CAFA Class Action Defense Cases-Falcon v. Philips Electronics: New York District Court Holds Plaintiff’s Lawyer Not Entitled To Go “Fishing” For New Class Representative And Dismisses Class Action For Lack Of Jurisdiction

After Denying Motion to Certify Class Action on Grounds that Named Plaintiff would be an Inadequate Class Representative, New York District Court Denies Plaintiff’s Lawyer Leave to Conduct Discovery to Identify New Class Representative and Dismisses Class Action Because Subject Matter Jurisdiction Under Class Action Fairness Act of 2005 (CAFA) no Longer Existed

Plaintiff filed a putative class action against Philips Electronics alleging design defects in certain television models that caused them to require repair after the expiration of the express warranty period; federal court jurisdiction existed solely because of the Class Action Fairness Act (CAFA). Falcon v. Philips Electronics North Am. Corp., 489 F.Supp.2d 367,368 (S.D.N.Y. 2007). Plaintiff moved the district court for an order certifying the litigation as a class action; the district court denied the motion, agreeing with defense attorneys that plaintiff was not an adequate representative of the class. Id. Plaintiff’s lawyers then sought further discovery in an effort to find an adequate representative of the class, id. The district court denied the motion and dismissed the class action for lack of jurisdiction.

The district court order refusing to certify a class action turned on the fact that the sole named plaintiff “could not be an adequate class representative, because, among other problems, she did not actually purchase the television in question and because after receiving it, she subsequently discarded it.” Falcon, at 368. Plaintiff’s lawyer sought discovery of the names of customers who complained about the television models identified in the class action complaint “in the hope that that will lead to identification of an adequate class representative.” Id. The district court refused to reopen discovery so plaintiff’s lawyer could go “fishing” for a new class representative, explaining at page 369:

Certification of Class Actions Class Action Court Decisions Class Action Fairness Act (CAFA) Uncategorized

Home Depot Class Action Defense Case-Kitzes v. Home Depot: Illinois Court Holds Denial Of Class Action Was Not Improper Because Individual Issues Would Predominate Over Common Questions Of Fact

Class Action Complaint Alleging Damages from Sale of CCA-Treated Wood did not Warrant Class Action Treatment as Defense Showed Individual Defenses and Individual Damage Analyses would Predominate over Fact Questions Common to Class Illinois Court Holds

Plaintiffs filed a putative class action in Illinois state court against Home Depot alleging violations of the state’s unfair and deceptive business practices statutes arising out of its sale of outdoor products made with wood treated with chromate copper arsenate (CCA) on the theory that “all CCA-treated wood is defective because it leaches toxic chemicals, such as arsenic and chromium VI to the surface of the wood and to nearby soil.” Kitzes v. Home Depot, U.S.A., Inc., 872 N.E.2d 53, Slip Opn., at 1 (Ill.App. June 28, 2007). Plaintiffs’ moved the trial court to certify the litigation as a class action; defense attorneys opposed class action treatment. The appellate court affirmed.

The class action complaint alleged that Home Depot misrepresented that CCA-treated wood was safe for outdoor use. Kitzes, at 1-2. Plaintiffs’ class action certification motion was supported by an expert declaration claiming “a reasonably high degree of scientific certainty that CCA-treated wood used in outdoor settings leaches arsenic to the surface of the wood and the surrounding soil, regardless of factors such as use, location, age and sealant history (except for very recently sealed surfaces),” and an expert declaration that “proposed methodology for calculating the removal and replacement costs associated with pressure-treated lumber in residential settings in multiple states.” Id., at 2. Among the pieces of evidence submitted against class action treatment, defense attorneys introduced plaintiffs’ deposition testimony (1) that they still used the CCA-treated wood deck, and had wood replaced and treated several times, (2) that no one told them that the CCA-treated wood deck diminished the value of their property, and (3) that they had a fence built with wood that had been treated with arsenic. Id., at 2-3. Defense attorneys also submitted press releases from the Environmental Protection Agency concerning the industry’s decision to stop using CCA-treated wood, and stating:

Certification of Class Actions Class Action Court Decisions Uncategorized

15 U.S.C. § 78dd-2—Prohibited Foreign Trade Practices By Domestic Concerns Under The Federal Private Securities Litigation Reform Act (PSLRA) Governing Individual And Class Action Securities Lawsuits

