Attorney Fee Awards in Class Action Cases-In re High Sulfur Content Litigation: Fifth Circuit Reverses Portion Of District Court Class Action Settlement Order Allocating Attorney Fees Among Class Action Plaintiff Lawyers For Procedural Defects

District Court Order Allocating $6.875 Million in Attorney Fees to 79 Class Action Plaintiff Lawyers Following Final Approval of Class Action Settlement Required Reversal because District Court “Abdicated its Responsibility to Ensure that the Individual Awards Recommended by the Fee Committee were Fair and Reasonable” Second Circuit Holds

Various plaintiffs filed class action lawsuits against Shell Oil alleging that its Louisiana refineries “produced contaminated gasoline that was purchased and used by thousands of motorists, damaging, inter alia, their fuel gauges.” In re High Sulfur Content Gas. Prods. Liab. Litig., 517 F.3d 220, 2008 WL 287347, *1 (5th Cir. 2008). The class actions were “consolidated in a federal class action,” id. Shell initiated a program to repair damaged fuel gauges, id. Eventually, the parties agreed to the terms of a class action settlement under which Shell agreed to expand its repair program, pay $3.7 million in damages for class members, and pay $6.875 million in attorney fees and costs: The trial court approved the class action settlement, and “appointed a five-member Fee Committee to allocate the fee award among approximately thirty-two law firms and seventy-nine plaintiffs’ attorneys who worked on the case.” Id. The Fee Committee presented its recommendations at an ex parte status conference – none of the other 74 class action plaintiff attorneys knew of the hearing and, also without their knowledge, the proposed order not only discussed allocation of attorney fees but “(a) placed under seal the document prepared by the Fee Committee listing each attorney’s fee award…; (b) prohibited each plaintiffs’ attorney from disclosing to anyone, including his clients and other attorneys, the amount of his award under penalty of sanctions to be imposed by the court; (c) required fees, costs, and expenses to be ‘distributed immediately;’ (d) mandated that fee award checks bear a full and final release; and (e) established the district court’s process for dealing with any objections to fee awards.” Id., at 1-2 (footnotes omitted). The ex parte hearing on allocation of the attorney fees under the class action settlement lasted 20 minutes; the court signed the proposed order “apparently without modification” and sealed the transcript of the hearing on the motion, id., at *3. Some of the attorneys, disgruntled that approximately half of the attorney fee award went to the law firms of the five members of the Fee Committee, requested that the district court reconsider its ruling and unseal the hearing transcript; that failing, they appealed the fee award. Id. The Fifth Circuit reversed.

As this case involves the narrow issue of the allocation of attorney fees only, we do not discuss it at length. We note simply that the court order is reviewed for abuse of discretion, and that the appeal involved but a single issue – “the procedures the district court used to allocate the $6.875 million lump-sum attorneys’ fee award among plaintiffs’ counsel.” In re High Sulfur Content, at *3. The Fifth Circuit reversed the fee allocation order, agreeing with the appellants that the district court “used flawed procedures to award individual attorneys’ fees and to review objections to those fees.” Id., at *4. The Circuit Court explained at page *4, “For all practical purposes the five-member Fee Committee controlled the allocation of attorneys’ fees in this case.” And while the federal court was entitled to appoint a committee to recommend allocation of attorney fees, “the appointment of a committee does not relieve a district court of its responsibility to closely scrutinize the attorneys’ fee allocation, especially when the attorneys recommending the allocation have a financial interest in the resulting awards.” Id. In this case, the Fifth Circuit held that “the district court abdicated its responsibility to ensure that the individual awards recommended by the Fee Committee were fair and reasonable.” Id.

