Options Backdating Class Action Defense Cases–American Tower Settles Federal Securities Class Action Lawsuits For $14 Million

The Associated Press reports that American Tower Corp. has agreed to pay $14 million to settle class action lawsuits alleging violations of federal securities laws “concern[ing] its historical stock option granting practices and related accounting.” American Tower operates broadcast and communications towers. At that time of AP’s report, it was not know whether American Tower’s insurers’ will contribute to the settlement.

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CAFA Class Action Defense Cases-May’s v. Total Containment: Alabama Federal Court Remands Class Action To State Court Holding Amendment Of Complaint After CAFA’s (Class Action Fairness Act) Effective Date Did Not Permit Removal

Amendment of Class Action Complaint After Effective Date of Class Action Fairness Act of 2005 (CAFA) did not Trigger Removal Period Because Under State Law the Amendment Related Back to Original Complaint Alabama Federal Court Holds Plaintiff, operator of three gasoline distribution facilities, filed a putative class action against Total Containment (TCI) arising out of the manufacture, sale and installation of allegedly defective gas station piping systems. May’s Distributing Co. Inc.

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

Sprint Nextel Class Action Defense Cases—State Court Approves $57.5 Million Class Action Settlement Resolving Class Action Arising Out Of Recombination Of Its Tracking Stocks In 2004

The Kansas City Star reports that a state court judge granted final approval today to a class action settlement that “resolves a class-action lawsuit against Sprint Nextel Corp. over the recombination of its tracking stocks in 2004.” Johnson County District Judge Kevin Moriarty gave final approval to the settlement, which requires Sprint Nextel pay $57.5 million. The court also awarded class action counsel about $18 million in attorney fees and costs, but ordered further that about $1.

Class Actions In The News Uncategorized

Class Action Defense Cases-John v. National Security: Second Circuit Reverses District Court Approval Of Class Action Settlement Holding Lower Court Lacked Jurisdiction Over Class Action Claims For Unregistered Copyrights

Copyright Act Section 411(a) Limits Federal Court Jurisdiction to Registered Works and District Court Lacked Jurisdiction to Approve Class Action Settlement that Included Unregistered Copyrights Second Circuit Holds

Plaintiffs filed a class action on behalf of a class that consisted primarily “of freelance writers who contracted with publishers to author the works for publication in print media, and retained the copyrights in those works,” but whose work had been reproduced without their consent on various electronic databases. In re Literary Works In Electronic Databases Copyright Litig., ___ F. 3d ___ (2d Cir. November 29, 2007) [Slip Opn., at 3]. The legal foundation of the class action rested on _New York Times Co. v. Tasini_, 533 U.S. 483, 488 (2001), which “held that § 201(c) of the Copyright Act does not permit publishers to reproduce freelance works electronically when they lack specific authorization to do so.” _Id._, at 4. Essentially, _Tasini_ requires publishers obtain a separate license to reproduce written works electronically. Defense counsel argued, however, relying on section 411(a) of the Copyright Act, that the district court lacked jurisdiction over the class action because putative members of the class action generally failed to register their copyrights. _Id._, at 5. The Circuit Court noted at page 3 that “The overwhelming majority of claims within the certified class arise from the infringement of unregistered copyrights.” Nonetheless, based on _Tasini_ the district court ordered the parties to mediation, and after three years a settlement was reached, _id._, at 6. The district court eventually approved the class action settlement, and several objectors appealed. _Id._, at 7-8. The Second Circuit reversed, holding that the district court lacked jurisdiction to approve the settlement.

We do not here discuss the details of the class action allegations or the terms of the class action settlement. For present purposes, it is sufficient to note that class was defined so as to include works that had not been registered, In re Literary Works, at 6, and that defense counsel argued “that this litigation possessed scant settlement value because the District Court could never certify the vast majority of the claims for inclusion in any proposed class” because section 411(a) of the Copyright Act provides that “no action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title,” id., at 5 (quoting 17 U.S.C. § 411(a)). Defense counsel introduced survey evidence suggesting that less than one percent of the works had been registered; thus, according to the defense the jurisdictional defect exited as to “more than 99 percent of the claims at issue.” Id., at 5-6. Plaintiffs’ lawyers did not concede the precise number at issue, but admitted that “the large majority of ‘subject works’ have not been registered with the U.S. Copyright Office.” Id., at 6. “The District Court never considered whether it had jurisdiction to certify a class consisting mostly of claims arising from unregistered copyrights, or to approve a settlement resolving those claims.” Id., at 8.

