Class Action Defense Cases—In re LandAmerica: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In District of South Carolina

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees to Transfers Class Actions to District of South Carolina Two class actions – one in California and one in South Carolina – were filed against various defendants, including LandAmerica and SunTrust Banks, “on behalf of individuals and entities that sought to enter into a Section 1031 tax-deferred exchange and entrusted money to facilitate the exchange with the qualified intermediary LandAmerica 1031 Exchange Services, Inc.

Class Action Court Decisions Multidistrict Litigation Uncategorized

BofA Class Action Defense Cases–In re Consumer Privacy: California Appellate Court Affirms Trial Court Approval Of Class Action Settlement And Award Of Attorney Fees Under Clear Sailing Agreement

Trial Court did not Err in Approving Class Action Settlement in Class Action Against Bank of America for Invasion of Privacy Arising from Sale of Customer Information to Third Party Marketers and “Clear Sailing Agreement” as to Attorney Fee Award to Class Counsel did not Invalidate Award California Appellate Court Holds Plaintiffs filed a putative class action against Bank of America and related entities alleging inter alia invasion of privacy arising from the Bank’s alleged disclosure of “personal and confidential information to third party telemarketers and direct mail marketers for a fee, to enable them to market services to plaintiffs”; the class action was coordinated with two similar class actions against the Bank, and a consolidated class action complaint was filed in 2003.

Class Action Court Decisions Uncategorized

Labor Law Class Action Defense Cases–Hernandez v. Vitamin Shoppe: California Court Affirms Order Barring Attorney In One Class Action From Contacting Class Members In Related Class Action After Class Conditionally Certified In That Action

As Matter of First Impression, Class Action Plaintiff Attorney Ethically Prohibited from Contacting Class Members in Class Action once Trial Court Conditionally Certifies Litigation as a Class Action and Appoints Class Counsel California State Court Holds

Plaintiffs filed three separate putative class action lawsuits against Vitamin Shoppe alleging labor law violations; specifically, the class action complaint alleged that defendant failed to pay employees overtime, or to provide meal and rest periods, as allowed by California law. Hernandez v. Vitamin Shoppe Ind. Inc., 174 Cal.App.4th 1441, 95 Cal.Rptr.3d 734, 737-38 (Cal.App. 2009). The Perry class action (which included appellant Lisa Hernandez as a named plaintiff) was filed in Marin County, as was the Beauford class action; the Thompson class action was filed in Orange County. Id., at 738. Plaintiff’s attorney in the Thompson class action was Jeffrey Spencer; Spencer also represented named plaintiff Hernandez in the Perry class action. Id., at 737-38. Defense attorneys offered to settle the putative class actions on a class-wide basis, provided that all three plaintiffs attended the mediation; Spencer, on behalf of the Thompson class action, refused to participate. Id., at 738. The parties reached a proposed class action settlement of the Perry class action, and Spencer – as plaintiff’s attorney in Thompson – tried unsuccessfully to coordinate the three class actions or, alternatively, to stay the Perry class action. Id. Spencer, again acting as counsel for the Thompson plaintiffs, opposed court approval of the proposed class action settlement in Perry on the grounds that the settlement “was based on erroneous factual and legal assumptions, and that it was not within a range of reasonableness.” Id. The trial court gave preliminary approval to the proposed class action settlement in Perry and appointed class counsel (not Spencer), but before the claims administrator had sent notice to the class, Spencer (acting as counsel in the Thompson class action) sent letters to Vitamin Shoppe employees urging them to opt-out of the proposed settlement in the Perry class action and to retain him as their attorney. Id., at 739. In pertinent part, the court proceedings that followed included a court order that “ordered that a corrective notice be sent, directed Spencer to refrain from any further communications with class members that he did not represent, and granted the request for monetary sanctions.” Id., at 740. Following reassignment to a new judge after Spencer successfully challenged the original trial court for bias, id., the trial court reaffirmed the court order enjoining Spencer from communicating with any class members that he did not represent, ordering a corrective notice be sent to the class (as well as a procedure for determining the impact of Spencer’s letter on class members), and imposing sanctions against Spencer, id., at 741. The appellate court affirmed the order except for the award of sanctions.