To aid class action defense attorneys in defending against securities class action lawsuits, we provide the text of the Private Securities Litigation Reform Act of 1995 (PSLRA). Congress described prohibited foreign trade practices by domestic concerns under the PSLRA in 15 U.S.C. § 78dd-2, which states:

§ 78dd–2. Prohibited foreign trade practices by domestic concerns

(a) Prohibition

It shall be unlawful for any domestic concern, other than an issuer which is subject to section 78dd–1 of this title, or for any officer, director, employee, or agent of such domestic concern or any stockholder thereof acting on behalf of such domestic concern, to make use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to—

(1) any foreign official for purposes of—

(A)

(i) influencing any act or decision of such foreign official in his official capacity,

(ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or

(iii) securing any improper advantage; or

(B) inducing such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality,

in order to assist such domestic concern in obtaining or retaining business for or with, or directing business to, any person;

(2) any foreign political party or official thereof or any candidate for foreign political office for purposes of—

Statutes & Rules Uncategorized

New Class Action Lawsuits Alleging Labor Law Violations Continue To Top Weekly Class Action Filings In California State And Federal Courts

In order to assist California class action defense attorneys anticipate the new class action claims against which they will have to defend, 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

Class Action Defense Cases-In re Farmers Insurance Exchange: Ninth Circuit Rejects “$3,000 Rule” Created By District Court In FLSA Class Action

In Class Action Alleging Violations of Federal Fair Labor Standards Act (FLSA), $3,000 Rule Crafted by District Court as Exception to Overtime Pay Lacked Support in Record and was Unworkable in Practice Ninth Circuit Holds

Plaintiffs, former and current insurance claims adjusters for Farmers Insurance Exchange, filed a class action against their employer alleging that they were misclassified as exempt employees and denied overtime pay in violation of the federal Fair Labor Standards Act (FLSA). In re Farmers Ins. Exch., Claims Representatives’ Overtime Pay Litig., 481 F.3d 1119, 1124 (9th Cir. 2007). The district court established a “$3,000 in claims paid per month” rule and, applying that test, concluded that some of the claims adjusters were exempt but others were not. Id. Before the Ninth Circuit, all parties agreed that the district court’s $3,000 rule “is neither workable nor supported by the evidence.” Id. The Circuit Court agreed, holding that “all of the adjusters in this case are exempt,” id. The Ninth Circuit stated that “For more than 50 years, the Department of Labor has considered claims adjusters exempt from the Fair Labor Standard Act’s overtime requirement.” Id.

For purposes of this article, we address solely the “$3,000 rule” creatively crafted by the district court. On this point, the Ninth Circuit concluded that the district court’s rule not only “lack[ed] support in the record,” but is “simply unworkable in practice.” In re Farmers, at 1132. The Circuit Court explained at page 1132,

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-In re Wells Fargo: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Two Class Action Lawsuits But Selects Northern District of California As Transferee Court

Judicial Panel Grants Defense Request, Over Plaintiffs’ Objection, for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and but Rejects Defense Request to Transfer Class Actions to District of Kansas Two class action lawsuits were filed against Wells Fargo, one in California and one in Kansas, alleging labor law violations based on the company’s alleged failure to pay overtime to its loan processors. In re Wells Fargo Loan Processor Overtime Pay Litig.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Microsoft Class Action Defense Case-Odom v. Microsoft: Ninth Circuit Overrules Prior Circuit Law Defining “Enterprise” Under RICO And Reverses District Court Order Dismissing Class Action Complaint

Ninth Circuit Holds that Prior Case Law Concerning “Enterprises” under Racketeer Influenced and Corrupt Organizations Act (RICO) is Confusing and Inconsistent with Supreme Court Authority, Overrules Prior Authority and Under new Standard Reverses Dismissal of RICO Class Action

Plaintiffs filed a putative class action against Microsoft and Best Buy alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) based on an agreement under which Microsoft paid Best Buy to promote MSN Internet service. Odom v. Microsoft Corp., 486 F.3d 541, 543 (9th Cir. 2007). Defense attorneys moved to dismiss the class action complaint under Rule 12(b)(6) because it did not “allege an ‘associated in fact’ ‘enterprise’ under RICO” and under Rule 9(b) because it did not “plead wire fraud with particularity,” id. The district court agreed, dismissing the class action without leave to amend. Id. The Ninth Circuit reversed.

