Class Action Defense Cases—In re Orleans Homebuilders: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District Of Texas

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Class Action Plaintiffs, and Transfers Actions to Southern District of Texas Nineteen (19) class actions – seven in the District of New Jersey; two in the Southern District of Texas; and one each in the Middle District of Alabama, the District of Arizona, the Eastern District of California, the Southern District of California, the Northern District of Florida, the Southern District of Florida, the District of Kansas, the Western District of Missouri, the Northern District of Ohio, and the Eastern District of Wisconsin – were filed against Heartland Payments Systems arising from an “electronic intrusion into Heartland’s processing system.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases–Clark v. American Residential: California Appellate Court Reverses Approval Of Class Action Settlement Holding Trial Court Lacked Sufficient Information And Amounts Approved Were Excessive

Approval of Class Action Settlement Required Reversal because (1) Record did not Support Trial Court’s Valuation of Class Claims, (2) Incentive Award of 44 Times Average Recovery of Class Members was Excessive, and (3) Trial Court could not Award Costs in Excess of Amount set forth in Class Notice without Further Notice to Class California Appellate Court Holds

Plaintiffs filed a putative class action in California state court against their employer, American Residential Services alleging labor law violations; the class action complaint alleged that defendant failed to pay minimum wage or overtime, and failed to provide meal and rest periods. Clark v. American Residential Services LLC, ___ Cal.App.4th ___, 96 Cal.Rptr.3d 441, 444 (Cal.App. 2009). Defense attorneys removed the class action to federal court under the Class Action Fairness Act (CAFA), but the district court granted plaintiffs’ motion to remand the class action to state court. _Id._, at 445. Eventually, the parties negotiated a settlement of the class action whereby the two named plaintiffs would receive $25,000 each, and the 2360 class members would receive an average of $560 each. _Id._, at 444. Additionally, plaintiffs’ attorneys would receive $640,000 in fees and costs as part of the class action settlement, _id._, at 445. Following notice, 20 members of the putative class objected to the settlement on the grounds that they “worked at least two hours of unpaid overtime every workday, that they would be compensated for only about 1% of the total value of their claims, and that no evidence was presented to the court to justify the settlement.” _Id._, at 444. According to the objectors, class members would receive only $6 for each week that they had worked for defendant. _Id._, at 445. Plaintiffs’ counsel responded that the overtime claim had “absolutely no” value, _id._, at 453. The trial court approved the class action settlement, but the Court of Appeal reversed.

The Court of Appeal noted that its review of class action settlements was “limited in scope.” Clark, at 451. The objectors argued that the trial court apparently relied on plaintiffs’ counsel’s belief that the overtime claim had “‘absolutely no’ value” despite objectors’ counsel’s belief that this evaluation was based on a “staggering mistake of law.” Id., at 444. The appellate court agreed, concluding that the trial court “did not receive and consider sufficient information on a core legal issue, affecting the strength of the case for plaintiffs on the merits, to make the requisite independent assessment of the reasonableness of the terms of the settlement.” Id., at 451 (citation omitted). Additionally, the Court held that “the enhancement or incentive awards were excessive” and that the trial court erred in awarding costs in excess of the maximum amount set forth in the notice to the class, id. The appellate court rejected the argument that the objectors had to prove the settlement was unfair, holding at page 453 that “it is the trial court’s duty, whether or not there are objectors, to employ those factors to evaluate independently the fairness of a proposed settlement.” And in this case, “the record before the trial court…did not contain the information required for ‘an understanding of the amount that is in controversy and the realistic range of outcomes of the litigation.’” Id. (citation omitted). The Court of Appeal held that “the trial court is obligated, at a minimum, to determine whether a legitimate controversy exists on a legal point, if that legal point significantly affects the valuation of the case for settlement purposes.” Id., at 455.

Class Action Court Decisions Uncategorized

FedEx Class Action Defense Cases–In re FedEx Ground: Indiana Federal Court Grants Class Action Certification Motions As To Certain State Labor Law Class Action Claims And Denies Class Action Treatment As To Five State Lawsuits

Labor Law Class Actions, Coordinated for Pretrial Purposes by Judicial Panel on Multidistrict Litigation, Warranted Class Action Treatment under Certain State Laws but failed to Satisfy Prerequisites for Class Action Treatment under Other State Laws Indiana Federal Court Holds

