Class Action Defense Cases-In re Stand ‘N Seal: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In The Northern District of Georgia

Judicial Panel Rejects Opposition to Defense Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 and Grants Defense Motion for Centralization of Three Class Action Lawsuits Numerous class action lawsuits were filed against several defendants alleging “that plaintiffs suffered injuries resulting from their use of Tile Perfect Stand ‘n Seal “Spray-On” Grout Sealer.” In re Stand ‘N Seal Products Liab. Litig., 469 F.Supp.2d 1351, 1351 (Jud. Pan.Mult.Lit. January 5, 2007).

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases-Goplen v. 51job: New York Federal Court Grants Defense Motion To Dismiss Securities Fraud Class Action For Failing To Plead With Particularity Required by PSLRA and Rule 9(b)

Defense Attorneys Established that Class Action Complaint Failed to Adequately Plead Securities Fraud with Particularity as Required by Rule 9(b) and the Private Securities Litigation Reform Act of 1995 (PSLRA) but New York Federal Court Gives Plaintiffs Leave to Amend their Complaint

Seven putative securities fraud class actions were filed against 51Job and several of its officers and directors alleging “false and misleading statements with respect to the company’s revenues and expected growth, in violation of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 . . ., and Rule 10b-5,” Goplen v. 51job, Inc., 453 F.Supp.2d 759, 763 (S.D.N.Y. 2006) (citations omitted). Defense attorneys filed a motion to dismiss the class action complaint on the ground that it failed to satisfy the heightened pleading requirements set forth in Rule 9(b) of the Federal Rule of Civil Procedure and in the Private Securities Litigation Reform Act of 1995 (PSLRA), 15 U.S.C. § 78u-4, for securities fraud. Id. The district court agreed with the defense and dismissed the class action complaint, but granted plaintiffs leave to file an amended complaint if they could allege facts sufficient to satisfy the PSLRA.

We do not here summarize the particular factual allegations in this case; the facts are quite detailed and an attorney interested in understanding the applicability of the PSLRA’s heightened pleading requirements for securities fraud class actions is well advised to read the opinion in its entirety. We provide only a broad summary of the legal arguments in the opinion. The district court concisely summarized at pages 765 and 766 the legal standard it was to apply as follows:

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Buller Trucking Class Action Defense Case: Illinois Federal Court Remands Class Action To State Court Holding Lawsuit Not Removable Under Class Action Fairness Act Of 2005 (CAFA)

State Law Governed the Effective Date of the Filing of an Amended Complaint for Purposes of CAFA (Class Action Fairness Act of 2005) Illinois Federal Court Holds

In January 2004, plaintiff filed a lawsuit in Illinois state court against its cargo loss insurer for breach of contract, delay in paying insurance claim and fraud. On February 7, 2005, plaintiff requested leave of court to file an amended complaint to allege class action allegations and to represent three nationwide classes against the insurer; the motion was granted on February 18 – the same date that CAFA(Class Action Fairness Act of 2005) became effective. Buller Trucking Co. v. Owner Operator Independent Driver Risk Retention Group, Inc., 461 F.Supp.2d 768, 770-71 (S.D. Ill. 2006). On March 7, 2005, defense attorneys removed the class action to federal court. The district court remanded the class action to state court and defense attorneys petitioned the Seventh Circuit for leave to appeal. Id., at 771. The Circuit Court vacated the district court’s remand order and instructed the lower court to consider whether the filing of the amended complaint after CAFA became effective rendered the class action removable under CAFA. Id. The district court concluded that the effective date of the amended complaint pre-dated CAFA thus compelling remand to state court.

After summarizing CAFA and observing that CAFA does not apply retroactively to cases filed before its effective date, Buller Trucking, at 772, the district court explained that whether an amended complaint “recommences” a class action under state law for purposes of CAFA generally turns on “whether the amendment ‘relates back’ to the filing date of the original complaint: if it does, then the case is not removable, but if it does not, the case is subject to removal under CAFA.” Id. (quoting Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805, 807 (7th Cir. 2005)). In the Seventh Circuit, “a new claim for relief (a new ’cause of action’ in state practice), the addition of a new defendant, or any other step sufficiently distinct that courts would treat it as independent for limitations purposes, could well commence a new piece of litigation for federal purposes even if it bears an old docket number for state purposes.” Id. (quoting Knudsen, 411 F.3d at 807).

