Wells Fargo Class Action Defense Cases–In re Wells Fargo: Ninth Circuit Reverses Certification Of Labor Law Class Action Holding District Court Erred In Relying On Employer’s Uniform Exemption Policy To Exclusion Of Other Factors

Labor Law Class Action Certification Order Reversed because District Court Abused its Discretion in Relying on Wells Fargo’s Internal Policy of Treating Employees as Exempt “To the Near Exclusion of Other Relevant Factors Touching on Predominance” under Rule 23(b)(3) Ninth Circuit Holds

Plaintiffs filed a putative class action in California against their employer, Wells Fargo Home Mortgage, alleging labor law violations; the class action complaint – brought individually and on behalf of roughly 5000 other current and former Wells Fargo home mortgage consultants (HMCs), who market and sell mortgages – alleged defendant paid HMCs by sales commission until 2005, when “Wells Fargo changed the commission system to include a minimum, non-recoverable draw against commissions.” In re Wells Fargo Home Mortgage Overtime Pay Litig., 571 F.3d 953 (9th Cir. 2009) [Slip Opn., at 8325, 8328-29]. According to the allegations underlying the class action, prior to 2005 Wells Fargo did not track the hours worked by HMCs or pay them overtime because “it treated nearly all of its HMCs as exempt from state and federal overtime requirements.” Id., at 8329. Several plaintiffs filed various putative class action lawsuits against Wells Fargo alleging state and federal labor law violations, which the Judicial Panel on Multidistrict Litigation ultimately consolidated in the Northern District of California. Id. The plaintiffs in this particular California class action (Mevorah) alleged that Wells Fargo’s conduct violated California’s Unfair Competition Law (UCL) by violating the federal Fair Labor Standards Act (FLSA), id. Plaintiffs’ counsel moved the district court to certify the litigation as a class action; defense attorneys opposed the motion in part on the ground that “individual issues predominated and that class treatment was not superior,” and “pointed to a number of exemptions under the FLSA (applicable through the UCL) and California labor law that would require individualized inquiries.” Id. The district court agreed that “individual inquiries would be necessary with respect to five exemptions: the federal outside sales exemption…, California’s outside sales exemption…, California’s commissioned sales exemption…, and the federal highly compensated employee exemption….” Id., at 8329-30. Specifically, the federal court found that these inquiries “would require an analysis of the job experiences of the individual employees, including the amount of time worked by each HMC, how they spend their time, where they primarily work, and their levels of compensation.” Id., at 8330. On the other hand, the district court concluded that common issues existed only as to two exemptions – “whether Wells Fargo qualifies as a ‘retail or service establishment’ for purposes of a federal exemption for commissioned sales…, and whether the employees earned ‘commission wages’ under California’s commissioned sales exemption….” Id. The court nonetheless granted class action treatment “relying on Wells Fargo’s uniform exemption policies,” id., at 8330-31. The Ninth Circuit reversed, holding that while “uniform exemption policies” – such as “an employer’s internal policy of treating its employees as exempt from overtime laws” – is relevant to the predominance test in Rule 23(b)(3), “it is an abuse of discretion to rely on such policies to the near exclusion of other relevant factors touching on predominance.” Id., at 8328.

The Ninth Circuit explained at page 8332: “The question here is whether the district court abused its discretion in finding Rule 23(b)(3)’s predominance requirement was met based on Wells Fargo’s internal policy of treating all HMCs as exempt from state and federal overtime laws. To succeed under the abuse of discretion standard, Wells Fargo must demonstrate that the district court either (a) should not have relied on its exemption policy at all or (b) made a clear error of judgment in placing too much weight on that single factor vis-a-vis the individual issues.” The Circuit Court construed Wells Fargo’s arguments “as a challenge to the weight accorded to the internal exemption policies” in that the district court “[considered] the proper factors but committing clear error in weighing them.” In re Wells Fargo Home Mortgage, at 8332. Specifically, defense attorneys argued that the weight afforded by the district court to Wells Fargo’s exemption policy “was tantamount to estoppels.” Id., at 8332-33. The Circuit Court agreed, finding at page 8333 that the district court’s class action certification order “was clearly driven by Wells Fargo’s uniform exemption policy.” That finding, in turn, “leads to the central question: whether such heavy reliance constituted a clear error of judgment in assaying the predominance factors.” Id.

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

Extremely Light Week For California Class Action Lawsuits But Labor Law Class Actions Regain Top Spot Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

In order to assist class action defense attorneys anticipate the types of class actions against which they will have to defend in California, 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.

