Source: http://classactiondefense.jmbm.com/40class_action_court_decisions/index.html?page=24
Timestamp: 2013-06-18 07:54:28
Document Index: 265656118

Matched Legal Cases: ['§ 1407', '§ 1407', '§ 1404', '§ 1404', '§ 1404', '§ 1407', '§ 1407', '§ 1407', '§ 1407', '§ 1407', '§ 1407']

FACTA Class Action Defense Cases—In re Texas Roadhouse: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiff Motion To Centralize Class Action Litigation In Northern District of Illinois
Judicial Panel Grants Plaintiff Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 over Defense Objection Two class action lawsuits – one in Illinois and one in Pennsylvania – were filed in against defendants Texas Roadhouse Holdings LLC and Texas Roadhouse, Inc., for violations of the Fair and Accurate Credit Transactions Act (FACTA), alleging that defendants printed information on credit card and debit card customer receipts that FACTA required be excluded therefrom. In re Texas Roadhouse Fair & Accurate Credit Transactions Act (FACTA) Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. April 7, 2008) [Slip Opn., at 1]. Plaintiff’s lawyer in the Pennsylvania class action filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the litigation pursuant to 28 U.S.C. § 1407 in the Northern District of Illinois; plaintiff in the Illinois class action supported the motion. Id. Defense attorneys opposed pretrial coordination, and alternatively filed motions under 28 U.S.C. § 1404 to transfer the class actions to Kentucky, id. The Judicial Panel granted the motion to centralize the class action lawsuits, explaining at page 1: “Common discovery is likely, as defendants have suggested that discovery related to their credit and debit card receipt policies will be company-wide. Centralization under Section 1407 will eliminate duplicative discovery; prevent inconsistent pretrial rulings, especially with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary.” The Judicial Panel also agreed that the Northern District of Illinois was the appropriate transferee court. Id., at 1-2.Download PDF file of In re Texas Roadhouse Fair & Accurate Credit Transactions Act (FACTA) Litigation Transfer Order
Posted In: FCRA Class Actions, Multidistrict Litigation, Class Action Court Decisions Posted On: May 22, 2008
FCRA Class Action Defense Cases–Sullivan v. Greenwood Credit Union: In Case Of First Impression First Circuit Affirms Summary Judgment In Favor Of Defense In FCRA Class Action Holding Creditor’s Letter Was A “Firm Offer” Under FCRA
Affirming Summary Judgment in Favor of Defense in Class Action Alleging Violations of FCRA (Fair Credit Reporting Act), Class Action Complaint Properly Dismissed because, as Matter of First Impression, Offer of Credit Satisfies FCRA if Creditor will not Deny Credit to Consumers who Meet Pre-Selection Criteria First Circuit Holds Plaintiff filed a putative class action against Greenwood Credit Union alleging violations of the Fair Credit Reporting Act (FCRA) arising out of “an unsolicited letter to a consumer about the offering of credit for a home loan.” Sullivan v. Greenwood Credit Union, 520 F.3d 70, 71 (1st Cir. 2008). Greenwood had purchased credit reports for purposes of pre-screening individuals, and then sent home loan offers to “a list of individuals meeting certain minimal credit requirements”: the class action complaint alleged that the unsolicited letters fall within the FCRA and that consumer credit information had been obtained for an improper purpose; defense attorneys argued that the FCRA permits obtaining credit reports for various purposes, including extending a “firm offer of credit.” Id. The First Circuit explained at page 71, “This case is about plaintiff's efforts to collect that statutory penalty for a class of consumers; there is no claim [he] was wrongfully denied credit.” The thrust of the class action claims was that the offer of credit “was based on such minimal criteria and the actual extension of credit was so contingent on other conditions that the letter could not be a firm offer of credit.” Id. Defense attorneys moved for summary judgment on the class action complaint, and the district court granted the motion. As a matter of first impression in the First Circuit, the Circuit Court considered the phrase “firm offer of credit” and affirmed. Defense attorneys argued that Greenwood limited its offer of credit to homeowners “having at least $10,000 in revolving debt and a credit score of 500 or greater.” Sullivan, at 71. Greenwood did not obtain a consumer’s entire credit report; rather, it obtained from the credit reporting agency only contact information for consumers who met these criteria. Id., at 71-72. Greenwood then sent consumers a letter offering them, for a limited time, loans up to 100% of the value of their home at “some of the lowest rates in decades”; however, the letter did not provide the interest rate being offered, nor did it state the duration of the loan. Id., at 72. The letter noted, however, “Limited time offer to customers who qualify based on equity, income, debts, and satisfactory credit. Rates and terms subject to change without notice. Most loan programs require both a satisfactory property appraisal and title exam for final approval.... If at time of offer you no longer meet initial criteria, offer may be revoked.” Id. The letter also informed consumers as to the steps they could take if they wanted to stop receiving prescreened offers of credit. See id. Plaintiff responded to the letter by filing the class action complaint, id. Plaintiff’s theory was that Greenwood had not extended a “firm offer of credit” because the letter “‘is lacking crucial terms for it to be an offer’ and ‘is so vague and lacking in terms as not to constitute an “offer capable of acceptance”.’” Id. The class action complaint sought statutory damages of $1,000 per class member on behalf of approximately 2 million individuals, id. Continue reading "FCRA Class Action Defense Cases–Sullivan v. Greenwood Credit Union: In Case Of First Impression First Circuit Affirms Summary Judgment In Favor Of Defense In FCRA Class Action Holding Creditor’s Letter Was A “Firm Offer” Under FCRA" »
Posted In: FCRA Class Actions, Class Action Court Decisions Posted On: May 21, 2008
Posted In: Class Action Fairness Act (CAFA), FCRA Class Actions, Removal & Remand, Class Action Court Decisions Posted On: May 20, 2008
Class Action Defense Cases–ChartOne v. Raglon: Arkansas Supreme Court Affirms Class Action Certification Of Lawsuit Alleging Fees Charged For Medical Records Exceeded Amounts Allowable By Statute
