Number Of Class Action Lawsuits Drop During Past Week But Class Action Cases Involving Employment Law Claims Continue To Lead Weekly Class Action Filings In California State And Federal Courts

To assist class action defense attorneys anticipate the types of 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

Toy Lead Class Action Defense Cases-In re RC2 Corp.: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Northern District of Illinois

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 in Northern District of Illinois, Rejecting Motion of California Class Action Plaintiff to Centralize Litigation in the Central District of California Fourteen (14) class action lawsuits (9 in Illinois, and 1 in Arkansas, California, Indiana, New Jersey and New York) were filed against various defendants, including RC2 Corp. and Learning Curve Brands, “stem[ming] from certain toys that were manufactured and/or distributed by defendants and recalled due to the presence of elevated levels of lead in surface paints.

Class Action Court Decisions Multidistrict Litigation Uncategorized

BP CAFA Removal Class Action Defense Cases-Eatinger v. BP: Kansas Federal Court Refuses To Remand Class Action To State Court Holding Removal Jurisdiction Exists Under Class Action Fairness Act (CAFA)

Amount in Controversy Required for Removal Jurisdiction under CAFA (Class Action Fairness Act) not Defeated by Plaintiff’s Statement in Class Action Complaint that Damages “May” not Exceed $5 Million Kansas Federal Court Holds

Plaintiff filed a class action lawsuit in Kansas state court against BP America on behalf of royalty owners alleging that BP engaged in self-dealing and “failed to properly account and pay royalties to the plaintiff and the class”; defense attorneys removed the class action to federal court arguing that removal jurisdiction existed under the Class Action Fairness Act (CAFA). Eatinger v. BP America Prod. Co., 524 F.Supp.2d 1342, 2007 WL 4395068, *1 (D. Kan. 2007). Plaintiff’s lawyer moved to remand the class action to state court on the ground that the amount in controversy failed under either test because the class action complaint specifically pleads amounts in controversy below the jurisdictional requirements. Id. The district court denied the motion to remand.

The district court noted plaintiff did not dispute diversity,” Eatinger, at *5; accordingly, the jurisdictional issue is whether the amount in controversy requirement is met. Accordingly, “the single matter in dispute” is whether “the requisite amount in controversy” had been shown, id., at *1. Defense attorneys submitted that, based on the definition of the proposed class, “the minimum amount of total royalty payments alleged to be in controversy to be at least $693,000,000” so unless the alleged underpayment is less than .7215009% the amount in controversy exceeds $5,000,000. Id. Moreover, the defense argued that plaintiff’s individual claim places in excess of $440,000 at issue, so unless he claims less than a 16% underpayment his amount in will exceed $75,000. Id. Plaintiff’s lawyer responded that central to BP’s arguments is the claim that plaintiff has “refused to stipulate to an amount of damages at stake,” and advanced various objections to this reasoning, id., at *2. Defense attorneys countered that requiring more than its percentage-based calculations of damages “would create a virtually impossible standard of proof,” id. Additionally, plaintiff’s “vague statement in the initial complaint that the amount in controversy ‘may’ exceed $5 million,” combined with his refusal to stipulate otherwise, “is sufficient to establish jurisdiction in federal court.” Id.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized

PSLRA Class Action Defense Cases-In re H&R Block: Missouri Federal Court Dismisses Securities Class Action Against H&R Block Concluding Class Action Allegations Failed To Satisfy PSLRA’s Heightened Pleading Requirements

Defense Motion to Dismiss Securities Class Action Against H&R Block and Individual Defendants Granted because Class Action Complaint Failed to Meet Heightened Pleading Requirements Mandated by the Private Securities Litigation Reform Act of 1995 (PSLRA) Missouri Federal Court Holds

Plaintiffs filed a class action against H&R Block and various individual defendants alleging violations of section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities Exchange Commission, and seeking derivative “controlling persons” liability under section 20(a) of the 1934 Act. In re H&R Block Securities Litig., ___ F.Supp.2d ___ (W.D. Mo. February 19, 2008) [Slip Opn., at 1]. The class action alleged that H&R Block failed to attribute its financial success to “deceptive consumer practices” which “thereby artificially inflating its reported earnings,” failed to properly account for its effective income tax rate thereby “requiring a restatement of reported financial results,” and failed to implement “a system of safeguards and procedural controls” to ensure that financial statements and reports were reliable rather than “materially overstated.” _Id._, at 2. Defense attorneys moved to dismiss the class action complaint; the district court granted the motion but granted leave to amend as to the restatement of financials claim if plaintiffs could plead with specificity “that the Company knew, not just that it had internal control weaknesses, but that it was releasing materially false financial information as a result.” _Id._, at 2-3. Plaintiffs filed an amended class action complaint, _id._, at 3, alleging that defendants “misled the Company’s public investors by disseminating a series of materially false and misleading statements concerning the Company’s revenues, earnings, profitability, and financial condition,” and defense attorneys again moved to dismiss the class action. _Id._, at 1-2. The district court granted the motion and dismissed the securities class action complaint.

