New Class Action Lawsuits Alleging Labor Law Violations Retain Top Spot Among Class Action Cases Filed This Past Week In California State And Federal Courts

To assist class action defense attorneys anticipate the cases against which they may 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

Class Action Defense Cases-In re Allianz Life: Judicial Panel On Multidistrict Litigation (MDL) Denies Plaintiff’s Motion To Centralize Class Action Litigation Agreeing With Defense That Class Actions Need Not Be Coordinated

Judicial Panel Denies Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 Because Class Action Certification Motions had been Granted in Four of the Five Cases and Fact Discovery Completed in Three of the Class Actions Five class action lawsuits were filed against Allianz Life Insurance of North America challenging its deferred annuity marketing and sales practices. In re Allianz Life Ins. Co. of N. Am.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases-Central States v. Merck-Medco: Second Circuit Reverses Approval Of Class Action Settlement Because Conflict Of Interests Exists Between Class Representatives And Certain Members Of Class

Class Action Certification should have Included Subclass to Protect the Interests of Class Members that Objected to Distribution of Settlement Proceeds under Terms of Class Action Settlement Second Circuit Holds

Plaintiffs, beneficiaries and trustees of employee welfare benefit plans, filed a class action lawsuit against a pharmaceutical benefits manager (PBM) and its former parent company under ERISA (Employee Retirement Income Security Act) for breach of fiduciary duty; the class action complaint alleged that the PBM “fail[ed] to act in their best interest in its capacity as a pharmaceutical benefits manager for the plans.” Central States S.E. & S.W. Areas Health & Welf. Fund v. Merck-Medco Managed Care, L.L.C., ___ F. 3d ___, 2007 WL 3033489, *1 (2d Cir. October 4, 2007). Plaintiff and defense attorneys negotiated a class action settlement that was approved by the district court, _id._ As part of that process, the district court denied a motion by CareFirst, a third-party administrator (TPA), to intervene in the class action lawsuit. Following approval of the settlement, CareFirst and other objectors appealed challenging the district court orders “(i) certifying the instant action as a class action pursuant to Fed.R.Civ.P. 23(a) and (b)(3); (ii) approving the amended Settlement Agreement as fair, reasonable, and adequate; (iii) awarding legal fees and disbursements; and (iv) severing cases in which the ERISA plans opted out of the settlement.” _Id._ The Second Circuit remanded the matter for a district court determination of whether the class representatives had standing to prosecute the ERISA claims in the class action and to enter into the class action settlement; the lower court found that standing did exist. _Id._ The Second Circuit then reassumed jurisdiction over the appeal and, _inter alia_, affirmed the district court finding that the TPA had standing but held the lower court erred in failing to certify a subclass or consider arguments directed at protecting the interests of that subclass. As the Circuit Court summarized, “we conclude that the court erred both in certifying the class without properly considering the conflicts of interest among members of the class and in approving the Settlement Agreement.” _Id._

In broad terms, the class representatives are trustees and beneficiaries of employee welfare benefit plans contracted directly or indirectly with Medco, a PBM, for pharmacy benefit management services. Merck-Medco, at *2. __The PBM had authority, in its discretion, to “manage certain aspects of the Plans for the primary purpose of containing pharmaceutical costs.” According to the class action complaint, the PBM breached fiduciary duties to the plans under ERISA by favoring products manufactured by its parent company, Merck, by “interchanging lower cost competing drugs with relatively higher cost Merck drugs,” and by entering into agreements with pharmaceutical manufacturers, including Merck, that were financially beneficial to Medco but more expensive for the Plans. Id. The Second Circuit described the differences in the relationship of various plans to the PBM at page *2 as follows:

By way of an indirect contract, insured Plans paid set premiums to their insurance companies in exchange for full payment of their beneficiaries’ prescription drugs, and the insurance companies in turn contracted with Medco for plan management services. By contrast, capitated Plans paid set premiums directly to Medco in exchange for full payment of their beneficiaries’ drugs. In the case of both the insured and capitated Plans, respectively, the insurer or Medco bore the risk of higher drug cost in paying each beneficiary’s claims for prescription medications. Plans that were self-funded, however, did not pay set premiums to either an insurer or to Medco and instead paid the entire cost of the prescription drugs directly to Medco as PBM or through a third-party administrator for a fee. Accordingly, self-funded Plans alone carried the direct risk of higher drug cost.

