Sears Class Action Defense Cases-Berbig v. Sears: Illinois State Court Holds Trial Court Erred In Denying Motion To Dismiss Products Liability Class Action On Grounds Of Forum Non Conveniens

Products Liability Class Action should have been Filed in Minnesota, not Illinois, and Trial Court Abused its Discretion in Denying Defense Motion to Dismiss Class Action on Grounds of Forum Non Conveniens Illinois State Court Holds

Plaintiff filed a products liability class action in Illinois state court against Sears Roebuck after he sustained injuries while using a Craftsman GT 5000 Riding Lawnmower. The class action complaint alleged that plaintiff’s right foot got caught in the lawnmower’s blade while he was using it at his home in Minnesota, and that plaintiff had purchased the lawnmower in Minnesota. The class action further alleged that plaintiff had been treated for his injuries at a hospital in Minnesota, and that he received further treatment in Illinois. Berbig v. Sears Roebuck & Co., Inc., ___ N.E.2d ___, 2007 WL 4562890 (Ill.App. December 26, 2007). Plaintiff identified as witnesses two individuals who lived in Minnesota. Defense attorneys moved to dismiss the class action based on interstate forum non conveniens, _see_ Supreme Court Rule 187 (134 Ill.2d R. 187). The defense argued the class action should be dismissed because the lawnmower was purchased in Minnesota, plaintiff lives in Minnesota, the accident occurred in Minnesota, and plaintiff’s initial medical treatment was performed in Minnesota. Defense attorneys also argued that no witnesses lived in Cook County, and that the Cook County court’s docket is more congested than the court in Hennepin County. The trial court denied the motion “concluding that defendants had not made a strong factual showing that trying the case in Cook County, as opposed to Minnesota, would be more costly or inconvenient or pose a hardship.” The defense petitioned the appellate court for leave to appeal; the appellate court granted the petition and reversed.

The sole issue on appeal was “whether the trial court abused its discretion in denying defendants’ motion to dismiss based upon interstate forum non conveniens.” The appellate court began by noting that Electrolux Home Products, a co-defendant and the manufacturer of the lawnmower in question, was based in South Carolina and the lawnmower had been manufactured in South Carolina. Sears, on the other hand, has its principal place of business in Illinois, and its laboratory and marketing department, as well as corporate records, are in Illinois, but it did not test the lawnmower in Illinois. The defense argued that the class action should have been filed in Minnesota, and that the trial court “accorded undue weight to the location of Sears’ corporate headquarters in [Illinois], especially when none of the personnel or documents relevant to this case are located there.” The appellate court agreed.

Class Action Court Decisions Uncategorized

Labor Law Class Action Lawsuits Continue Dominance In Weekly Class Action Filings In California State And Federal Courts

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

Starbucks Hit With $105 Million Judgment In Labor Law Class Action Brought By Baristas Alleging Improper Sharing Of Tips With Shift Supervisors

Andrea Chang of the Los Angeles Times reports today that a California state court in San Diego has ordered Starbucks to pay more than $100 in a class action brought by baristas. The class action – filed in 2004 – alleged “that shift supervisors, who also make coffee and serve customers, were illegally getting a cut of employee tips,” Ms. Chang reports. The San Diego Superior Court certified the class action in 2006, defining a class that reportedly “could affect as many as 100,000 current and former baristas who worked in California stores since October 2000.

Class Actions In The News Uncategorized

Labor Law Class Action Against Starbucks, Alleging Improper Sharing Of Baristas Tips With Supervisors, Results In $105 Million Judgment And Injunctive Relief In Favor Of Members Of Class Action Suit

Vikas Bajaj of the New York Times reports today on the $105 million class action ruling by a California state court against Starbucks. The class action alleged, and the San Diego Superior Court agreed, that Starbucks improperly had permitted shift supervisors to share in tips left by customers for baristas. The New York Times reports, “The case centers on the division of labor between managers and rank-and-file workers. Under California labor law and rules, tips can be pooled and shared among workers but restaurant owners or their ‘agents,’ which are typically construed to mean managers and supervisors, cannot share in the money.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re Southeastern Milk: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Selects Eastern District of Tennessee As Transferee Court

Judicial Panel Grants Defense Request, Opposed by Plaintiffs, for Pretrial Coordination of 4 Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, but Transfers Actions to Eastern District of Tennessee Four class action lawsuits, 2 in the Middle District of Tennessee and 2 in the Eastern District of Tennessee, were filed against various defendants alleging antitrust violations for failing to “compete for the purchase of raw Grade A milk produced, marketed and processed in the Southeast United States.

