Labor Law Class Action Cases Regain Top Spot In New Class Action Filings In California State And Federal Courts

In order to assist California class action defense attorneys anticipate the claims 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-Payday v. Findwhat.Com: New York Federal Court Grants Defense Motion In Click-Fraud Class Action To Dismiss Unjust Enrichment, Negligence And Civil Conspiracy Claims But Denies Motion As To Breach Of Contract Claim

Click-Fraud Class Action Stated Claim for Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing, but Under New York Law Remaining Claims in Class Action Complaint Fail

Plaintiff, an advertising customer, filed a putative class action against Findwhat.com, an Internet search engine operator, and Advertising.com, an Internet advertising provider, alleging that defendants “engaged in ‘click fraud’ by employing individuals and ‘robot’ computer programs (commonly called ‘bots’) to click on Payday’s hyperlinked advertisements and thereby caused Payday to incur inflated charges under its agreement with Findwhat.” Payday Advance Plus, Inc. v. Findwhat.Com, Inc., 478 F.Supp.,2d 496, 499 (S.D.N.Y. 2007). The class action complaint alleged causes of action for breach of contract, unjust enrichment, negligence and conspiracy, as well as two claims based on an alleged joint venture. Id. The defense moved to dismiss the class action complaint for failure to state a claim, id. The district court granted the defense motion as to most of the claims in the complaint, but refused to dismiss the class action claims alleging breach of contract.

Plaintiff contracted with Findwhat to provide Internet advertising services. Findwhat offers advertising services in connection with its Internet search engine, and utilizes a “pay-per-click” formula for charging its customers: “Under this formula, an advertising customer bids on one or more keywords which, when entered into Findwhat’s search engine by Internet users, will return a hyperlink . . . to the advertising customer’s web site alongside the search results returned by the search engine.” Payday, at 500. Each time an Internet user clicks on a customer’s link, a fee is charged ranging from 50 cents per click to more than $100 per click for “the most sought-after keywords.” Id. Defendant Advertising developed “ClickTracker,” a software program that tracks and measures Internet sales. Id., at 501. According to the class action complaint, Findwhat and Advertising entered into a business relationship to split revenue from their Internet advertising activities, and then conspired to artificially inflate the price of popular keywords. Id. Additionally, plaintiff alleged that Findwhat hired people to click on advertising links in order to increase revenue at the cost of the customer, and that Advertising used computer programs to “click continuously and systematically” on customer links in order to increase revenue. Id.

The class action complaint named only Findwhat as a defendant on the breach of contract claim, and alleged that the Findwhat contract only permitted a charge for “the actual click through advertising from actual consumers” but that Findwhat charged for “advertising and/or services that were not generated from potential consumers, but from individuals, ‘robot’ programs and other software employed by the Defendants solely designed to increase traffic to Plaintiff’s website and drive up revenue.” Payday, at 502. Defense attorneys disagreed, arguing that the terms of the contract are not as restrictive as plaintiff claims, id. Under New York law, the court resolved the contract interpretation issue as a matter of law, id. However, plaintiff never signed the contract relied upon by Findwhat and refused to acknowledge that the terms of the unsigned agreement proffered by Findwhat was the “actual agreement of the parties”: “Because there has been no agreement on the language that reflects the contract terms, and because there is a reasonable dispute as to the meaning of the terms relating to the ‘clicks’ for which Payday owed payments, the Court cannot find as a matter of law that the contract is unambiguous.” Id.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Day v. Check Brokerage: Illinois Federal Court Holds That Class Action Rule 23(a)(1) Numerosity Test Does Not Require Exact Number And Debt Collection Letters Presented Common Questions Of Fact And Law

FDCPA Class Action Certified Over Defense Objection that Range of 100-500 Class Members does not Satisfy Numerosity and that Allegation that Debt Collection Letters Violate Federal Fair Debt Collection Practices Act (FDCPA) Presented Common Questions of Law and Fact Illinois Federal Court Holds

Plaintiff filed a putative class action against Check Brokerage Corp. alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) based on debt collection letters sent by the company. Day v. Check Brokerage Corp., 240 F.R.D. 414, 415 (N.D. Ill. 2007). The class action alleged that defendant’s letters violate the FDCPA in that they are “false, deceptive, or misleading as determined by the unsophisticated consumer standard and therefore in violation of 15 U.S.C. § 1692(e), (e)(2)(A), (e)(5), and (e)(10).” Id., at 416. The class action complaint also alleged that defendant “used unfair or unconscionable means to collect or attempt to collect a debt in violation of 15 U.S.C. § 1692(f) and (f)(1)” and that the notice concerning a consumer’s right to dispute a debt failed to comply with 15 U.S.C. § 1692(g)(a), id. Plaintiff moved the court to certify the litigation as a class action; defense attorneys argued that class action treatment was inappropriate because neither numerosity nor commonality had been met. Id., at 415. The district court disagreed.