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

Class Action Defense Cases-In re Spectrum: Georgia Federal Court Grants Defense Motion To Dismiss Securities Fraud Class Action Finding Allegations Fail To Meet Requirements Under Private Securities Litigation Reform Act (PSLRA)

Allegations in Securities Fraud Class Action Complaint Failed to Satisfy Heightened Pleadings Requirements Imposed by PSLRA (Private Securities Litigation Reform Act) But Plaintiffs Are Entitled To Leave To Amend Georgia Court Holds

In September 2005,, plaintiffs filed a putative securities fraud class action under the Securities Exchange Act of 1934 against Spectrum Brands (formerly known as Rayovac) and individual defendants – including its Chief Executive Officer and Chief Financial Officer/Executive Vice President – on behalf of purchasers of persons who purchased Spectrum Brands’s common stock between November 11, 2004, and November 13, 2005 alleging that defendants’ conduct “artificially affected the value of Spectrum Brands’s stock” through the practice of “channel-stuffing.” In re Spectrum Brands, Inc. Sec. Litig., 461 F.Supp.2d 1297, 1300-01 (N.D. Ga. 2006). Plaintiffs amended the complaint in February 2006, and defense attorneys moved to dismiss, id., at 1300. The district court granted the motion, finding that the class action complaint failed to plead securities fraud with sufficient particularity as required by the federal Private Securities Litigation Reform Act (PSLRA).

Channel-stuffing refers to the act of persuading customers to purchase more inventory than they presently require – a practice the Eleventh Circuit recognizes “is not fraudulent per se.” Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006). The practice, however, causes a company to realize as revenue monies that would otherwise be received later, assuming that the customer did not decide to switch suppliers. In re Spectrum Brands, at 1301. The class action complaint alleged Spectrum “engaged in aggressive channel-stuffing during the fourth quarter of 2004 and the first quarter of 2005, which allowed Spectrum Brands’s performance in the battery market to appear better than it should have and caused an artificial spike in the company’s stock price.” Id. As the district court summarized at page 1301, the class action hinged on the theory that “[company] statements of strong battery sales growth and positive earnings guidances were misleading because Defendants concealed that battery sales reported during the Class Period were generated at the expense of sales in future quarters.” The complaint asserts senior management engaged in channel-stuffing for the purpose of artificially inflating the company’s stock price. Id., at 1301-02.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Coca Cola Class Action Defense Case-Oshana v. Coca Cola: Federal Court Jurisdiction Exists And District Court Properly Granted Defense Motion To Dismiss Class Action Under Cable Communications Policy Act Because Act Does Not Apply To Internet Services

Seventh Circuit Holds that Certification of Class Action Properly Denied Because Putative Class Included Members who Suffered no Damage and Because Plaintiff’s Claims were not Typical of the Class

Plaintiff filed a putative class action against Coca Cola in Illinois state court for violating the state’s Consumer Fraud and Deceptive Practices Act and for unjust enrichment on the theory that “Coke tricked consumers into believing that fountain Diet Coke and bottled Diet Coke have the same ingredients” when in fact the company used different sweeteners in the drinks. Oshana v. Coca-Cola Co., 472 F.3d 506, 509 (7th Cir. 2006). According to plaintiff, Coke used only aspartame in the bottled drinks, but combined aspartame with saccharin in its fountain drinks. Id. Defense attorneys removed the class action to federal court and defeated plaintiff’s motion for class certification. The defense then tendered a judgment of $650 to plaintiff, which plaintiff accepted with the provisos that she be permitted to challenge on appeal whether the action had been proper removed and whether her motion to certify a class action had been properly denied. Id. The Seventh Circuit affirmed both rulings of the district court.

Plaintiff purported to bring this action on behalf of “.All individuals who purchased for consumption and not resale fountain Diet Coke in . . . Illinois from March 12, 1999, through the date of entry of an order certifying the class.” Oshana, at 510. Her class action complaint hinged on the allegation that “Coke began advertising in 1984 that Diet Coke would be sweetened with 100% NutraSweet® brand aspartame, leading consumers to believe that all forms of Diet Coke would follow that formula, even though fountain Diet Coke continued to use saccharin.” Id., at 509. While plaintiff disclaimed any right to individual damages in excess of $75,000, she steadfastly refused defense requests that she “admit she would not individually seek an award of attorneys’ fees over $75,000; punitive damages over $75,000; a combined award of compensatory and punitive damages and attorneys’ fees over $75,000; or a combined award of disgorgement, attorneys’ fees, and punitive damages over $75,000.” Id. Accordingly, Coca Cola removed the putative class action to federal court asserting a good faith belief that the amount in controversy exceeded $75,000; the district court denied plaintiff’s motion to remand the action to state court concluding that plaintiff’s damages could exceed $75,000, particularly in light of her refusal to “admit otherwise.” Id., at 509-10.

