En Banc Denied in Amalgamated Transit v. Laidlaw Transit — Class Action Defense Cases

CAFA (Class Action Fairness Act of 2005) Requires That Appeal From Grant Or Denial of Motion to Remand Must Be Made Within 7 Days Ninth Circuit Holds On May 22, 2006, the Court of Appeals for the Ninth Circuit refused to reconsider en banc its decision in Amalgamated Transit Union Local 1309 v. Laidlaw Transit Serv., Inc., 435 F.3d 1140 (9thCir. 2006). However, six justices dissented from the denial of rehearing en banc, and severely criticized as an “abuse of our judicial power” the decision to read “less” as “more.

Class Action Court Decisions Uncategorized

Amalgamated Transit Union v. Laidlaw Transit — Class Action Defense Cases

CAFA (Class Action Fairness Act of 2005) Requires Appeal From Grant or Denial of Motion to Remand Be Made Within 7 Court Days Ninth Circuit Holds On January 26, 2006, the Court of Appeals for the Ninth Circuit denied a motion to dismiss as untimely an appeal under CAFA (Class Action Fairness Act of 2005) from a district court order denying a motion to remand a putative class action to state court.

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

Class Action Defense Issues: Certification of Class Actions Numerosity Requirement Under Rule 23(a)(1)

Defending Class Actions: Certification Under Rule 23 – Part II

The Numerosity Requirement of Rule 23(a)(1)

In defending a class action, the single most important motion facing a defendant is the plaintiff’s motion to certify a class. Rule 23(a) requires that the plaintiff demonstrate numerosity, commonality and typicality, and that the class members will be adequately represented, and must additionally demonstrate that the action satisfies Rule23(b). The class action requirements of Rule 23 are mandatory. Thus, class certification requires that the prospective class representative satisfy the elements set forth in Rule 23(a), as well as the elements of Rule 23(b) (discussed in a separate article) be met. General Telephone Co. of Southwest v. Falcon, 457 U.S. 152, 102 S.Ct. 2364 (1982) (reversing class certification for failure to analyze Rule 23 requirements). This article discusses the numerosity requirement of Rule 23(a).

Rule 23(a)(1) of the Federal Rules of Civil Procedure provides that a class action may not be maintained unless “the class is so numerous that joinder of all members is impracticable.” It has been said that numerosity and commonality “form the core of the class-action concept.” Newberg on Class Actions, “Prerequisites for Maintaining a Class Action,” §3:13, p.316. However, no bright line or threshold exists at which the numerosity requirement is met. Each circumstance must be examined on a case-by-case basis. General Telephone Co. v. E.E.O.C., 446 U.S. 318, 330, 100 S.Ct. 1698 (1980).

There are, of course, the obvious cases. See e.g., Georgine v. Amchem Products, Inc., 83 F.3d 610, 626 n.11 (3rd Cir. 1996), aff’d, Amchem Products, Inc. v. Windsor, 521 U.S. 591, 117 S.Ct. 2231 (1997) (“This class, which may stretch into the millions, easily satisfies the numerosity requirement.”); In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 800 (3rd Cir. 1995), cert. denied, General Motors Corp. v. French, 516 U.S. 824, 116 S.Ct. 88 (1995) (“The numerosity requirement of Rule 23(a) is plainly satisfied in this action encompassing nearly six million truck owners.”); Ballard v. Equifax Check Services, Inc., 186 F.R.D. 589, 594 (E.D. Cal.1999) (class of “approximately 1.4 million California residents” satisfied numerosity).

Certification of Class Actions Uncategorized

In re Briscoe: MDL (Multidistrict Litigation) And Class Action Defense Cases

District Court Denial of Motion to Remand MDL Actions Involving Opt-Out Class Members Following Class Action Settlement Agreement Does Not Warrant Writ of Mandamus (Mandate) Because Appellate Review Will Provide Adequate Relief, and District Court Ruling on Fraudulent Joinder Upheld Because Statute of Limitations Had Run on Non-diverse Defendants, Third Circuit Holds

