TILA Class Action Defense Cases–Jordan v. Paul Financial: California Federal Court Denies Class Action Treatment To TILA Law Class Action Holding Plaintiff Lacks Standing And His Claims Lack Typicality

Class Action Complaint Alleging Violations of Federal Truth in Lending Act (TILA) did not Warrant Class Action Treatment because Plaintiff Lacked Standing to Prosecute TILA Claim, Plaintiff was an Inadequate Representative because he could not Establish Traceability, and Plaintiff’s Claims were not Typical of the Putative Class Claims California Federal Court Holds

Plaintiff filed a putative class action against Paul Financial concerning option adjustable rate mortgages (Option ARMs); specifically, the class action complaint alleged that Option ARMs are “deceptively devised” in that they “promise that the loan [will] have a low, fixed interest rate” when in fact the loan carries a much higher interest rate. The class action alleged further that defendant “disguised” the fact that the Option ARM “was designed to cause negative amortization.” Jordan v. Paul Financial, LLC, ___ F.Supp.2d ___ (N.D. Cal. January 27, 2009) [Slip Opn., at 1-2]. The class action alleged, _inter alia_, violations of the federal Truth in Lending Act (TILA) and California’s Unfair Competition Law (UCL), _id._, at 2, and amendments to the class action complaint added HSBC and Luminent Capital Mortgage as defendants, _id._, at 1. Plaintiff sought to represent two classes of borrowers who received Option ARM loans secured by their primary residences: (1) a nationwide class, and (2) a California statewide class, _id._, at 1-2. Plaintiff’s attorney moved the district court to certify the litigation as a class action; defense attorneys argued against class action treatment. _Id._, at 1. The district court determined that class action treatment was not warranted and therefore denied plaintiff’s class action certification motion.

Paul Financial originated residential loans, and while it also serviced loans, Paul Financial sold 75% of its loans to third party investors and sold the servicing rights to other investors. Jordan, at 2. Defendant “sold the loans to about ten investors,” but does not have records of subsequent sales by those investors, id., at 2-3. Plaintiff’s loan, for example, was sold to defendant Luminent, and then pooled with other Option ARM loans into a mortgage-backed security pool; defendant HSBC was the trustee of the pool. Id., at 3. Defendant sold the servicing rights for plaintiff’s loan to yet another investor, Greenwich Capital, id. By December 2008, Paul Financial had less than $1000 and planned to cease operations on December 31, 2008. Id., at 2. After discussing the general rules regarding class action certification under Rule 23, see id., at 3-4, the district court turned to whether plaintiff had standing to represent the TILA class or the California class.

Certification of Class Actions Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

BofA UCL Class Action Defense Cases–Miller v. Bank of America: California State Court Affirms Dismissal Of Class Action Holding National Bank Act Preempts Application Of State Holiday Statutes To Credit Card Payments

State “Holiday Statutes” Preempted by National Bank Act and therefore cannot Support Class Action Claims alleging Unfair Business Practices Against Bank of America for Charging Late Fees or Interest for Credit Card Payments Posted on the First Day Following a State Holiday California State Court Holds Plaintiffs filed a class action against Bank of America, a national bank, now known as FIA Card Services, N.A., which is also a national bank, alleging violations of California’s Unfair Competition Law (UCL); specifically, the class action complaint, brought on behalf of credit card holders, asserted that California and Arizona have “holiday statutes” that “essentially state that whenever a legal or contractual act is required to be performed on a holiday, the act may be performed on the next business day without any adverse consequence,” but that the Bank violated these statutes by “charging late fees or interest for credit card payments ‘posted on the first business day after a Holiday due date, when such fee[s] or interest would not have been due if the payment was posted on the Holiday due date.

Class Action Court Decisions Uncategorized

SLUSA Class Action Defense Cases–Kurz v. Fidelity Management: Seventh Circuit Affirms Removal Of Class Action And Subsequent Defense Judgment In Class Action Holding Class Action Complaint Fell Within SLUSA

Class Action Premised on Violations of “Best Execution” Duty Fell within Scope of SLUSA (Securities Litigation Uniform Standards Act of 1998) so Properly Removed and then Properly Dismissed because Time-Barred and no Proof of Injury Seventh Circuit Holds Plaintiffs, former investors in portfolio managed by Fidelity Management & Research and FMR Co. (collectively “Fidelity”), filed a class action in state court against Fidelity alleging violations of state law and breach of contract based on the allegation that “some of [Fidelity’s] employees placed trades through Jeffries & Co.

