Carlton Fields' Class Action Blog

Classified News: April 25, 2007

Wed, 25 Apr 2007 14:03:00 GMT

Class certification denied in tobacco case

Mentally ill prisoners file class action suit against State of California

Tax-savings company agrees to pay $6 million to settle class action suit

Oklahoma may become first state in nation with an “opt in” provision for class-action lawsuits

Classified News: May 8, 2007

Tue, 08 May 2007 11:18:00 GMT

Proceeds from class action settlement between Microsoft and State of Florida will benefit state schools

Doral Financial Corp. settles consolidated securities class-action lawsuit for $129 million

British soccer league and independent music publisher Bourne Co. file class action lawsuit against YouTube

Ohio judge will hold settlement fairness hearing on Friday, May 11, 2007 in Carfax class action lawsuit

Software firm Quovadx Inc. settles final class-action lawsuit pending against the company

Eleventh Circuit Details Factors Applicable to Enforceability of Class Action Arbitration Waivers

Wed, 03 Oct 2007 17:56:00 GMT

What factors should be included in deciding the enforceability of a class action arbitration waiver? Does the recoverability of attorneys fees preclude unconscionability? The Eleventh Circuit addressed these issues in the context of a class action waiver in Comcast’s mandatory arbitration agreements with consumers, finding the waiver unconscionable and therefore unenforceable. Dale v. Comcast, Corp., ~ F.3rd ~, 2007 WL 2471222 (11th Cir. Sept. 4, 2007).

The Court reviewed a district court decision that had upheld the class action waiver clause found in Comcast's mandatory arbitration provision.  That provision was contained in the cable provider's policies and procedures that were distributed to subscribers when their service was installed or with their company's December, 2004 invoice.

In reaching its conclusion, the Court recited a number of factors, which it emphasized were non-exclusive, that would be important in analyzing, in each case, whether a waiver would be unconscionable.   These included the fairness of the provisions; the cost to an individual plaintiff of vindicating the claim when compared to the plaintiff’s potential recovery; the ability to recover attorneys’ fees and other costs and thus obtain legal representation to prosecute the underlying claim; the practical affect the waiver would have on the company’s ability to engage in unchecked market behavior; and related public policy concerns.

The Court focused much of its analysis on the recoverability of attorneys fees.   It noted several prior cases in which it had upheld class action waivers by relying in part of the ability of an individual plaintiff to recover attorneys fees. It went on to find that, although the relevant law in this case provided "the potential recovery of attorneys' fees and litigation costs," this was different from those prior cases in which the reovery of fees and costs for a prevailing plaintiff was automatic or likely. Thus, here unlike those prior cases, there was less incentive for an attorney to represent an individual plaintiff.

Because the Court found the waiver provision unenforceable, Comcast's entire arbitration provision -- according to its terms -- was likewise unenforceable.

Classified News: May 20, 2008

Mon, 19 May 2008 09:02:00 GMT

Several major oil refiners agree to pay largest settlement to date over drinking-water contamination caused by methyl tertiary butyl ether.

House passes Credit and Debit Card Receipt Clarification Act, which would amend the Fair and Accurate Credit Transaction Act (FACTA) to ensure that it is not abused by frivolous class-action lawsuits against businesses.

Texas mayors and business leaders file class-action lawsuit against Department of Homeland Security seeking an injunction to block work on construction of fence along the Mexican border.

Federal judge approves $40 million settlement in class action alleging Unum Group artificially inflated its stock price.

The Eleventh Circuit Forcefully Confirms The Need For Rigorous Analysis Of Rule 23’s Requirements

Tue, 07 Apr 2009 12:57:41 GMT

Today, the Eleventh Circuit released a strongly worded opinion reversing an order certifying class claims for unpaid wages and unjust enrichment. In finding that the district court abused its discretion in just about every aspect of its order, the Court in Vega v. T-Mobile, USA, Inc., No. 07-13864 (11th Cir. Apr. 7, 2009), exhaustively examined each element of Rule 23(a) and (b)(3).

The plaintiff in Vega sought to certify a nationwide class of former T-Mobile employees who had certain commissions “charged back” pursuant to T-Mobile’s commission policies. The district court scaled back the proposed class to a Florida-only class and made some other minor adjustments, but otherwise certified the class under Rule 23(b)(3).

The Eleventh Circuit went through each of the elements necessary for the certification of a Rule 23(b)(3) class, finding that the district court abused its discretion as to each element.

At the outset, the Court saw no evidence as to the numerosity of a Florida-only class, as opposed to a nationwide class. Though recognizing that T-Mobile is a large company, the Court reiterated that it is the plaintiff who bears the burden of putting forth some evidence to establish each element of rule 23. Without a “shred” of evidence on the size of a Florida-only class, the inference on numerosity was “an exercise in sheer speculation.”

Interestingly, the Court commented in a footnote that, had the district court properly determined that the aggregate number of Florida class members fell below 100 (while still meeting the numerosity requirement), the court would not lose subject matter jurisdiction under CAFA (specifically, 28 U.S.C. § 1332(d)(5)(B)) because CAFA’s jurisdictional requirements are determined with regard to the “proposed” class, rather than what is actually certified.

As for the commonality and predominance requirements, after observing that the district court “clearly misread[]” Rule 23 in essentially merging the two elements, the Court further chided the district court for failing to identify a single common question of law or fact. The district court’s failure to follow the proper procedural analysis of the commonality and predominance requirements was, by itself, an abuse of discretion requiring reversal.

As if that were not enough, the Court observed that the substantive application of those requirements also constituted an abuse of discretion. The Court began by noting that no breach of contract claim was pled, and the district court erred by analyzing the unpaid wages claim as such. (The Court characterized the district court’s action as “a display of cognitive dissonance” given that two weeks prior the district court had denied the plaintiff’s motion for leave to add a breach of contract claim).

The Court then found that a breach of contract claim fails to satisfy either the commonality or predominance requirements because the complaint lacks any allegation that compensation for all class members was governed by the same contract. The Court rejected the plaintiff’s argument that T-Mobile’s 2004 compensation program could be a common contract, finding controlling Florida law establishing that a policy statement is not a binding employment contract.

Turing to plaintiff’s unjust enrichment claim, the Court recognized that “common questions will rarely, if ever, predominate an unjust enrichment claim, the resolution of which turns on individualized facts.” That is, the court must look to the equities of each individual class member’s situation. In this case, there can be no commonality because the issue turns on whether each class member knew of and accepted T-Mobile’s compensation policies. If so, there would be no inequity in T-Mobile following that policy.

Moving on to typicality, the Eleventh Circuit first observed that the district court failed altogether to conduct a full typicality inquiry and, even if it had, the plaintiff’s claims were not typical because, among other things, there is no evidence that he was operating under the same employment contract as the remainder of the class.

The certification order fared no better on the Rule 23(b)(3) elements. The predominance element failed for the reasons above. As for superiority, the Court found the order lacking in any meaningful analysis. The Court also found that individualized issues causing the failure of the other Rule 23 elements also seriously compromise the manageability of the class, and the plaintiff failed to even attempt to propose a trial plan that would address the individualized issues.

The Court then admonished the district court for waiting until just before trial court issue its order, and closed by vacating the certification order and remanding with instructions that the plaintiff’s claims proceed individually.

Can Plaintiffs Aggregate Their Claims Against Multiple Defendants To Reach CAFA's Amount In Controversy Requirement?

Fri, 09 Mar 2007 10:15:00 GMT

CAFA now provides that "[i]n any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs." 28 U.S.C. § 1332(d)(6).

CAFA clearly increased the amount in controversy to $5 million, and also allows the plaintiffs to aggregate their claims to meet this amount, but does it also allow the plaintiff class to aggregate their claims against multiple defendants to reach the jurisdictional amount? One court has determined that it does. Kearns v. Ford Motor Co., No. CV-05-5644 GAF (JTLX), 2005 WL 3967998 *5-*6 (C.D. Cal. Nov. 21, 2005).

In Kearns, the Central District of California reasoned that "[i]f this rule against aggregation still applied to class action suits, in which the individual claims are often quite small, it would effectively nullify CAFA's attempt to expand jurisdiction." The court relied exclusively on CAFA’s legislative history in reaching this conclusion, but noted that the legislative history "does not address this question directly." In the Eleventh Circuit, this question remains unanswered. However, in the absence of any explicit guidance from Congress on the issue, the Eleventh Circuit may be hesitant to overturn the long-standing rule prohibiting plaintiffs from aggregating their claims against multiple defendants. Further, the Eleventh Circuit recently stated that CAFA did not change the rule that the party seeking removal has the burden of proof survives because the statute didn't expressly change the burden. See Evans v. Walter Industries, 449 F.3d 1159 (11th Cir. 2006).

Do You Want to Arbitrate? Strike While the Iron Is Hot

Fri, 09 Mar 2007 10:33:00 GMT

On February 28, 2007, in Freedom Life Ins. Co. v. Wallant, -- So. 2d --, 2007 WL 6000629 (Fla. 4th DCA 2007), the Fourth District rejected the defendant Freedom’s second attempt to send the case to arbitration. This is the second appellate decision in the case. In 2004, the court affirmed class certification under Rule 1.220(b)(3). See Freedom Life Ins. Co. v. Wallant, 891 So. 2d 1109 (Fla. 4th DCA 2004). Before the class was certified, the trial court had denied Freedom’s motion to compel arbitration. Freedom did not appeal that decision. After class certification, Freedom again moved to compel arbitration, and that motion was again denied. This time Freedom appealed, but the Fourth District dismissed the appeal as being an improper attempt to have another bite at the apple. The class certification did not change the circumstances since the possibility existed when the class action complaint was filed that a class eventually would be certified. The lesson is: as the title of this post says, strike while the iron is hot. File your appeal the first time around because you won’t get a second chance.

Can A Class Representative Waive An Ethical Conflict?

Mon, 19 Mar 2007 08:56:00 GMT

Florida Rule of Professional Conduct 4-1.7(a)(2) states in pertinent part that “a lawyer shall not represent a client if (1) the representation of 1 client will be directly adverse to another client; or (2) there is a substantial risk that the representation of 1 or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.” Under Rule 4-1.7(b), a lawyer may represent a client even though there is a conflict if “the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; . . . and each affected client gives informed consent, confirmed in writing or clearly stated on the record at a hearing.”

In most class action contexts, however, each client cannot give informed consent because many of the “clients” are absent class members who will never even meet the attorney who represents the class. This presents a dilemma because class representatives should not be permitted to give “informed consent” on behalf of the class. Davis v. Kraft Foods North American, 2006 WL 237512 *13 (E.D. Pa. Jan. 31, 2006) (“I do not believe [the class representative] can waive any conflict on the class’s behalf.”); In re Terazosin Hydrochloride Antitrust Litigation, 223 F.R.D. 666, 677 (S.D. Fla. 2004) (stating that “none of the parties have cited to any case law holding that some putative class members can waive actual or potential Rule 23(a)(4) conflicts” and concluding that “[i]t is doubtful that these representative members can waive any actual or potential conflicts for the remaining approximately 1,947 members of the defined proposed class”).

What's the solution? The obligation falls on the court to ensure that the interests of the absent class members are protected. See e.g. Palumbo v. Tele-Communications, Inc., 157 F.R.D. 129, 133 (D.C. 1994) (“In the class action context, the Court has an obligation to closely scrutinize the qualifications of counsel to assure that all interests, including those of as yet unnamed plaintiffs are adequately represented.”). There are three options.

One is to require the class representatives to obtain informed waivers from all unnamed class members. This is often impracticable. Yet another is to replace class counsel.

Still a third is to deny certification. Cf. Davis, 2006 WL 237512 at *6 (denying class certification where a conflict caused class counsel to abandon arguments a conflict-free counsel would have made).

In any event, a court should not permit class counsel to represent the class where a waiver via informed consent cannot properly be requested. According to the comments to Rule 4-1.7, for example, a lawyer cannot request a waiver when “a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent.”

Will There Be A Class Action Arbitration? Who Decides?

Mon, 19 Mar 2007 09:11:00 GMT

One hot topic of late in class action law is whether a class action can occur in arbitration? And who decides? Have the Florida courts weighed in?

In Fastfunding the Company, Inc. v. Betts, 951 So. 2d 116 (Fla. 5th DCA March 16, 2007), the Fifth DCA did. In this short opinion, issued March 16, 2007, the court stated that "the arbitrator must determine whether, under Florida law, the arbitration may proceed as a class action."

Debt Collection Class Action

Sat, 03 Feb 2007 09:27:00 GMT

On February 1, in Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, -- So. 2d --, 2007 WL 268769 (Fla. Feb. 1, 2007), the Florida Supreme Court ruled that the judicially created “litigation privilege” applies to claims alleging statutory violations as well as common law tort causes of action. While the specific ruling in the case is beyond the scope of this blog, the case nonetheless is of interest because of its class action context.

Two years ago, in Echievarria, 896 So. 2d 773 (Fla. 1st DCA 2005), the First District affirmed in part the trial court’s certification of a class of property owners who had defaulted on their mortgages and received reinstatement letters from the defendant law firm. The property owners alleged that the reinstatement letters had violated the Florida Consumer Collection Practices Act and Florida Deceptive and Unfair Trade Practices Act by requiring payment of costs for things such as title searches and examinations, when the actual cost to perform those functions was far less than the amount demanded. The trial court granted the motion to certify a class, but limited the class to those property owners who had paid the debt and had their mortgages reinstated. In other words, property owners who had paid the debt and had their homes foreclosed on were excluded from the class. Those property owners had no damages, so the limitation sounds reasonable, right?

Not according to the First District. The court ruled that the violation occurred when the letter first went out, irrespective of whether the property owner relied on it. Thus, it concluded, the limitation on the class was probably an “oversight,” but if not, an error as a matter of law.

The First District’s decision makes no mention of whether the issue of causation would be individualized or whether, if so, that would predominate over common issues. Nor does the opinion suggest that the law firm attempted to defend the class limitation on the ground that property owners who did not pay the fee suffered no loss or damages from the violation and should have been excluded from the class on that ground. Nor still does it discuss whether the defendant argued that a unique defense exists for those class members who paid the costs based on the voluntary payment doctrine. The Supreme Court likewise did not address those issues.

5 Stupid Things Not To Do in Settling a Class Action in Federal Court

Mon, 19 Feb 2007 09:38:00 GMT

David Letterman has his top 10 lists. We have a top 5 list. This is a list of things NOT to do in settling a class action in federal court. Each item is followed by a “moral” (like in Aesop’s fables) and a brief explanation.

1. Once you negotiate a settlement for your class action suit, immediately file your Notice of Voluntary Dismissal and hope that the judge doesn’t ever get wind of the terms of the settlement.

Moral: Do not forget that the court must approve the settlement and its terms.

Explanation: Rule 23(e) requires court approval for settlement of all certified class actions and settlement of even uncertified class actions if the parties intend to settle on a classwide basis. While the court is not permitted, under the law, to modify the terms of a proposed settlement, it certainly may reject a settlement that is not fair or reasonable to the class.

2. Don’t worry about certification if you are going to settle a claim prior to trial because who cares whether it meets the class requirements once it is settled and gone?

Moral: Do not forget that, except for the (b)(3) manageability component of the superiority requirement, the requirements of Rule 23 to certify a class must be satisfied in the settlement context just as they would be in the litigated class context.

Explanation: The Supreme Court declared in Amchem that the requirements of Rule 23 must be satisfied for class action settlements, although the superiority requirement can be examined through the lens of the settlement (so that "manageability" at trial is not a factor as it would be in a litigated class action context). This has practical ramifications to a defendant if the class certification question has not been adjudicated. It means that a defendant must effectively concede that the Rule 23(a) and (b)(3) predominance requirements are satisfied in order to obtain a class settlement -- even at the risk that the court will not approve the settlement and place the parties back in a contested litigation posture. Stating in the settlement agreement that the defendant's agreement that the Rule 23 factors are satisfied is only for "settlement purposes" likely will not ameliorate the risk of this concession. The moral: Make sure the settlement is on terms that are likely to be approved.

3. Settle your case with a valueless coupon

Moral: Do not ignore the terms of the Class Action Fairness Act.

Explanation: Assuming it applies, CAFA contains specific cautions and requirements.

a. The cautions are that coupon settlements will be closely scrutinized by the court. This is not to say that all coupon settlements are automatically prohibited, but it does mean they will need to be justified, perhaps by expert testimony.

b. The requirements relate to notice; the statute requires that settling defendants give notice to certain government authorities. Failure to comply will cause the settlement not to be binding on affected class members. See CAFA for details.

4. Go ahead and agree to pay the opposing counsel’s excessive attorney’s fees as part of the settlement. It is a drop in the bucket of the whole class settlement and opposing counsel has suggested that he will treat you to a dinner at Bern’s a few months down the road.

Moral: Do not overreach in attempting to "buy peace."

Explanation: The court will conduct its own analysis of the fairness of the settlement. Overreaching -- by either party, including agreeing to pay or accept excessive attorneys fees -- may result in challenges to the settlement from absent class members or sua sponte scrutiny by the court. As noted, the denial of court approval could place the parties back in an undesirable litigation posture.

5. When settling, be sure to have plaintiff’s counsel agree not to take any similar cases against your client.

Moral: Do not attempt to get plaintiffs' counsel to agree not to take similar cases against your client.

Explanation: The Florida Bar ethics rules prohibit this practice. It is appropriate, however, for defendant's counsel to obtain a statement from plaintiff's counsel that he or she has no current additional cases against your client. Under CAFA, however, this side letter must be disclosed in the notice.

Windstorm Certification and Judgment Swept Away

Fri, 19 Jan 2007 10:25:00 GMT

In recent months, the Florida courts have issued several opinions in windstorm class actions. Here are two.

In Litvak v. Scylla Properties, LLC, 946 So. 2d 1165 (Fla. 1st DCA 2006), the First District reversed the denial of unnamed class members' motion to intervene in a class action seeking to recover under insurance policies for losses incurred during the 2004 hurricane season. The trial court had certified a mandatory, no-opt out class and subclasses. The defendant opposed the intervention on the ground that intervenors must take a lawsuit as they find it, a long-standing rule that prevents a stranger from coming late to litigation and attempting to reshape it. The court of appeal ruled that this principle did not apply because the unnamed class members who sought intervention were not strangers to the lawsuit, but already parties. The court then reversed the class certification because the intervenors had not had a chance to make their arguments opposing it.

While the intervenor's appeal was pending, the trial court granted final judgment to the class. In Citizens Property Ins. Corp. v. Scylla Properties, LLC, 946 So. 2d 1179 (Fla. 1st DCA 2006), the First District reversed this decision. Because the class certification had been vacated, "entry of final judgment at this juncture would bind nobody not actually named as a party."

Because the judgment construed the policy language, it further would render the appellate court's decision reversing the class certification nugatory.

Failure to Exhaust Administrative Remedies Dooms Class Action

Sun, 04 Mar 2007 10:45:00 GMT

In State Dep’t of Highway Safety & Motor Vehicles v. Rendon, -- So. 2d --, 2007 WL 521156 (Fla. 3d DCA Feb. 21, 2007), the Third District joined the Second District in effectively ruling out class actions seeking money damages in refund litigation against the State.

This class action challenged the fees imposed by the State for issuing handicap parking placards pursuant to federal regulations promulgated under the Americans with Disabilities Act. Even though the regulation prohibited the state from charging a surcharge, Florida had charged a $15.00 fee for the placards until 2002, at which time the fee had been replaced by an administrative processing fee of $1.50. The trial court granted class certification and summary judgment to the plaintiffs. After a tortured history involving an appeal to the U.S. Supreme Court, the Third District affirmed the grant of prospective injunction and declaratory relief invalidating the surcharge. The court, however, reversed the part of the judgment permitting the recovery of money damages. It noted that, under Second District precedent, P.R. Marketing Group, Inc. v. GTE Fla., Inc., 747 So. 2d 962 (Fla. 2d DCA 1999), every class member would have to exhaust administrative remedies by applying for a refund before filing suit. A demand by a class representative would not suffice. Because the summary judgment record did not reveal which class members had applied for a refund, the court reversed the judgment for all class members which had not sought a refund.

A Gentle Reminder to Trial Courts

Sun, 04 Mar 2007 10:48:00 GMT

On March 2, 2007, in Florida Health Sciences Center, Inc. v. Elsenheimer, Florida’s Second District Court of Appeal reminded class action litigants that a certification decision must be based on evidence, not allegations or argument.

The plaintiffs alleged that Tampa General Hospital engaged in wrongful conduct by “attempting to collect an excessive and unlawful debt.” At the class certification hearing, no testimony was taken, and the plaintiffs filed no evidence other than the their own hospital bills, a hospital annual report, and some news articles from the Internet. The hearing thus consisted of argument of counsel, and the court noted that the transcript of the argument was only 23 pages long. The trial court order based the bulk of its findings on the complaint. In reversing, the appellate court reminded litigants that the old bromide that used to be frequently cited by plaintiffs, that the trial court can accept the complaint’s allegations as true, is no longer true, if it ever was: “Contrary to the Plaintiffs’ assertions, it is insufficient for the trial court to accept the allegations in the Plaintiffs’ complaint as true for purposes of the class certification.”

Welcome to Classified!

Mon, 01 Jan 2007 10:57:00 GMT

Welcome to Classified Carlton Fields' Eleventh Circuit Class Action Blog. As the title suggests, this blog is dedicated to reviewing and analyzing class action cases arising out of the Eleventh Circuit, its district courts (Alabama, Georgia, and Florida), and the state courts of Alabama, Georgia, and Florida. We may discuss significant cases arising elsewhere, but this is our main focus.

Posts will typically consist of three types: (1) summaries of recent cases; (2) pointers to class action news stories of interest; and (3) short analysis pieces. We hope you find this blog useful!

Florida Causes of Action as Class Actions Series: Fraud

Mon, 19 Mar 2007 16:20:00 GMT

This series of postings will address whether certain causes of action can be maintained on a class-wide basis under Florida and federal law. As to fraud, the law in Florida is well-settled: claims of fraud will not be certified for class treatment. The general rationale behind this rule is that individualized issues in a fraud action predominate. Cases reflecting this holding are listed below. Does the same hold true for federal courts? The next posting will address this question.

Florida Supreme Court

Lance v. Wade, 457 So. 2d 1008 (Fla. 1984) (claims for fraud based on separate contracts cannot be the basis for a class action because “there must be an intentional material misrepresentation upon which the other party relies to his detriment . . . [w]hat one purchaser may rely upon in entering into a contract may not be material to another purchaser”)

First District Court of Appeal

Davis v. Powertel, Inc., 776 So. 2d 971, 973 (Fla. 1st DCA 2000) (“Multiple claims of intrinsic fraud cannot meet the test of commonality under rule 1.220(a)(2), because the issue of reliance is unique to each person who is alleged to have been defrauded.”)

Second District Court of Appeal

Estate of Bobinger v. Deltona Corp., 563 So .2d 739, 744 (Fla. 2d DCA 1990) (recognizing that “[f]raud class actions based on separate contracts are prohibited” but holding that extrinsic fraud, or fraud on the court, can be a basis for a valid cause of action in a class action complaint, since the Florida fraud class action rule does not include extrinsic fraud)
Humana, Inc. v. Castillo, 728 So. 2d 261, 264 (Fla. 2d DCA 1999) (“We conclude that the Florida Supreme Court has clearly and unequivocally held that class actions seeking relief from separate contracts on the basis of fraud, whatever the genesis of the fraud, are prohibited.”)

Third District Court of Appeal

Rosenwasser v. Frager, 307 So. 2d 865 (Fla. 3d DCA 1975) (stating that “an action based on fraud and deceit is inappropriate as a class action”)

Fifth District Court of Appeal

Black Diamond Properties, Inc. v. Hayes, 940 So. 2d 1176 (Fla. 5th DCA Nov. 1, 2006) (stating that “generally, claims involving allegations of fraud may not proceed as a class”)
Hoechst Celanese Corp. v. Fry, 753 So. 2d 626, 627 (Fla. 5th DCA 2000) (“Florida law is clear that fraud claims are inappropriate for class treatment as a matter of law because of the individual questions presented.”)

Classified News: March 16, 2007

Fri, 16 Mar 2007 16:57:00 GMT

Morgan Stanley settles gender class action suit.

What Standard of Review Applies to an Arbitrator's Class Certification Decision?

Mon, 19 Mar 2007 17:02:00 GMT

Under AAA Rules, an arbitrator's decision on class certification is immediately appealable to a court -- but what standard of review applies? In the first appellate court decision on the issue, the Third Circuit rejected the notion that, because the AAA Rules required a "reasoned" class determination award and allowed immediate judicial review of such decisions, a de novo review was envisioned. Sutter v. Oxford Health Plans, LLC, 2007 WL 625625 (3rd Cir. Feb. 28, 2007). Instead, the Court held that the AAA Rules were silent on what standard of review would apply. Therefore, it could not be said that the parties had agreed to a standard different from those in the Federal Arbitration Act, and accordingly, the typical "highly deferential" standard of review would apply. The Court indicated that its decision is "not precedential."

Class Actions Barred via Arbitration Clause

Tue, 20 Mar 2007 11:08:00 GMT

Maryland appeals court finds arbitration clause effectively prohibited both arbitration and litigation class actions. In Doyle v. Finance America, LLC., ~ A.2d ~, 2007 WL 765211 (Md. App. Mar. 15, 2007), the Maryland Court of Special Appeals upheld the granting of a motion to compel arbitration. Plaintiffs' argued that, although they would be required to arbitrate an individual claim, they could proceed outside arbitration with the class action they had filed because the arbitration clause barred class actions in that forum. The court rejected their argument, holding that "the plain language of the Agreement requires that any dispute arising out of or in any way related to the loan shall be resolved by arbitration [if either party so elected]. Therefore, if the [a]greement bars the filing of a class action claim in arbitration, there can be no filing of a class action claim at all." The court did note that it would have been "wise" expressly to include a no-class-action provision, but that the language nonetheless was sufficiently clear.

Classified News: January 19, 2007

Fri, 19 Jan 2007 10:32:00 GMT

Sharper Image to settle class action lawsuit over air purifier Ionic Breeze.

Saskatchewan judge says Vioxx case has merit.

If Class Reps Claims Become Moot, Class Can Still Be Certified

Tue, 27 Mar 2007 11:20:00 GMT

In Bishop’s Property & Investments, LLC v. Protective Life Ins. Co., 463 F.Supp.2d 1375 (M.D. Ga. 2006), which was decided on November 29, an insured brought putative class action on behalf of persons who were entitled to, but were denied refund of unearned premium on credit insurance coverage upon early termination of their automobile loans. Credit insurer moved for summary judgment on ground of mootness. The court denied the motion and held that insurer's tender of refund to named plaintiff before class could be certified did not under facts moot controversy. The court noted that if individual claims of class representative are not live both at time he brings suit and when district court determines whether to certify putative class, the court lacks a justiciable controversy and must dismiss the claim as moot. In contrast, if the class representative's claims remain live throughout the certification process, but become moot after certification, the court retains jurisdiction so long as there is at least one member of the certified class whose claim remains viable.

No Need To Exhaust Administrative Remedies Before Bringing Class Action

Tue, 27 Mar 2007 11:24:00 GMT

In Homes of Georgia, Inc. v. Humana Employers Health Plan of Georgia, Inc., 640 S.E.2d 313 (Ga. App. 2006), an employer sued health care insurer for alleged overcharges for insurance renewal premiums for its group health insurance plan. The Superior Court dismissed the complaint based on ERISA preemption. The employer appealed. The Court of Appeals reversed, and held that: (1) claim of overcharging was not preempted by ERISA, and (2) employer was not required to exhaust administrative remedies on claim that overcharging violated statutory requirements for rating small groups. More specifically, the court noted that the employer was not required to exhaust administrative remedies before pursuing a class action on its claim that health plan insurer's overcharging of renewal premiums violated statutory requirements for rating small groups; insurance commissioner did not have exclusive or primary jurisdiction over such disputes, and employer was not aggrieved by commissioner's final directive after investigating employer's claim.

Unjust Enrichment Where Class Members Not Required To Pay Into Common Fund

Tue, 27 Mar 2007 11:26:00 GMT

In Barnes v. City of Atlanta, 639 S.E.2d 420 (Ga. App. 2006), the Georgia Appellate Court affirmed the trial court's rulings that Class I plaintiffs could only recover refunds for the three years preceding their re-certification, and that those lawyers who opted out of their class would not be responsible for the attorney fees of class counsel. The Supreme Court granted certiorari and reversed, holding (i) that the trial court failed to recognize that the filing of the refund claims in the trial court by named plaintiffs who had exhausted their administrative remedies satisfied the exhaustion requirement on behalf of the Class I plaintiffs, and (ii) that those taxpayers who opt out would be unjustly enriched if they were not required to pay attorney fees through the common fund. Accordingly, the Georgia Appellate Court vacated its prior judgment, and adopted the judgment of the Supreme Court.

Language of Arbitration Clause Insufficient to Bar Class Action

Tue, 27 Mar 2007 12:00:00 GMT

Does phrasing an arbitration clause in terms of "you" and "your" limit a claimant's ability to bring a class action in the arbitration? Does it matter that the respondent is to bear the arbitration costs? The arbitrator in Orea v. Tavistock Restaurants, LLC, AAA Case No. 11-160-01982-06 (Mar. 2, 2007) held that neither of these precluded class action arbitrations.

In his Clause Construction Award, the arbitrator ruled that using "you" and "your" in referring to the types of disputes subject to arbitration and the remedies available in it were not sufficient to preclude class actions. The arbitrator stated that, "Had the drafters intended a specific exclusion of class-action participation, they had the obligation clearly to articulate the exclusion." The arbitrator also held that language providing "you ... will have the same remedies available in arbitration as those available in a court of law," unambiguously suggested that "there would be no contractual impediment to proceeding as a class action."

The arbitrator also rejected the argument that, because the arbitration clause called for the employer to bear the cost of any arbitration, it implied a limitation on class actions.

California Public Policy Trumps Parties' Choice of Law Provision

Tue, 27 Mar 2007 14:18:00 GMT

California law overcomes provision that Delaware law governs when Delaware law would have precluded class action arbitration. Although the parties to an agreement had provided that it would be governed by Delaware law, a law that did not permit class action arbitrations, the arbitrator ruled that California (not Delaware) law would apply and, therefore, there was "no contractual impediment" to a class arbitration. Fannan v. Technisource, Inc., AAA Case No. 11-160-01881-06 (Feb. 25, 2007).

The arbitrator first considered whether Delaware had a substantial relationship to the parties or transaction or whether there was some other reasonable basis for their choice of Delaware law. Finding none, the arbitrator then assessed the relative interests of the two states in adjudicating the controversy -- and found that California had a significant interest and Delaware had none. Of significance, the putative class resided entirely in California; the named rep was a California resident who performed his services in that state for the respondent which was physically located there; and the claimant sought enforcement of an "intensely regulated area" of California law in which the state had a public policy of vigorous enforcement.

Parties Must Petition Under Rule 5 To Appeal Remand Orders Under The Class Action Fairness Act

Wed, 17 Jan 2007 23:31:00 GMT

In Main Drug, Inc. v. Aetna U.S. Healthcare, Inc., Nos. 06-12419, 06-12420, 2007 WL 92756 (11th Cir. Jan. 16, 2007), the Eleventh Circuit joined four other circuits in deciding that, not only does Fed. R. App. P. 5 apply to CAFA remand orders, but those requirements are jurisdictional.

The defendants in Main Drug removed two putative class action cases (involving the same issues) under CAFA. In the district court, plaintiffs argued that CAFA should not govern and the case should be remanded because the complaint was filed before the effective date of CAFA, even though the summons were not provided to the state court clerks until after the effective date. Plaintiffs also argued that CAFA’s amount in controversy requirement was not met. The district court denied the motion to remand.

The plaintiffs filed a notice of appeal with the district court within seven days of the district court’s ruling, but failed to file a petition for permission to appeal to the Eleventh Circuit. In accord with the other four circuits to decide the issue, the Eleventh Circuit ruled that the requirements of Fed. R. App. 5 apply to interlocutory appeals of CAFA remand orders. Because the requirements of rule 5 are jurisdictional and the plaintiffs failed to satisfy those requirements, the court was without appellate jurisdiction to decide whether the district court lacked jurisdiction.

The court noted the Supreme Court’s holding in Eberhart v. United States, 546 U.S. 12 (2005), that Fed. R. Crim. P. 33 was not jurisdictional, but rejected the plaintiffs’ contention that Eberhart was controlling, stating: “Obedience to a Supreme Court decision is one thing, extrapolating from its implications a holding on an issue that was not before that Court in order to upend settled circuit law is another thing.”

The court reiterated that it not authorized under Fed. R. App. 2 to suspend the timing requirements under rule 5. The court also rejected the plaintiffs’ argument that their timely notices of appeal to the district court should operate as petitions for permission to appeal, recognizing that the a notice of appeal serves a different function than a petition for permission to appeal.

Largest Financial Interest Is Determinative In Fight Over Who Gets to Be Class Representative In Securities Class Action

Fri, 19 Jan 2007 23:51:00 GMT

In this securities class action case under the Private Securities Litigation Reform Act of 1995 (PSLRA), five groups of plaintiffs filed competing motions for the appointment of lead plaintiff and for approval of their selection of counsel, but the plaintiff with the largest financial stake prevailed. Edward J. Goodman Life Income Trust v. Jabil Circuit, Inc., No. 8:06-CV-1716-T-23EAJ, 2007 WL 170556 (M.D. Fla. Jan. 18, 2007).

