Class Action Defense Cases—In re SemGroup Energy: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In Northern District of Oklahoma

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Common Class Action Defendants or by Plaintiffs in New York Class Action, and Transfers Class Actions to Northern District of Oklahoma Two class actions – one in Oklahoma and one in New York – were filed against SemGroup Energy Partners alleging violations of federal securities laws; specifically, the class action complaints alleged that defendants “made materially false and misleading statements which artificially inflated the price of SGLP common stock in violation of the federal securities laws” In re SemGroup Energy Partners, L.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Sprint Class Action Defense Cases–Harlow v. Sprint: Kansas Federal Court Denies Motion To Dismiss Class Action Holding Kansas Wage Payment Act Class Action Claim May Be Brought By Employees Who Neither Live Nor Work In Kansas

Class Action Alleging Violations of Kansas Wage Payment Act may be Brought by Plaintiffs who do not Live or Work in Kansas because State Law Contains no Express Geographical Limitation and Employment Agreement Expressly Contained Kansas Choice of Law Provision Federal Court Holds Plaintiffs filed a class action against their employer, Sprint Nextel and Sprint/United Management (collectively “Sprint”) alleging violations of federal securities law; specifically, the class action claimed that “Sprint failed to pay [plaintiffs] proper commissions.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Oracle Labor Law Class Action Defense Cases–Sullivan v. Oracle: Ninth Circuit Reverses Summary Judgment In Favor Of Defense In Labor Law Class Action Holding California Labor Code Applies To Work Performed In The State By Nonresidents

Class Action Against Oracle Alleging Failure to Pay Overtime Pursuant to State and Federal Laws Survives Summary Judgment as to California Law Claims because Nonresidents are Protected by California Labor Code for Work Performed within California, but District Court Properly Granted Summary Judgment as to Class Action Claim Alleging Violation of California’s Unfair Business Practices Act (UCL) for Failure to Pay Overtime under Federal Fair Labor Standards Act (FLSA) because California’s UCL “does not have Extraterritorial Application” Ninth Circuit Holds

Plaintiffs filed a class action against their employer, Oracle, alleging labor law violations; specifically, the class action complaint asserted that Oracle failed to pay employees overtime under either the federal Fair Labor Standards Act (FLSA) or California state law. Sullivan v. Oracle Corp., ___ F.3d ___ (9th Cir. November 6, 2008) [Slip Opn., at 15261]. According to the class action, Oracle hired hundreds of employees “to train Oracle customers in the use of its software” but “classified these workers as teachers who were not entitled to compensation for overtime work under either federal or California law.” _Id._ The putative class was not limited to California residents, and the three putative class representatives were nonresidents of California who “performed only some of their work for Oracle in California,” _id._ The class action complaint contained three claims for relief – two of them sought recovery for work performed in California, and one for work performed “anywhere in the United States.” _Id._ Each of the claims, however, was premised on California law; specifically, either the California Labor Code, or California Business & Professions Code section 17200 (unfair business practices). _Id._, at 15264-65. Defense attorneys moved for summary judgment on all claims in the class action; the district court granted the motion “on the ground that the relevant provisions of California law did not, or could not, apply to the work performed by Plaintiffs.” _Id._, at 15261. The district court reasoned that California’s Labor Code “do[es] not apply to nonresidents who work primarily in other states,” and that it would violate the Due Process Clause of the Fourteenth Amendment to construe the Labor Code so as to apply to work performed primarily outside of California, _id._, at 15265. Similarly, the federal court concluded that California’s unfair business practices statute does not apply to work performed outside of California, _id._ The Ninth Circuit affirmed as to the class action’s unfair business practices claim premised on work performed outside of California, but reversed as to the first two claims for relief.

