GM Class Action Defense Cases–General Motors v. Bryant: Arkansas Supreme Court Affirms Class Action Certification Of Nationwide Class Action Alleging Product Defect Holding Variations In State Laws May Be Addressed By Decertification of Class Action

Trial Court did not Err in Granting Class Action Treatment to Nationwide Product Defect Class Action Against General Motors because Choice-of-Law Analysis Irrelevant to Class Action Certification Determination Arkansas Supreme Court Holds

In September 2006, plaintiff filed a class action against General Motors in Arkansas state court. The first amended class action complaint alleged that GM sold 4,000,000 pickup trucks and SUVs with defectively designed parking brakes; specifically, the class action alleged that GM discovered the defect in 2000, redesigned the defective part in October 2001, but “withheld from dealers admission of responsibility for the defect until January 28, 2003.” General Motors Corp. d/b/a/ Chevrolet, GMC, Cadillac, Buick, and Oldsmobile v. Bryant, ___ S.W.3d ___ (Ark. June 19, 2008) [Slip Opn., at 1-2]. According to the class action, this scheme permitted GM “to avoid paying millions of dollars in warranty claims.” _Id._, at 2. Plaintiff alleged further that GM’s 2005 recall involved only about 60,000 of the 4 million vehicles affected, _id._ Plaintiff filed a motion for class action certification; the trial court granted the motion in a 51-page order. _Id._, at 2-3. GM sought interlocutory review of the class action certification order, challenging predominance, superiority, and the definition of the class, _id._, at 3. The Arkansas Supreme Court affirmed.

The primary issue on appeal concerned GM’s challenge to the applicable choice of law. Defense attorneys argued that “the significant variations among the fifty-one motor-vehicles product-defect laws defeat predominance,” and that the trial court was required to perform a choice-of-law analysis before granting class action treatment to the lawsuit. Bryant, at 4. Plaintiff argued that Arkansas law does not require such an analysis prior to class action certification, id. The Arkansas Supreme Court agreed with plaintiff: because if found that a “predominating questions” exists – specifically, “[w]hether or not the class vehicles contain a defectively designed parking-brake system and whether or not General Motors concealed that defect,” id., at 6 – it found that the trial court did not err. In the Court’s words, “That various states’ laws may be required in determining the allegations of breach of express warranty, breach of implied warranty, a violation of Magnuson-Moss Warranty Act, unjust enrichment, fraudulent concealment, damages, and restitution does not defeat predominance in the instant case.” Id., at 7. (The author confesses that he finds this reasoning difficult to follow: legal claims do not exist in a vacuum, and it does not seem “judicially efficient” to try a case on a class-wide basis simply to determine one or two common facts, regardless of how important those facts may be, and then decertifying the case for apparently millions of trials to be held on a case-by-case basis focusing on the various claims of individual class members based on the particular state laws governing those claims.) The Arkansas Supreme Court recognized that other courts have held that choice-of-law “is crucial in making a class-certification decision,” id., at 8 (citation omitted), and indeed cited cases from California, New Jersey and Texas to that effect, see id., at 8-9. Nonetheless, it rejected this approach in favor of the “certify now, decertify later” approach followed in Arkansas, id., at 9-10.

Certification of Class Actions Class Action Court Decisions Uncategorized

FLSA Class Action Defense Cases–Johnson v. Big Lots: Louisiana Federal Court Decertifies FLSA Collective Action After Week-Long Bench Trial Because Evidence Revealed Class Members Were Not Similarly Situated

Defense Post-Trial Motion to Decertify FLSA Collective Action Granted because Evidence Revealed Lack of Similarity Among Class Members thereby Precluding Defense from Presenting a Uniform Defense to FLSA Claims Louisiana Federal Court Holds

Plaintiffs filed a labor law class action against Big Lots Stores for violations of the federal Fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Big Lots had misclassified employees and failed to pay them overtime. Johnson v. Big Lots Stores, Inc., ___ F.Supp.2d ___ (E.D. La. June 20, 2008) [Slip Opn., at 1]. The gravamen of the class action was that Big Lots failed to pay its store managers and assistant store managers for overtime, _id._, at 3. Over defendant’s objection, the district court certified the litigation as an FLSA collective action and approximately 1,000 people elected to opt-in to the lawsuit, _id._, at 4-5. Following a one-week bench trial, the federal court decertified the nationwide class, dismissed without prejudice the claims of the individuals who had opted in to the action, and held that plaintiffs could proceed with their individual actions. _Id._, at 1.