The putative RICO class action alleged that Microsoft and Best Buy agreed that Microsoft would invest $200 million in Best Buy and to promote Best Buy through its MSN Internet service, that Best Buy in turn would promote MSN and other Microsoft products. Odom, at 543. Best Buy allegedly gave customers different MSN trial software depending in the product purchased, and scanned debit/credit card information with the trial software not for “inventory control” (as purportedly represented to customers) but so Microsoft would have billing information for customers who failed to cancel their trial subscriptions to MSN. Id. Specifically, plaintiff alleged that he purchased a laptop computer from Best Buy and told the company that he did not need the MSN trial software because he used another Internet service, that he never used the MSN software during the 6-month trial period following his purchase, and that after 6 months MSN began charging the credit card he used to purchase the laptop for Internet service. Id., at 543-44. Plaintiff telephoned Microsoft and canceled the service, id., at 544. The putative class action was transferred to the Western District of Washington pursuant to the MSN subscriber agreement where plaintiff amended the complaint to include an additional plaintiff who, following the purchase of a cell phone from Best Buy and receiving a 30-day MSN trial CD, found that MSN had been billing her debit card for 1½ years without her knowledge or consent. Id.

Class Action Court Decisions Uncategorized

FDCPA Class Action Defense Case-Griffith v. Javitch: Ohio Federal Court Holds Pre-Certification Notice To Putative Class Of Dismissal Of Class Action Not Required Because No Evidence Of Reliance Or Prejudice

Dismissal of Class Action Alleging Violations of Federal Fair Debt Collection Practices Act (FDCPA) did not Warrant Notice to Absent Members of Putative Class because no Evidence of Reasonable Reliance on Prosecution of Class Action Ohio Federal Court Holds

Plaintiff/debtor filed a putative class action against attorneys for a creditor alleging that the law firm’s collection efforts violated the federal Fair Debt Collection Practices Act (FDCPA). Defense attorneys successfully moved to dismiss plaintiff’s claims in her class action complaint on the ground that she lacked standing to prosecute claims that now belonged to the bankruptcy trustee, and the federal court rejected plaintiff’s effort to bar the bankruptcy trustee from settling with the defense. Thereafter, the bankruptcy trustee “acting in good faith on behalf of the estate’s creditors, negotiated a settlement with Defendants”; however, the district court agreed with plaintiff/debtor that “notice of the involuntary dismissal should be given to the putative class members, because some risk existed that those class members would be prejudiced by the expiration of the statute of limitations later this year.” Griffith v. Javitch, Block & Rathbone, LLP, 241 F.R.D. 600, 601 (S.D. Ohio 2007). Plaintiff filed her proposed notices and requested that defendant be ordered to pay for the notice; defense attorneys moved the court to reconsider its order requiring notice to putative class members, id. The court granted the defense motion, holding that notice need not be provided to putative class members.

Preliminarily, the federal court found that the proposed notices prepared by plaintiff’s counsel were “clearly inadequate” and that they “simply invite contact with Plaintiff’s counsel.” Griffith, at 601. The court further stated that it would not order defendant to pay the costs of the notice, noting that as a general rule in class actions the plaintiff is responsible for the costs associated with notices to the class, especially when the court has not yet ruled on the merits of any claim alleged in the class action complaint id.

Class Action Court Decisions FDCPA Class Actions Uncategorized

WorldCom Class Action Defense Case: Second Circuit Holds Class Action Complaint Tolls Statute Of Limitations Of Putative Class Members Who File Individual Suits Prior To Certification Of Class Action

As Matter of First Impression, Second Circuit Holds that American Pipe Tolling Applies to Putative Class Members of Class Action who File Individual Lawsuits Prior to Decision on Class Action Certification