Class Action Court Decisions Uncategorized

Arbitration Class Action Defense Cases-Aguilar v. BLH Construction: California Court Affirms Trial Court Order Denying Petition To Compel Arbitration Of Class Action Thereby Permitting Labor Law Class Action To Proceed In State Court

In an Unpublished Opinion, California Appellate Court Holds that Trial Court did not Abuse Discretion in Denying Petition to Compel Arbitration of Labor Law Class Action on Ground that Defense Attorneys Failed to Prove that Plaintiffs Signed Arbitration Agreement

Plaintiffs filed a class action lawsuit against their employer, BLH Construction alleging labor law wage and hour claims. Aguilar v. BLH Construction Co., 2007 WL 4418105, *1 (Cal.App. December 19, 2007). Defense attorneys moved to compel arbitration, but the court opinion is silent on the arbitration clause purported to bar class actions or whether the defense sought to enforce a class action arbitration waiver. Id. The trial court denied the motion, finding that plaintiffs had not signed the arbitration agreement, id. The defense appealed, arguing that the trial court abused its discretion “by not continuing the hearing to permit oral testimony and cross-examination of witnesses on the issue.” Id. The Court of Appeal affirmed.

BLH hired plaintiffs as construction workers in February 2005 and, on the day they were hired, provided each plaintiff with an employee handbook, a form entitled “Receipt of Handbook and Acknowledgement of At-Will Employment,” and a form entitled “Mutually Binding Arbitration Agreement.” Aguilar, at *1. “Each form had lines for the employee’s signature and the date of signing.” Id. As part of the petition to compel arbitration, defense attorneys submitted signed copies of the “Mutually Binding Arbitration Agreement.” Id. Plaintiffs, however, insisted that they had not signed this document and by declaration claimed that their signatures had been forged, id. In response, defense attorneys submitted (1) the declaration of a supervisor stating that he had given plaintiffs the employee documents referenced above and that plaintiffs “signed and dated the two signature pages contained within the Employee Handbook,” (2) the declaration of BLH’s chief operations officer stating that plaintiffs had signed the mutually binding arbitration agreement, and (3) the declaration of BLH’s counsel stating that the signed documents had been obtained from the BLH custodian of records, “and that it was BLH’s custom and practice to have each employee sign the arbitration agreement.” Id.

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

New Class Action Lawsuits Alleging Employment-Related Claims Top 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 7 – 13, 2008, during which time 54 new class action lawsuits were filed.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re Mercedes-Benz: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In District of New Jersey

Judicial Panel Grants Defense Request, Supported by Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Agrees with Defense Attorneys that District of New Jersey is Appropriate Transferee Court Three class action lawsuits (and subsequent tag-along lawsuits) were filed against Mercedes-Benz “relating to (1) the impact of the conversion of the cellular network from an analog/digital network to a digital-only network in early 2008, and (2) the availability of Tele Aid service in certain Mercedes vehicles thereafter.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Hurricane Class Action Defense Cases-Audler v. CBC Innovis: Fifth Circuit Holds Plaintiff Lacked Standing To Prosecute Class Action Against Companies Unrelated To His Property And Affirms Dismissal Of Class Action Complaint Against Remaining Defendant

Class Action Alleging Companies Erroneously Advised Lenders that Homes were Outside Flood Zones Properly Dismissed because (1) Plaintiff Lacked Standing to Pursue Class Action Claims Against Companies that did not Provide Plaintiff’s Lender with Flood Zone Determination and (2) Company that Provided such Determination on Plaintiff’s Property owed Duties Only to Lender not Plaintiff Fifth Circuit Holds

After his home suffered floodwater damage from Hurricane Katrina, plaintiff filed a putative class action in Louisiana state court against numerous defendants that provide flood zone determinations to lenders; the class action alleged that defendants failed to properly determine whether homes were located within a Special Flood Hazard Area (SFHA), and sought damages under state law based on theories of negligence, failure to warn, detrimental reliance, and breach of guaranty or warranty. Audler v. CBC Innovis Inc., 519 F.3d 239, 2008 WL 509323 (5th Cir. 2008). Each claim in the class action complaint was “separate and apart from the federal flood insurance legislation governing lenders and… none of [the] claims arise under that legislation.” Id., at *3. In essence, the class action alleged that the class members failed to secure flood insurance because defendants erroneously advised them that their homes were outside a SFHA, so they were uninsured when Hurricane Katrina struck. Id., at *2. Defense attorneys removed the class action to federal court on the ground of diversity jurisdiction and under the Class Action Fairness Act of 2005 (CAFA), id., at *3. The defense then moved to dismiss the class action complaint for failure to state a claim and for lack of standing, id. The district court agreed with the defense arguments and dismissed the class action. Id. The Fifth Circuit affirmed.

