Class Action Defense Cases—In re Saturn: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In The District of Nebraska

Judicial Panel Grants Plaintiff’s Unopposed Request for Pretrial Coordination of 3 Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Class Actions to the District of Nebraska Three class action lawsuits (2 in Illinois and 1 in Nebraska) were filed against General Motors and Saturn Corp. asserting products liability claims based on “allegations that certain Saturn vehicles have defective metal timing chains and oiler nozzles.” In re Saturn L-Series Timing Chain Products Liab.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Discovery Cases-Montoya v. S.C.C.P. Painting: Maryland Federal Court Holds Employer Bank Records Relevant But Discovery Concerning Immigration Status Irrelevant To Class Action Certification Issues

Labor Law Class Action Plaintiffs Entitled to Redacted Bank Records of Putative Class Members because Defendant Lacked other Business Records Relevant to Class Action Numerosity and Commonality Requirements, and Class Action Defense Attorneys Entitled to Information Regarding Specific Terms of Plaintiffs’ Employment Agreements because Relevant to Typicality and Commonality but not Entitled to Information Concerning Immigration Status, Maryland Federal Court Holds

Plaintiffs filed a labor law class action against S.C.C.P. Painting alleging that it “failed to pay wages for all work performed, failed to pay wages for work directed to be performed but not accounted for on timesheets, failed to pay time and a half for hours worked greater than 40 hours, and deducted wages from paychecks, purportedly for tax withholding purposes but not in fact withheld for that purpose.” Montoya v. S.C.C.P. Painting Contractors, Inc., 530 F.Supp.2d 746, 747 (D.Md. 2008). The class action alleged violations of both state and federal law, and sought to proceed both as a class action under Rule 23 and as a collective action under 29 U.S.C. § 216(b), id. As discovery limited to class action certification issues proceeded, disputes arose and each side filed motions to compel discovery. Id., at 747-48. Plaintiffs’ lawyer sought bank records; defense attorneys sought inter alia information concerning plaintiffs’ immigration status and concerning the specific employment agreements between the putative class representatives and defendant. The court granted the plaintiffs’ motion, and granted and denied the defense motion.

The district court first addressed plaintiffs’ request for bank records, which sought documents “reflecting wages paid to any employees.” Montoya, at 748. The court held that information sought was relevant to issues of numerosity and commonality, and that privacy concerns were resolved by plaintiffs’ agreement that the names of the employees may be redacted from the bank records. Id. The court noted that the records were necessary “in light of the absence of other business records,” and that according to defense attorneys “SCCP did not have any payroll records, no information submitted to tax authorities, no tax sheets or sign-in sheets, no personnel files and no documents showing the rates of pay for any person.” Id. Because the company did not have any information necessary to support a motion for class action certification, plaintiffs were entitled to obtain the bank records.

Certification of Class Actions Class Action Court Decisions Uncategorized

Class Action Defense Cases-CashCall v. Superior Court: California State Court Affirms Trial Court Order Permitting Class Action Plaintiff Who Was Never Member Of Putative Class To Obtain Precertification Discovery Of Actual Class Member Identities

As Matter of First Impression, Request in Class Action for Precertification Discovery by Plaintiffs who Learns They were Never Members of Putative Class is not Automatically Prohibited and Trial Court did not Err in Permitting such Discovery where Wrong Alleged Involved Surreptitious Recording of Telephone Calls so Class Members would not Know Their Privacy Rights had been Violated California State Court Holds

Plaintiffs filed class action against their lender, CashCall, alleging that it secretly and illegally monitored its collection calls in violation of the borrowers’ privacy rights; they subsequently filed an amended class action complaint alleging further that defendant “surreptitiously monitored or eavesdropped on their conversations through a machine or other manner” in violation of California law. CashCall, Inc. v. Superior Court, ___ Cal.App.4th ___, 2008 WL 192282, *1 (Cal.App. January 24, 2008). After discovering that the plaintiffs named in the class action had not had their calls monitored, the class action complaint was further amended to substitute new named plaintiffs, _id._ However, the new plaintiffs, too, were not members of the putative class so plaintiffs sought precertification discovery for the identities of the apparently 551 members of the putative class action whose calls had been surreptitiously recorded. _Id._, at 1-2. Defense attorneys argued a bright-line rule exists in class actions that preclude discovery of the identity of class members if the named plaintiffs were never members of the class, _id._, at *3. The trial court disagreed and defense attorneys petitioned the Court of Appeal for writ relief.

The appellate court summarized plaintiffs’ argument as follows: CashCall disclosed in discovery that it had monitored collection calls at least 551 times but refused to disclose the names or contact information of the borrowers at issue. CashCall, at *2. Plaintiffs argued, “It is the clandestine component that makes [CashCall’s] monitoring illegal, and it is that aspect [that] makes it difficult, if not impossible, for a victim to ever learn [his or her] rights were violated.” Id. Absent the requested discovery, “the class action might be dismissed for lack of a suitable class representative and then the one-year statute of limitations” may run, “leaving the actual class members without a remedy for CashCall’s violation of their privacy rights.” Id. Plaintiffs argued that the trial court should apply a “balancing test” and “should conclude the rights of the parties (i.e., class members) outweigh any potential abuse of the class action procedure and therefore should order that CashCall disclose the names and contact information of the 551 putative class members.” Id. They relied on Parris v. Superior Court, 109 Cal.App.4th 285, 300-01, which held that in determining whether to grant precertification discovery of the identities of putative members of the class action, the “trial court must…expressly identify any potential abuses of the class action procedure that may be created if the discovery is permitted, and weight the danger of such abuses against the rights of the parties under the circumstances.”

Class Action Court Decisions Uncategorized

Class Action Defense Cases-Holmgren v. County of Los Angeles: California State Court Affirms Judgment Adverse To Class Action Plaintiffs Holding Engineers Of Firms Under Contract With County Were Not Common Law Employees Of County

Trial Court Properly Entered Judgment for Defense in Class Action by Engineers, Employed by Firms Working under Contract for County, because Engineers were not “Common Law Employees” of County California State Court Holds

Plaintiff-engineers filed a putative class action against the County of Los Angeles alleging that they had been designated improperly as employees of the independent contractors hired to perform work for the County, rather than as employees of the County itself. Holmgren v. County of Los Angeles, ___ Cal.App.4th ___, 71 Cal.Rptr.3d 611, 613 (Cal.App. 2008). As authorized by the California Government Code, Los Angeles outsourced engineering work to two firms: “The engineers were employees of the contracting firms and paid by the contracting firms, and all signed written acknowledgements that they were _not_ employees of the County and _not_ entitled to any of the benefits available to County employees.” _Id._, at 612. Nonetheless, plaintiffs filed the class action complaint alleging that they were “common law employees” of the County and, as such, entitled to benefits under the County’s retirement plan. _Id._, at 612-13. The “theme” of the class action complaint was that even though plaintiffs were paid by the independent contractor and designated as a contract employees, they had been “screened, interviewed, and effectively hired by the County; worked solely on County business; had [their] salary fixed by the County; [were] subject to the direct supervision and control of the County; and used County facilities, equipment and supplies to perform County business.” _Id._, at 613-14. The class action further alleged that plaintiffs performed the same work as, and worked side-by-side with, “recognized County employees,” but for lower pay and without receiving the benefits of County employees. _Id._, at 614. The trial court granted plaintiffs’ motion for class action treatment of the lawsuit, _id._, but decided three critical “threshold” issues in favor of the County that effectively eviscerated the class action, _see id._, at 614-15. Accordingly, plaintiffs stipulated to entry of judgment in favor of the County and appealed, _id._, at 615. The Court of Appeal affirmed, holding that the engineers were not County employees.

The facts underlying the class action claims were as follows: The County entered into “Master Agreements” with two firms for engineering services pursuant to which each firm would supply the County with the firm’s own employees, bill the County for work performed, and receive payment from the County. The Master Agreement provided that each firm was “solely liable” for the compensation and benefits of their employees, and expressly prohibited the County from soliciting the firms’ engineers. Holmgren, at 613. The named plaintiffs in the putative class action each acknowledged, in writing, that they were not County employees and that they “do not have and will not acquire any rights or salary benefits of any kind from the County of Los Angeles by virtue of my performance of work [for the County].” Id. and n.1. The class action alleged that plaintiffs were “temporary” or “leased” employees, entitled to County benefits, id., at 613.

Class Action Court Decisions Employment Law Class Actions Uncategorized

HP Class Action Defense Cases–Indiana Electrical Workers v. Dunn: California Federal Court Grants Defense Motion To Dismiss Class Action Challenging $21.4 Million Severance Package Hewlett-Packard Paid Former CEO Fiorina

Class Action Derivative Claims Challenging Severance Package Paid by HP to Former CEO Dismissed for Failure to Make Requisite Demand on Board and Failure to Establish Futility California Federal Court Holds

Plaintiffs filed a class action against Hewlett-Packard, its former chief executive officer, Carleton Fiorina, and various other individual defendants challenging the severance package HP paid Fiorina. Indiana Electrical Workers Pension Trust Fund v. Dunn, ___ F.Supp.2d ___ (N.D. Cal. March 28, 2008) [Slip Opn., at 1-2]. The class action complaint outlined Fiorina’s role in HP’s merger with Compaq, over board member Walter Hewlett’s vigorous opposition, and alleged that Fiorina and HP used knowingly false financial projections to secure approval of the merger. _Id._, at 2-3. The class action also alleged that after the merger was characterized as a failure, HP fired Fiorina and paid her more than $40 million in benefits, including a $21.4 million severance package that, plaintiffs allege, was aimed at “mak[ing] sure that Fiorina kept quiet about the Compaq merger debacle.” _Id._, at 3. The second amended class action complaint charges that Fiorina’s severance package were ‘far in excess” of “the express terms of the Company’s Severance Policies,” _id._ The gravamen of the complaint was that Fiorina termination was “involuntarily” and, accordingly, “she was not entitled to any accelerated vesting of payments under HP’s Long-Term Performance Cash (‘LTPC’) Program.” _Id._, at 3-4. Defense attorneys for HP and the individual defendants moved to dismiss the class action; the district court granted the motion.

The defense motion to dismiss the class action advanced two main arguments. First, defense attorneys argued that the class action complaint’s derivative claims failed because plaintiffs never made the requisite demand on HP’s board of directors. Dunn, at 8. The district court explained that “[a] shareholder seeking to vindicate the interests of a corporation through a derivative suit must first demand action from the corporation’s directors or plead with particularity the reasons why such demand would have been futile.” Id., at 8-9 (citing In re Silicon Graphics Inc. Securities Litig., 183 F.3d 970, 989-90 (9th Cir. 1999)). Because the laws of the state in which HP is incorporated govern whether it would be futile to make the requisite demand and because HP is incorporated in Delaware, the court analyzed futility under Delaware law. Id., at 9. Based on its detailed factual analysis, the district court rejected plaintiffs’ counter that making the requisite demand on the board would have been futile. See id., at 9-14. The district court also concluded that the business judgment rule insulates the board’s decision to pay Fiorina the $21 million severance. Id., at 14. The court explained at pages 14 and 15 that it was incumbent upon plaintiffs to “allege facts sufficient to rebut a presumption that the decision was a result of a valid exercise of business judgment.” Based on the federal court’s analysis, plaintiffs failed to rebut this presumption, see id., at 15-17, and failed to establish that the board’s acts were ultra vires, see id., at 17-21.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

ERISA Class Action Defense Cases–Adams v. IBM: New York Federal Court Grants Defense Motion To Dismiss ERISA Class Action Finding Res Judicata Barred Class Action Against Plan And Plan Administrator

ERISA Class Action Barred by Plaintiff’s Prior Lawsuit Against IBM thus Supporting Defense Motion to Dismiss Class Action New York Federal Court Holds Plaintiff filed a putative class action in New York against his former employer’s pension plan and its administrator alleging violations of ERISA (Employee Retirement Income Security Act of 1974) by failing to pay him plan benefits. Adams v. IBM Personal Pension Plan, 533 F.Supp.2d 342, 343 (S.D.N.Y. 2008).

Class Action Court Decisions Employment Law Class Actions Uncategorized

Employment-Related Class Action Lawsuits Command Top Spot On List Of Weekly Class Action Filings 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 California state and federal courts in the 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 March 28 – April 4, 2008, during which time 49 new class action lawsuits were filed.

Class Actions In The News Uncategorized

Copycat Class Action Filed Against Starbucks In New York Following $100+ Million Class Action Judgment In California

Steven Greenhouse of The New York Times reports today that a copycat lawsuit has been filed in New York federal court against Starbucks seeking damages arising out of the company policy of sharing store tips with shift supervisors. The class action, filed by a former barista, comes hot on the heels of a $105 million California class action judgment against Starbucks. (Our summary of that judgment may be found here.) Mr.

Class Actions In The News Uncategorized

Second Circuit Reverses District Court Certification Of Class Action Against Tobacco Companies In “Light Cigarette” Class Action Case

The Los Angeles Times reports today on the Second Circuit opinion reversing class action certification of a fraud under RICO class action against various tobacco companies. (Our initial news on this opinion may be found here, and our summary of the Circuit Court opinion may be found here.) The Los Angeles Times notes that the damages sought by the class action “theoretically could have ballooned to as much as $800 billion,” and quotes a defense attorney as noting that the decision has “tremendous significance” due to its potential impact on numerous similar class action lawsuits pending in other state and federal courts.

Class Actions In The News Uncategorized

Second Circuit Court of Appeals Reverses District Court Order Certifying Class Action Against Tobacco Companies In “Light” Cigarettes Case Holding that Individual Proof of Reliance on Defendants’ Marketing Precluded Class Action Treatment

Chad Bray and Anjali Cordeiro of The Wall Street Journal report today on the Second Circuit ruling that reverses class action certification in a tobacco lights case. (Our news report may be found here, and our summary of the Second Circuit opinion may be found here.) Noting that the class action sought “$280 billion in damages, which could be tripled to more than $800 billion if the smokers’ federal racketeering claims are granted,” the Circuit Court concluded that “difference[s] in plaintiffs’ knowledge and levels of awareness made it difficult to establish a common reliance by the entire class of smokers on the cigarette maker’s marketing.

Class Actions In The News Uncategorized