The class action complaint was premised upon four debt collection letters defendant sent to plaintiff concerning a $20 debt. Day, at 416. The first letter advised Day that his $20 check had not cleared, that he now owed $65 (which included a “return check charge” of $25 and a “bank charge to merchant” of $20), and that additional fees may be imposed if payment is not made promptly and it was in his “‘best interests to clear this check immediately,’ despite the notification at the end of the letter that Day had thirty days to dispute the validity of the debt.” Id. The second letter “suggest[ed] you give this matter your immediate attention” and quoted Illinois Commercial Code § 3-806 about liability for dishonored checks. Id. The third letter “demand[ed] the $65.40 and stat[ed], ‘WE MUST HAVE YOUR PAYMENT NOW!!’” The letter also warned plaintiff that he could be liable for additional amounts. Id. Finally, the fourth letter stated, “THIS CHECK REMAINS UNPAID! WE ARE, THEREFORE, GOING TO SHOW YOU HOW MUCH IT COULD COST SHOULD IT GO TO LITIGATION.” This letter included reference to warrants for arrest and adverse credit reports, and ended, “Common sense would dictate that this check be paid at this point. THE AMOUNT DUE, INCLUDING THE CHECK AND SERVICE CHARGES TO THIS POINT, IS $65.40.” Id.

Certification of Class Actions Class Action Court Decisions FDCPA Class Actions Uncategorized

Credit Suisse Class Action Defense Case-Credit Suisse v. Billing: Supreme Court Holds Antitrust Class Action Based On Syndicate Conduct In Sale Of IPOs Barred Because “Clearly Incompatible” With Securities Laws

Federal Securities laws Barred Class Action Complaints Alleging Antitrust Violations Because, under Facts of the Case, Securities Laws “Implicitly Precluded” Enforcement of Antitrust Laws United States Supreme Court Holds

Purchasers of initial public offerings (IPOs) filed a class action against various underwriting firms that market and distribute IPOs for antitrust violations alleging that defendants “unlawfully agreed with one another that they would not sell shares of a popular new issue to a buyer unless that buyer committed (1) to buy additional shares of that security later at escalating prices (a practice called ‘laddering’), (2) to pay unusually high commissions on subsequent security purchases from the underwriters, or (3) to purchase from the underwriters other less desirable securities (a practice called ‘tying’).” Credit Suisse Securities (USA) LLC v. Billing, 551 U.S. __ (June 18, 2007) [Slip Opn., at 1]. Defense attorneys argued that the antitrust violations underlying the class action complaint were precluded by the federal securities laws, id., at 4. The district court agreed with the defense arguments and dismissed the class actions, but the Second Circuit reversed and reinstated the class action complaints, id. The U.S. Supreme Court granted certiorari and reversed the Second Circuit, id., at 4; the Supreme Court held that “we must interpret the securities laws as implicitly precluding the application of the antitrust laws to the conduct alleged in this case,” id., at 1.

The antitrust class action lawsuits arose from the following facts. As part of an IPO, underwriters “will typically form a syndicate to help market the shares,” which in turn estimates market demand and recommends offering price and number of shares for the offering. Credit Suisse, at 2. The syndicate then commits to purchase from the company all of the newly issued shares on a date certain for a fixed price; the price reflects “[the] price the syndicate will charge investors when it resells the shares,” but the syndicate’s actual purchase price reflects a discount that “amounts to the syndicate’s commission.” Id. In other words, the syndicate purchases the shares at a discounted price, and then resells them at the agreed upon fixed price, id., at 3. From this, class actions were filed alleging that defendant underwriters “abused” the syndication practice “by agreeing among themselves to impose harmful conditions upon potential investors,” id.; the Supreme Court added that these were “conditions that the investors apparently were willing to accept in order to obtain an allocation of new shares that were in high demand,” id. These conditions included entering into laddering agreements, tying agreements and paying excessive commissions, thereby “artificially inflat[ing] the share prices of the securities in question,” id., at 4.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

FACTA Class Action Defense Cases-Spikings v. Cost Plus: Certification Of Class Action Rejected For Technical Violation Of Fair And Accurate Credit Transactions Act Because Class Action Treatment Would Subject Defendant To Disproportionate Liability

Rule 23(b)(3) Superiority Class Action Requirement not met Where Financial Impact on Defendant for Technical Violation of FACTA (Fair and Accurate Credit Transactions Act) would be Disproportionate to any Harm to the Class California Federal Court Holds

Within hours of purchasing an item at Cost Plus with her credit card, plaintiff filed a putative class action alleging a technical violation of the federal Fair and Accurate Credit Transactions Act (FACTA) in that her receipt truncated her credit card number but failed to omit the expiration date of the card. Spikings v. Cost Plus, Inc., Case No. CV-06-8125-JFW (C.D. Cal. May 25, 2007) [Slip Opn., at 1-2]. Plaintiff filed a motion for certification of class action treatment; defense attorneys objected arguing in part that the prerequisite Rule 23(b)(3) finding of superiority did not exist thus barring class action certification. Id., at 2. The district court agreed with the defense and refused to certify the litigation as a class action.

FACTA requires that no more than the last 5 digits of a credit card number be shown on customer receipts, and that the expiration date of the credit card not be disclosed on the receipt. 15 U.S.C. § 1681c(g). Plaintiff purchased an item at Cost Plus on December 19, 2006, and within four (4) business hours filed her putative class action complaint. Spikings, at 2. Plaintiff served the class action complaint on December 26, 2006, defendant deleted the expiration date from credit card receipts in all but three of its stores by January 11, 2007, and completed the process of deleting the expiration date from all customer credit card receipts by January 29, 2007. Id. Nonetheless, plaintiff pursued the class action, alleging that defendant’s violation of FACTA was “willful” within the meaning of 15 U.S.C. § 1681n, thus entitling the class to statutory damages of $100-$1000 per violation, as well as punitive damages and attorney fees. Id. Plaintiff also moved the court to certify the litigation as a class action, id., at 1.

Certification of Class Actions Class Action Court Decisions FCRA Class Actions Uncategorized

FACTA Class Action Defense Cases-Soualian v. International Coffee & Tea: California Federal Court Denies Plaintiff’s Motion To Certify Class Action In Fair And Accurate Credit Transactions Act (FACTA) Suit

Putative Class Action Alleging FACTA Violation for Inclusion of Credit Card Expiration Date on Customer Receipts did not Warrant Class Action Treatment Because Rule 23(b)(3) Superiority Requirement not Satisfied California Federal Court Holds, Particularly as Defendant’s Act in Correcting the Violation Immediately on Receipt of Plaintiff’s Complaint Established its Good Faith and “Nullified Any Deterrence Benefit”

Plaintiff filed a putative class action against International Coffee & Tea alleging that it violated the Fair and Accurate Credit Transactions Act (FACTA) because it provided customers with credit card receipts that included the last five digits of the credit card and the card’s expiration date. Soualian v. International Coffee & Tea, LLC, Slip Opn., at 1 (C.D. Cal. June 11, 2007). Plaintiff filed a motion to certify the litigation as a class action; defense attorneys objected that Rule 23(b)(3)’ superiority test had not been met. Id. The district court agreed and refused to permit the litigation to proceed as a class action.

FACTA provides that “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last five digits of the card number of the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1). Plaintiff’s putative class action sought to represent “the class of individuals who made purchases at Defendant’s stores…and who received receipts on which Defendant printed more than the last five digits of the person’s credit card or debit card number, or on which Defendant printed the expiration date of the person’s credit or debit card.” Soualian, at 1. The district court outlined the elements required for class certification under Rule 23(a), but focused its analysis on whether Rule 23(b)(3) had been satisfied, id.

Certification of Class Actions Class Action Court Decisions FCRA Class Actions Uncategorized

15 U.S.C. § 78z–Congressional Provisions Regarding Unlawful Representations Under The Private Securities Litigation Reform Act (PSLRA)

As a reference for class action defense attorneys who defend against securities class action litigation, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for unlawful representations in 15 U.S.C. § 78z of the PSLRA, which provides: § 78z. Unlawful representations No action or failure to act by the Commission or the Board of Governors of the Federal Reserve System, in the administration of this chapter shall be construed to mean that the particular authority has in any way passed upon the merits of, or given approval to, any security or any transaction or transactions therein, nor shall such action or failure to act with regard to any statement or report filed with or examined by such authority pursuant to this chapter or rules and regulations thereunder, be deemed a finding by such authority that such statement or report is true and accurate on its face or that it is not false or misleading.

