Federal Judge Attacks Thompson Memo Cut-Off Of Defense Lawyer Fees – Indicated Class Action Law Firm Applauds Ruling

In a prior article, we discussed defense lawyer concerns about federal government efforts to require companies to divulge communications with its attorneys. That effort arises from federal guidelines contained in what is known as the Thompson memorandum, written in 2003. Another guideline suggests that corporate payment of lawyer fees for the criminal defense of employees will constitute a “black mark” against the company and may lead to an indictment. Lynnley Browning of the New York Times reports that yesterday a federal judge issued “the first major criticism from the bench” against tactics used by prosecutors and the Thompson memo.

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Experian v. Superior Court: Successful Defense of Class Certification Bars Letter to Potential Class Action Members Informing Them Of Their Possible Legal Rights California Court Holds

After a California state court denied a motion for class certification in a putative class action brought under the Consumer Credit Reporting Agencies Act (CCRAA), California Civil Code §§ 1785.1 et seq., plaintiff’s lawyer convinced the trial judge to allow communication by letter with potential class members that advised them of their potential legal rights against the defendant in the class action and sought their cooperation in pursuing the plaintiff’s damage claim in her lawsuit.

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New York Times Reports Class Action Law Firm And Lawyer Paid “Serial Plaintiff” $1 Million To Serve As Plaintiff

The news continues to go from bad to worse for class action law firm Milberg Weiss and its lawyers indicted on May 18, 2006, on charges that it paid more than $11 million in kickbacks to clients to serve as plaintiffs. According to Julie Creswell and Jonathan Glater of the New York Times, one such plaintiff, Howard J. Vogel, admits in a plea bargain with federal prosecutors that “he and relatives were linchpins in [a] long-running arrangement” that helped class action law firm Milberg Weiss “reap hundreds of millions of dollars as counsel in securities lawsuits.

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Cingular Fails To Stop Three Class Actions From Proceeding In California State Court

The Los Angeles Times recently reported that the efforts of Cingular Wireless to stop three class actions from proceeding in California state court came to an end on June 5, 2006, when the United States Supreme Court refused to grant certiorari in cases involving California court rulings that rejected class action restrictions in arbitration agreements. The rulings permitted plaintiffs to “bypass” arbitration. According to the Los Angeles Times, “The central questions was how much room the federal law [Federal Arbitration Act] leave for states to apply neutral rules such as California’s prohibition on ‘unconscionable’ contracts.

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Starbucks Faces California Employment Class Action

Former California Manager Seeks Class Action Status in Lawsuit Alleging Failure to Pay Overtime and Failure to Provide Meal and Rest Breaks In prior articles, we have discussed the prevalence of class actions against employers alleging labor law violations. These are among the “favorites” of plaintiff class action attorneys. Henry Lee of the San Francisco Chronicle reports today that a putative class action has been filed against Starbucks in federal court by a former manager who worked in two California Starbucks shops.

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Class Action Defense Cases–Kristian v. Comcast: Class Action Waiver In Arbitration Clause Unenforceable

Arbitration Agreements Retroactive and Enforceable But Class Actions And Attorney Fees Waiver Unenforceable First Circuit Holds

Circuit Courts of Appeal continue to struggle with whether class action waivers in arbitration agreements are enforceable. On April 20, 2006, the First Circuit addressed that issue, and several others, in Kristian v. Comcast Corp., 446 F.3d 25 (1st Cir. 2006). Subscribers filed putative class actions against cable TV giant Comcast alleging violations of state and federal antitrust laws. Comcast moved to compel arbitration based on an arbitration clause first added to the subscription service agreements in 2001. This motion was critical to Comcast’s defense of the class action for several reasons, chief among them that the arbitration agreements barred class action arbitration and barred recovery of attorney fees and costs. The district court concluded that the arbitration provisions did not apply retroactively and refused to compel arbitration. Id., at 29-30. The First Circuit Court of Appeals reversed, but severed the class action waiver provision, as well as the provision barring recovery of attorney fees and costs, holding that those provisions “prevent the vindication of statutory rights under state and federal law.” Id., at 29. Kristian spans 40 pages in the Official Reports and so cannot be explored in detail here. It will be discussed at length in a separate article concerning the enforceability of class action waivers in arbitration agreements. We provide here but a brief overview of the highlights of Kristian.

• Comcast provided adequate notice of the arbitration agreements and the provision waiving class actions, provided as a “billing stuffer” with the subscribers’ November 2001 invoices, Kristian, at 30, 36-37. The arbitration provision – including the waiver of class action claims – was set forth in bold face and capital letters, id., at 31-32.

• While none of the plaintiffs’ initial service agreements contained arbitration clauses or the class action waivers, the arbitration agreements nonetheless applied retroactively. Id., at 30, 31-36.