Class Actions In The News Uncategorized

Class Action Defense Cases—In re Cox Enterprises: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Transfers Class Actions To Western District Of Oklahoma

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Class Action Plaintiffs, but Transfers Actions to Western District of Oklahoma Four class actions – two in Louisiana and one in Arizona and Georgia – were filed against various defendants, including Cox Enterprises, Cox Communications, Cox Communications Louisiana, Cox Communications New Orleans, and CoxCom (collectively “the Cox defendants”), together with an additional 14 potentially-related class action alleging antitrust violations; specifically, the class action complaints allege “that Cox improperly tied and bundled the lease of cable boxes to the ability to obtain premium cable services in violation of Section 1 of the Sherman Antitrust Act.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Labor Law Class Action Defense Cases–Johnson v. Arvin-Edison: California Court Affirms Dismissal Of Labor Law Class Action Against Water Storage District Holding Public Agency Exempt From State Labor Laws

Labor Law Class Action Against Water Storage District Properly Dismissed by Trial Court because Water District Subject to Federal Labor Laws but not State Labor Laws California State Court Holds Plaintiff filed a putative class action in California state court against his employer, Arvin-Edison Water Storage District (the District), alleging violations of California’s labor code; the class action complaint alleged that defendant failed to pay its employees overtime or to provide meal breaks required by California law.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases–In re HealthSouth: Eleventh Circuit Affirms Class Action Settlement Of Securities Fraud Class Action Including Bar Order Impacting CEO’s Indemnity Agreement With Company

Class Action Settlement Calling for Bar Order, Wiping Out Corporate Officer’s Indemnification Agreement and Advancement of Attorney Fees from Company Properly Approved by District Court Eleventh Circuit Holds

Plaintiffs filed a class action against HealthSouth Corporation and others, including its former chairman and CEO Richard M. Scrushy, alleging securities fraud; the class action complaint was filed in March 2003, after “HealthSouth acknowledged that its previous financial statements had substantially overstated its income and assets.” In re HealthSouth Corp. Sec. Litig., 572 F.3d 854, 2009 WL 1675398, *1 (11th Cir. 2009). According to the several class action complaints that were filed, defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934. Id. Ultimately, the class actions were consolidated in the Northern District of Alabama, and a partial settlement was reached between HealthSouth and the lead plaintiffs whereby HealthSouth would pay $445 million in settlement. Id. Scrushy was not a party to the settlement (having been prohibited from the mediation as the alleged mastermind of the fraud), and the district court approved the settlement over his objections, id. In part, the settlement included a bar order that extinguished “[Scrushy’s] contractual claims against HealthSouth for indemnification of settlement payments he might make to the underlying plaintiffs and extinguishes his claims for advancement of legal defense costs.” Id.

The basis of the appeal is that, in 1994, “Scrushy and HealthSouth executed an agreement requiring HealthSouth to indemnify Scrushy to the fullest extent permitted by law.” In re HealthSouth, at *1. Specifically, the indemnity agreement “require[d] HealthSouth to indemnify Scrushy for any judgment or settlement in any action in which he is sued for actions taken as a director or officer of the company, if he acted in good faith and reasonably believed he was acting in the best interest of the company.” Id. The bar order, however, wiped out any indemnity obligations, id. Scrushy’s objection was premised on the fact that the bar order “extinguished valuable and enforceable rights to which Scrushy was entitled under his indemnification agreement with HealthSouth.” Id., at *2. But “[t]he Bar Order is reciprocal, extinguishing similar claims by the settling defendants.” Id., at *2 (footnote omitted). The Eleventh Circuit reviewed Scrushy’s challenges to the settlement bar order for an abuse of discretion, id., at *3.

Class Action Court Decisions Class Actions In The News PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–In re Neurontin: Massachusetts Federal Court Denies Class Action Certification In Class Action Complaint Arising Out Of Manufacture And Sale Of Prescription Drug Neurontin

Class Action Plaintiffs’ Renewed Motion for Class Action Treatment Adequately Addressed District Court’s Concerns Regarding Rule 23(a)’s Requirements for Class Action Certification but Failed to Satisfy Predominance Prong of Rule 23(b)(3) Massachusetts Federal Court Holds

Plaintiffs – consisting of consumers and third-party payors (TPPs) – filed a putative nationwide class action against Warner-Lambert and Pfizer arising out of defendants’ manufacture and distribution of the drug Neurontin; specifically, the class action complaint alleged that defendants “systematically and knowingly engaged in a fraudulent campaign to market and sell Neurontin for treatment of ‘off-label’ indications – conditions for which the Federal Drug Administration (‘FDA’) had not approved Neurontin – even though defendants knew Neurontin was not effective for those conditions.” In re Neurontin Marketing, Sales Practices & Prod. Liab. Litig., ___ F.R.D. ___ (D.Mass. May 13, 2009) [Slip Opn., at 1]. According to the allegations in the class action complaint, defendants’ conduct violated federal RICO (Racketeer Influenced and Corrupt Organizations Act) and the New Jersey Consumer Fraud Act (NJCFA), as well as claims for common law fraud and unjust enrichment, _id._, at 1-2. Thus, despite its caption, the class action was not a products liability case, _id._, at 2. Plaintiffs’ moved the district court to certify the litigation as a nationwide class action, but the court denied the motion finding that plaintiffs “failed to satisfy the commonality, numerosity, typicality, and predominance requirements of Rule 23 of the Federal Rules of Civil Procedure.” _See In re Neurontin Mktg. & Sale Practices Litig._, 244 F.R.D. 89, 105-107 and 114-16. (D. Mass. 2007). But the federal court denied class action certification without prejudice to the filing of a new motion for class action treatment “that addressed the Court’s concerns.” _In re Neurontin_, at 2 (citing 244 F.R.D. at 115). Plaintiffs filed a new motion for class certification, but the district court denied the motion finding that “common questions will not predominate over issues affecting individual plaintiffs, in accordance with Rule 23(b)(3),” _id._, at 2-3.

We do not here summarize the factual history set forth in the district court’s opinion, see In re Neurontin, at 3-6, or the court’s analysis of the commonality, numerosity and typicality requirements of Rule 23(a) for class action treatment, which the court concluded were satisfied by plaintiffs’ renewed motion for class certification, see id., at 6-17. But the district court spent more than 30 pages analyzing whether the predominance prong of Rule 23(b)(3) had been met, and concluded that it had not. See id., at 17 et seq. We do not discuss the lengthy order in detail. We note that with respect to the first class certification motion, “the Court’s concerns [with predominance] with respect to both groups emanated from their ability to demonstrate by common proof that defendants’ fraudulent marketing of Neurontin caused financial injury to all plaintiffs.” Id., at 18. More specifically, on the facts of this case “the Court could not simply presume that defendants’ fraudulent conduct caused all the off-label Neurontin prescriptions.” Id., at 23. Based on the New Jersey Supreme Court’s subsequent opinion concerning Vioxx in International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., Inc., 192 N.J. 372 (2007), referred to as Vioxx by the district court, the federal court refused to grant class action treatment to the litigation because “Vioxx precludes NJCFA plaintiffs from establishing causation through a report from a single expert, and the instant plaintiffs seek to do exactly that,” id., at 25.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-Satterfield v. Simon & Schuster: Ninth Circuit Reverses Defense Summary Judgment In Class Action Holding Text Message Is A “Call” Under TCPA And Triable Issues Exist As To Class Action Plaintiff’s Consent To Receive Text Message

Summary Judgment in Telephone Consumer Protection Act (TCPA) Class Action Improper because Text Message may Constitute a “Call” within the Meaning of TCPA and because Triable Issues of Material Fact Exist as to Whether Defendants were “Affiliates” of Nextones.com and therefore Whether Plaintiff Consented to Receive Text Message Ninth Circuit Holds

Plaintiff filed a putative class action against Simon & Schuster, Inc. and ipsh!net Inc. alleging violations of the federal Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227; the class action complaint was filed after plaintiff received an unsolicited text message. Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009) [Slip Opn., at 7329, 7332-33]. According to the allegations in the class action, plaintiff received the text message after she became a registered user of Nextones.com “in order to receive a free ringtone,” id., at 7333. Plaintiff had signed up at the request of her minor son, and his initials and first three letters of his last name, her email address, zip code, phone number and account information in order to sign up. Id., at 7333-34. Further, she affirmatively agreed to “receive promotions from Nextones affiliates and brands.” Id., at 7334. Plaintiff thereafter received a text message from Simon & Schuster, sent by ipsh!, promoting the sale of a new Stephen King novel, id. Plaintiff’s number was one of 100,000 cell phone numbers obtained by ipsh! from Mobile Information Access Company (MIA), the “exclusive agent for licensing the numbers of Nextones subscribers.” Id. Defense attorneys moved for summary judgment on the class action claims on the grounds that “(1) it had not used an ATDS [Automatic Telephone Dialing System], (2) [plaintiff] had not received a ‘call’ within the meaning of the TCPA, and (3) [plaintiff] had consented to the message and had not been charged for its receipt.” Id., at 7335. The district court granted the summary judgment “holding that (1) Simon & Schuster and ipsh! had not used an ATDS and (2) [plaintiff] had consented to receiving the message.” Id. The district court did not reach the issue of whether the text message was a “call” within the meaning of the TCPA, id. The Ninth Circuit reversed.

After summarizing the TCPA, the Ninth Circuit held that the district court erred in granting summary judgment because “there was a disputed issue of material fact as to whether the system Simon & Schuster used was an ATDS; (B) the text message was a ‘call’ within the meaning of the TCPA; and (C) [plaintiff] did not consent to the receipt of such a message, because Simon & Schuster is not an affiliate or brand of Nextones.” Satterfield, at 7336-37. First, the Circuit Court held that the district court erroneously limited an ATDS to a phone system that “produced, or called numbers ‘using a random or sequential number generator.’” Id., at 7337. Based on its analysis of the statute, the Ninth Circuit held that the relevant inquiry is “whether the equipment has the capacity ‘to store or produce telephone numbers to be called, using a random or sequential number generator,’” not whether it actually did so in the particular case at bar. Id., at 7337-38. So defined, the Court reversed summary judgment because it found “a genuine issue of material fact with regard to whether this equipment has the requisite capacity,” id., at 7338.

Class Action Court Decisions Uncategorized

Very Heavy Two-Week Period For California Class Action Lawsuits And Labor Law Class Actions Drop To Second Place Among Weekly Class Action Lawsuits Filed In California State And Federal Courts

As a resource to 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 June 26 – July 9, 2009, during which time a remarkable high number of new class actions — 108 — were filed.

Class Actions In The News Uncategorized

Class Action Defense Cases—In re Oral Sodium Phosphate: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Northern District Of Ohio

Judicial Panel Grants Defense Request for Pretrial Coordination of 38 Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, and Transfers Actions to Northern District of Ohio even though Only One of the Class Actions was Pending in that District Thirty-eight (38) class actions were filed against common defendant C.B. Fleet (Fleet) and various defendants alleging products liability claims; specifically, the class action complaints allege oral sodium phosphate solution-based (OSPS) products by Fleet were unsafe and caused personal injuries because they “high doses of OSPS products could lead to acute phosphate nephropathy, a type of kidney injury, and that Fleet knew of the risks associated with high doses of OSPS but downplayed or obscured those risks.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Ford Class Action Defense Cases–Kearns v. Ford Motor: Ninth Circuit Affirms Dismissal Of Class Action Under California UCL/CLRA Holding Class Action Complaint Failed To Satisfy Rule 9(b)’s Heightened Pleading Requirements

Class Action Alleging Violations of California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) Properly Dismissed because Heightened Pleadings Requirements of Rule 9(b) for Fraud Applied to Allegations in Class Action Complaint and Plaintiff Failed to Allege Fraud with Requisite Specificity Ninth Circuit Holds

Plaintiff filed a putative class action in California state court against Ford Motor and certain dealerships (collectively “Ford”) alleging violations of California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA); specifically, the class action complaint . Kearns v. Ford Motor Co., 567 F.3d 1120, 1122 (9th Cir. 2009). Defense attorneys removed the class action to federal court on grounds of diversity; the district court denied plaintiff’s motion to remand the class action to state court under the “local controversy exception” to the Class Action Fairness Act (CAFA). Id., at 1123. According to the allegations underlying the class action, Ford sells vehicles as either new, used, or Certified Pre-Owned (CPO) – “CPO vehicles are late model used vehicles, which Ford purports to put through a rigorous inspection process in order to certify that the vehicle’s safety, reliability, and road-worthiness surpass non-certified used vehicles.” Id., at 1122. Ford sells CPA vehicles for more than it sells non-certified used vehicles, id., at 1122-23, and the class action alleged that Ford “acted illegally to increase sales of [its CPO] vehicles, in violation of the CLRA and UCL,” id., at 1122. Defense attorneys moved to dismiss the third amended class action complaint on the grounds that the UCL and CLRA claims were premised on allegations of fraud, and that the class action complaint failed to plead fraud with the particularity required by Rule 9(b). Id. The district court granted the motion to dismiss but gave plaintiff an additional opportunity to amend the class action complaint; plaintiff refused, believing that the complaint satisfied the requisite pleading requirements, and the district court dismissed the class action, id., at 1123-24. Plaintiff appealed, and the Ninth Circuit affirmed.

The gravamen of the class action complaint is that “Ford makes false and misleading statements concerning the safety and reliability of its CPO vehicles.” Kearns, at 1123. According to the class action, “by making such false statements, Ford conspires to mislead class members into believing that the CPO program guarantees a safer, more reliable, and more roadworthy used vehicle.” Id. Ford allegedly charges an additional $1,000 dollars for CPO vehicles, but fails to disclose that provides “very little oversight…over the certification process.” Id. The class action complaint further alleged “that Ford misrepresents (1) the quality of the complete repair and accident-history report; (2) the level of training of CPO technicians; and (3) the rigorous certification inspection.” Id. Plaintiff claims “the inspection is not rigorous; the warranty does not cover all components; and the CPO vehicles are not any safer, more reliable, or more roadworthy than a regular used vehicle.” Id.

Class Action Court Decisions Uncategorized