Class Action Defense Cases-Taylor v. Quall: California Federal Court Grants Defense Motion To Dismiss Class Action Holding That Debt Collection Practices During Lawsuit Are Insulated By Litigation Privilege

California’s Litigation Privilege Bars Claims of Unfair Debt Collection Practices California Federal Court Holds

Plaintiff filed a putative class action in California state court alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) and California’s equivalent statute, the Rosenthal Fair Debt Collection Practices Act (RFDCPA), and for violations of California’s unfair competition law (UCL), California Business & Professions Code section 17200 et seq. The lawsuit was premised on acts committed by defendants’ efforts to collect a debt Defense attorneys removed the class action to federal court, and filed a motion to dismiss two claims for relief. Taylor v. Quall, 458 F.Supp.2d 1065, 1065-66 (C.D. Cal. 2006). Defendants argued that their conduct was absolutely privileged because it was part of the lawsuit aimed at collecting the debt. Id., at 1066. The district court agreed with the defense and granted the motion.

Plaintiff’s class action complaint alleged the following. After plaintiff lost his job, he received several calls from people attempting to collect monies owed on his Citibank credit card account. Plaintiff advised these people that he was unemployed and would not pay the debt. Eventually, these collection efforts ended. However, defendants thereafter acquired the Citibank debt and filed a lawsuit against plaintiff seeking to collect the amounts owed. Plaintiff claims the lawsuit was time-barred and that defendants lacked standing. Plaintiffs further alleges that “Defendants improperly sought attorney’s fees and costs, and made multiple misrepresentations to Plaintiff until he ultimately settled the action.” Taylor, at 1066. As noted above, defense attorneys argued that any statements made during the course of the lawsuit fell within the scope of the litigation privilege, thus warranting dismissal under Rule 12(b)(6). The district court agreed.

Class Action Court Decisions FDCPA Class Actions Uncategorized

Class Action Defense Cases-Morgan v. Gay: Third Circuit Holds As Matter Of First Impression That Under CAFA (Class Action Fairness Act Of 2005) Defense Still Bears Burden Of Establishing Amount-In-Controversy

Federal Class Action Fairness Act of 2005 (CAFA) did not Shift Burden of Proving $5 Million Amount in Controversy to Plaintiff and Plaintiff’s “Damages-Limitation Provision” could be used to Avoid Federal Court Provided Plaintiff did not Thereafter Seek to Recover More than $5 Million Third Circuit Holds

Plaintiff filed a putative class action in New Jersey state court based on false advertising claims in the sale of the skin cream StriVectim-SD and asserting various state law claims. Morgan v. Gay, 471 F.3d 469, 471 (3d Cir. 2006). Defense attorneys removed the class action to federal court under the federal Class Action Fairness Act of 2005 (CAFA), and plaintiff moved to remand the class action to state court. Id. The district court granted the motion, concluding that defense attorneys had failed to establish CAFA’s $5,000,000 amount-in-controversy requirement, and the Third Circuit granted the defense leave to appeal. Id., at 471-72. As a matter of first impression in the Third Circuit, the Court of Appeals held that CAFA did not shift to plaintiff the burden of proving the amount in controversy for removal purposes, and affirmed the district court order remanding the class action to state court.

With respect to the amount in controversy, plaintiff’s class action complaint expressly stated that the damages sought in the action, including treble damages and punitive damages, “‘shall not [in total] exceed $5 million in sum or value.'” Morgan, at 471. The district court granted the motion to remand because the defense had not established that the amount in controversy met the $5 million threshold. Id. On appeal, the Third Circuit first addressed whether CAFA shifted the burden of establishing federal court jurisdiction from the defense to the plaintiff. Id., at 472. The Circuit Court agreed with defense attorneys that the legislative history evidenced a willingness to “switch the burden of proof from the party seeking removal to the party seeking remand,” id., but ultimately concluded – as a matter of first impression in the Third Circuit – that CAFA did not alter the time-honored burden of proof and held that “the party seeking to remove the case to federal court bears the burden to establish that the amount in controversy requirement is satisfied,” id., at 473.