Analyzing the allegations of the class action complaint under the heightened pleading requirements dictated by the Private Securities Litigation Reform Act of 1995 (PSLRA), In re H&R Block, at 4, the federal court turned first to the Section 10(b) claim. Defense attorneys claimed that the amended class action complaint failed to cure the deficiencies in the original class action complaint; specifically, it failed to “plead facts giving rise to a strong inference that the Defendants acted with scienter when accounting errors caused inaccurate financial statements to be released.” Id., at 4-5. Relying on the test enunciated by the Supreme Court in Tellabs, Inc. v. Makor Issues & Rights, Ltd., ___ U.S. ___, 127 S.Ct. 2499 (2007), a summary of which may be found here, the district court held that plaintiff’s “four confidential sources” were insufficient — not because the sources were unnamed, but because plaintiffs had failed to establish that the information from these sources was reliable, _id._, at 6 (citation omitted). The federal court also concluded that even if the information from the unnamed sources was reliable, the allegations failed to satisfy the PSLRA’s heightened pleading requirements because the company had issued warnings of possible problems with its financial statements and had conducted an investigation in conjunction with an independent auditor, thus undermining a claimed intent to deceive. _Id._, at 7-8. As the court summarized at page 9, “[T]he Court is left with statements by confidential informants suggesting that Defendants knew they had problems involving corporate tax accounting controls. The Company repeatedly disclosed the problems to investors beginning in July 2004. The Company continued to evaluate and work towards remedying the problems, including by hiring the help of an independent third-party. The culmination of the investigation led to a Restatement. Thus, Plaintiff has still not pled facts giving rise to a strong inference that Defendants acted with an intent to deceive the investing public by releasing incorrect financial statements.”

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases-In re Tyco: New Hampshire Federal Court Approves Class Action Settlement And Awards Class Counsel Record $464 Million For Prosecuting Securities Fraud Class Action Lawsuit

Proposed $3.2 Billion Settlement Of Securities Fraud Class Action Fair, Reasonable and Adequate, and Request By Class Action Plaintiffs’ Counsel for $464 Million Fee Award Reasonable New Hampshire Federal Court Holds

Plaintiffs filed a securities fraud class action lawsuit against Tyco International, its former auditor, PricewaterhouseCoopers, and five individual defendants; the gravamen of the class action was that defendants “misrepresented the value of multiple companies that Tyco acquired and misreported Tyco’s own financial condition in ways that artificially inflated the value of Tyco stock,” thereby permitting the individual defendants “to reap enormous profits by looting the company through a combination of unreported bonuses, forgiven loans, excessive fees, and insider trading.” In re Tyco Int’l, Ltd., ___ F.Supp.2d ___, 2007 WL 4462593, *1 (D. N.H. December 19, 2007). The district court granted plaintiffs’ motion for class action treatment, and the parties eventually negotiated and sought district court approval of a proposed $3.2 billion settlement of the class action. _Id._ Specifically, the terms of the class action settlement requires that Tyco pay $2.975 billion in cash, plus interest, and that PricewaterhouseCoopers pay $225 million in cash, plus interest, _id._, at *5. The district court stated at page *5: “Tyco’s payment will be the largest cash payment ever made by a corporate defendant in the history of securities litigation. [PricewaterhouseCoopers’] payment will be the second-largest auditor settlement in securities class action history. In all, the proposed settlement is the third largest securities class action recovery in history, behind only Enron and WorldCom.” As part of the motion for approval of the class action settlement, plaintiffs’ lawyers sought an attorney fee award of 14.5% of the $3.2 billion settlement, _id._, at *1, together with almost $29 million in costs, _id._, at *14. The district court approved the class action settlement and awarded the attorney fees requested.