Briefly, Oracle’s principal place of business is California, and it hires “instructors” on a contract basis to travel throughout the U.S. and for the purpose of training its customers in the use of Oracle software. Sullivan, at 15261-62. Three individuals – two of them residents of Colorado, and the third a resident of Arizona – worked as Oracle Instructors; they each spent a limited amount of time in California, though not necessarily each calendar year. See id., at 15262-63. None of the plaintiffs worked more than 36 days in California during a calendar year, and one of the plaintiffs did not work in California at all one year. Id. Oracle originally classified its instructors as “teachers” and did not pay them overtime; however, in 2003 Oracle reclassified its California instructors and began paying them overtime under California law, and in 2004 it reclassified its remaining instructors and began paying them overtime under the FLSA. Id., at 15263.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Stewart v. Cheek & Zeehandelar: Ohio Federal Court Strikes Rule 68 Offer Of Judgment In FDCPA Class Action Holding Rule 68 Offer To Settle Individual Claims After Class Action Certification Motion Filed Cannot Moot Class Claims

Class Action Claims not Rendered Moot by Rule 68 Offer of Judgment to Settle Individual Claims of Named Plaintiffs so long as Plaintiffs have not Delayed in Seeking Class Action Treatment of Litigation Ohio Federal Holds

Two class action lawsuits were filed against the law firm of Cheek & Zeehandelar, a consumer debt collection firm, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) and Ohio’s Consumer Sales Practices Act (CSPA); the class action complaints alleged that defendant “engages in misleading and deceptive debt-collection practices” and that it “uniformly fails to properly investigate whether debtor funds are lawfully subject to attachment, prior to seeking and obtaining orders of attachment. Stewart v. Cheek & Zeehandelar, LLP, 252 F.R.D. 384, 384-85 (S.D. Ohio 2008). The class actions were consolidated, and the district court ordered that plaintiffs file their motion for class action certification by February 15, 2008. Id., at 385. Prior to February 15, defendant served a Rule 68 offer of judgment on plaintiffs, which offered to compensate them for their individual claims only; the Rule 68 offer did not offer to settle the claims of the putative class. Id. Plaintiffs moved to strike the offer of judgment and, on February 15, 2008, filed their motion for certification of the litigation as a class action. Id. The district court granted plaintiffs’ motion to strike the offer of judgment.

The district court began its analysis by noting that “[t]he purpose of Rule 68 ‘is to encourage settlement and avoid litigation.’” Stewart, at 385 (quoting Marek v. Chesny, 473 U.S. 1, 5 (1985)). Rule 23 class actions, by contrast, serves to vindicate important constitutional and statutory rights by permitting individually small damage claims to be grouped together so that the amount of money involved is worth the fight. Id. Or as the Supreme Court put it, “Where it is not economically feasible to obtain relief within the traditional framework of a multiplicity of small individual suits for damages, aggrieved persons may be without any effective redress unless they may employ the class-action device.” Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 339 (1980). The district court observed at page 385, “The great weight of federal authority holds that a Rule 68 offer of judgment cannot moot the named plaintiffs’ claims after a motion for class certification has been filed.” (Citations omitted.) To hold otherwise would permit defendants to “unilaterally control whether the district court ever heard the certification motion,” id., at 385-86 Moreover, “Although courts are somewhat more divided about the effect of a Rule 68 offer before a class-certification motion has been filed, most have endorsed the view that the settlement offer will not moot the named plaintiffs’ claims so long as the plaintiffs have not been dilatory in bringing their certification motion.: Id., at 386 (citations omitted). After summarizing the reasons behind the majority view, the district court adopted that rule and held, further, that plaintiffs had not been dilatory in seeking class action certification. Id., at 386-87. Accordingly, the district court granted plaintiffs’ motion to strike the Rule 68 offer of judgment, id., at 387.