Big Lots is a nationwide retailer with approximately 1,400 stores in 46 states. Johnson, at 2. Typically, each store has store manager and at least one assistant store manager, but the physical size, products available for sale, sales volume, sales history and number of employees all affected the number and nature of managers and assistant managers at any given store. Id. “Significant variations” existed as to the duties performed by assistant store managers, but each one was expected to work at least five 9-hour shifts per week. Id., at 3. All managers and assistant managers were salaried employees, but they were classified as “executive employees” under the FLSA and therefore exempt from overtime pay. Id., at 2. The job description of an assistant store manager supported this classification, see id., at 2-3. The class action complaint, however, filed as a collective action under the FLSA, alleged that Big Lots misclassified its assistant store managers as exempt employees because, in the words of one plaintiff, “a Big Lots ASM is nothing more than a ‘glorified stocker.’” Id., at 3-4.

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

Labor Law Class Action Cases Regain Top Spot Of Weekly Class Action Lawsuits Filed In California State And Federal Courts

As a resource to California class action defense attorneys, 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. This report covers June 13 – 19, 2008, during which time 38 new class action lawsuits were filed.

Class Actions In The News Uncategorized

National Bank Act Class Action Defense Cases–NNDJ v. National City Bank: Michigan Federal Court Dismisses Class Action Against National Banks Holding Class Action Claims Challenging Fees Banks Charged To Cash Official Checks Preempted By Federal Law

As Matter of First Impression, Class Action Complaint Against National Banks must be Dismissed because Class Action Claims Challenging Bank Fees Charged Non-Accountholders to Cash “Official Checks” were Preempted by the National Bank Act which Authorizes Banks to Charge such Fees Michigan Federal Court Holds

Plaintiffs filed a putative class action against National City Bank, Comerica, JPMorgan Chase, and Fifth Thirds Bank for violations of the Uniform Commercial Code (UCC), as enacted by Michigan; specifically, the class action complaint alleged that defendants issued “official checks” – i.e., cashier’s checks or teller’s checks – and then charged fees to non-accountholders to cash them. NNDJ, INC. v. National City Bank, 540 F.Supp.2d 851, 851 (E.D. Mich. 2008). Defense attorneys for National City Bank and JPMorgan Chase, federally chartered banks created under and governed by the National Bank Act (the “National Banks”), moved to dismiss the class action complaint on the grounds that the class action claims were preempted by the National Bank Act, id. The district court granted the motion and dismissed the class action against the National Banks.

The class action complaint alleged that the National Banks issue cashier’s checks and teller’s checks. NNDJ, at 851. Under the UCC, a cashier’s check is “a draft with respect to which the drawer and the drawee are the same bank or branches of the same bank,” and a teller’s check is “a draft drawn by a bank (I) on another bank, or (ii) payable at or through a bank.” Id. (citations omitted). The class action alleged that the National Banks charged a non-accountholders a fee to cash the official checks that “the National Banks themselves have issued,” and that this violated the UCC. Id., at 8511-52. Defense attorneys argued that the UCC does not prohibit the National Banks from charging such fees, but further that if the UCC did prohibit such fees then it was preempted by the National Bank Act. Id., at 852. The district court explained that the National Banks’ motion presented two issues of first impression: (1) whether Michigan’s UCC “prohibit[s] banks from issuing official checks and subsequently charging non-accountholders a fee to cash them”; and (2) if so, whether those portions of Michigan’s UCC are preempted by the National Bank Act. Id. The federal court found it necessary to discuss only the preemption issue.

Class Action Court Decisions Uncategorized

FLSA Class Action Defense Cases–Amendola v. Bristol-Myers: New York Federal Court Denies Plaintiff’s Request To Give Notice Of FLSA Class Action And To Equitably Toll Claims Period For Employees Who Later Join Class Action Litigation

FLSA Class Action Plaintiff not Entitled to give Notice of Litigation to Other Pharmaceutical Representatives of Bristol-Myers Squibb because Administrative Employee Exemption to Overtime Pay Likely Applies New York Federal Court Holds