We do not here discuss the district court’s analysis of the proposed settlement, or its conclusion that the terms of the class action settlement were fair, reasonable and adequate. See Tyco, at *7-*11. We do note, however, that the court stated it would be “difficult to overstate the complexity of this case,” id., at *8, and that the case was “risky…for both sides,” id., at *9. The court further highlighted the expense involved, noting that more than 488,000 hours of attorney time had been devoted to prosecution of the class action, id., at *10. The court’s analysis and rejection of the various objections to the proposed settlement may be found at pages *11-*14. The attorney fee award bears mention because it represents the single largest attorney fee award in class action history.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases-In re Dynamic Random Access Memory: California Federal Court Grants Motion To Dismiss Certain Antitrust Class Action Claims Finding Plaintiffs Lack Antitrust Standing

Antitrust Class Action Complaint Failed to Adequately Establish Antitrust Injury thus Warranting Dismissal of Certain Antitrust Claims in Class Action Complaint for Lack of Standing California Federal Holds

Plaintiffs filed a class action lawsuit against various defendants for allegedly conspiring to artificially inflate and fix the prices of dynamic random access memory (DRAM) in the market: plaintiffs are indirect purchasers of DRAM, and filed the class action on behalf of other indirect purchasers; the class action named as defendants foreign corporations, or U.S. subsidiaries of foreign corporations, that manufacture and sell DRAM in the U.S. In re Dynamic Random Access Memory (DRAM) Antitrust Litig., ___ F.Supp.2d ___ (N.D. Cal. January 29, 2008) [Slip Opn., at 1-2]. Defense challenges to the class action led to the filing of a second amended class action complaint, and defense attorneys moved to dismiss certain claims therein. _Id._ The district court granted the motion in part and denied the motion in part.__

By way of background, the district court explained at page 2 that in August 2006, defense attorneys moved for judgment on the pleadings with respect to the original class action complaint, and in June 2007, the court granted the motion in part in an order that enunciated “two overarching conclusions”: (1) that “under the standing test enunciated in Assoc. Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983)(‘AGC’), plaintiffs lacked antitrust standing to assert their claims under both the California Cartwright Act and 13 state antitrust statutes, for all claims based on purchases of products in which DRAM is a component,” and “further granted defendants’ motion for lack of standing with respect to 3 more state antitrust statutes, regardless whether those claims were based on purchases of non-component DRAM, or products in which DRAM is a component”; and (2) that the class action claims “under various states’ consumer protection statutes failed, on grounds that the claims were untimely, had procedural deficiencies, or else failed to state a valid claim for relief.” The district court granted plaintiffs’ leave to amend, “but only as to three specific state laws – South Dakota, New York, and Rhode Island.” In re DRAM, at 2. Plaintiffs did so, but then sought leave to further amend the class action complaint believing they could overcome the concerns expressed by the court in its June 2007 order; defense attorneys opposed the motion on the ground of futility, but the court granted leave to amend and a second amended class action complaint was filed. Id., at 2-3. Defense attorneys moved to dismiss certain claims therein, id., at 3.

Class Action Court Decisions Uncategorized

Labor Law Class Action Lawsuits Dominate Weekly Class Action Filings 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 February 8 – 14, 2008, during which time 40 new class action lawsuits were filed.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re Peregrine Systems: Judicial Panel On Multidistrict Litigation (MDL) Grants Joint Defense/Plaintiff Motion To Centralize Class Action Litigation In Southern District of California

Judicial Panel Grants Defense Request for Pretrial Coordination of 35 Class Action and Individual Lawsuits Pursuant to 28 U.S.C. § 1407, Joined by Sole Plaintiff Outside California, and Transfers Actions to Southern District of California Thirty-five (35) individual and class action lawsuits (34 in California and 1 in New Jersey) were filed against various defendants, including Arthur Andersen, “arising out of alleged misrepresentations or omissions relating to improper accounting practices at Peregrine Systems, Inc.

Class Action Court Decisions Multidistrict Litigation Uncategorized

UCL Class Action Defense Cases-Hall v. Time: California State Court Affirms Dismissal Of Class Action Complaint Concluding Plaintiff Lacked Standing Under Unfair Competition Law (UCL) To Prosecute Class Action Claims

Class Action Plaintiff must Suffer Loss of Money or Property to have Standing to Prosecute UCL (Unfair Competition Law) Class Action and must Establish Causal Connection Between Alleged Loss and Defendants Conduct California State Court Holds