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Verizon Pays Record Amount To Settle Pregnancy Discrimination Class Action

The defense of class actions can span several years, and generally class action complaints allege damages dating back many years. That combination played a part in the record settlement of a pregnancy discrimination class action lawsuit, according to Amy Joyce of the Washington Post. By way of background, Nynex Corporation was formed in 1984 to provide telephone service to the states of Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

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Violante v. Communities Southwest — California Class Action Defense Cases

California Holds in Class Actions Case That Liability for Failure to Pay Prevailing Wages on Public Works Projects is Limited to Direct Employer

On April 18, 2006, a California court published its opinion in a class action case that addressed an issue of first impression in California: whether employees on public works projects may sue parties other than their direct employer for alleged violations of the prevailing wage law. Violante v. Communities Southwest Dev. & Constr. Co., 138 Cal.App.4th 972 (Cal.App. 2006). There, construction workers filed a putative class action in California state court for recovery of prevailing wages, alleging that perhaps thousands of workers “were paid less than prevailing wages as required by California Labor Code section 1770 et seq. for public works projects.” The class action complaint alleged violations of Labor Code section 1774, breach of contract and unfair business practices against numerous defendants including S. J. Burkhardt, Inc., the contractor that hired Raymond David Paci, doing business as Pacific Structures; Pacific Structures had employed plaintiffs directly. The trial court sustained the demurrers of three other defendants – Chapman Heights (a contractor), Communities Southwest Development and Construction Company (a developer and general partner of Chapman Heights), and Yucaipa Valley Acres (a developer and contractor) – without leave to amend and plaintiffs appealed. 138 Cal.App.4th at 975-76.

After a careful analysis of the statutory scheme, the Court held at page 979, “Plaintiffs have a right of action against the subcontractor, their direct employer [citations]. . . . But the Labor Code nowhere requires the contractor to pay prevailing wages to a subcontractor’s employee or permits a subcontractor’s employee to sue the prime contractor when the subcontractor fails to pay prevailing wages.”

Plaintiffs contend defendants violated section 1774 because plaintiffs were not paid prevailing wages by their direct employer, a subcontractor. ** This is an untenable interpretation.** The Labor Code provides a contractor and a subcontractor must pay prevailing wages **_to their respective employees_** on a public works project, not that a contractor must pay prevailing wages to a subcontractor’s employees. 138 Cal.App.4th at 978 (italics added).

Class Action Court Decisions Employment Law Class Actions Uncategorized

Melena v. Anheuser-Busch — Class Action Defense Issues

Employment Arbitration Agreement Under FAA (Federal Arbitration Act) Enforceable By Employer Illinois Supreme Court Holds

As discussed in a separate article, Circuit Courts of Appeal and state courts do not agree on the enforceability of arbitration agreements in employment contracts. This issue may be of critical importance in the defense of class actions, because a class action waiver in an employment arbitration agreement cannot possible be enforceable if the court would refuse to enforce the arbitral forum even without a class action restriction. On March 23, 2006, in an opinion that should have direct and positive impact in the defense of class action waivers in arbitration agreements in the state, the Illinois Supreme Court cast its vote on the issue, holding that under the FAA (Federal Arbitration Act, 9 U.S.C. § 1 et seq. (1994)), employment arbitration agreements are enforceable under “principles of fundamental contract law because we believe that approach is more faithful to the FAA.” Melena v. Anheuser-Busch, Inc., 847 N.E.2d 99, 107 (Ill. 2006).

In Melena, Anheuser-Busch hired plaintiff in February 1999. One year later, it mailed to employees a letter announcing a new “Dispute Resolution Program” that included a requirement for arbitration under the FAA. Employees were informed that “’by continuing or accepting an offer of employment’ with Anheuser-Busch, all employees to whom the policy was applicable ‘agree as a condition of employment to submit all covered claims to the dispute resolution program.’” 847 N.E.2d at 101. Plaintiff was injured in September 2002, and fired in March 2003. She filed suit against Anheuser-Busch in state court in May 2003. ANHEUSER-BUSCH moved to compel arbitration, but the trial court denied the motion without explanation. The appellate court affirmed, concluding that “’even if the plaintiff entered into the agreement knowingly, she did not do so voluntarily,’” and expressing doubt “about whether an agreement to arbitrate, offered as a condition of employment, ‘is ever voluntary.’” Id., at 102 (quoting appellate court opinion).

The Illinois Supreme Court reversed, holding: “In our view, the FAA’s plain language makes clear that arbitration agreements are enforceable except for state-law grounds for ordinary contract revocation.” 847 N.E.2d at 107 (italics added, citations omitted). Importantly, the Illinois Supreme Court did not make any distinction between arbitration agreements in an employment context or in a commercial setting, and did not suggest that a class action waiver provision would be interpreted under different contract principles.

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British Airways and Virgin Atlantic Hit With Class Action In New York Alleging “Price Fixing”: Defense of Class Actions

Dominic O’Connell and Dominic Rushe of The Sunday Times reported today that a putative class action has been filed in New York against British Airways and Virgin Atlantic alleging a price-fixing conspiracy. The lawsuit reportedly was filed June 23 by Cohen, Milstein, Hausfeld & Toll, and alleges that “[British Airways and Virgin Atlantic] implemented their agreement by exchanging information in secret . . . communications.” The article states that British Airways revealed last week that the Office of Fair Trading and the American Department of Justice was investigating charges of price-fixing related to fuel surcharges on long-haul flights, and reports that BA placed two senior executives on leave during the investigation.

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