Fraudulent joinder is discussed in separate articles which explain a plaintiff may not join a party-defendant for purposes of defeating federal court jurisdiction. MDL (Multidistrict Litigation) topics also are discussed in separate articles which explain that the Judicial Panel for Multidistrict Litigation may transfer litigation pending in multiple courts to a single district court for pretrial proceedings. The MDL cases must be remanded prior to trial, and it is incumbent upon a party to the MDL litigation to file a motion for such remand. On May 15, 2006, in a case brought by individuals who had opted out of a class action settlement agreement, the Third Circuit refused to grant a petition for writ of mandamus to review a district court order denying remand on the grounds that appellate review would be adequate, and the Third Circuit affirmed the district court’s ruling that non-diverse parties had been fraudulently joined to defeat federal court jurisdiction. In re Briscoe, 448 F.3d 201 (3d Cir. 2006).

The underlying has a tortured background. In 1997, Wyeth withdrew two diet drugs from the market – and 18,000 lawsuits followed. The Judicial Panel for Multidistrict Litigation consolidated the actions and transferred them to the Eastern District of Pennsylvania (MDL-1203). After four separate trips to the Third Circuit that “set forth various facets of the background to MDL-1203 and its class action settlement agreement,” the class action settlement was consummated. Briscoe, at 206. More than 14,000 additional lawsuits followed, brought by 30,000-35,000 individuals who had opted out of the class action settlement. The group of 127 lawsuits at issue in Briscoe had been filed in Texas state court between November 2002 and August 2003, had included as named defendants the individual doctors that had prescribed the diet drugs, and had not alleged any federal law claims. Id., at 208-09. Wyeth removed the cases to federal court and the MDL Judicial Panel transferred the cases to the docket of MDL-1203. Id., at 209.

Class Action Court Decisions Class Actions In The News Multidistrict Litigation Removal & Remand Uncategorized

Class Action Defense Issues: Certification of Class Actions Commonality Requirement Under Rule 23(a)(2)

Defending Class Actions: Certification Under Rule 23 – Part II

The Commonality Requirement of Rule 23(a)(2)

In defending a class action, the single most important motion facing a defendant is the plaintiff’s motion to certify a class. Rule 23(a) requires that the plaintiff demonstrate numerosity, commonality and typicality, and that the class members will be adequately represented, and must additionally demonstrate that the action satisfies Rule23(b). The class action requirements of Rule 23 are mandatory. Thus, class certification requires that the prospective class representative satisfy the elements set forth in Rule 23(a), as well as the elements of Rule 23(b) (discussed in a separate article) be met. General Telephone Co. of Southwest v. Falcon, 457 U.S. 152, 102 S.Ct. 2364 (1982) (reversing class certification for failure to analyze Rule 23 requirements). This article discusses the commonality requirement of Rule 23(a).

Rule 23(a)(2) of the Federal Rules of Civil Procedure provides that a class action may not be maintained unless “there are questions of law or fact common to the class.” It has been said that numerosity and commonality “form the core of the class-action concept.” Newberg on Class Actions, “Prerequisites for Maintaining a Class Action,” §3:13, p.316. As the Third Circuit noted, “‘commonality’ like ‘numerosity’ evaluates the sufficiency of the class itself, and ‘typicality’ like ‘adequacy of representation’ evaluates the sufficiency of the named plaintiff.” Hassine v. Jeffes, 846 F.2d 169, 176 n.4 (3d Cir.1988).

“Rule 23 does not require that the representative plaintiff have endured precisely the same injuries that have been sustained by the class members, only that the harm complained of be common to the class, and that the named plaintiff demonstrate a personal interest or ‘threat of injury . . . [that] is “real and immediate,” not “conjectural” or “hypothetical.”’” Hassine, at 177 (quoting O’Shea v. Littleton, 414 U.S. 488, 494, 94 S.Ct. 669 (1974). Thus, in Georgine, supra, the Third Circuit held that “commonality” did not exist because “this class is a hodgepodge of factually as well as legally different plaintiffs.” Georgine v. Amchem Products, 83 F.3d at 632.