Class Action Court Decisions Multidistrict Litigation Uncategorized

ERISA Class Action Defense Cases-In re Federal National Mortgage: District Of Columbia Federal Court Grants Motion To Certify Securities Class Action Against Fannie Mae and KPMG But Grants Defense Request To Limit Class Period

Federal Securities Class Action Satisfied Rule 23 Requirements for Class Action Treatment but Duration of Class Period must be Limited as Requested by Defense District of Columbia Federal Court Holds

Several federal securities class action lawsuits were filed against various defendants Federal National Mortgage Association (Fannie Mae) and its former accountant KPMG, as well as various officers and directors of Fannie Mae alleging that they “intentionally manipulated earnings and violated Generally Accepted Accounting Principles (‘GAAP’), causing losses to investors.” In re Federal Nat’l Mortgage Ass’n Securities, Derivative, & “ERISA” Litig., 247 F.R.D. 32, 33-34 (D.D.C. 2008) (footnote omitted). The class actions were consolidated, and the consolidated class action complaint alleged accounting discrepancies at Fannie Mae in violation of GAAP and inadequate internal controls, id., at 34-35. The class action cited to an SEC investigation and to the Paul Weiss report, each of which confirmed accounting problems at Fannie Mae. Id., at 35-36. The class action alleged that Fannie Mae was ordered to restate its financial statements, and that concerns with these financial reports caused the stock to drop dramatically. Id., at 35. Plaintiffs moved for certification of the litigation as a class action and for appointment of class counsel, id., at 33. Defense attorneys apparently did not oppose class certification per se, id., at 36, but rather objected to the proposed duration of the class period (April 2001 to September 2005) and the identity of the putative class members, id., at 33-34. The district court granted the motion in part.

In addressing whether to grant class action treatment, the district court noted that “[t]he requirements of Rule 23(a) are so clearly met in this case that the defendants raise no opposition to this requirement being satisfied.” In re Federal Nat’l Mortgage, at 37. Defense attorneys did oppose, however, the relevant class period: The parties (other than KPMG) agreed that the start date was April 17, 2001, but while plaintiff sought an end date of September 27, 2005, the defense (except KPMG) sought an end date of December 22, 2004. Id. The defense argued that after December 22, 2004, “it was unreasonable, as a matter of law, for any investor to rely on Fannie Mae’s financial statements as a basis to allege that they were a victim under a fraud on the market theory.” Id., at 37-38. The defense selected that date because Fannie Mae issued a corrective disclosure warning on December 22, 2004 that disavowed its earlier financial reports; accordingly, the defense argued that “any purchasers who acquired stock after December 22, 2004, cannot rely on that presumption because Fannie Mae’s corrective disclosure cured the fraud on the market and thus rebutted the presumption of reliance, leaving only individual issues of reliance to predominate thereafter.” Id., at 38. The district court agreed.

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

E*Trade TILA Class Action Defense Cases-Silvas v. E*Trade: Ninth Circuit Affirms Dismissal Of UCL Class Action Premised On TILA Violations For Failure To Refund Loan Lock-In Fees Holding Federal Law Preempted Class Action Claims

Class Action Alleging Unfair Competition Law (UCL) and False Advertising Preempted by Federal Law because Class Action Claims were Premised on Alleged Violations of Truth in Lending Act (TILA) for Conduct Governed by HOLA (Home Owners’ Loan Act) and Implementing OTS Regulations Ninth Circuit Holds