Prior to the filing of putative class action lawsuits and within one year after plaintiffs discovered “the untrue statement or the omission,” see 15 U.S.C. § 77m, certain pension funds filed individual lawsuits against underwriters of WorldCom bonds under Section 11 of the federal Securities Act of 1933 alleging that they had purchased bonds based on registration statements that contained false and misleading information. In re WorldCom Sec. Litig., ___ F.3d ___, 2007 WL 2127874, *1 (2d Cir. July 26, 2007). Numerous putative class action lawsuits also were filed against WorldCom and its bond underwriters, including Caboto-Gruppo Intensa and Caboto Holdings Sim, and these alleged _inter alia_ violations of Section 11, _id._ After the expiration of the one-year limitations period, the pension funds amended the individual complaints to add Caboto as party-defendants, _id._ Caboto defense attorneys moved to dismiss the individual actions as time-barred; plaintiffs countered that the class actions tolled the running of the statute of limitations. _Id._ The district court granted the defense motion, ruling that the class action complaints did not toll the limitations period because plaintiffs had filed suit before a decision on class certification in the class action lawsuits. _Id._ The Second Circuit reversed.

Briefly, WorldCom falsified financial records to paint an inaccurate picture of the company’s profitability, but in 2002 “the scheme collapsed.” In re WorldCom, at *2. A class action complaint was filed against WorldCom in April 2002, and numerous other class actions soon followed. More than 120 individual lawsuits also were filed against the company, all of which were removed to federal court based on WorldCom’s petition for bankruptcy protection. Id. By May 2003, the individual actions had been consolidated with the class action complaints, id. In October 2003, the district court certified a class action against WorldCom alleging securities violations; that class action complaint included Section 11 claims against Caboto and other bond underwriters. Id., at *3. In analyzing Caboto’s motion to dismiss the class action and individual claims, the district court found that the statute of limitations began to run no later than June 25, 2002, but that Caboto and certain other bond underwriters were not named as defendants until September 24, 2003 – three months after the expiration of the one year limitations period. Id., at *4.

Certification of Class Actions Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases-Pastor v. State Farm: Seventh Circuit Affirms Refusal To Certify Class Action Holding Individual Fact Issues Predominate Over Common Questions Rendering Class Action Treatment Unmanageable

District Court Properly Denied Class Certification Motion on Grounds of Unmanageability because Literally Thousands of Individual Evidentiary Hearings would be Required Seventh Circuit Holds

Plaintiff filed a putative class action in Illinois federal court against State Farm alleging that it failed to pay insureds $10 as required by its insurance policies when car repairs render the insured’s vehicle unusable for at least one day but the insured does not rent a car during the repair period. Pastor v. State Farm Mut. Auto. Ins. Co., 487 F.3d 1042, 1043 (7th Cir. 2007). Defense attorneys argued against certification of a class action, and the district court agreed; plaintiff thereafter accepted an offer of judgment, and appealed the denial of class certification. Id. The Seventh Circuit affirmed, holding that class action treatment was not appropriate because common issues did not predominate over individual issues.

Plaintiff’s car windshield was damaged in an accident 11 years ago. Pastor, at 1044. Her auto insurer, State Farm, paid for the repairs, which were completed in about one hour, but it did not pay her an additional $10 pursuant to a provision in her policy that required State Farm to “pay you $10 per day if you do not rent a car while your car is not usable.” Id. The policy states that the “per day” entitlement period begins at the time of the accident or “if your car can run, when you leave it at the shop for agreed repairs,” and ends when the repairs are complete. Id. Plaintiff did not rent a car for the one-hour repair period and did not ask State Farm for the extra $10, but the class action complaint alleges that the insurer was contractually obligated “to notify her that she was entitled to the money,” id. The Circuit Court was harsh in its characterization of plaintiff’s claim, stating “there is nothing in the policy to suggest that upon receipt of a claim seeking reimbursement of one cost (the cost of repairing the windshield) the insurer must determine and inform the insured of any additional entitlement that the policy might confer on her, just in case its customers don’t bother to read their insurance policies when they file claims under them.” Id. Despite this problem, just before the expiration of the 10-year statute of limitations period, plaintiff filed a putative class action in Illinois federal court seeking to represent all State Farm insureds who “received payments for claims for damage to their vehicles, did not rent a car, yet did not receive any payment pursuant to the $10 a day clause.” Id.

Certification of Class Actions Class Action Court Decisions Uncategorized