Certification of Class Actions Class Action Court Decisions FDCPA Class Actions Uncategorized

Class Action Defense Cases–Harper v. 24 Hour Fitness: California State Court Reverses Decertification Of Class Action Holding Trial Court’s Analysis Of UCL Class Action Claims Was “Legally Incorrect”

Trial Court Erred in Decertifying UCL Class Action because Post-Proposition 64 UCL Relief does not Extend Beyond Named Plaintiffs Absent Class Action Treatment and because Attorney Fees Generally not Recoverable Absent Class-Wide Relief California State Court Holds

Plaintiffs filed a class action against 24 Hour Fitness alleging violations of California’s unfair competition law (UCL) and Consumers Legal Remedies Act (CLRA), and false advertising; the class action complaint asserted that their health club memberships allowed them to renew for an additional three years – the same period as their original membership contract – “at the same rate if they renewed their membership when the initial term expired,” but defendant asserted that the membership contracts permitted “renewals at the specified rate for an annual term only.” Harper v. 24 Hour Fitness, Inc., ___ Cal.App.4th ___ (Cal.App. October 22, 2008) [Slip Opn., at 2-3]. The class action argued that “24 Hour Fitness’s contracts and sales techniques were deceptive and falsely implied that members who prepaid their dues for the entire contract term were entitled to keep their dues at the same rate if they renewed their membership when the initial term expired.” _Id._, at 2. In March 2003, the trial court granted plaintiffs’ motion to certify the litigation as a class action, _id._, at 3-4, but plaintiffs thereafter made seven (7) attempts to modify the definition of the class, each of which were rejected by the trial court, _id._, at 4-5. In January 2006, defense attorneys moved the trial court to decertify the class, which the trial court granted. _Id._, at 5-7. The Court of Appeal reversed.

The trial court’s class action decertification order was based on the court’s reexamination of whether a class action was a superior means for resolving the UCL claims and whether – with the benefit of three (3) years of class discovery – plaintiffs could establish commonality and typicality. Harper, at 5-6. The trial court concluded that class action treatment was no longer warranted; on the contrary, it found that class action treatment “has ceased to be beneficial” and that class action treatment had “become an obstacle to the prompt, fair, and (reasonably) economical resolution of this matter.” Id., at 6.. The Court of Appeal summarized the court’s ruling at page 6 as follows:

Certification of Class Actions Class Action Court Decisions Uncategorized

Labor Law And UCL Class Action Lawsuits Swap Spots In Weekly Class Action Filings In California State And Federal Courts As Employment-Related Class Actions Regain Top Spot

To assist class action defense attorneys anticipate the types of class action lawsuits 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 California state and federal courts in the 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

FLSA Class Action Defense Cases—In re DirecTech: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Eastern District of Louisiana

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 Eastern District of Louisiana Three class actions –in the Eastern District of Louisiana, the Western District of Tennessee and the Eastern District of Texas – were filed against DirecTech Southwest alleging violations of the federal Fair Labor Standards Act; specifically, the class action complaints allege defendant failed to pay its technicians overtime as required by the FLSA.

Class Action Court Decisions Employment Law Class Actions Multidistrict Litigation Uncategorized

Class Action Defense Cases–Munoz v. Financial Freedom: California Federal Court Grants Defense Motion To Dismiss Class Action Claims As Preempted By HOLA But Grants Leave To File Amended Class Action Complaint

Home Owners’ Loan Act (HOLA) Preempted Class Action Claims Premised on Scheme to Defraud Senior Citizens into Entering into Reverse Mortgages but Plaintiff given Leave to File Amended Class Action Complaint California Federal Court Holds

