Class Action Law Firm Milberg Weiss California Criminal Case Loses Fifth Federal Judge

California Federal Judges Recuse Themselves From Hearing Los Angeles Case Prior articles have discussed the California criminal case involving the federal indictment leveled against class action law firm Milberg Weiss Bershad & Schulman. Molly Selvin of the Los Angeles Times recently reported that yet another federal judge, U.S. District Court Judge R. Gary Klausner, has recused himself from hearing the case, bringing to five the number of judges who have bowed out.

Class Actions In The News Uncategorized

Stock Option Awards Scandals: Class Action Defense Issues

California Semiconductor Company In The News By now, the accounting scandals that have torn apart Wall Street are well known. The litigation fallout has pitted company against accounting firm against law firm, in a never-ending circle of passing the blame. California companies have not been immune; on the contrary, several California companies have been in the throes of such litigation. Eric Dash of the New York Times reported today on the continuing fight between Micrel Inc.

Class Actions In The News Uncategorized

Class Action Defense Cases: Kircher v. Putnam Funds Trust : Remand Of SLUSA Class Action To State Court Not Appealable Supreme Court Holds

Remand to State Court of Case Removed Under SLUSA (Securities Litigation Uniform Standards Act of 1998) Not Appealable U.S. Supreme Court Holds

CAFA (Class Action Fairness Act of 2005) and SLUSA (Securities Litigation Uniform Standards Act of 1998) are discussed in various separate articles. Removal and remand issues also are discussed in various articles, which set forth the general rule recently reiterated by the United States Supreme Court: “28 U.S.C. § 1447(d) limits appellate review of a district court order remanding a case from federal to state court.” Kircher v. Putnam Funds Trust, 547 U.S. ___, 126 S.Ct. 2145, 2150 (2006). The Supreme Court addressed the scope of appellate review of remand orders in Kircher. As the Supreme Court summarized, “The question here is whether an order remanding a case removed under [SLUSA] is appealable, notwithstanding § 1447(d). We hold it is not.” Kircher, at 2150 (italics added).

Kircher involves eight separate putative class actions by investors against mutual funds, investment advisers and an insurance company that alleged state law claims for damages (such as damages for negligence and breach of fiduciary duty) arising out of the practice of “market timing.” Kircher, at 2150 and n.4. The actions were removed to federal court on the grounds that they were “removable under and precluded by [SLUSA].” Id., at 2151. The investors moved to remand the lawsuits claiming the district court lacked subject matter jurisdiction; the district court agreed, and remanded the actions on the grounds that it lacked subject matter jurisdiction and that SLUSA did not preclude the claims asserted therein. Id.

The Seventh Circuit reversed, but only after concluding that it had appellate jurisdiction to hear the appeal. Kircher v. Putnam Funds Trust, 373 F.3de 847, 849-50 (7th Cir. 2004). In part, the Court concluded that the district court’s orders were not actually founded on lack of jurisdiction but on the substantive issue of whether the state law claims were precluded by SLUSA: accordingly, the Seventh Circuit concluded that appellate review was not barred by § 1447(d). Id., at 849-51. Having concluded that it had appellate jurisdiction, the Seventh Circuit then held further that SLUSA precluded the investors’ claims.

Class Action Court Decisions Class Actions In The News PSLRA/SLUSA Class Actions Uncategorized

Marrone v. Philip Morris — Defense of Class Action Cases

Ohio Supreme Court Rejection of Class Action Against Tobacco Company of Limited Value to Class Action Defendants On June 14, 2006, the Ohio Supreme Court issued an opinion reversing certification of a class action against a tobacco company for the allegedly “unfair, deceptive, and unconscionable practice[]” of labeling certain cigarettes as “light.” Marrone v. Philip Morris USA, Inc., ___ N.E.2d ___, 2006 WL 1584163 (Ohio 2006). While this victory has been widely reported in the press, it is of limited value to class action defendants.