Class Action Complaint Challenging as Excessive Fees Charged for Medical Records Properly Certified as Class Action because Defense Challenges to Class Action Treatment Went to Issues of Damages or to the Merits, Neither of Which Defeat Class Action Certification Arkansas Supreme Court Holds Plaintiff filed a putative class action in Arkansas state court against ChartOne, “a health-information management company that provides copying services of medical records for doctors, hospitals, and other medical-care providers throughout Arkansas,” alleging that the fees it charged for copying medical records exceeded the amount allowed by statute. The class action complaint also alleged that ChartOne charged shipping and postage fees that either were not incurred or were reimbursed by the healthcare provider. ChartOne, Inc. v. Raglon, ___S.W.3d ___ (Ark. April 24, 2008) [Slip Opn., at 1-2]. Plaintiff moved the trial court to certify the litigation as a class action; defense attorneys argued that class action treatment was not appropriate because the proposed definition of the class “was ambiguous and provided no objective criteria by which to ascertain the members of the class,” and because plaintiff failed to satisfy the statutory requirements for class action certification. Id., at 2. A representative of ChartOne testified at the class certification hearing that it was not possible to tell from company records whether a particular individual was charged a notary fee, id., at 2-3. Ultimately, the trial court granted plaintiff’s motion and certified a class action covering those “who requested a copy of medical records from a healthcare provider located in Arkansas and who paid ChartOne (1) base fees, clerical fees, retrieval fees and/or page fees as part of a charge for copying medical records, which resulted in charges being in excess of $5 for the first five pages and 25¢ for each page thereafter; and/or (2) shipping charges.” Id., at 3. The Arkansas Supreme Court affirmed. The Supreme Court addressed first defense objections to the definition of the class. Defense attorneys argued that membership in the class could not be determined in any “reasonable or feasible manner” because “there is no way of ascertaining the per-page charges without reviewing the actual requests for records that are stored with the patients’ medical files” and that a manual, file-by-file review of more than 120,000 files would be required. ChartOne, at 5. Plaintiff responded that membership in the class was readily determinable from ChartOne’s billing records, and that the objective raised by the defense went to damages rather than whether class action treatment was appropriate, id. The Arkansas Supreme Court agreed that class actions must provide a “precise definition” of the putative class, and explained that such a definition ensures that only “those people who are actually harmed by the defendant’s wrongful conduct will participate in the relief ultimately awarded.” Id., at 6. Nonetheless, it agreed that defendant’s objections went to damages, not the definition of the class itself. Id., at 6-7. In particular, the Court was unimpressed by the argument that ChartOne’s “failure to maintain accurate records” could serve to defeat class certification. Id., at 9. Continue reading "Class Action Defense Cases–ChartOne v. Raglon: Arkansas Supreme Court Affirms Class Action Certification Of Lawsuit Alleging Fees Charged For Medical Records Exceeded Amounts Allowable By Statute" »
Posted In: Certification of Class Actions, Class Action Court Decisions Posted On: May 19, 2008
Posted In: Class Action Fairness Act (CAFA), Removal & Remand, Class Action Court Decisions Posted On: May 16, 2008
Deference Afforded Plaintiff’s Choice of Forum “Diminished” in Class Action Cases, and Factors Affecting Convenience of Parties/Witnesses and Interests of Justice Supported Transfer of Class Action to Georgia under 28 U.S.C. § 1404(a) New York Federal Court Holds Plaintiff filed a class action complaint against former officers of NetBank, FSB, a failed Internet bank that had been taken over by the Office of Thrift Supervision; the class action purported to be on behalf of bank depositors and alleged inter alia fraud, negligence and violations of new York’s consumer protection statute. Totilo v. Herbert, __ F.Supp.2d ___, 2008 WL 613148, *1 (S.D.N.Y. March 5, 2008). Defense attorneys moved to dismiss the class action complaint for failure to state a claim, for lack of jurisdiction and for improper venue, or alternatively moved the district court to transfer venue from New York to Georgia under 28 U.S.C. §§ 1404(a) and 1406(a). Id. The court explained at page 639 that “Section 1404(a) permits the transfer of any action to another district in which it might have been brought if such a transfer would serve the convenience of the parties and witnesses and be in the interest of justice.” The federal court granted the motion under Section 1404(a), and therefore did not analyze the Section 1406(a) claim. Plaintiff’s lawyer filed the class action in the Southern District of New York on the grounds of diversity jurisdiction. Totilo, at *1. The district court readily resolved the threshold question of whether the class action complaint could have been brought in Georgia, as Netbank’s headquarters and principal place of business are in Georgia, and “a substantial part of the events or omissions giving rise to the claim occurred there,” see id. Accordingly, the federal court turned to whether transfer “would serve the convenience of the parties and witnesses and be in the interest of justice.” In this regard, the court noted that the deference generally afforded a plaintiff’s choice of forum is “diminished” in class action cases, but the relevant inquiry still involves an analysis of “(1) the convenience to the parties, (2) the convenience to the witnesses, (3) the relative ease of access to sources of proof, (4) the availability of process to compel the attendance of unwilling witnesses, (5) the cost of obtaining willing witnesses, (6) the practical problems indicating where the case can be tried more expeditiously and inexpensively, and (7) the interests of justice.” Id. The court easily concluded that transfer was warranted, explaining at page *2: While plaintiff no doubt would find litigation in Atlanta less convenient than litigation here, it is perfectly plain on this record that the inconvenience to the defendants and non-party witnesses, all or most of whom are far closer to Atlanta than to New York, would dwarf any inconvenience suffered by plaintiff in consequence of litigation in Georgia. The Northern District would have readier access to sources of proof than would this Court. In short, all of the practical problems that attend the handling of litigation would be considerably reduced by litigation in Georgia, where the events occurred. Moreover, it bears mention that there are related cases already before the Northern District. Accordingly, the district court transferred the class action to the Northern District of Georgia.Download PDF file of Totilo v. Herbert