For purposes of this article, we focus on the court order prohibiting Spencer from further communication with members of the putative class and awarding sanctions. The appellate court easily found that the court order did not create any conflict with Spencer’s ethical obligation to communicate with clients because it specifically exempted communications with class members who had retained him. See Hernandez, at 743-44. On the contrary, the court order prohibited Spencer from communicating directly with individuals represented by other counsel – class counsel. The Court of Appeal also concluded that the trial court order was well within its discretionary power to oversee litigation, and “‘to protect the rights of all parties, and to prevent abuses which might undermine the proper administration of justice.’” Id., at 745 (citation omitted). In this regard, the appellate court held that the trial court’s duty to protect absent class members is “particularly pronounced” following class action certification “because class members must decide whether or not to opt out.” Id. (citation omitted). In this case, “Spencer sent his letters unilaterally, without court approval, after the court had reviewed the proposed settlement, counsel’s arguments, preliminarily approved the settlement, and ordered the claims administrator to send notice to the class.” Id. Moreover, Spencer’s letters were misleading, id., at 745-46. And finally, the Court of Appeal rejected the claim that the court order infringed on Spencer’s right to free speech, holding at page 746, “Spencer fails to establish that his constitutional free speech rights entitled him to interfere with the trial court’s duty and authority to supervise the exclusion process after conditionally certifying the class, or to contact class members for whom the court had appointed class counsel.” Accordingly, the Court affirmed the trial court orders, save for the sanction as noted below. Id., at 751.

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

Class Action Defense Cases–Martorana v. Marlin & Saltzman: California Court Affirms Dismissal Of Claims Against Defendant And Class Counsel Arising From Class Action Settlement By Class Member Who Submitted An Untimely Claim

Class Action Settlement Approved by Court Provided Procedure for Timely Submitting Claims for Benefits as part of Resolution of Labor Law Class Action, and Putative Class Member’s Negligence Claims against Class Action Defendant and Negligence/Malpractice Claims against Class Counsel Properly Dismissed because Defendant and Class Counsel Owed no Duty to Class Members to Ensure that they Timely Submitted Claims Forms California State Court Holds

A putative class action was filed in California state court against Allstate Insurance Company (the Sekly action) alleging that the company failed to pay overtime wages to its claims adjusters in violation of California’s Labor Code, and seeking damages and related penalties; several years later, “the parties in the Sekly action agreed to a class action settlement totaling $1.2 million.” Martorana v. Marlin & Saltzman, ___ Cal.App.4th ___, 96 Cal.Rptr.3d 172 (Cal.App. July 1, 2009) [Slip Opn., at 2-3]. The trial court approved the class action settlement, _id._, at 3. Plaintiff Ron Martorana was a member of the class and, _id._, at 2, and as “a senior claims adjuster for Allstate, …[he] was entitled to receive approximately $65,000 as his portion of the settlement provided that he submit a timely claim form,” _id._, at 3. However, because plaintiff filed to timely submit a claim form, he did not receive any of the settlement proceeds, _id._, at 2. Plaintiff filed suit against Allstate and against counsel for the class alleging that they were “negligent in failing to take action to contact [him] before the claim filing deadline to determine why he had not filed a claim form and to make sure that he was aware of the need to timely do so.” _Id._ Defendants demurred to the complaint, and the trial court sustained the demurrers and granted Allstate’s request for sanctions under Code of Civil Procedure section 128.7. _Id._ Plaintiff appealed, and the appellate court affirmed the dismissal of the lawsuit but set aside the award of sanctions.

