Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

(c) Disclosure of consumer reports by users allowed.

A consumer reporting agency may not prohibit a user of a consumer report furnished by the agency on a consumer from disclosing the contents of the report to the consumer, if adverse action against the consumer has been taken by the user based in whole or in part on the report.

(d) Notice to Users and Furnishers of Information

(1) Notice requirement.

A consumer reporting agency shall provide to any person

(A) who regularly and in the ordinary course of business furnishes information to the agency with respect to any consumer; or

(B) to whom a consumer report is provided by the agency;

a notice of such person’ s responsibilities under this title.

(2) Content of notice.

The Federal Trade Commission shall prescribe the content of notices under paragraph (1), and a consumer reporting agency shall be in compliance with this subsection if it provides a notice under paragraph (1) that is substantially similar to the Federal Trade Commission prescription under this paragraph.

FCRA Class Actions Statutes & Rules Uncategorized

Employment Law Class Action Cases Again Lead California Weekly Filings

Employment Law Class Action Cases Again Lead California Weekly Filings To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly, unofficial summaries of the 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. Employment law cases once again head up the list.

Class Actions In The News Uncategorized

15 U.S.C. § 1681d – Disclosure of Investigative Consumer Reports: Statutory Language for the Class Action Defense Lawyer of Provisions of the FCRA (Fair Credit Reporting Act)

Class action defense lawyers defending against claims under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., may benefit from ready access to the text of the FCRA, as we provide the statutory provisions as a benefit to class action counsel.

§ 1681d. Disclosure of investigative consumer reports

(a) Disclosure of fact of preparation.

A person may not procure or cause to be prepared an investigative consumer report on any consumer unless

(1) it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made, and such disclosure

(A) is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and

(B) includes a statement informing the consumer of his right to request the additional disclosures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 1681g(c) of this title; and

(2) the person certifies or has certified to the consumer reporting agency that

(A) the person has made the disclosures to the consumer required by paragraph (1); and

(B) the person will comply with subsection (b).

(b) Disclosure on request of nature and scope of investigation.

Any person who procures or causes to be prepared an investigative consumer report on any consumer shall, upon written request made by the consumer within a reasonable period of time after the receipt by him of the disclosure required by subsection (a)(1) of this section, make a complete and accurate disclosure of the nature and scope of the investigation requested. This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later.

FCRA Class Actions Statutes & Rules Uncategorized

Merck Defense Wins Another Individual Vioxx Case, Further Strengthening Its Defense Position Against Class Action Lawsuits

Merck’s defense team has prevailed in another Vioxx case, this one in California, adding further support to Merck’s claims that class action treatment of these cases would be inappropriate. Merck also must present a defense against a class action lawsuit brought by insurers that alleges Merck defrauded them. Alex Berenson of the New York Times reports today that Merck’s aggressive stance and early successes have resulted in the voluntary dismissal of more than 300 federal lawsuits against the company, as plaintiffs’ attorneys reevaluate the upside of pursuing weak claims, though that still leaves pending roughly 14,000 such lawsuits.

Class Actions In The News Uncategorized

Class Action Defense Issues-Barnette v. Brook Road: 2003 Amendment to Federal Fair Credit Reporting Act (FCRA) Did Not Eliminate All Private Rights Of Action Under § 1681m But Only Those Under § 1681m(h) Virginia District Court Holds

Federal District Court Holds Use of Word “Section” Instead of “Subsection” in FCRA (Fair Credit Reporting Act) § 1681m(h)(8) was a Drafting Error and Denies Defense Motion for Judgment on the Pleadings

The federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., enacted in 1970, has been described by courts as both “comprehensive” and “complex.” In part, it sets forth statutory requirements governing the use of consumer reports. See 15 U.S.C. § 1681m. In 2003, Congress amended the FCRA by enacting the Fair and Accurate Credit Transactions Act (FACTA). The amendments included adding subsection (h) to § 1681m, which provides: Section 1681m(h)(8) states that no civil actions may be filed for “any failure by any person to comply with this section” (italics added); rather, such violations “shall be enforced exclusively under section 1681s” (italics added), which provides for administrative enforcement of FCRA violations.

Following a so-called “yo-yo” car sale, the consumer/purchaser filed suit in federal court against Brook Road, Inc. alleging violations of various state and federal laws, as well as common law causes of action. Barnette v. Brook Road, Inc., 429 F.Supp.2d 741 (D. Va. 2006). The complaint included an FCRA claim under § 1681m(a) and (b), based on the allegation that the lender had obtained and relied on her credit report, and had engaged in an “adverse action” in reliance on the report, but had failed to provide her with the required notice of the adverse action. Id., at 745. The defense moved for judgment on the pleadings on the grounds that FACTA eliminated private rights of action for all violations of § 1681m; the consumer argued that the use of the word “section” in § 1681m(h)(8) was a typographical error, and that Congress intended to bar private rights of action only for alleged violations of **sub**section (h). Id., at 746.

Class Action Court Decisions FCRA Class Actions Uncategorized