Preliminarily, it bears noting that “[a] determination…that a property is not located within a SFHA does not prevent a borrower from purchasing private flood insurance.” Audler, at *2. The defendant involved in plaintiff’s loan (CBC) argued that it prepared flood zone determinations for the lender and that it owed no duties to the borrower in the loan transaction. Id., at *3. The other class action defendants argued that they were not involved in plaintiff’s loan and thus he lacked standing to prosecute any claims against them, id. Following dismissal of the class action complaint, plaintiff appealed to the Fifth Circuit; two defendants moved to dismiss the appeal for lack of standing. Id.

Certification of Class Actions Class Action Court Decisions Uncategorized

ADEA Class Action Defense Cases-Schuler v. PricewaterhouseCoopers: District of Columbia Circuit Reverses District Court Order Dismissing ADEA Class Action Finding Plaintiff Satisfied ADEA Prerequisites For Filing Class Action

District Court Erred in Dismissing ADEA (Age Discrimination in Employment Act) Class Action because Plaintiff Satisfied ADEA Prerequisites for Filing Class Action Complaint and because Plaintiff was not Required to File Separate Charges for each Allegedly Discriminatory Failure to Promote Plaintiff District of Columbia Circuit Court Holds

Plaintiff, who worked in Washington, D.C., filed an EEOC (Equal Employment Opportunity Commission) charge in New York alleging PricewaterhouseCoopers discriminated against him on the basis of age in violation of the federal Age Discrimination in Employment Act (ADEA) “by maintaining a discriminatory partnership policy under which the company refuses to promote older qualified employees.” Schuler v. PricewaterhouseCoopers, LLP, ___ F.3d ___, 2008 WL 398968, *1 (D.C. Cir. February 12, 2008). The EEOC dismissed the charge and informed plaintiff of his right to sue. Plaintiff responded by filing a class action complaint in the district court for the District of Columbia; the class action alleged violations of the ADEA and of D.C.’s Human Rights Act. _Id._ Defense attorneys moved to dismiss the class action complaint: The district court dismissed the class action on the ground that plaintiff “failed to satisfy the ADEA’s procedural requirements because he failed to file (1) his EEOC charge with the D.C. Office of Human Rights and (2) a new EEOC charge following the company’s allegedly unlawful July 2005 promotion denial.” _Id._ Plaintiff appealed and the Circuit Court reversed, reinstating his class action.

The class action alleged that PricewaterhouseCoopers requires mandatory retirement at age 60, and that as a result it “rarely promotes employees over the age of forty-five to partner.” Schuler, at *2. This damages qualified employees because “Partners enjoy higher salaries, more generous retirement benefits, and greater responsibilities than other professional employees.” Id. The class action complaint further alleges that PricewaterhouseCoopers “refuses to promote him ‘and other qualified older professional employees’ to partner on the basis of age in violation of the ADEA” and that “he is the longest serving managing director in the firm, having been promoted to that position in 1994, and that his education, training, and experience qualify him for partnership.” Id. (Plaintiff previously sued PwC in 2002 over the same allegedly discriminatory partnership policy. Id., at *2.) The Circuit Court also noted that plaintiff’s EEOC charge had included the instruction: “I want this Class Action Charge filed with both the EEOC and the State and local Agency, if any.” Id., at *3.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-In re Ingram Barge Company: Fifth Circuit Dismisses Appeal From Order Granting Defense Motion To Strike Class Action Allegations For Lack Of Appellate Jurisdiction

District Court Order Striking Class Action Allegations but Permitting Named Plaintiffs to Pursue Individual Claims not Appealable thus Requiring Dismissal of Appeal from Class Action Order Fifth Circuit Holds Plaintiffs filed a class action lawsuit against various defendants alleging that the Army Corps of Engineers had defectively designed and constructed various levee and floodwall systems that failed during a hurricane, resulting in flood damage. In re Complaint of Ingram Barge Co.