Approval of the class action settlement followed the usual process: the trial court gave preliminary approval to the class action settlement and a claims administrator sent notice to each member of the class at their last known address; class members had 75 days to submit claim forms or to opt out of the class; and the trial court ultimately gave final approval to the class action settlement finding that it was “fair and adequate and . . . the result of arms length negotiations between the parties.” Martorana, at 3. Plaintiff does not dispute that he received the necessary paperwork; rather, he argued that he submitted an untimely claim form because of health problems. Id. His original complaint alleged negligence against Allstate, and negligence and malpractice against class counsel, id. According to plaintiff, “Allstate and Class Counsel owed a duty to the class as a whole to establish a settlement notice procedure whereby class members who had not responded to the notice would be contacted prior to the claim filing deadline to ascertain the reason why they had not submitted a timely claim form.” Id., at 4. The malpractice claim additionally alleged that “Class Counsel owed a duty to [plaintiff] individually to take reasonable steps to contact him about his failure to file a claim and to make sure that his claim form was timely submitted.” Id. The trial court sustained Allstate’s demurrer without leave to amend, and awarded $4,800 in sanctions because the lawsuit “was so completely devoid of merit that the court finds it was filed to harass, annoy, or vex Allstate.” Id. The trial court sustained the demurrer of class counsel with leave to amend as to the malpractice claim, but when class counsel demurred to the amended complaint, the court sustained the demurrer without leave to amend. Id., at 4-5. Put simply, the court found that class counsel owed, but did not breach, a duty of care to plaintiff. Id., at 5-6.

Class Action Court Decisions Uncategorized

Labor Law Class Action Defense Cases–Vinole v. Countrywide: Ninth Circuit Affirms Order Granting Defense Motion To Deny Class Action Treatment To Labor Law Class Action

District Court did not Err in Granting Defense Motion to Deny Class Action Certification in Labor Law Class Action because Rule 23 does not Preclude Defendants from Filing such Motions, Plaintiffs had Adequate Time to Conduct Discovery, and District Court did not Abuse its Discretion in Concluding Rule 23(b)(3)’s Predominance Requirement could not be Satisfied Ninth Circuit Holds

Plaintiffs filed a putative class action against Countrywide Home Loans alleging labor law violations; the class action complaint alleged that defendant misclassified its 1,140 External Home Loan Consultants (HLCs) as “exempt” and, accordingly, failed to pay them overtime and other wages lawfully due non-exempt employees. Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935 (9th Cir. 2009) [Slip Opn., at 8299, 8303]. Plaintiffs filed the class action in California state court, but defense attorneys removed the class action to federal court. Id., at 8305. According to the allegations underlying the class action, Countrywide employs HLCs to sell loan products and pays them entirely on a commission basis. HLCs “are focused on outside sales and ‘represent Countrywide in local communities, and specifically work with realtors, builders, and other potential business partners in order to develop business relationships and obtain referral business.’” Id., at 8304. Prior to the discovery cut-off date and before plaintiffs moved for class certification, defense attorneys filed a motion to deny class action treatment. Id., at 8303. Countrywide admitted that it “applies a uniform wage exemption to HLCs,” classifying them as “exempt” outside salespeople under California law and the federal Fair Labor Standards Act (FLSA). See id., at 8304-05. But Countrywide asserted that it does not monitor what the HLCs do and that it “has no control over what HLCs actually do during the day”; rather, each HLC independently decides “how much, or how little time HLCs spend in the office, or working overall,” “how they want to market themselves,” and “how much money they want to make.” Id., at 8304. With respect to this last issue, the average HLC was paid more than $100,000 per year, and some earned “several hundreds of thousands of dollars,” id. Countrywide additionally introduced evidence that the amount of time individual HLCs spent in the office “varies greatly” and that it tracks only “the number and value of loans that HLCs close each month.” Id., at 8305. The district court granted Countrywide’s motion, concluding that class action treatment was not warranted. Id., at 8303. Plaintiffs appealed, and the Ninth Circuit affirmed.