Posted In: Class Action Court Decisions Posted On: May 16, 2008
Wells Fargo Class Action Defense Cases—In re Wells Fargo Mortgage Lending Practices: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Transfers Class Actions To California
Judicial Panel Grants Defense Request for Pretrial Coordination Pursuant to 28 U.S.C. § 1407 of Class Action Lawsuits Alleging Discriminatory Lending Practices, but Agrees with California Plaintiffs that Northern District of California is Appropriate Transferee Court Four class action lawsuits (3 in California and 1 in Illinois) were filed against Wells Fargo alleging discriminatory pricing in its mortgage loan products. In re Wells Fargo Mortgage Lending Prac. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. April 10, 2008) [Slip Opn., at 1]. Defense attorneys filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the litigation pursuant to 28 U.S.C. § 1407 in the Northern District of Illinois or, alternatively, in the Southern District of Iowa; lawyers for the various class action plaintiffs agreed that pretrial coordination was appropriate and the Illinois plaintiffs supported transfer to Illinois, but lawyers in the California class actions argued that the Northern District of California was the appropriate transferee court. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, explaining that “[a]ll actions share factual questions relating to whether Wells Fargo engaged in discriminatory residential lending practices, including the imposition of discretionary fees/charges which increased the cost of financing resulting in higher loans for minority borrowers than similarly situated nonminority borrowers.” Id. Further, centralization “will eliminate duplicative discovery; avoid inconsistent pretrial rulings, especially on the issue of class certification; and conserve the resources of the parties, their counsel and the judiciary.” Id. However, the Judicial Panel agreed with the California class action plaintiffs’ request to transfer the lawsuits to the Northern District of California because three of the actions are pending there and because Wells Fargo is headquartered in San Francisco. Id. Accordingly, the Panel ordered the class actions transferred to California, id., at 2.Download PDF file of In re Wells Fargo Mortgage Lending Practices Transfer Order
Posted In: Multidistrict Litigation, Class Action Court Decisions Posted On: May 15, 2008
ERISA Class Action Alleging Failure to Pay Benefits Premised on Strained Reading of Long-Term Disability Insurance Policies and Defense Entitled to Partial Summary Judgment as to certain Class Action Claims New York Federal Court Holds Plaintiffs filed a putative class action lawsuit against Unum Provident Corporation, Unum Life Insurance Company of America, First Unum Life Insurance Company and Colonial Life and Accident Insurance Company (collectively, “Unum”) alleging violations of ERISA (Employee Retirement Income Security Act). Loughman v. Unum Provident Corp., 530 F.Supp.2d 1121, 2008 WL 515916, *1 (S.D.N.Y. February 25, 2008). The policies underlying the class action are “substantially similar” and “provide for the payment of benefits only in the event that an employee suffers a long-term disability and, consequently, contain language establishing an elimination period.” Id. The second amended class action complaint alleged that Unum improperly terminated long-term disability (LTD) benefits and wrongfully withheld LTD benefits during “the so-called ‘elimination period’”; defense attorneys moved for partially summary judgment with respect certain class action claims on the ground that no LTD benefits are due during the elimination periods in the respective policies. Id. The district court agreed and dismissed the class action with prejudice. The heart of the class action is as follows: plaintiffs sought disability benefits based on the argument that, while LTD benefits are not payable during the elimination period, the policies require that “once the elimination period has run, a policyholder is entitled to receive retroactive benefits for the prior 180 days of disability.” Loughman, at *2. As a matter of contract interpretation, the district court disagreed. After explaining that ambiguity in a contract may not be premised on a “strained” reading of its terms, see id., at *3, the court rejected plaintiffs’ interpretation of the policies because the class action claims “hinge on their selective reading of a provision of the Policies outside the context of the Policies as a whole,” id., at *4. The federal court explained at page *4 that “plaintiffs construe the phrase ‘[t]he benefit will be paid for the period of disability’ to mean that they are entitled to benefits for the entire period in which they are disabled, regardless of other language in the Policies limiting the period for which benefits must be paid.” But this superficial reading of the policy language ignores the balance of its terms. Continue reading "ERISA Class Action Defense Cases–Loughman v. Unum: New York Federal Court Grants Defense Summary Judgment Motion In ERISA Class Action Holding Policies Excluded Plainly Coverage During Elimination Period" »
Posted In: Employment Law Class Actions, Class Action Court Decisions Posted On: May 14, 2008
Antitrust Class Action by Assignees of Direct Purchasers of Antidepressant Wellbutrin SR Satisfied Rule 23 Class Action Requirements Pennsylvania Federal Court Holds Plaintiffs filed a class action complaint against SmithKline Beecham Corporation dba GlaxoSmithKline (GSK) alleging antitrust violations arising out of its manufacture and sale of the antidepressant drug Wellbutrin SR. The class action purports to be filed on behalf of “direct purchasers” of the drug, and the class action complaint alleges “(1) Defendant unlawfully extended its monopoly over Wellbutrin SR by making fraudulent assertions to the United States Patent and Trademark Office and by engaging in ‘sham’ litigation against generic drug manufacturers seeking to market less expensive versions of the drug; (2) Because the litigation delayed the market entry of generic versions of Wellbutrin SR, the class members were forced to pay unnecessarily high prices for the drug because no generic alternatives were available for nearly two years after Defendant’s patent monopoly would have expired; and (3) Defendant filed the baseless infringement suits against the generic manufacturers solely to preserve its monopoly during the pendency of the infringement litigation.” In re Wellbutrin