New Labor Law Class Action Complaints Regain Sole Possession Of Top Spot In Weekly Class Action Filings In California State And Federal Courts

To assist defense attorneys in California predict the type of cases against which they may have to defend, 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.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re C.H. Robinson: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff’s Motion To Centralize Class Action Litigation And Selects District of Minnesota As Transferee Court

Judicial Panel Grants Request, Over Defense Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Class Actions to District of Minnesota, but Panel Refuses Joint Request to Circumscribe Authority of Transferee Court Hundreds of lawsuits, many of them putative class actions, were filed against C.H. Robinson Worldwide alleging failure to pay overtime in violation of the federal Fair Labor Standards Act (FLSA). In re C.

Class Action Court Decisions Multidistrict Litigation Uncategorized

MARK YOUR CALENDARS – CLASS ACTION DEFENSE CONFERENCE COMING TO NEW YORK

The American Conference Institute is sponsoring a two-day seminar on “Defending Fraud Claims in Consumer Class Actions.” The conference will be held in New York on October 15 and 16, 2007. The details of the conference, its location and its topics may be found here. More information about the American Conference Institute may be found at its website: www.americanconference.com.

Class Actions In The News Uncategorized

UCL Class Action Defense Cases- Akkerman v. Mecta Corp.: California Court Upholds Denial Of Class Action Treatment For Class Action Complaint Premised On False Advertising/Unfair Competition Law (UCL) Violations

Putative Class Action Alleging False Advertising Against Manufacturer did not Warrant Class Action Treatment Because Proposed Class was Overly Broad, not Readily Ascertainable, Plaintiff was not an Adequate Class Representative, Commonality was not Shown as Individual Issues would Predominate over Common Questions, and Class Action Device was not Superior Method of Resolving Dispute California Appellate Court Holds

Plaintiff filed a putative class action in California state court against Mecta Corporation, the manufacturer of an electro-convulsive therapy (ECT) machine, alleging violations of the state’s Unfair Competition Law (UCL) based on false advertising. Akkerman v. Mecta Corp., Inc., 152 Cal.App.4th 1094, 62 Cal.Rptr.3d 39, 42 (Cal.App. 2007). Plaintiff filed a motion to certify the litigation as a class action; defense attorneys argued that class action treatment was inappropriate for a litany of reasons. The trial court agreed with defense attorneys and refused to certify a class action finding that plaintiff “did not establish the elements for class certification; did not adequately define an ascertainable class; did not show that he could represent it; and did not demonstrate a sufficient community of interest among the class members.” Id. Further, class action treatment was inappropriate because “[t]he factual issues pertaining to each class member’s tort restitution claim predominate over common questions of law and fact for the class.” Id. The California Court of Appeal affirmed.

In 1999, plaintiff began receiving ECT treatments to address severe depression; plaintiff filed a putative class action against Mecta in federal court claiming that the electric shocks resulted in memory loss and impaired cognitive functioning. Akkerman, at 42. The class action claims alleged violations of California’s UCL, and the federal court remanded the class action causes of action to state court, id., at 43. Ultimately, the federal court ruled in favor of the defense on the remaining causes of action, id. Plaintiff also filed a state-court lawsuit against his doctor, id., at 42-43, but that, too, ultimately resulted in judgment for the defense, id., at 43. What remained, then, was plaintiff’s state-court UCL class action complaint against Mecta, which was premised on the allegations that his doctor “falsely represented” that the ECT treatments were “not harmful” based on “false information provided to him by Mecta.” Id., at 43-44.

Plaintiff’s motion for class certification defined the class as “all members of the public who have received shock treatment in California from MECTA devices after September of 1997.” Akkerman, at 44. The trial court agreed with the defense that class action treatment was not warranted, and “denied the motion ‘based on the inability to determine the class, and for failure to show other elements necessary for class certification.’” Id. Plaintiff then filed a motion asking the trial court to order hospitals that were not parties to the lawsuit to notify their patients that had received ECT treatments of the putative class action: the trial court initially granted the motion, but reversed that decision after an appellate court issued an alternative writ of mandate, id. Plaintiff appealed, arguing that the trial court erred in refusing to certify a class action and in refusing to order hospitals to give the pre-certification notice he requested. Each of these claims is reviewed for abuse of discretion, id.

Certification of Class Actions Class Action Court Decisions Uncategorized

FedEx Settles Class Action – California Federal Court Gives Final Approval To Settlement Of Class Action Alleging Race Discrimination

FedEx reports that on August 14, 2007, Judge Susan Illston of the U.S. District Court for the Northern District of California gave final approval to a class action settlement in Satchell v. FedEx Express, a class action that alleged racial discrimination by the company. In part, the terms of the class action settlement require FedEx discontinue its use of a Basic Skills Test (BST), which the company believed necessary to “ensure that customer-facing employees possess the basic skills required for successful job performance”; the class action alleged that the BST acted as a barrier to minority advancement in the company.