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

In re Edward Jones Class Action Defense Case: California Federal Court Denies Motion To Remand Securities Class Action And Grants Defense Motion To Dismiss Finding Class Action Complaint Preempted By SLUSA

California Court Holds that Plaintiffs’ Procedural Objections to Removal are Waived as Untimely and that Federal Securities Litigation Uniform Standards Act (SLUSA) Preempted Class Action Claims Requiring Dismissal of Complaint

In 2004, plaintiffs filed a putative class action against Edward D. Jones & Co., one of the largest brokerages in the United States, for violations of California’s unfair competition laws (UCL) and breach of fiduciary duties alleging that it “entered into agreements with certain mutual fund companies whereby Defendant placed the companies on an internal ‘Preferred Funds’ list and received retention ‘kickbacks’ based on the amount of money held by Plaintiff and the Class members in those funds.” In re Edward Jones Holders Litig., 453 F.Supp.2d 1210, 1211 (C.D. Cal. 2006). Defense attorneys removed the action to federal court on the ground that the state law claims were preempted by the federal Securities Litigation Uniform Standards Act (SLUSA), but the district court granted plaintiffs’ motion to remand finding that SLUSA did not apply “because the alleged wrongdoing . . . was not ‘in connection with the purchase or sale of covered securities.'” Id., at 1212. Two years later, after the Supreme Court issued its opinion in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 548 U.S. —-, 126 S.Ct. 1503 (2006), defense attorneys removed the class action to federal court anew on the ground that Dabit “compels a finding that Plaintiffs’ claims are in fact preempted by SLUSA.” Id. Plaintiffs again moved to remand the complaint to state court, but the district court denied the motion.

First, the district court held that plaintiffs’ procedural objections to removal were waived because the motion to remand the class action to state court was untimely under 28 U.S.C. § 1447(c). In re Edward Jones, at 1212-13. Plaintiffs had argued that the removal was defective in two ways: (1) as untimely under 28 U.S.C. § 1446(b), and (2) as an improper “successive” notice predicated on the identical legal ground previously raised and rejected by the district court. Id., at 1212. An untimely notice of removal is a procedural defect, not a jurisdictional defect, id., at 1213 n.3 (citation omitted), and Rule 6(e) does not extend the time for filing a motion to remand so the motion – filed 32 days after removal – was untimely, id., at 1213.

Class Action Court Decisions PSLRA/SLUSA Class Actions Removal & Remand Uncategorized

12 U.S.C. § 2609– Limitation On Requirement Of Advance Deposits In Escrow Accounts Under The Real Estate Settlement Procedures Act (RESPA)

As a resource for the class action defense lawyer who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of RESPA. Congress detailed limitations on lender requirements for advance deposits in escrow accounts under RESPA in 12 U.S.C. § 2609, which provides:

§ 2609. Limitation on requirement of advance deposits in escrow accounts

(a) In general

A lender, in connection with a federally related mortgage loan, may not require the borrower or prospective borrower–

(1) to deposit in any escrow account which may be established in connection with such loan for the purpose of assuring payment of taxes, insurance premiums, or other charges with respect to the property, in connection with the settlement, an aggregate sum (for such purpose) in excess of a sum that will be sufficient to pay such taxes, insurance premiums and other charges attributable to the period beginning on the last date on which each such charge would have been paid under the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, and ending on the due date of its first full installment payment under the mortgage, plus one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period; or

(2) to deposit in any such escrow account in any month beginning with the first full installment payment under the mortgage a sum (for the purpose of assuring payment of taxes, insurance premiums and other charges with respect to the property) in excess of the sum of (A) one-twelfth of the total amount of the estimated taxes, insurance premiums and other charges which are reasonably anticipated to be paid on dates during the ensuing twelve months which dates are in accordance with the normal lending practice of the lender and local custom, provided that the selection of each such date constitutes prudent lending practice, plus (B) such amount as is necessary to maintain an additional balance in such escrow account not to exceed one-sixth of the estimated total amount of such taxes, insurance premiums and other charges to be paid on dates, as provided above, during the ensuing twelve-month period: Provided, however, That in the event the lender determines there will be or is a deficiency he shall not be prohibited from requiring additional monthly deposits in such escrow account to avoid or eliminate such deficiency.

Statutes & Rules Uncategorized

12 U.S.C. § 2608—Title Insurance And Liability Of Sellers Under The Real Estate Settlement Procedures Act (RESPA) For Requiring Use Particular Title Companies

As a resource for the class action defense lawyer who defends against RESPA (Real Estate Settlement Procedures Act) class actions, we provide the text of RESPA. Congress prohibited sellers from requiring that buyers use a “particular title company” and provided for liability for any such conduct in 12 U.S.C. § 2608, which states: § 2608. Title companies; liability of seller (a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.