Plaintiffs filed a class action in California state court against E*Trade Mortgage alleging violations of the state’s Unfair Competition Law (UCL); the gravamen of the class action complaint was that E*Trade failed to refund loan rate lock-in fees following the exercise of a right of rescission under the federal Truth in Lending Act (TILA). Silvas v. E*Trade Mortgage Corp., 514 F.3d 1001, 1003 (9th Cir. 2008). Plaintiffs alleged that they paid a $400 fee to lock in an interest rate but subsequently exercised their 3-day right to rescind the loan transaction under TILA; E*Trade refused to reimburse the $400 fee, and the class action alleged that it was corporate policy not to refund lock-in fees following such rescissions. Id. Defense attorneys removed the class action to federal court, and then moved to dismiss the class action complaint on the ground that federal law preempted the UCL claims. Id. The agreed with the defense and dismissed the class action, id.; the Ninth Circuit affirmed.

Preliminarily, the Ninth Circuit held that the general presumption against federal preemption did not apply to this case because it involved a field long-regulated by the federal government. Silvas, at 1004. Congress enacted the Home Owners’ Loan Act (HOLA) for the purpose of restoring public confidence in federal savings and loan associations, and the Ninth Circuit previously has “described HOLA and its following agency regulations as a ‘radical and comprehensive response to the inadequacies of the existing state system,’ and ‘so pervasive as to leave no room for state regulatory control.’” Id., at 1004-05 (citation omitted). Congress provided the Office of Thrift Supervision (OTS) “broad authority to issue regulations governing thrifts,” and these, too, are afforded preemptive effect. Id., at 1005. Because E*Trade is subject to HOLA and the OTS regulations, see id., at 1006 n.2, and because the false advertising and other UCL claims are expressly preempted by federal law, see id., at 1006-07, the district court did not err in dismissing the class action.

Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

ERISA Class Action Defense Cases-Robinson v. Sheet Metal Workers’: Second Circuit Affirms District Court Judgment In ERISA Class Action In Favor Of Defense Holding Trustees Did Not Violate Anti-Cutback Rule Or Breach Contract

ERISA Class Action Failed to Establish Violation of Anti-Cutback Rule or Breach of Contract or Fiduciary Duties because Industry-Related Disability Pension was a Welfare Benefit Plan and an Ancillary Benefit Second Circuit Holds Plaintiffs, as recipients of an Industry-Related Disability Pension (IRD), filed a putative class action against the Sheet Metal Workers’ National Pension Fund alleging breach of contract and breach of fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA).

Class Action Court Decisions Employment Law Class Actions Uncategorized

Attorney Fee Awards in Class Action Cases-In re High Sulfur Content Litigation: Fifth Circuit Reverses Portion Of District Court Class Action Settlement Order Allocating Attorney Fees Among Class Action Plaintiff Lawyers For Procedural Defects

District Court Order Allocating $6.875 Million in Attorney Fees to 79 Class Action Plaintiff Lawyers Following Final Approval of Class Action Settlement Required Reversal because District Court “Abdicated its Responsibility to Ensure that the Individual Awards Recommended by the Fee Committee were Fair and Reasonable” Second Circuit Holds

Various plaintiffs filed class action lawsuits against Shell Oil alleging that its Louisiana refineries “produced contaminated gasoline that was purchased and used by thousands of motorists, damaging, inter alia, their fuel gauges.” In re High Sulfur Content Gas. Prods. Liab. Litig., 517 F.3d 220, 2008 WL 287347, *1 (5th Cir. 2008). The class actions were “consolidated in a federal class action,” id. Shell initiated a program to repair damaged fuel gauges, id. Eventually, the parties agreed to the terms of a class action settlement under which Shell agreed to expand its repair program, pay $3.7 million in damages for class members, and pay $6.875 million in attorney fees and costs: The trial court approved the class action settlement, and “appointed a five-member Fee Committee to allocate the fee award among approximately thirty-two law firms and seventy-nine plaintiffs’ attorneys who worked on the case.” Id. The Fee Committee presented its recommendations at an ex parte status conference – none of the other 74 class action plaintiff attorneys knew of the hearing and, also without their knowledge, the proposed order not only discussed allocation of attorney fees but “(a) placed under seal the document prepared by the Fee Committee listing each attorney’s fee award…; (b) prohibited each plaintiffs’ attorney from disclosing to anyone, including his clients and other attorneys, the amount of his award under penalty of sanctions to be imposed by the court; (c) required fees, costs, and expenses to be ‘distributed immediately;’ (d) mandated that fee award checks bear a full and final release; and (e) established the district court’s process for dealing with any objections to fee awards.” Id., at 1-2 (footnotes omitted). The ex parte hearing on allocation of the attorney fees under the class action settlement lasted 20 minutes; the court signed the proposed order “apparently without modification” and sealed the transcript of the hearing on the motion, id., at *3. Some of the attorneys, disgruntled that approximately half of the attorney fee award went to the law firms of the five members of the Fee Committee, requested that the district court reconsider its ruling and unseal the hearing transcript; that failing, they appealed the fee award. Id. The Fifth Circuit reversed.