Certification of Class Actions Uncategorized

Class Action Defense Issues: Certification of Class Actions Typicality Requirement Under Rule 23(a)(3)

Defending Class Actions: Certification Under Rule 23 – Part II

The Typicality Requirement of Rule 23(a)(3)

In defending a class action, the single most important motion facing a defendant is the plaintiff’s motion to certify a class. Rule 23(a) requires that the plaintiff demonstrate numerosity, commonality and typicality, and that the class members will be adequately represented, and must additionally demonstrate that the action satisfies Rule23(b). The class action requirements of Rule 23 are mandatory. Thus, class certification requires that the prospective class representative satisfy the elements set forth in Rule 23(a), as well as the elements of Rule 23(b) (discussed in a separate article) be met. General Telephone Co. of Southwest v. Falcon, 457 U.S. 152, 102 S.Ct. 2364 (1982) (reversing class certification for failure to analyze Rule 23 requirements). This article discusses the typicality requirement of Rule 23(a).

Rule 23(a)(3) of the Federal Rules of Civil Procedure provides that a class action may not be maintained unless “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Unlike numerosity and commonality, which focus on the characteristics of the class, typicality and adequacy of representation (discussed separately) focus on the characteristics of the plaintiff representative of the class. Hassine v. Jeffes, 846 F.2d 169, 176 n.4 (3rd Cir.1988); Newberg on Class Actions, “Prerequisites for Maintaining a Class Action,” §3:13, pp.316-17 (4th ed. 2002).

“The typicality criterion focuses on whether there exists a relationship between the plaintiff’s claims and the claims alleged on behalf of the class.” Newberg, at 317 (citing General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 102 S.Ct. 2364 (1982)). Newberg also states that “typicality of claims seeks to assure that the interests of the representative are aligned with the common questions affecting the class,” id., at 319 (footnote omitted).

Certification of Class Actions Uncategorized

Class Action Defense Cases–Prime Care of Northeast Kansas v. Humana Insurance: Tenth Circuit Rules On Removal Of Class Action Under CAFA (Class Action Fairness Act)

CAFA (Class Action Fairness Act of 2005) Allows Removal of Suit Filed Prior to CAFA’s Effective Date by Defendant Added to Suit by Amendment After CAFA’s Effective Date Tenth Circuit Holds On May 12, 2006, the Court of Appeals for the Tenth Circuit considered as a matter of first impression the question of “whether CAFA permits the removal of a class action filed before the Act’s effective date if the removing defendant was first added by amendment after the effective date.

Class Action Court Decisions Class Action Fairness Act (CAFA) Class Actions In The News Removal & Remand Uncategorized

Class Action Defense Issues: Certification of Class Actions Adequate Representation Requirement Under Rule 23(a)(4)

Defending Class Actions: Certification Under Rule 23 – Part II

The Adequate Representation Requirement of Rule 23(a)(4)

In defending a class action, the single most important motion facing a defendant is the plaintiff’s motion to certify a class. Rule 23(a) requires that the plaintiff demonstrate numerosity, commonality and typicality, and that the class members will be adequately represented, and must additionally demonstrate that the action satisfies Rule23(b). The class action requirements of Rule 23 are mandatory. Thus, class certification requires that the prospective class representative satisfy the elements set forth in Rule 23(a), as well as the elements of Rule 23(b) (discussed in a separate article) be met. General Telephone Co. of Southwest v. Falcon, 457 U.S. 152, 102 S.Ct. 2364 (1982) (reversing class certification for failure to analyze Rule 23 requirements). This article discusses the adequate representation requirement of Rule 23(a).

Rule 23(a)(4) of the Federal Rules of Civil Procedure provides that a class action may not be maintained unless “the representative parties will fairly and adequately protect the interests of the class.” At the end of this article, we briefly discuss issues of the criminal record and/or credibility of the proposed class representative, and the effect on class certification. In brief, such issues may be relevant because unlike numerosity and commonality, which focus on the characteristics of the class, typicality and adequacy of representation focus on the characteristics of the plaintiff representative of the class. Hassine v. Jeffes, 846 F.2d 169, 176 n.4 (3d Cir.1988); Newberg on Class Actions, “Prerequisites for Maintaining a Class Action,” §3:13, pp.316-17 (4th ed. 2002).

On the other hand, this test focuses generally but not exclusively on the adequacy of counsel for the represented class, rather than the adequacy of the plaintiff representatives. In fact, the Eleventh Circuit recently summarized the four elements required for class certification under Rule 23(a) as “numerosity, commonality, typicality, and adequacy of counsel.” Hines v. Widnall, 334 F.3d 1253. 1255-56 (11th Cir. 2003) (italics added).

Certification of Class Actions Uncategorized

CAFA (Class Action Fairness Act of 2005) and Rule 23 – A General Overview

CAFA (Class Action Fairness Act of 2005) and Rule 23 – A General Overview for the Class Action Defense Lawyer

Class action litigation is rampant, and all too often class action lawsuits cause more injury than the wrong they sought to redress. These actions seem driven by a desire to maximize attorney fees rather than to serve the public. A 1995 House Conference Report, for example, enumerated ways in which abusive class actions have hurt the U. S. economy. See, H.R.Rep. No. 104-369, p. 31 (1995). These concerns led to sweeping reforms in federal securities law class actions through the enactment of SLUSA (Securities Litigation Uniform Standards Act) in 1998. Abuse of class action lawsuits also led to the enactment of CAFA (Class Action Fairness Act of 2005).

Class actions may serve an important function. The preamble to CAFA (Class Action Fairness Act of 2005) states, “Class-action lawsuits are an important and valuable part of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.”

In federal court, class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. The procedure for filing a class action is simple enough; the difficulty arises when one seeks to certify the class.

A lawsuit is filed with one or more plaintiffs purporting to bring the action on behalf of a putative class. (This is not to suggest that the court may only approve a plaintiff-class. On the contrary, it is possible to seek certification of a defendant class. See e.g., ASARCO Inc. v. Kadish, 490 U.S. 605, 610, 109 S.Ct. 2037, 2041 (1989) (noting that trial court certified the case as a defendant class action); Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 n.3, 105 S.Ct. 2965, 2974 (1985) (noting that opinion “is limited to those class actions which seek to bind known plaintiffs concerning claims wholly or predominately for money judgments”and “[does not] address class actions where the jurisdiction is asserted against a defendant class.” It is far more common, however, for a suit to seek certification of a plaintiff class.)

Certification of Class Actions Uncategorized

Brief Overview of Class Action Issues Under SLUSA (Securities Litigation Uniform Standards Act) For The Defense Lawyer

SLUSA (Securities Litigation Uniform Standards Act) was enacted by Congress in 1998 to affect sweeping changes to federal securities laws class actions. SLUSA addresses numerous federal securities laws class actions issues including pleading, class representation, discovery, liability, attorney fee awards, expenses and more. SLUSA also sought to pre-empt state law securities class action litigation, but the Circuit Courts disagreed on the breadth of that pre-emption.

In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, __ U.S. ___, 126 S.Ct. 1503 (2006), the United States Supreme Court issued its opinion. This opinion addresses whether the Securities Litigation Uniform Standards Act (SLUSA) “only pre-empts state-law class-action claims brought by plaintiffs who have a private remedy under federal law,” as the Second Circuit held in Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 395 F.3d 25 (2005), or whether SLUSA “also pre-empts state-law class-action claims for which federal law provides no private remedy,” as the Seventh Circuit held in Kircher v. Putnam Funds Trust, 403 F.3d 478 (7th Cir. 2005). The Supreme Court agreed with the Seventh Circuit, holding that SLUSA’s pre-emption provision was intended to be read broadly, and pre-empted state-law class-action claims brought not only by purchasers and sellers of securities, but also by holders of securities. As so read, SLUSA pre-empted state-law claims alleging the fraudulent manipulation of stock prices.

As the Supreme Court observed,

Title I of the Securities Litigation Uniform Standards Act of 1998 (SLUSA) provides that “[n]o covered class action” based on state law and alleging “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security” “may be maintained in any State or Federal court by any private party.” § 101(b), 112 Stat. 3227 (codified at 15 U.S.C. § 78bb(f)(1)(A)).

Merrill Lynch v. Dabit, 126 S.Ct. at 1506-07.

PSLRA/SLUSA Class Actions Uncategorized