Class Action Court Decisions PSLRA/SLUSA Class Actions Removal & Remand Uncategorized

Employment-Related Class Action Lawsuits Retain Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

As a resource for California class action defense attorneys 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. This report covers the period from March 6 – 12, 2009, during which time 39 class actions were filed.

Class Actions In The News Uncategorized

Class Action Defense Cases—In re Fannie Mae: 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, Largely Unopposed by Class Action Plaintiffs, and Transfers Actions to Southern District of New York Nineteen (19) class actions – 15 in New York and one each in the District of Columbia, Florida, New Jersey and Pennsylvania – were filed against the Federal National Mortgage Association (“Fannie Mae”) and numerous other defendants alleging that “Fannie Mae was undercapitalized during the relevant time period, and that defendants concealed this fact from investors in order to raise capital.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases–Langendorf v. Conseco: Illinois Federal Court Grants Motion To Dismiss Class Action’s Consumer Fraud Claim Because It Was Premised On Breach Of Contract And Illinois Law Requires More

Defense Motion to Dismiss Class Action’s Claim under Illinois Consumer Fraud and Deceptive Practices Act (ICFA) Granted because Illinois does not Permit Consumer Fraud/Deception Claim to be Founded on Breach of Contract Illinois Federal Court Holds Plaintiffs filed a class action against Conseco and Conseco Senior Health Insurance Company (Conseco) alleging inter alia breach of contract and violations of the Illinois Consumer Fraud and Deceptive Practices Act (ICFA); specifically, the class action complaint alleged that Conseco formulated a scheme “designed to avoid paying…claims under the pretense of requiring additional documentation of proof of a claim above and beyond a Medicare verification” for the purpose of reducing payments to insureds.

Class Action Court Decisions Uncategorized

Class Action Defense Cases–Telco v. Ameritrade: Eighth Circuit Affirms Dismissal Of Class Action And Refuses To Address Appeal From Denial Of Class Action Certification For Lack Of Live Controversy

District Court Order Dismissing Class Action Affirmed for Failure to Plaintiff to Address Merits of Dismissal and District Court Order Denying Class Action Treatment Affirmed because Plaintiff no Longer Member of Class it Purported to Represent Eighth Circuit Holds Plaintiff filed a class action against Ameritrade, an Internet-based securities brokerage firm, alleging that defendant caused its customers to suffer damages by delaying trade executions; essentially, the class action complained that defendant’s failure to timely execute trade requests resulted in the failure to obtain the best possible prices.

Class Action Court Decisions Uncategorized

Class Action Defense Cases–Lu v. Hawaiian Gardens Casino: California State Court Affirms Summary Judgment For Defense In Labor Law Class Action Except For Class Action Claim Under UCL

Class Action Challenging Casino-Employer’s Tip-Pooling Policy Properly Thrown Out on Summary Judgment, but Single Claim – alleging Casino Violated Unfair Competition Law (UCL) by Sharing Tips with Employer’s Agents – Reversed because Triable Issue of Fact Existed as to Whether Employer Participated in Tip Pool in Violation of California Law State Court Holds

Plaintiff filed a class action against his employer, Hawaiian Gardens Casino, alleging violations of California’s Labor Code and of the state’s unfair business practices statute; specifically; the class action complaint asserted defendant’s written tip pool policy governing casino dealers, which “requires dealers to segregate 15 or 20 percent of the tips they receive at the close of each shift” but permits the dealers to keep the remaining portion of the tips they receive, violated California law. Lu v. Hawaiian Gardens Casino, Inc., ___ Cal.App.4th ___, 88 Cal.Rptr.3d 345, 350 (Cal.App. 2009). According to the allegations underlying the class action, the money placed into the tip pool was distributed among “designated employees who provide service to customers, such as the chip service people (also known as ‘chip runners’), poker tournament coordinators, poker rotation coordinators, hosts, customer service representatives or ‘floormen,’ and concierges.” _Id._ However, defendant’s policy expressly prohibited “employers, managers, or supervisors” to participate in the tip pool, _id._ Defendant moved for summary judgment on the grounds that its tip pooling policy did not violate California law, relying in part on _Leighton v. Old Heidelberg, Ltd._, 219 Cal.App.3d 1062 (Cal.App. 1990). _Id._, at 349. The trial court granted defendant’s motion and dismissed the class action, and the appellate court affirmed.