Plaintiff filed a putative class action against Financial Freedom Senior Funding Corporation alleging that “Financial Freedom instituted a complex scheme to defraud senior citizens in the structuring, origination, underwriting, marketing and sale of reverse mortgages.” Munoz v. Financial Freedom Senior Funding Corp., 567 F.Supp.2d 1156, 1158 (C.D. Cal. 2008). The class action complaint alleged ten claims for relief: elder abuse, violation of California’s Unfair Competition Law (UCL) practices by violating the Real Estate Settlement Procedures Act (RESPA) and Regulation X, false advertising, breach of fiduciary duty and aiding and abetting breach of fiduciary duty, fraudulent concealment, unjust enrichment and imposition of constructive trust, violation of the Consumer Legal Remedies Act (CLRA), breach of the implied covenant of good faith and fair dealing, and negligent misrepresentation. Id., at 1161. At bottom, the class action alleged that defendant “included a number of hidden costs and fees in the reverse mortgage transactions, and also to have paid brokers ‘kickbacks’ for directing borrowers to the company.” Id., at 1158. Defense attorneys moved the district court for judgment on the pleadings as to the class action claims under Rule 12(c) on the ground that the class action claims are preempted by federal law. Id., at 1159. The district court granted the motion in part and denied it in part.

The district court summarized the three ways in which federal law may preempt state law, and noted that while there is generally a presumption against federal presumption, that presumption does not apply to the banking industry because it is “‘an area where there has been a history of significant federal presence.’” Munoz, at 1159 (citation omitted). Defense attorneys argued that the class action claims were preempted by the Home Owners’ Loan Act of 1933 (HOLA), which gave “broad authority” to the Office of Thrift Supervision (OTS) to “promulgate regulations governing savings and loan institutions,” id., at 1160. The OTS regulations, in turn, expressly provide, “OTS hereby occupies the entire field of lending regulation for federal savings associations.” Id. (quoting 12 C.F.R. § 560.2(a)). Under Ninth Circuit authority, “HOLA preempts all state regulation of savings associations under the doctrine of field preemption.” Id. (citations omitted). Specifically, HOLA expressly preempts state laws governing “Loan-related fees, including without limitation, initial charges, late charges, prepayment penalties, servicing fees, and over limit fees,” § 560.2(b)(5), and “Disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents,” § 560.2(b)(9).

Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

Class Action Defense Cases–Caudle v. Towers, Perrin: New York Federal Court Grants Defense Motion For Judgment On Negligence And Breach Of Fiduciary Duty Class Action Claims Premised On Theft Of Individuals’ Personal Information

Class Action Seeking Credit Monitoring Costs and Identify Theft Insurance Following Theft of Laptops Containing Employees’ Personal Information, including Social Security Numbers, Failed to Establish Negligence or Breach of Fiduciary Duty Claims New York Federal Court Holds

Plaintiff filed a class action against Towers, Perrin, Forster & Crosby, Inc., a benefit and pension consultant to Altria, the parent company of Phillip Morris, where plaintiff worked for 20 years; the class action followed Altria’s disclosure that several laptops had been stolen from Towers’ New York office, and that one of the laptops contained personal information concerning plaintiff, including his social security number. Caudle v. Towers, Perrin, Forster & Crosby, Inc., ___ F.Supp.2d ___, 2008 WL 4104035, *1 (S.D.N.Y. 2008). The class action was filed in federal court under the auspices of the Class Action Fairness Act (CAFA), _id._, at *4. Altria’s letter to plaintiff stated that “although all of the laptops were ‘password-protected,’ only ‘some’ of the files contained on the hard drive of the laptop were protected by a separate and additional password.” _Id._, at *1. Plaintiff received an additional letter directly from Towers stating that it had arranged, and would pay for one year, for Caudle to enroll in the Equifax Credit Watch Gold, a 3-in-1 credit monitoring service that would provide plaintiff “with an early warning system for changes to [his] credit file and help [him] to understand the content of [his] credit file at the three credit reporting agencies.” _Id._ Instead, plaintiff enrolled in “LifeLock,” in part because LifeLock offered more credit fraud insurance than Equifax and because plaintiff believed he needed more than one year of credit monitoring. _Id._, at *2. Plaintiff’s class action alleged that Towers “negligent and breached its contractual and fiduciary duties in allowing the theft to occur,” and sought “to recover the costs of multi-year credit monitoring and identity theft insurance.” _Id._, at *1. Notably, the class action complaint did not allege that plaintiff’s (or any class member’s) personal information had been misused, or that plaintiff had suffered any out-of-pocket loss other than the cost of credit monitoring and identity theft insurance. _Id._ The district court bifurcated discovery, “setting a first phase of discovery to permit the parties to explore whether plaintiff has suffered a compensable injury.” _Id._ At the conclusion of the first phase of discovery, defense attorneys moved for judgment on the class action complaint; the district court granted the motion as to the class action claims for negligence and breach of fiduciary duty, but denied the motion as to the contract claims “without prejudice to the making of a summary judgment motion after the close of all discovery.” _Id._