Having found that PSLRA’s notification requirement was satisfied, the court next determined which of the plaintiffs had the largest financial interest, as required by PSLRA. As the California Group had the largest financial interest, it was presumptively the most adequate plaintiff. With that, the court determined that the California Group otherwise satisfied Fed. R. Civ. P. 23, the final requirement under the PSLRA.

The district court rejected another plaintiff’s request to be appointed as a co-lead plaintiff, finding that the appointment of co-counsel would detract from the PSLRA’s fundamental goal of client control of securities class actions.

Finally, consistent with the PSLRA, the court accepted the California Group’s selection of class counsel.

Classified News: March 29, 2007

Thu, 29 Mar 2007 10:02:00 GMT

Five U.S. Gas Retailers Must Face Gas Price Class Suit.

EEOC Files Class Action Suit Alleging Discrimination at Walgreens.

Florida Court Shifts Cost Of Class Notice

Wed, 28 Feb 2007 17:54:00 GMT

Aren't the class representatives supposed to bear the cost of notice of certification to the class? Not according to the Florida court in the circumstances of this decision.

In Fla. Dept. of Agriculture and Consumer Servs. v. Cox, 947 So. 2d 561 (Fla. 4th DCA 2007), the court affirmed a trial court order requiring a defendant Florida agency to pay the costs of providing notice to class members. The class members were property owners who asserted the agency improperly destroyed their canker-exposed citrus trees. This cost shifting is a departure from the usual rule. Why?

The court explained that shifting the cost of notice would "result in the most economically viable means of assuring efficient and cost-effective notification." The agency already had an "extensive database" of class members and had mailed communications to the class on at least three prior occasions. These communications had been in English, Spanish and Creole, reflecting the multi-lingual nature of South Florida's population. In addition, the class had shown some success on the merits of the case by defeating partial summary judgment. Thus, the agency was "uniquely positioned" to distribute the notice.

Class Action Settlement Approved After Twenty-Five Years Of Litigation

Mon, 01 Jan 2007 11:18:00 GMT

In Knight v. Alabama, 469 F. Supp. 2d 1016 (N.D. Ala. 2006), a class action suit involving the desegregation of Alabama's public universities that was filed in 1981, the district court approved a proposed settlement agreement after scrutinizing the terms of the settlement based on the following two main factors: (1) whether the proposed settlement is the result of fraud or collusion; and (2) whether the proposed settlement is fair, adequate and reasonable.

As to the first main factor, the Court noted that it had first-hand knowledge that the settlement agreement was not reached as a result of fraud or collusion, but, rather, as the result of "hard-fought negotiations that lasted many, many months." In considering whether the proposed settlement was fair, adequate and reasonable, the Court separately addressed nine sub-factors, but noted that the likelihood of success at trial is the most important factor.

Due to the numerous hearings and two bench trials over which the district judge had presided, the judge was "highly familiar with the facts and law involved in this case" and "believe[d] that good cause exists for the parties to wish to resolve their disputes . . ., rather than placing a decision concerning those disputes in the Court's hands."

Claims of Overcharging For Carpet Installation Not Maintainable As A Class

Thu, 25 Jan 2007 12:04:00 GMT

In Marino v. Home Depot U.S.A., Inc., No. 06-80343, 2007 WL 201260 (S.D. Fla. Jan 24, 2007), the court determined that having to apply 50 states' breach of contract laws meant the claim could not meet the predominance requirement and was not judicially efficient.

Nether could the plaintiff’s claim under the Florida Deceptive and Unfair Trade Practices Act be brought under rule 23(b)(3). The plaintiff’s theory to satisfy deceptive act element was that Home Depot failed to inform of a charge, which was a deception by omission. Proof on that theory would require mini-trials for every class member.

Lastly, the Southern District determined that neither the breach of contract nor the FDUTPA could be maintained under rule 23(b)(2) because the declaratory relief sought was equivalent to a request for declaration of liability—a situation not appropriate for class treatment under rule 23(b)(2)

Non-economic Conflict Results In Failure to Satisfy Adequacy of Representation

Thu, 01 Feb 2007 12:06:00 GMT

In Grimes v. Fairfield Resorts, Inc., No. 06-14363, 2007 WL 245128 (11th Cir. Jan. 30, 2007) (unpublished), the plaintiff owned a timeshare interest, purchased from Fairfield. The plaintiff was determined to be an inadequate representative where a large segment of the class derived a benefit from the very actions that formed the basis of the suit.

The plaintiff brought the class action on the theory that Fairfield was devaluing his interest by offering programs that permit owners to book stays at other locations. It turns out a large segment of the class see these programs as beneficial.

The court determined that the non-economic based conflict was sufficient to defeat the adequacy of representation requirement.

Alabama Supreme Court Reaffirms Prerequisites For Conditionally Certifying A Class For Settlment Purposes Only

Mon, 01 Jan 2007 14:45:00 GMT

In Wright v. Childree, __ So. 2d __, 2006 WL 3759345 (Ala. December 22, 2006), the Alabama Supreme Court reaffirmed that the trial court must conduct the rigorous analysis of determining whether the prerequisites of Rule 23(a) and (b) of the Alabama Rules of Civil Procedure are met prior to conditionally certifying a class for settlement purposes only.

Alabama Supreme Court Concludes That Individual Issues Predominate In Putative Breast Implant Class Action

Sat, 13 Jan 2007 15:09:00 GMT

Justice Harwood of the Alabama Supreme Court pointed out that "in order properly to perform the predominance inquiry, a court must examine the substantive law applicable to the various claims asserted in the case and identify the elements of those claims, giving consideration to the proof that the plaintiffs must present to establish each element." Having determined that on or more of the essential elements of most of the claims would require individualized testimony, the Court spent the balance of the opinion addressing those individualized issues.

Classified News: March 30, 2007

Fri, 30 Mar 2007 13:59:00 GMT

Home builder faces class action lawsuit for conspiring to illegally finance unqualified purchasers to buy newly-constructed homes.

Federal judge denies class certification in suit seeking damages for spills of radioactive tritium at nuclear power plant.

Classified News: April 3, 2007

Tue, 03 Apr 2007 18:33:00 GMT

Microsoft sued over Windows Vista marketing. Proposed class action focuses on efforts by Microsoft and computer makers to avoid a lull in PC sales.

Classified News: April 4, 2007

Wed, 04 Apr 2007 18:40:00 GMT

ConAgra sued. The first suit seeking class action in the Peter Pan brand peanut butter recall was filed Wednesday.

Alabama Magistrate Judge Summarily Concludes Inmate Is Inadequate Class Representative

Mon, 09 Apr 2007 15:42:00 GMT

In Grice v. Blanco, No. 2:07-cv-189MHT, 2007 WL 1034945 (M.D. Ala. March 30, 2007), a state inmate, proceeding pro se, challenged the legality of his transfer to the Southeast Correctional Center in Basile, Louisiana, and the constitutionality of the conditions of his confinement. He brought the action pursuant to 42 U.S.C. Sec. 1983. In a short recommendation, Magistrate Judge Coody recommended that Mr. Grice's class certification motion be denied due to Mr. Grice's inability to fairly represent the class. On March 30, 2007, District Judge Myron H. Thompson summarily adopted Magistrate Judge Coody's recommendation and denied class certification.

Classified News: April 11, 2007

Wed, 11 Apr 2007 11:28:00 GMT

Securities class action filed against Florida bank.

State of Texas settles long-running Medicaid class action suit.

Judge refuses to unseal records of how attorney’s fees award was divided in 2004 class action suit against Shell Oil Co.

Laid off employees file class action against Circuit City alleging age bias.

American class action lawyers swoop in on European cases.

Class settlement reached on currency conversion charges.

After 10 years of litigation, $62.5 million judgment affirmed for farmers in consumer fraud class action against BASF.

Another Admonition To Trial Courts: Make Specific Findings In The Certification Order!

Wed, 11 Apr 2007 16:38:00 GMT

In recent months, several Florida state appellate courts have issued decisions reversing trial court class certification orders on the ground that the order was insufficiently specific. Here's another.

In Integon Corp. v. Gordon, Case No. 1D05-3187 (Fla. 1st DCA April 9, 2007), the First District reversed a class certification order because the order failed to separately state the findings of fact upon which the determination was based, as required by Fla. R. Civ. P. 1.220(d)(1).

In addition, if standing is an issue, as it was in this case, a class certification order must "provide an explanation of the rationale on which its decision is based, to permit intelligent review of the determination."

The Eleventh Circuit Answers Some Questions About “Mass Actions” Under The Class Action Fairness Act

Thu, 12 Apr 2007 12:27:00 GMT

The Eleventh Circuit cleared up some ambiguities in CAFA’s “mass actions” provision, including what it requires and where the jurisdictional burden lies. The court also determined that any defendant entitled to remove under CAFA can do so, regardless of whether any other defendants are permitted by law to remove the action.

In Lowery v. Ala. Power Co., Nos. 06-16324, 06-16325, 2007 WL 1062769 (11th Cir. Apr. 11, 2007), the court began by making clear that the two defendants added after CAFA’s effective date could remove the entire action under CAFA, despite the fact that the other defendants were part of the action prior to CAFA’s effective date and had no basis for removal.

The court then identified “at least” four requirements for taking advantage of CAFA’s “mass actions” provision: (1) an amount in controversy requirement of an aggregate of $5,000,000 in claims; (2) a diversity requirement of minimal diversity; (3) a numerosity requirement that the action involve the monetary claims of 100 or more plaintiffs; and (4) a commonality requirement that the plaintiffs' claims involve common questions of law or fact.

The court further determined that, although each plaintiff must satisfy the $75,000 jurisdictional requirement, that is not a threshold requirement and a district court has jurisdiction over the entire action if the other requisites are met. Individual plaintiffs not meeting the jurisdictional amount may subsequently be dismissed.

The burden of proving the “mass action” requirements by a preponderance of the evidence falls on the defendant. And the defendant must prove those requisites, including the sufficiency of the amount in controversy, with the documents attached to the notice of removal. No post removal discovery is permitted to establish removal jurisdiction.

The court concluded that the defendants failed to demonstrate the $5,000,000 amount in controversy requirement because the notice of removal contained no document clearly demonstrating that amount by a preponderance of the evidence.

The Eleventh Circuit Also Answers Some CAFA Removal Questions

Fri, 13 Apr 2007 08:24:00 GMT

Yesterday we summarized the salient points on mass action law from the Eleventh Circuit's Lowery v. Alabama Power opinion. Does the decision provide any important clarifications of removal law, either in the context of the Class Action Fairness Act or as a general matter?

It does. In fact, the decision may significantly narrow the grounds for removing cases -- under CAFA and otherwise. Written by Judge Tjoflat, the opinion clarifies CAFA removal law in the Eleventh Circuit in the following important respects:

1. CAFA does not shift the burden of proof in removal cases. The removing defendant still must show that diversity jurisdiction, as redefined by CAFA, exists.

2. As under prior circuit precedent, if the complaint contains an unspecified demand for damages, the defendant must show that the aggregate amount in controversy exceeds $5 million by a "preponderance of the evidence."

3. This presents an anomoly in that the propriety of removal is to be judged on the face of the pleadings, including the notice of removal, and so there generally is no "evidence" to weigh. Judge Tjoflat suggested that "forcing this square peg into a round hole" could lead to a decision based on speculation and "unabashed guesswork." Nonetheless, the court was bound to follow circuit precedent as to the "preponderance" standard.

4. Judge Tjoflat further warned that removing defendants should attach to the notice of removal whatever documents are necessary to satisfy the amount in controversy requirement by a preponderance of the evidence. "The absence of factual allegations pertaining to the existence of jurisdiction is dispositive and, in such absence, the existence of jurisdiction should not be divined by looking to the stars."

5. Moreover, under 28 U.S.C. s. 1446(b), the documents proving the existence of jurisdiction must come from the complaint, other papers received by the plaintiff, a contract, or pre-removal pleadings and discovery.

6. Judge Tjoflat observed that speculation in the notice of removal will not satisfy this standard. He further went to pains to point out that a removing defendant has a Rule 11 obligation to ensure that there exists, at the time of removal, a good faith evidentiary basis for alleging that the amount in controversy requirement is satisfied.

7. Moreover, post-removal discovery will not be permitted to remedy a defect in the jurisdictional evidence.

The Lowery decision may portend a significant shift in removal law in the Eleventh Circuit, even apart from the mass action aspects of the case.

Arbitration Class Action Does Not Overcome Forum Provision

Tue, 17 Apr 2007 15:11:00 GMT

Does an arbitration class action in one state necessarily bring in all similarly situated claimants even if their contracts have different state forum provisions? A California federal district court said "no." In re Cintas Corp. Overtime Pay Arbitration Litigation, 2007 WL 1089695 (N.D. Cal. Apr. 11, 2007).

While an arbitrator in California was considering whether employment agreements entered into by 1,900 individuals would permit them to have their claims against Cintas arbitrated on a class or collective basis, Cintas brought 70 cases in various states against 1,800 of the individuals. In those suits, relying on "place-of-arbitration" clauses in each of the agreements, Cintas sought to compel the 1,800 to arbitrate their claims in the state where they were employed, rather than in the California arbitration.

The 70 cases were consolidated in a multi-district proceeding. The court ruled that by seeking to arbitrate in California, the 1,800 were refusing to arbitrate under the terms of their agreements, thus violating § 4 of the Federal Arbitration Act. The cases accordingly would be returned to the 70 courts in which they were filed.

Classified News: April 19, 2007

Thu, 19 Apr 2007 17:55:00 GMT

Antitrust class action deal a windfall for Iowa residents.

Motorola to pay $190 million in deal to settle securities fraud class action.

Former client files class action against lemon-law firm for mishandling of cases.

Third class action lawsuit alleging company officials withheld information filed against Coast Financial Holdings Inc., parent company of Bradenton-based Coast Bank.

Antitrust Litigation After The Class Action Fairness Act Of 2005: The Experience So Far

Thu, 19 Apr 2007 19:43:00 GMT

I am at the Spring Meeting of the ABA Antitrust Section. Today, I attended a presentation on "Antitrust Litigation After The Class Action Fairness Act of 2005: The Experience So Far." Here's a report.

There were 3 panelists: (1) Judge Susan Illston of the Northern District of California, (2) Bruce Simon, a class action plaintiff's lawyer, and (3) James Wilson, a defense attorney. The main points of the discussion are summarized:

1. Increase in filings? All panelists predicted when CAFA was passed that more antitrust class actions would wind up in federal court. After two years of experience with CAFA, they think that perhaps happened. But they are not sure. All three panelists agree that court tracking data is not particularly reliable at this point.

2. "Interests of Justice" exception to jurisdiction. Some comments related to CAFA exceptions. For example, with respect to the section 1332(d)(3) exception (where between 1/3 and 2/3 of class members are in-state residents and the primary defendants also are in-state residents, CAFA states that the district court may decline to exercise jurisdiction "in the interests of justice" and "looking at the totality of the circumstances." Judge Illston opined that she would determine how she would exercise her discretion on this "on a case by case basis." She suggested that looking to traditional abstention principles would be appropriate.

3. "Local Controversy" exception to jurisdiction. Another CAFA exception to federal jurisdiction -- when greater than 2/3 of class members are citizens of the forum state and a defendant from whom significant relief is sought and whose alleged conduct forms a significant basis for the claims asserted is also from the forum state -- is very hard to satisfy. The primary strategy for plaintiffs' counsel is to try to fit the case within the alternative local controversy exception -- where the court must decline the exercise of jurisdiction when greater than 2/3 of class members are citizens of the forum state and the primary defendants are citizens of the forum state.

4. Discovery. It is an open question how much discovery will be permitted to determine whether the local controversy exception applies. Simon noted that he wants early discovery to "get his nose in the tent" on merits issues. Judge Illston commented that limited discovery "may be appropriate." In indirect purchaser cases, where discovery generally would need to be of third parties, this creates some interesting dilemmas for the court and the parties.

5. Class certification. Simon opined that "gone" are the days when a plaintiff's attorney could simply file a boilerplate class certification motion and get the class quickly certified. Plaintiff's lawyers must now support their position with declarations and evidence.

6. Unintended consequences. CAFA was not directed at antitrust cases. Nonetheless, it may well have an unintended effect on antitrust jurisprudence. Thanks to CAFA, indirect purchaser cases filed in state courts under state law are being removed to federal court and coordinated in MDL litigation along with the direct purchaser action. This federal court experience with indirect purchaser litigation might lead Congress to repeal Illinois Brick, the Supreme Court's decision barring indirect purchaser cases under the Sherman Act. By the way, the Antitrust Modernization Commission, whose report came out just this month, is recommending that Congress in fact repeal Illinois Brick.

7. Removal considerations. Does a defendant ever not want to be in federal court? Sometimes. Factors to consider are: (a) whether national coordination is required; (b) whether it is important that the court take the Daubert rule on expert testimony seriously at the class certification stage, (c) whether state substantive law is better (or state class certification law), and (d) whether a class action determination is immediately appealable.

It was a good panel.

Florida Court Addresses Certification of FDUTPA Class

Wed, 25 Apr 2007 13:34:00 GMT

The 2d DCA issued a new class certification decision in this case.

In Sonic Automotive, Inc. v. Galura, issued today, the court affirmed a (b)(3) certification of a FDUTPA claim against an automobile dealership. The plaintiffs alleged that the dealer engaged in deceptive trade practices by selling a vehicle theft protection product called "Etch," which plaintiffs contended was an "essentially worthless" product. In affirming the trial court certification, the court heavily relied on Veal v. Crown Auto Dealership, Inc., 236 F.R.D. 572 (M.D. Fla. 2006), where Middle District of Florida Judge James Whittemore had certified a class bringing similar claims.

The Second District, however, reversed certification of a (b)(2) declaratory/injunctive relief class. It pointed out that changes in the law and changes in Sonic's business practices obviated the need for declaratory or injunctive relief.

The court also ordered the trial court to modify the class definition. It agreed with Sonic that customers who already had received a refund should not be included in the class. It further agreed that customers who made their purchase after certain legislative changes went into effect were not properly part of the class because, after that date, the money damages remedy provided by FDUTPA no longer was available to them.

DISCLAIMER: The author of this post was one of Crown's counsel in Veal, for whatever that is worth.

Classified News: April 27, 2007

Fri, 27 Apr 2007 13:45:00 GMT

Judge approves $63.8 million settlement in Paxil class action

State Farm settles tornado class action after seven years of litigation

350 plaintiffs to receive $5000 apiece in settlement of class action alleging illegal strip-searches

Massachusetts banks file class action against T.J. Maxx owner over data theft

Morgan Stanley settles gender bias class action for $46 million

Wells Fargo settles subprime mortgage class action

Two federal class actions filed against Vitamin Shoppe

Novel Approach To Prohibition On Class Action Arbitrations Leads To Unusual Result

Mon, 30 Apr 2007 13:44:00 GMT

After compelling arbitration of a particular claim on which it denied summary judgment, may a court opine on the merits of that claim? In Berenson v. National Financial Services LLC, 485 F.3rd 35 (1st Cir. Apr. 27, 2007), the plaintiffs had brought a class action suit in federal court against Fidelity. In addition to prohibiting the filing of class action arbitrations, the parties' agreement also precluded compelling a plaintiff to arbitrate his claim when the plaintiff has filed a class action lawsuit and certification has not yet been denied. In these circumstances, at the court's suggestion, the parties agreed to have the court consider the named plaintiff's claims on the merits before deciding the certification question.

The court granted summary judgment for Fidelity on all of the claims for which class certification had been sought; but in the same ruling denied summary judgment on the remaining individual claims, indicating that an opinion would follow. It then granted Fidelity's motion to compel arbitration on those individual claims.

While the arbitration was pending, the court issued its opinion, which included substantive findings against Fidelity's position on the remaining claims. Fidelity argued that this effectively denied its right to arbitrate those claims and sought to vacate the opinion. The First Circuit disagreed finding that the district court's opinion was merely an explanation of its earlier summary judgment and essentially was effective from that time forward.

Although not an issue in the appeal, the First Circuit apparently had no difficulty with the prohibition against class action arbitrations. In fact, it noted that, if the court had not entered its summary judgment ruling, it could not have granted Fidelity's motion to compel arbitration because the class claims still would have been pending.

Causes of Action as Class Actions Series: Fraud

Thu, 03 May 2007 14:38:00 GMT

The last post in this series stated that a cause of action for fraud cannot be maintained as a class action in Florida state courts. What about the Eleventh Circuit?

In Sikes v. Teleline, Inc., 281 F.3d 1350 (11th Cir. 2002), the Eleventh Circuit refused to certify a class alleging fraud-based RICO violations. In doing so, the Eleventh Circuit held that reliance could not be presumed in a consumer fraud case because "each individual plaintiff is the only person with information about the content of the advertisement upon which he relied." The court determined that individual issues therefore predominated over common issues. The court reached a similar result in Andrews v. American Telephone and Telegraph Co., 95 F.3d 1014 (11th Cir. 1996).

The Eleventh Circuit later stated that "the simple fact that reliance is an element in a cause of action is not an absolute bar to class certification." Klay v. Humana, Inc., 382 F.3d 1241 (11th Cir. 2004). The Eleventh Circuit's decision in Klay suggests that class certification may be appropriate where each plaintiff can prove reliance through common evidence. However, Klay looks like the exception that proves the rule. Recently, a district court within the Eleventh Circuit reiterated that "while fraud claims requiring individual proof of reliance are not per se barred from class certification, material differences in the representations made or the reliance of the addressee may render such claims unsuitable for class treatment." Fisher v. Ciba Specialty Chemicals Corp., 238 F.R.D. 273, 313 (S.D. Ala. 2006).

Can Class Counsel Agree, In Settling A Case, Not To Bring Future Cases Against A Defendant?

Fri, 04 May 2007 08:34:00 GMT

In settlement discussions, we are frequently asked by our class action defendant clients whether they can obtain an agreement from class counsel not to represent future claimants in litigation against them. Is that permissible?

No, according to rule 4-5.6(b) of the Rules Regulating the Florida Bar, which provides that a “lawyer shall not participate in offering or making ... an agreement in which a restriction on the lawyer's right to practice is part of the settlement of a client controversy.”

In fact, according to this Florida Supreme Court decision, entering into such an agreement may get the plaintiff's lawyer disbarred.

In The Florida Bar v. St. Louis, -- So. 2d --, 2007 WL 1285836 (Fla. 2007), a plaintiff's lawyer not only agreed not to represent future Benlate plaintiffs against DuPont but also entered into a secret "engagement agreement" to be hired by DuPont for a $6,445,000 fee, while still representing Benlate plaintiffs. In disciplinary proceedings, The Florida Bar referee recommended that the offending lawyer be suspended from the practice of law for 60 days and required to forfeit $2,227,663. The Florida Supreme Court instead imposed disbarment, in large part because the lawyer attempted to hide the engagement agreement from a judge and bar representatives. The court warned that "severe sanctions" would be imposed on any attorney who restricted his right to practice in settlement negotiations.

The court further upheld the constitutionality of rule 4-5.6(b) under a rational basis test, stating that the rule "promotes public welfare by prohibiting lawyers from entering in engagement agreements and thereby ensuring that (1) the public has access to qualified attorneys; (2) clients' awards are based on the merits of their claims; and (3) no conflicts exist between the interests of present and future clients."

Alabama Inmate Is Inadequate Class Representative In 42 U.S.C. § 1983 Action

Mon, 07 May 2007 09:02:00 GMT

In Smith v. Allen, No. 2:07-cv-98-MEF, 2007 WL 1299321 (M.D. Ala. April 30, 2007), District Judge Mark E. Fuller overruled pro se plaintiff Cedric Allen Smith's objections and adopted the Recommendation of Magistarte Judge Terry F. Moorer for denial of class certification due to Smith's inability to fairly represent the inerests of the class. Smith sought to certify a class of inmates who allegedly were denied correctional incentive time under the express provisions of the Alabama Correctional Incentive Time Act.

Regardless Of How It's Pleaded, A Claim Based On Fraud Will Not Be Certified

Mon, 07 May 2007 10:51:00 GMT

The Middle District of Florida reenforced the principle that, no matter how it's pleaded, a claim that is actually based on fraudulent conduct is not suitable for class treatment.

In Buell v. Direct General Insurance Agency, Inc., No. 8:06-cv-1791-T-26MSS, 2007 WL 1296347 (May 1, 2007), the plaintiffs' filed a three-count complaint claiming that the defendants violated the provision in Florida's Unfair Insurance Trade Practices Act regarding "sliding." The court first rejected defendants' argument that there was no private cause of action under the statute, holding that plaintiffs' were bringing common law causes of action based on the violation of the statutory provision.

However, the court then agreed with the defendants in determining that plaintiffs' claims were rooted in allegations of fraud and deceit. The court rejected plaintiffs' argument that the claims were not pleaded as fraud claims, instead holding that the legal underpinning for plaintiffs' claims was in fact fraudulent conduct.

Plaintiffs were given ten days to refile their claims as individual actions.

The Scope Of Pre-Certification Discovery Does Not Extend To Merits Or Damages Issues

Tue, 08 May 2007 09:13:00 GMT

The court in this Middle District of Florida decision made clear that discovery at the pre-certification stage is limited to issues bearing on the class certification decision--discovery aimed at merits or damages issues is not permitted.

In Rebman v. Follet Higher Education Group, Inc., No. 6:06-cv-1476-Orl-28KRS, 2007 WL 1303031 (M.D. Fla. May 3, 2007), the plaintiffs, on behalf of a putative class of college students, sued their college and Follett Higher Education Group, Inc. based on allegations that they breached contractual provisions setting prices for the sale and repurchase of college text books.

In addition to dealing with relevance and overbreadth objections, the court denied plaintiffs' motion to compel responses to several requests for production that strayed beyond issues relevant to the pending class certification question and went to issues related to merits or damages.

Does the Class Action Fairness Act Apply To Cases Filed Before Its Enactment?

Tue, 08 May 2007 11:05:00 GMT

The Class Action Fairness Act ("CAFA") was enacted on February 18, 2005. Section 9 of CAFA provides that the statute applies only to suits “commenced on or after the date of enactment of this Act": is there an exception to this requirement?

In Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805, 807 (7th Cir. 2005), the Seventh Circuit stated that “a new claim for relief (a new ‘cause of action’ in state practice), the addition of a new defendant, or any other step sufficiently distinct that courts would treat it as independent for limitations purposes, could well commence a new piece of litigation for federal purposes even if it bears an old docket number for state purposes.” After Knudsen, some courts have held that an action is recommenced--and can be removed under CAFA--if, under state law, an amended complaint filed by the plaintiffs does not relate back to the original complaint. See e.g. Hall v. State Farm, 2007 WL 215662 (6th Cir. Jan. 29, 2007) (stating that under Michigan law, “the amended complaint constituted the ‘commencement’ of a new action for purposes of CAFA because it did not relate back to the filing of the original action”).

Recently, however, the Ninth Circuit rejected the concept of "recommencement." McAttee v. Capital One, 479 F. 3d 1143 (9th Cir. 2007) (stating that "a California state action is commenced for the purpose of the effective date of CAFA when the original complaint is filed . . . Any amendment of that complaint--whether to add new causes of action, to add or replace plaintiffs, or to add or replace defendants--does not change the commencement date"); see also Weekley v. Guidant Corp., 392 F. Supp. 2d 1066 (E.D. Ark. 2005) (stating that “[p]leadings may be amended, but amending pleadings does not commence a civil action”).

The Eleventh Circuit recently declined to address the issue of whether an action can be recommenced. Lowery v. Alabama Power Co., 2007 WL 1062769, *24 (11th Cir. April 11, 2007) (stating that "[c]ourts have separately considered whether an action 'commences' as to a newly added defendant-thus making CAFA applicable to that defendant-when a plaintiff amends its pre-CAFA complaint to add the defendant after the Act's effective date. . . . That question is determined by reference to state law, but because the parties here do not dispute the applicability of CAFA . . . , we need not consider it”).

Court's Reconsideration Permits Class Action To Go Forward

Thu, 10 May 2007 15:24:00 GMT

May a court reconsider its order sending class action claims to arbitration after the arbitrators have then dismissed those claims as not eligible for arbitration? In Clark v. First Union Securities, Inc., ~ Cal. Rptr. 3d ~, 2007 WL 1346188 (Cal. Ct. App. May 9, 2007), the court of appeals found that could occur.

The trial court had made its initial decision at the request of the defendant (Wachovia) At the trial court, Wachovia had moved to have both the class and individual claims of Clark (a former employee) sent to arbitration even though the employment provision made arbitration subject to NASD rules which made class action claims ineligible for arbitration. Wachovia argued that Clark could not avoid his obligation to arbitrate employment claims merely by bringing those in a representative capacity on behalf of all former employees.

In the arbitration, Wachovia then obtained dismissal of the class claims, arguing that the NASD rules did not permit the plaintiff to use the procedural device of a class action to assert the claims and therefore they were not arbitration-eligible.

Although the class claims had not been remanded to its court, the trial court raised for reconsideration its ruling that had referred them to arbitration. Over Wachovia's objection that the arbitrators' dismissal was final, the trial court now found that Clark had no obligation to arbitrate those claims and could continue to maintain them in its court.

On appeal, the court of appeals upheld that ruling, holding that the arbitrator's decision did not foreclose the trial court from reconsidering its earlier ruling, even though the claims had been dismissed. The appellate court found that NASD rules permitted either the court or arbitrators to make the arbitrability decision, and that, by dismissing the claims, the arbitrators had not intended to foreclose the trial court from considering them.

A Not-So-Gentle Reminder That Applying Laws From All 50 States Would Be "Absurd and Clumsy"

Fri, 11 May 2007 15:00:00 GMT

The Southern District of Florida explained in no uncertain terms that adjudicating a proposed nationwide class action where the laws of all fifty states would be implicated would be "absurd and clumsy."

In Vega v. T-Mobile USA, Inc., No. 06-CIV-20554, 2007 WL 1364333 (S.D. Fla. May 8, 2007), the court ultimately certified a state-wide class of employees suing T-Mobile for improprieties in the cellular service provider's commission structure. Focusing mainly on the commonality and typicality elements of Rule 23, the court first determined that there was no commonality in the proposed nationwide class because of the differences in the laws of the various states as they related to the contract and unjust enrichment claims--though the court was satisfied that the commonality requirement was met as to the state-wide class.

With regard to typicality, the court determined that the plaintiff's claims were not typical in light of the proposed definition's inclusion of persons whose commissions were withheld. The complaint made no such allegations with regard to the named plaintiff. The court ultimately cut out that language from the class definition and certified the state-wide class.

Twelve Is Not Enough For A Collective Action Under The FLSA

Fri, 11 May 2007 14:59:00 GMT

What is the threshold for the certification of a collective action under the Fair Labor Standards Act? Not twelve.

The plaintiff in Sanders v. Drainfield Doctor, Inc., No. 6:06-cv-1216-Orl-28JGG, 2007 WL 1362723 (M.D. Fla. May 7, 2007), sought to condititionally certify a collective action against a former employer under the FLSA based on allegations that the employer failed to pay overtime when required by law.

With little analysis (perhaps little was needed), the court determined that the twelve employees suggested by the plaintiff was not large enough to justify class treatment. The court also pointed out that the support for the plaintiff's allegations that additional persons might want to opt into the action was not specific enough.

Classified News: May 11, 2007

Fri, 11 May 2007 16:10:00 GMT

Blue Cross Blue Shield settles class action lawsuit for $128 million

Federal judge blasts plaintiff’s counsel in denying class certification in suit against Oreck Direct

Classified News: May 15, 2007

Tue, 15 May 2007 13:23:00 GMT

Attorneys’ Fees Barred for One Lawyer because of Misconduct in Settlement of Diocese Class Action

Lawsuit Alleging Deceptive Practices Against Allianz is Given Class Action Status by Minnesota District Court

LAPD Sued Again Over Rally

Classified News: May 25, 2007

Fri, 25 May 2007 10:19:00 GMT

Class action suit filed against Apple Inc.

Class action alleges price-fixing in railroad fuel surcharges.

Priceline.com settles class action for $80 million.

Former and current black employees file class action lawsuit against Bank of America alleging racial bias.

Northern District of Georgia gives preliminary approval to settlement of class action against Immucor.

Study finds the number of securities class actions filed in 2006 fell 38% from the previous year.

The United State Supreme Court dismisses antitrust class action against Verizon and three regional Bell companies.

Hotels.com faces class action lawsuit for failure to guarantee accessibility of advertised hotels.

Blue Cross of California settles class action over cancellation of health insurance policies.

State Farm settles class action with Florida policyholders for $6.8 million.

Seventh Circuit Decides That Claim For Payment Under Automobile Insurance Policy Cannot Be Certified

Fri, 01 Jun 2007 15:09:00 GMT

Judge Posner's opinion in Pastor v. State Farm Mutual Insurance Company, No. 06-2384, 2007 WL 1487350 (7th Cir. May 23, 2007), states that when the determination of an insured's right to payment under an insurance policy requires "thousands of evidentiary hearings each involving a trivial amount of money," the case is not appropriate for class certification because there would be "no significant economies from consolidating the class members' tiny claims." In Pastor, the plaintiff sued State Farm after she did not receive a $10 car rental reimbursement. The policy stated that State Farm would pay an insured $10 per day if the insured did not rent a car while his or her car was "unusable." The period of entitlement began either when the accident occurred (if the car could not run) or when the insured left it at the shop (if the car could run). The Seventh Circuit affirmed the district court's denial of class certification, pointing out that individual hearings would be necessary to determine whether a class member made a claim for the $10 a day, whether the car was unusable, and if so for how long.