Plaintiff filed a putative action lawsuit against various Time Inc. entities for violations of Californias unfair competition law (UCL) by allegedly tricking people into buying books as part of a free trial period program. Hall v. Time Inc., 158 Cal.App.4th 847, 70 Cal.Rptr.3d 466, 467 (Cal.App. January 28, 2008). The gravamen of the class action was that Time engaged in a scheme by which it induced consumers to purchase books by offering a free preview period during which the consumer had 21 days in which to review the book and return it to Time with no obligation to buy. Id. The class action complaint alleged that after the consumer reviews the book pursuant to an ostensible no obligation free trial basis, Time employs a scheme to obtain immediate payment from the consumer throughmisleading and deceitful tactics. Id. Defense attorneys moved to dismiss the class action on the ground that plaintiff did not suffer an injury in fact and thus lacked standing to prosecute the class action; the trial court agreed and dismissed the class action complaint. Id. The Court of Appeal affirmed.

Plaintiff alleged that he ordered a book from Time. Hall, at 468. The class action alleged that Time sent a bill with the book that encouraged him to pay for the book immediately but made clear that he was under no obligation to do so and that he had 21 days to return the book at Times expense, id., at 467-68. Plaintiff admits he kept the book and did not pay for it. Id., at 468. According to the allegations in the class action complaint, after the trial period ended Time began sending bills to plaintiff demanding payment; when plaintiff failed to pay, the matter was referred to collection. Id. Ultimately, plaintiff paid for the book and then filed the class action complaint alleging that Time had engaged in an ongoing, unfair and/or fraudulent and/or unlawful business practice by sending invoices before the expiration of the free trial period to obtain immediate payment for the book requested. Id. The trial court granted Times motion to dismiss the class action for lack of standing, finding that plaintiff got the book that he asked for, at the price he asked for it, and the payment schedule he wanted. Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

CAFA Class Action Defense Cases-Toller v. Sagamore: Arkansas Federal Court Delays Ruling On Motion To Remand Class Action Against Insurer Pending Additional Evidence Of Amount In Controversy For Removal Under Class Action Fairness Act (CAFA)

In Motion for Remand of Class Action Against Insurer for Failure to Provide No-Fault Insurance, both Plaintiff and Defense Failed to Present Admissible Evidence of Amount in Controversy so Court had Insufficient Evidence to Determine Whether Removal Jurisdiction Existed Under CAFA (Class Action Fairness Act) Arkansas Federal Court Holds

Plaintiff filed a putative class action in Arkansas state court against her automobile insurance carrier, Sagamore Insurance, alleging various breaches of the terms of the auto policy. Toller v. Sagamore Ins. Co., 514 F.Supp.2d 1111, 1113-14 (E.D. Ark. 2007). The class action complaint alleged that Sagamore “has consistently issued automobile liability insurance policies without providing no-fault coverages or obtaining waivers of such coverage as required by Arkansas law.” Id., at 1114. Defense attorneys removed the class action to federal court under the Class Action Fairness Act of 2005 (CAFA); plaintiff’s lawyer moved to remand the class action on the ground that removal jurisdiction did not exist under CAFA because the requisite amount in controversy had not been established. Id. The district court found that it lacked sufficient evidence from either side to rule on the remand motion and, accordingly, held the motion in abeyance pending receipt of such evidence.

Plaintiff’s class action alleged that Sagamore issued her an automobile insurance policy without providing her no-fault coverage and without obtaining from her a waiver of such coverage in writing. Toller, at 1114. Following a car accident in which she suffered $48,000 in medical costs, Toller filed her lawsuit alleging that Sagamore wrongly denied her claim. The class action complaint provided no further information regarding alleged damages, and plaintiff did not limit her damages to an amount under $75,000. Id. The relief sought in the complaint includes attorney fees, penalties for breach of contract, and declaratory and injunctive relief, but the class action provides that “the amount in controversy will not exceed the sum or value of $4,999,999, and she specifically waives any amount of compensatory damages, restitution, interest, costs, and attorneys’ fees above that amount.” Id. Defense attorneys removed the class action to federal court alleging both diversity jurisdiction and CAFA removal jurisdiction: we do not discuss here the district court’s conclusion that the requirements for diversity jurisdiction had not been met, see id., at 1116-18; rather, we discuss here solely removal jurisdiction under CAFA, and Sagamore’s argument “that this case is a class action, that the class has more than 100 members, that the amount in controversy exceeds $5,000,000, and that minimal diversity exists, so this Court has jurisdiction pursuant to the Class Action Fairness Act, codified at 28 U.S.C. § 1332(d),” id., at 1114.

Class Action Court Decisions Class Action Fairness Act (CAFA) Removal & Remand Uncategorized