In granting the defense motion, the district court noted that plaintiff had been told “by Towers, his employer, all three credit reporting agencies and by LifeLock’s marketing materials that, save for the credit fraud insurance, he could perform all the services performed by LifeLock for free.” Caudle, at *2. The class action complaint alleged that plaintiff and 300,000 others “were injured by the theft of the laptops because their personal information was exposed, creating the potential for identity theft and fraud leading plaintiff and the purported class to spend money on monitoring services.” Id. The class action alleged further that “‘[t]he moneys that Plaintiffs reasonably spend to reduce the danger of identity theft and mitigate their damages’ would have to continue ‘beyond the one-year coverage offered by Towers Perrin.’” Id. However, the only actual damages, if any, suffered by plaintiff or the class was the cost for credit monitoring; the class action did not allege any direct financial loss or that any class member had suffered identity theft. Id.

Class Action Court Decisions Uncategorized

Class Action Defense Cases–Brinkley v. Public Storage: In Labor Law Class Action, California State Court Affirms Defense Summary Judgment On Class Action’s Meal And Rest Period Claims Holding Breaks Need Only Be Available

Class Action Claims Alleging Employer Violated State Law because it did not Ensure Employees took Meal and Rest Breaks Failed because Employer need only make Meal and Rest Breaks “Available” but need not “Ensure” they are taken California State Court Holds

Plaintiff filed a class action against his former employer, Public Storage, alleging state labor law violations; in pertinent part, the class action complaint alleged that the paystubs defendant provided to employees failed to comply with state law, and that defendant failed to ensure that employees took all meal and rest breaks permitted by state law. Brinkley v. Public Storage, Inc., 167 Cal.App.4th 1278 (Cal.App. 2008) [Slip Opn., at 2]. The trial court granted plaintiff’s motion to certify the litigation as a class action. Id., at 4-5. Defense attorneys then moved for summary judgment on the grounds that (1) the class action paystub claim failed because defendant’s misstatements were not knowing and intentional, and plaintiff did not suffer any injury, and (2) the class action meal and rest period claims failed because defendant made the breaks available, and California law requires nothing more. Id., at 2. The trial court granted the defense motion and entered judgment in favor of defendant as to all causes of action in the class action complaint premised on those theories (the third, fifth and sixth causes of action). Id., at 5. The California Court of Appeal affirmed. We address the issues in reverse order, because far more labor law class action complaint allege missed meal and rest breaks.

With respect to the class action’s meal and rest period claim, the appellate court held that an employer need only make such breaks available to employees but need not ensure that they are taken. Brinkley, at 10-12 (meal periods) and 12-13 (rest periods). Specifically addressing the class action’s meal breaks claim, the appellate court explained that while plaintiff introduced evidence only that he and other class members “at times missed meal breaks,” but he “did not produce evidence that he or other employees were denied an opportunity to take them.” Id., at 12. Similarly, as for the class action’s rest period claim, defendant pointed to its written policy authorizing employees to take rest breaks, plaintiff’s receipt of that policy, and defendant statements at meetings instructing employees that they were required to take rest periods. Id., at 13. The Court of Appeal held that plaintiff’s allegation that he “could not” take rest breaks was insufficient to raise a triable issue of material fact, id.

Class Action Court Decisions Employment Law Class Actions Uncategorized