The class action complaint alleged twelve causes of action against Countrywide, each premised on the assumption that Countrywide misclassified HLCs as exempt. Vinole, at 8305. The appeal centered on “whether the district court abused its discretion by (1) considering Countrywide’s motion to deny class certification before Plaintiffs had filed a motion to certify and prior to the pretrial and discovery cutoffs, and (2) denying class certification based on its reasoning that individual issues predominate over common issues.” Vinole, at 8303. We do not belabor the Ninth Circuit’s holding that “Rule 23 does not preclude a defendant from bringing a ‘preemptive’ motion to deny certification.” Id., at 8307. Other courts have reached a similar conclusion, and it rests on the solid observation that “[n]othing in the plain language of Rule 23(c)(1)(A) either vests plaintiffs with the exclusive right to put the class certification issue before the district court or prohibits a defendant from seeking early resolution of the class certification question.” Id., at 8307-08. In resolving this issue of first impression in the Ninth Circuit, the Court explained that “no rule or decisional authority prohibited Countrywide from filing its motion to deny certification before Plaintiffs filed their motion to certify, and Plaintiffs had ample time to prepare and present their certification argument.” Id., at 8303.

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

Labor Law Class Actions Retain Grip On Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

As a resource for California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in the state and federal courts located in 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 preceding week. This report covers the period from July 17 – 23, 2009, during which time 35 new class actions were filed.

Class Actions In The News Uncategorized

BofA Class Action Defense Cases—In re Bank of America: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District Of New York

Judicial Panel Grants Unopposed Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, and Transfers Actions to Southern District of New York Thirty (30) individual and class action lawsuits were filed against Bank of America and other defendants arising out of “alleged misrepresentations and omissions made in the context of Bank of America’s acquisition of Merrill Lynch & Co., Inc.”; 28 of the lawsuits had been filed in New York, and one each in California and Kansas.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases–Steinberg v. Nationwide: New York Federal Court Awards Attorney Fees Following Class Action Settlement Using Lodestar Method And Applying 1.5 Multiplier

Class Action Counsel Obtained Significant Benefit through Class Action Settlement Following 10-Year Litigation but Requested Multiplier was Excessive given Billing Rates of Class Counsel, Warranting Multiplier of 1.5 rather than 1.79 as Requested New York Federal Court Holds Plaintiff filed a class action in New York state court against his automobile insurance company following its payment of insurance benefits that allegedly “did not reflect the amount that plaintiff, the insurance adjuster and the dealer had agreed upon.

Class Action Court Decisions Uncategorized

FLSA Class Action Defense Cases–Haro v. City of Rosemead: California Court Dismisses Appeal From Denial Of Class Action Treatment Of FLSA Class Action Complaint And Reaffirms FLSA Actions Not Subject To Class Action Treatment

Putative Class Action Alleging Violations of Federal Fair Labor Standards Act (FLSA) not Subject to Class Action Treatment because “Opt-In” Provision of FLSA Incompatible with “Opt-Out” Nature of California Class Action Lawsuits California State Court Holds

Plaintiffs filed a putative class action in California state court against the City of Rosemead alleging violations of the federal Fair Labor Standards Act (FLSA); the class action complaint alleged that the City failed to pay nonexempt employees “for all hours worked.” Haro v. City of Rosemead, 174 Cal.App.4th 1067, 94 Cal.Rptr.3d 874, 876 (Cal.App. 2009). According to the allegations underlying the class action complaint, the City did not pay the employees sought to be covered by the action “the wages to which they were entitled.” Id., at 878. Plaintiffs filed a motion with the trial court to certify the litigation as a class action under California Code of Civil Procedure section 382; defense attorneys opposed class action treatment on the ground that the “opt-in” requirement of an FLSA collective action was incompatible with the “opt-out” nature of class actions under Section 382. Id. The trial court agreed and refused to certify the litigation as a class action, id., at 876; in so ruling, the court observed that plaintiffs had not sought to proceed with a “collective action” under the FLSA but, rather, as a class action under Section 382, id., at 878-79. The trial court denied also plaintiffs’ motion for leave to amend their class action complaint. Id., at 876. Plaintiffs appealed both orders, and the California Court of Appeal dismissed the appeals on the grounds that the underlying trial court orders were not appealable.

The Court of Appeal began by analyzing the differences between “collective actions” under the FLSA and “class actions” under Section 382. Haro, at 876. Importantly, the FLSA requires that members of the putative class affirmatively “opt-in” to the litigation, id. (citation omitted), which has been referred to as “‘[p]robably the most significant difference in procedure between the FLSA’ and, in federal practice, class actions under Federal Rules of Civil Procedure, rule 23,” id. (citation omitted). For this reason, at least one federal circuit court has held, “There is a fundamental, irreconcilable difference between the class action described by Rule 23 and that provided for by FLSA § 16(b). In a Rule 23 proceeding a class is described; if the action is maintainable as a class action, each person within the description is considered to be a class member and, as such, is bound by judgment, whether favorable or unfavorable, unless he has ‘opted out’ of the suit. Under § 16(b) of FLSA, on the other hand, no person can become a party plaintiff and no person will be bound by or may benefit from judgment unless he has affirmatively ‘opted into’ the class; that is, given his written, filed consent.” Id., at 876-77 (quoting LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286, 288 (5th Cir.1975) (footnote omitted). Moreover, “at least one California court has held that the opt-in feature cannot be adopted in California class actions.” Id., at 877 (citing Hypertouch, Inc. v. Superior Court, 128 Cal.App.4th 1527, 1550 (Cal.App. 2005). The California appellate court reaffirmed that “FLSA actions are not class actions,” id.

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

CAFA Class Action Defense Cases–Admiral Insurance v. Abshire: Fifth Circuit Affirms Remand Of Class Action Holding Amended Complaint Did Not Commence Civil Action Under Class Action Fairness Act (CAFA)

District Court did not Err in Remanding Class Action to State Court because Addition of Class Action Allegations to Ninth Amended Complaint did not Commence a Civil Action under CAFA (Class Action Fairness Act) and Addition of New Plaintiffs and Claims did not Commence a Civil Action under CAFA Fifth Circuit Holds

In the early 1990s, plaintiffs, as purchasers of “life insurance policies, annuities, and corporate notes from three Louisiana companies” – Public Investors Life Insurance Co. (PILCO), Public Investors (PI) and Midwest Life Insurance (MLI) – filed a class action in Louisiana state court against the State of Louisiana and other defendants after all three companies failed; the class action complaint alleged “negligent, intentional, and criminal acts (regulatory and otherwise) that they claim contributed to these failures.” Admiral Ins. Co. v. Abshire, ___ F.3d ___, 2009 WL 1887381, *1 (5th Cir. 2009). The original lawsuits were not styled as class actions; rather, originally more than 1300 plaintiffs filed three lawsuits in two different Louisiana state courts. _Id._ Eventually, the three lawsuits were consolidated and a ninth amended complaint was filed that sought class action treatment. _Id._ Defense attorneys removed the ninth amended class action complaint to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA). _Id._ The district court remanded the lawsuit to state court, but denied plaintiffs’ motion for fees and costs associated with securing remand, _id._ Both sides appealed and the Fifth Circuit affirmed both the remand order and the denial of fees and costs.

The state-court complaint was amended to seek class action treatment because plaintiffs’ counsel lost contact with about 250 of the plaintiffs and an advisory opinion from the Ethics Advisory Service Committee of the Louisiana State Bar Association “determined that [plaintiffs’] attorneys would violate the Rules of Professional Conduct if they tried or settled the claims of plaintiffs with whom they had lost contact, using only the powers of attorney that these plaintiffs had executed at the time of retainer.” Abshire, at *1. Plaintiffs’ counsel initially sought to withdraw as counsel for those clients, but subsequently pursued the class action route in order to resolve the ethical issues created by loss of contact with their clients. Id., at *1-*2. Defense attorneys removed the lawsuit to federal court immediately after the ninth amended complaint was filed, id., at *2. Plaintiffs moved to remand the class action on the ground that it had been “commenced” long before CAFA’s February 18, 2005 effective date; the district court agreed, id. Pursuant to 28 U.S.C. § 1447(c), plaintiffs requested attorneys’ fees and costs incurred in winning remand, arguing that the State’s removal of the class action to federal court under CAFA was “objectively unreasonable.” Id., at *3. The district court refused to award fees “because case law in the area was unsettled at the time of removal.” Id.

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