Numerous class action lawsuits were filed in various states against Federal Express alleging labor law violations in that FedEx allegedly failed to pay certain delivery drivers overtime and other wages; ultimately, the Judicial Panel on Multidistrict Litigation coordinated the class actions for pretrial purposes in the Northern District of Indiana. In re FedEx Ground Package System, Inc., Employment Practices Litig., ___ F.3d ___ (N.D.Ind. July 27, 2009) [Slip Opn., at 1 _et seq._]. In October 2007 and March 2008, the district court resolved “the first of three wages” of class action certification motions involving putative class actions that had been filed in 28 states. _Id._, at 1 (and see Note, below). Plaintiffs in 14 of the remaining class actions, filed in at least 11 different states, moved the district court to certify their lawsuits as class actions (or as collective actions under the Fair Labor Standards Act (FLSA)), _id._, at 1-2. The district court explained that in considering whether to grant class action treatment with respect to the states at issue, “Analysis focuses primarily on whether the substantive law governing the motion allows resolution, without extrinsic evidence, of whether the Operating Agreement and policies applicable to the entire class create an employment relationship, and whether a would-be employer’s conduct can convert an employment relationship (as defined in the employment contract) into an independent contractor relationship.” _Id._, at 2.

Given the length of the district court’s opinion, and the detailed analysis involved in considering each state’s laws, we provide here only the court’s conclusions. First, the district court granted the motion by Arizona plaintiffs to certify their lawsuit as a class action, see In re FedEx, at 4-5. Second, the court denied the motion by Colorado plaintiffs to certify their lawsuit as a class action, id., at 7. Third, the court denied the motion by Connecticut plaintiffs to certify their lawsuit as a class action, id., at 9. Fourth, the court denied the motion by certain plaintiffs for conditional certification of a collective action under the FLSA, id., at 16. Fifth, the court granted the motion by Georgia plaintiffs to certify their lawsuit as a class action, id., at 24. Sixth, the court granted the motion by Louisiana plaintiffs to certify their lawsuit as a class action with respect to certain claims for relief, but denied the motion with respect to other claims for relief, id., at 39-40. Seventh, the court denied the motion by certain plaintiffs to certify as a class action their lawsuit under the Motor Carrier Safety Act, id., at 43-44. Eighth, the court granted the motion by Nevada plaintiffs to certify their lawsuit as a class action with respect to a statutory claim brought under Nev. Rev. Stat. Ch. 608, but otherwise denied the motion with respect to all other claims for relief, id., at 50. Ninth, the court granted the motion by North Carolina plaintiffs to certify their lawsuit as a class action, id., at 52. Tenth, the court granted the motion by Ohio plaintiffs to certify their lawsuit as a class action, id., at 56. Eleventh, the court granted the motion by Oregon plaintiffs to certify their lawsuit as a class action with respect to all claims for relief except for the rescission claim, id., at 67. Twelfth, the court denied the motion by Vermont plaintiffs to certify their lawsuit as a class action, id., at 78.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Multidistrict Litigation Uncategorized

Class Action Defense Cases–In re CP Ships: Eleventh Circuit Affirms Class Action Settlement Of Securities Fraud Class Action Holding Class Members Of Canadian Class Actions Could Opt Out

District Court did not Abuse its Discretion in Approving Class Action Settlement in Securities Fraud Class Action Filed in United States because Class Members with Claims in Canadian Class Actions were Provided Adequate Notice of the Right to Opt Out of the U.S. Class Action Settlement Eleventh Circuit Holds

Plaintiffs filed a class action against CP Ships, a container shipping company, and others alleging violations federal securities laws; specifically, the class action complaint alleged that Belo – a media company that inter alia published the Dallas Morning News (DMN), which accounted for 30% of Belo’s revenue – “engaged in a fraudulent scheme designed to inflate DMN’s circulation artificially.” In re CP Ships Ltd. Securities Litig., 578 F.3d 1306 (11th Cir. 2009) [Slip Opn., at 1]. Defendant is organized under the laws of Canada, headquartered in England, and operates in several countries; 80% of the company’s stock is traded on the Toronto Stock Exchange (TSX), and 20% is traded on the New York Stock Exchange (NYSE). Id. Additionally, “crucial headquarters activities – including the relevant operations and personnel that were central to the fraud (i.e. the accounting department and executive offices) – were located in Tampa, Florida.” Id. According to the allegations underlying the class action complaint, CP Ships acquired 9 business during a 10-year period, each with its own accounting system: the company eventually transitioned to a single accounting system, but later “announced that the transition had caused it to understate its operational costs” causing the stock price to drop by more than 20% on both the TSX and NYSE. Id. This class action complaint followed, as did lawsuits filed in Canada, id. Defense attorneys successfully moved to dismiss the U.S. class action on the grounds that the complaint failed to adequately plead scienter under the heightened pleading requirements established by the Private Securities Litigation Reform Act (PSLRA), but while plaintiffs’ appeal from that order was pending, the parties negotiated a class action settlement. Id. The district court approved the settlement over various objections, including the objections of an individual who was also a class member in a Canadian class action that “the settlement would prevent some members of the Canadian class from pursuing their action in Canada.” Id., at 1-2. All class members were given notice and an opportunity to opt out of the U.S. class action settlement, id., at 1. One of the objectors appealed, and the Eleventh Circuit affirmed.

The objector leveled a multi-prong attack against the class action settlement: (1) the district court lacked subject-matter jurisdiction over the claims of class members who purchased foreign stock, or at the very least, as a matter of comity, should have declined to exercise jurisdiction over the dispute, (2) that the notice was inadequate, and (3) that the terms of the settlement were not fair, reasonable or adequate. In re CP Ships, at 1. The Circuit Court began by considering de novo whether subject matter jurisdiction was present over the dispute. Id., at 2. The Court found that the objector failed to raise a factual challenge to jurisdiction, see id., at 2-3, and concluded that the facial challenge to jurisdiction failed because jurisdiction exists under the “conduct test,” see id., at 3-6. The Eleventh Circuit then readily rejected the objector’s challenge to the adequacy of the notice, id., at 7, and turned to the adequacy of the class action settlement.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–Fener v. Belo: Fifth Circuit Court Affirms Denial Of Class Action Treatment In Securities Fraud Class Action Holding Plaintiffs Failed To Establish Loss Causation

Class Action Complaint Alleging Securities Fraud Properly Denied Class Action Treatment because Plaintiffs Failed to Establish that Decline in Stock Price was Connected to Disclosure of Alleged Fraud rather than Long-Term Industry Trends Fifth Circuit Holds

Plaintiffs filed a putative class action against Belo Corporation and others alleging violations of the Securities Exchange Act of 1934; specifically, the class action complaint alleged that Belo – a media company that inter alia published the Dallas Morning News (DMN), which accounted for 30% of Belo’s revenue – “engaged in a fraudulent scheme designed to inflate DMN’s circulation artificially.” Fener v. Belo Corp., ___ F.3d ___ (5th Cir. August 12, 2009) [Slip Opn., at 1-2]. According to the allegations underlying the class action complaint, Belo “allegedly paid bonuses for achieving circulation targets, rigged audits of DMN’s circulation, and implemented a no-return policy that eliminated any incentive for distributors to return unsold newspapers.” _Id._, at 2. These acts “artificially increased recorded circulation, which led to higher advertising revenues for DMN and larger profits for Belo” because 90% of DMN’s revenue came from advertising. _Id._ Belo eventually disclosed these facts in a press release, and the company’s stock price dropped substantially, _id._, at 2-3. The class action complaint followed, and plaintiffs moved the district court to certify the litigation as a class action. _Id._, at 3. Defense attorneys opposed class action treatment, relying on an expert opinion that “plaintiffs could not show that the fraudulent disclosure in the press release was the primary cause of the stock price decline.” _Id._, at 3-4. Plaintiffs countered with an expert opinion that the drop in stock price was “entirely or almost entirely attributable to the revelation of the relevant truth in this case.” _Id._, at 4. The district court denied class action treatment and plaintiffs appealed. _Id._ The Fifth Circuit affirmed.

After outlining the standard of review and the elements (including loss causation) required to prove a securities fraud case, see Fener, at 4-7, the Circuit Court noted that a district court may properly examine loss causation as part of a class action certification determination, id., at 7. The issue before the Court was “whether these plaintiffs have presented enough information to show loss causation under Rule 23.” Id. While plaintiffs submitted 100 pages in support of their class certification motion, defendants introduced expert testimony that Belo’s press release contained three distinct parts: “DMN’s circulation decrease resulted from (1) fraudulent overstatements; (2) changes in DMN’s methodology; and (3) industry-wide decline in newspaper circulation” and concluded – based on an examination of 132 analyst reports – that Belo’s stock dropped primarily because of “the non-fraudulent disclosures instead of the fraudulent one.” Id., at 8-9. The Fifth Circuit stated that it was important to resolve whether the press release should be viewed as “one complete disclosure or three separate ones,” id., at 9. Based on the “plain language” of the press release, the Circuit Court concluded that it was three separate disclosures. Id., at 10. Accordingly, “the release divides the news into fraudulent and non-fraudulent information related to possible future circulation declines.” Id.

Certification of Class Actions Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Heavy Week For New Class Action Filings And Labor Law Class Actions Maintain Top Spot Among New Filings In California State And Federal Courts

In order to assist class action defense attorneys anticipate the types of claims against which they will have to defend in California, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in the state and federal courts located in Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week.