Defendant paid its dealers the minimum hourly wage every two week, without deduction for any tips they received; defendant did not use the tip pool to “offset or pay” the salaries it paid dealers and did not divert any of the money “for its own use.” Lu, at 350. The dealers’ take home pay was “significantly” in excess of the minimum wage, id. Plaintiff alleged that the casino’s tip pooling policy “constituted a conversion of his wages, and violated employee protections contained in Labor Code section 221 (employers may not compel wage kickbacks); section 351 (employers may not take, collect or receive gratuities); section 450 (employers may not compel employees to patronize the employer); section 1197 (employers may not pay less than minimum wage); and section 2802 (employer indemnification for employee’s necessary expenses).” Id. The class action alleged further that defendant’s policy constituted an unfair business practice, id. The appellate court noted that Leighton held that California law does not prohibit tip pooling in restaurants, but that no California case had addressed tip pooling in casinos. Id., at 349. Plaintiff argued that Leighton was distinguishable because “unlike restaurants where tips are left on the tables, in casinos, gratuities are handed directly to dealers, with the result that such gratuities belong solely to the dealers.” Id. Like the trial court, the Court of Appeal disagreed, concluding that “nothing in Labor Code section 351 prohibits tip pooling in casinos.” Id. The appellate court held further that while certain labor laws did not provide a private right of action, they could “nonetheless serve as predicates for suits under the UCL” and, accordingly, the trial court’s order was reversed as to that limited issue, id.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Lead Toys Class Action Defense Cases–In re Mattel: California Federal Court Denies Motion To Dismiss Class Action Complaint Holding Class Action Allegations Were Adequate Save For Federal CPSA Claim

Defense Motion to Dismiss Class Action Claim under Federal Consumer Protection Safety Act (CPSA) Granted but Remaining Claims in Class Action Adequately Pleaded and Survived Motion to Dismiss California Federal Court Holds

Plaintiffs filed a class action against numerous defendants, manufacturers and retailers of children’s toys, alleging they “sold certain toys that were defective and unsafe, and made actionable representations about the quality of the products.” In re Mattel, Inc., Toy Lead Paint Products Liab. Litig., 588 F.Supp.2d 1111, 1114 (C.D. Cal. 2008). Specifically, the class action focused on three types of toys: “toys that were produced with allegedly unsafe levels of lead paint, toys that included small, swallowable magnets that allegedly pose a hazard to children, and a specific toy blood pressure cuff that allegedly contains high levels of lead, but is not specifically alleged to contain lead paint.” Id. The class action advanced numerous claims for relief, including violations of the federal Consumer Protection Safety Act (CPSA), and of California’s Consumers Legal Remedies Act (CLRA), unfair competition law (UCL), and Song-Beverly Consumer Warranty Act (CWA). Id. The class action defendants included Mattel and Fisher-Price (the “Manufacturer Defendants”), id. n.2, and Target, Toys “R” Us, Wal-Mart, KB Toys and Kmart (the “Retailer Defendants”), id. n.3. The Consumer Product Safety Commission ordered a recall of the lead paint toys and magnet toys, and the Manufacturer Defendants provided replacement toys to consumers. Id. Wal-Mart moved to dismiss the class action claims against it, and the remaining defendants filed a separate motion to dismiss the class action as to them. Id. The district court granted the motion in part, and denied the motion in part.

Defense attorneys first argued that the “a voluntary product replacement pursuant to a 16 C.F.R. § 1115.20 corrective action plan preempts state law remedies seeking reimbursement for an allegedly hazardous product.” In re Mattel, at 1115. The district court disagreed. The federal court explained that CPSC regulations permit a company to “submit a voluntary ‘corrective action plan’ to correct an alleged violation of the consumer product safety laws.” Id. (citing 16 C.F.R. § 1115.20(a)). However, the same regulations “explicitly state that actions taken in a voluntary corrective action plan have ‘no legally binding effect,’ and that the CPSC ‘reserves the right to seek broader corrective action.’” Id. (quoting 16 C.F.R. § 1115.20(a)). If preemption applied, as defendants argued, then a manufacturer could essentially “choose their own remedy to a CPSA violation with no guarantee for input from harmed parties…and little incentive on the part of the CPSC to ensure that the proposed remedy was completely adequate.” Id. (citation omitted). The district court therefore rejected the preemption argument, id., at 1116.

Class Action Court Decisions Uncategorized

Labor Law Class Action Lawsuits Again Claim Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

In order to assist class action defense attorneys anticipate the types of class actions 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