Classified News: June 1, 2007

Fri, 01 Jun 2007 12:04:00 GMT

A Federal Judge Approved A $2.35 Million Dollar Settlement In The Class-Action Lawsuit By Aggrieved Readers Against Publisher Random House And Author Of A Million Little Pieces, James Frey.

Suit Seeks Class Action Status And Claims Alamo Overcharges Customers With Hidden Fees.

New Jersey Supreme Court Revives Class Action Suit Against Wal-Mart.

Class Action Lawsuit Alleging Pinellas Schools Failed To Properly Educate Black Children Will Go To Trial In Clearwater After Compromise Reached Over Concerns of Racial Make-Up Of Jury Pool.

Supreme Court Resolves "Willfulness" Dispute Under FCRA

Tue, 05 Jun 2007 09:30:00 GMT

Does the term "willfulness" refer only to a knowing violation of a statute or does it also cover reckless ones as well? The answer to this question often has implications for class actions since reckless conduct, in some situations, can be subject to common proof, while subjective motivation arguably cannot. In the context of a Fair Credit Reporting Act class action, in Safeco Ins. Co. of America v. Burr, -- S. Ct. --, 2007 WL 1582951 (2007), the Supreme Court resolved this issue.

The court held that liability for "willfully" failing to comply with FCRA extends not only to acts known to violate the statute, but also to reckless disregard of statutory duty. Moreover, it declared that civil recklessness -- unlike criminal recklessness -- contains no subjective knowledge component.

The court also found, however, that the defendant insurance companies did not violate the statute by failing to give a required notice when they believed the notice requirement did not apply to initial rate offers. Their failure was not reckless when their reading of the statute, though erroneous, was not "objectively unreasonable," particularly where they had no prior guidance from the courts or the FTC on the question of statutory construction. The court also "did not foreclose" the possibility that a good faith reliance on counsel could provide a defense.

Classified News: June 5, 2007

Tue, 05 Jun 2007 13:04:00 GMT

Class action bar goes global.

Professional appraisers file federal class action against mortgage technology firm.

District Court Has Jurisdiction To Review Arbitrator's Clause Construction Award

Tue, 05 Jun 2007 16:25:00 GMT

Is a AAA arbitrator's clause construction award merely an interlocutory ruling that a District Court lacks jurisdiction to review? -- Not according to a Michigan federal district court. In Dealer Computer Services, Inc. v. Dub Herring Ford, ~ F. Supp. 2d ~, 2007 WL 1560204 (E.D. Mich. May 29, 2007), the Court looked to Rule 3 of the AAA Supplementary Rules for Class Arbitrations, which, the Court held, "plainly evinces an intent that such matters are properly reviewed by a federal district court even though a final result has not yet been reached." That Rule mandates a 30-day stay following the award "to permit any party to move a court" to confirm or vacate it.

Turning to the Panel's ruling and applying the deferential review standards of whether the panel had exceeded its power or manifestly disregarded the law, the Court upheld the Panel's determination that the parties' arbitration clause permitted class arbitrations.

In so doing, the Court rejected the plaintiff's argument that the clause construction should have been resolved by a court because it involved "arbitrability." The Court found instead that such a determination is one "regarding the form" the arbitration would take and that it was within the Panel's power to make such a determination even though the arbitration clause was silent with respect to class arbitrations. In addition, the Court held that there was nothing to support plaintiff's argument that the Panel had disregarded a clearly defined legal principle that was not subject to reasonable debate. As a result, the Court said, there was no showing that the Panel had manifestly disregarded the law.

Class Certification Orders And The Standard Of Review

Fri, 08 Jun 2007 09:38:00 GMT

We know that a Florida state court class certification decision is discretionary with the trial court and subject to review on an abuse of discretion standard. But what does this mean in practice?

Florida law on the abuse of discretion standard as applied to class certification orders is relatively undeveloped. Outside that context, the Florida Supreme Court held that a trial court’s discretion is abused “only where no reasonable man would take the view adopted by the trial court.” Canakaris v. Canakaris, 382 So. 2d 1197, 1203 (Fla. 1980). The First District applied that language to review a class certification order in Seven Hills, Inc. v. Bentley, 848 So. 2d 345, 352 (Fla. 1st DCA 2003). Hence, a trial court does not abuse its discretion – even if an appellate court would disagree with its reasoning – unless the appellate court can say that the trial court decision was in some sense arbitrary, fanciful or unreasonable. Canakaris, 382 So. 2d at 1203; Seven Hills, 848 So. 2d at 352; Silverstein v. Public Medical Assistance Trust Fund, 911 So. 2d 831 (Fla. 1st DCA 2005).

This means that factual determinations of the trial court, used to support either a grant or denial of certification, must be accorded deference. It also means, however, that errors of law are reviewed de novo. Consolidated Resources Healthcare Fund I, Ltd. v. Fenelus, 853 So. 2d 500 (Fla. 4th DCA 2003).

The Second District has noted on at least two occasions the Fla. R. Civ. P. 1.220(d)(1) requirement that trial courts ruling on certification must separately state the findings of fact and conclusions of law upon which the determination is based. Fla. Health Sciences Center, Inc. v. Eisenheimer, 952 So. 2d 575 (Fla. 2d DCA 2007); Rollins, Inc. v. Butland, 951 So. 2d 860 (Fla. 2d DCA 2006).

When the distinction between the way an appellate court will treat findings of fact and conclusions of law becomes clear, it is easy to see why. Separately stated findings and conclusions permit the court of appeal to more readily parse the certification order to determine whether the trial court’s discretion has been abused.

Shameless Plug For A Friend

Sun, 10 Jun 2007 17:32:00 GMT

Mark Herrmann of Jones Day (and Curmudgeonly advice fame) and Jim Beck of Dechert, LLP blog at the Drug and Device Law Blog. I urge you to go there regularly: http://druganddevicelaw.blogspot.com/. They have written an excellent post on inconsistent standards between Fed. R. Civ. P. 23(b)(1)(a) and conflict preemption in drug and device cases. As bloggers say, "Read the whole thing."

Classified News: June 12, 2007

Tue, 12 Jun 2007 11:24:00 GMT

Philip Morris bid to have class action suit tried in federal court blocked by U.S. Supreme Court.

Lawsuit seeking class action status filed against Advanced Medical Optics, Inc. after voluntary recall of contact lens solution.

Federal Judge gives go-ahead to class action suit against UnitedHealth Group and its former chief executive.

The Connecticut Department of Children and Families has agreed to settle a federal class action lawsuit by spending $10 million over the next three years to improve services for mentally ill children in foster care.

Eleventh Circuit Affirms Decertification Of FLSA Collective Action

Tue, 12 Jun 2007 12:37:00 GMT

Is a district court bound by the plaintiffs’ allegations and affidavits that the workplace circumstances of other employees are “similarly situated” to their own, which would allow the other employees to join the plaintiffs’ wage-and-hour action? The answer is “no” and has significant implications limiting the scope of wage-and-hour claims before they can go to trial. In the context of a Fair Labor Standards Act suit alleging that employees were not paid for all the compensable time they worked, the Eleventh Circuit held that the district court did not abuse its discretion in decertifying the collective action. Anderson v. Cagle’s, Inc., -- F.3d --, 2007 WL 1662662 (11th Cir. June 11, 2007).

Other employees are allowed to opt into a plaintiffs’ FLSA action if their workplace circumstances are “similarly situated” to the plaintiffs’. Certification of such collective actions proceeds in two stages. In the first stage, which typically occurs before or in the early stages of discovery, the courts apply a “fairly lenient standard” based primarily on the detailed allegations of the plaintiffs’ pleadings and their affidavits. Many cases are certified at that point and proceed through discovery. After discovery, however, employers often move to decertify the class and the courts then apply a “stricter” standard that focuses on the disparate factual employment settings of the individuals, the various defenses available to the employer, and fairness and procedural considerations. The “more material distinctions revealed by the evidence, the more likely the district court is to decertify the collective action.” At this stage, the similarities necessary to maintain the collective action “must extend beyond the mere facts of job duties and pay provisions.”

It was at this second stage that the district court in Anderson decertified the class and the Eleventh Circuit found no abuse of discretion. Discretion is abused if the district court applied the wrong legal standard, followed improper procedures in making its class determinations, or made clearly erroneous findings of fact. Although the named plaintiffs could show some similarities between themselves and the opt-in plaintiffs, the district court was within its discretion to find insufficient similarities to justify certification, based on the record developed by the employer.

Waiver Of Class Action Arbitrations Impacts Motions To Dismiss And Transfer

Tue, 12 Jun 2007 15:30:00 GMT

Does an arbitration clause that precludes class actions have a role to play in preemption and venue transfer arguments? In Van Slyke v. Capital One Bank, 2007 WL 1655641 (N.D. Cal. June 7, 2007), the answer was clearly "yes."

Plaintiffs alleged that Capital One, a Virginia-based bank, had engaged in various deceptive actions in violation of California unfair competition and common laws, and the federal Truth-in-Lending Act . Defendants urged that the choice of law provision in the parties' agreement called for Virginia law to apply and, therefore for this and other reasons, the action should be dismissed on preemption grounds as to the California claims and transferred to Virginia on the federal claim.

In denying dismissal, the Court held that the existence in the parties' arbitration clause of an agreement to waive class actions argued against preemption and dismissal. California had a fundamental public policy in favor of class actions as an effective consumer remedy and had found class-action waivers in adhesion contracts unconscionable. In contrast, Virginia likely would enforce the waiver provision. Applying California choice of law principles, the Court held that California law would govern.

The Court also denied the motion to transfer, finding that, among other things, California's interest in ensuring efficacious remedies, such as class actions, for its citizens was greater than Virginia's interest in regulating its banks.

U.S. Supreme Court Sends “Lights” Putative Class Action Suit Against Philip Morris Back To State Court

Mon, 18 Jun 2007 16:19:00 GMT

In Watson v. Philip Morris Companies, Inc., 2007 WL 1660910 (June 11, 2007 U.S.), consumers brought a putative class action in Arkansas state court against Philip Morris claiming that Philip Morris violated Arkansas unfair business practice laws by advertising certain cigarettes as “light” while manipulating testing results to register lower levels of tar and nicotine than would actually be delivered to consumers of the product. Id. at *3.

Philip Morris removed the case to federal court. Philip Morris claimed that it was “acting under” a “federal official” of the United States because of the extensive regulation of its activities by the Federal Trade Commission (FTC).

The U.S. Supreme Court reviewed the history and purpose of the removal statute and ultimately disagreed with Philip Morris and sent the class action case back to state court. The Court said that complying with the law does not equal “acting under” a federal official, and even though the cigarette testing process is highly regulated by the FTC such an expansion of the removal statue to bring state-court actions against highly regulated industries within the removal statute's scope is not supported by its language, history or purpose.

Classified News: June 18, 2007

Mon, 18 Jun 2007 17:04:00 GMT

GlaxoSmithKline faces investor class action over misrepresentations about safety of diabetes drug Avandia

Shareholder class action filed against biopharmaceutical corporation Telik, Inc.

Judge rules shareholder class actions against Tyco International not subject to dismissal

Class action suit against SendTec, Inc. dismissed

New York, Missouri courts split on whether to certify class actions alleging unpaid wages at Wal-Mart

Morgan Stanley pays $4.4 million to settle class action suit with brokerage clients over precious metals

United States, Canada undergoing role reversal when it comes to class actions

Several Obstacles Prevented Certification Of Claims Based On Damage Waiver In Tool Rental Agreements

Tue, 19 Jun 2007 00:59:00 GMT

The Southern District of Florida managed to find no less than three fatal deficiencies in plaintiff’s motion for class certification based on claims that Home Depot’s damage waiver provision in its tool rental agreements was deceptive.

In O’Neill v. Home Depot U.S.A., Inc., No. 05-61931-civ-Altonaga/Turnoff, 2006 WL 4579687 (S.D. Fla. Dec. 27, 2006), plaintiff claimed that the supposedly optional damage waiver offered to customers who rent tools was not actually optional and, in any event, was worthless.

The first fatal flaw in plaintiff’s attempt at certification was the overly broad class definition, which included all customers who purchased damage waivers within the limitations period. That definition includes, among other things, people who, unlike the plaintiff, read the contract, understood the contract, and decided to purchase the damage waiver anyway.

The class members’ different individual experiences also precluded a finding of commonality and typicality. Similarly, predominance was lacking because each individual class member would have to put on evidence that he or she was mislead in order to demonstrate that Home Depot’s policy requiring disclosure of the damage waiver was not followed on a class wide basis.

Finally, the court refused to certify any single class-wide issues under Rule 23(c)(4) because the case as a whole failed to meet the requirements of Rule 23.

(By the way, although this case is a few months old, it is being posted now because it just turned up on Westlaw.)

Why Risk Certification? Just Have All The Class Reps Dismissed

Tue, 19 Jun 2007 01:05:00 GMT

The defendants in this securities litigation were facing a potential class action suit based on allegedly misleading prospectuses. Without even reaching the merits, however, they managed to have the entire action dismissed by taking out the class representatives on statute of limitations grounds.

In Gerin v. Aegon USA, Inc., No. 06-15502, 2007 WL 1720733 (11th Cir. June 15, 2007) (unpublished), the Eleventh Circuit affirmed the dismissal of two class representatives based on statute of limitations grounds. Those two class reps intervened and attempted to take over the litigation after it became clear that the original class rep no longer wished to pursue the litigation. With no class reps, the action was properly dismissed.

Pfizer Continues To Whittle Down Claims And Potential Class Reps In Lipitor Litigation

Tue, 19 Jun 2007 01:14:00 GMT

Even before the class certification determination, Pfizer is successfully knocking out claims and potential class representatives in this suit alleging false advertising of the widely-prescribed cholesterol reducing drug Lipitor.

After having four class representatives’ claims dismissed in their entirety, Pfizer managed to narrow the scope of the claims with regard to the remaining three class reps.

In Prohias v. Pfizer, Inc., No. 05-22658-civ-Jordan, 2007 WL 1682515 (S.D. Fla. May 29, 2007), plaintiffs claimed that Lipitor advertisements were deceptive because Lipitor was not approved to reduce the risk of heart disease. In July 2004, the drug had, in fact, been approved for that purpose. Claims based on post-July-2004 advertisements were therefore preempted by the FDA’s rule on product labeling. Claims based on pre-July 2004 advertisements survived the motion to dismiss.

Plaintiffs’ claims for unjust enrichment were dismissed based on the court’s determination that the plaintiffs did obtain the benefit of the bargain—lower cholesterol. The consumer fraud act and negligent misrepresentation claims withstood the motion to dismiss.

It remains to be seen whether plaintiffs will be able to have the remaining claims certified on a class wide basis.

U.S. Supreme Court Determines That Investors Cannot Bring Class Action Antitrust Claims Against Underwriters

Tue, 19 Jun 2007 09:22:00 GMT

In determining that federal securities laws were "clearly incompatible" with antitrust laws with respect to the conduct of an underwriting syndicate during an IPO, the Supreme Court made the following points:

The underwriters' efforts jointly to promote and to sell newly issued securities is central to the proper functioning of well-regulated capital markets, and securities regulators consider joint underwriting activity such as road shows and book-building efforts essential to the successful marketing of an IPO.
The law grants the SEC authority to supervise and otherwise regulate virtually every aspect of the practices in which underwriters engage.
The SEC has continuously exercised its legal authority to regulate conduct of underwriters and has defined in detail what underwriters may and may not do and say during their road shows.
Evidence tending to show unlawful antitrust activity and evidence tending to show lawful securities marketing activity may overlap, or prove identical, and given "the nuanced nature of the evidentiary evaluations necessary to separate the permissible from the impermissible, it will prove difficult for those many different courts to reach consistent results."
Permitting antitrust suits in this context might undermine the Private Securities Litigation Reform Act--in which Congress made an effort to "weed out unmeritorious securities lawsuits"--by allowing plaintiffs "to dress what is essentially a securities complaint in antitrust clothing."

Credit Suisse Securities (USA) LLC v. Billing, No. 05-1157, 2007 WL 1730641 (June 18, 2007). The Court concluded: "We believe it fair to conclude that, where conduct at the core of the marketing of new securities is at issue; where securities regulators proceed with great care to distinguish the encouraged and permissible from the forbidden; where the threat of antitrust lawsuits, through error and disincentive, could seriously alter underwriter conduct in undesirable ways, to allow an antitrust lawsuit would threaten serious harm to the efficient functioning of the securities markets."

Does A Federal District Court Have Jurisdiction To Decide Whether An Arbitration Agreement Enables A Plaintiff To Demand A Class Arbitration?

Tue, 19 Jun 2007 16:37:00 GMT

In Redman Home Builders Co. v. Lewis¸ Case No. 2:07-cv-107, 2007 WL 1559932 (S.D. Ala. May 29, 2007), the district court concluded that because the arbitration agreement was silent as to the issue of class action arbitration, the arbitrator (not the court) must resolve the issue of whether the arbitration agreement nevertheless permits class action arbitration.

Is A Pro Se Litigant An Adequate Class Representative?

Tue, 19 Jun 2007 17:23:00 GMT

In Purveegiin v. Streiff, Case No. 06-0617-WS-C, 2007 WL 1713353 (S.D. Ala. June 11, 2007), a district judge adopted a magistrate judge’s recommendation that class certification be denied due to the plaintiff’s pro se status. Batsaihan Purveegiin, a diabetic former inmate of a correctional facility in Alabama, sought to certify a class of diabetic inmates incarcerated at that correctional facility in an action brought pursuant to 41 U.S.C. § 1983.

Alabama District Court Says Damages From Head Injury Too Speculative To Permit Removal Of Lawsuit To Federal Court

Tue, 19 Jun 2007 17:30:00 GMT

Citing Lowery v. Alabama Power Co.¸483 F.3d 1184 (11th Cir. 2007), District Judge W. Keith Watkins held in Carswell v. Sears, Roebuck and Co., Case No. 2:06-cv-1098-WKW, 2007 WL 1697003 (M.D. Ala. June 12, 2007), that the damages sought by a plaintiff whose fall in one of defendant’s stores resulted in a head injury that required surgery were too speculative to warrant removal to federal court. Although the medical expenses incurred were at least $38,136.96, the plaintiffs did not specify the amount of damages sought for pain and suffering, mental anguish, and punitive damages. Therefore, the court concluded that the documents before it did not unambiguously establish that the damages sought exceeded $75,000.00. The district court, pursuant to Lowery¸ also declined to permit the defendant to conduct discovery on jurisdiction

Class Certification Denied For Putative Class of Juvenile Inmates Detained In County Youth Facility Longer Than Seven Days Permitted By Alabama Statute

Wed, 20 Jun 2007 16:27:00 GMT

In Ward v. Wood, Case No, 2:06-cv-908-MHT, 2007 WL 1575975 at *2 (M.D. Ala. May 30, 2007), the district court held that the predominance requirement was not met “because the court believes that individualized determinations of liability will be required in order to adjudicate each class member’s claim.” Specifically, the central federal claim in the case was based on an alleged “unreasonable delay in placement, treatment and services subsequent to a juvenile’s commitment.” Id. The Court found that to determine whether a delay in placement was “reasonable” would require an individualized examination of the facts and circumstances surrounding each juvenile detainee. Id. at *3. Thus, class certification was improper. Id.

Classified News: June 22, 2004

Fri, 22 Jun 2007 15:17:00 GMT

United States Supreme Court ruling grants investment banks broad antitrust immunity

U.S. wheat growers file third antitrust class action against Australian wheat exporter AWB

Humane Society files its first class action lawsuit in 53-year history, claiming pet store sold sick puppies

Eleventh Circuit affirms ruling in favor of UnitedHealth Group in 1999 class action filed by doctors

Lawyer files class action suit to shut down online attorney rating service Avvo

Lawyers object to proposed settlement in BarBri class action suit

Maryland class action alleges home equity theft in foreclosure-rescue scheme

Court dismisses class action against Spectrum Brands, Inc.

Judge denies class certification in suit against 3M over water pollution

Debate over “hot fuel” leads to filing of class action lawsuits in several states

Scienter Pleading Requirement In Securities Class Action Satisfied If Complaint Demonstrates It Is "More Likely Than Not" That Defendant Acted With Intent To Defraud

Sun, 24 Jun 2007 12:38:00 GMT

In Tellabs, a group of investors brought a class action suit against a company engaged in the business of manufacturing specialized equipment used in fiber optic networks and its chief executive officer and president, alleging that they violated section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and alleging that the president was a "controlling person" under section 20(a) of the 1934 Act. The Company moved to dismiss on the grounds that the investors' complaint failed to satisfy the heightened pleading requirements of the PSLRA. The Seventh Circuit held that the investors' complaint sufficiently alleged scienter, and the United States Supreme Court vacated the Seventh Circuit's judgment.

To establish liability under section 10(b) and Rule 10b-5, a plaintiff must prove that the defendant acted with scienter, "a mental state embracing intent to deceive, manipulate, or defraud." The PSLRA requires that a securities complaint "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." 15 U.S.C. § 78u-4(b)(2). Circuits were split as to the meaning of the term "strong inference."

The Seventh Circuit decided in Tellabs that a complaint could survive a motion to dismiss as long as it alleged "facts from which, if true, a reasonable person could infer that the defendant acted with the required intent." The Seventh Circuit expressly rejected the Sixth Circuit's approach, under which "plaintiffs are entitled only to the most plausible of competing inferences."

The Court held that the proper approach in determining whether a private securities fraud complaint gives rise to a "strong inference" of scienter involves an examination of competing inferences. The Court concluded that a plaintiff must "plead facts rendering an inference of scienter at least as likely as any plausible opposing inference." The Court stated:

To determine whether the plaintiff has alleged facts that give rise to the requisite "strong inference" of scienter, a court must consider plausible nonculpable explanations for the defendant's conduct, as well as inferences favoring the plaintiff. . . . Yet the inference of scienter must be more than merely "reasonable" or "permissible"--it must be cogent and compelling, thus strong in light of other explanations. A complaint will survive, we hold, only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any opposing inference one could draw from the facts alleged.

Justices Scalia and Alito concurred in the judgment but disagreed as to the test the Court adopted. Justice Scalia stated that the test should be "whether the inference of scienter (if any) is more plausible than the inference of innocence."

Justice Stevens dissented and would have affirmed the Seventh Circuit.

Even Though Plaintiff Alleged $4,999,999 In Damages, It Was "Unnecessary" To Determine Whether Plaintiff May Limit The Amount In Controversy So As To Avoid Federal Jurisdiction

Mon, 25 Jun 2007 06:34:00 GMT

In Vanyo v. Citifinancial Inc., No. 1:06CV2943, 2007 WL 1795959 (N.D. Oh. June 20, 2007), a loan borrower filed a class action suit against his lender, alleging that the lender failed to file a timely termination statement for a loan covering consumer goods, entitling him to statutory damages of $500 under Ohio Rev. Code § 1309.513. The borrower alleged that the class had suffered $4,999,999 in damages. The lender removed the case to federal court, arguing that the borrower was attempting to to cap damages at $1 less than the threshold to avoid federal jurisdiction.

The defendant provided an affidavit from the Ohio Secretary of State's office, stating that there were 22,837 active financing statements on file in which the lender was identified as the secured party, which would result in damages of $11,418,000. However, the court rejected this affidavit as evidence of the size of the class, determining that "this categorization is improper, as it exceeds the scope of Section 1309.625, which provides statutory damages for a limited class of claimants--those who (1) have active financing statements with the defendant, (2) covering consumer goods, (3) the loans for which have been paid-off, but for which (4) the defendant did not timely file a termination statement."

The court concluded:

"[The lender] has therefore failed to provide sufficient evidence that the putative class is large enough to support aggregate damages greater than CAFA's statutory minimum to establish subject matter jurisdiction. It is therefore unnecessary for this court to decide whether the plaintiff may limit the amount in controversy in the complaint by refusing to accept damages over a certain dollar amount."

Does The Defeat Of Class Certification Partly Due To The Plaintiffs' Failure To Demonstrate That Common Questions Of Law Or Fact Predominate Necessarily Lead To Success On The Defendant's Subsequent Motion To Sever The Plaintiffs' Claims?

Mon, 25 Jun 2007 10:08:00 GMT

In Fisher v. CIBA Specialty Chemicals Corp., Case No. 03-0566-WS-B, 2007 WL 1795819 at *2 (S.D. Ala. June 20, 2007), the district judge explained that the “Rule 20 inquiry is distinct from that under Rule 23, and a ruling against the plaintiffs on the latter in no way suggests (much less mandates) a likely outcome with respect to the former.” The court continued: “Stated differently, there is no predomination prerequisite for joinder of multiple plaintiffs’ claims, and Rule 20 contemplates a much lower threshold for allowing plaintiffs’ claims to proceed to trial together than is required by Rule 23 for class certification.” Id. Citing efficiency and judicial economy as the most important factors in deciding a motion to sever, the Court concluded that it was most efficient and economical for the five plaintiffs’ claims to proceed in the consolidated posture.

Individualized Questions Of Reasonableness Preclude Certification

Tue, 26 Jun 2007 09:17:00 GMT

Where the main issue in the litigation was the reasonableness of individual charges for hospital services, the Southern District found most of the requirements for class certification lacking.

In Colomar v. Mercy Hospital, Inc., No. 05-22409-civ-Seitz, 2007 WL 1784118 (S.D. Fla. Apr. 11, 2007), plaintiff claimed that the prices Mercy charged uninsured patients was unfairly high. According to the court, the chief problem, as it relates to class certification, is that the reasonableness of the charges in plaintiff’s case has little bearing on the reasonableness of the charges to the rest of the class. For this reason, both commonality and typicality were deemed lacking.

The court was not even satisfied that the numerosity requirement was satisfied because, although the proposed class definition included over 24,000 former patients, plaintiff did not distinguish which uninsured patients were not charged the full price for services due to charity discounts or write-offs.

The court rejected plaintiff’s suggestion that the average prices would be sufficient to demonstrate reasonableness on a class wide basis, instead determining that the actual cost and actual charges are the relevant data that must be analyzed to determine reasonableness. Also, with regard to the predominance requirement, the court noted that “[t]he use of averages is simply too blunt an instrument” to determine the issues in this case. Plaintiff’s motion for certification under Rule 23(b)(2) was rejected for similar reasons.

Class Action Against Cigarette Manufacturer Not Removable Under Federal Officer Removal Statute

Mon, 02 Jul 2007 09:41:00 GMT

In Watson v. Philip Morris Companies, Inc., 127 S. Ct. 2301 (2007), consumers filed a class action in Arkansas state court claiming that a cigarette manufacturer violated Arkansas unfair business practice laws by advertising certain cigarette brands as "light." The cigarette manufacturer removed the case to federal court under the federal officer removal statute, which permits removal of an action against "any officer (or any person acting under that officer) of the United States or of any agency thereof."

The United States Supreme Court determined that removal was improper. The Court reasoned:

The upshot is that a highly regulated firm cannot find a statutory basis for removal in the fact of federal regulation alone. A private firm's compliance (or noncompliance) with federal laws, rules, and regulations does not by itself fall within the scope of the statutory phrase "acting under" a federal "official." And that is so even if the regulation is highly detailed and even if the private firm's activities are highly supervised and monitored. A contrary determination would expand the scope of the statute considerably, potentially bringing within its scope state-court actions filed against private firms in many highly regulated industries.

The cigarette manufacturer argued that the government had delegated the task of cigarette testing to manufacturers, thereby causing manufacturers to fall within the scope of the federal officer removal provision. The Court rejected this argument, stating, "though we find considerable regulatory detail and supervision, we can find nothing that warrants treating the FTC/Philip Morris relationship as distinct from the usual regulator/regulated relationship. This relationship, as we have explained, cannot be construed as bringing Philip Morris within the terms of the statute."

Classified News: July 3, 2007

Tue, 03 Jul 2007 15:22:00 GMT

Judge overturns $17 million verdict in aftermarket parts class action.

Oscar Mayer workers file class action seeking back pay for time spent changing in and out of protective gear.

Parmalat to appeal district court’s refusal to dismiss investor class action.

Court dismisses shareholder class action against Centene Corp.

District court denies summary judgment in class action alleging off-label sales of antipsychotic drug, Zyprexa.

Claims Based On Section 8 of RESPA Are Too Individualized For Class Treatment

Thu, 05 Jul 2007 22:00:00 GMT

Can a Statement of Policy (SOP) issued by HUD after the district court issued its original certification order be a proper basis for the district court to rethink its initial decision and decertify a class? The Eleventh Circuit says yes.

In Culpepper v. Irwin Mortgage Corp., No. 06-11105 (11th Cir. July 2, 2007), the Eleventh Circuit disposed of its fourth appeal stemming from this action brought by borrowers based on payments to mortgage brokers by lenders that were allegedly in violation of section 8 of the Real Estate Settlement Procedures Act (“RESPA”).

The Eleventh Circuit had held in a prior appeal that certification of this action was proper. However, in direct response to that decision, HUD issued an SOP explicitly rejecting that decision’s approach to determining liability under section 8 of RESPA. In that SOP, HUD made clear that the determination of liability involved a case-by-case analysis and must be assessed in light of the particular facts and circumstances of the borrower’s transaction.

With that, the Eleventh Circuit joined several others circuits in concluding the individualized inquiries required by a section 8 RESPA action make class certification inappropriate.

Ten Days Means Ten Days For Interlocutory Appeal Of Certification Decision

Tue, 10 Jul 2007 21:36:00 GMT

What happens when a district court vacates its order denying certification and then reenters that same order so that the plaintiffs can timely file a petition for permission to appeal? After evoking images of an evangelical revival, the Eleventh Circuit held that the district court has no authority to circumvent the ten-day window provided by Rule 23(f).

The district court had initially denied plaintiffs’ motion for class certification, and also subsequently denied the motion for reconsideration. Plaintiffs petitioned under Rule 23(f) for permission to appeal the denial, but the petition was not delivered until after the ten-day deadline, and the Eleventh Circuit dismissed the petition as untimely. In order to give plaintiffs another chance for interlocutory appeal, the district court vacated its previous order, and then entered the exact same order. Plaintiffs’ petition on that order made it to the Eleventh Circuit within ten days of the date of the second order.

In Jenkins v. Bellsouth Corp., No. 07-90008, 2007 WL 1881294 (11th Cir. July 2, 2007), the Eleventh Circuit made clear that Rule 23(f) does not permit a district court to reopen the ten-day window to permit an otherwise untimely petition under Rule 23(f). Although this practice is permitted for interlocutory appeals under § 1292(b), the Court determined that Rule 23(f) is different. An order that simply maintains the status quo cannot re-trigger Rule 23(f)’s ten-day window.

Although The Relation Back Doctrine Applied In This CAFA Case, It Did Not Divest The Court Of Federal Jurisdiction

Thu, 12 Jul 2007 23:02:00 GMT

Does the relation back doctrine apply under the Class Action Fairness Act (“CAFA”)? Yes . . . at least in the Southern District of Florida in a decision where Florida law applies.

Congress and the Supreme Court already made clear that CAFA applies only to actions commenced on or after February 18, 2005. But what about actions commenced before then, and are amended after that effective date?

The Southern District of Florida faced that situation in Waldman v. Cingular Wireless LLC., No. 07-80081-civ, 2007 WL 1970858 (S.D. Fla. July 3, 2007). Although the original complaint was filed before February 18, 2005, it was amended after CAFA’s effective date. The plaintiffs argued that the relation back doctrine operated to relate the amended complaint back to the original filing date. The Defendants, of course, argued that the relation back doctrine does not apply in a CAFA action.

Although the district court agreed with the plaintiffs in holding that the relation back doctrine does apply in a CAFA action generally, it ultimately determined that the amendment to the complaint was sufficiently different from the original complaint that the relation back doctrine does not apply in this case. The court, therefore, had federal jurisdiction under CAFA to hear the case.

Lowery's Impact Continues In District Courts

Mon, 16 Jul 2007 12:13:00 GMT

In Constant v. International House of Pancakes, Inc., 487 F. Supp. 2d 1308 (S.D. Ala. 2007), the district court remanded a slip-and-fall case to state court due to the defendant’s failure to establish the jurisdictional amount by a preponderance of the evidence. In noting the significance of its decision, the Court stated: “If this court turns out to be right when, by separate order, it grants the motion to remand filed by plaintiff, . . . the court will have come close to proving that the day of the knee-jerk removal of diversity tort cases from state to federal court within the three states comprising the Eleventh Circuit came to an end on April 11, 2007, when Lowery v. Alabama Power Company, 483 F.3d 1184 (11th Cir. 2007) [a class action case], was decided.” Id. at 1308-09.

Federal Court In Georgia Awards Class Counsel Reasonable Attorney's Fee Equal To 55% Of Counsel's Requested Lodestar

Mon, 16 Jul 2007 12:23:00 GMT

The Court thus directed the parties to attempt to agree on a reasonable reduced amount for Class Counsel’s attorney fee. See 2007 WL 2001797, at *2. As a result, the parties agreed that $425,000 was a reasonable fee and expenses in the amount of $25,782.55 were reasonable. See id. The Court agreed that those amounts were indeed reasonable. See id. at *3. The Court noted, however, that an hourly rate of $400 was “barely” a reasonable rate. See id. The Court also approved a $5,000 payment to each class representative “for their time and expenses.” See id. at *4.

