Merrill Lynch Defense Team Settles Class Action Lawsuits For $133 Million

Chad Bray of the Wall Street Journal reports today that a federal court has given final approval to settlement of a class action against Merrill Lynch. The lawsuit alleged that Merrill Lynch and its former top technology-stock analyst, Henry Blodget, issued false or misleading research reports regarding Internet-based companies. The settlement reportedly covers 20 separate class action lawsuits filed against Merrill Lynch in federal court. Mr. Bray’s article, entitled “Merrill Settlement is Approved,” may be found on page C7 of the September 6, 2007 edition of the Wall Street Journal.

Class Actions In The News Uncategorized

Arbitration Class Action Defense Cases-Gatton v. T-Mobile: California Court Holds Class Action Waiver Renders Arbitration Clause Unconscionable And Unenforceable Despite Consumer Alternatives To Services From Defendant

Class Action Waiver Rendered Arbitration Clause Unconscionable “Notwithstanding the Availability of Market Alternatives” and Federal Arbitration Act (FAA) does not Preempt California State Court Holding that Class Action Waivers are Unconscionable under California Law

Plaintiffs filed a putative class action in California state court against T-Mobile alleging violations of the state’s unfair business practices statute arising out of the early termination fees charged cellular telephone service customers and the sale of “locked” cellular phones that customers cannot use if they switch to another carrier. Gatton v. T-Mobile USA, Inc., 152 Cal.App.4th 571, 61 Cal.Rptr.3d 344, 346 (Cal.App. 2007). The trial court denied a defense motion to compel arbitration pursuant to the service agreement’s arbitration clause, which included a class action waiver, id., at 346-47. The California Court of Appeal affirmed, holding that “the class action waiver rendered the arbitration provision unenforceable” and that the Federal Arbitration Act (FAA) did not “preempt[] any rule that class action waivers are unconscionable under California law.” Id., at 347. The appellate court therefore affirmed the trial court order, which permitted plaintiffs to prosecute the putative class action in state court. The appellate court’s discussion of the FAA’s impact on class action waivers is contained in a portion of the court’s opinion that, pursuant to California Rules of Court, is not published and therefore many not cited; accordingly, we summarize here only that part of the opinion holding that the class action waiver rendered the arbitration clause unenforceable.

Plaintiffs signed cellular telephone service agreements with T-Mobile, acknowledging that they had “received and reviewed the T-Mobile Terms and Conditions” and that “ All disputes are subject to mandatory arbitration in accordance with paragraph 3 of the Terms and Conditions.” Gatton, at 347. The introductory paragraph of the Terms and Conditions advised people to “carefully read these Terms and Conditions” and to “NOT USE THIS SERVICE OR YOUR UNIT” if they are unwilling to agree to be bound by the provisions contained therein. Id. Section 3 of the Terms and Conditions, entitled “Mandatory Arbitration; Dispute Resolution,” precluded customers from seeking class action relief, id., and the appellate court summarized at pages 347 and 348 that “The terms and conditions incorporated into each of the plaintiff’s agreements included a mandatory arbitration clause including a class action waiver.” The contract required each party to pay for their own attorney fees, and for customers to pay $25 toward the arbitrator’s fee (save for claims of less than $25, in which case T-Mobile would pay for the arbitrator’s fee). Id., at 348, n.3.

With respect to the early termination fees underlying the class action allegations of certain plaintiffs, the class action complaint alleged that customers who terminate service prior to the expiration of the service contract are required to pay approximately $200 per telephone, and that this fee is also charged if T-Mobile cancels the contract for nonpayment or other reasons. Gatton, at 348. According to the class action complaint, the early termination fee is the same “whether the contract has been in effect for several weeks or several months,” and this “flat-fee early termination penalty constitutes an unlawful penalty under Civil Code section 1671, subdivision (d), is unlawful under the unfair competition law [(UCL)] (Bus. & Prof. Code, § 17200 et seq.), and is unconscionable under the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.).” Id., at 348-49 (footnote omitted). With respect to the class action’s claims concerning handset, the complaint charges that it is unlawful require prevent customers to purchase a new phone if they switch service providers. Id., at 349. The class action alleged that T-Mobile locked the SIM card so that the phone could not be programmed to operate on the service network of a competitor, and that the SIM can be unlocked simply by entering a numerical code, id. The class action complaint alleges that T-Mobile falsely represents that its phones “are not compatible with and will not work with other wireless networks” in violation of the UCL and the CLRA. Id. The complaint further alleges that locking the SIM “makes it impossible or impracticable for subscribers to switch cell phone service providers without purchasing a new handset.” Id.