Plaintiff filed a putative labor law class action against Bristol-Myers Squibb alleging violations of the federal fair Labor Standards Act (FLSA); specifically, the class action complaint alleged that Bristol-Myers misclassified its pharmaceutical representatives as exempt from overtime pay. Amendola v. Bristol-Myers Squibb Co., ___ F.Supp.2d ___ (S.D.N.Y. June 4, 2008) [Slip Opn., at 2]. As part of her discovery leading up to a motion to certify the litigation as a class action, plaintiff sought the names and addresses of defendant’s other pharmaceutical representatives, and asked the federal court to authorize that notice of the class action complaint be sent to those individuals and that the limitations period for absent class members to file claims be equitably tolled. _Id._ The district court denied the motion finding that while defendant’s pharmaceutical representatives are not exempt from overtime pay under the “outside salespersons” exemption, the “administrative employees” exemption likely applies. _Id._

According to the class action complaint, plaintiff worked for Bristol-Myers from February 1998 through March 2006 and was “often required…to work more than forty hours per week” but never received overtime pay. Amendola, at 3. Plaintiff filed her class action on June 28, 2007 and promptly sought discovery of the names and contact information of all 4500 pharmaceutical representatives. Id. At a status conference, defense attorneys explained that the company’s pharmaceutical representatives “include four levels of seniority and are employed by five distinct business units, each of which is subdivided across several geographic regions”; the defense argued that pharmaceutical representatives are not “similarly situated” as required for the litigation to proceed as an FLSA collective action. Id. The district court responded by ordering defense counsel to provide the names of “two or three” representatives “randomly selected from each business unit, geographic region, and job level”; Bristol-Myers ultimately provided plaintiff with contact information for 350 employees and 6000 documents. Id., at 3-4. It also produced for deposition five witnesses, consisting of the “vice president or manager overseeing each of [the company’s] five business divisions.” Id., at 4. Plaintiff then renewed her request to notify the pharmaceutical representatives of the litigation; defense attorneys opposed the motion, arguing that at least one of four statutory or regulatory exemptions applied. Id., at 4-5.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–Berson v. Applied Signal Technology: Ninth Circuit Reverses Dismissal Of Securities Class Action Holding Class Action Complaint Satisfied Pleading Requirements

Securities Class Action Erroneously Dismissed because Company’s Characterization of “Stop-Work” Orders as “Backlog” could have Misled Investors as to Company’s True Financial Condition Ninth Circuit Holds

Plaintiffs filed a putative class action against Applied Signal Technology (AST) and two of its officers for violations of federal securities laws; specifically, the class action complaint alleged that the company’s “backlog” reports misled investors as to its financial condition. Berson v. Applied Signal Technology, Inc., 527 F.3d 982 (9th Cir. June 5, 2008) [Slip Opn., at 6391-92]. The Ninth Circuit explained that AST’s customers were predominantly government agencies that may, at any time and for any reason, issue “stop-work” orders; once issued, AST immediately stops earning money on those projects, “[a]nd, because stopped work often is eventually cancelled altogether, a stop-work order signals a heightened risk that the company never will earn the money.” Id., at 6391-92. However, AST “continued to count the stopped work as part of its ‘backlog’ – a term the company defines as the dollar value of the work it has contracted to do but hasn’t yet performed.” Id., at 6392. The class action alleged that plaintiffs were misled into believing that it was “likely” the stop-work projects would be completed when “in reality” it was “likely to be lost forever.” Id. Defense attorneys moved to dismiss the class action; the district court granted the motion and plaintiffs appealed. The Ninth Circuit reversed.

The Circuit Court began its analysis by rejecting the defense argument under Rule 9(b) that plaintiffs failed to plead fraud with particularity; we do not discuss that portion of the opinion. See Whiting, at 6392-94. Rather, we begin with the defense argument that the statements regarding the company’s backlog were not misleading. First, AST argued that because its SEC filings clearly revealed that the backlog consisted of “uncompleted portions of existing contracts,” investors would know that this work included stop-work orders. Id., at 6394-95. The Ninth Circuit found this to be a “conceivable interpretation” of the SEC disclosure, but not the “most plausible” one, id., at 6395. In the end, the Court concluded, “we cannot find, as a matter of law, that defendants disclosed that backlog included a significant amount of work that had been halted by the company’s customers.” Id., at 6396. The Ninth Circuit noted that AST was not required to release its backlog report, but once it “chose to tout” the backlog, it was obligated to do so “in a manner that wouldn’t mislead investors as to what that backlog consisted of.” Id., at 6397. The Circuit Court held further that plaintiffs had “state[d] with particularity facts giving rise to a strong inference” of defendants’ intent to deceive by alleging that defendants “were aware that stop-work orders had halted significant amounts of work, yet counted the stopped work as backlog anyway.” Id.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–Amaral v. Cintas: California Court Affirms Class Action Judgment In Favor Of Plaintiffs In Labor Law Class Action Holding City’s Living Wage Ordinance Applied To All Work By All Employees

Class Action Judgment in Favor of Plaintiffs Proper because City’s Living Wage Ordinance Covered Work Performed on City Contract Outside the City by Employees who did not Live within the Territorial Boundaries of the City, and because Employees were Intended Beneficiaries of Ordinance and therefore had Standing to Pursue Claims under it California State Court Holds

Plaintiffs filed a class action against Cintas for labor law violations; the class action complaint alleged that because Cintas has a contract with the City of Hayward, California, that required it to comply with Hayward’s Living Wage Ordinance, Cintas was required to pay workers in the City of San Leandro the wages mandated by the Ordinance. Amaral v. Cintas Corp. No. 2, ___ Cal.App.4th ___, 78 Cal.Rptr.3d 572 (Cal.App. 2008) [Slip Opn., at 1]. The class action alleged violations of the Ordinance, as well as California Labor Code § 200 and Business and Professions Code § 17200. _Id._ Defense attorneys admitted that Cintas did not provide employees located outside of Hayward with “the minimum wages or benefits required by the ordinance,” but argued that the Ordinance was unconstitutional, _id._ The trial court disagreed and, on cross-motions for summary judgment, found that Cintas for backpay and unpaid benefits, _id._ The trial court also found, however, that Cintas did not act “willfully” and so limited the amount of plaintiffs’ damages. _Id._, at 2. Both parties appealed; the California Court of Appeal affirmed the trial court order in all respects.

Briefly, the facts are as follows. From 1999 to 2003, Cintas contracted with the City to provide uniform and linen services; the City would lease linens and garments from Cintas, and contracted further with Cintas to collect, clean and return these items. Amaral, at 2. The City did not lease specific items, and Cintas did not necessarily return to the City the same items that it had picked up from the City; rather, the linens and garments would be collected and cleaned as a group, inspected for damage, sorted, and sent out to customers. Id. Cintas processed items it collected from and delivered to Hayward, at its facilities in Union City and San Leandro, and employees at both locations “worked on items for many different customers each day.” Id. Hayward’s Living Wage Ordinance was enacted in 1999 for the purpose of providing sufficient compensation so employees could “afford a decent standard of living in Hayward,” id., at 3 (italics added), and “requires covered contractors to pay their employees at least $8.00 per hour if health benefits are provided, or $9.25 per hour if no health benefits are provided,” id. Before the Ordinance went into effect, the City advised Cintas of its passage, and after the Ordinance went into effect, the City required Cintas certify that it would comply with the Ordinance. Amaral, at 4. Cintas represented to the City that it agreed to comply with the Ordinance, but never contacted the City to inquire into its applicability to employees outside the City. Id. Cintas terminated its contract with the City in 2003; during the life of the contract, the City’s business accounted for less than 1% of the company’s revenue. Id., at 5.

Class Action Court Decisions Employment Law Class Actions Uncategorized

HAPPY FATHER’S DAY FROM THE CLASS ACTION DEFENSE BLOG

The author of the Class Action Defense Blog extends best wishes for a happy Father’s Day. A new class action article will be published tomorrow.

Class Actions In The News Uncategorized

Unfair Business Practice Class Action Cases Finally Top Labor Law Class Action Cases In Weekly List Of Class Action Lawsuits Filed In California State And Federal Courts

As a resource to California class action defense attorneys, 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. This report covers June 6 – 12, 2008, during which time 51 new class action lawsuits were filed.

Class Actions In The News Uncategorized

Class Action Defense Cases—In re Washington Mutual: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Western District of Washington

Judicial Panel Grants Defense Motion, Unopposed by Most Class Action Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Centralizes Class Actions in Western District of Washington Seven (7) class action lawsuits – five in Washington and two in New York – were filed against defendants Washington Mutual alleging “misrepresentations or omissions concerning WaMu’s financial condition with respect to its subprime home loan portfolio.” In re Washington Mutual, Inc.

Class Action Court Decisions Multidistrict Litigation Uncategorized