Deceptive Settlement Tactics Result in Loss of Arbitration Rights

Mon, 16 Jul 2007 14:17:00 GMT

May a party lose its arbitration rights if it misrepresents the benefits of a proposed class settlement? In Aviation Data, Inc. v. American Express Travel Related Services Co., ~ Cal. App. 3d ~, 2007 WL 1953916 (Cal. App. July 6, 2007), the court confronted exactly that issue and held that it could.

In that case, plaintiffs alleged that Amex's travel programs resulted in improper charges that would only be refunded if the cardholder complained. In deposition, Amex's director of systems development denied that its computer program could be modified to identify improper charges and thereby avoid billing those charges.

Later, Amex advised plaintiffs counsel that such to its systems could be made, and, at mediation, this prospective change served as the basis for the settlement. Throughout its submissions in support of preliminary -- and final -- approval of the settlement, Amex referred to the changes as being proposed modifications to its system. At the preliminary approval hearing, Amex's counsel told the court that this prospective change was the principal benefit to the class as no monetary relief was provided in the settlement, and notice was sent to the class.

However, plaintiffs withdrew from the settlement when it was learned that this change was not prospective at all. In fact, it had been implemented by Amex -- for reasons unrelated to the lawsuit -- even before the deposition of its systems development director. Amex's counsel acknowledged that he had become aware of that implementation after the settlement had been reached and several months prior to the preliminary approval hearing but had not disclosed it to plaintiffs' counsel or the court.

With the settlement having failed, the court granted class certification but Amex sought to invoke its arbitration provision to compel arbitration of the class members on an individual basis. The settlement agreement provided that, if the settlement were not approved, it would not be deemed a waiver of Amex's right to enforce its arbitration provision.

The trial court denied Amex's motion finding that it had waived its right to arbitrate because it had sought to resolve the claims on a classwide basis by misleading the absent class members and the court. The appellate court upheld this ruling. In so holding, the court recognized the basic principle that parties must be free to attempt to settle disputes without losing arbitration rights if settlement fails, but found "no policy justification to extend this principle to encompass attempts to secure judicial imprimatur and finality on settlements obtained through misleading or deceptive tactics."

Class-Arbitration Waiver Does Not Violate New Jersey Public Policy

Tue, 17 Jul 2007 16:01:00 GMT

Does a class-arbitration waiver violate New Jersey public policy? Although a New Jersey Supreme Court decision held that a class-arbitration waiver in a consumer arbitration agreement was unconscionable, the federal district court held that this did not establish a fundamental public policy against such waivers. Homa v. American Express Co., ~ F. Supp. ~, 2007 WL 1585168 (D.N.J. May 31, 2007).

Amex's cardmember agreements provide that Utah law governs and contain an arbitration provision requiring arbitration of claims arising out of the agreement and providing that there would be no class-action mechanism available in such arbitrations. Homa brought a putative class action in federal court, arguing among other things that the arbitration provision was unenforceable because it violated the Federal Arbitration Act and, in any event, that New Jersey had a fundamental public policy against class-arbitration waivers and therefore would not apply Utah law.

The Court made short work of each argument. As to the FAA, the Court noted that the Supreme Court and several federal circuit courts had enforced arbitration agreements even though they contained an express waiver of class action arbitrations.

As to New Jersey policy, the Court acknowledged that the New Jersey Supreme Court had deemed unconscionable a class-arbitration waiver in a consumer contract (Muhammad v. County Bank, 912 A.2d 88 (N.J. 2006), but denied that the decision had established a fundamental policy against such waivers. Instead, the decision reflected an application of New Jersey's approach to unconscionability which requires a fact-sensitive analysis in each case.

No Requirement That Arbitrator Hear Absent Class Members On Clause Construction Issue

Tue, 17 Jul 2007 16:42:00 GMT

Must an arbitrator permit absent class members to intervene on the issue of whether an arbitration clause permits class actions? A Connecticut Superior held that no such requirement exists. TES Franchising v. Kastel, ~ A.2d ~, 2007 WL 1748141 (Conn. Super. May 25, 2007).

In this case, TES Franchising, the respondent in an arbitration, brought an action in state court seeking to vacate a AAA arbitrator's determination that the arbitration provision in its franchise agreements -- which was silent as to class arbitrations -- in fact permitted such arbitrations. Prior to the clause construction hearing, 13 franchisees petitioned to intervene so that they could be heard on the issue. The arbitrator denied their petition noting that he was unaware of any AAA authority that would authorize him to entertain such a petition, and that the petitioners had not cited any. The arbitrator went on to find that the provision permitted class arbitrations.

The state court upheld both determinations, finding that the arbitrator had not exceeded his authority in denying intervention and had not manifestly disregarded the law in finding that the arbitration provision permitted class arbitrations.

As to the former, the court noted that nothing in the franchise agreement, the AAA rules, or case law compelled the arbitrator to entertain a petition to intervene or to hear from absent class members before deciding the clause construction issue. As to the latter, the court held that it could not conclude that the arbitrator's conclusion was clearly erroneous or that the arbitrator had ignored clearly governing legal principles in reaching that conclusion.

Classified News: July 18, 2007

Wed, 18 Jul 2007 11:11:00 GMT

Judge certifies class in suit against heavy construction vehicle maker Caterpillar Inc.

PricewaterhouseCoopers LLP settles class action brought by investors in Tyco International Ltd. for $225 million.

Judge approves $49 million settlement in Bar/Bri class action, but nixes incentive payments to class representatives.

Plaintiff files class action suit against maker of Snapple for product mislabeling.

Wisconsin Supreme Court rules antitrust class action against Bayer Corp. may proceed.

Farm workers receive $1.9 million judgment in class action alleging federal labor law violations.

Walgreen’s settles discrimination suit for $24 million.

Teachers file class action suit against National Education Assn. over retirement plan.

AT&T loses bid to block class action suit alleging wireless customers were overcharged for roaming fees.

Diary farmers file antitrust class action against Dairy Farmers of America Inc.

"Sliding Scale" Renders Arbitration Provision With Class-Action Waiver Unconscionable

Fri, 20 Jul 2007 10:54:00 GMT

Is an arbitration provision barring class actions unconscionable even where there is only a minimal showing of procedural unconscionability? In Gatton v. T-Mobile USA, Inc., 152 Cal. App. 4th 571 (Cal. App. 2007), the affirmed the denial of T-Mobile's motion to compel arbitration in a putative class action challenging its early termination fee and sale of handsets that could not be used when switching carriers. In so doing, the court applied a sliding scale approach under which a minimal showing of procedural unconscionability was counterbalanced by a sufficiently strong showing of substantive unconscionability.

The court found a minimal showing of procedural unconscionability because the provision was contained in a contract of adhesion even though T-Mobile argued (and the dissent agreed) that there was no procedural unconscionability given its affirmative efforts to bring the provision to the attention of its customers and both Nextel and Sprint offered their services without class action waivers.

Turning to substantive unconscionability, the court -- applying Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005) -- held that class action waivers in consumer contracts (1) are indisputably one-sided even if they are facially neutral because companies typically due not bring class actions against their customers, and (2) when found in a contract of adhesion, are exculpatory in effect if disputes predictably will involve small amounts of money, and the party with the superior bargaining power is alleged to have engaged in a scheme to cheat large numbers of consumers out of small amount of money. Under that standard, the court found, there was a high degree of substantive unconscionability with respect to the class action waiver given that the monetary amount of individual claims was generally less than $200, thus making a class action the only practicable way for consumers to obtain redress.

Applying a sliding scale, the court then upheld the determination that the arbitration provision was unconscionable, emphasizing that the more substantively oppresssive the contract term, the less evidence of procedural unconscionability is required to find the term unenforcable.

Classified News: July 20, 2007

Fri, 20 Jul 2007 14:09:00 GMT

Sixth Circuit affirms dismissal of class action suits targeting alcohol advertising.

Bristol-Myers Squibb pays $13 million to settle class action over Taxol pricing.

Pozen Inc. settles shareholder class action.

Class action alleges Chiquita Brands International Inc. with funding terrorism.

Judge asked to approve $6 million settlement in junk fax class action against Verizon Wireless.

NAACP files class action against mortgage lenders alleging bias against blacks.

Agreement To Reimburse Attorneys Fees if Arbitration Successful Does Not Overcome Unconscionability of Class Action Waiver

Fri, 20 Jul 2007 13:45:00 GMT

Does an agreement to reimburse a successful complainant's attorneys fees overcome the otherwise substantive unconscionability of an aribtration provision's class action waiver? In a putative class action alleging that Cingular had overcharged its customers up to $45 per month for long distance and roaming calls, the court found the attorneys fees provision was insufficient to overcome such unconscionability and therefore vacated the trial court's order compelling arbitration. Scott v. Cingular Wireless, ~ P.3d ~, 2007 WL 2003404 (Wash. July 12, 2007). (The dissent may be found here.)

Although the trial court had found there was no substantive unconscionability, the Washington Supreme Court disagreed. It found substantive unconscionability because (a) without class actions many meritorious, but small, claims under Washington's Consumer Protection Act would never be brought and therefore the provision would violate the state's policy to protect the public and foster honest and fair competition; and (b) the provision effectively would exculpate Cingular from liability where the cost of pursuing an individual customer's claim outweighs that party's potential recovery. Having found substantive unconscionability, the court found it unnecessary to address the question of procedural unconscionability.

Cingular argued that the Federal Arbitration Act required enforcement of the class action waiver and, in any event, there was no substantive unconscionability given its promise to pay a successful complainant's attorneys fees. The Court found these assertions insufficient. It found the FAA only placed arbitration clauses on the same analytical footing as other contracts, and thus was subject to an unconscionability analysis. As for the fee provision, the Court noted that it would only be applicable if the complainant recovered the full amount of his or her demand; and that attorneys are generally unwilling to take on actions to recover small amounts of money anyway.

The Court then looked to the arbitration provision, found that the class action waiver was not severable from the remainder of the provision, and therefore held that the entirety of the arbitration clause was null and void.

Classified News: July 24, 2007

Tue, 24 Jul 2007 13:54:00 GMT

Former Employee of Pfizer who was among 17,000 Workers whose Personal Data was Posted Online is Suing the Drug Company and Seeks Class Action Status for the Case.

Lawsuit Alleges “Shameful Failures” of VA in Providing Medical and Mental Healthcare to Servicemen and Women.

Judge Criticizes Settlement of Class Action Lawsuit Over Disparity Between Class Benefit and Fees.

Season Ticket Holder Files Class Action Suit against San Diego Chargers Accusing Team of Unjust Enrichment for Playoff Refund Plan.

Eleventh Circuit Confirms That Constitutional Notice Requirement And Res Judicata Apply In Class Action Settlements

Wed, 25 Jul 2007 21:48:00 GMT

When is a lawsuit filed after a class action settlement barred by res judicata? The Eleventh Circuit made clear that, when the notice is constitutionally sufficient and the claims brought by class members are covered by the settlement agreement, general res judicata principles will bar the subsequent suit.

In Adams v. Southern Bureau Life Ins. Co., No. 06-13162 (11th Cir. July 25, 2007), the Eleventh Circuit confirmed that established principles governing constitutionally required notice and res judicata apply in the class action context.

Although the plaintiffs in this consolidated appeal agreed that they were members of the class of a previous lawsuit, they argued that the notice to class members of the action and settlement was not constitutionally sufficient and, in any event, the claims there were asserting in the present case were not covered by the earlier settlement agreement.

The court rejected the plaintiffs’ notice argument, finding that the defendants satisfied constitutional due process and did all that was practicable to give proper notice in the former lawsuit. That notice included a 48-page Q&A style notice, pronounced language regarding the waiver of the claims involved, multiple mailings, publication in a national newspaper, and a toll-free number, website, and mailing address for potential class members to direct questions.

The court also rejected plaintiffs’ assertion that their claims were not covered by the former settlement, instead finding that, regardless of the title plaintiffs’ ascribed to their claims, they were at heart the same claims identified in the notice and resolved by the prior settlement.

Classified News: August 2, 2007

Thu, 02 Aug 2007 13:28:00 GMT

Securities class action filed against Bioenvision, Inc.

Possible settlement of Enron class action could result in largest ever settlement of securities class action.

Nike Inc. settles class action alleging racial discrimination for $7.6 million.

Wisconsin judge approves $300,000 settlement of class action against slumlord.

Less than a month after iPhone’s release, customer files class action against Apple, Inc.

Judge dismisses class action involving child slavery allegations.

Class action alleges Postal Service sold workers’ personal information.

Second employee overtime lawsuit filed against IBM.

Classified News: August 3, 2007

Fri, 03 Aug 2007 16:34:00 GMT

Plaintiffs accuse Wells Fargo of discriminatory lending.

Lexus sued over air-bag systems.

Class certification granted to homeless residents alleging City of Fresno destroyed their personal property.

Novartis Faces Class Action Over Sex Bias.

Sun-Times media group settles securities class actions for $30 million.

FDA’s ruling on Avandia likely to prevent wave of class actions.

Judge throws out $17 million verdict against American Family Insurance in class action suit involving after-market auto parts.

Morgan Stanley settles bias suit.

Judge enters summary judgment in favor of class in suit against Continental Tire North America Inc.

Can residents of one correctional facility be typical class representatives of a putative class that encompasses inmates state-wide?

Wed, 08 Aug 2007 12:23:00 GMT

In Twarog v. Allen, __ F. Supp. 2d __, Case No. 2:05-cv-811-MHT, 2007 WL 2228635, at *1 (M.D. Ala. July 31, 2007), District Judge Myron Thompson denied the plaintiffs’ motion for class certification because class representatives residing at Easterling Correctional Facility were not typical of the putative class as a whole. The Court also declined to redefine the class to meet the requirements of Rule 23 because the plaintiffs, who were alleging state-wide unconstitutional conditions, “have an obligation to select typical class representatives rather than invite the court to narrow the definition of the class and needlessly limit the scope of the suit.” Id.

Florida 3d DCA Orders Adorno Firm To Disgorge $3.5 Million Settlement Amount

Wed, 08 Aug 2007 14:22:00 GMT

In Masztal v. The City of Miami, the Third District ordered the Adorno & Yoss law firm to disgorge a $3.5 million settlement amount for what the court called a "breach of fiduciary duty" to an uncertified, putative class of Miami taxpayers.

Seven plaintiffs, represented by the Adorno firm, filed a putative class action against the City of Miami, alleging that a special assessment to fund fire rescue services was unconstitutional. The plaintiffs sought donations from the public to pay for the lawsuit.

No class was certified.

The plaintiffs and a city attorney agreed to settle the matter on an individual basis for $7 million, to be paid in two equal installments. One $3.5 million installment was paid to the Adorno firm as administrator of the settlement. The plaintiffs later admitted that they received a "significant windfall" from the settlement as compared the refund amount to which they otherwise would have entitled. $2 million went to the plaintiffs' lawyers in fees. Apparently, the plaintiffs did not explain the nature of the settlement to the trial court.

Both the City and class intervenors sought to vacate the settlement on grounds of unilateral mistake, breach of fiduciary duty, and collusion. The trial court agreed and ordered disgorgement of the $3.5 million installment. It further certified a class and appointed the intervenors' lawyers as class counsel.

The Third District held that the trial court properly vacated the settlement on the ground that the original plaintiffs and the Adorno firm breached their fiduciary duties to the uncertified class. It pointed out that, even though no class had been certified, there nonetheless was an "implied fiduciary relationship" between the plaintiffs, counsel and the putative class members.

The court castigated the plaintiffs and attorneys for misleading taxpayers into donating money for a class action that merely enriched seven individuals, for "conspir[ing] to keep silent about the settlement terms," and for failing to move the case along, allowing the statute of limitations to run on absent class members' claims.

Judge Cortinas' concurrence was even stronger. He called the plaintiffs' conduct "reprehensible" and a "scheme to defraud," a "case of unchecked avarice coupled with a total absence of shame on the part of the original lawyers."

I suspect we have not seen the end of this matter.

Classified News: August 8, 2007

Wed, 08 Aug 2007 18:47:00 GMT

Wal-Mart now faces wage-and-hour class-action lawsuit by employees in South Carolina.

Rhode Island Supreme Court adopts narrow policy on standard of review for collateral attacks on a foreign class action.

Stanford Law School study finds shareholders are suing corporations less in class-action lawsuits.

Class-action suit against Qwest Communications alleging illegal withholding of overtime pay is conditionally certified.

Can A Defendant Be Forced To Serve As Representative Of A Defendant Class Against Its Will?

Thu, 09 Aug 2007 14:06:00 GMT

In City of Tampa v. Addison, -- So. 2d --, 2007 WL 2254577 (Fla. 2d DCA Aug. 8, 2007, Florida's Second District Court of Appeal said yes.

Two Tampa lawyers filed a class action challenging the City of Tampa's occupational license tax as applied to attorneys. The trial court certified both a plaintiff class of attorneys throughout Florida subject to the tax and a defendant class of municipalities and counties which imposed the tax.

The City of Tampa appealed the class certification on three pertinent grounds, none of which were successful.

First, the City argued that the controlling case law supported the constitutionality of the tax. The appellate court found this argument "interesting" but declined to address it as merits-based.

Second, the City argued that the plaintiffs lacked standing to represent attorneys practicing in other municipalities and counties. The court responded that "generally" standing issues exist where "the defendant class includes parties against whom the nominal plaintiffs have no claim." In this case, however, "the enactment of the various occupational license tax ordinances under the authority of the same enabling legislation by all of the members of the proposed defendant class provides the requisite 'juridical link' that authorizes the certification of the proposed defendant class."

Finally, the City argued that it was not an adequate representative of a defendant class. The court agreed that a motion to certify a defendant class raises heightened concerns related to due process and the adequacy of representation requirement. It further agreed that there is "potential unfairness" in requiring a reluctant defendant class representative to incur additional legal fees and costs associated with defending a class action. Nonetheless, despite the City's argument that its legal department "lacked the necessary resources to defend the attack on the constitutionality of the occupational license tax as applied to attorneys on behalf of the more than 200 members of the proposed defendant class," there was "competent substantial evidence" that the City was an adequate representative for the defendant class.

Comments on Masztal Decision

Fri, 10 Aug 2007 15:01:00 GMT

We have received two comments on yesterday's post concerning the Third District's Masztal case. I quote them verbatim.

One commenter (who is involved in law firm risk management) said: “I'm not at all surprised by this result. Several courts, in varying contexts, have held that class counsel is bound to protect the interests of the class, even against the selfish interests of a named plaintiff trying to advantage itself at the expense of the class. Cf. Soskel v. Texaco, 94 F.R.D. 201 (S.D.N.Y. 1982); Blanchard v. Edgemark Corp., 1998 U.S. Dist. Lexis 15420 (N.D. Ill. 1998); Lazy Oil v. Witco Corp., 166 F.3d 581 (3d Cir. 1999). I understand these cases may have some logical inconsistencies with other "established" rules (e.g., that class members are not clients). Sometimes, however, concepts of fundamental fairness carry the day.”

Another commentator (a good plaintiff’s lawyer) had a different take than we did on part of the opinion: “While the opinions castigated the class attorneys for their attempt to let the statute run on the absent class members' claims, the concurrence also on a couple of occasions mentions that it was a futile effort. I interpreted this to refer to the American Pipe tolling rule, and in essence the concurring judge was suggesting that the absent class members' statute of limitations was tolled as long as the potential class case was pending (although this is never expressly stated). So, while the court correctly criticized the class attorneys for attempting to screw the absent class members, I don't think the court believed that the effort was going to succeed. And indeed it shouldn't, assuming the American Pipe rule applied, which as far as I know is still an open question under Florida law. While this was certainly an egregious case, I'm concerned (and you may well be too!) that this opinion is going to make it much more difficult to reach individual settlements in class cases even in circumstances where such a settlement may be appropriate.”

For what it is worth, I have strong doubts as to whether the American Pipe tolling rule applies in Florida given the language of the statute of limitations and Florida Supreme Court decisions construing it. That, however, is a post for another day!

Causes of Action as Class Actions: Breach of Contract

Sat, 11 Aug 2007 09:26:00 GMT

First District

Ouellette v. Wal-Mart Stores, Inc., 888 So. 2d 90, 92 (Fla. 1st DCA 2004) (reversing denial of class certification where complaint alleged, among other things, breach of contract, without prejudice to plaintiffs redefining the class on remand)
Paladino v. American Dental Plan, Inc., 697 So. 2d 897 (Fla. 1st DCA 1997) (certifying a class of dentists claiming breach of contract where every dentist had the same provision in his or her contract, and interpretation of that provision predominated over the other questions of law or fact affecting the individual class members)

Second District

Rollins, Inc. v. Butland, 2006 WL 3686484 (Fla. 2d DCA Dec. 15, 2006) (refusing to certify class where contract imposed various obligations on the customers, and each class member would be required to prove at trial his or her performance of these obligations)

Third District

Neighborhood Health Partnership, Inc. v. Fischer, 913 So. 2d 703 (Fla. 3d DCA 2005) (reversing certification where plaintiff lacked standing to bring breach of contract action on behalf of the class)
Shoma Development Corp. v. Vazquez, 749 So. 2d 1287, 1289 (Fla. 3d DCA 2000) (affirming certification of breach of contract claim where class members signed the "same sort of form contract")
Allstate Indem. Co. v. Domato, 730 So. 2d 343 (Fla. 3d DCA 1999) (reversing certification of a breach of contract claim where the named plaintiff was an improper class representative)
Ford Motor Co. v. Magill, 698 So. 2d 1244, 1254 (Fla. 3d DCA 1997) (stating that "Florida law generally frowns on class action in contract matters")
Sears, Roebuck and Co. v. Labora, 670 So. 2d 1025 (Fla. 3d DCA 1996) (affirming grant of class certification in a breach of contract action)
Love v. General Development Corp., 555 So. 2d 397 (Fla. 3d DCA 1989) (reversing denial of class certification where owners of individual home sites asserted that a developer breached identical clauses in their purchase agreements by failing to complete roads leading to the communities within the time provided by the contracts)

Fourth District

Freedom Life Ins. Co. of America v. Wallant, 891 So. 2d 1109, 1119 (Fla. 4th DCA 2004) (affirming class certification under Rule 1.220(b)(3) of claim involving breach of insurance contract)
Stone v. CompuServe Interactive Services, Inc., 804 So. 2d 383, 390 (Fla. 4th DCA 2001) (affirming denial of class certification of breach of contract action)

Fifth District

W.S. Badcock Corp. v. Webb, 699 So. 2d 859 (Fla. 5th DCA 1997) (vacating order of class certification where plaintiffs lacked standing to bring breach of contract action)

Despite The Impracticality of Joinder, Numerosity Was Lacking

Sat, 11 Aug 2007 16:26:00 GMT

Can a proposed class have enough members to make joinder impractical, yet the numerosity requirement remains unsatisfied? That is exactly what happened in this Middle District of Florida decision.

In Grillasca v. Hess Corp., No. 8:05-cv-1736, 2007 WL 2121726 (M.D. Fla. July 24, 2007), the plaintiffs brought this class action based on Hess’s practice of instituting pre-authorization requests when customers use debit cards to purchase gas. According to the plaintiffs, the pre-authorization requests resulted on holds on their accounts for sums in addition to the cost of the gas purchased.

With regard to numerosity, the court determined that there were at least twenty class members, and joinder of all such members would be impractical. Nonetheless, the court went on to find that numerosity was ultimately lacking where the plaintiffs failed to proffer sufficient evidence to provide a reasonable estimate of the total number of putative class members.

Without a reasonable estimate of the number of class members, plaintiffs could not demonstrate satisfaction of the jurisdictional requisite. The court did see fit to evaluate the remaining Rule 23 elements, finding the rest of 23(a) and 23(b)(3) were satisfied.

Classified News: August 14, 2007

Tue, 14 Aug 2007 15:45:00 GMT

Nevada Supreme Court rules unnamed class members have standing to object to and appeal class settlement.

Hurricane Katrina victims file class action suit against manufacturer of FEMA trailers.

Investors file class action suit against Pozen, based on failure to obtain FDA approval of migraine drug.

Toy recall spurs class action against Mattel, Inc. and Fisher-Price Inc.

Court dismisses securities class action against Astea International Inc.

Objectors to American Express Class Action Settlement Move to Drop Appeal

Wed, 22 Aug 2007 08:12:00 GMT

In 2005, the Southern District of Florida approved the settlement of a class action suit alleging that the American Express Company violated state and federal law when it failed to disclose transaction fees associated with foreign currency purchases. Objectors to the settlement appealed to the Eleventh Circuit, arguing that the settlement was inadequate and objectionable on various grounds. They have recently moved to dismiss the appeals.

According to an article in the New York Sun, the decision to drop the appeals came after American Express “agreed to pay more than $3 million to drop appeals claiming that the deal shortchanged consumers.” The article discusses the ethical and legal implications of the situation. The article states that the “resolution highlights two potential abuses in class action litigation”: “[o]bjecting lawyers can obtain legal fees by standing in the way of a settlement” and “businesses can avoid having an appeals court review the matter by simply offering extra case to those diligent enough to pursue an appeal.”

In considering the adequacy of a purported class representative, is knowledge irrelevant?

Thu, 23 Aug 2007 10:01:00 GMT

In Eslava v. Gulf Telephone Co., __ F. Supp. __, Case No. 04-00297-KD-B, 2007 WL 2298222 (S.D. Ala. Aug. 7, 2007), the Court stated that “[c]lass representatives should not only have a working knowledge of the case, but should possess a level of understanding of the case to be capable of ‘controlling’ or ‘prosecuting’ the litigation.” Id. at *3 (citation and internal quotation marks omitted) (collecting cases). After reviewing the testimony of three of the purported class representatives, the court concluded that they were inadequate class representatives because they had “virtually abdicated the representative role to their counsel.” Id. at *4 (citation omitted) (collecting cases). The court did decide, however, that a fourth purported representative was an adequate representative for one claim. Id. Nevertheless, since the district court’s order was entered three days prior to the pretrial hearing in the case and approximately three weeks from the start of trial, the Court denied plaintiffs’ request for leave to name additional class representatives as untimely. Id. at *7.

Is class certification pursuant to Rule 23(b)(1)(B) restricted to cases involving a "limited fund"?

Thu, 23 Aug 2007 10:05:00 GMT

In so holding, the Court concluded that the Supreme Court’s holding in Ortiz v. Fibreboard Corp., 527 U.S. 815, 834, 119 S. Ct. 2295 (1999) “does not stand for the proposition that certification under 23(b)(1)(B) is available only in limited funds cases.” Id. at *5 (emphasis in original). “Addressing this claim [for alleged breaches of fiduciary duties relating to the establishment and maintenance of the escrow fund] in an individual action would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudication.” Id. at *6. Accordingly, the Court held that the one claim for alleged breaches of fiduciary duties relating to the establishment and maintenance of the escrow fund could be certified as a class claim. Id.

Classified News: August 23, 2007

Thu, 23 Aug 2007 13:33:00 GMT

Class action suit claims that people with disabilities are being forced into nursing homes instead of having the option of home or community-care because of state funding choices.

Class-action lawsuit against morgue settled for $8 million.

Court decides suit against AT&T can proceed as class action.

All Wage-Based Claims Need Not Be Brought As Collective Actions Under The FLSA

Sat, 01 Sep 2007 09:45:00 GMT

Must all wage-based claims proceed as a collective action under the Fair Labor Standards Act (FLSA), or are there circumstances where such claims can be brought as a regular class action under Rule 23(b)(3)? The Eleventh Circuit determined that certain wage-based claims under the Migrant and Seasonal Agricultural Worker Protection Act (AWPA) can proceed as a Rule 23(b)(3) class.

Under the FLSA, an employee cannot be a party plaintiff to any action for unpaid wages unless he opts into a class. Under Rule 23(b)(3), on the other hand, all qualifying class members are party-plaintiffs unless they opt out.

In Leon-Granados v. Eller & Sons Trees, Inc., No. 06-15876 (11th Cir. August 31, 2007), the defendants argued that the district court abused its discretion in certifying a class under Rule 23(b)(3) because the AWPA claims were wage claims essentially based on violations of the FLSA. The Eleventh Circuit disagreed, holding that the AWPA claims were substantively different from the FLSA claims, and that the statutory language of the AWPA supported the use of class actions.

The defendants also attacked certification on the grounds that the class representatives were not adequate because they invoked the Fifth Amendment when asked in deposition whether they worked for other employers in the United States. The Eleventh Circuit was satisfied that the district court’s acknowledgement of the potential problem and commitment to continued examination of this issue was sufficient.

Finally, the defendants attacked the superiority of the class action due to the individualized inquiries surrounding the amount of hours each employee worked as opposed to what was recorded. However, the availability of statutory damages under the AWPA eliminated the need for such individualized inquiries.

Federal Removal Time - Indeterminate Damages

Fri, 07 Sep 2007 13:47:00 GMT

In Lowery v. Ala. Power Co., 483 F.3d 1184 (11th Cir.2007), a recent case involving the Class Action Fairness Act of 2005 (“ CAFA” ), the Court suggested that it is hardly ever appropriate for a defendant to remove a case on diversity grounds where the complaint alleges indeterminate damages because the amount in controversy is not apparent from a "paper" provided by the plaintiff. More specifically, the Court noted that in a case involving a complaint with an unspecified damages claim, a defendant typically cannot sign a notice of removal in good faith until the defendant receives “other paper” from the plaintiff containing information pertaining to the value of the plaintiff's claim. Such “other paper” includes deposition testimony. Lowery, 483 F.3d at 1212 n.62.

On August 24, 2007, the Middle District of Georgia held in Harp v. Wal-Mart Stores, Inc., 2007 WL 2417392 (M.D.Ga. 2007) that the thirty-day time period did not begin to run on November 30, 2006, the date Defendant received service of process, because the Plaintiff's complaint contained an unspecified damages claim and was therefore not removable. Rather, the thirty-day removal period began to run on May 1, 2007, the date of Plaintiff's deposition. "That is the date on which Defendant first received 'other paper' from the Plaintiff containing information relevant to the actual value of Plaintiff's claim." Id. at *2.

Can A Motion To Dismiss Determination Be Appealed Because Of The Expense Of Aggregate Litigation?

Mon, 10 Sep 2007 10:53:00 GMT

The Second District confirmed that the answer, generally, is "no," in DeLoach v. Aird, -- So. 2d --, 2007 WL 2552071 (Fla. 2d DCA Sept. 7, 2007).

A mobile home park association sued the park owner when it evicted the residents. A class action complaint was dismissed, but an amended complaint naming over 150 individual plaintiffs was not. The defendants filed a petition for common law certiorari, arguing that the time, inconvenience, potential difficulty, and expense associated with proceeding against the numerous plaintiffs inflicted irreparable harm on them. The Second District summarily rejected the argument, noting that it was not the function of the appellate court to review interlocutory orders to save litigants time and expense.

Orange County Circuit Court Denies Class Certification In Home Construction Case

Mon, 10 Sep 2007 11:01:00 GMT

In Bouchard v. The Ryland Group, Inc., 2007 WL 2460386 (9th Jud. Cir., Orange County, Fla., Jan. 16, 2007), the court denied a motion for class certification in an extensive decision.

The plaintiffs contended that their homes suffered water intrusion due to construction defects in the exterior finish of the homes. The facts revealed that, prior to the 3 hurricanes which buffeted central Florida in 2004, Ryland received very few reports of water intrusion problems. During and after the period of hurricane activity, claims of water intrusion increased.

The court ruled that none of the requirements of Rule 1.220 were satisfied.

Numerosity. Even though there were 8,000 putative class members, the numerosity requirement required an evaluation of whether the class was adequately defined and clearly ascertainable. It was not here, because the class included former Ryland home owners who had incurred expenses to replace or repair property damage. This required fact finding on the "ultimate issues in the case," including causation, to determine who was a class member.

Commonality and Typicality. With respect to the breach of contract, breach of express warranty, breach of implied warranty, negligence, statutory building code, and FDUTPA claims, the evidence necessary to establish liability and causation was too varied. Among other things, "[a]n untold number of would-be class members have sustained no losses attributable to any contractual breach."

Adequacy. The class had too many "inconsistent interests" for a finding of adequacy. Some class members had alleged remedies others did not have. For some, the proposed uniform "fix" would be insufficient to redress personal property damage. For others, the limited common repair remedy failed to compensate potential personal injury and de-emphasized personal property damage and diminution damages.

Predominance. There was a need for individualized proofs that would require hundreds and perhaps thousands of mini-trials, both as to liability and the fact, nature, extent, and cause of damages. The numerous individual issues presented destroyed the cohesiveness necessary to satisfy the predominance requirement.

Superiority. Because significant common issues existed, "little value is gained by proceeding as a class action." The court saw "nothing 'superior' in certifying a class and then having to conduct numerous mini-trials on liability and damages." Such a procedure "defeats the very purpose of the class action rule."

Note: For what it is worth, the author of this post was one of several Carlton Fields attorneys representing Ryland in this matter. The court's decision is on appeal.

Eleventh Circuit Changes Law On Enforceability Of Class Action Waivers In Arbitration Agreements

Tue, 11 Sep 2007 11:13:00 GMT

In Dale v. Comcast Corp., -- F.3d --, 2007 WL 2471222 (11th Cir. Sept. 4, 2007), the court reviewed the enforceability of a mandatory arbitration provision of Comcast, a cable television service provider. The provision was contained in Comcast’s “policies and procedures” distributed to subscribers at the time of service installation or with their December invoice. The provision stated that either the subscriber or Comcast could elect to arbitrate a dispute rather than litigate. It also stated, however, that no class arbitration could be brought. It finally stated that, if the clause was declared unenforceable, the entire arbitration provision would be rendered unenforceable.

The court found the class action waiver to be unenforceable. It distinguished several prior cases upholding class action waivers, stating “[w]e did not consider a factual scenario in which a remedy was effectively foreclosed because of the negligible amount of recovery when compared to the cost of bringing an arbitration action.” It also noted that the arbitration provisions in which waivers were upheld (unlike the Comcast provision) permitted the recovery of attorneys’ fees and expert costs should the plaintiff prevail. Because the class action waiver could not be severed from the agreement, however, the entire arbitration provision was rendered unenforceable, and the plaintiff’s case was remanded to litigation.

Pursuant to this decision, the enforceability of a particular class action waiver in an arbitration agreement must be determined “on a case-by-case basis, considering the totality of the facts and circumstances.” Relevant circumstances include: (i) the fairness of the provisions; (ii) the cost to an individual plaintiff of vindicating the claim when compared to the plaintiff’s potential recovery; (iii) the ability to recover attorneys’ fees and other costs and thus obtain legal representation to prosecute the underlying claim; (iv) the practical affect the waiver would have on the company’s ability to engage in unchecked market behavior; and (v) related public policy concerns.

National Law Journal Reports On Trend To Reject Class Action Waiver Clauses In Arbitration Agreements

Tue, 11 Sep 2007 14:30:00 GMT

On Monday, August 27, 2007, a National Law Journal article reported on a trend where courts are striking down class action waivers as unconscionable. See Pamela A. MacLean, "Class Action Waivers Hit A Wall," The National Law Journal (August 27, 2007).

The article notes that the "pendulum has begun swinging favorably toward consumers," citing decisions striking waivers in the Ninth Circuit and states of Washington anad Wisconsin.

Now add the Eleventh Circuit to the list of courts at least willing to listen to requests to strike such clauses.

May class members join a new defendant to a successive, court-approved action for individual damages against the defendants from underlying class action litigation?

Wed, 22 Aug 2007 19:26:00 GMT

In Miller, successive litigation to Engle v. Liggett Group, Inc., et al., 934 So. 2d 1246 (Fla. 2006), a class action brought against cigarette manufacturers, the Florida Supreme Court held that class members had the right to pursue individual damages remedies against the Engle defendants. 2007 WL 2399184, at *1. The plaintiffs joined Vector Group LTD, who was not a defendant in Engle, to their action for individual damages. Id. The defendants alleged that the plaintiffs fraudulently joined Vector, who was a citizen of the same state as some of the plaintiffs, to defeat diversity jurisdiction. Id. A Southern District of Florida judge disagreed and held that Vector was an appropriate defendant. Id. at *5.

In so holding, the Court reasoned that even though Vector “was not an Engle Defendant,” Vector was an appropriate Defendant in the individual damages litigation “because Plaintiffs . . . laid out a reasonable argument that Vector is a liable successor to” one of the Defendants in Engle. Id. at *4. The Court examined Plaintiff’s theory of liability in search of a “reasonable basis for a cause of action against Vector” and found one based on the involvement of Vector’s predecessors in the cigarette industry, and possibly on Vector’s own actions. Id. Accordingly, the Court held that Plaintiffs did not join Vector fraudulently and remanded the action to state court. Id. at *5.

Do plaintiffs always bear the burden of proving the applicability of the “local controversy” exception to a federal court’s jurisdiction under the Class Action Fairness Act?

Sun, 19 Aug 2007 19:33:00 GMT

In so holding, the Court concluded that the plaintiff failed to present sufficient evidence, namely that over two-thirds of the class members were citizens of Georgia to invoke the exception and block removal from Georgia state court to federal court Id. at *4. Rather than present his own evidence, the plaintiff asserted that the defendant’s “evidence of the citizenship of only nine class members [did] not prove that less than two-thirds of the 1.5 million member-class [were] Georgia citizens.” Id. Stated another way, the plaintiff argued that because the defendant’s evidence did not disprove his assertion, then his assertion must have been true. The Court rejected the plaintiff’s argument, stating that “[s]uch logic . . . would turn the burden of proof for invoking the exception to CAFA on its head. . . . While it may seem an onerous task for the plaintiff to prove the citizenship of at least two-thirds of the approximately 1.5 million-member class, it is nevertheless the plaintiff’s burden to bear.” Id. at *4-5. Hence, the Court concluded that the plaintiff failed to meet his burden with respect to proving Georgia citizenship of two-thirds of the class members, the “local controversy” exception to CAFA did not apply, and the defendant properly removed the case to federal court.

Does The Sarbanes-Oxley Act Revive Previously Time-Barred Securities-Fraud Class Actions?

Mon, 17 Sep 2007 09:24:00 GMT

After determining based on inquiry notice that the class claims at issue were barred under both the old statute of limitations and the Sarbanes-Oxley Act’s (SOA) amended statute of limitations, the Eleventh Circuit did not have to answer this interesting question.

In Tello v. Dean Witter Reynolds, Inc., 494 F.3d 956 (11th 2007), the class-action complaint alleged that the brokerage firm manipulated the price of stock by engaging in a “short squeeze.” The Eleventh Circuit had previously remanded the case for a determination of when the class representative was on inquiry notice of the alleged fraud.

Depending on exactly when the class representative was on inquiry notice, the Eleventh Circuit could have been presented with the question of whether, by filing the complaint after the effective date of the SOA, the SOA’s amended (and lengthened) statute of limitations would operate to revive the otherwise time-barred action.

After coming down rather hard on the district judge for not answering the question on remand, the Eleventh Circuit itself answered its own inquiry notice question based on the record. Unfortunately for those of us looking for an answer to the title question, the court determined that the class representative was on inquiry notice long enough before filing the complaint that the action was time barred under either the old statute of limitations or the longer SOA statute of limitations.

Classified News: September 17, 2007

Mon, 17 Sep 2007 14:45:00 GMT

Cleaners file suit over pay for jobs near Ground Zero.

New Jersey High Court denies nationwide class-action status to insurance companies seeking Vioxx reimbursements.

Second Circuit orders lower court to revisit order denying class certification in antitrust IPO case.

EMC facing class action sexual discrimination lawsuit.

Florida lawyers sue to change licensing laws.

Can A Plaintiff Base Its Request for Certification To A Nationwide Opt-in Class On The Defendant's Status As A Nationwide Employer?

Wed, 19 Sep 2007 18:32:00 GMT

The plaintiff, a limousine driver/chauffer, brought a Fair Labor Standards Act claim against her employer and sought preliminary certification and notice to a nationwide class consisting of all limousine drivers/chauffeurs employed by the defendant during the relevant time period, regardless of whether the potential plaintiffs worked for the defendant or its subsidiaries, or were classified by the defendant as house chauffeurs/independent contractors, employees, or independent owner operators. Id. at 1-2. The plaintiff based her claim for a nationwide class on the ground that the defendant “operate[d] a limousine business throughout the United States, all of whom are subject to the same standards of operation.” Id. at 2. The plaintiff further argued that “the differences in the job responsibilities and control exercised over the limousine drivers/chauffeurs [were] not sufficiently significant to preclude a finding that they are all similarly situated.” Id. In rejecting the plaintiff’s proposed analysis, the court instead analyzed five factors under the “totality of the circumstances,” including: (1) whether the plaintiffs all held the same job title; (2) whether the plaintiffs worked in the same geographic location; (3) whether the alleged violations occurred during the same time period; (4) whether the plaintiffs were subjected to the same policies and practices, and whether these policies and practices were established in the same manner and by the same decision-maker; and (5) the extent to which the actions which constituted the violations claimed by the plaintiff were similar. Id. at 4, 15. Based on these factors, the court granted the motion for preliminary certification without prejudice, narrowing the scope of the notice to employees who worked in one particular office of the defendant and leaving the door open for the defendant to file a motion for decertification at the close of discovery if the evidence reflected that the plaintiffs who elected to opt-in were not similarly situated. Id. at 15.

May A Court Look Behind The Pleadings Of A Plaintiff’s Claims Prior To Ruling On Class Certification?

Tue, 14 Aug 2007 18:43:00 GMT

The plaintiff sought to purchase a vehicle from the defendant, a car dealership. Id. at *1. After allowing the plaintiff to possess the vehicle for several days pending approval of her financing, the defendant demanded return of the vehicle when a creditor rejected the plaintiff’s credit application. Id. The plaintiff, who claimed that she and her children were “emotionally crushed” by the defendant’s actions, filed a lawsuit on her behalf and on behalf of others similarly situated, alleging that the defendant’s actions violated several laws governing fair credit, lending, and business practices. Id. at *1-2.

In ruling on the issue of certification, the court reasoned that it “must conduct a ‘rigorous analysis’ to determine whether the prerequisites of Rule 23(a) and (b) [had] been met,” and that that it needed to “probe behind the pleadings before coming to rest on the certification question.” Id. at *3 (internal citations omitted). In so doing, the court easily ascertained that because the plaintiff (1) suffered no damages, (2) included several material misrepresentations on her credit application, and (3) signed a bailment agreement stating that her ownership of the vehicle was pending credit approval, the plaintiff had no standing to serve as a class representative. Id. at *4-8. Accordingly, the court granted summary judgment to the defendant and denied class certification.

Must A Court Analyze Whether A Defendant’s Conduct Violates The “Substantially Similar” Laws Of Other States After Concluding That The Named Plaintiffs Failed to Raise A Valid Claim On The Laws Of The States Where Their Injuries Actually Occurred?

Fri, 20 Jul 2007 18:50:00 GMT

Two plaintiffs brought a class action complaint against a New Jersey-based rental car agency for automatically assessing a $3.00 cost recovery fee for all car rentals in addition to its daily charge. Id. at *1. The plaintiffs, who rented vehicles in Florida and North Carolina, respectively, alleged that the fee was a “hidden profit center” for the defendant “rather than a legitimate means of recouping the cost of licensing and registering its fleet of rental vehicles . . . .” Id. The plaintiffs alleged that the defendant violated various consumer and trade protection laws in New Jersey, Florida, and North Carolina, as well as “the substantially similar consumer fraud laws of certain states.” Id. at *3-6. The court conducted a choice of law analysis and determined that only North Carolina and Florida law applied to the plaintiffs’ claims.

Upon finding that the plaintiffs failed to state a cause of action under either North Carolina or Florida law, the court concluded that because a nationwide class had not been certified, and because neither of the named plaintiffs rented vehicles in states other than North Carolina or Florida, the court would not pass upon the question of whether the alleged substantially similar statutes of other states would be violated by the facts alleged in the Complaint. Id. Accordingly, the court found that the substantially similar consumer fraud laws of other states were not applicable to the named plaintiffs’ claims, and dismissed that claim with prejudice as to both named plaintiffs. Id.

Consumer Class Action Against Auto Dealer Settled With Coupon Component

Thu, 20 Sep 2007 08:40:00 GMT

In one of a string of class actions filed against Florida automobile dealers related to the sale of an "etch" aftermarket product, a Middle District of Florida judge approved a classwide settlement of a class action against Crown Auto. See Veal v. Crown Auto Dealerships, Inc., 2007 WL 2700969 (M.D. Fla. Sept. 13, 2007). The class members received a sum between $125 and $500 in cash payments and some members also received a $100 coupon.

The author of this post, one of Crown's counsel, attended the fairness hearing. In approving the settlement, the judge emphasized that the coupons were redeemable for any service offered at a Crown dealership and that there was no expiration date on them.

Although this case pre-dated the Class Action Fairness Act, under CAFA, settlements containing a coupon component will receive heightened scrutiny. This case provides anecdotal evidence that it will become more difficult to obtain approval of settlements with coupons that (a) are conditioned on purchase of another product from the defendant and (b) expire within a short time period.

Update: Court Denies Motion To Reconsider Order Denying Class Certification And Dismissing Complaint, But Clarifies That Dismissal Was Without Prejudice

Sun, 23 Sep 2007 19:39:00 GMT

The court previously entered an order denying class certification on the ground that the plaintiffs failed to sufficiently allege numerosity. Grillasca, 2007 WL 2702334, at *1. The plaintiffs also failed to satisfy the amount in controversy requirement, and the court dismissed the plaintiffs’ complaint with prejudice. Id. A link to our blog post analyzing the court’s prior decision can be found here.

In addressing the plaintiffs’ motion for reconsideration, the court found that the plaintiffs failed to identify “(1) an intervening change in controlling law; (2) the availability of new evidence; [or] (3) the need to correct clear error or prevent manifest injustice” such that the circumstances of the case warranted reconsideration. Id. at *2 (internal citations omitted). In addition, the court clarified that its dismissal of the plaintiffs’ complaint for lack of subject matter jurisdiction did not constitute an adjudication on the merits and that, as such, the plaintiffs “[were] not prevented from seeking relief in the proper court . . . .” Id. Accordingly, the court modified its previous order to reflect that its dismissal of the plaintiffs’ complaint was without prejudice. Id. at *3.

Under What Circumstances May A Court Approve A Class Action Settlement Agreement?

Tue, 02 Oct 2007 23:23:00 GMT

In Bragg, the Court approved such a settlement after more than five years of hard-fought litigation between the parties. 2007 WL 2781105, at *3. In evaluating the fairness of the settlement, the Court considered the: (1) "[l]ikelihood of success at trial compared to the settlement agreement"; (2) "[c]omplexity, expense and duration of litigation"; (3) "[j]udgment of counsel"; (4) "[s]tage of the proceeding"; (5) "[l]ack of opposition"; and (6) arms-length negotiations of the parties. Id. at * 3-4. The Court found that the settlement was fair and awarded attorneys fees and costs, for which the settlement agreement also provided, to Plaintiffs’ counsel. Id. at *5.

Classified News: October 3, 2007

Wed, 03 Oct 2007 13:15:00 GMT

Blind shoppers may sue Target in class action suit claiming website was not accessible to blind shoppers.

Supreme Court deals blow to tobacco industry in case linked to Florida.

Jets fan files class action lawsuit against Patriots and Belichick for “deceiving customers” stemming from videotaping of signals by the Patriots during games.

Sonic and Storm season-ticket holders file class action lawsuit alleging team owners defrauded ticket holders.

Are judges taking a harder look at class actions?

EEOC files suit against financial services and media company Bloomberg, LP alleging it discriminated against female employees after they became pregnant and took maternity leave.

Differences Among States in Unconscionability Analyses of Class Action Arbitration Waivers Defeats Class Certification

Wed, 03 Oct 2007 15:07:00 GMT

Can differing state laws on the conscionability of class action waivers in arbitration defeat class certification of nationwide classes? In Lozano v. AT&T Wireless Services, Inc., ~ F.3rd ~, 2007 WL 2728758 (9th Cir. Sept. 20, 2007), the Ninth Circuit upheld a district court's decision doing exactly that.

In Lozano, the plaintiff brought a nationwide class action challenging the sufficiency of AWS' disclosure of its billing practice by which a roaming call made in one month to an area not covered by AWS' cellular network could end up in the following month's billing cycle. AWS moved to compel arbitration pursuant to a provision in the "Welcome Guide" it provided to new customers. That provision, however, prohibited class action arbitrations and the district court therefore denied arbitration holding that the prohibition was procedurally and substantively unconscionable, and therefore unenforceable, under California law.

While AWS' appeal of that ruling was pending, the Court denied class certification of the nationwide class. The court found predominance lacking because AWS clearly intended to compel arbitration and the propriety of class action waivers, therefore, would need to be assessed on a state-by-state basis.

Discovery Going To Common Questions Overcomes Privacy Concerns

Sat, 06 Oct 2007 22:42:00 GMT

In Kallas v. Carnival Corporation, No. 06-0115, 2007 WL 2819385 (S.D. Fla. Sept. 25, 2007), the plaintiffs moved to compel discovery they argued was relevant to certification issues. The court granted the motion, though it did not explicitly address the class issues.

The plaintiffs contracted Norovirus and contend that Carnival was at fault. During the course of discovery, plaintiffs sought information about passengers that suffered from Norovirus over a specific period, as well as information about all other passengers over that period. Plaintiffs argued that the information they sought was relevant not only to determining the class size, but also to showing a common source of infection. Defendants countered that HIPAA prohibited the disclosure the requested information.

The court granted the motion to compel on the grounds that the information is relevant and the other passengers are important witnesses in the case. Plaintiff agreed to the appropriate protective order to alleviate HIPAA concerns, and also agreed not to use the information to solicit additional class members until the class is certified.

Federal Court Concludes That Putative Class's Damages Resulting From Alleged Violations Of The Telephone Consumer Protection Act Are Too Speculative For Removal To Federal Court

Thu, 11 Oct 2007 17:36:00 GMT

Citing Lowery v. Alabama Power Co.¸483 F.3d 1184 (11th Cir. 2007), Chief Judge Callie V.S. Granada held in Cleveland v. Ark-La-Tex Financial Services, LLC, Case No. 07-0444-CG-M, 2007 WL 2460753 (S.D. Ala. Aug. 24, 2007), that the damages sought by a class of individuals whom received faxes allegedly in violation of TCPA were too speculative to warrant removal to federal court under CAFA. The complaint specified that “the total award to named Plaintiffs and the proposed Class shall under no circumstances exceed Five Million ($5,000,000) Dollars.” After considering the defendant’s support for its position that the damages sought by the class indeed exceeded $5,000,000, the Court concluded that the defendant had not met its burden of affirmatively demonstrating, by a preponderance of the evidence, that the jurisdictional minimum has been met.”

Federal Court Closes Door But Opens Window For Proposed Class Of Adults With Mental Retardation

Thu, 11 Oct 2007 17:40:00 GMT

In Susan J. v. Riley, Case No. 2:00-cv-918-MEF, 2007 WL 2702073 (M.D. Ala. Sept. 12, 2007), a group of Alabama adults with mental retardation sued the State of Alabama for violating their constitutional rights. The Court denied their request that a class be certified on the grounds that the proposed class contained persons with substantive claims and persons with procedural claims. In so ruling, however, the Court stated that their claims would be better addressed by dividing the proposed class into subclasses. Accordingly, the Court gave plaintiffs leave to file an amended motion for class certification that proposes subclasses.

Classified News: October 17, 2007

Wed, 17 Oct 2007 15:44:00 GMT

Medtronic faces class action lawsuit over recalled defibrillators.

Third-phase of class action trial ends with jury finding that DuPont should pay $55.5 million to clean-up property after being found liable for creating negligent waste site.

Trial in class action case against Florida Department of Agriculture begins over whether Department improperly destroyed citrus trees in its bid to eradicate citrus canker lesions.

U.S. Supreme Court denies appeal and allows class action lawsuit against Microsoft and Best Buy to proceed.

Is A Generalized Statement That A Potential Class Would “Number In The Thousands” Sufficient To Satisfy The Numerosity Prerequisite?

Thu, 18 Oct 2007 00:00:00 GMT

The plaintiff, a former credit card holder, sought classwide relief under the Fair Debt Collection Practices Act against a collection company that allegedly made false statements in a form debt collection letter sent to multiple credit card holders. Id. at *1. The disputed statements implied that the Internal Revenue Service was involved in collecting the debt at issue in the letter. Id. In attempting to satisfy the numerosity requirement, the plaintiff merely alleged that the "class numbers would number in the thousands." Id. at *3. The court relied on the Eleventh Circuit’s general rule that "[a]lthough mere numbers are not dispositive, . . . ‘less than twenty-one is inadequate, more than forty adequate, with numbers between varying according to other factors.’" Id. (citing Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1553 (11th Cir. 1986)). The plaintiff’s allegations, which did not include an exact number of putative class members or even a close approximation, failed to past muster under the Eleventh Circuit’s general rule. Id. The Court stated that while it may "‘make common sense assumptions in order to find support for numerosity,’ . . . the [c]ourt will not just accept a number pulled out of thin air." Id. at *5. The court concluded that the plaintiff’s failure to provide a "reasonable estimate" of the putative class was fatal to her motion for class certification and, accordingly, denied the plaintiff’s motion. Id. at *4.

Can Filing An Amended Complaint Reset The 90-Day Time Limit For Moving For Certification

Thu, 25 Oct 2007 20:54:00 GMT

The Northern District answered with a resounding "no" in Jones v. Hartford Ins. Co., 243 F.R.D. 694 (N.D. Fla. 2006).

The plaintiffs in this action tried to avoid the Northern District's local rule, which requires a motion for certification be filed within 90 days of the filing of a complaint, by filing an amended complaint, then filing the certification motion. The court did not appreciate the sentiment, holding--in accord with local rules from other jurisdictions--that the amended complaint did not reset the clock.

Moreover, the court determined that the failure to file a timely motion for certification indicates that the class representative will not adequately represent the class.

Court Gives Approval To Cell Phone Insurance Settlement

Thu, 25 Oct 2007 21:23:00 GMT

With a nation-wide class of over 10 million members, the Southern District determined that the essentially non-monetary settlement was fair, adequate, and reasonable.

The plaintiffs in Perez v. Asurion Corp., 501 F. Supp. 2d 1360 (S.D. Fla. 2007), alleged that wireless phone insurers were demanding unreasonable deductibles in phone protection policies, failing to adequately inform customers that refurbished phones were available, and providing replacement phones that cost less than the deductible. The parties agreed to a settlement whereby the defendants would provide phone cards and replacement phone vouchers, pay all settlement costs, notify the insureds before sending replacement phones valued at less than the deductible, and change their advertising.

The court found that the postcard notice was the best practicable notice where it defined the class, described the allegations of the complaint, explained the opt-out and objection procedures, provided the time and place of the final fairness hearing, informed of the right to appear through counsel, warned that class judgment would bind them unless they opted out, and indicated where to obtain a full copy of the settlement agreement.

The court then went through each of the six Bennett factors used in determining whether a class action settlement is fair, adequate, and reasonable, finding that each factor weighed in favor of settlement. Those factors include: (1) the likelihood of success at trial, (2) the range of possible recovery, (3) the point on or below the range of possible recovery at which a settlment is fair, adequate, and reasonable, (4) the complexity, expense, and duration of litigation, (5) the substance and amount of opposition to the settlement, and (6) the stage of proceedings at which the settlement was achieved.

Claims Administrator For Nationwide Class Action Settlement Is Not Subject To A Lawsuit In The State Where It Mailed A Claim Form

Sat, 03 Nov 2007 09:10:00 GMT

In Futch, the plaintiff--who, the court noted, was "an abusive litigant and a serial filer in federal court"--alleged that the class action settlement claims administrator and the bank that was the defendant in the class action giving rise to the settlement conspired to fraudulently charge excessive fees to his credit card and to fraudulently deny his claim for class action settlement proceeds related to those fees.

The plaintiff argued that the court had personal jurisdiction over the claims administrator because the administrator mailed him a claim form in Georgia and was administering a nationwide class settlement fund. The court rejected this argument, pointing out that mail contact is generally insufficient to show the minimum contacts necessary to establish personal jurisdiction.

The court also dismissed the plaintiff's claims against the bank. The class action settlement at issue had resolved claims against the bank asserted by credit card holders who were charged improper finance charges and fees by the bank. The court pointed out that the plaintiff asserted that he belonged to the class of plaintiffs entitled to proceeds under the settlement agreement. The court concluded that the plaintiff's claims against the bank alleging that the bank charged excessive fees were barred by claim preclusion, since they were the same claims asserted by the class.

Classified News: November 5, 2007

Mon, 05 Nov 2007 10:28:00 GMT

Staples, Inc. reaches settlement with California-based assistant store managers in wage and hour class action lawsuit

Merrill Lynch facing securities fraud class action

American Italian Pasta Co. announces $25 million settlement of securities class action lawsuit

District court certifies class in lawsuit against Sears, Roebuck and Co. over false claims about clothes dryers

Qwest Communications agrees to pay $411 million to shareholder groups that opted out of $400 million class action settlement

Plaintiffs’ firms set to ask for $460 million in fees stemming from Tyco securities class action lawsuit

Classified News: November 15, 2007

Thu, 15 Nov 2007 14:24:00 GMT

Hannah Montana fan files class action lawsuit against fan club alleging it failed to provide members priority for concert tickets.

Class action lawsuit filed by consumer group accuses car rental companies of price fixing.

Securities fraud class action lawsuit filed against Flamel Technologies, SA.

Class Action Waiver in Arbitration Agreement is Unenforceable

Mon, 03 Dec 2007 07:28:00 GMT

In S.D.S. Autos, the trial court held that the arbitration provision in the lease unenforceable on the grounds that they violated Florida's public policy and were unconscionable. The First District began its analysis of the class action waivers in the arbitration provisions of the lease by pointing out that the Federal Arbitration Act ("FAA") governed the arbitration provisions. The court noted that defenses to contract enforcement generally applicable under state law--such as voidness for violation of public policy--can render arbitration clauses invalid without offending the FAA.

The court concluded that the class action waivers in the leases "violate public policy by hampering important remedial purposes of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), because they are designed to prevent individuals with small claims . . . from seeking remedies as a class." The court reasoned that where the amount of an individual consumer's actual damages is small, and the statutory scheme provides limited attorney's fees due to the limited damages involved, the enforcement scheme alone cannot "effectively deter violations, . . . if consumer are prevented from seeking relief as a class."

Although noting that courts have not invalidated "every arbitration provision precluding consumers from seeking class-wide vindication of every statutory claim," the First District held that for numerous, small claims brought against motor vehicle dealers under section 501.976, Florida Statutes (2005), class wide relief must be permitted.

First District Court of Appeal Affirms Certification of FDUTPA Class Action

Mon, 03 Dec 2007 08:06:00 GMT

In S.D.S. Auto, the automobile lessees sought certification of a class of similarly situated consumers under Rule 1.220(b)(3) and (b)(3). The First District affirmed certification of the class, citing to its own prior holding in Davis v. Powertel, Inc., 776 So. 2d 971, 974 (Fla. 1st DCA 2000) that “certification does not require proof of each individual putative class member’s actual reliance on an alleged deceptive act because an actionable deceptive trade practice is one which ‘is likely to deceive a consumer acting reasonably in the same circumstances,’ not one upon which any individual ‘actually relied.’”

Trial Court's Failure to Specify Subsection of Class Action Rule under which Class Has Been Certified is Not Fatal

Mon, 03 Dec 2007 08:16:00 GMT

Alabama District Court Awards Attorney Fees At The High End Of The Median Range For A Common Fund Fee Award

Fri, 07 Dec 2007 15:24:00 GMT

In awarding a fee at the high end of awards for a common fund class action, the district judge in Eslava v. Gulf Telephone Company, Inc., Case No. 04-0297-KD-B, 2007 WL 4105977 (S.D. Ala. Nov. 16, 2007), emphasized the extensive amount of professional time required, the novelty and difficult of the case, the undesirability of the case, and the result obtained. The fee awarded, $1,697,058.00, was an amount equal to 30% of the common fund.

Does The Class Action Fairness Itself Provide A Basis For Subject Matter Jurisdiction In Federal Court Simply When the Complaint (Which Was Filed Pre-CAFA) Is Simply Amended To Include A CAFA Claim?

Fri, 07 Dec 2007 15:40:00 GMT

In May’s Distributing Co., Inc. v. Total Containment, Inc., Case No. 2:06-cv-702-MEF, 2007 WL 4180362 (M.D. Ala. Nov. 28, 2007), the court agreed with the majority approach (not yet adopted by the Eleventh Circuit Court of Appeals) that an amendment to a complaint does not commence a new action for CAFA purposes if the amended complaint “relates back” to the original complaint under state law. The court concluded that the amended complaint did indeed relate back to the original complaint under Alabama law, and, consequently, the amended complaint did not “commence” a new action.

Southern District Of Florida Readily Certifies Class Of Under 40 In Wage Action

Wed, 12 Dec 2007 09:07:00 GMT

The small class seemed to work to the plaintiffs’ advantage in satisfying the class requisites in this wage action.

In Moreno-Espinosa v. J & J AG Products, Inc., No. 07-80539-civ, 2007 WL 4246147 (S.D. Fla. Nov. 29, 2007), a foreign national brought an action on behalf of himself and 37 other foreign nationals based on allegations that their employer failed to reimburse for pre-employment expenses.

In a relatively brief opinion, the district court dispensed with all the requirements for a Rule 23(b)(3) action. The small number of similarly-situated plaintiffs seemed to facilitate the court’s analysis. The court also rejected the defendant’s arguments against certification on the grounds that they went to the merits of the case, rather than whether the action could be maintained as a class.

Defendant’s Preemptive Attempt To Strike Class Allegations Is Unsuccessful

Wed, 12 Dec 2007 09:10:00 GMT

The defendant in Romano v. Motorola, Inc., 07-civ-60517, 2007 WL 4199781 (S.D. Fla. Nov. 26, 2007), attempted to remove the class action aspect from the litigation by moving to strike the class allegations from the complaint, but, according to the district court, it failed to meet the difficult burden of demonstrating that class certification was “impossible.” In fact, the court really gave short shrift to the argument and provided little analysis in rejecting it.

Can A Class Representative’s Notice Satisfy Florida's Statutory PIP Notice Requirement For The Entire Class?

Wed, 12 Dec 2007 09:12:00 GMT

In dealing with this issue of first impression, the Southern District of Florida says “no.”

The defendants in Shenandoah Chiropractic, PA v. Nat’l Specialty Ins. Co., No. 07-60492-civ, 2007 WL 4276531 (S.D. Fla. Dec. 3, 2007), successfully argued for the dismissal of the plaintiff’s class complaint on the grounds that Florida’s statutory PIP presuit notice requirement could not be satisfied as to the entire class by the single notice provided by the class representative.

Prior to reaching that issue, the district court first disposed of another matter of first impression by rejecting the plaintiff’s argument that the notice requirement was procedural rather than substantive. Had plaintiff prevailed in its argument, Florida's procedural notice requirement would not apply in federal court because the federal rules of procedure would govern, and they contain no similar notice requirement.

Fourth Time Is Still Not The Charm For Proposed Coupon Settlement

Wed, 12 Dec 2007 09:21:00 GMT

In accord with the vigorous opposition to the settlement, the Southern District of Florida determined that the proposed coupon settlement could not withstand the heightened scrutiny demanded by the Class Action Fairness Act.

In Figueroa v. Sharper Image Corp., No. 05-21251-civ, 2007 WL 2979785 (S.D. Fla. Oct. 11, 2007), the plaintiffs brought a class action based on allegations that Sharper Image’s Ionic Breeze air purifier was falsely advertised and emitted dangerous amounts of ozone. Several other actions based on similar allegations were also pending throughout the country.

After numerous attempts, counsel submitted a third amended settlement agreement for final approval. Counsel even went so far as to procure an affidavit from a leading expert on coupon settlements--the expert on whose opinions many of the opponants relied.

The crux of the proposed settlement was to give customers a $19 coupon for use at Sharper Image, as well as the opportunity to purchase an OzoneGuard at cost. Class counsel was to receive approximately $2 million in fees and costs. That proposed settlement was met with opposition not only from the plaintiffs in the other pending actions, but also from the Attorneys General from over 35 states.

Ultimately, the district court determined that every relevant factor weighed against approval of the proposed settlement agreement. As for procedural fairness, the district court determined that class counsel was bargaining from a position of weakness. Sharper Image had the option of re-filing a motion to stay this action in favor of one of the other pending actions; had they done so, class counsel in this case would have effectively been out of the litigation. Recognizing the state of affairs, class counsel significantly reduced the amount of the coupon it sought during the course of negotiations.

The court also determined that none of the substantive factors favored approval. Of note, the court determined, based on the voluminous submissions, that plaintiffs had a strong likelihood of success on the merits of some of their claims. The court also noted that, given the low value of the proposed settlement, the class would not be risking a great deal by continuing with the litigation.

Florida Court Holds That Defendant is Estopped From Asserting That Plaintiff's Claims are Precluded by Res Judicata

Thu, 20 Dec 2007 13:34:00 GMT

In determining that the plaintiff was excluded from the class and could therefore assert the same claims as the class, the court reasoned that (1) the plaintiff's name was on the list of persons excluded from class membership; (2) the district court handling the class action had waived the plaintiff's violation of the deadline for exclusion; and (3) the defendant could have argued in the class action that the plaintiff should not be on the list of excluded persons, but did not, and was therefore estopped from making the argument "at this late date." The court also concluded that although one defendant was not a party to the class action, "due process concerns are not implicated because it now enjoys the benefits of the class action result."

Classified News: January 3, 2008

Thu, 03 Jan 2008 11:59:00 GMT

Travelers Cos. pays $6 million to settle class action lawsuit alleging business steering in the commercial insurance market.

Two passengers who were on-aboard American Airlines jets on the ground for more than nine hours in 2006 have sued the airline and are seeking class certification.

Class action lawsuit brought against Intuit and H&R Block, tax software vendors, alleging they charged excessive fees for electronic filing.

Merrill Lynch is sued amid allegations it hid billions of dollars in losses during combination with First Republic Bank.

Rehearing Denied In Landmark Eleventh Circuit Removal Case

Fri, 04 Jan 2008 10:22:00 GMT

In 2007, the Eleventh Circuit issued a landmark decision on removal practice in Lowery v. Alabama Power Co. We blogged the decision here. Yesterday, the court denied rehearing en banc and rehearing by the panel. It looks as if Lowery will be with us for awhile.