As this case involves the narrow issue of the allocation of attorney fees only, we do not discuss it at length. We note simply that the court order is reviewed for abuse of discretion, and that the appeal involved but a single issue – “the procedures the district court used to allocate the $6.875 million lump-sum attorneys’ fee award among plaintiffs’ counsel.” In re High Sulfur Content, at *3. The Fifth Circuit reversed the fee allocation order, agreeing with the appellants that the district court “used flawed procedures to award individual attorneys’ fees and to review objections to those fees.” Id., at *4. The Circuit Court explained at page *4, “For all practical purposes the five-member Fee Committee controlled the allocation of attorneys’ fees in this case.” And while the federal court was entitled to appoint a committee to recommend allocation of attorney fees, “the appointment of a committee does not relieve a district court of its responsibility to closely scrutinize the attorneys’ fee allocation, especially when the attorneys recommending the allocation have a financial interest in the resulting awards.” Id. In this case, the Fifth Circuit held that “the district court abdicated its responsibility to ensure that the individual awards recommended by the Fee Committee were fair and reasonable.” Id.

Class Action Court Decisions Uncategorized

Arbitration Class Action Defense Cases-Aguilar v. BLH Construction: California Court Affirms Trial Court Order Denying Petition To Compel Arbitration Of Class Action Thereby Permitting Labor Law Class Action To Proceed In State Court

In an Unpublished Opinion, California Appellate Court Holds that Trial Court did not Abuse Discretion in Denying Petition to Compel Arbitration of Labor Law Class Action on Ground that Defense Attorneys Failed to Prove that Plaintiffs Signed Arbitration Agreement

Plaintiffs filed a class action lawsuit against their employer, BLH Construction alleging labor law wage and hour claims. Aguilar v. BLH Construction Co., 2007 WL 4418105, *1 (Cal.App. December 19, 2007). Defense attorneys moved to compel arbitration, but the court opinion is silent on the arbitration clause purported to bar class actions or whether the defense sought to enforce a class action arbitration waiver. Id. The trial court denied the motion, finding that plaintiffs had not signed the arbitration agreement, id. The defense appealed, arguing that the trial court abused its discretion “by not continuing the hearing to permit oral testimony and cross-examination of witnesses on the issue.” Id. The Court of Appeal affirmed.

BLH hired plaintiffs as construction workers in February 2005 and, on the day they were hired, provided each plaintiff with an employee handbook, a form entitled “Receipt of Handbook and Acknowledgement of At-Will Employment,” and a form entitled “Mutually Binding Arbitration Agreement.” Aguilar, at *1. “Each form had lines for the employee’s signature and the date of signing.” Id. As part of the petition to compel arbitration, defense attorneys submitted signed copies of the “Mutually Binding Arbitration Agreement.” Id. Plaintiffs, however, insisted that they had not signed this document and by declaration claimed that their signatures had been forged, id. In response, defense attorneys submitted (1) the declaration of a supervisor stating that he had given plaintiffs the employee documents referenced above and that plaintiffs “signed and dated the two signature pages contained within the Employee Handbook,” (2) the declaration of BLH’s chief operations officer stating that plaintiffs had signed the mutually binding arbitration agreement, and (3) the declaration of BLH’s counsel stating that the signed documents had been obtained from the BLH custodian of records, “and that it was BLH’s custom and practice to have each employee sign the arbitration agreement.” Id.

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized