Class Action Defense Cases-Lindstrom v. City of Des Moines: Court Rejects Defense Effort To Remove Class Action To Federal Court Holding Class Action Claims Not Preempted By Federal Cable Act

Iowa Federal Court Remands to State Court Class Action Lawsuits Challenging Cable Television Franchise Fees Holding that Class Action Claims were not Preempted by Federal Cable Communications Policy Act and that Class Action Complaints did not “Arise Under” Federal Law

Seven putative class action lawsuits were filed in state court against various Iowa cities challenging as illegal a cable television franchise fee tax, and defense attorneys removed the class action to federal court arguing that the claims for damages in the class action complaints are preempted by the Federal Cable Communications Policy Act, 47 U.S.C. § 521 et seq. (Federal Cable Act). Lindstrom v. City of Des Moines, Iowa, 470 F.Supp.2d 1002, 1004-05 (S.D. Iowa 2007). Plaintiffs moved to remand the class action to state court, arguing that their class action lawsuits did not contain any federal claims. Id., at 1005. The district court summarized the class action complaints as follows: “Plaintiffs have stated only a single claim that arises under state law, i.e., whether the Cities can collect the cable franchise fees, in amounts exceeding the reasonable costs of regulating the activity, without express authorization by the Iowa Legislature.” Id. The district court granted the motion and remanded the class action to state court.

The district court recognized that the defense bore the burden of establishing subject matter jurisdiction, Lindstrom, at 1006. While the class action did not state federal claims, defense attorneys argued that the claims were preempted by the Federal Cable Act, id. The federal court stated that “nothing on the face of [the class action complaints] raises a federal question,” id., so the issue was whether the Federal Cable Act completely preempts the state law cause of action in the class actions, id., at 1007. After a detailed analysis, see id., at 1007-10, the court held that the class action claims were not preempted by the Federal Cable Act because the cities were charging less than the maximum tax allowed by federal law and that this would further, not undermine, the intent of the Act, id., at 1010. The court rejected also a defense argument that the class action is preempted because it conflicts with the Act’s definition of “franchise fees,” id., at 1010-11, and that removal was proper because the class action claims “arise under” federal law, id., at 1011-12.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Bellikoff v. Eaton Vance: Second Circuit Affirms Judgment For Defense In Investment Company Act Class Action Holding That No Private Rights Of Action Exist For Claimed Violations Of The Act

Class Action Complaint Properly Dismissed Because no Private Rights of Action Exist for Alleged Violations of Sections 34(b), 36(a) and 48(a) of the Federal Investment Company Act of 1940 (ICA), and Section 36(b) Claim Failed as a Matter of Law Second Circuit Court Holds

Plaintiffs filed a putative class action against various Eaton Vance entities under sections 34(b), 36(a) and 48(a) of the federal Investment Company Act of 1940 (ICA) arising out of the marketing, managing, and distributing shares of various Eaton Vance mutual funds. Bellikoff v. Eaton Vance Corp., 481 F.3d 110, 113-14 (2d Cir. 2007). The thrust of the class action complaint was that defendants paid kickbacks to brokers who promoted the sale of Eaton Vance mutual funds, that the increase in fund assets meant higher advisory fees paid to certain defendants “while providing no benefits to the funds or the fund investors,” and that the advisory fees paid were too high. Id., at 114. Defense attorney’s moved to dismiss the class action, arguing that no private rights of action exist under ICA for the claims alleged, id. The district court agreed with the defense and dismissed the class action; the Second Circuit affirmed.

The class action complaint alleged that defendants entered into arrangements with Morgan Stanley, Salomon Smith Barney, Wachovia and others that included “(1) cash payments to brokers in return for the brokers’ agreement to promote sales of fund shares; (2) directing fund portfolio brokerage to brokers in return for agreements by the brokers to promote the funds (a practice known as “directed brokerage”); and (3) excessive commission arrangements with brokers.” Bellikoff, at 114. At bottom, “as more investors were drawn to the funds through these arguably nefarious business practices, the fees paid to various defendants mushroomed,” id. The Second Circuit noted that SEC had investigated and sanctioned Morgan Stanley “for accepting impermissible payments from the defendants here in exchange for aggressively pushing Eaton Vance funds over other comparable investment options” while “fail[ing] to disclose adequately certain material facts to its customers … [namely that] it collected from a select group of mutual fund complexes amounts in excess of standard sales loads and Rule 12b-1 trail payments.” Id., at 114-15. The SEC fine resulted in the predictable Pavlovian response. In the words of the Circuit Court, “Smelling blood in the water, five investors then filed complaints . . . against Eaton Vance and many of its affiliated entities, alleging, inter alia, violations of the ICA, the Investment Advisers Act, and breaches of fiduciary duties.” Id., at 115.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Cole v. General Motors: Fifth Circuit Agrees With Defense That Lower Court Erred In Certifying Nationwide Class Action Because Of Numerous Differences In Several Jurisdictions