Arbitration Class Action Court Decisions Uncategorized

FLSA Class Action Defense Cases-Parker v. Rowland: Minnesota District Court Adopts Eleventh Circuit Holding That Conditional Class Action Certification Of FLSA Class Action Requires Proof That Other Class Members Want To Opt In

As Matter of First Impression in Eighth Circuit, Plaintiff in FLSA Class Action must Establish that Other “Similarly Situated” Putative Class Members Desire to “Opt In” to the Lawsuit as a Prerequisite to Conditional Class Certification Minnesota District Court Holds

Two former truck drivers filed suit against regional package delivery company Rowland Express for violations of the federal Fair Labor Standards Act (FLSA), the Employee Retirement Income Security Act of 1974 (ERISA) and Minnesota and Iowa state law, alleging that Rowland improperly classified its drivers as independent contractors instead of employees, thereby denying them overtime pay. Parker v. Rowland Express, Inc., 492 F.Supp.2d 1159, 1162-63 and n.1 (D.Minn. 2007). Plaintiffs filed a motion requesting that the court conditionally certify a class action under FLSA (technically a “collective action”) so that other Rowland employees may be provided an opportunity to “opt in” to the putative class action. Id., at 1162. Defense attorneys opposed class action treatment, arguing Eleventh Circuit precedent that conditional class certification requires a showing that other class members desire to “opt in” to the lawsuit. The district court denied the motion, holding as a matter of first impression in the Eighth Circuit that conditional class action certification and notice to putative class members is not warranted absent evidence that other similarly situated class members wish to join the action.

The class action complaint alleged that Rowland previously classified its drivers as “employees” and paid them overtime, but that after it became affiliated with DHL it changed the classification of its drivers to “independent contractors” and ceased paying overtime. Parker, at 1162-63. After conducting limited discovery, plaintiffs moved for an order conditionally certifying a FLSA class action on the grounds that plaintiffs “are ‘informed and believe’ that other drivers worked in excess of 40 hours per week and did not receive overtime compensation.” Id., at 1163. Defense attorneys opposed class action treatment, arguing in part that plaintiffs “failed to show that other ‘similarly situated’ individuals desire to opt in to this litigation,” id.

After discussing FLSA class actions and the FLSA’s requirement that the other employees be “similarly situated” to the plaintiffs but failure to define that term, see Parker, at 1163-64, the district court described the two-stage process generally followed in determining whether the plaintiffs are “similarly situated” to other putative class members: the first stage, known as the “notice stage,” involves a preliminarily determination “usually based only on the pleadings and any affidavits which have been submitted” as to whether notice of the class action should be provided in order to give putative class members an opportunity to “opt in”; the second stage involves a more in-depth analysis by the court into whether the plaintiffs are in fact similarly situated to the putative class, id., at 1164. At the first stage, the plaintiffs’ burden “is not onerous” but neither is it “invisible,” id.

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

Circuit City Class Action Defense Case-Gentry v. Superior Court: California Supreme Court Invalidates Class Action Waiver In Arbitration Clause As Against Public Policy And Concludes Arbitration Clause Procedurally Unconscionable Despite Right To Opt Out

Class Action Lawsuits are More Effective in Redressing Employee Labor Law Claims thus Rendering Class Action Waiver in Arbitration Clause Unenforceable, and Arbitration Clause was Procedurally Unconscionable Despite 30-Day Window to Opt Out of Entirely Voluntary Dispute Resolution Program California Supreme Court Holds

Plaintiff filed a putative class action in California state court against Circuit City alleging violations of the state’s unfair and deceptive business practices statutes and labor code arising out of its misclassifying employees as exempt in order to deny them overtime pay. Gentry v. Superior Court, ___ Cal.4th ___, 64 Cal.Rptr.3d 773, Slip Opn., at 2-3 (Cal. August 30, 2007). Defense attorneys moved to dismiss the class action and compel arbitration pursuant to an arbitration clause with a class action waiver. The trial court found the arbitration clause and the class action waiver to be fully enforceable, and granted the defense motion. The Court of Appeal agreed with the trial court’s reasoning, but the California Supreme Court reversed.