Certification of Class Actions Class Action Court Decisions Uncategorized

ERISA Class Action Defense Cases-In re Syncor: Ninth Circuit Reverses Defense Judgment In Class Action Holding District Court Erred In Failing To First Consider Proposed Class Action Settlement Under Rule 23(e)

District Court Erred in Granting Summary Judgment in ERISA Class Action Because it should have Considering Proposed Class Action Settlement Prior to Ruling on Summary Judgment and Because Third Circuit’s Moench Presumption not Applicable in Ninth Circuit Triable Issues of Fact Existed Precluding Summary Judgment Ninth Circuit Holds

Plaintiffs, participants in employee stock ownership plan (ESOP), filed a class action against their employer, Syncor International, and two board of directors alleging breach of fiduciary duties under ERISA (Employee Retirement Income Security Act); the class action alleged that Syncor administered an Employee’s Saving and Stock Ownership retirement plan governed by ERISA (“the Plan”), and permitted employees to invest in Syncor stock even though they knew that Syncor’s Taiwanese subsidiary and other foreign offices systematically used bribes to increase sales and to grow Syncor’s business in violation of the Foreign Corrupt Practices Act (FCPA). In re Syncor ERISA Litig., 516 F.3d 1095, 2008 WL 427763, *1-*2 (9th Cir. 2008). Once news of the illegal payments became public Syncor’s stock price lost half of its value, decreasing the value of the Plan by at least $24 million and precipitating the filing of the class action lawsuit on behalf of Plan participants. Id., at *2. Plaintiffs’ lawyers sought and obtained certification of the litigation as a class action, id. Syncor Taiwan pleaded guilty to violating the FCPA, and a member of the board of directors surrendered $2.5 million worth of personal Syncor stock to reimburse the company for fines levied by governmental agencies. Id. Following the filing of a consolidated class action complaint, defense attorneys filed a motion for summary judgment; simultaneously, the parties participated in settlement discussions. Id. In December 2005, the district court took the summary judgment motions under submission, and in January 2006, without knowing that the district court had decided the summary judgment motion, the parties signed a proposed settlement of the class action. Id. The parties notified the court of the tentative settlement on January 10, 2006, but failed to provide the court with the term sheet evidencing the settlement; that same day, the district court entered an order granting summary judgment in favor of the defense. Id. The following day, the parties requested that the court not rule on the summary judgment motions because of the proposed settlement, but again failed to provide a term sheet, id., at *3. Nonetheless, on January 12, 2006, the district court entered judgment in favor of defendants on the class action complaint, and denied as moot the proposed class action settlement, id. The Ninth Circuit reversed.

The Ninth Circuit summarized its holding as follows: “We hold that, when parties (1) enter into a binding class action settlement agreement, which requires court approval pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, and (2) provide the required notice of the settlement to the district court prior to the district court’s entry of the final judgments, the district court should hold a hearing and review the settlement agreement to determine if it is fair, reasonable, and adequate…. Failure to do so-even when the district court has already drafted a summary judgment order-is an abuse of discretion.” In re Syncor, at *1. The Circuit Court further held that the district court erred in granting summary judgment “genuine issues of material fact exist regarding whether the Defendants breached their fiduciary duty under ERISA,” id.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases—In re Transpacific: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In Northern District of California

Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Class Action Plaintiff or by any Class Action Defendants, and Transfers Class Actions to Northern District of California Two class actions – one in the Central District of California and one in the Northern District of California – were filed against Air New Zealand and other airlines alleging antitrust violations; specifically, each class action alleged that “[the] airline defendants conspired to fix the price of passenger airfares for flights between the United States and transpacific destinations in violation of the Sherman Antitrust Act.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases-Anderson v. CNH: Eighth Circuit Dismisses As Moot Appeal From District Court Order Denying Class Action Certification

Class Action Settlement Reached after District Court Denied Motion for Class Action Treatment Precluded Settling Plaintiffs from Appealing Denial of Class Action Motion Eighth Circuit Holds Plaintiffs, retirees of Case Corporation, filed a putative class action against administrators of the company’s pension and retirement plans for “violat[ing] the terms of the retirees’ pension plan by failing to make certain payments the month after each retiree turned 62 years old. Anderson v.

Class Action Court Decisions Employment Law Class Actions Uncategorized