District Court Abused its Discretion in Certifying Nationwide Class Action Because Numerous and Substantial Differences in Applicable Substantive laws Precluding Finding that Rule 23(b)(3) Predominance Test was Met Fifth Circuit Holds

Plaintiffs filed a putative class action against General Motors in Louisiana federal court, alleging that the sensors on 1998 and 1999 Cadillac DeVilles were defective. Cole v. General Motors Corp., 484 F.3d 717, 2007 WL 1054697, *1 (5th Cir. 2007). Plaintiffs’ moved to certify the lawsuit as a nationwide class action; defense attorneys opposed the motion, arguing in part that substantial differences in substantive laws among the 51 jurisdictions precluded a finding of predominance under FRCP Rule 23(b)(3). The district court rejected the defense arguments and certified a nationwide class action as requested. The defense filed an interlocutory appeal under Rule 23(f), arguing that the lower abused its discretion in certifying the class action, id., at *3. The Fifth Circuit agreed with the defense and reversed.

In September 2000, after receiving 300 reports of airbags deploying inadvertently, GM sent a voluntary recall notice to all 224,000 DeVille record owners/lessees stated that “a defect which relates to motor vehicle safety exists and may manifest itself in your 1998 or 1999 model year Cadillac DeVille” in that “the side impact air bags in your car [may] deploy unexpectedly, without a crash, as you start your car or during normal driving.” Cole, at *1. GM expected to have sufficient replacement parts by April 2001, but availability was delayed until May 2001, id. However, GM was able to replace 40,000 parts by November 2000, id. Plaintiffs Beverly Cole, Anita S. Perkins and Jewell P. Lowe received the voluntary recall notice: the Court of Appeals described them as follows: “Lowe is the mother of one of plaintiffs’ counsel, Perkins is a paralegal for another of plaintiffs’ counsel, and Cole is the paralegal’s cousin.” Id. None of them had experienced a side airbag deploying inadvertently, but they filed a federal court class action against GM one month after receiving GM’s September 2000 letter, id. In November 2000, GM offered to replace the sensors in plaintiffs’ cars, but the offer was rejected “because GM did not extend the offer to all DeVille owners and GM would not answer questions about the source of the parts, the number available, and whether the SISMs had been properly tested.” Id. Plaintiffs dismissed this class action but filed a new class action in Louisiana state court in December 2000; defense attorneys removed the class action to federal court in January 2001 on the basis of diversity jurisdiction, id., at *1-*2.

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Bishop v. Heartland Services: Kansas Federal Court Rejects Defense Opposition To Conditional Certification Of FLSA (Fair Labor Standards Act) Class Action

Plaintiffs in Class Action Alleging Failure to Pay Overtime in Violation of Federal Fair Labor Standards Act (FLSA) Demonstrated that they were “Similarly Situated” to Putative Class Members thus Supporting Court Order Granting Motion to Conditionally Certify Lawsuit as a Class Action and to Provide Notice to Class Members Kansas Federal Court Holds Plaintiffs filed a class action complaint in Kansas federal court against their employer, Heartland Services, alleging failure to pay overtime in violation of the federal Fair Labor Standards Act (FLSA).

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

15 U.S.C. § 78u-5—Safe Harbor For Forward-Looking Statements 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 a safe harbor for forward-looking statements for purposes of private securities class action lawsuits, in 15 U.S.C. § 78u-5, which states:

§ 78u–5. Application of safe harbor for forward-looking statements

(a) Applicability

This section shall apply only to a forward-looking statement made by—

(1) an issuer that, at the time that the statement is made, is subject to the reporting requirements of section 78m (a) of this title or section 78o (d) of this title;

(2) a person acting on behalf of such issuer;

(3) an outside reviewer retained by such issuer making a statement on behalf of such issuer; or

(4) an underwriter, with respect to information provided by such issuer or information derived from information provided by such issuer.