Statutes & Rules Uncategorized

Merck’s Vioxx Defense Team Suffers Setback As New Jersey Appellate Court Holds Trial Court “Prematurely Terminated” Class Action Complaint

Peter Loftus of The Wall Street Journal reports today that a New Jersey state appellate court has reversed a lower court ruling dismissing a putative class action against Merck on behalf of people who used Vioxx for at least six (6) weeks but who have not evidenced any medical problems. While the opinion is a setback for the Vioxx defense team, it does not appear to be a “tremendous decision” as viewed by plaintiffs’ counsel.

Class Actions In The News Uncategorized

Labor Law Class Action Cases Again Claim Top Spot In New Class Action Cases Facing Defense Attorneys In California

To aid California class action defense attorneys in anticipating claims against which they may have to defend, we provide weekly an unofficial summary of legal categories for 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. This report covers the time period of from January 11 – January 18, 2007. We include only those categories that contain 10% or more of the class action filings during the relevant timeframe.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re PolyMedica: Massachusetts Federal Court Refuses To Certify Securities Fraud Class Action For Contested Period Because Plaintiff Failed To Establish “Cause And Effect” And “Market Efficiency”

Defense Defeats Class Action Certification for Contested Time Period Because Plaintiff’s Evidence Failed to Demonstrate “Cause and Effect” and Only “Weakly” Showed Market Efficiency Massachusetts Court Holds

Plaintiff investors filed a putative class action against PolyMedica and others alleging securities fraud, relying on the “fraud on the market” doctrine to establish the reliance element of their securities fraud claim. In re PolyMedica Corp. Securities Litig., 453 F.Supp.2d 260, 264-65 (D. Mass. 2006). A Massachusetts federal court certified a class action for the time period of October 26, 1998 to August 21, 2001; the First Circuit reversed with respect to the time period of January 1, 2001 to August 21, 2001, and remanded the case for further proceedings. Id., at 264. The new district court explained at page 264, “The sole issue for further adjudication here is whether Rule 23(b)(3) can be satisfied in the circumstances of this case.” (Broadly, Rule 23(b)(3) requires that common questions of law or fact predominate over individual issues and that the class action device be the superior method for resolving the dispute.) The court agreed with defense attorneys that it could not, and refused to certify a class for the 2001 time period.

The federal court began by noting the special problem created by securities fraud class actions, explaining at page 264: “In the context of securities fraud allegations, the nature of Rule 23(b)(3) analysis is quite particularized. Securities frauds, like all frauds, entail proof of reliance. . . . While reliance is typically demonstrated on an individual basis, the Supreme Court has noted that such a rule would effectively foreclose securities fraud class actions because individual questions of reliance would inevitably overwhelm the common ones under Rule 23(b)(3). . . . To avoid this result, the Supreme Court has recognized the fraud-on-the-market theory, which relieves the plaintiff of the burden of proving individualized reliance on a defendant’s misstatement, by permitting a rebuttable presumption that the plaintiff relied on the ‘integrity of the market price’ which reflected that misstatement.” (Citations omitted.) The fraud on the market doctrine requires that the market be “efficient” – that is, “‘one in which the market price of the stock fully reflects all publicly available information,'” id., at 265 (quoting In re PolyMedica Corp. Securities Litig., 432 F.3d 1, 14 (1st Cir. 2005)).

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

Sinclair v. Merck-Class Action Defense Case: New Jersey Appellate Court Holds Class Action Ruling In Favor Of Defense In Vioxx Case Was Premature

New Jersey Court Holds that Whether Trial Court should Order Medical Monitoring of Vioxx Patients who Show no Signs of Illness, and Whether such Patients have a “Presently Cognizable Injury,” Requires Additional Evidence

Plaintiffs filed a putative class action against Merck in New Jersey state court for negligence, products liability, fraud and breach of warranty because they had used Vioxx for at least six consecutive weeks before the drug was removed from the market. The plaintiffs had not yet suffered any medical problems but alleged that “as a result of their direct and prolonged exposure to Vioxx, they have an enhanced risk of sustaining serious, undiagnosed and unrecognized myocardial infarctions,” and prayed for “the establishment of a court-administered medical screening program, funded by Merck.” Sinclair v. Merck & Co., Inc., — A.2d —-, 2007 WL 91446, *1 (N.J.Super.A.D. January 16, 2007). Defense attorneys moved to dismiss the class action complaint on the ground that New Jersey law did not afford the remedy of medical screening in products liability cases; the trial court agreed and granted the motion to dismiss. Id. The appellate division reversed, holding that the trial court “prematurely terminated plaintiffs’ opportunity to establish the existence of a legally cognizable claim.” Id., at *2.