Class Action Court Decisions Class Actions In The News Uncategorized

Class Action Cases and Multidistrict Litigation (MDL)

Multidistrict litigation (MDL) arises when multiple actions, class action or otherwise, involving the same facts are pending in different federal district courts. Under such circumstances, 28 U.S.C. § 1407 sets forth the procedure for the transfer of the actions to a single federal court for coordination or consolidation. This is known as “multi-district litigation” (MDL). The Judicial Panel on Multidistrict Litigation affects the transfer of cases under Section 1407(a).

A request to coordinate or consolidate is made by motion by any party in any of the various federal court actions. “A copy of such motion shall be filed in the district court in which the moving party’s action is pending. The panel shall give notice to the parties in all actions in which transfers for coordinated or consolidated pretrial proceedings are contemplated, and such notice shall specify the time and place of any hearing to determine whether such transfer shall be made.” 28 U.S.C. § 1407(c)(ii). The Judicial Panel may also initiate the transfer of the cases on its own motion. 28 U.S.C. §1407(c)(i).

The Judicial Panel on Multidistrict Litigation reviews the request under the guidelines of Section 1407 to determine whether the cases are appropriately coordinated or consolidated for pretrial purposes. See e.g., In re Agent Orange Product Liability Litigation, 818 F.2d 216 (2d Cir. 1987) (use of MDL procedure in connection with Agent Orange class action cases). The Judicial Panel may consider any evidence introduced by any party to any of the various federal court actions in determining whether to coordinate or consolidate the cases. 28 U.S.C. § 1407(c)(ii).

Class actions may be consolidated under the MDL procedure. The Judicial Panel applies the same guidelines in class action cases as in requests made in single plaintiff cases. MDL treatment does not alter the applicability of Rule 23 to class actions, and class certification may follow consolidation under MDL. See e.g., Hilao v. Estate of Marcos, 393 F.3d 987 (9th Cir. 2004).

Multidistrict Litigation Uncategorized

Class Action Defense Issues: Settlement Procedure and Class Certification for Settlement – Rule 23(e)

Class action lawsuits are often filed for the purpose of bringing sufficient leverage to bear both through the sheer cost of defending against the lawsuit and the risk, however remote, of substantial liability so as to force the defendant to settle. Thus, plaintiffs’ counsel often use class actions as weapons of extortion, seeking to compel a settlement from defendants. If a defendant elects to but its peace, it does not want to settle only with the named plaintiffs because then there is no guarantee that another lawsuit will soon follow. On the contrary, it is likely that rewarding plaintiffs’ counsel with a settlement will invite another lawsuit. The defendant, therefore, demands the broadest release possible, and plaintiffs’ counsel are generally willing to oblige provided that they have been compensated adequately. In such a situation, the Rule 23 elements of class certification are not meaningfully contested; indeed, the parties often stipulate (as part of the proposed settlement) that the class may be certified.

Rule 23(e) addresses the settlement of class actions. It provides, “A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs.”

A class action settlement will not bind members of the class unless and until the class is certified. The prerequisites to class certification are set forth in Rule 23 of the Federal Rules of Civil Procedure (discussed in a separate article). It is incumbent on the District Court to analyze the Rule 23 factors carefully. General Telephone Co. of Southwest v. Falcon, 457 U.S. 152, 102 S.Ct. 2364 (1982) (reversing class certification for failure to analyze Rule 23 requirements). The question arises, however, whether the same rules apply when plaintiff(s) and defendant(s) seek class certification solely for purposes of settlement.

Prior to 1997, federal circuit courts of appeal were divided on whether Rule 23 applied strictly where the purpose of the motion for class certification was to effectuate the purposes of a proposed class settlement. The Fifth Circuit, for example, held that the requirements for class certification under Rule 23 need not be examined strictly if the ultimate purpose of the motion is to settle the dispute. See, In re Asbestos Litigation, 90 F.3d 963, 975-976, and n.8 (5th Cir. 1996). The Third Circuit, by contrast, held that while it was appropriate to certify a class solely for the purpose of class-wide settlement, Rule 23’s requirements still must be satisfied to the same extent as if the case were to be litigated. See, In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 799-800, cert. denied, 516 U.S. 824, 116 S.Ct. 88 (1995).