Statutes & Rules Uncategorized

Class Action Lawsuits Alleging Employment-Related Claims Again Lead Weekly Class Action Filings In California State And Federal Courts As No Other Class Action Category Meets 10% Threshold

To assist California defense attorneys in anticipating 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—In re Orthopaedic Implant: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District of Indiana As Transferee Court

Judicial Panel Grants Defense Request, Unopposed by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 of Class Action Lawsuits Alleging Antitrust Conspiracy Four federal antitrust class action lawsuits, two in Tennessee and two in Indiana, were filed against various defendants alleging that they “engaged in a conspiracy to artificially increase, maintain, and/or stabilize prices of orthopaedic implants.” In re Orthopaedic Implant Device Antitrust Litig., 483 F.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases-Omstead v. Dell: California Federal Court Grants Defense Motion To Stay Class Action Litigation And Compel Arbitration Where Arbitration Clause Contains Class Action Waiver

In Putative Class Action Against Computer Manufacturer, California Federal Court Holds that Texas Choice of Law Provision in Computer Sales Agreement is Valid and Arbitration Clause Containing Class Action Waiver is Enforceable

Plaintiffs filed a class action against Dell alleging defects in its notebook computers. Omstead v. Dell, 473 F.Supp.2d 1018, 1021 (N.D. Cal. 2007). Defense attorneys moved to stay the class action and compel arbitration pursuant to the Federal Arbitration Act (FAA), id., at 1020. The arbitration clause contained a class action waiver, prohibiting customers from initiating or participating in class action litigation with Dell, id., at 1022. The district court granted the defense motion, holding that the class action waiver did not invalidate the arbitration clause.

Plaintiffs propose to litigate a class action on behalf of purchasers of Dell notebook computers alleging that they were “manufactured with three defects – inadequate cooling systems, a power supply that prematurely fails when used as intended, and motherboards that prematurely fail when used as intended.” Omstead, at 1021. The defense moved to stay the class action and compel arbitration based on the sales agreement provided to its computer purchasers; that agreement states that Texas law shall apply to any dispute arising out of the purchase of the computer and contains an arbitration clause governed by the FAA. Id. Further, all sales confirmations advised purchasers that the “Conditions and Terms of Sale” contain “a dispute resolution clause.” Id. Plaintiffs did not dispute receiving the sales agreement; rather, they argued that California law governed whether the arbitration clause therein was enforceable, not Texas law, and that under California law the class action waiver provision was unenforceable. Omstead, at 1022.

Arbitration Class Action Court Decisions Uncategorized

TILA Class Action Defense Cases-Andrews v. Chevy Chase: Wisconsin Court Grants Defense Request For Stay Of Class Action Pending Appellate Review Of Order Certifying Federal Truth-In-Lending Act (TILA) Lawsuit As A Class Action

Uncertainty as to Whether Seventh Circuit will Hold that Class Action Under TILA (Truth-in-Lending Act) may seek Rescission Warrants Stay of Proceedings Pending Appeal Wisconsin Federal Court Holds Plaintiff filed a class action against Chevy Chase Bank alleging various violations of the federal Truth-in-Lending Act (TILA). Ultimately, the district court extended by three years the borrowers’ rescission period based on its finding that the bank materially violated TILA, and certified the litigation as a class action “leaving the decision as to whether to actually seek rescission to each individual class member.

Certification of Class Actions Class Action Court Decisions RESPA/TILA Class Actions Uncategorized

Class Action Defense Cases—In re Graphics Processing: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff’s Motion To Centralize Class Action Litigation And Agrees Northern District of California Is Appropriate Transferee Court

Judicial Panel Grants Request, Supported by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 in the Northern District of California, Rejecting Request of Non-Moving Plaintiffs to Transfer Class Actions to Central District of California Seven federal antitrust class action lawsuits were filed against various defendants alleging a “conspiracy to fix the price of graphics processing units, which are a type of specialized semiconductor”; all but one of these class actions were filed in the Northern District of California, with the remaining class action filed in the Central District of California.

Class Action Court Decisions Multidistrict Litigation Uncategorized