Certification of Class Actions Class Action Court Decisions Uncategorized

CAFA Class Action Defense Cases-Smith v. Nationwide: Sixth Circuit Affirms Applicability Of CAFA To Class Action Complaint And Affirms Order Remanding Class Action To State Court Because Plaintiff Disclaimed Damages Over $5 Million

Amendment to Complaint Adding Class Action Allegations “Commences” Action within Meaning of Class Action Fairness Act (CAFA) but Plaintiff may Disclaim Damages in Order to Defeat Federal Court Jurisdiction and Defense Failed to Establish Requisite Amount in Controversy to Satisfy CAFA Removal Jurisdiction Sixth Circuit Holds

In 2004, plaintiff filed an individual lawsuit (not a class action) in Tennessee state court against his automobile insurance carrier for failing to pay for the post-repair loss of value he suffered – that is, alleging that when the insurer pays for repairs to the vehicle, it is further “obligated to restore vehicles to their prior appearance, function and value” and breaches this alleged duty “by not assessing the vehicle after it [is] repaired, not informing Plaintiff of any lost value following such an assessment, and failing to pay the post-repair loss of value unless Plaintiff demands and proves loss of value.” Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F. 3d 401, 403 (6th Cir. 2007). Plaintiff amended the complaint so as to assert class action allegations in September 2006, and limited recovery on behalf of individual insureds to $74,999, and on behalf of the class to $4,999,999. Id. Defense attorneys removed the class action complaint to federal court under the Class Action Fairness Act of 205 (CAFA), but the district court granted plaintiff’s motion to remand the class action to state court. Id., at 402-03. Defense counsel appealed this order pursuant to 28 U.S.C. § 1453(c)(1), id., at 404, and the Sixth Circuit affirmed.

The Sixth Circuit began its analysis by employing the majority rule that CAFA does not alter the defendant’s burden of establishing federal court jurisdiction. Smith, at 404-05. It then turned to the question of whether CAFA applies to this class action, given that the original complaint was filed in 2004 but the class action allegations were not added until 2006. Id., at 405. The Circuit Court held that under Tennessee law the class action was “commenced” after the effective date of CAFA because “Defendant was neither afforded adequate notice of the generic identity of the proposed class nor provided adequate notice of claims of all plaintiffs who might someday fall within a putative class by virtue of [the] original complaint.” Id., at 406. Accordingly, the Sixth Circuit resolved the threshold inquiry by holding that defendant’s notice of removal was timely, id., at 406-07.

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

Class Action Defense Cases-In re Literary Works: Second Circuit Rejects Ethics Committee Recommendation For Recusal From Hearing Class Action Settlement Appeal Based On Judges Membership In Class Action

Judge Who Learns He is Member of Class Action need not Recuse Himself from Hearing Appeal of Class Action Settlement if Financial Interest is Small and He Promptly Divests Himself of that Interest Second Circuit Holds

Prior to hearing oral argument in an appeal from a class action settlement, but after the three-judge panel had completed a substantial amount of work in preparing for oral argument, the Second Circuit panel learned that two of the judges may be members of the class action. In re Literary Works in Electronic Databases Copyright Litig., ___ F. 3d ___ (2d Cir. November 29, 2007) [Slip Opn., at 2 and n.1]. The Circuit Court requested that the Committee on Codes of Conduct of the Judicial Conference opine as to whether the panel should recuse itself from hearing the appeal; by letter dated March 22, 2007, the Committee concluded that recusal was required. _Id._ The Panel advised the Committee of additional facts not previously known

A class action was filed “on behalf of freelance authors whose work has been reproduced without their express consent on a variety of electronic databases, including but not limited to LexisNexis and Westlaw.” Literary Works, at 4. The class action was certified and ultimately settled. Notice of the class action settlement was given to class members by mail and publication, and required members of the class action submit proofs of claim by September 30, 2005. Id. The class action settlement received final approval on September 27, 2005, id., and on October 21, 2005, several of the class members who had objected to the settlement filed an appeal, id., at 5. Months after the claims period had expired, the three-judge panel received the briefing on the appeal and in March 2007, “after extensive pre-argument preparation,” two of the judges learned that they may be members of the class because “there was a high probability that we held copyrights in works, such as law review articles and speeches, reproduced on defendants’ databases.” Id. At oral argument, the panel members disclaimed any financial interest in the settlement; no one advised the Panel that the claims period already had expired so they “were at that point ineligible to recover anything in the class action in any event.” Id.

Class Action Court Decisions Uncategorized

New Labor Law Class Action Lawsuits Drop In Weekly List Of Class Actions Filed In California State And Federal Courts But Still Top Categories Of New Class Action Cases

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 the time period of November 30 – December 6, 2007, during which time 52 new class action lawsuits were filed.

Class Actions In The News Uncategorized

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

Judicial Panel Grants Plaintiff Request, Over Defense Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Agrees With Defense Request to Transfer Class Actions to Eastern District of Pennsylvania Two class action lawsuits (followed by 28 potential tag-along class actions) were filed against various defendants, including SmithKlineBeecham Corp., arising out of the manufacture and sale of certain diabetes drugs that allegedly caused increased risk of heart attack and other injuries.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Arbitration Class Action Defense Cases-Skirchak v. Dynamics Research: First Circuit Holds Class Action Waiver In Arbitration Clause Unconscionable And Thus Unenforceable In FLSA Class Action

Based on the Specific Facts Presented by this Class Action Case, the District Court Properly Compelled Arbitration of Plaintiffs’ Fair Labor Standards Act and State Law Equivalent Class Action Claims but Properly Found that the Class Action Waiver Clauses in the Employer’s Dispute Resolution Program were Unconscionable First Circuit Holds