At the time Circuit City hired plaintiff, he was provided with written materials that included the company’s “Dispute Resolution Rules and Procedures”; the program gave employees “various options, including arbitration, for resolving employment-related disputes” and provided that if the employee elected arbitration – a choice that was subject to a class action arbitration waiver – then the company could compel the employee to dismiss any civil action in favor of arbitration. Gentry, at 3. As the Supreme Court explained, “The packet included a form that gave the employee 30 days to opt out of the arbitration agreement. [Plaintiff] Gentry did not do so.” Id. Both the trial court and the appellate court were influenced by the fact that plaintiff failed to opt out of the arbitration program within the 30-day window, despite the fact that there would have been no adverse employment ramifications had he done so. Id., at 3-4. The Supreme Court, however, disagreed.

In a strangely vague and sharply split opinion, the Supreme Court held that class action arbitration waiver provisions in overtime cases “may be contrary to public policy,” Gentry, at 5 (italics added). But despite all of its hedging, the Court seems to be clear that anything short of an attorney-supervised waiver would not withstand scrutiny, explaining at page 12:

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

FLSA Class Action Defense Cases-In re Tyson Foods: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Selects Middle District Of Georgia As Transferee Court

Judicial Panel Grants Defense Request, Opposed by Virtually All Plaintiffs, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 but Rejects Defense Request to Transfer Class Actions to Alabama Eighteen (18) putative class action lawsuits were filed in ten federal courts against Tyson Foods, Tyson Chicken and Tyson Farms (collectively “Tyson”) alleging, inter alia, violations of the federal Fair Labor Standards Act Litigation (FLSA). In re Tyson Foods, Inc.

Class Action Court Decisions Multidistrict Litigation Uncategorized

15 U.S.C. § 78gg—Separability Of Statutory Provisions Of The Federal Private Securities Litigation Reform Act (PSLRA)

As a resource to class action defense lawyers who defend securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress provided for the separability of the provisions of the PSLRA in 15 U.S.C. § 78gg, which states: § 78gg. Separability If any provision of this chapter, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the chapter and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

Statutes & Rules Uncategorized

Yet Again Employment Law Class Actions Lead List Of New Class Action Filings In California State And Federal Courts

To assist class action defense attorneys anticipate the claims 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 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 relevant timeframe.

Class Actions In The News Uncategorized

California Supreme Court Rejects Class Action Arbitration Waiver In Employment Contract

Divided California Supreme Court Holds Class Action Arbitration Clause would “Undermine the Vindication of the Employees’ Unwaivable Statutory Rights and would Pose a Serious Obstacle to the Enforcement of the State’s Overtime Laws” Yesterday, in a 4-3 decision with far-reaching impacts on class action arbitration waivers in California, the Supreme Court essentially held that class action waivers are unenforceable under California law. While the majority opinion claims that it is not condemning all such waivers, the dissent cogently observes that — for all intents and purposes — it is the practical effect of the decision.

Class Actions In The News Uncategorized

Class Action Defense Cases-In re Household Goods: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff’s Unopposed Motion To Centralize Class Action Litigation In District of South Carolina

Judicial Panel Grants Request, Unopposed by Defense, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Concurs with Request to Transfer Class Actions to District of South Carolina Antitrust class action lawsuits were filed in Illinois and South Carolina against various moving companies for violation of the Sherman Act arising from the allegation that defendants entered into an agreement concerning the method for calculating fuel surcharges.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases-CE Design v. Mortgage Exchange: Illinois Court Grants Defense Motion To Dismiss Appeal From Refusal To Certify Class Action For Lack Of Jurisdiction

Motion for Reconsideration of Denial of Class Action did not Toll Statutory Time Period for Appealing Court Order Appellate Court Holds Plaintiffs filed a putative class action in Illinois state court against The Mortgage Exchange alleging violations of the federal Telephone Consumer Protection Act of 1991 (TCPA), which makes it unlawful to send unsolicited advertisements via facsimile, and the state’s Consumer Fraud and Deceptive Business Practices Act, which prohibits “unfair or deceptive acts or practices.

Class Action Court Decisions Uncategorized