SR Direct Purchaser Antitrust Litig., ___ F.Supp.2d ___ (E.D. Pa. May 2, 2008) [Slip Opn., at 1-2 (footnotes omitted)]. In essence, plaintiffs allege defendant violated Section 2 of the Sherman Act by requiring that they pay inflated prices “from the time Defendant’s monopoly was extended until the time the price of [the drug] reached competitive levels.” Id., at 4. Defense attorneys moved to dismiss claims in the various class action complaints, and the district court dismissed the claims alleging fraudulent prosecution of a patent and the antitrust claims seeking injunctive relief. Id., at 2 n.4. Plaintiffs moved the district court to certify the litigation as a class action, id., at 2; defense attorneys opposed class action treatment on the grounds that plaintiffs were not adequate representatives of the class and that the definition of the class is overly broad. The district court rejected the defense arguments and certified the litigation as a class action. The district court had no difficulty in concluding that Rule 23(a)’s numerosity, commonality and typicality requirements had been satisfied. See In re Wellbutrin, at 4-8. With respect to the adequacy of representation of Rule 23(a)(4), defense attorneys did not challenge the qualifications of plaintiffs’ counsel, who the court found to be qualified to represent the class. See id., at 8. Rather, the defense argued (1) that plaintiffs could not represent the class because they are assignees of the direct purchasers (not direct purchasers themselves), (2) that a unique defense exists as to one of the named plaintiffs, “rendering it inadequate to represent the class”; and (3) that “significant conflicts” exist among the class members. Id., at 8-9. The district court rejected each argument. First, it noted that circuit case authority permits the assignment of antitrust claims, see id., at 9-10. Second, it rejected the claim that a defense challenge to the validity of the assignment to named-plaintiff SAJ Distributors will consume SAJ’s attention, id., at 10; as the issue is not likely to be a “major focus” of the class action litigation, the district court concluded that “it is not an issue that will distract SAJ to the detriment of the class itself,” id., at 11. Finally, the district court refused to follow Valley Drug Co. v. Geneva Pharmaceuticals, Inc., 350 F.3d 1181 (11th Cir. 2003), cited in support of the defense claim of a conflict between national drug wholesalers and downstream retail distributors such that the challenged activity may have been financially beneficial to the national wholesalers, explaining at page 14 that “the controlling question is whether the class members suffered an overcharge: if an overcharge occurred, all class members are entitled to recover, whether or not some plaintiffs experienced a net benefit while others experienced a net loss.” Continue reading "GlaxoSmithKline Class Action Defense Cases–In re Wellbutrin: Pennsylvania Federal Court Certifies Class Action Against GlaxoSmithKline In Antitrust Class Action By Direct Purchasers Of Antidepressant Drug" »
Posted In: Certification of Class Actions, Class Action Court Decisions Posted On: May 13, 2008
Class Action Complaint Alleging Failure to Pay Employees for Time Incurred Doffing and Donning Protective Gear Satisfied Rule 23 Requirements for Class Action Certification Wisconsin Federal Court Holds Plaintiffs filed a labor law class action against their employer, Kraft Foods, alleging violations of the Federal Labor Standards Act (FLSA) for failure to pay them for time spent doffing and donning protective gear at a meat processing plant; the class action complaint alleged that employees were required “to put on several items of safety and sanitation equipment and then walk to their work stations” before clocking in for the day, and were required to reverse the process after clocking out at the end of the day. Spoerle v. Kraft Foods Global, Inc., ___ F.Supp.2d ___ (W.D. Wis. May 5, 2008) [Slip Opn., at 1]. As the court explained at page 4, Kraft “requires that all hourly employees wear certain company-provided items in the performance of their jobs: footwear…, hair nets, beard nets…, protective headgear…, polyester frocks, and ear plugs or ear muffs,” and that some employees are required to wear cotton shirts and/or safety glasses. Employees are required to don this gear before swiping in, and to doff the gear after swiping out, id., at 5. The time incurred by employees to comply with this requirement varies, as does the time incurred in walking to/from the employee’s workstations. Id., at 1. The gravamen of the class action is that Kraft’s failure to pay for this “off the clock” time violates federal and state labor laws. Id. Defense attorneys moved for summary judgment on the grounds that the time at issue was not compensable because it fell within the scope of various exceptions under the FLSA; the district court denied the motion. See Spoerle v. Kraft Foods Global, Inc., 527 F.Supp.2d 860 (W.D. Wis. 2007). Plaintiffs moved the court to certify a collective action under the FLSA and a Rule 23(b)(3) class action under Wisconsin state law, Spoerle, at 2; the district court granted plaintiffs’ motion, finding this to be “an easy case” for certification of a class action, id., at 3. The federal court first addressed the defense argument that the state and federal class action claims could not be prosecuted in the same action, based on the theory that “a plaintiff should not be allowed to maintain a representative action involving both federal and state law wage claims because of the procedural differences between the two types of claims.” Spoerle, at 8. This argument is premised on the fact that employees must affirmatively “opt in” to the FLSA class action to be members of the class, but the same employees are deemed members of the state law class action unless they affirmatively “opt out.” Id. According to defense attorneys, “potential plaintiffs will be hopelessly confused by the differences between the two claims and will be unable to make an intelligent decision regarding whether to opt in or out of the lawsuit,” id.; this confusion is exacerbated by plaintiffs’ unilateral and premature notice to the class, which “contained inaccurate information,” id., at 9. The district court agreed that “plaintiffs made a foolish blunder,” id., at 9, but concluded that any confusion could be addressed through carefully drafted notices, id., at 8-9. Continue reading "Kraft FLSA Class Action Defense Cases–Spoerle v. Kraft: Wisconsin Federal Court Certifies Class Action Of Class Action Complaint Alleging Labor Law Violations For Failure To Compensate Employees For Doffing/Donning Protective Gear" »
Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions Posted On: May 12, 2008
Summary Judgment in Favor of Defense in ERISA Class Action Proper because Class Action Claims that Defendants should not have Invested in Company Stock ran Counter to Terms of Eligible Individual Account Plan (EIAP) and because Negligent Misrepresentations Alleged in Class Action Complaint were not made in Fiduciary Capacity Fifth Circuit Holds Plaintiff filed a class action against his employer, Reliant Energy, Inc. (REI) and the Benefits Committee of his employer’s savings plan alleging violations of ERISA (Employee Retirement Income Security Act). The Plan is an Eligible Individual Account Plan (EIAP) under ERISA, and the class action complaint alleged that defendants breached fiduciary duties owed to current and former participants in the Plan in that defendants “had a fiduciary duty to liquidate the Common Stock Fund and cease purchasing REI shares, notwithstanding the Plan's express contrary requirements.” Kirschbaum v. Reliant Energy, Inc., ___ F.3d ___, 2008 WL 1838324, *1 (5th Cir. April 25, 2008). The district court granted plaintiff’s motion to certify the litigation as a class action, id. Defense attorneys moved for summary judgment on the ground that defendants satisfied their legal duties to the class: The district court granted summary judgment as to all class action claims, and entered judgment in favor of defendants on the class action complaint. Id. Plaintiff appealed, and the Fifth Circuit affirmed. Under the Plan participants were permitted to invest up to 16% of their compensation in a number of funds, “ranging from riskier, growth-oriented funds to more stable mutual funds”; one of these options was the REI Common Stock Fund which essentially consisted of REI common stock. Kirschbaum, at *1. Moreover, “REI agreed to match up to the first six percent of an employee's contribution with shares of REI common stock allocated to the employee's Common Stock Fund account,” but the matching contributions had to stay in Common Stock Fund until the employee was 55 years old and had 10 years of service with the company. Id. After the disclosure of certain “sham transactions” by REI employees and another energy trader, the stock dropped 40% causing a substantial loss in the value of the Common Stock Fund, id. REI later admitted that the trades in question inflated REI’s revenue by 10% over a three-year period. Id. Plaintiff filed his class action complaint alleging that defendants were “responsible under ERISA to make good the losses the Plan sustained on REI common stock.” Id., at *2. Specifically, the class action alleged that defendants knew REI stock “was not a prudent investment” and that they owed a fiduciary duty to discontinue purchasing REI stock, to sell the Plan’s holdings of REI stock, and to discontinue the Common Stock Fund. Id. The district court certified the litigation as a class action, but agreed with defense attorneys that summary judgment was appropriate as to each of the class action claims because “the Plan afforded [defendants] no discretion to terminate the fund or halt investments in it” and, accordingly, “defendants had no fiduciary duty to do so.” Id. Continue reading "ERISA Class Action Defense Cases–Kirschbaum v. Reliant Energy: Fifth Circuit Affirms Summary Judgment In Favor Of Defense In ERISA Class Action Complaint Holding Class Action Claims" »
Posted In: Employment Law Class Actions, Class Action Court Decisions Posted On: May 9, 2008
Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407and Transfers Actions to District of Maryland Four (4) class action lawsuits were filed in Arizona, Florida, Illinois and New York against various defendants, including Michelin North America and American Honda Motor relating to the PAX “run-flat” tire system manufactured by Michelin and installed in certain Hondas and Acuras sold in the United States. In re Michelin North Am., Inc. PAX Sys. Marketing & Sales Prac. Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. February 15, 2008) [Slip Opn., at 1]. Defense attorneys for Michelin filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class action litigation pursuant to 28 U.S.C. § 1407 in the District of Maryland; defense attorneys for Honda supported the motion. Id. All plaintiffs agreed that pretrial coordination was appropriate, but they argued for transfer to the Northern District of Illinois. Id. The Judicial Panel granted the motion to centralize the class action lawsuits, concluding that this “will eliminate duplicative discovery; avoid inconsistent pretrial rulings; and conserve the resources of the parties, their counsel and the judiciary.” Id. The Panel also agreed with defense attorneys that the District of Maryland was the appropriate transferee court, noting that “the wave of putative statewide class action lawsuits relating to the PAX System began with an action removed to the District of Maryland” and that the Maryland district court judge has “had an opportunity to familiarize himself with issues in this litigation.” Id., at 2.Download PDF file of In re Michelin North America Transfer Order Posted In: Multidistrict Litigation, Class Action Court Decisions Posted On: May 9, 2008
Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407 and Transfers Actions to Western District of Washington Seven (7) class action lawsuits (5 in Washington and 2 in New York) were filed against various defendants, including Washington Mutual, “arising from alleged misrepresentations or omissions concerning WaMu’s financial condition with respect to its subprime home loan portfolio.” In re Washington Mutual, Inc., Securities, Derivative & “ERISA” Litig., ___ F.Supp.2d ___ (Jud.Pan.Mult.Lit. February 21, 2008) [Slip Opn., at 1]. Defense attorneys for common defendant Washington Mutual filed a motion with the Judicial Panel for Multidistrict Litigation (MDL) requesting centralization of the class action litigation pursuant to 28 U.S.C. § 1407 in the Western District of Washington, where five class actions already were pending; no party opposed pretrial coordination, but plaintiffs’ lawyers in the New York class actions argued for that district as the transferee court. Id. The Judicial Panel granted the motion to centralize the class action lawsuits and agreed with the defense that the Western District of Washington was the appropriate transferee court because most of the actions were pending there and because WaMu is headquartered in Seattle. Id., at 1-2.Download PDF file of In re Washington Mutual Transfer Order
Posted In: Multidistrict Litigation, Class Action Court Decisions, PSLRA/SLUSA Class Actions Posted On: May 8, 2008
Posted In: Class Action Fairness Act (CAFA), Removal & Remand, Class Action Court Decisions Posted On: May 7, 2008