Statutes & Rules Uncategorized

Surge in Unfair Competition Law Class Action Cases Drop Labor Law Cases To Second Spot Among New Class Action Filings In California State And Federal Courts

To assist defense attorneys who defend class actions 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 relevant timeframe. This report covers the time period from June 8 – June 14, 2007, during which time 39 new class action cases were filed in these courts.

Class Actions In The News Uncategorized

Class Action Defense Cases-Hollins v. Debt Relief: Nebraska Federal Court Denies Defense Motion To Compel Arbitration Of RICO Class Action Holding Arbitration Clause Unenforceable

Class Action Defense Effort to Compel Arbitration Based on Provision in Contract Executed by Plaintiff Rejected by District Court because Arbitration Clause Held to be Unconscionable

Plaintiffs filed a putative class action against Debt Relief of America (DRA) in Nebraska federal court alleging that DRA – a company that offers “to help consumers eliminate their debt by negotiating reduced payoffs in settlement of the debts” – engaged in acts of fraud and charged excessive and undisclosed fees in violation of Racketeer Influenced and Corrupt Organizations Act (RICO) and Nebraska’s Consumer Protection Act and Deceptive Trade Practices Act. Hollins v. Debt Relief of Am., 479 F.Supp.2d 1099, 1103 (D. Neb. 2007). Defense attorneys moved to compel arbitration under a Client Negotiation Agreement executed by plaintiff in Nebraska; the Agreement includes an arbitration clause and a Texas choice-of-law provision. Id. The district court denied the defense motion, holding that the arbitration clause was procedurally and substantively unconscionable.

Plaintiff responded to an advertisement by DRA to assist in reducing debt; he admits signing the Agreement but claims that he did not notice the arbitration clause, that it was “buried in the fine print of an illegible fax,” and that DRA did not point out the arbitration provision before he executed the Agreement. Hollins, at 1103. The class action complaint alleged that plaintiff paid DRA almost $5000 based on its “promise[] to manage his debts,” but that the company “never took any action to assist [him] or contact his creditors.” Id. The complaint further alleged DRA advised him to “ignore[] his creditors,” that his accounts were sent to collection, and that “he filed bankruptcy because of DRA’s alleged misrepresentations.” Id. Plaintiff’s purported class action seeks to represent “all Nebraska residents who paid any amount for DRA’s debt relief services,” id.

Arbitration Class Action Court Decisions Uncategorized

Class Action Defense Cases-Doiron v. Conseco Health: Louisiana Federal Court Agrees With Defense That Rule 23(b)(1) and (b)(2) Class Action Could Not Be Certified But Certifies Class Action Against Health Insurer Under Rule 23(b)(3)

Allegedly Wrongful Denial of Insurance Policy Benefits Satisfies Commonality and Typicality Requirements for Class Action Treatment, and While Rule 23(b)(1) and (b)(2) Classes Would not be Certified, Louisiana Federal Court Holds that Rule 23(b)(3) Class Action Treatment was Warranted

Plaintiff filed a breach of contract class action against her health insurer arising out of the denial of insurance benefits allegedly due and owing under a cancer insurance policy. Doiron v. Conseco Health Ins. Co., 240 F.R.D. 247, 249 (M.D. La. 2007). The class action complaint alleged that the cancer policy required the insurer to pay benefits directly to the insured if certain terms and conditions of the policy were met. Id. Plaintiff’s husband was diagnosed with cancer in March 2001 and underwent treatment, but he died in December 2001. Plaintiff submitted documentation to the insurer, but it only paid a portion of the insured’s claim. Id. Plaintiff filed as a putative class action on the grounds that “she, and the members of the Sub-Classes she seeks to represent, were and will continue to be denied claims for benefits for certain charges they commonly and typically incurr(ed), and which claims Conseco consistently deny(ied), for their radiation treatment and/or chemotherapy treatment.” Id. Plaintiff moved the court to certify the lawsuit as a class action; defense attorneys objected to class action treatment insisting that case-by-case inquiries would be required, thus defeating commonality and typicality, and that none of the subparts of Rule 23(b) could be satisfied. The district court concluded that Rule 23(a) had been satisfied, and that a Rule 23(b)(3) class could be certified.

With respect to numerosity, defense conceded that the class consisted of at least 200 members, and the district court observed that in the Fifth Circuit a class of 100-150 members is generally deemed sufficient to satisfy the numerosity requirement; accordingly, the court found that Rule 239(a)(1) had been satisfied. Doiron, at 251.

Certification of Class Actions Class Action Court Decisions Uncategorized