Non-class Member Seeking Enforcement Of Class Settlement In Wrong Lawsuit Denied Relief

Tue, 08 Jan 2008 11:56:00 GMT

Mr. Fuentes sent correspondence to the defendant and to attorneys who he mistakenly believed to be counsel for the class to determine the status of the class action, his rights as a class member, and information relating to claims procedures.

Upon receiving no response from the defendant or from counsel, Mr. Fuentes filed a motion seeking relief in federal district court. Specifically, Mr. Fuentes requested an order enforcing the terms of the class settlement agreement as to him, and compelling McCarter & English, LLP, who represented the defendant, but who Mr. Fuentes believed to be attorneys for the plaintiff class, to represent him or to allow Mr. Fuentes to exclude himself from the plaintiff class. The defendant objected, contending that Mr. Fuentes was not a member of the Horton class and that, even if he were, McCarter, as counsel for the defendant, did not and could not represent Mr. Fuentes because of its obligations to the defendant. The court agreed and ruled that McCarter could not represent Mr. Fuentes and that, upon closer examination, Mr. Fuentes’s claims actually related to a class action that had been filed in Pennsylvania.

Discussion Thread: The Most Ridiculous Item of the Week

Thu, 17 Jan 2008 09:13:00 GMT

Large Fee to Named Plaintiff and Lack of Notice to Class in Related Lawsuits Lead to Reversal of Class Settlement

Sun, 20 Jan 2008 13:01:00 GMT

The settlement in Grosso involved three separate lawsuits alleging that in connection with title insurance policies issued on refinancing transactions, Fidelity National ("National") or Fidelity Title Insurance Company of New York ("Fidelity of NY") or their agents charged the plaintiffs rates that violated the prescribed "reissue rates" pursuant to Section 626.7825, Florida Statutes.

On January 20, 2005, the named plaintiff ("Named Plaintiff") in one of the lawsuits (i) filed a third amended complaint, without notice to the other two named plaintiffs, (ii) expanded her class action to include them in the amended complaint, (iii) negotiated a settlement with National to settle the claims against both National and Fidelity of NY, (iv) entered into a settlement agreement with both entities, and (v) received class certification and preliminary approval of the settlement from the trial court.

In examining whether the settlement was proper, the Third District concluded that heightened scrutiny applies where a class settlement occurs prior to class certification because the trial court's ability to protect the interests of absent class members is "compromised." In particular, the Third District noted that attorneys jockeying for class counsel position might be tempted to cut a deal with the defendants that undercuts the class members' interests.

The Third District concluded that the trial court failed to apply heightened scrutiny because it certified the class and approved the settlement even though the Named Plaintiff expanded the class to include the other classes and failed give them notice; the settlement limited the defendants' liability to $1.4 million from an estimated $45 million; the Named Plaintiffs' attorneys would receive $500,000; and she was to receive $5,000, an amount one hundred times greater than other class members.

The Third District also held that notice of the settlement was inadequate because, among other reasons, it failed disclose the amount of fees to be awarded to class counsel.

Neil Kodsi Honored with The Most Effective Lawyer Award (Class Action)

Fri, 01 Feb 2008 11:37:00 GMT

Our client was Florida Legal Services, which filed a complaint against the Florida Agency for Health Care Administration in the Southern District of Florida in May 2005 on behalf of Medicaid beneficiaries. The complaint alleged that AHCA was interpreting drug coverage rules far too strictly. The Federal Medicaid Act requires states to follow federal requirements for prescription drug coverage. AHCA argued Medicaid programs should only cover FDA-approved uses for prescription drugs.

The suit claimed that Florida’s restriction on Medicaid payments for Neurontin and its generic version violated federal law. FLS argued that AHCA’s attempt to restrict coverage was a cost-saving measure made at a time when many states are struggling to pay rising prescription drug costs. The late U.S. Magistrate Judge Theodore Klein ruled in February 2006 that AHCA violated federal law by barring most of the non-FDA-approved uses of Neurontin and its generic counterpart gabapentin.

The state withdrew its appeal to the 11th U.S. Circuit Court of Appeals in June 2007.

Is An Arbitration Agreement That Includes A Class Action Waiver Unconscionable?

Fri, 01 Feb 2008 17:00:00 GMT

In Sanders v. Comcast Cable Holdings, 2008 WL 150479, at *1 (M.D. Fla. Jan. 14, 2008), the plaintiffs initially filed their putative class action against Comcast in Florida state court. Comcast removed the action to federal court and moved to stay the case and compel arbitration based on a notice that added arbitration terms to the parties’ service agreement. Id. In response, the plaintiffs asserted that no valid agreement to arbitrate existed and that the terms of the arbitration notice were procedurally and substantively unconscionable. Id.

To ascertain whether the arbitration notice was procedurally unconscionable, the Court examined “the circumstances surrounding the transaction to determine whether [the plaintiffs] had a meaningful choice at the time the contract was entered.” Id. at *7. The Court reasoned that the class action waiver was not procedurally unconscionable because the arbitration notice featured the waiver prominently in all capital letters. Id. Even though the waiver did not appear until the third page of the notice, the Court was not persuaded that its decision would have been any different had the waiver appeared on the first page of the notice or in the title. Id. The Court noted that the arbitration notice was not presented to the plaintiffs “on a take it or leave it basis,” and that the plaintiffs “were free to take advantage of all of Comcast’s services and leave out the provisions of the Arbitration Notice.” Id. Further, the notice provided each plaintiff with “ample time” to opt out of the agreement and informed them that the new arbitration terms “may have a substantial impact on the way in which” they would resolve any disputes with Comcast. Id.

The Court likewise rejected the plaintiffs’ contention that the arbitration notice was substantively unconscionable. Id. The plaintiffs argued that the arbitration notice was substantively unconscionable because it contained the class action waiver and because the agreement imposed a one-year deadline for the plaintiffs to pursue arbitration despite the fact that their cause of action was governed by a four-year statute of limitations. Id. The Court distinguished the instant case from others in which plaintiffs were not provided an opportunity to opt out of an arbitration agreement. Id. at *7-9. By contrast, in Sanders, Comcast provided the plaintiffs with an opportunity to opt out of arbitration and indicated that doing so would not affect the plaintiffs’ cable services. Id. at 10. The court also found that the one-year deadline for plaintiffs to bring any arbitration claims did not contravene public policy, whereas Florida law permits parties to agree to shorten a statute of limitations. Id. at *12.

Ultimately, the arbitration notice presented plaintiffs with the opportunity to control their own destiny as to how any disputes with Comcast would be handled, and the plaintiffs failed to seize upon that opportunity. In the words of the Court, “Plaintiffs did not opt out of arbitration, and Plaintiff[s] must live with that decision.” Id. at *10.

The Court also found the plaintiffs’ argument that they were not bound by the terms of the arbitration notice because they never received it insufficient to rebut the presumption of receipt created when Comcast mailed the arbitration notice with the plaintiffs’ monthly bills. Id. at *6. The Court did not reach a determination as to whether the plaintiffs’ complaint met the requirements for a class action under Federal Rule of Civil Procedure 23.

For an analysis regarding the impact of this case on Florida alternative dispute resolution law, click on the following link.

Eleventh Circuit Confirms The Need For Class Discovery Prior To A Certification Determination

Tue, 05 Feb 2008 11:35:00 GMT

In Mills v. Foremost Ins. Co., No. 06-16458, 2008 WL 45806 (11th Cir. Jan. 4, 2008), the Eleventh Circuit determined that the district erred in making the certification decision as a matter of law where the pleadings alleged very different versions of the facts relevant to the claims at issue and whether class treatment is appropriate.

The district court further erred in denying certification based only on its determination that Rule 23(b)(3)’s predominance requirement was not satisfied where the complaint also asserted that class treatment was appropriate under Rule 23(b)(1) and (b)(2).

A Class Action, By Its Very Nature, Does Not Provide A Basis For Prevailing Party Attorneys’ Fees

Tue, 05 Feb 2008 11:37:00 GMT

The Southern District shot down the Plaintiff’s attempt at prevailing party attorneys’ fees where the only basis for fees was the fact that the litigation was brought on a class-wide basis. The court made clear that a class action, by itself, does not present a proper basis for attorneys’ fees. Kallas v. Carnival Corp., No. 06-201150CIV, 2008 WL 111064 (S.D. Fla. Jan. 8, 2008).

Opt-In Collective Actions Versus Rule 23 Class Actions: Compatibility Of Claims

Tue, 05 Feb 2008 11:39:00 GMT

The Southern District confirmed that claims under the Fair Labor Standards Act and Rule 23 can survive together in a single action only if each claim seeks a distinct form of relief. Resnick v. Oppenheimer & Co., Inc., No. 07-80609-CIV, 2008 WL 113665 (S.D. Fla. Jan. 8, 2008).

Does The District Court Have The Discretion To Modify A Class Opt-Out Deadline?

Tue, 05 Feb 2008 11:40:00 GMT

It does if the district court set the deadline in the first instance, according to the Eleventh Circuit in Valley Drug Co. v. Genera Pharm., Inc., No 06-14055, 2008 WL 114839 (11th Cir. Jan. 11, 2008) (unpublished). Thus, the Court reversed the lower court where it thought it lacked the discretion to grant an extension of time to extend the opt-out deadline to accommodate the appellants’ notice, which was received only a few hours past the deadline.

The Eleventh Circuit also confirmed that the lower court must consider the factors from Pioneer Invest. Servs. v. Brunswick Assocs., 507 U.S. 380 (1993), in the determining whether there exists excusable neglect.

RESPA Claims That Involve Only A “Binary” Determination Are Maintainable As A Class

Tue, 05 Feb 2008 11:44:00 GMT

The Eleventh Circuit determined that, where a claim under the Real Estate Settlement Procedures Act involves only a determination of whether any services where provided at all—as opposed to whether the charge for services rendered was reasonable—individualized factual inquiries do not preclude class treatment.

In Busby v. JRHBW Realty, Inc., No. 06-15308, 2008 WL 151872 (11th Cir. Jan 17, 2008), the Plaintiffs claimed that the Defendant violated RESPA by charging an Administrative Brokerage Commission fee that amounted to a fee for which no service was performed.

Basing its decision on Eleventh Circuit RESPA decisions in the context of Yield Spread Premiums, the district court denied certification on the grounds that individualized issues regarding the reasonableness of the fee would predominate. The Eleventh Circuit reversed, recognizing that, under the YSP-type analysis, two types of RESPA claims are possible. The first involves the reasonableness of the charge and is not suitable for class treatment. The second involves a claim that a fee was charged where no services were provided at all. The Court determined that the latter type of claim involves only a “binary” determination and can satisfy Rule 23 (b)(3)’s predominance requirement.

Can A Plaintiff Bring A Civil Rights Act “Pattern Or Practice” Claim As An Individual Claim Rather Than As A Class Claim?

Thu, 07 Feb 2008 10:23:00 GMT

In Davis v. Coca-Cola Bottling Co. Consolidated, No. 05-12988, 2008 WL 314962 (11th Cir. Feb. 6, 2008), the Eleventh Circuit joined the other circuits to have addressed this issue in holding that a “pattern or practice” claim can be maintained only as a class action.

Section 707(a) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-6(a), permits, among other things, an individual to bring a class action under Title VII based on a pattern of practice of intentional discrimination by an employer against a class of employees. In such an action, the result would be class-wide declaratory and injunctive relief, and possibly individual damages for back pay.

The plaintiffs here sought to bring such a claim. However, they did not seek to bring the claim as a class, but merely as individual claims. The Eleventh Circuit affirmed the district court’s dismissal of the claims, holding that the plaintiffs’ complaint mirrored the hybrid class action permitted by section 707(a) and, therefore, they lacked standing to bring such a claim as individuals because the complaint did not allege a likelihood that they will be victims of the discriminatory policy in the future. The Court also recognized the statute of limitations and res judicata issues that unnamed class members would face if the plaintiffs were proceeded to go forward essentially based on a theory of third-party standing.

Reliance And Class Certification in FDUTPA Case

Fri, 08 Feb 2008 16:40:00 GMT

In Egwuatu, the plainitff alleged in a putative class action that Juffy Lubes in Florida charged an environmental fee when it charged customers for oil changes but allegedly misled consmers into thinking the fee was a tax when it represented profit. The trial court denied the motion for class certification on the ground that there were individualized differences among the putative class members as to whether they paid the fee or knew the fee was not a tax.

On appeal, the plaintiff argued that the First District's much criticized decision in Davis v. Powertel, Inc., 776 So. 2d 971 (Fla. 1st DCA 2001) compelled class certification. The court noted that the Fourth and Fifth Districts had criticized Davis's holding that a plaintiff need not prove reliance to establish a FDUTPA claim. See Philip Morris USA, Inc. v. Hines, 883 So. 2d 292 (Fla. 4th DCA 2003); Black Diamond Props., Inc. v. Haines, 940 So. 2d 1176 (Fla. 5th DCA 2006). Nonetheless, it stood by its prior decision, believing its reading of the statute in Davis "was correct at the time" and "continues to be correct."

The court went on to caution, however, that "because class litigation is possible in a statutory action for a deceptive trade practice," it "does not follow" that it "will always be appropriate." It observed that there might be "many other reasons" for denying class certification of a FDUTPA claim. In the case before it, the record showed that the Jiffy Lube stores used a variety of methods over a period of time to inform customers that the environmental fee was not a tax. Thus, it was not an abuse of discretion for the trial court to find that "would be necessary to make a number of individual inquiries to determine which potential class members had actual knowledge that the fee was not a tax."

Look for us to comment on the split between the courts on the issue of reliance in a FDUTPA case in the days to come.

Classified News: February 11, 2008

Mon, 11 Feb 2008 09:37:00 GMT

Scripps Health settles class action involving pricing and collection practices for uninsured patients.

Elder care operator agrees to unprecedented settlement.

Drop in number of securities class actions may be attributable to Milberg case.

Pending settlement reached in class action against DeBeers diamond company.

Plaintiffs find it difficult to maintain actions against Chinese companies.

How Early Is Too Early To Attack Class Allegations?

Mon, 11 Feb 2008 16:39:00 GMT

Any time before a motion for certification, according to the Southern District in Grabein v. 1-800-Flowers.com, Inc., No. 07-22235-CIV, 2008 WL 343179 (S.D. Fla. Jan. 29, 2008).

Though ruling on other aspects of the defendants' motion to dismiss, the court refused to address the motion to dismiss or strike the plaintiff’s class claim, considering such a motion premature where the plaintiff had not yet moved for certification.

Classified News: February 20, 2008

Tue, 19 Feb 2008 19:32:00 GMT

British Airways and Virgin Airlines tentatively agree to settle class action lawsuit over alleged fixing of fuel surcharge prices.

Class action lawsuit by advocacy group on behalf of thousands of children in state custody seeks changes in Michigan’s foster care system.

Judge grants summary judgment and dismisses class action lawsuit alleging Tyson Foods knowingly hired illegal immigrants to save money on wages.

Computer service giant EDS is sued over allegations it misclassified employees to avoid paying overtime.

Under The AAA Rules, The Arbitrator Has The Authority To Decide Whether Class-Wide Arbitration Will Be Permitted

Sun, 24 Feb 2008 14:15:00 GMT

The court stated that "[f]or all that appears, the arbitrator, upon appointment, will make a determination favorable to the mobile-home companies," which argued that class treatment was not appropriate. Thus, the court suggested that class-wide arbitration should not be permitted.

Another interesting tidbit: this case involved a writ of mandamus not a direct appeal. After the mobile home purchasers commenced the AAA arbitration proceedings against mobile home manufacturers, the manufacturers filed a declaratory judgment action in Alabama state court, asking the judge to stay the arbitration proceedings. The court stayed the arbitration proceedings. Instead of appealing the ruling, the purchasers asked the Alabama Supreme Court for a writ of mandamus directing the lower court to vacate its orders. The Alabama Supreme Court concluded that the writ of mandamus was the appropriate remedy, since the lower court acted without jurisdiction.

Amendment of Complaint Did Not Permit Removal of a Case Filed Before the Enactment of CAFA

Sun, 24 Feb 2008 15:31:00 GMT

In May's, an operator of gasoline distributing facilities sued the manufacturers and distributors of a "flexible pipe" system, alleging that the system was defective. The operator brought the suit in 2003, before the enactment of CAFA. After CAFA was enacted, the operator amended the complaint by (1) reducing the number of counts in the action from ten to a single negligence count and (2) expanding the allegations to include every type of hose the defendants designed or manufactured between 1990 and 1997. The court held that under Alabama law, these amendments related back to the original complaint because (1) the amendments did not add any new claims and (2) the original complaint was not necessarily limited to a single type of pipe. The court held that the amendments could not give rise to federal jurisdiction pursuant to CAFA.

From Shrink Wrap to Stamps: Mailing an "Arbitration Notice" Creates a Binding Arbitration Agreement

Sun, 24 Feb 2008 16:01:00 GMT

In Milligan, cable television subscribers brought a class action their cable provider, asserting various causes of action arising from the cable provider's practice of charging fees for a service protection plan it offered. The cable provider moved to compel the subscribers to arbitrate their claims. The cable provider pointed out that it had mailed an "Arbitration Notice" along with the subscribers' bill stating that unless the subscriber "opted out" of the arbitration clause, it would be bound by an arbitration agreement. The notice also stated that continued use of the cable service constituted acceptance of the new arbitration agreement. The court enforced the arbitration agreements as to subscribers who had received the notice, holding that their "failure to opt out of the agreement [] created an arbitration agreement."

Offer to Compensate Entire Class Moots Class Action Suit

Sun, 24 Feb 2008 16:31:00 GMT

"Are Plaintiffs seriously imploring this court to prohibit future interruptions of satellite radio service? Disregarding for a moment that Plaintiffs' Consumer Agreements with XM contemplate service interruptions, such relief is inconceivable. Unless a satellite is in geostationary orbit directly above the great state of Alabama, this court may be unable to compel the satellite to perform continually with no interruption. Thus, despite Kenny Rogers' assertion otherwise,[ ] satellites may in fact be able to outrun the long arm of the law." The court cited in a footnote to Kenny Rogers' "The Long Arm of the Law."

No Class Actions In Florida County Court

Mon, 25 Feb 2008 10:28:00 GMT

Is it permissible for a class action to be prosecuted in a Florida county court? In Hernando County v. Morana, -- So. 2d --, 2008 WL 462039 (Fla. 5th DCA Feb. 22, 2008), the Florida Fifth District said "no," unless the total aggregate amount in controversy is less than $15,000.

The court confirmed its prior decision in Galen of Florida, Inc. v. Arscott, 629 So. 2d 856 (Fla. 5th DCA 1993) that jurisdiction over a putative class action is conferred on the circuit court when the aggregated claims of the class are greater than $15,000. The Florida Supreme Court approved the reasoning of Galen in Johnson v. Plantation General Hosp. Ltd. Partnership, 641 So. 2d 58 (Fla. 1994).

Judge Sawaya dissented, arguing that neither Galen nor Johnson required mandatory aggregation of putative class claims for purposes of determining the amount in controversy and contending that the decision to aggregate damages should instead be permissive. The dissent did not address, however, what seems to me to be the fundamental question: How can a plaintiff seeking class representation status, consistent with Fla. Stat. s. 57.105, argue that the claims should not be aggregated for purposes of determining the amount in controversy and at the same argue that the claims should be aggregated for purposes of determining class certification? The two positions seem to me to be fundamentally irreconcilable.

Florida First DCA Confirms No Merits Discovery Pre-Certification

Thu, 06 Mar 2008 13:21:00 GMT

Can a putative class representative seek merits discovery prior to a class certification determination? In Commonwealth Land Title Ins. Co. v. Higgins, --- So.2d ----, 2008 WL 595923 (Fla. 1st DCA March 6, 2008), the First District joined the Fifth District in saying "no."

Title insurance purchasers sued Commonwealth alleging that the title insurer failed to give them a discount "reissue rate" for which they may have been eligible when they refinanced their home. In pre-certification discovery, the trial court ordered Commonwealth to produce documents concerning reissue rates actually paid to absent class members, in effect, full merits discovery. The First District granted Commonwealth's petition for writ of common law certiorari to quash that order in a lengthy, thorough opinion.

The court noted that the requested documents were in the possession of over a thousand title insurance agents, including 445 law firms. According to unrebutted evidence, production would have consisted of over 69 million pages from these various agents, the privilege review alone would have cost over $1.6 million, and the cost of copying the closing files alone would exceed $6.9 million. These expenses, in the precertification class context, constituted sufficient irreparable harm to necessitate certiorari review.

The court further observed that precertification discovery generally should be limited to class issues rather than merits issues (citing Policastro v. Stelk, 780 So. 2d 989 (Fla. 5th DCA 2001) and several federal court decisions). Even though there is not always a bright line between class and merits discovery, in the case before the court, it was apparent that the discovery sought was not all necessary for class certification and thus overbroad. The court further noted that pre-certification merits discovery is sometimes used in class actions as a weapon capable of imposing large and unjustified costs on the adversary.

Judge Kahn dissented, stating that he did not believe certiorari review was appropriate in the case and contending that the discovery was relevant to class certification issues.

Note: Carlton Fields represents Commonwealth in this case, although the author of this blog article was not involved in the appeal.

Can A Defendant Use A Rule 68 Offer Of Judgment To Moot A Named Plaintiff’s Class Claims?

Fri, 07 Mar 2008 16:16:00 GMT

Only if the motion for class certification is unduly delayed, according to the Southern District in Sampaio v. People First Recoveries, LLC, No. 07-22436-civ, 2008 WL 509255 (S.D. Fla. Feb. 19, 2008).

Courts are split on this issue and, without any Eleventh Circuit precedent to guide it, the Southern District adopted a Pennsylvania district court’s position in determining that the defendant’s premature Rule 68 offer should be stricken in order to “prevent it from undermining the use of the class action device.”

Section 1983 Claim Concerning Parole Policies Cannot Be Certified As A Class Action

Sat, 08 Mar 2008 16:11:00 GMT

Eleventh Circuit Reverses Denial of Class Certification in RESPA Case

Sat, 08 Mar 2008 16:20:00 GMT

The court stated that even if the counsel's conduct violated ethical non-soliciation rules, the district court was "not then required to find" that the plaintiff was inadequate to represent the class. The court quoted the Seventh Circuit's decision in Halverson v. Convenient Food Mart, Inc., 458 F.2d 927 (7th Cir. 1972), for the proposition that "[o]nly the most egregious misconduct on the part of the plaintiffs' lawyer could ever arguably justify denial of class status." The court also pointed out, still quoting Halverson, that when class counsel acts improperly, "[t]he ordinary remedy is disciplinary action against the lawyer and remedial notice to the class members," not denial of class certification.

Classified News: March 19, 2008

Wed, 19 Mar 2008 10:00:00 GMT

Judge grants class-action status to lawsuit filed on behalf of county jail prisoners alleging that they were improperly treated.

Airborne, an herbal supplement company, will pay $23.3 million to settle a class-action lawsuit brought against the company for false advertising.

Court dismisses securities class action lawsuit filed against Ikanos Communications, Inc.

Dreier law firm commences securities class action lawsuit against PMI on behalf of investors.

Middle District of Alabama Reaffirms That Pro Se Litigants Cannot Serve As Class Representatives

Thu, 20 Mar 2008 06:43:00 GMT

Classified News: March 20, 2008

Thu, 20 Mar 2008 14:03:00 GMT

ACLU sues Palm Beach County schools over "dismal" graduation rates.

Consortium Appointed Lead Plaintiff Despite Objections That Decision To Move For Appointment Was “Lawyer-Driven”

Fri, 21 Mar 2008 17:29:00 GMT

In rendering its ruling, the court followed the procedure outlined in the Private Securities Litigation Reform Act, which contains no requirement that the members of a group of plaintiffs moving for appointment as lead counsel be related, but rather that any such group fairly and adequately protect the class. The court determined that the prior relationships of the movant group and connection between its members was an appropriate factor for the court to consider in its calculus of whether the group would fairly and adequately protect the interests of the class, but it was that test, and not the test of relatedness, with which the court said it should concern itself. In so doing, the court concluded that the consortium had the greatest financial interest in the relief sought by the class and otherwise satisfied the requirements of Rule 23 and, therefore, could best protect the interests of the class.

Court Rules That It Is “Plain Error” To Allow A Pro Se Inmate Plaintiff To Represent Others In A Class Action

Fri, 21 Mar 2008 17:00:00 GMT

Under The Class Action Fairness Act, Must A Subclass Alleged In The Alternative To A Principal Class Satisfy The Same Jurisdictional Amount For Certification?

Fri, 21 Mar 2008 16:45:00 GMT

In Rebman, two named plaintiffs sought to serve as class representatives for all individuals or entities throughout the United States who bought or sold used textbooks at unfair prices at college bookstores affiliated with Follett. Follett, who is in the business of managing bookstores throughout the United States, routinely entered into contracts that determined the prices at which it would sell and purchase used books. The contracts also determined the profit margin for the gained from the transactions for both Follett and the bookstores. The named plaintiffs alleged that they were intended-third party beneficiaries of one such contract, and that Follett breached the contract by overcharging them for the purchase of used books, and by underpaying them in the buyback of used books.

As a threshold issue, the court analyzed whether the named plaintiffs individually had standing to bring causes of action for breach of contract. Finding that the Follett contracts did not specifically and clearly express an intent to benefit third parties like the named plaintiffs, the court ruled that the named plaintiffs lacked standing. The court then turned its attention to three narrower subclasses proposed in the alternative to the principal class. The court determined that each of the proposed subclasses suffered the same fatal error with regard to the issue of standing. In anticipating the argument that one of the subclasses could have proceeded solely on a non-breach of contract claim brought under the Florida Deceptive and Unfair Trade Practices Act, the Court ruled that such a subclass could only proceed if the named plaintiffs showed that the amount in controversy exceeded $5 million—the threshold amount for a federal court to exercise its jurisdiction under the Class Action Fairness Act. Because the named plaintiffs produced no showing of damages that would amount to $5 million, the court denied certification, but did so without prejudice and with leave to refile.

First Circuit Requires "Searching" Inquiry Into Merits To Determine Class Certification

Mon, 31 Mar 2008 10:21:00 GMT

In New Motor Vehicles Canadian Export Antitrust Litig., the plaintiffs argued that, from 2001 to 2003, the currency exchange rate differential between the strong U.S. dollar and the weaker Canadian dollar created arbitrage opportunities in the gray market to sell lower-priced Canadian cars in the United States. They contended, however, that the U.S. automobile manufacturers conspired to restrict the flow of Canadian cars into the U.S. by, among other things, refusing to honor warranties on Canadian cars in this country, discouraging dealers from installing domestic gauges on Canadian cars, mandating no export clauses in sale agreements, charging exporting dealers with penalties, and withholding information about safety recalls from exporting customers. They argued that these measures suppressed the supply of Canadian cars in the United States and led to increases in U.S. car prices.

The district court certified six exemplar classes of state damages claims. The central question on appeal was whether the predominance requirement was satisfied because plaintiffs asserted sufficiently common proof of impact. The plaintiffs relied on expert testimony from Professor Robert Hall of Stanford, who opined that statistical models would account for heterogeneity across vehicles, dealers, consumers, and time. The defendants' expert, Joseph Kalt of Harvard, disputed that common impact existed, arguing that the gray market was too spotty, erratic, and insignificant to affect the national market, even absent collusive activity. Faced with this "battle of the experts," what was the court to do?

The First Circuit called it a "settled question" that some inquiry into the merits was required. It was "less settled" what degree of merits inquiry was required. The court noted a "spectrum" suggesting "substantial differences" among the various federal circuits. The Second, Fourth, Fifth, and Seventh Circuits, for example, required rigorous, though preliminary, findings regarding common proof. The Third and Eighth Circuits, on the other hand, did not require "findings" and expressed caution that a merits inquiry may not be necessary. The First Circuit stated that, under its own precedent, a "searching inquiry" was necessary when there were disputed basic facts and where plaintiffs offered a "novel theory of legally cognizable inquiry." The merits inquiry needed to focus on "the viability of that theory and the existence of facts necessary for the theory to succeed." Moreover, the court should weigh the testimony of both sides' experts on making this determination.

In applying this standard, the court agreed with the defendants that plaintiffs' "but for" theory of causation required a flood of significantly lower-priced Canadian cars coming across the border for resale in the United States. In its view, Professor Hall had not answered questions regarding how the size of the but-for influx of cars would be established or how large that influx would have to be to affect the national market sufficiently to raise prices. Nor did he explain how his models could separate out the effects of permissible vertical restraints from the effects of impermissible horizontal restraints. He further did not show how each class member was injured at the consumer level by paying inflated prices. The "intuitive appeal" of an inference from upward pressure on national pricing was not enough.

The specifics of the antitrust evidence aside, it is now clear, at least in the federal courts, that plaintiffs no longer credibly can cite Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) for the proposition that the court is precluded from a preliminary merits inquiry on class certification. No longer are defendants' hands tied in defending class certification based on the way the plaintiff has framed the allegations in the complaint or the testimony offered by a plaintiff's expert.

Newsflash: Second Circuit Reverses Light Tobacco Class Certification

Thu, 03 Apr 2008 17:15:00 GMT

Today, in McLaughlin v. American Tobacco Co., Docket No. 06-4666 cv (2d Cir. April 3, 2008), the Second Circuit REVERSED Judge Weinstein's controversial certification of a class of cigarette smokers who allegedly were deceived into believing that smoking light cigarettes was healthier than "full flavored" cigarettes.

Common issues did not predominate over individual issues because each plaintiff would have to prove reliance, injury, and damages. In addition, many putative class members' claims were time-barred.

The opinion is sure to be carefully analyzed over the coming days. For now, the following quotes may be of interest:

"While redressing injuries caused by the cigarette industry is 'one of the most troubling ... problems facing our Nation today, not every wrong can have a legal remedy, at least not without causing collateral damage to the fabric of our laws." slip op. at 3-4 (internal citations omitted).
"Rule 23 is not a one-way ratchet, empowering a judge to conform the law to the proof." slip op. at 4.

The court rejected the plaintiffs' and district court's invitation to craft a fraud on the market theory that would permit a presumption of reliance, as in the securities litigation context. In the context of supposed reliance on marketing representations, "one motivation does not fit all." slip op. at 18.

The plaintiffs' loss-causation theory likewise failed as a matter of law. The plaintiffs postulated that they were overcharged for light cigarettes because the deceptive marketing campaign drove up demand and therefore prices. But, according to the court, establishing that the misrepresentations caused an increase in market demand would require individualized proof. If smokers purchased lights for reasons other than increased health, plaintiffs couldn't show that their economic injury was directly caused by the fraud.

The court additionally rejected plaintiffs' theories of injury -- loss of value and price impact -- as implausible as a matter of law. Neither theory is cognizable under RICO. Note that the court did not hesitate to examine the plausibility of these merits theories at the class certification stage.

Finally, the district court's theory of aggregated damages created an impermissible fluid recovery. This was a violation of both due process and the Rules Enabling Act. "Roughly estimating the gross damages to the class as a whole and only subsequently allowing for the processing of individual claims would inevitably alter defendants' substantive right to pay damages reflective of their actual liability." slip op. at 33.

The court concluded its blockbuster opinion by rejecting the plaintiffs' invitation to consider certifying a (c)(4) issue class. Certifying the issue of the "defendants' scheme to defraud" would not materially advance the litigation because it would not dispose of the larger issues such as reliance, causation, injury, and damages.

Classified News: April 7, 2008

Mon, 07 Apr 2008 10:35:00 GMT

Florida nursing home residents file class action against State of Florida under Americans with Disabilities Act.

Federal judge dismisses shareholder class action lawsuit against Hewlett-Packard Company’s board of directors.

In current economy, attorneys specializing in securities class actions expect more lawsuits with smaller settlements.

In potential first, video game fan asks judge to certify class action involving online role-playing games.

Federal judge certifies class in lawsuit challenging the manner in which inmates held for minor offenses are searched at the Burlington County (PA) Jail.

Two weeks before final fairness hearing in California Ford Explorer lawsuit, consumer group files legal challenge questioning settlement's fairness.

Oops. Wrong Party Sues.

Wed, 09 Apr 2008 12:47:00 GMT

What happens to a class certification order when the named plaintiffs lack standing to bring their claims? As demonstrated in Ell-Cap/Diversified 75 Naples Estates v. Naples Estates Homeowners Ass'n, 975 So. 2d 577 (Fla. 2d DCA 2008), it gets vacated.

The trial court certified a class of mobile home owners alleging that the owner of the park in which they lived improperly sold the park to a third party without giving the owners a contracted-for right of first refusal. On appeal, the Second District held that the contract gave the right of first refusal to the mobile home owners' association, not the individual homeowners themselves. Thus, the homeowners lacked standing to bring their class claims, requiring reversal of the class certification order.

Interestingly, the court was not reticent to delve into the merits of the contract dispute in order to determine the standing issue. Although not noted in this opinion, other Florida cases make clear that standing issues should be adjudicated before class certification.

Middle District Of Florida Approves ERISA Class Action Settlement

Fri, 11 Apr 2008 10:52:00 GMT

After engaging in a thorough analysis of whether the settlement sufficiently withstood the fairness requirements imposed under Rule 23, the Court awarded $2,985,000.00 to the plaintiffs for the settlement, 26% of which would go to their counsel for attorneys’ fees, along with $76,602.52 for litigation expenses.