PSLRA Class Action Defense Cases--Cornelia I. Crowell GST Trust v. Possis Medical: Eighth Circuit Affirms Dismissal Of Securities Fraud Class Action Holding Allegations In Class Action Complaint Failed To Meet PSLRA's Heightened Pleading Requirements
District Court Properly Dismissed Securities Fraud Class Action Without Leave to Amend because Class Action Complaint Failed to Satisfy Private Securities Litigation Reform Act (PSLRA) Pleading Requirements Eighth Circuit Holds Plaintiff filed a class action complaint against Possis Medical and two individuals alleging securities fraud violations. The class action alleged that after Possis Medical decided in 2001 to study whether its non-surgical catheter system, designed to remove blood clots, could be used for other medical procedures, it “made several public statements regarding the study's potentially favorable impact on company revenues”; however, in August 2004, Possis Medical released the results of its study “which did not support expanded…usage.” The precipitous drop in stock value led plaintiff to file her putative class action. Cornelia I. Crowell GST Trust v. Possis Medical, Inc., 519 F.3d 778, 781 (8th Cir. 2008). Defense attorneys moved to dismiss the class action on the ground that the class action complaint “failed to meet the heightened pleading standards” required by the Private Securities Litigation Reform Act (PSLRA), id. The district court granted the motion and dismissed the class action complaint, without granting leave to amend, on the ground that the pleadings were insufficient under the PSLRA. Id. Plaintiff appealed, arguing that the class action adequately alleged securities fraud or, alternatively, that the district court erred in failing to grant leave to file an amended class action complaint, id. The Eighth Circuit affirmed. With respect to the motion to dismiss the class action, the district court found that the complaint “failed to establish that Possis Medical had misrepresented a material fact or acted with the required scienter.” Crowell Trust, at 782. The Eighth Circuit agreed. First, the class action failed to “provide the level of detail” required to support the misrepresentation element: “‘[R]ote allegations that the defendants knowingly made false statements of material fact’ alone are insufficient.” Id. (quoting In re Navarre Corp. Sec. Litig., 299 F.3d 735, 745 (8th Cir. 2002)). The Circuit Court held that the anonymous statements relied on by plaintiff failed to provide the necessary “who, what, when, where and how” of the allegedly actionable statements. Id., at 782. Moreover, the scienter element was missing because the court cannot focus on isolated acts but rather must consider “‘whether all the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any allegation, scrutinized in isolation meets that standard.’” Id. (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., ___ U.S. ___, 127 S.Ct. 2499, 2502 (2007)). The mere fact that the study was important was insufficient to establish scienter, id., at 783. With respect to the denial of leave to amend, the Circuit Court noted that plaintiff “failed to demonstrate any meaningful basis upon which it could amend its complaint to comply with the heightened securities pleading standards”; accordingly, the trial court did not err in refusing to grant leave to amend. Crowell Trust, at 784. The Eighth Circuit therefore affirmed the district court order, id.Download PDF file of Cornelia I. Crowell GST Trust v. Possis Medical
Posted In: Class Action Court Decisions, PSLRA/SLUSA Class Actions Posted On: May 6, 2008
All Writs Act did not Permit District Court to Issue Injunction Prohibiting Class Action Defendant from Negotiating Settlements of Class Actions Pending in Other Federal Courts, and Anti-Injunction Act Barred District Court from Issuing Injunction Prohibiting Class Action Defendant from Negotiating Settlements of Class Actions Pending in State Court Ninth Circuit Holds Plaintiff filed a class action complaint against Allianz Life Insurance Company of North America alleging inter alia violations of RICO (Racketeer Influenced and Corrupt Organizations Act) and breach of fiduciary duty arising out of defendant’s sale of fixed deferred annuities which, the class action alleged, was “‘an unsuitable financial product’ because the maturity date exceeded his life expectancy and restricted his access to principal without surrender charges.” Negrete v. Allianz Life Ins. Co. of North Am., 523 F.3d 1091, 2008 WL 1868993, *1 (9th Cir. 2008). The district court certified the litigation as a nationwide class action with respect to the RICO claims, and as a state-wide class action with respect to certain other claims, id. This class action was but one of several class actions filed against Allianz regarding the sales of annuities, including: Iorio v. Asset Marketing Inc., No. 05-CV-00633 (S.D.Cal.), filed in March 2005, in the United States District Court for the Southern District of California, and certified as a state-wide class action (covering a class that “partially overlaps the Negrete class”) in July 2006; Mooney v. Allianz Life Ins. Co. of North Am., No. 06-CV-00545, filed February 9, 2006, in the United States District Court for the District of Minnesota, and certified as a nationwide class action (covering a class that, according to defense attorneys, includes annuity transactions that “overlap those in Negrete”); and Castello v. Allianz Life Ins. Co. of North Am., Civ. No. MC03-20405, filed December 22, 2003, in a Minnesota state court and certified as a nationwide class action. Id. (The nationwide class action certification order in Negrete expressly excludes members of the nationwide class action certified in Castello, id., at *1 n.3.) In addition to these class actions, the Minnesota Attorney General filed State of Minnesota v. Allianz Life Ins. Co. of North Am., Civ. No. 07-581, on January 7, 2007, in a Minnesota state court (“the AG Action”), seeking “relief under Minnesota law on behalf of Minnesota residents who purchased Allianz's fixed deferred annuity products” (covering a class that, according to defense attorneys, also may partially overlap the class certified in Negrete). Id., at *2. The district court entered an order “that effectively prevents [Allianz] from proceeding with any settlement negotiations on similar class action claims raised in any federal or state court without first obtaining permission from Negrete's Co-Lead Counsel, and from finalizing a settlement in any other court ‘that resolves, in whole or in part, the claims brought in [the Negrete] action,’ without first obtaining the district court's approval.” Id., at *1. The Ninth Circuit reversed.