Certification of Class Actions Uncategorized

Class Action Defense Issues: Certification of Class Action Cases Under Rule 23 Part I – A General Overview

Defending Class Actions: Certification Under Rule 23 Part I

General Overview

In defending a class action, the single most important motion facing a defendant is the plaintiff’s motion to certify a class. Federal law requires that the plaintiff demonstrate numerosity, commonality and typicality, and that the class members will be adequately represented. The plaintiff must also show the risk of inconsistent or prejudicial adjudications if separate actions are tried, and that a class action is the superior method for resolving the dispute. This article identifies the statutory requirements for class certification.

In federal court, class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. A prospective class representative must satisfy the prerequisites of Rule 23(a), which provides:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

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Class Action Provisions of the Securities Litigation Uniform Standards Act of 1998 (SLUSA) – A Brief Overview: Class Action Defense Issues

SLUSA (Securities Litigation Uniform Standards Act) was enacted by Congress in 1998. SLUSA followed the Private Securities Litigation Reform Act of 1995 (PSLRA), 109 Stat. 737 (codified at 15 U.S.C. §§ 77z-1 and 78u-4). The House Conference Report accompanying the PSLRA enumerated ways in which abusive class actions have hurt the U. S. economy. See, H.R.Rep. No. 104-369, p. 31 (1995). To address these concerns, Congress enacted sweeping changes to federal securities laws class actions, covering pleading, class representation, discovery, liability, attorney fee awards, expenses and more. This article discusses the salient points of class action provisions of SLUSA; SLUSA is discussed in more detail in a separate article.

One powerful change concerned new requirements for pleading fraud. As the Sixth Circuit explained,

Congress heightened the pleading standard for securities fraud. Before 1995, a plaintiff had to allege fraud “with particularity.” Fed.R.Civ.P. 9(b). Under the PSLRA, a plaintiff must now “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2) (emphasis added).

Helwig v. Vencor, Inc., 251 F.3d 540, 548 (6th Cir. 2001); see also, Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 345, 125 S.Ct. 1627 (2005).

The PSLRA also imposed limits on damages and attorney fees, imposed limits on the way lead plaintiffs were selected and the amounts they could be awarded, imposed sanctions for frivolous litigation, provided companies with a “safe harbor” for certain statements, and allowed courts to issue stays of discovery pending motions by a defendant to have the case dismiss. See, 15 U.S.C. § 78u-4.

PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases-Manbeck v. Katonah-Lewisboro: New York Federal Court Grants Defense Motion To Dismiss Putative Civil Rights Class Action Based Involving Access To Kindergarten

Defense Motion Granted Because Underage Students do not have a Protected Property Interest in Education or in Transportation to Private Kindergarten We briefly summarize an unremarkable class action case for defense attorneys who may benefit from it. New York law requires a school district to accept children who turn five years old prior to December 1st, and allows individual school districts to decide the admission age for kindergarten for children who turn five after that date.

Class Action Court Decisions Uncategorized

Class Action Defense Cases–Miedema v. Maytag: Defense Bears Burden Under Class Action Fairness Act of 2005 (CAFA) To Establish Subject Matter Jurisdiction

CAFA (Class Action Fairness Act of 2005) Requires Defendant Prove Subject Matter Jurisdiction Supporting Removal Eleventh Circuit Holds Removal under CAFA (Class Action Fairness Act of 2005) continues to raise basic questions. On June 5, 2006, the Court of Appeals for the Eleventh Circuit addressed several of these questions in Miedema v. Maytag Corporation, ___ F.3d ___, 2006 WL 1519630 (11thCir. 2006). The main issue presented was whether CAFA shifted the burden of proof to the plaintiff to establish that remand was proper.

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