(Italics added.)

Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re Vioxx: Louisiana Federal Court Examines E-Discovery Attorney-Client Privilege Issues Arising In Class Action And Other Complex Case Litigation

Class Action Discovery Disputes Require Creative Approaches to Resolve and Use of Special Master to Resolve Class Action Discovery Issues for Louisiana Federal Court

Numerous class action and individual lawsuits have been filed against Merck arising out of its manufacture and sale of Vioxx, and the Judicial Panel on Multidistrict Litigation coordinated the federal cases for pretrial purposes under 28 U.S.C. § 1407 in the Eastern District of Louisiana. In re Vioxx Products Liab. Litig., 501 F.Supp.2d 789, 790 (E.D. La. 2007). The district court “appointed committees of counsel to represent the parties” and discovery proceeded “on two parallel tracks” – one by the plaintiff and defense Steering Committees, “charged with initiating, conducting, and coordinating all non-case-specific discovery,” and one that focused on the on “case-specific discovery in thousands of individual cases” in which “every plaintiff who alleges a cardiovascular injury” must provide Merck with certain information, following which Merck is required to disclose case-specific information concerning contacts it had with plaintiffs’ doctors “and any other relevant information Merck may have about individual plaintiffs.” Id., at 790-91. Defense attorneys refused to produce certain information based on the attorney-client privilege, leading to the court’s in camera review of 81 boxes containing 30,000 documents totaling 500,000 pages. Id., at 791. The court opinion we summarize in this article involves a discovery dispute over those documents. In the words of the district court, “This discovery dispute has dragged on for over a year and at times has seemed hopelessly endless. Although Merck has produced over two million documents in this MDL, the company has also asserted attorney-client privilege as to approximately 30,000 documents which it contends need not be produced. ” Id., at 789.

We do not here summarize the extensive details of the discovery process, see In re Vioxx, at 790 et seq., or the district court’s extensive discussion of the attorney-client privilege, id., at 795 et seq. We summarize the following. “The majority of the withheld documents are print-outs of electronic communications, primarily internal company e-mails and attachments.” Id., at 789. Merck sought appellate review of a discovery order, and while the Fifth Circuit denied review it instructed the district court to devise a better way of dealing with discovery disputes, id., at 791. In an effort to implement the Fifth Circuit’s recommendation, Merck gave the court 10 boxes containing roughly 2,000 documents that were “representative of all the documents in question.” Id. In response, the court appointed a special master/expert to review the sampling of the documents in question and provide a recommendation as to the privilege asserted by defense counsel.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Microsoft Class Action Defense Cases- Shersher v. Superior Court: California Court Holds Plaintiffs May Seek Restitution In False Representation UCL Class Action Against Microsoft Even Without Direct Contract With Company

In Class Action/Representative Action Against Microsoft, Claim for Restitution under California’s Unfair Competition Law (UCL) is Available even Where Plaintiff did not Purchase Falsely-Advertised Product Directly from Microsoft California Court Holds

Plaintiff filed a putative class action in California state court against Microsoft for violations of California’ unfair competition law (UCL) alleging that “wireless routers, adapters, and other similar products manufactured by Microsoft” were advertised as capable of delivering transfer speeds of “11Mbps” and “54 Mbps” but that “these numbers were ‘not based on the actual transmission rates of these wireless products and therefore are … false, deceptive and misleading.’” Shersher v. Superior Court, 154 Cal.App.4th 1491, 1494-95 (Cal.App. 2007). The class action complaint also alleged claims brought in a representative capacity, and contained causes of action for breach of express warranty, violation of the state’s Consumer Legal Remedies Act (CLRA), violation of the UCL, and false advertising, and sought inter alia restitution. Id., at 1495. Defense attorneys moved to strike from the class action complaint the prayer for restitution and any reference to restitution: “The motion was predicated on a single sentence from [Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1149]: ‘Any award that plaintiff would recover from defendants would not be restitutionary as it would not replace any money or property that defendants took directly from plaintiff.’” Id. Defense attorneys argued that the word “directly” precluded a claim for restitution because neither plaintiff nor other members of the putative class action purchased products “directly” from Microsoft, id., at 1495-96. The trial court granted the defense motion, but the Court of Appeal granted plaintiff’s petition for writ of mandate and reversed.