The district court order arose as follows. Allianz entered into settlement discussions with the parties in Mooney, Castello, and the AG Action. Negrete, at *2. Plaintiffs’ lawyers in Negrete learned of these negotiations from a third party and requested that defense attorneys assure them that the settlement negotiations would not cover any of the claims addressed in or class members covered by the Negrete action; defense attorneys refused to provide such assurances so Negrete filed an ex parte application seeking an order that would prohibit Allianz from “settling, attempting to settle, negotiating, compromising, or releasing any claims, causes of action, or damages relating to any Allianz deferred annuity purchased by any Class Member in the Negrete/Healey matter during the relevant Class Period, in any other forum, including but not limited to, the Mooney matter, without the express approval of this Court and participation of Court appointed Co-Lead Counsel in the Negrete/Healey matter.” Id. While the district court order, issued without a hearing, “nominally” denied the application as “not authorized by the All Writs Act,” the court nonetheless ordered, “Any discussions of a settlement that would affect any claims brought in this litigation, other than claims of an individual plaintiff or class member, must be conducted or authorized by plaintiffs' Co-Lead Counsel. Any proposed settlement that resolves, in whole or in part, the claims brought in this action shall first be subject to review and approval by the Court in this litigation.” Id. Defense attorneys appealed that order, id., at *3. Continue reading "Class Action Defense Cases–Negrete v. Allianz Life: Ninth Circuit Reverses District Court Order Enjoining Class Action Defendant From Settling Class Actions Pending In Other State And Federal Courts" »
Posted In: Class Action Court Decisions Posted On: May 5, 2008
Punitive Damages for Breach of Fiduciary Duties Improper because Evidence Established Merely Contractual Relationship even though Plaintiff Entrusted Secret Scientific Discoveries to Defendant for Commercial Exploitation California Supreme Court Holds Plaintiff City of Hope filed suit (not a class action) against Genentech alleging breach of contract and breach of fiduciary duties arising out of an agreement whereby “City of Hope, in return for royalties, entrusted a secret scientific discovery to Genentech to develop, to patent, and to commercially exploit.” City of Hope v. Genentech, Inc., ___ Cal.4th ___ (Cal. April 24, 2008) [Slip Opn., at 1]. Plaintiff prevailed at trial, and the jury awarded $300 million in compensatory damages and $200 million in punitive damages. Id. In a case of critical importance to class action and non-class action cases alike, the California Supreme Court addressed “whether, as the jury found, a fiduciary relationship necessarily arose” between City of Hope and Genentech. Id. The High Court held that it did not and, accordingly, reversed the punitive damage award. However, in a portion of the opinion that we do not summarize, the Supreme Court affirmed the $300 million damage award, concluding that “the evidence that City of Hope introduced at trial to prove that Genentech had breached a fiduciary duty [did not] so prejudice[] the jury as to require setting aside the jury’s award of compensatory damages for breach of contract.” Id., at 2. We again stress that this lawsuit was not a class action, but it involves a topic of significant importance to class action litigation. In brief, scientists employed by City of Hope “developed a groundbreaking process for genetically engineering human proteins,” and filed a confidential application with the National Institutes of Health for a grant. City of Hope, at 2-3. Genentech was formed by a doctor who learned of the discovery and a venture capitalist “to commercially exploit biotechnology.” Id., at 3. Genentech contacted the City and offered to fund additional research and to secure the patents required for commercialization of the products developed; these discussions led to a draft agreement that left open the royalty rate because Genentech had not yet decided whether to accept the City’s proposal of a 2% flat rate. Id. Ultimately, the parties entered into a contract, see id., at 4-6 (summarizing salient terms), and “the rest is history,” so to speak. Genentech obtained various patents and granted various licenses, but it did not inform the City of all of those licenses. Id., at 6. Genentech also filed a lawsuit, which it settled for $20 million, alleging infringement of patents held by the City’s scientists, but it refused to share any of that award with the City. Id., at 8. That refusal precipitated the lawsuit by the City against Genentech for breach of fiduciary duty and breach of contract, id. As noted above, while the first trial ended deadlocked at 7-5 in favor of Genentech, the jury at the second trial ruled in favor of the City, id., at 8-9. Continue reading "Punitive Damages Class Action Defense Issues–City of Hope v. Genentech: California Supreme Court Affirms $300 Million Compensatory Award For Breach Of Contract But Reverses $200 Million Punitive Damage Award For Breach Of Fiduciary Duty" »
Posted In: Class Action Court Decisions Posted On: May 1, 2008
Wal-Mart Class Action Defense Cases–Sepulveda v. Wal-Mart: In Unpublished Opinion Ninth Circuit Reverses Denial Of Class Action Treatment In Labor Law Class Action Filed On Behalf Of Assistant Managers
Fifth Circuit’s “Incidental Damages” Approach to Class Action Certification under Rule 23(b)(2) Inapplicable in Ninth Circuit and District Court Erred in Denying Class Action Treatment of Labor Law Class Action based on Conclusion that “Claims for Monetary Relief were Non-Incidental” Ninth Circuit Holds Plaintiffs filed a class action against Wal-Mart on behalf of assistant managers alleging labor law violations. Plaintiffs filed a motion with the district court for class action certification, arguing that class action treatment was appropriate under Rule 23(b)(2) and 23(b)(3). In an order denying class action certification that may be found here, see Sepulveda v. Wal-Mart Stores, Inc., 237 F.R.D. 229 (C.D.Cal. 2006), the district court refused to certify the litigation as a class action on the grounds that (1) the claims for monetary relief in the class action complaint were not incidental, thus rendering certification under Rule 23(b)(2) inappropriate, and (2) the duties of associate managers “are not susceptible to collective proof,” thus rendering class action treatment under Rule 23(b)(3) inappropriate. Id., at 245-46 and 248-49. Plaintiffs appealed. Sepulveda v. Wal-Mart Stores, Inc., Case No. 06-56090 (9th Cir. April 25, 2008) [Slip Opn., at 1-2]. In an unpublished opinion, the Ninth Circuit reversed. In a single paragraph, the Circuit Court stated that the district court had “misapplied Ninth Circuit precedent when, relying on its conclusion that Plaintiffs’ claims for monetary relief were non-incidental, it denied certification under [Rule] 23(b)(2),” and cited a Ninth Circuit opinion that “refus[ed] to adopt the incidental damages approach set forth by the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998).” Id., at 2 (citing Molski v. Gleich, 318 F.3d 937, 949-50 (9th Cir. 2003)). Rather, the lower court should have “focus[ed] on the intent of the Plaintiffs in bringing suit.” Id. (citation omitted). By failing to do so, the district court abused its discretion in denying class action treatment under Rule 23(b)(2). Id. The Ninth Circuit instructed the district court to reconsider on remand whether class certification was appropriate under Rule 23(b)(2) and, further, to consider “using Rule 23(c)(4) to certify issues under the Rule 23(b)(2) standard.” Id. (citation omitted). The author notes that the district court opinion contains the following discussion of Rule 23(b)(2): Continue reading "Wal-Mart Class Action Defense Cases–Sepulveda v. Wal-Mart: In Unpublished Opinion Ninth Circuit Reverses Denial Of Class Action Treatment In Labor Law Class Action Filed On Behalf Of Assistant Managers" »