Class Actions In The News Uncategorized

RESPA Class Action Defense Cases-Pierce v. NovaStar: Washington Federal Court Rejects Defense Claim In RESPA Class Action That NovaStar Purchased Loans On Secondary Market But Finds Triable Issues As To Whether Lender Violated RESPA

District Court Grants Plaintiffs’ Motion for Partial Summary Judgment as to Whether in Connection with Plaintiffs’ Loans NovaStar Fell Within the Bona Fide Secondary Market Transaction Exemption Afforded by RESPA (Real Estate Settlement Procedures Act), but Triable Issues of Fact as to the Adequacy of NovaStar’s Disclosures of Yield Spread Premiums (YSPs) Precluded Summary Judgment on RESPA Claims

Plaintiffs filed a class action against NovaStar Mortgage alleging that it failed to adequately disclose yield spread premiums (YSPs) – payments made to mortgage brokers by lenders “as an incentive to induce borrowers to enter into mortgages with higher interest rates” – on its good faith estimates, in violation of Washington’s Consumer Protection Act (CPA). Pierce v. NovaStar Mortgage, Inc., 489 F.Supp.2d 1206, 1208 (W.D. Wash. 2007). The district court certified the litigation as a class action, id., at 1208-09. Plaintiffs’ lawyer filed a motion for partial summary judgment on the ground that NovaStar’s conduct was “per se unfair or deceptive under the CPA” and thus violated the Consumer Loan Act (CLA), id., at 1209; defense attorneys opposed the motion, arguing that it purchased the loans “in a bona fide secondary market transaction,” id., at 1210. The district court rejected the defense argument as to whether the disclosures were required, but agreed that triable issues of fact existed that precluded summary judgment.

The class action complaint alleged that in May 2004 plaintiff Larry Brown sought to refinance his home loan through NovaStar Home Mortgage, and Brown maintained that he was “not aware of any distinction between NovaStar Home and NovaStar Mortgage or that NovaStar Mortgage agreed to pay a fee to NovaStar Home” but that the payment of that fee “significantly increased interest rate on his loan.” Pierce, at 1209. NovaStar Mortgage’s “Loan Approval Summary” to NovaStar Home described the latter as a “customer,” stated the initial interest rate on Brown’s adjustable rate loan would be 8.2%, and discloses that NovaStar Mortgage would pay NovaStar Home a broker fee of 3% of the loan amount. Id. This summary also revealed that the interest rate on the loan in the absence of the YSP would have been 6.45%, id. The class action alleged that Brown never received a good faith estimate; an allegation NovaStar disputed. Id., at 1209-10. Brown signed the promissory note on May 28, 2004, and that same date NovaStar Home transferred the loan to NovaStar Mortgage through an allonge. Id., at 1209. The loan was funded through a “UBS warehouse loan,” and then transferred to a Wachovia Bank line of credit, id., at 1210. The loan documents provided to Brown “[did] not clearly distinguish between NovaStar Home and NovaStar Mortgage,” id.

Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

Class Action Defense Cases-Adams v. Southern Farm: Eleventh Circuit Holds Class Action Plaintiffs Bound By Settlement Of Prior Class Action Compelling Dismissal Of Class Action Complaint On Grounds Of Res Judicata

1999 Nationwide Class Action Settlement of Federal Court Class Action Challenging Insurer’s Marketing and Sales Practices of Life Insurance Policies was Entitled to Res Judicata Effect and thus Barred 2005 State Court Class Actions Against Insurer Eleventh Circuit Holds

A class action was filed against insurer Southern Farm in Georgia federal court culminating in a nationwide class action settlement in 1999, but in 2005 two new class action lawsuits were filed against Southern Farm, this time in Mississippi state court, presenting the issue of whether the new class actions were barred by res judicata. Adams v. Southern Farm Bureau Life Ins. Co., 493 F.3d 1276, 2007 WL 2119182, *1 (11th Cir. 2007). Defense attorneys moved to enjoin the new class actions from proceeding on the ground that they were barred by the Adams class action settlement, id., at *5; plaintiffs argued that notice afforded in the Adams class action was “constitutionally inadequate” and that the types of claims they asserted in the new class actions were different from those settled and released in the Adams class action id., at *6. The district court granted the defense motion, and the Eleventh Circuit affirmed.