Class Actions In The News Uncategorized

Class Action Defense Cases—In re Citigroup: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District Of New York

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Over Objection of Class Action Plaintiffs, and Transfers Actions to Southern District of New York Three class actions – two in New York and one in Pennsylvania – were filed against Citigroup and others alleging that “Citigroup entities and/or its employees made misrepresentations or omissions in the context of the sale of auction rate securities (ARS).

Class Action Court Decisions Multidistrict Litigation Uncategorized

Qualcomm Class Action Defense Cases–Lorenzo v. Qualcomm: California Federal Court Dismisses Antitrust Class Action Complaint Against Qualcomm For Lack Of Standing And Failure To Adequately Plead Damage

Class Action Alleging Antitrust And State Law Violations Against Qualcomm Warranted Dismissal because Plaintiff Lacked Standing to Prosecute Clayton Act/Cartwright Act Antitrust Claims and Failed to Adequately Plead Damage Resulting from Defendant’s Conduct California Federal Court Holds

Plaintiff filed a putative class action against Qualcomm alleging inter alia violations of state and federal antitrust laws, as well as violations of California’s Unfair Competition Law and Unfair Practices Act; specifically, the class action complaint “challenged the lawfulness of Qualcomm’s licensing practices with respect to its intellectual property used for Code Division Multiple Access (‘CDMA’) wireless technology.” Lorenzo v. Qualcomm Inc., ___ F.Supp.2d ___ (S.D.Cal. August 10, 2009) [Slip Opn., at 1-2]. Defense attorneys moved to dismiss the class action; the district court granted the motion, finding in part that plaintiff lacked standing under the Clayton Act because his injury was “too remote from Qualcomm’s alleged antitrust violations” and because “the Complaint fails to allege sufficient facts to support a finding that Plaintiff’s alleged injury is inextricably intertwined with Qualcomm’s unlawful conduct so as to fit within the narrow exception to the market participant requirement.” _Id._, at 2. But the court gave plaintiff leave to file an amended class action complaint, which he did. _Id._, at 2-3. Defense attorneys again moved to dismiss the class action, _id._, at 3; the district court granted the motion without leave to amend but without prejudice.

After setting forth the standard of review, see Lorenzo, at 3-4, the district court turned to the issue of standing under the Clayton Act, id., at 4. Because the amended class action complaint, like the original complaint, alleged that “there are at least three intermediaries – CDMA chipset manufacturers, CDMA device manufacturers, and CDMA device vendors – between Plaintiff’s injury and the alleged antitrust violations,” id., at 5-6, plaintiff’s injury remained too remote to support a Clayton Act claim, id., at 6. The district court granted the motion to dismiss the unfair practice act claims because plaintiff’s allegations in the amended class action complaint were identical to those in the original complaint, id., at 7. And dismissed the unfair competition law claim because plaintiff lacked standing as he had not adequately alleged that he suffered any damage as a result of the alleged representations made by Qualcomm. Id., at 7-10. Accordingly, the district court dismissed the class action complaint without leave to amend. Id., at 11. However, as explained in the Note, it dismissed the action without prejudice, id.

Class Action Court Decisions Uncategorized

Antitrust Action Defense Cases–Ginsburg v. InBev: Missouri Federal Court Grants Motion For Judgment On The Pleadings Of Antitrust Class Action

Antitrust Class Action Challenging Merger of Anheuser-Busch and InBev Fails as a Matter of Law because InBev could not Reasonably be Viewed as a “Potential Competitor” Prior to the Merger Missouri Federal Court Holds Plaintiffs, characterizing themselves as “a group of Missouri beer consumers and purchasers,” filed a putative class action against Anheuser-Busch and InBev NV/SA challenging the proposed merger of the companies; the class action complaint alleged that “the merger “violates Section 7 of the Clayton Act because it would eliminate InBev as a ‘perceived’ and ‘actual’ potential competitor” in the United States beer market.

Class Action Court Decisions Uncategorized

Blue Cross Class Action Defense Cases–Yeager v. Blue Cross: California Court Affirms Judgment For Insurer In Class Action Challenging Infertility Treatment Coverage Holding Full Coverage Not Required By Statute

Trial Court Properly Granted Insurer’s Motion for Summary Judgment in Class Action Challenging Infertility Treatment Benefits because California Law Requires only that Blue Cross “Offer” such Coverage on Terms Negotiated with Employer, not that the Insurance Benefits Provide “Full” Coverage for Infertility Treatments California Appellate Court Holds Plaintiff filed a putative class action against Blue Cross of California alleging for violations of California’s Unfair Competition Law (UCL) and false advertising; specifically, the class action complaint alleged that California law required Blue Cross to offer to provide insurance coverage for infertility treatments, but that it only offered “to pay up to $2,000 a year for half the cost of each group member’s treatment for infertility.

Employment Law Class Actions Uncategorized