The California appellate court explained that relief under the UCL is limited to injunction and restitution, which in this context means “the return of money to those persons from whom it was taken or who had an ownership interest in it.” Shersher, at 1497, quoting Madrid v. Perot Systems Corp., 130 Cal.App.4th 440, 455 (Cal.App. 2005).

Class Action Court Decisions Uncategorized

TILA/Venue Class Action Defense Cases-Kay v. National Security: Ohio Federal Court Grants Defense Motion To Transfer Venue Of Truth-In-Lending-Act (TILA) Class Action To South Carolina

Class Action Complaint Focused on Defense Conduct in South Carolina and Implicates South Carolina Residents and Substantive Law thus Supporting Defense Motion to Change Venue of Class Action Ohio Federal Court Holds

Plaintiff filed in Ohio federal court a class action lawsuit against his lender, National City Mortgage, alleging that it violated the federal Truth in Lending Act (TILA) because it “charged broker fees and/or points on his loans, as well as on those of other putative class members, without treating such fees as prepaid finance charges as required by the TILA.” Kay v. National City Mortgage Co., 494 F.Supp.2d 845, 848 (S.D. Ohio 2007). Plaintiff was a resident of South Carolina, and his loan was secured by real property in South Carolina, and focused on broker fees paid to The Kelly Mortgage Group, a mortgage broker based in South Carolina. Id. Defense attorneys counterclaimed against plaintiff for breach of contract (failure to pay his loan) and for judicial foreclosure, id., at 848-49. The defense moved to change venue to South Carolina not because venue was improper in Ohio, where defendant was headquartered, but because it “is not the most convenient forum for resolution of this matter,” id., at 849. The district court granted the defense motion and transferred the class action to South Carolina.

The federal court first noted that South Carolina had subject matter jurisdiction over the dispute, and that venue would be proper in South Carolina because “all of the loan contracts in the case sub judice were negotiated in South Carolina and are secured by South Carolina property.” Kay, at 849. Further, by bringing the motion to change venue the defendant “appears to concede that it would be subject to process issuing out of the court in South Carolina.” Id. The question, then, is whether transfer is warranted for “the convenience of parties and witnesses” and “in the interest of justice,” id., for which the defense bears the burden of proof, id., at 849-50.

Class Action Court Decisions Uncategorized

False Advertising Lawsuit Against Sears, Roebuck Granted Class Action Status by District of Columbia Federal Court

District of Columbia Federal Court Grants Class Action Certification in Class Action Alleging Sears Misrepresented that its Kenmore-Brand Clothes Dryers had Stainless Steel Drums Bloomberg News reports today that District of Columbia District Court Judge Harry Leinenweber has granted plaintiff’s motion for class action treatment in a lawsuit against Sears, Roebuck. The class action complaint alleges that Sears falsely advertised that its Kenmore clothes dryers were made with stainless steel drums.

Class Actions In The News Uncategorized

Labor Law Class Action Filings Decline But New Employment Law Class Actions Still Hold Top Spot Among New Class Action Lawsuits Filed In California State And Federal Courts This Past Week

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 relevant timeframe. During the time period covered by this report (October 26 – November 1, 2007), there were 45 new class action lawsuits filed in these California state and federal courts, and once again new labor law class action lawsuits easily headed the list with 17 new class action complaints alleging employment law claims, or 38% of the new class action filings for the week.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re Schering-Plough: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff’s Unopposed Motion To Centralize Class Action Litigation And Selects District of New Jersey As Transferee Court

Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Plaintiff’s Request to Transfer Class Actions to District of Delaware Five class action lawsuits were filed in three federal district courts (two in Massachusetts and New Jersey, and one in Florida) against Schering-Plough alleging that it “improperly engaged in the promotion of certain prescription medications for off-label purposes.” In re Schering Marketing & Sales Prac.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Comcast Class Action Defense Cases-Anderson v. Comcast: First Circuit Upholds Comcast Arbitration Clause But Severs Class Action Waiver and Holds Severability of Class Action Waiver Saves Arbitration Agreement from Unconscionability Claim

First Circuit Leaves Validity of Class Action Waiver in Arbitration Clause to Arbitrator, Holds Bar on Multiple Damages Invalid and Severs from Arbitration Agreement, Holds Bar on Recovery of Attorney Fees Invalid and Severs from Agreement, and Invalidates One-Year Limitations Period on Claims Against Comcast and Severs from Agreement

Plaintiff filed a putative class action lawsuit in Massachusetts state court against his telecommunications provider, Comcast, for violations of the state’s unfair business practices statute and other tort claims based on the allegation that it charged customers a monthly to lease a cable converter box and remote control for television service even if the customer already owned a cable-ready television. Anderson v. Comcast Corp., 500 F.3d 66, 68(1st Cir. 2007). Defense attorneys removed the class action to federal court based on diversity jurisdiction, and then moved to compel arbitration under an arbitration clause the prohibited class actions as well as “multiple or punitive damages,” id., at 69. Among the arbitration provisions central to the appeal were the following: (1) a class action waiver provision, (2) a requirement that any claims against Comcast be brought within one year, (3) a requirement that consumers pay their own costs of arbitration, including attorney’s fees, (4) a bar on any award in arbitration of multiple or punitive damages, and (5) a severance clause. Id. The district court agreed with defense attorneys that plaintiff must arbitrate his claims but held that he could pursue a class action in arbitration, and while the district court granted the motion to compel arbitration and dismissed the class action complaint, id., at 69-70, it severed several other portions of the arbitration agreement, such as the requirement that each side bear its own costs – including attorney and expert fees, id., at 69 n.5. The First Circuit largely upheld the district court’s order, holding in part that the validity of the class action waiver provision must be addressed first by the arbitrator.

Plaintiff’s class action complaint alleged that Comcast violated the Massachusetts Consumer Protection Act and various common law torts. Anderson, at 68. The class action also sought treble damages, punitive damages and attorney fees, id., at 69. Defense attorneys moved to compel arbitration under provisions of its standard agreement with subscribers entitled, “Notice to Customers Regarding Policies, Complaint Procedures & Dispute Resolution.” Id., at 68 n.1. The district court applied the First Circuit’s recent decision in Kristian v. Comcast, Corp., 446 F.3d 25 (1st Cir. 2006) – summarizedhere – and granted the motion to compel, but “only after severing provisions in the arbitration agreement prohibiting attorney’s fees, double or treble damages and a class action remedy in the arbitral forum.” Anderson, at 68. The district court also ruled that “the arbitrator will have the power to determine the validity and applicability of the agreement’s one-year statute of limitations.” Id. Both plaintiff and defense appealed the district court’s ruling.

The First Circuit began its analysis by observing that it considered the appeal “against the backdrop of a strong pro-arbitration policy expressed by Congress and repeatedly upheld by the courts.” Anderson, at 70. With respect to the class action bar, the Circuit Court held that there was no conflict between Massachusetts state law and the class action waiver provision, id., at 71. The First Circuit distinguished its holding in Kristian, which invalidated a Comcast class action wavier in an arbitration clause, because it found a conflict between such a waiver and the “nature and purposes of antitrust law”; here, by contrast, the class action bar, by its terms, applies “unless your state’s laws provide otherwise,” and the consumer law statute in question expressly permits class action lawsuits be filed to enforce it. Id., at 72. The Court did not hold that the exception to class action litigation applied, however, concluding that the question of arbitrability must be addressed first by the arbitrator, id.

Arbitration Class Action Court Decisions Uncategorized