In January 1998, Walter Adams filed a putative class action in Georgia federal court against insurer Southern Farm alleging fraudulent and deceptive practices in its marketing and sale of flexible premium and universal life insurance policies by “misrepresenting the benefits of the new policies; failing to provide an adequate explanation of concepts such as the policy’s ‘cash value’ and the ‘premium’ required by the policy; and ‘employing performance projections based on unreasonable explanations concerning interest rates and misrepresenting and/or omitting adequate explanation of the consequences of less favorable performance.’” Adams, at *1. The Adams class action eventually settled as a nationwide class, defined as “those persons and entities who currently own, or have owned, one or more flexible premium or universal life insurance policies [] issued between January 1, 1983 and March 24, 1999 by [Southern Farm] to replace other life insurance policies.” Id. Class notice was mailed via first class to the last known of address of 174,000 class members, a toll-free telephone number was established to answer questions about the class action, notice was published in USA Today, and information about the class action and the settlement was posted on the insurer’s website. Id.

The notice sent out in the Adams class action was a 48-page “Q & A”-type notice that disclosed that the Adams class action “involv[ed] claims about how flexible premium and universal life insurance policies have been sold and how those policies have performed” and, specifically, in a section entitled “Description of the Lawsuit,” that the Adams Class Action alleged Southern Farm had “made misrepresentations or omissions of fact in connection with the sale of flexible premium and universal life insurance policies,” including (1)”misleading policyowners to believe that only a single or fixed, limited number of out-of-pocket premium payments would be required to keep a policy in force, and that the promised death benefits and increasing or stable cash values would continue to exist, without the policymaker making any further out-of-pocket premium payments;” and (2) “misleading policy owners to believe that interest rates illustrated at the time the policies were sold to Class Members were reasonable, and that such rates were not likely to change, or would not change in an amount sufficient to cause the policies to perform differently than was represented at the time of sale.” Adams, at *2. The class notice described the two forms of relief provided to participants in the Adams class action settlement, and warned putative class members that they would be bound by the terms of the class action settlement unless they affirmatively opted out, and provided notice of the release and waiver of claims applicable to all participants in the class action settlement. Id., at *2-*3. The Adams class action settlement was approved in August 1999, with the district court retaining jurisdiction as to enforcement of the class action settlement. Id., at *4. Notice of final approval of the class action settlement was also provided to class members, id.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-In re WorldCom: Second Circuit Reverses Judgment In Favor Of Defense Holding That Class Action Lawsuits Tolled Statutes Of Limitation For Claims By Putative Class Members Who Filed Individual Actions

District Court Erred in Denying American Pipe Tolling to Individual Plaintiffs who had Filed Lawsuits Prior to Court Ruling on Class Certification Motion in Securities Class Action, because as Matter of First Impression Class Action Complaint Tolled Statute of Limitations even as to Claims by all Putative Class Members Regardless of Whether They had Filed Individual Lawsuits Second Circuit Holds

Hundreds of individual and class action lawsuits were filed in state and federal courts against WorldCom and various bond underwriters, each of which ultimately found their way to the United States District Court for the Southern District of New York. In re WorldCom Sec. Litig., 496 F.3d 245, 2007 WL 2127874, *1 (2d Cir. 2007). After the district court certified a class action, defense attorneys for certain bond underwriters moved to dismiss the individual actions on the ground that they were time-barred because they had been added as named defendants after the limitations period had expired, id. Plaintiffs argued that the limitations period was tolled as to later-named defendants even though they had filed individual actions prior to a court ruling on whether to certify a class action, id. The district court agreed with defense attorneys, ruling that the plaintiffs’ claims were not tolled. The Second Circuit reversed, holding that even though plaintiffs had filed their individual lawsuits prior to the district court’s ruling on class certification, their claims were tolled under American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), during the pendency of the class action litigation.

The district court summarized the facts underlying this litigation as follows: “For many years, WorldCom grew by acquisitions. By 1998, it had acquired more than sixty companies in transactions valued at over $70 billion…. In early 2000, however, its attempt to acquire Sprint collapsed. During this period of acquisition-driven expansion, WorldCom had used accounting devices to inflate its reported earnings. Senior WorldCom management instructed personnel in the company’s controller’s office on a quarterly basis to falsify WorldCom’s books to reduce WorldCom’s reported costs and thereby to increase its reported earnings. When the pace of acquisitions slowed, it added new strategies to disguise a decline in its revenues. In 2002, however, the scheme collapsed.” In re WorldCom, Inc. Sec. Litig., 294 F.Supp.2d 392, 400 (S.D.N.Y. 2003). In April 2002, the first class action lawsuit was filed against WorldCom, and a few months later, on June 25, “WorldCom admitted publicly that it had previously issued false and misleading financial statements” and that “it had overstated earnings and had falsely reported ordinary costs as capital expenditures.” In re WorldCom, 2007 WL 2127874 at *2. Soon after making these admissions WorldCom filed bankruptcy. Id. These admissions spawned dozens of securities class action lawsuits – transferred in August 2002 to the Southern District of New York by the Judicial Panel on Multidistrict Litigation – and hundreds of individual lawsuits. Id. Between July 2002 and October 2003, more than 100 pension funds filed individual lawsuits against WorldCom in state courts; the actions were ultimately removed to federal court under 28 U.S.C. § 1452(a) by virtue of WorldCom’s bankruptcy filing; in May 2003, these individual actions were consolidated with the class actions id.