Florida Appellate Court Weighs In On Class Action Settlement

Tue, 22 Apr 2008 11:25:00 GMT

In Nelson v. Wakulla County, -- So. 2d --, 2008 WL 1774184 (Fla. 1st DCA April 21, 2008), Florida's First District Court of Appeal addressed several aspects of class action settlement practice: (a) the nature and method of disbursement from a common fund, (b) attorney's fees and costs, and (c) class notice.

Background

The plaintiffs, taxpayers, challenged a county ordinance permitting special assessments on improved real property to pay for emergency medical services. The minimum assessment was $35 per parcel. The trial court declared the ordinance unconstitutional and also certified a class of property owners who had paid the assessment. The parties subsequently entered into several settlement agreements, all of which the trial court rejected. The parties appealed the latest rejection.

Common Fund

The trial court rejected the payment mechanism because the parties' settlement agreement did not create an actual common fund, but instead provided that the county could apply credits to future tax payments. It called the payment figure used in the settlement a prohibited "conditional value." The First District ruled that this rejection rested on a misunderstanding of the common fund doctrine. There did not need to be a "cigar box full of cash" to represent the fund. The county's agreement to pay a credit was sufficient.

The court did note, however, that, when assessing the value of the settlement for purposes of awarding attorney's fees and costs, the pro rata sum attributable to persons who opted out should be excluded.

Attorney's Fees and Costs

The trial court's rejection of the settlement also was based on the settlement agreement's statement that the attorney's fee award was an integral feature of the settlement and its award of fees and costs pursuant to a "clear sailing provision. Under a "clear sailing" provision, the defendant agrees not to contest the amount to be awarded by the court so long as it falls below a negotiated ceiling. The First District ruled that clear sailing agreements do not automatically invalidate class action settlements, although they do require the circuit court to carefully scrutinize the fee award to be sure it is fair and reasonable. The appellate court did go on to hold that a trial court has the discretion to reject a settlement making an attorney's fee award a "package deal" with the settlement amounts awarded to the class. A careful reading of the opinion suggests, however, that the court did not make such a provision automatically invalid.

Class Notice

The trial court also rejected the parties' version of the class notice and wrote its own version. With a minor exception, the First District upheld this decision and called the trial court's notice "an unbiased account of the litigation." It observed that class notice has due process implications and must be concisely drafted and easily understood.

Classified News: May 16, 2008

Fri, 16 May 2008 16:56:00 GMT

Carrier faces class action lawsuit for allegedly fixing prices on shipping to and from Puerto Rico.

A federal judge decides to dismiss a class-action lawsuit after the company last year issued the largest recall of full-size cribs in the United States.

West Palm Beach Menorah Gardens cemetery will finally be rededicated Sunday, after two class action lawsuits alleging grave desecration settled for $100 million in 2003.

A Santa Clara County judge has certified an overtime-related lawsuit against Sun Microsystems Inc. as a class action.

Is the Lowery holding limited to cases removed under CAFA?

Tue, 27 May 2008 13:54:00 GMT

In Siniard v. Ford Motor Co., --- F.Supp.2d ---, 2008 WL 2132078 (M.D. Ala. 2008), a product liability case brought by the estate of a Tennessee resident who died in a motor vehicle accident in Alabama, Chief Judge Fuller recently confirmed that "it is quite plain from the text of Lowery that the holdings of the case are not limited solely to cases removed under CAFA." In Siniard, Ford filed a Notice of Removal thereby removing the case from state court. Plaintiff filed a motion to remand the case back to state court. In response, Ford argued, inter alia, that Plaintiff's complaint, which sought unspecified compensatory and punitive damages for the wrongful death of Ms. Siniard, involved an amount in controversy exceeding $75,000 exclusive of interest and costs. In support of this argument, Ford asserted that other Alabama courts routinely entered wrongful death verdicts in excess of $75,000 in product liability claims. Citing Lowery, Judge Fuller held that in cases where the complaint does not specify the amount of damages sought, the removing party always bears the burden of establishing the jurisdictional amount by a preponderance of the evidence. In addition, Judge Fuller noted that Lowery specifically rejected Ford's attempt to satisfy its burden of proving the amount in controversy by reliance on jury verdicts in similar cases. Because Ford failed to meet its burden in this regard, Judge Fuller remanded the case back to state court.

Class Is Not Entitled To "Unearned Premiums" Paid For Guaranteed Auto Protection Policies

Thu, 29 May 2008 18:00:00 GMT

In Massih, the class was comprised of individuals who had financed the purchase of their cars through loans. They purchased guaranteed auto protection insurance policies, which covered any portion of the loan remaining after their automobile insurance paid the determined amount for a total loss of the car.

The court held that the insureds were obligated under the policy to provide notice of cancellation of the policy when they decided to pay off their car loans. Since the named plaintiff did not provide notice when he paid off his loan early, he was not entitled to a refund of any portion of his premium.

Classified News: June 4, 2008

Wed, 04 Jun 2008 16:46:00 GMT

H&R Block owned company sued in class action suit for allegedly targeting minorities in Massachusetts for subprime mortgages.

Multiple lawsuits arising from a data breach at Hannaford Bros. Co. are likely to be consolidated into a single class-action lawsuit.

AT&T agrees to refund unauthorized third-party charges for ring tones in Florida.

Florida attorney files a class-action lawsuit against Bank of America alleging it over-charged customers when recalculating payments on adjustable-rate mortgages.

Brocade Communications Systems has agreed to pay $160 million to settle a securities class-action lawsuit related to backdating of stock options.

Middle District Grants Petition For Attorneys’ Fees Totaling $3,744,500.00

Fri, 06 Jun 2008 11:39:00 GMT

Applying the “common fund” doctrine, and noting that the “Supreme Court and the Eleventh Circuit have held that it is appropriate that the attorneys’ fees be awarded on the entire Maximum Gross Settlement Amount even though the amounts to be paid to settlement class members who do not file a claim form will remain the sole and exclusive property of the defendant,” the Court found counsel’s request to be reasonable and granted the petition. The Court reduced the award by $35,000.00, however, as a sanction imposed pursuant to Defendants’ Motion to Enforce Settlement and for Contempt, or in the Alternative, Sanctions for Plaintiffs’ Counsel’s and Class Administrator’s Surreptitious Issuance of Improper Class Notice.

Florida Court Overturns Certification In "Premature Wear" Automobile Defect Case

Thu, 12 Jun 2008 15:07:00 GMT

The plaintiff sought to represent a class of all Florida purchasers of 1999-2001 Kia Sephia automobiles. She sought the recovery of economic losses ostensibly due to the loss in value of the vehicle resulting from the alleged design defect. She sued under the Magnuson Moss Warranty Improvement Act, the Florida Deceptive and Unfair Trade Practices Act, and breach of express and implied warranties.

The Third District reversed the trial court's class certification order in what is becoming a familiar pattern in automobile defect cases. See Volkswagen of Am., Inc. v. Sugarman, 909 So. 2d 923 (Fla. 3d DCA 2005); Ortiz v. Ford Motor Co., 909 So. 2d 479 (Fla. 3d DCA 2005). It noted that "[c]lass actions are an exception to the general rule that litigation is conducted by, and on behalf of, individual named parties only." It further reiterated the "practical guidance" of the Second District in Humana, Inc. v. Castillo, 728 So. 2d 261, 266 (Fla. 2d DCA 1999) that the predominance inquiry must be guided by how a class action trial would proceed. From this standpoint, "[t]he opportunity to adequately and vigorously present material defenses lies at the very core of the adversarial process."

The court rejected the plaintiff's portrayal of the class as a "large, unified group that has suffered a uniform, collective injury." First, the brake systems in various model Kias changed over time. This resulted in different warranty repair rates (which diminished over the class period). Accordingly, it was "scientifically and logically impossible to conclude that any performance issues for these three model years were the result of a common design." Indeed, "to proceed at the level of abstraction urged by [the plaintiff] would raise due process concerns."

Second, the plaintiff defined the class to include both car owners whose brakes manifested a problem and owners whose brakes performed satisfactorily. The court aligned itself with the "majority of jurisdictions" that denied certification of overbroad classes like this.

Third, without individual inquiry, there was no way to determine whether the need for a specific repair was based on normal wear, a defective part, driver error, or a host of other possibilities.

The court also held that individual legal questions predominated over common questions with respect to both causation and damages for the FDUTPA and warranty classes. It further ruled that the class action device in this type of automobile defect litigation is not superior to either individual suits under the state Lemon Law or the National Highway Safety Act recall procedures.

In sum, "[i]n complex cases such as this, where no one set of operative facts establishes liability, where no single proximate cause applies to each defendant, and where individual issues outnumber common issues, trial courts should be hesitant to certify class actions."

Does Less Mean More When It Comes Time To Appeal A CAFA Remand Decision?

Fri, 13 Jun 2008 15:15:00 GMT

Class Action Fairness Act lawyers know that 28 U.S.C. s. 1453(c)(1), the appeal provision of CAFA, states that application to appeal a remand order must be made "not less than 7 days after entry of the order." Most courts, including the Eleventh Circuit, have stated that this is a scrivenor's error such that "less means more" and the application to appeal must be made within 7 days of the order. See Miedema v. Maytag Corp., 450 F.3d 1322, 1326 (11th Cir. 2006). What does Judge Easterbrook of the Seventh Circuit say about this?

In Spivey v. Vertrue, Inc., -- F.3d --, 2008 WL 2357099 (7th Cir. 2008), he says less does not mean more, choosing instead to follow the plain language of the statute. An application to appeal must be made "not less than 7 days" after the entry of the order. "That Congress has written a deadline imprecisely, or even perversely, is not a sufficient reason to disregard the enacted language."

Does this mean litigants who file an application to appeal before the seventh day after an order get bounced? No. A premature notice of appeal, under FRAP 4(a)(2) "remains on file and springs into effect when the decision becomes appealable." According to the court, "[i]t makes sense to use the same approach for a premature permission for leave to appeal."

Does this mean litigants have forever to appeal? "No way." FRAP 5(a)(2) and 4(a), read together, say that when a statute does not provide for a terminal date for appeal, a petition must be filed within 30 days.

This reading, according to the court, gives due deference to the plain language of the statute and yet "avoids nasty surprises for litigants who believe - and are entitled to believe - that courts will honor the language in the enrolled bill that the President signs."

Does the Seventh Circuit Disagree With Lowery?

Fri, 13 Jun 2008 15:35:00 GMT

Not directly. However, the court's opinion seems to signal disagreement with the Eleventh Circuit's approach. The court reversed a remand of a class action under CAFA, where the plaintiff alleged that putative class members' credit cards were charged without authorization. The district court remanded on the ground that the amount in controversy had not been satisfied. The defendant calculated the amount as exceeding $5 million because its billings for four of the 22 challenged programs exceeded $6 million and attached an affidavit to that effect to the notice of removal. The district court found that the defendant's proof failed because it did not admit which portion of the charges was unauthorized.

Judge Easterbrook, however, declared that the defendant's burden of "describing how the controversy exceeds $5 million" is a "pleading requirement, not a demand for proof." "Discovery and trial come later." The burden is simply to plausibly explain how the stakes exceed $5 million.

The court did not mention Lowery. Suffice it to say that this is a very different framework for removal analysis.

Fifth District Reaffirms - No Merits Discovery Prior to Class Certification

Fri, 20 Jun 2008 11:00:00 GMT

Classified News: June 20, 2008

Fri, 20 Jun 2008 17:02:00 GMT

Milberg Weiss to pay $75 million to settle federal kickback case involving class-action lawsuits.

Illinois appeals court reinstates $120 million judgment against owners of the former Clark Oil refinery, reversing trial court’s decision to dissolve the class-action suit after a verdict was reached.

Investor files class action lawsuit against Wells Fargo, claiming the company misrepresented the liquidity of auction-rate securities.

Judge certifies class action in lawsuit challenging Wisconsin’s policy of allowing in-state law school graduates to become lawyers without passing the bar exam.

Jury orders Kia Motors Corporation to pay New Jersey car owners $6 million for breach of warranty arising from defective brake systems.

Alabama Court Declares the Fair and Accurate Credit Transactions Act Unconstitutional

Mon, 23 Jun 2008 06:43:00 GMT

The court determined that the words "not less than $100 and not more than $1,000" were "an almost perfect illustration of the concept of 'void for vagueness.'" The court pointed out that statute provided no guidance for a jury to determine how to choose between awarding $100 and $1000 in damages.

The court also concluded that the provision for punitive damages in the statute was contrary to the Supreme Court's holding in State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 426 (2003) that punitive damages must bear a reasonable and proportionate relationship to actual damages. The court concluded that since FACTA permitted punitive damages "without the suffering of any harm," it was "inherently disproportionate."

The court also attacked the structure of the statute, noting that a customer could return to the same vendor five times and be entitled to damages for five separate FACTA violations. The court concluded that "[t]he possibility for misuse of credit card by customers reaches astronomical proportions more than the possibility of misuse of credit card information by thieves."

Alabama Court Certifies Class of Pharmacies Claiming That They Were Not Properly Reimbursed Under The Terms of Their Contracts With Pharmacy Benefits Manager For Drugs Sold To Patients

Mon, 23 Jun 2008 07:59:00 GMT

The contracts provided that the pharmacies would be reimbursed based on a percentage discount from the Average Wholesale Price ("AWP") for each brand drug prescription filled by the pharmacy. The contracts defined AWP as "the current average wholesale price of a Covered Drug . . ." The pharmacies argued that the term "current" in the definition required the benefits manager to use the most frequent AWP updates available, which would have been daily updates--not the weekly updates used.

The court held that the plaintiffs' claims were typical of the class, even though they did not contract directly with the benefits manager because they "share[d] the same 'essential characteristics' justifying treatment as a class."

The court held that the plaintiffs were adequate representatives, despite the defendants' argument, based on the plaintiffs' deposition testimony, that the plaintiffs demonstrated a fundamental lack of knowledge about the case. The court noted that "it is not a requirement of Rule 23 that the named representatives be the 'driving force' behind the litigation."

The court rejected the defendants' argument that the plaintiffs had a conflict of interest with the class because they had a low amount of damages relative to a few of the putative class members and thereby had lacked sufficient incentive to adequately represent the class. The court concluded that "the fact that named have a small stake in the litigation does not make them inadequate; indeed, it is the principal justification for class actions-using a cost spreading mechanism to allow plaintiffs to bring suits that otherwise would not be profitable."

The court also rejected an argument that a plaintiff's failure to accurately answer an interrogatory rendered it inadequate, concluding that only "the most egregious misconduct" could justify denial of class status.

The court also rejected an argument that it would be necessary to examine each class member's belief and understanding regarding the term "current" to resolve the ambiguity of the term and that individualized issues of waiver should preclude class certification.

Increased Class Action Filings In Federal Court After CAFA

Wed, 25 Jun 2008 12:04:00 GMT

According to the May 2008 ABA Journal, the Federal Judicial Center has released findings on which circuits experienced significant increases in the filing of class actions after the enactment of the Class Action Fairness Act. The bottom line is that more conservative circuits had fewer increases in filings and more liberal circuits had greater increases in filings. Do you want to know where the Eleventh Circuit fell?

Second Circuit: 200 percent.
Third Circuit: 513 percent.
Fifth Circuit: 305 percent.
Ninth Circuit: 560 percent.
Eleventh Circuit: 488 percent.

How Specific Must An Opt-Out Notice Be?

Thu, 26 Jun 2008 11:41:00 GMT

In In re Managed Care Litigation, No. 00-1334-MD, 2008 WL 2329448 (S.D. Fla. June 4, 2008), the court decided that an opt-out notice containing (1) the name of the person signing the notice, (2) the name of the entity at issue, (3) the address of the entity, (4) a telephone number, (5) and the Federal Tax ID Number of the entity, was sufficient to establish that the entity at issue opted out of the prior class action and was not precluded from going forward with a separate action.

Predominance Element Lacking In National Breach Of Employment Contract Action Against FedEx

Thu, 26 Jun 2008 11:43:00 GMT

Variations in contract law across the nation, along with factual issues over whether unpaid work was actually performed, led to a finding that individualized issues of both law and fact predominated over issues common to the proposed class.

In Clausnitzer v. Federal Express Corp., 248 F.R.D. 647 (S.D. Fla. 2008), the plaintiffs sought to certify a class based on claims that FedEx, their employer, failed to pay employees for work performed during “gap” times—the time between their scheduled start time and the time they manually punch the time clock. (Employees are paid only for their scheduled time.).

The court first determined that the class definition was inadequate because the definition relied on statutes of limitations to define the relevant class, yet the effect of the various statutes of limitations would vary greatly by state when applied to the breach of contract claims. For example, some states recognize contractual limitations that vary the statutory limitations period, while others do not.

The court also determined that individualized issues of law predominate because the breach of contract claims were based on employment manuals, and various states differ on whether a breach of contract claim can be based on an employment manual. In further determining that individualized issues of fact also predominate, the court noted conflicted factual evidence as to whether the employees were even working during the “gap” times.

Causation Issues Make Class Treatment Unsuitable In Ongoing Litigation Over Impact Resistant Glass

Thu, 26 Jun 2008 11:49:00 GMT

The Southern District of Florida determined in Jones v. Jeld-Wen, Inc., No. 07-22328, 2008 WL 2433213 (S.D. Fla. June 13, 2008), that individualized causation issues precluded certification of a class seeking damages for allegedly defective windows.

The plaintiffs in this action were homeowners seeking certification based on claims that the impact resistant glass installed in their homes was defective. The defendants (or more accurately the third-party defendants who actually manufactured the products) successfully argued that individualized issues predominate because the jury must determine, on a house by house basis, whether the defective resin in the windows was the legal cause of the damages for each pane of glass.

Classified News: June 30, 2008

Mon, 30 Jun 2008 11:06:00 GMT

Collector files class action lawsuit against Louis Vuitton for failure to provide sufficient documentation for limited edition handbags.

On same day that Tyson Foods Inc. settles false advertising lawsuit brought by competitor, lawyers file class action in same court on behalf of customers across the country accusing Tyson of consumer fraud, breach of express warranty and unjust enrichment.

Seven workers file class action lawsuit against several Verizon Communications contractors and subcontractors, alleging they were not paid minimum wage and overtime wages.

Supreme Court’s ruling cutting punitive damages awarded to Alaskans harmed by Exxon Valdez spill may have far-reaching implications for all class actions involving significant damages.

New Jersey town files class action lawsuit suing travel websites accused of shortchanging towns out of hotel occupancy taxes.

Mannatech, Inc. reaches settlement in derivative shareholder lawsuits.

Classified News: July 27, 2008

Sun, 27 Jul 2008 19:21:00 GMT

Cleveland law firm to disburse millions in u nclaimed class action awards to charities.

Class action lawsuits filed by shareholders of TRM Corp., a provider of ATM services and products, are dismissed.

A health insurance company charged with systematically paying too little for out-of-network care to its members has agreed to a $255 million settlement of class-action suits.

How Much Evidence Is Necessary To Support Removal Under CAFA?

Tue, 29 Jul 2008 00:00:00 GMT

More than a conclusory statement about the aggregate sum of the amount in controversy in an affidavit by an officer of the defendant.

In PHLD Partnership v. Arch Specialty Ins. Co., 2008 WL 2635550, No. 08-60688 (S.D. Fla. July 3, 2008), the defendant removed the case to federal court under CAFA, relying on an affidavit by its president as evidence that the jurisdictional requirements were satisfied.

The district court had little trouble concluding that remand was necessary where the affidavit contained only a conclusory allegation that an aggregate of $5,000,000 was at issue, and the affidavit failed altogether to address whether the class consists of more than 100 members.

Can Fee Award Using A Lodestar Multiplier That Relies On Factors Condemned By The Supreme Court Still Be Affirmed?

Tue, 29 Jul 2008 00:04:00 GMT

Yes, but only so long as Judge Carnes is constrained by the prior panel precedent rule.

In Kenny A. v. Perdue, Nos. 06-15514, 06-15874 (11th Cir. July 3, 2008), the plaintiffs’ attorneys were awarded costs and fees, which included a 1.75 lodestar multiplier, for their work in securing a consent decree based on a § 1983 class action brought on behalf of Georgia foster children.

Judge Carnes, writing for the Court, found fault in just about every aspect of the order awarding fees. For example, Judge Carnes noted the attorney affidavits filed in support of the reasonableness of the award were not “disinterested” in light of the fact that the attorneys who authored the affidavits have an undeniable self-interest in a large fee award. The situation prompted Judge Carnes to present this apt quote: “It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place.”

Moving on to the lodestar enhancement, the court conducted an in depth analysis as to why the factors employed by the district court are directly contrary to Supreme Court precedent. Nonetheless, Judge Carnes was constrained to affirm the award by the prior panel precedent rule, as two Eleventh Circuit decisions construed those Supreme Court decisions (wrongly in the Court’s opinion) as permitting those factors as a basis for a lodestar multiplier.

Judge Wilson specially concurred, finding that those prior Eleventh Circuit decisions were properly decided.

All Quiet On The Western Front

Thu, 21 Aug 2008 11:02:00 GMT

We have hit a quiet spell in terms of Florida class action law (although the federal courts remain active and we should have some posts up on federal cases shortly). There is a small piece of news on the Florida state court front.

In Jackson v. Southern Auto Finance Co., 2008 WL 3850864 (Fla. 4th DCA Aug. 20, 2008), the Fourth District reversed a summary judgment granted to a lender in an auto repossession case filed as a class action. The summary judgment merits are unrelated to class certification law, but the court did reject the defendant's argument that an offer to settle with the named plaintiff for the full amount of damages sought made the class action moot. It stated: "Nor do we agree with the lender's argument that its unaccepted settlement offer for the full amount of plaintiff's claim, a practice which is known as 'picking off' a class representative, made this case moot. Neither Florida nor the federal courts sanction that practice." The court did not state whether a motion to certify a class had been filed at the time of the offer. Under prior precedent, the filing of the motion to certify a class is a trigger for when a proposal to settle becomes an attempt to "pick off" the named plaintiff.

Does The Potential For A De Minimus Recovery Defeat Class Certification?

Thu, 28 Aug 2008 13:28:00 GMT

In Gaalswijk-Knetzke, the plaintiffs filed a complaint alleging that the defendant, a debt collection agency, committed violations under the federal Fair Debt Collection Practices Act (the “FDCPA”) and the Florida Consumer Collection Practices Act (the “FCCPA”). The plaintiff claimed that the defendant sent debt collection letters that were improper in both form and legibility to over 16,000 individuals. Interestingly, the defendant averred that the letters were sent to over 156,000 individuals. Although the parties jointly stipulated that several of the requirements to certify a class under Federal Rule of Civil Procedure 23 were met, they sharply disagreed over the issue of whether a class action would not be a superior means of conducting the litigation under Rule 23(b)(3).

The defendant contended that the superiority element was not met because the potential recovery for class members, $3.20 per individual, was de minimus while the attorneys steering the litigation stood to inherit a “windfall” of fees. Gaalswijk-Knetzke, 2008 WL 3850657 at *4. The court cited a litany of cases analyzing this very issue with divergent results and concluded that those cases dictated that “each case must [be] decided on its own face and circumstances.” Id. The court noted that the de minimus rule assumes that an individual would pursue his or her legal rights based on a violation of the FDCPA or the FCCPA, and that that assumption rests on the “foregone conclusion that a potential individual plaintiff knows that a given collection letter violates the law, or at least possesses sufficient interest to investigate the legality of the letter.” Id. at *5. The court reasoned that this was not the result that Congress intended under the FDCPA because it “provided for class actions as a means for recovery to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action.” Id. (citations omitted). Based on what it understood to be the intent of the FDCPA, the court found, in its discretion, that the plaintiff met her burden of establishing the element of superiority and ultimately certified the class.

Classified News: September 3, 2008

Wed, 03 Sep 2008 15:47:00 GMT

Judge grants motion to dismiss of securities class action lawsuit against ATM and voting machine maker Diebold, Inc. which alleged investors were misled.

Settlement in works for class action lawsuit filed by gym members against Court South gym over “lifetime memberships.”

Target Corp. agrees to settle a class-action lawsuit filed by the National Federation of the Blind by modifying its website and paying damages.

The Southern District Of Florida Will Not Blindly Follow State Court’s Reliance Decision

Sun, 28 Sep 2008 15:48:00 GMT

In rejecting the plaintiffs’ argument that reliance need not be shown to certify a class under the Florida Deceptive and Unfair Trade Practices Act, the Southern District not only distinguished a seemingly contrary Florida state court decision, but explicitly stated that the court is not bound by that decision.

In Pop’s Pancakes, Inc. v. NuCO2, Inc., No. 07-14157, 2008 WL 2901748 (S.D. Fla. July 22, 2008), the plaintiffs brought a class action alleging that a beverage equipment lessor violated FDUTPA and breached its contracts by failing to properly disclose an administrative processing fee. The plaintiffs could not even convince the court that commonality under rule 23(a)(2) was satisfied, where the circumstances regarding the disclosure and assessment of the fee at issue “could vary greatly.”

The court likewise rejected plaintiffs’ argument that reliance was unnecessary for the FDUPTA claims. In doing so, the court refused to accept a First District Court of Appeal decision seemingly to the contrary.

As federal jurisdiction was premised on CAFA’s class jurisdiction provisions, the district court dismissed the individual claims for lack of jurisdiction.

What Documents Can A Defendant Use To Satisfy The Court That CAFA’s Jurisdictional Threshold Is Satisfied For Removal?

Sun, 28 Sep 2008 16:16:00 GMT

Only documents provided by the plaintiff, according to the Southern District of Florida’s interpretation of controlling Eleventh Circuit precedent.

In Innovative Health & Wellness LLC v. State Farm Mut. Auto. Ins. Co., No. 08-60786, 2008 WL 3471597 (S.D. Fla. Aug. 11, 2008), the defendant removed, asserting that federal jurisdiction was proper because, among other things, CAFA’s $5,000,000 amount in controversy requirement was satisfied.

In defending against the plaintiff’s motion to remand, the defendant presented two affidavits from its officers and one of the exhibits provided by the plaintiff. According to the defendant, extrapolating from the information in the complaint as to the named plaintiff, the $5,000,000 amount in controversy requirement was easily satisfied.

According to the court, the defendant's error was not in its analysis, but in its use of affidavits it created. The court made clear that, in establishing removal jurisdiction under CAFA, the defendant can rely only on documents provided by the plaintiff.

The Plaintiffs In This Managed Care Litigation Could Not Avoid Res Judicata Effect Of Prior Class Action

Sun, 28 Sep 2008 16:36:00 GMT

While conceding that all the other elements for res judicata were satisfied, the plaintiffs contended that their case did not arise out of a common nucleus of operative facts. The district court disagreed, finding irrelevant that the prior class action was decided on summary judgment and holding that the claims asserted here by the plaintiffs could have been asserted in the prior litigation.

Also of note, the court denied the plaintiffs’ motion to remand for lack of jurisdiction. Though recognizing an intra and inter-district conflict, the court held that complete preemption—which applied in this case—provides the court with federal jurisdiction. In re Managed Care Litigation, No. 00-1334, 2008 WL 3851601 (S.D. Fla. Aug. 14, 2008).

Can A Party Propound A Request For Admission As To The Amount In Controversy For A Particular Subclass?

Sun, 28 Sep 2008 16:58:00 GMT

Yes, but the responding party does not have to supply an answer because, according to the Middle District of Florida, such a request improperly calls for speculation. Rebman v. Follett Higher Education Group, Inc., No. 06-1476, 2008 WL 3928793 (M.D. Fla. Aug. 26, 2008).

Procedural Pointer From Judge Altenbernd

Fri, 17 Oct 2008 10:03:00 GMT

In Ameriquest Mortgage Co. v. Scheb, -- So. 2d --, 2008 WL 4568383 (Fla. 2d DCA Oct. 15, 2008), Florida's Second District Court of Appeal affirmed "per curiam" an order granting class certification in a case where a homeowner sought repayment of "excess premiums" charged for title insurance policies on refinanced mortgage loans. Unlike many similar cases filed in recent years, this one was filed against the lender, not the title insurance company.

Judge Chris Altenbernd filed a concurring opinion in which he noted that the lender raised "colorable arguments" as to whether the complaint stated a cause of action. It seemed to him "unclear" why these issues were not raised or resolved prior to the class certification determination. He stated: "It seems highly inefficient to proceed with the rather expensive and involved steps of notification of the class in this case when it is uncertain whether the complaint alleges a cognizable claim." After a detailed recitation of federal case law construing Rule 23, he concluded that trial courts should consider assessing the "basic merits" on a motion to dismiss before deciding class certification issues. Entertaining motions for summary judgment may even be appropriate.

This is a practical and welcome suggestion by a highly respected jurist.

Classified News: October 17, 2008

Fri, 17 Oct 2008 15:37:00 GMT

Economic downturn expected to fuel more litigation, including class actions.

Plaintiffs file securities class action against Medicis Pharmaceutical Corporation.

Class action suit alleges violations of commerce clause alleging that drivers from New York and New Jersey who use the E-ZPass pay more at Boston area toll plazas than users of Massachusetts’ FAST LANE transponders.

Plaintiff files antitrust class action in federal court alleging Sprint Nextel Corp., Verizon Communications Inc., AT&T Inc. and T-Mobile USA Inc. conspired to fix text-messaging rates.

The carriers respond.

Federal judge approves $24 million settlement for owners of pets that became sick or died after eating pet food contaminated with melamine.

Predatory-lending individual and class actions against Countrywide Financial Corp. will be consolidated and heard in U.S. District Court in San Diego.

Can A Party Prove The Requirements For Jurisdiction Under The Class Action Fairness Act When Plaintiffs Allege An Imprecise Amount Of Damages That Only “Likely Exceed” The Jurisdictional Amount?

Fri, 24 Oct 2008 22:30:00 GMT

In Drury, the plaintiffs brought a class action on behalf of all individuals in the state of Florida who had a lender-placed insurance policy wrongfully put on their homes by the defendants. The defendants removed the action pursuant to the Class Action Fairness Act (“CAFA”), and the plaintiffs sought remand. At issue was whether the defendants were able to prove by a preponderance of the evidence that the plaintiffs alleged facts that established federal jurisdiction under CAFA, and specifically whether the plaintiffs alleged at least five million dollars in damages as required under CAFA. The court reasoned that although the plaintiffs’ definition of class was imprecise, it was broad enough to include most of the defendants’ alleged 100,000-plus wrongful placements of insurance policies. Because the plaintiffs established through an affidavit that the plaintiffs were charged approximately $640 per lender-placed policy, the court was able to surmise that the total damages for the probable class likely exceeded five million dollars in satisfaction of CAFA.

Middle District of Alabama Grants Summary Judgment for Defendants in Civil Rights Class Action

Mon, 24 Nov 2008 07:39:00 GMT

The court reasoned that the real right at issue in the case was not the fundamental right to liberty or property but the right not to be stopped by an uncertified, unsupervised officer. The court determined that this was not a fundamental right protected by the substantive due process clause.

The court also determined that there was no violation of procedural due process because the plaintiff had the opportunity to challenge the certification status of the officers who arrested him during his court hearing on his traffic citations.

Finally, the court determined that there was no equal protection violation because the equal protection clause only protects people from being treated differently in the same place. Because the plaintiff offered no evidence that people within the city of Autaugaville had been treated differently than him, the defendants were entitled to summary judgment on the equal protection claim.

Clever Pleading Helps Plaintiff Avoid Federal Court

Sun, 21 Dec 2008 18:06:00 GMT

The District of Maine applied the home state exception to the Class Action Fairness Act, which provides that "[a] district court shall decline to exercise jurisdiction . . . [over a class action in which] two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed."

The plaintiff defined the class to include only Florida citizens. The court held that because the class was defined to include only Florida citizens, the home state exception to the Class Action Fairness Act applied. The court therefore remanded the case.

Get A Court Reporter!

Fri, 09 Jan 2009 11:15:00 GMT

Does a lack of a court reporter and resulting transcript at a class certification hearing impact how the appellate court reviews the proceeding? The Second District's Judge LaRose thinks so!

Guy's World, Inc. v. Condon, Case No. 2D08-1759 (Fla. 2d DCA Dec. 31, 2008) involved a plaintiff's claim that the defendant sent him unsolicited "junk faxes." He brought a putative class action under the Telephone Consumer Protection Act of 1991, seeking statutory damages as well as declaratory and injunctive relief. The trial court certified a class of "similarly situated" Florida residents, and a panel of the Second District affirmed that ruling in a per curiam decision. The court did not write an opinion.

Judge LaRose wrote an interesting concurrence, though. He stated that he saw "no reason to disturb" the trial court's conclusions because "[w]e have no transcript of the hearing, nor do we have a stipulated statement of the evidence." The "limited record" before the court showed no demonstrable reversible error. He noted, however, that there is a substantial legal question as to whether the TCPA authorizes class actions. After canvassing a number of cases, he observed that the "legal question of whether the TCPA bars class actions calls for an answer."

No answer would be provided in this case, however. Judge LaRose opined that "providing a useful analysis of the question requires that the issue be framed properly for our review." Because there was no court reporter and no transcript at the trial court certification hearing, he could not determine whether the issue had been raised below.

Morale: The class certification hearing is supremely important. Even if the plaintiff does not, the defendant needs to go to the expense of getting a court reporter for the hearing. Otherwise, the consequences might not be so pleasant.