In reinstating the class action complaint, the appellate division noted the “difficulty” created by “the relative paucity of New Jersey precedent.” Sinclair, at *2. The opinion discusses at length the three controlling decisions on the issue of medical monitoring, id., at *2-*6, and concluded that those cases required an analysis of “scientific and other evidence relevant to plaintiffs’ claims” in order for the trial court to properly determine “that a medical monitoring remedy should not be recognized in connection with Vioxx exposure,” id., at *6. The appellate division explicitly noted that it was “express[ing] no opinion as to the ultimate viability of plaintiffs’ action,” id., at *2, and recognized that “evidence may prove the judge to be correct” in dismissing the class action, id., at *6.

Class Action Court Decisions Uncategorized

Dale v. Comcast Class Action Defense Case: Georgia Federal Court Grants Defense Motion To Compel Arbitration Under Agreement Barring Class Action Lawsuits Holding Arbitration Clause Unconscionable And Dismisses Class Action Complaint

Arbitration Clause Barring Class Action Lawsuits in Contract Governed by Federal Arbitration Act (FAA) Valid and Enforceable Georgia Federal Court Holds, Agreeing with Defense that Arbitration Agreement was not Unconscionable

Plaintiffs filed a putative class action in Georgia state court against their cable television company alleging that it overcharged them for cable television services in violation of the federal Cable Communications Policy Act, 47 U.S.C. § 522 et seq. Dale v. Comcast Corp., 453 F.Supp.2d 1367, 1370 (N.D. Ga. 2006). Defense attorneys removed the action to federal court and moved to compel arbitration under a clause governed by the Federal Arbitration Act (FAA) that arbitration clause required customers to bring claims only in an individual capacity, thereby precluding participation in class action lawsuits, id., at 1374. Specifically, the arbitration clause provided, ” ALL PARTIES TO THE ARBITRATION MUST BE INDIVIDUALLY NAMED, THERE SHALL BE NO RIGHT OR AUTHORITY FOR ANY CLAIMS TO BE ARBITRATED OR LITIGATED ON A CLASS ACTION OR CONSOLIDATED BASIS OR ON BASIS INVOLVING CLAIMS BROUGHT IN PURPORTED REPRESENTATIVE CAPACITY ON BEHALF OF THE GENERAL PUBLIC (SUCH AS A PRIVATE ATTORNEY GENERAL), OTHER SUBSCRIBERS, OR OTHER PERSONS SIMILARLY SITUATED.” Id. The district court granted the defense motion.

Comcast provides its customers with a “subscriber agreement” at the time it installs service, and “on an annual basis, [it] disseminates notices of its policies and practices to its subscribers by including them in the subscribers’ monthly bills.” Dale, at 1371. Notice of the arbitration clause was provided to customers in December 2004 via “a billing stuffer entitled ‘Important Notices to Our Customers: Your Local Cable Company’s Policies & Practices,'” id., and noted that this complied with federal law, id., at 1372 n.2. For new customers, Comcast provided notice of the arbitration agreement at the time service was installed, and new Comcast customers signed forms agreeing to be bound to the terms of the subscriber agreement. Id., at 1371. The district court found that “plaintiffs were given copies of the Subscriber Agreement containing the arbitration provisions at the time of installation of their service” and that “when defendant amended the Subscriber Agreement, it notified plaintiffs that the changes would not take effect for thirty days and that plaintiffs could cancel their service if they objected to the changes.” Id., at 1377 n.4. Defense attorneys moved to compel arbitration and to dismiss the class action allegations.

In analyzing the defense motion, the federal court held that while it was obligated to determine the validity of the arbitration clause under state contract laws, Dale, at 1371-72, “as the FAA is ‘preemptive of state laws hostile to arbitration,’ the court should take into consideration the federal policy favoring arbitration,” id., at 1372 (citing Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367-68 (11th Cir.2005)). The district court first rejected plaintiffs’ claim that they never entered into an arbitration agreement with Comcast. Id. Comcast established that it sent the notices in the regular course of business, and that plaintiffs’ paid their December 2004 bills evidencing that they received the billing statements. Based on the evidence presented, the federal court concluded “that plaintiffs’ denials and/or conclusory declarations that they do not recall receiving copies of the arbitration provisions are insufficient to defeat defendant’s motion to compel.” Id.

Arbitration Class Action Court Decisions Uncategorized