A state-court class action was filed on April 21, 2003, in Alaska state court against several underwriters of WorldCom bonds; the class action was removed to the Southern District of New York in August 2003, and the following month, on September 24, 2003, the class action complaint was amended to name additional bond underwriters as defendants, among these the “Caboto defendants,” for violations of § 11 of the Securities Act but these allegations were “not based on fraud, but rather on negligence and strict liability for registration statements containing untrue statements of material fact.” In re WorldCom, 2007 WL at *3.

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

Class Action Defense Cases-Buell v. Direct General: Florida Federal Court Dismisses Class Action Complaint And Holds No Private Right Of Action Exists Under Florida Statutes Section 626.954(1)(z)

Defense Motion to Dismiss Class Action Granted because Florida State Law Prohibiting “Sliding” in Connection with Sale of Ancillary Insurance Products is a Regulatory Statute and does not Authorize a Private Right of Action to Support Class Action Against Insurer

Plaintiffs filed a putative class action lawsuit in Florida against Direct General Insurance alleging a violation of a Florida state law that prohibits the act or practice of “sliding” with respect to the sale of certain ancillary insurance products. Buell v. Direct General Ins. Agency, Inc., 488 F.Supp.2d 1215 (M.D. Fla. 2007). The underlying statute – Florida Statutes, § 626.954(1)(z) – is part of Florida’s statutory scheme concerning unfair insurance trade practices, id., at n.4. The district court granted a defense motion to dismiss the class action complaint, but ruled that while plaintiffs may not amend to allege a class action, the plaintiffs could amend to assert individual claims, id., at 1216. On plaintiffs’ motion for rehearing, the district court dismissed the class action with prejudice, concluding that the underlying statute did not give rise to private rights of action.

Following the district court’s May 1, 2007, entry of an order dismissing the third amended class action complaint without prejudice to plaintiffs filing individual claims within 10 days, plaintiffs moved the court to reconsider its ruling and permit them to file a fourth amended class action complaint. Buell, at 1216. Defense attorneys countered with a motion requesting that the court modify its order dismissing the class action complaint so as to bar the filing of individual claims, id. The defense motion was premised on its prior argument that the underlying Florida statute did not provide for private rights of action; the district court originally rejected this argument based on its interpretation of the Eleventh Circuit decision in Davis v. Travelers Indem. Co., 800 F.2d 1050 (11th Cir. 1986). Id. The basis for the new defense motion was that post-Davis appellate opinions by Florida state courts, including the Florida Supreme Court, “had undermined Davis to the extent that Davis no longer represented the law of Florida with regard to how a court determines whether an alleged statutory violation bestows a private right of action on an individual.” Id. After initially denying the motion, the district court reversed its position and explained at page 1217:

Class Action Court Decisions Uncategorized

15 U.S.C. § 78dd-3— Prohibited Foreign Trade Practices By Persons Other Than Issuers Or Domestic Concerns Under The Federal Private Securities Litigation Reform Act (PSLRA) Governing Individual And Class Action Lawsuits For Securities Fraud

As a service to class action defense attorneys who defend securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress described prohibited foreign trade practices by persons other than issuers or domestic concerns under the PSLRA in 15 U.S.C. § 78dd-3, which states:

§ 78dd–3. Prohibited foreign trade practices by persons other than issuers or domestic concerns

(a) Prohibition

It shall be unlawful for any person other than an issuer that is subject to section 78dd–1 of this title or a domestic concern (as defined in section 78dd–2 of this title), or for any officer, director, employee, or agent of such person or any stockholder thereof acting on behalf of such person, while in the territory of the United States, corruptly to make use of the mails or any means or instrumentality of interstate commerce or to do any other act in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to—

(1) any foreign official for purposes of—

(A)

(i) influencing any act or decision of such foreign official in his official capacity,

(ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or

(iii) securing any improper advantage; or

Statutes & Rules Uncategorized