Posted In: Certification of Class Actions, Employment Law Class Actions, Class Action Court Decisions Posted On: April 30, 2008
Class Action Defense Cases–Ross v. Bank of America: Second Circuit Reinstates Antitrust Class Action Holding Cardholders Possessed Article III Standing To Pursue Class Action Claims Against Credit Card Issuers
District Court Erred in Dismissing Cardholder Class Action Against Credit Card Issuers, Alleging Conspiracy to Including Mandatory Arbitration Clauses in Credit Card Agreements in Violation of Federal Antitrust Laws, because Class Action Complaint Adequately Alleged Injury in Fact for Article III Standing Second Circuit Holds Plaintiffs filed a putative class action against various credit card issuing banks for antitrust violations alleging that defendants “illegally colluded to force cardholders to accept mandatory arbitration clauses in their cardholder agreements.” Ross v. Bank of America N.A., ___ F.3d ___ (2d Cir. April 25, 2008) [Slip Opn at 4]. The class action complaint contained two antitrust claims based on violations of Section 1 of the Sherman Act: (1) that defendants “conspired to impose mandatory arbitration clauses,” and (2) that defendants “participated in a group boycott by refusing to issue cards to individuals who did not agree to arbitration.” Id., at 5-6. The class action prayed for an injunction and sought “to invalidate existing mandatory arbitration clauses, and to force the banks to withdraw all pending motions to compel arbitration.” Id., at 6. Defense attorneys moved to dismiss the class action under Rule 12(b)(1) and (b)(6) on the grounds that plaintiffs lacked standing to prosecute the antitrust class action claims, id. The district court granted the motions on the sole ground of lack of standing, and dismissed the class action complaint. See In re Currency Conversion Fee Antitrust Litig., No. 05 Civ. 7116 (WHP), 2006 U.S. Dist. LEXIS 66986 (S.D.N.Y. September 20, 2006). (A copy of the district court order dismissing the class action may be found here
.) Plaintiffs appealed; the Second Circuit reversed and reinstated the class action. The district court dismissed the class action complaint based on its belief that the injuries alleged by plaintiffs were “entirely speculative and, therefore, insufficient to establish Article III standing.” Ross, at 6 (quoting In re Currency Conversion, at *9, *12-13). As the Second Circuit explained at page 6, “Specifically, according to the district court, the cardholders’ injuries are ‘contingent on their speculation that someday (1) Defendants may engage in misconduct; (2) the parties will be unable to resolve their differences; (3) Plaintiffs may commence a lawsuit; (4) the dispute will remain unresolved; and (5) Defendants will seek to invoke arbitration provisions.’” Id., at 6-7 (quoting In re Currency Conversion, at *14-15). The district court also characterized any “alleged anticompetitive effects” as “inchoate.” Id., at 7 (quoting In re Currency Conversion, at *16). The Circuit Court disagreed. Continue reading "Class Action Defense Cases–Ross v. Bank of America: Second Circuit Reinstates Antitrust Class Action Holding Cardholders Possessed Article III Standing To Pursue Class Action Claims Against Credit Card Issuers" »
Posted In: Class Action Court Decisions Posted On: April 29, 2008
Labor Law Class Action Defense Cases–Isner v. Falkenberg: California Court Affirms Summary Judgment In Favor Of Defense In Labor Law Class Action Holding Resident Employees Need Only Be Compensated For Carrying Out Assigned Duties
Class Action Alleging Failure to Pay Resident Employees for Time Spent “On Call” though not Performing Assigned Tasks Properly Subject to Summary Judgment in Favor of Defense California State Court Holds Plaintiffs filed a putative labor law class action against their former employer, a property management company, alleging inter alia that it had failed to pay them for overtime and waiting time; specifically, the class action complaint alleged that defendant failed to pay its “resident employees” for “on-call” time. Isner v. Falkenberg/Gilliam & Associates, Inc., 160 Cal.App.4th 1393, 73 Cal.Rptr.3d 433, 434 (Cal.App. 2008). The class action alleged that the resident employee employment agreement signed by plaintiffs required that they be on call “on designated evenings from 5:00 p.m. until 8:00 a.m. and on designated weekends from 5:00 p.m. Friday evening until 8:00 a.m. Monday morning.” The agreement further required employees to “remain on the facility premises within hearing distance of the emergency alarms systems and telephone” while on call, but provided that they were “otherwise free to use on-call time as he or she chooses.” Id. The appellate court explained, “The gravamen of the complaint was that these resident employees were entitled to payment not just for the hours they spent responding to emergencies while on call, but for all the hours they were on call and thus confined to their apartment or the building office so as to remain within audible range of the telephone and alarm.” Id., at 436. Defense attorneys moved for summary judgment arguing that plaintiffs were entitled to wages only for time spent on the job; the trial court agreed that payment was due only for work “actually performed” and, accordingly, granted summary judgment on the class action complaint. Id. The appellate court affirmed. The pertinent facts established that resident employees were allowed to arrange for another resident employee to “respond to emergency calls with the Employee, or in the place of the Employee” and that employees would be paid for “[a]ll time spent in responding to emergencies.” Isner, at 434. Moreover, if emergencies prevent an employee from obtaining 5 hours of “uninterrupted sleep,” then defendant agreed to “credit Employee with eight hours' time worked under the terms of [the agreement].” Id., at 435. Plaintiffs were given an apartment to live in, and at least one of them stayed within range of the alarm and telephone while on duty or on call. Id. “While [plaintiffs] were on duty and on call, they slept, ate, talked on their personal telephone, used the internet, played computer games, read magazines or watched television in their apartment when they were not responding to an emergency.” However, while on duty or on call, plaintiffs could not go to the pool or walk around the apartment, because they would be unable to hear the alarm or telephone, and they could not leave the apartment. Id. It was plaintiffs’ responsibility to keep track of and bill their time with respect to “both their usual eight-hour work day and times spent responding to emergencies,” id. And while defendant permitted them to bill all time spent on the job, plaintiffs generally “recorded only the calls that took 15 minutes or more.” Id., at 435-36. “[T]here was never an occasion when [plaintiffs] were not paid for time they recorded on their time sheets.” Id., at 436. Continue reading "Labor Law Class Action Defense Cases–Isner v. Falkenberg: California Court Affirms Summary Judgment In Favor Of Defense In Labor Law Class Action Holding Resident Employees Need Only Be Compensated For Carrying Out Assigned Duties" »
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