Class Action Court Decisions Removal & Remand Uncategorized

Employment Class Action Filings Again Top List But Federal Fair And Accurate Credit Reporting Act (FACTA) Class Action Cases Again Run Second In Weekly Class Action Filings In California State And Federal Courts

As is generally the case, class action defense attorneys in California will confront more labor law class action cases than any other category, but the number of class action lawsuits alleging violations of the federal Fair and Accurate Credit Reporting Act (FACTA) continue to surge. In an effort to assist class action 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 actions 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.

Class Actions In The News Uncategorized

24 CFR § 3500.2—Definitions Used In The Regulations Promulgated By The Secretary Of The Department Of Housing And Urban Development (HUD) For The Real Estate Settlement Procedures Act (RESPA)

As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of Regulation X. Congress gave authority to the Secretary of the Department of Housing and Urban Development (HUD) to promulgate regulations for RESPA, and the regulations are set forth in 24 CFR § 3500.1 et seq. The definitions used in Regulation X are set forth in § 3500.2, which provides:

§ 3500.2. Definitions

(a) Statutory terms. All terms defined in RESPA (12 U.S.C. 2602) are used in accordance with their statutory meaning unless otherwise defined in paragraph (b) of this section or elsewhere in this part.

(b) Other terms. As used in this part:

Application means the submission of a borrower’s financial information in anticipation of a credit decision, whether written or computer-generated, relating to a federally related mortgage loan. If the submission does not state or identify a specific property, the submission is an application for a prequalification and not an application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to an application for a federally related mortgage loan.

Business day means a day on which the offices of the business entity are open to the public for carrying on substantially all of the entity’s business functions.

Dealer means, in the case of property improvement loans, a seller, contractor, or supplier of goods or services. In the case of manufactured home loans, “dealer” means one who engages in the business of manufactured home retail sales.

Statutes & Rules Uncategorized

12 U.S.C. § 2617— Authority Granted To Secretary Of The Department Of Housing And Urban Development (HUD) Under The Real Estate Settlement Procedures Act (RESPA)

As a resource for class action defense attorneys who defend against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of the statute. Congress described the authority granted to the Secretary of the Department of Housing and Urban Development (HUD) under RESPA in 12 U.S.C. § 2617, which provides:

§ 2617. Authority of Secretary

(a) Issuance of regulations; exemptions

The Secretary is authorized to prescribe such rules and regulations, to make such interpretations, and to grant such reasonable exemptions for classes of transactions, as may be necessary to achieve the purposes of this chapter.

(b) Liability for acts done in good faith in conformity with rule, regulation, or interpretation

No provision of this chapter or the laws of any State imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Secretary or the Attorney General, notwithstanding that after such act or omission has occurred, such rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

Statutes & Rules Uncategorized

Class Action Defense Cases-In re Pharmacy Benefit Managers: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff’s Motion To Centralize Antitrust Class Action Litigation In The Eastern District of Pennsylvania

Judicial Panel Holds Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 Warranted and Concurs with View of Some Plaintiff and Defense Attorneys that Eastern District of Pennsylvania is Appropriate Transferee Court Six federal antitrust securities class action lawsuits were filed in Alabama, California, Illinois and Pennsylvania against several defendants “aris[ing] out of allegations that certain conduct by the pharmacy benefit manager (PBM) defendants-including the negotiation of rates for the sale of prescription drugs by retail pharmacies-violated the federal antitrust laws.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases-In re Terminix: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In The Northern District of California

Judicial Panel Agrees with Defense that Pretrial Coordination Pursuant to 28 U.S.C. § 1407 is Warranted for Two State Labor Law Class Action Lawsuits Two class action lawsuits were filed against Terminix in the Central and Northern Districts of California alleging violations of state labor laws for failure to pay overtime to pest control technicians and for misclassifying the class members as exempt employees.. In re Terminix Employment Practices Litig., 466 F.

Class Action Court Decisions Multidistrict Litigation Uncategorized