Plaintiffs filed a class action lawsuit against their former employer, Dynamics Research, alleging violations of the federal Fair Labor Standards Act (FLSA) and the Massachusetts Minimum Fair Wage Law. Skirchak v. Dynamics Research Corp., ___ F. 3d ___, 2007 WL 4098823, *1 (1st Cir. November 19, 2007). The class action complaint followed a complaint by Skirchak with the U.S. Department of Labor that resulted in an agreement by the company to pay back $75,000 to employees and to change its practices, _id._ Plaintiffs’ class action alleged that Dynamics misclassified employees as exempt in order to avoid paying them overtime and improperly made partial-day deductions from employee paid leave balances, and sought damages beyond those recovered by the DOL. _Id._ Defense attorneys moved to dismiss the complaint and compel arbitration pursuant to the terms of a Dispute Resolution Program that required arbitration of all disputes and prohibited class action claims. _Id._, at *2. The district court granted the defense motion to compel arbitration, but held that class-wide relief could be pursued therein because the class action waiver was unconscionable under Massachusetts state law, _id._ Our prior article discussing the district court opinion may be found here. Both sides appealed: the defense challenged the striking of the class action waiver; plaintiffs challenged the order compelling arbitration. _Id._ Plaintiffs subsequently agreed to arbitration but insisted on the right to pursue a class action because the class action waiver was unenforceable, _id._ The First Circuit affirmed.

Preliminarily, it bears noting that the First Circuit “[did] not reach the argument that waivers of class actions themselves violate either the FLSA or public policy.” Skirchak, at *1. Further, whether plaintiffs will succeed in obtaining class action certification was left to the arbitrator, id. The Circuit Court addressed only (1) whether the arbitration clause was enforceable, and (2) whether the class action waiver was enforceable. The First Circuit began by summarizing the Dispute Resolution Program and the notice provided to employees of its terms. See id., at *2-*3. In pertinent part, the Circuit Court observed that if an employee “read only the e-mail, the descriptive memorandum and the fifteen-page Program description” concerning the Program, she “would not know of the class action waiver.” Id., at *3. The class action waiver clauses were contained only in the Appendices to the Program, id., but even if an employee found the class action waiver provisions he “would likely still be confused” because of apparent inconsistencies in the documentation, id., at *4. Finally, the First Circuit noted that the adopted and implemented by e-mail notification to employees sent shortly before a holiday that deemed employees to have consented to the class action waivers if they returned to work following the holiday. Id., at *5.

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

Intel Class Action Defense Cases-Barbara’s Sales v. Intel: Illinois Supreme Court Applies Illinois Law To Fraud Class Action And Reverses Certification Of Class Action Against Intel

Trial Court Properly Held Illinois Law Applied to Class Action Certification Motion but Improperly Certified Statewide Fraud Class Action Against Intel because Company’s Allegedly Deceptive Statements were not Actionable Illinois Supreme Court Holds

Purchasers of computers run by Intel’s Pentium 4 processors filed a putative nationwide class action in Illinois state court alleging claims for unfair business practices under California law and Illinois law based on the allegation that, contrary to its billion-dollar marketing campaign that “4 is better than 3,” the Pentium 4 performed no better than the Pentium III. Barbara’s Sales, Inc. v. Intel Corp., 879 N.E.2d 910 (Ill. 2007) [Slip Opn., at 1-2]. The class action complaint essentially alleged that the Pentium 4 was not “better” than its predecessor and did not necessarily make programs run faster than its predecessor, id., at 5-6. Defense attorneys opposed class certification in part on the grounds that Illinois law applied and further argued that the decision to purchaser a Pentium 4 was not made “simply based on the number 4 being higher than the number 3.” Id., at 7. The parties’ experts disagreed on whether Pentium 4 outperformed the Pentium III, id., at 6-8. The trial court agreed that Illinois law applied and denied class certification on the California-law claims. The trial court also found that Illinois law could not be applied to a nationwide class action and so certified only a statewide class under the Illinois Consumer Fraud and Deceptive Business Practices Act claim, id., at 8. Our previous article summarizing the July 2006 Illinois appellate court opinion that had reversed the trial court statewide class certification order – holding that California law applies and a nationwide class action should have been certified – may be found here. Defense attorneys appealed to the Illinois Supreme Court, which held that Illinois law applied and that class action treatment should have been denied.

The Supreme Court explained that it certified review only of (1) whether Illinois or California law applied to the nationwide class action complaint, and (2) whether the lawsuit should have been certified as a class action. Intel, at 10. The class action sought relief on behalf of ‘a nationwide class of consumers who have made purchases and received representations in all 50 states and the District of Columbia,” and the Illinois High Court recognized “substantial differences” among the fraud laws of the 50 states, id., at 11. As “the masters of their complaint,” however, plaintiffs limited the class action to “relief only under Illinois or California,” id. After a detailed analysis, see id., at 11-20, the Supreme Court concluded that Illinois law applied, id., at 20-21. The Court noted also that plaintiffs did not argue that Illinois law should be applied to a nationwide class, so the only remaining inquiry was whether a statewide class action should have been certified, id., at 21.

Certification of Class Actions Class Action Court Decisions Uncategorized