Classified News: January 20, 2009

Tue, 20 Jan 2009 15:52:00 GMT

United Healthcare to pay $350 million to settle class action lawsuit.

Coca-Cola sued in a class action suit over vitamin water health claims.

Classified News: January 22, 2009

Thu, 22 Jan 2009 16:59:00 GMT

The number of federal securities class actions rise as the economy sours. To cut down on expenses and assert their collective power, investor plaintiffs are banding together in class action suits.

Hundreds of department stores across the United States have agreed to hand out $175 million worth of makeup to settle a 2003 class action lawsuit involving price-fixing allegations.

Classified News: February 6, 2009

Fri, 06 Feb 2009 07:48:41 GMT

Class action lawsuit filed against grocery distributor. The suit alleges several counts of anticompetitive behavior that purportedly constitutes violations of the Sherman Act.

Judge orders new trial in $300 million dollar class action lawsuit against Sprint-Nextel. The former Sprint customers challenged the ability of the company to charge early termination fees.

Can A Financially Strapped Named Plaintiff Be An Adequate Representative?

Fri, 06 Feb 2009 08:53:41 GMT

Can a named plaintiff be considered an inadequate class representative if it lacks the financial resources necessary to fund the cost of notice and class administration? See what the Florida Third District Court of Appeals had to say about this issue.

In Browning v. Angelfish Swim School, Inc., 2009 WL 187694, -- So. 2d -- (Fla. 3d DCA Jan. 28, 2009), two Florida corporations challenged the constitutionality of late fees imposed by the Secretary of State for the filing of late annual reports. They sought a declaratory judgment class action. The circuit court certified the class but the Third District reversed on adequacy grounds because the "present record" fell "woefully short" of demonstrating that the named plaintiffs could fund the costs of class notice, administration of opt outs, administration of a web site, expert witness fees, document production, transcripts, and other costs of the litigation.

In deposition, the plaintiffs' counsel had instructed one named plaintiff not to testify about "privileged financial matters" - including apparently the fee agreement with class counsel. The other named plaintiff testified that it had no assets. In these circumstances, the adequacy requirement, which the court noted must be "clearly established rather than merely argued by counsel," was not shown.

One wonders whether the result would have changed had plaintiffs' counsel turned over the fee agreement. Judge Shepherd noted in a separate opinion that "it has been ethically accepted and the usual practice for counsel to fund the costs of class litigation."

Judge Shepherd believed class certification should have been reversed for another reason. Class counsel waited for almost five years to press the issue of class certification. He noted that the requirement of diligence in moving for class certification benefits both putative class members (in avoiding a false sense of security that their rights are being protected) and the defendant (in knowing whether it faces a limited number of known plaintiffs or a much larger number of unknown plaintiffs).

Classified News: February 13, 2009

Fri, 13 Feb 2009 17:01:45 GMT

Parents of autistic children sue Kaiser Permanente in a class action law suit, claiming that the HMO refused to treat children with autism in order to save costs.

Class action lawsuit filed against JP Morgan Chase for charging borrowers high monthly fees which are added to borrowers’ balances.

California investors file a class action lawsuit against a prominent real estate brokerage firm and a former Orange County businessman for concocting a scheme in which the defendants allegedly bought small commercial properties, artificially inflated their prices, and sold the properties to investors.

Classified News: February 20, 2009

Fri, 20 Feb 2009 10:13:48 GMT

The U.S. Court of Appeals for the Ninth Circuit will revisit a Wal-Mart class action dispute. The case began in 2001 when a 54-year old Wal-Mart employee filed a sexual discrimination claim against Wal-Mart, claiming that she was denied the training that she needed to advance because of her sex.

Fortunoff, a jewelry and home goods retailer, laid off 300 employees and faces a class action lawsuit. The suit alleges that the company failed to provide advance written notice of the layoffs which is required by federal and state Worker Adjustment and Retraining Notification Acts.

Classified News: February 26, 2009

Thu, 26 Feb 2009 07:44:32 GMT

Classified News: February 27, 2009

Fri, 27 Feb 2009 08:20:07 GMT

Classified News: March 6, 2009

Fri, 06 Mar 2009 06:44:05 GMT

Judge decertifies class action involving off-label use of an epilepsy and neuralgia drug. The class representatives brought claims of misrepresentation, negligence, negligence per se and breach of express warranty on behalf of users of the drug Neurontin. The plaintiffs sought a refund of non-insured payments of the drug. The judge granted Pfizer, Inc.’s motion for class decertification because he felt there were questions of fact as to whether each class member had been benefited or harmed by their off-label use of the drug.

No Definitive Evidence of Adequacy; No Certification!

Thu, 12 Mar 2009 12:56:57 GMT

Should a class of property owners suing a property manager in a dispute over the amount of gross rental income the property owners should receive be certified when the owners' contracts are identical? Find out what the First District held in Brodeur v. Dale E. Peterson Vacations, Inc., -- So. 2d --, 2009 WL 528905 (Fla. 1st DCA 2009).

The trial court said "no" because extrinsic evidence would be required to determine what each owner understood the term "gross rental income" meant and it would be necessary for each property owner to testify as to his or her understanding of that term. Based on this legal framework, the court ruled that the predominance requirement was not satisfied. The First District disagreed because the case was "indistinguishable" from Paladino v. American Dental Plan, Inc., 697 So. 2d 897 (Fla. 1st DCA 1997). In Paladino, the court had ruled that a need to take some evidence of intent could be managed by certifying subclasses. Here too, the court held that subclasses could account for the "few factual scenarios" presented as defenses.

Nonetheless, the court felt "constrained" to affirm because the plaintiff failed to come forward with "definitive evidence" as to his adequacy to represent the class.

Actually, the defendant's contract ambiguity defense was not a bad legal theory for denying certification. Other state courts as well as federal courts have agreed that a need for extrinsic evidence to interpret an ambiguous contract term will require individual inquiry which could defeat the predominance requirement. However, unless there are multiple permutations possible, subclasses could conceivably satisfy the predominance requirement in the face of extrinsic evidence. I wonder, though, whether the extrinsic evidence requirement would defeat superiority. If every putative class member had to testify anyway as to his or her subjective understanding about an ambiguous contract term, how is a class action manageable or the superior remedy? The court in Brodeur did not address that issue because the trial court found that the superiority element was satisfied. Nonetheless, this does seem to be a hole in the analysis.

Classified News: March 13, 2009

Fri, 13 Mar 2009 07:58:24 GMT

A Sprint shareholder filed a class action lawsuit against Sprint, challenging whether the company propped up its stock price by avoiding timely disclosure of problems with its Nextel purchase.

A hospital network in Albany, New York has agreed to settle an antitrust class action suit for $1.25 million in which the nurses alleged that the hospitals had illegally conspired to hold down their wages.

CAFA Cannot Be Used To Remove A State Case Where The Case Was Not A “Class Action” Under Rule 23

Sat, 14 Mar 2009 10:42:29 GMT

Here, in granting the motion to remand, the Court decided that CAFA does not extend jurisdiction to this action because it is not a Rule 23 class action. The case was filed by a single plaintiff against three individuals defendants and the Plaintiff did not invoke Rule 23 or any State class action statute. The Court further said that even if it assumed that the case was a class action, CAFA only extends to class actions brought by plaintiffs on behalf of classes of plaintiffs, and does not extend to class actions brought against a class of defendants. Id. at *2.

Defendants’ argued that because the case is a declaratory action and is related to an arbitration where there are class allegations this case “involves” a class action and thus CAFA is met. The Court explained that this argument had no merit and mischaracterizes and improperly attempts to expand the act. CAFA only provides federal jurisdiction if the matter is a class action, not if it is just related to a class action. Plaintiff’s motion to remand was granted.

When Can A Plaintiff Properly Receive Pre-Certification Discovery Aimed Primarily At Identifying Potential Class Members?

Mon, 16 Mar 2009 07:05:17 GMT

Only when that list of class members is necessary to meet an element of Rule 23. In Drossin v. National Action Financial Services, 2008 WL 5381815 (S.D. Fla. Dec. 19, 2008), the defendant could not provide any information regarding the size of the potential class other than to identify each potential class member. Thus, the discovery was necessary for the plaintiff to address the numerosity requirement.

In that case, the Southern District found an exception to the rule prohibiting pre-certification discovery sought merely for the purpose of identifying individuals for notice of a class action.

Can A Plaintiff Use A “Place Marker” Allegation Reserving The Right To Later Bring The Action On A Class-Wide Basis?

Mon, 16 Mar 2009 07:18:11 GMT

Apparently not in the Southern District of Florida. In Santidrian v. Landmark Custom Ranches, Inc., 2009 WL 210668 (S.D. Fla. Jan. 28, 2009), the defendant successfully struck the plaintiff’s allegation purporting to reserve his right to later add plaintiffs in a class action. The court held that such an allegation served no purpose, as the court would set the relevant deadlines for amending the pleadings and adding parties.

Can A Phone Message To The Wrong Person Be The Basis For A Class Action Under The Fair Debt Collection Practices Act?

Mon, 16 Mar 2009 07:31:45 GMT

It was in Drossin v. National Action Financial Services, 2009 WL 289826 (S.D. Fla. Feb. 2, 2009). The defendant challenged the lone named plaintiff’s standing to raise a FDCPA claim on the basis that the allegedly offending message was actually meant for someone other than the named plaintiff. The court rejected that argument, holding that, because there was no way for the plaintiff to know the message was not intended for her, she may have a proper claim under the FDCPA.

The court proceeded through the remaining Rule 23 requirements, holding all were met as to the FDCPA claim. With regard to predominance, the court rejected the defendant’s argument that this type of phone message was a “mere aberration” because it failed to produce evidence of “clear policies” supporting that contention.

In addition to the federal FDCPA claim, the plaintiff also brought a Florida Consumer Collection Practices Act claim. That claim, however, was not suitable for class treatment. According to the court, the defendant's assertion that the message was left in error was sufficient to destroy the commonality necessary for a FCCPA claim, which has different requirements than a FDCPA claim.

Florida Bar’s Anti-Solicitation Rules Apply In Collective Actions And Class Actions

Mon, 16 Mar 2009 07:41:44 GMT

In this collective action under the Fair Labor Standards Act, the Southern District of Florida sanctioned Plaintiffs’ counsel for their pre-certification communications to prospective class members. In its discussion of the relevant authorities, the court seemed to indicate that the same rules and rationale it was applying in this collective action would also apply in a class action under Rule 23. Hamm v. TBC Corporation, 2009 WL 289822 (S.D. Fla. Feb. 3, 2009).

Recent Decisions From Other Circuits

Mon, 16 Mar 2009 09:53:51 GMT

Seventh Circuit Decertifies Multi-State Class Action Alleging Consumer Protection Act Violations – In an opinion sure to raise the ire of class counsel around the nation, the Seventh Circuit Court of Appeals decertified a multi-state class action against Sears, Roebuck & Co. alleging false advertising under various state consumer protection statutes and individual claims for violations of Tennessee’s Consumer Protection Act. Thorogood v. Sears, Roebuck & Co., 547 F.3d 742 (7th Cir. 2008). The named plaintiff brought the action in federal district court on behalf of himself and other purchasers, scattered across 28 states and the District of Columbia, of the more than half million Kenmore dryers advertised as containing stainless steel drums. Plaintiff alleged that the part of the front of the drum was made not of stainless steel, but of a ceramic-coated “mild” steel. Plaintiff contended that the sale of dryers so advertised was deceptive unless the drums were made entirely of stainless steel, because if they were not, they may rust and cause rust stains on clothes in the dryer.

The district court granted plaintiff’s motion for class action certification, determining class action treatment was warranted because “Sears marketed its dryers on a class wide basis…reliance [therefore] can be presumed.” The Seventh Circuit granted Sears’ appeal and reversed.

In a somewhat caustic opinion discussing at length the pros and cons of class action lawsuits, Judge Posner ultimately concluded “there are no positives” in class action treatment in this case: “not only do common issues of law or fact not predominate over the issues particular to each purchase and purchaser of a ‘stainless steel’ Kenmore dryer…but there are no common issues of law or fact, so there would be no economies from class action treatment.” The Court determined that because “[plaintiff’s] concerns are idiosyncratic,” the evaluation of the class members’ claims would require individual hearings to determine what each class member understood to be the meaning of a label or advertisement that identified the clothes dryer as containing a stainless steel drum. Accordingly, the Circuit Court reversed the district court order and remanded with instructions to decertify the class.

Third Circuit Clarifies Role of District Courts in Certifying Class Actions – In In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (2d Cir. 2008), the Third Circuit Court of Appeals clarified the standards a district court should apply when deciding whether to certify a class.

The action was brought by direct and indirect purchasers of hydrogen peroxide and related chemical products against chemical manufacturers under Section 4 of the Clayton Act, 15 U.S.C. § 15, alleging a conspiracy in restraint of trade violation Section 1 of the Sherman Act, 15 U.S.C. § 1. The direct purchasers sought to certify a national class, and after concluding that plaintiffs’ expert’s opinion was admissible and supported plaintiffs’ motion for class certification, the district court granted plaintiffs’ motion.

The Third Circuit granted the defendants’ Rule 23(f) motion for interlocutory appeal so it could consider “the standards a district court applies when deciding whether to certify a class.” Id. at 305.

The Court first considered the evidence that is required to meet Rule 23’s requirements. It observed that the requirements set forth in Rule 23 are “not mere pleading rules.” Id. at 316. Thus, the district courts may go beyond the pleadings to determine whether the requirements for class certification are met. The movant bears the burden of meeting the requirements by a preponderance of the evidence, and that burden cannot be met by an assurance of how the movant intends or plans to meet the requirements.

Second, the court explained that “[a]n overlap between a class certification requirement and the merits of a claim is no reason to decline to resolve relevant disputes when necessary to determine whether a class certification requirement is met.” Id. Thus, the Court concluded, “a district court errs as a matter of law when it fails to resolve a genuine legal or factual dispute relevant to determining the requirements.” Id. at 320.

Finally, the Court held that the district court’s obligation to consider all relevant evidence and arguments extends to expert testimony, no matter whether a dispute might appear to implicate the credibility of one or more experts. Thus, the court instructed it is reversible error for a district court not to resolve a “battle of the experts” at the class certification stage. Id. at 325.

Ninth Circuit Grants Rehearing En Banc in Wal-Mart Title VII Case – On February 13, 2008, the Ninth Circuit Court of Appeals granted a rehearing en banc in Dukes v. Wal-Mart, Inc., a Title VII case brought by current and former employees alleging sexual discrimination as to pay and managerial promotions. In a previous opinion, Dukes v. Wal-Mart, Inc., 509 F.3d 1168 (9th Cir. 2007), a panel of the Ninth Circuit (2-1) affirmed the certification of a 1.5 million member class of all women employed at any domestic Wal-Mart retail store at any time since December 26, 1998 who may have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices. The class was certified under Rules 23(a) and (b)(2).

With respect to Rule 23(a), there was no dispute as to the numerosity requirement. As to common questions of fact and law, however, the court found there was significant evidence of corporate-wide practices and policies of excessive subjectivity in personnel decisions, statistical evidence of gender disparities, and anecdotal evidence of gender bias. The court found these claims were typical of all the members of the class, even though the only class representative for managers held a low-level managerial position. The court also found the adequacy requirement was satisfied, even though there were in-store managers who were both class members and decision-making agents of the employer.

With respect to Rule 23(b)(2), the Ninth Circuit rejected Wal-Mart’s argument that plaintiffs’ monetary claims predominated over common claims, and found that the issue of predominance turned on “plaintiffs’ intent in bringing the suit.” The court also rejected Wal-Mart’s argument that it was entitled to an individualized hearing for each member’s claim.

The dissent argued that the case lacks commonality and typicality. The dissent also argued that the interests of the named plaintiffs may conflict and eventually require representation by separate counsel.

Expect these issues to be resolved upon the hearing en banc.

Can Defendants communicate with Plaintiffs, Opt-in Plaintiffs, and Potential Opt-in Plaintiffs before a class action is certified?

Mon, 16 Mar 2009 13:16:56 GMT

In Ojeda-Sanchez, et al. v. Bland Farms, et al., 2009 WL 577602 (S.D. Ga. March 4, 2009), plaintiffs sought a protective order to bar defendants and their employees and agents from further communications with plaintiffs, potential opt-in plaintiffs, and their family members. Plaintiffs alleged that a protective order was necessary because of defendants' efforts to intimidate plaintiffs and to discourage them from participating in the lawsuit, which alleged that defendants violated the Fair Labor Standards Act (FLSA) by failing to pay farm workers at least an average of the applicable minimum wage for every compensable hour of work performed in the workweek, in violation of 29 U.S.C. section 216(b).

The protective order was sought by plaintiffs after another employee of Bland Farms, who was not a named plaintiff or potential class member, traveled to Mexico at his employer's direction and met with at least 2 plaintiffs in person at their homes in Mexico. Bland Farms alleged that it sent its employee to Mexico to meet with plaintiffs because it needed to determine if plaintiffs had in fact designated Georgia Legal Services (GLS) as their representative. Bland Farms argued that because GLS had requested copies of plaintiffs' employment records without submitting evidence that GLS had been designated as the plaintiffs' representative pursuant to an applicable federal regulation, Bland Farms merely wanted to confirm that the plaintiffs had in fact designated GLS as their representative before it released their employment records.

The two plaintiffs who met with the Bland Farms employee in Mexico told a different story, however. They submitted affidavits to the Court indicating that they felt pressured by the visit not to participate in the lawsuit, and contended that the communications were abusive and coercive. Thus, they sought a protective order to prevent future communications regarding the litigation between defendants and plaintiffs and potential opt-in plaintiffs.

Concerned about limiting speech in violation of the First Amendment, the Court found that that communications at issue were of a commercial nature and therefore subject to more limited constitutional protection. The Court then considered whether the record reflected clear and specific evidence that the type of communications engaged in by the defendant had been abusive and threatened the litigation. It found that the defendant had engaged in "unilateral and unsolicited communications with class members" based on the statements contained in the affidavits of the two plaintiffs who were visited in Mexico. Citing Kleiner v. First Nat'l Bank, 751 F.2d 1193, 1201 (11th Cir. 1985), the Court found that "unsupervised, unilateral communications with the plaintiff class sabotage the goal of informed consent by urging exclusion on the basis of a one-sided presentation of facts, without opportunity for rebuttal. The damage from misstatements could well be irreparable."

The Court, however, agreed with the defendant that the scope of the requested protective order was broader than necessary. It noted that the "primary concern is with in-person communications with putative class members that might be inherently coercive due to the parties' employment relationship and may pressure class members to make on the spot decision that they would not otherwise make." The Court granted a limited protective order but ensured "that defendants have the opportunity to fully investigate and defend this case" by allowing defendants to communicate with the parties regarding the lawsuit "in writing provided that they serve a copy of the correspondence on plaintiffs' counsel at least ten days in advance in order to resolve any potential objections."

Plaintiffs’ Inadequate Class Definition Precludes Certification On Claims Brought Pursuant To Worker Adjustment and Retraining Notification Act

Tue, 17 Mar 2009 17:00:00 GMT

In Butler, the plaintiffs simultaneously sought class action relief under the Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”), 29 U.S.C. § 2101, et seq. and collective action relief under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. The Court did not even reach the issue of whether it was appropriate for the plaintiffs to pursue both class action and collective action relief in the same lawsuit because the proposed class definition was found to be “inadequate and overly broad” at the outset. Id. at *2. The Court adopted the Report and Recommendation of the United States Magistrate Judge and denied the motion for certification. In so doing, the Court ruled that the class definition, which included “[a]ll persons who were employees of the Defendants and who were ‘affected employees’ subject to an ‘employment loss’, as those terms are defined under . . . the WARN Act,” id. at *3, “could potentially include individuals who were terminated for reasons not covered by the WARN Act,” id. at *2. The Court denied the motion for collective certification on similar grounds. Id. at 7.

Must A Court Evaluate A Motion To Certify A Class For Purposes of Settlement With The Same Scrutiny As A Motion To Certify A Class For Purposes of Litigation?

Tue, 17 Mar 2009 17:00:00 GMT

In Ault, the plaintiffs, who are disabled and rely primarily upon Segways for mobility, brought a class action against Disney for alleged violations of Title III of the Americans with Disabilities Act, 42 U.S.C. § 12182, et. seq. 254 F.R.D. at 684. Disney allows visitors to its parks to use wheelchairs and scooters, but generally prohibits the use of Segways, “a two-wheeled, self-balancing, motorized transportation device . . . .” Id. Disney ultimately agreed to make available no fewer than fifteen Segway-like vehicles for guests at its parks starting some time after April 2009. Id. at 684-85. The parties presented the Court with a joint motion for conditional class certification after reaching the settlement agreement. Id. at 684. In granting the parties’ motion, the Court noted that “even in the context of certifying a settlement-only class, courts must remain vigilant in ensuring that the requirements of class certification have been met.” Id. at 685. The Court then proceeded to analyze the proposed settlement-only class under Rules 23(a) and 23(b)(2). Id. at 686-88. Although the proposed class satisfied the requirements of Rules 23(a) and 23(b)(2), the Court ultimately determined that the parties’ proposed notice of class action settlement, which would have gone only to the twenty-five individuals identified as likely class numbers and a disability rights advocacy group with an unspecified number of members, was insufficient under Rule 23(e). Id. at 689. The Court ordered the parties to provide a supplemental brief proposing the best practicable manner to provide notice to the class. Id. at 689-90.

Classified News: March 20, 2009

Fri, 20 Mar 2009 06:22:31 GMT

Louisiana Judge approves settlement in a class action lawsuit against Louisiana Citizens Property Insurance Corporation. The settlement would award $1,000 apiece to policyholders whose hurricane claims in 2005 were paid slowly.

A New Jersey Judge denies a class action on consumer Vioxx costs. The plaintiffs sued to recover their out-of-pocket costs associated with Vioxx.

Classified News: March 27, 2009

Fri, 27 Mar 2009 05:51:00 GMT

Top pension funds aim to lead class action lawsuit against Bank of America. The California Public Employee Retirement System and the California State Teachers Retirement System filed a motion in the United States District Court for the Southern District of New York to be designated lead plaintiffs in a class action suit. The suit involves allegations that the shareholders lacked complete information regarding the merger between Bank of America and Merrill Lynch.

Insurer WellPoint, Inc. was sued in a class action lawsuit over allegations that it failed to pay overtime to current and former nurses. The plaintiffs allege that they regularly worked more than 40 hours per week without overtime compensation. Damages for the group are estimated to exceed $5 million.

Southern District Whittles Down Class Action Securities Complaint

Mon, 30 Mar 2009 14:12:44 GMT

In In re 21st Century Holding Co. Sec. Litig., 2008 WL 5749572 (S.D. Fla. Nov. 7, 2008), the court granted in part the defendants’ motion to dismiss. The plaintiffs alleged that 21st Century, an insurance holding company, misrepresented its business and financial performance, resulting in the artificial inflation of the company’s stock price.

21st Century moved to dismiss, alleging that the complaint failed as a matter of law to state claims for violations of Section 10(b) and 20(a) of the Securities Exchange Act. The Southern district agreed with respect to certain allegations, though the claims survived.

Although holding that both Rule 9(b) and the PSLRA’s heightened pleading requirements were satisfied, the court determined that most of the alleged misrepresentations fail as a matter of law to satisfy the scienter requirements. The court also determined that several of the alleged misrepresentations either were not forward looking statements or were protected by the PSLRA’s safe harbor provision.

Nonetheless, the claims in the complaint did survive, as the complaint did allege at least some actionable misrepresentations. Of note, with regard to scienter, the court confirmed that statements by anonymous sources can support the necessary inference of scienter. The plaintiffs had a chance to replead the allegations the court found insufficient, but apparently decided not to.

Classified News: April 3, 2009

Fri, 03 Apr 2009 09:32:40 GMT

A federal judge approved class action status for royalty owners with interests in 290 natural gas wells in the Oklahoma pan handle and southwestern Kansas. The suit was filed against Fort Worth based XTO Energy. The royalty owners allege that XTO underpaid them by 15 to 20 percent by selling gas to a wholly owned company subsidiary at below market prices. The gas was later allegedly sold to an unaffiliated company at a higher price.

A class action suit was filed by 150 families and businesses against Exxon Mobil Corporation. The plaintiffs contend that they were contaminated by the gasoline additive MTBE. The plaintiffs are seeking more than $530 million dollars in individual damages and billions more in restoration damages.

Class Action Waiver Invalid In Leap Year Lawsuit, Though Mandatory Arbitration Provision Held Enforceable

Mon, 06 Apr 2009 11:56:00 GMT

Applying Delaware law, the Southern District of Florida in Caban v. J.P. Morgan Chase & Co., 2009 WL 890392 (S.D. Fla. Mar. 23, 2009), ruled that the class action waiver at issue was unconscionable because it effectively precluded individual suits where a single plainitiff's recovery would be minimal. The court did, however, uphold the mandatory arbitration provision and sent the case to arbitration to be determined on a class-wide basis.

The plaintiff sued J.P. Morgan Chase & Co. on the grounds that the interest rate on her credit card was improperly calculated because the daily rate was charged daily as 1/365th of the annual interest rate. According to plaintiff, this caused a windfall to the credit card company because every four years—i.e. every leap year—it would receive an extra, minute amount of interest to which it was not entitled.

According to the court, the minimal recovery to which the plaintiff would be entitled—$1.00 at most—would doom any potential lawsuit. As such, the class action waiver in the credit card terms and conditions was preclusive of small sum lawsuits and therefore unconscionable.

The arbitration provision, on the other hand, was upheld, and the case was sent to arbitration with the class allegations in tact.

Classified News: April 10, 2009

Fri, 10 Apr 2009 16:45:53 GMT

The United States Court of Appeals for the Ninth Circuit revived a class action lawsuit accusing Arco, Chevron, and other refiners of conspiring to fix gasoline prices in the mid-1990s. The plaintiffs contend that the defendants violated the Sherman Antitrust Act by limiting the supply of gasoline to raise prices and keep them high.

The Hartford and other insurers have been sued in a class action suit over the “dumping” of cheap Chinese food in the U.S. market. The plaintiffs allege that the defendants negligently issued hundreds of customs surety bonds to thinly capitalized and inexperienced importers and refused to pay out on the bonds. The bonds guaranteed the payment of any dumping duties that the government determined were owed by U.S. importers of Chinese goods. The plaintiffs seek nearly one billion dollars in damages.

Compelling Class Discovery—Before And After Class Certification

Wed, 22 Apr 2009 14:56:53 GMT

The Southern District of Florida in Rosen v. J.M. Auto, Inc., 2009 WL 1033816 (S.D. Fla. Apr. 17, 2009), confirmed that, while discovery aimed at the identity of potential class members is barred prior to class certification, it is available once the class is certified. The court rejected the defendants’ argument that the discovery was untimely because the deadline for discovery had past, holding that plaintiffs’ current motion to compel related back to the original timely motion that had beed denied on the ground that a class was not yet certified. The court also confirmed that the plaintiff must bear the costs expended in compiling the list of potential class members.

Classified News: April 24, 2009

Fri, 24 Apr 2009 08:23:21 GMT

Homebuilder Lennar Corporation has been named in a class action lawsuit brought by plaintiff homeowners who bought homes built with Chinese drywall. The plaintiffs claim that the drywall emitted gases that made them sick.

Workers who have lost their jobs in the recession are more likely to bring lawsuits against their prior employers given the bleak job market. Some of these suits are class action lawsuits. HomeBanc employees brought a class action lawsuit against the Atlanta-based mortgage lender for not giving them ample notice of their dismissal.

Banking software firm Fiserv was hit with a $1 billion class action lawsuit on April 2. The plaintiffs allege that Fiserv should share responsibility for the fate of securities and cash Bernard Madoff was supposedly managing. The plaintiffs allege that while Fiserv was the designated custodian for the plaintiffs’ IRA and pension accounts the designation was fictitious because no securities were purchased for the plaintiffs. The plaintiffs further allege that they received false monthly statements of their holdings detailing the purported value.

Classified News: April 30, 2009

Thu, 30 Apr 2009 16:09:03 GMT

Former Abbott employees have sued Abbott Laboratories, alleging that the healthcare products company cheated them out of their retirement benefits. The lawsuit stems from Abbott Laboratories spinoff into a separate company, Hospira, which is also named in the suit. The plaintiffs allege that they were promised a similar benefits package at Hospira, but that is not what they received.

A class action lawsuit has been filed against U.S. Fidelis. The plaintiffs allege that they purchased extended vehicle protection to cover their vehicles in the event of a repair, but that the policy included so much fine print that they were ultimately left out in the cold.

Classified News: May 6, 2009

Wed, 06 May 2009 08:19:25 GMT

Classified News: May 7, 2009

Thu, 07 May 2009 07:34:39 GMT

Classified News: May 14, 2009

Thu, 14 May 2009 16:25:53 GMT

A U.S. District Judge in New York has preliminarily approved a proposed settlement of a class action lawsuit over Costco’s annual membership renewal practices. The plaintiffs allege that Costco shortchanged them on membership benefits when Costco did not reset the renewal date after members renewed their membership.

A federal appeals court has revived a Tampa class action lawsuit. The suit seeks money for Florida shoppers whose credit and debit cards were swiped in a data breach that hit 109 Sweetbay supermarkets.

A Vioxx class action lawsuit is rejected by a California judge. The judge ruled that the patients and insurers could not sue as a group. The judge found that the patients paid varying amounts for the drug and had too many other differences to sue jointly.

Alabama District Court Allows Intervention Of New Plaintiffs In Class Action Matter, But Limits The Scope Of The Allegations Of The Complaint In Intervention

Thu, 14 May 2009 17:34:36 GMT

Two Recent Florida State Court Class Certification Opinions

Thu, 21 May 2009 14:21:01 GMT

The Florida Third and Fifth District Courts of Appeal have issued class certification opinions in the last two months. Which way did they go?

In Smith Lake Shores Village v. Marion County, -- So. 2d --, 2009 WL 722026 (Fla. 5th DCA March 20, 2009), the Fifth District affirmed the denial of class certification on adequacy grounds. The plaintiff, a developer of a mobile home community, challenged a Marion County ordinance adopting a special assessment to support fire rescue services. The trial court found that the plaintiff had conflicts of interest with other members of the class because its theory of liability was that the assessment as to it was too high. The court observed that any change in the assessment to the plaintiff's favor would disadvantage other prospective claimants.

In Safeway Premium Finance Co. v. Sosa, -- So. 2d --, 2009 WL 928434 (Fla. 3d DCA April 8, 2009), the Third District reversed a trial court decision certifying a class. The plaintiff, a consumer, alleged that Safeway had improperly charged him a $20 premium finance charge. The Third District reversal was based on predominance grounds. Defenses would differ from class member to class member, particularly, the defense of scienter. This was because there were multiple reasons why a given putative class member could have received a premium finance charge. Those reasons include (i) changing his or her name or address from one six-month premium application to the next; and (ii) generating more than one bill to the same address in a 12 month period.

Judge Shepherd concurred, elaborating on the reasoning of the majority opinion. Chief Judge Gersten dissented. He considered the case to be "ideal" for class treatment, noting that the defendant had admitted having a common practice.

One More Class Action Related Florida State Court Decision

Thu, 21 May 2009 14:49:10 GMT

In Campbell v. State, -- So. 2d --, 2009 WL 886227 (Fla. 1st DCA 2009), the First District resolved the appeal of an attorney against whom sanctions were imposed for pursuing "baseless litigation in a class action lawsuit against the State." What happened?

The plaintiff alleged that the State of Florida owed certain Medicaid recipients a share of the funds it received in its "landmark settlement with tobacco companies." The case was dismissed. The State, however, moved for sanctions against the plaintiff because "the proposed class representative was not a Medicaid recipient." The trial court declined to impose sanctions.

After the plaintiff's appeal was exhausted, the State again sought sanctions in the circuit court. This time, the trial court ordered the plaintiff to pay attorney's fees and costs as a sanction for pursuing "baseless litigation and perpetrating a fraud on the court."

The First District reversed the sanctions order on a law of the case theory, but it cautioned that it did not approve of the plaintiff's conduct, calling it "reprehensible." The State should have sought review of the prior order denying the initial sanctions request.

Classified News: May 22, 2009

Fri, 22 May 2009 14:48:47 GMT

The California Supreme Court revived a class action suit against the tobacco industry, ruling that smokers could hold the tobacco companies accountable for deceptive advertising.

A Massachusetts judge approved a $10.65 million settlement of a class action law suit filed against the U.S Smokeless Tobacco Company for price-fixing.

Classified News: May 29, 2009

Fri, 29 May 2009 10:23:42 GMT

Classified News: June 1, 2009

Mon, 01 Jun 2009 08:22:12 GMT

Classified News: June 3, 2009

Wed, 03 Jun 2009 16:20:55 GMT

Florida Adopts New Rules Pertaining to Complex Litigation

Thu, 04 Jun 2009 13:06:14 GMT

On May 28, 2009, the Supreme Court of Florida announced the adoption of certain amendments to the Florida Rules of Civil Procedure that are intended to provide procedures to improve case management of complex civil litigation. The amendments were proposed by the Task Force on the Management of Cases Involving Complex Litigation, and were adopted by the Supreme Court with slight modifications.

The most notable amendment to the Rules of Civil Procedure is the creation of a new rule, Rule 1.201, which pertains specifically to “Complex Litigation.” The rule defines a “complex action” as “one that is likely to involve complicated legal or case management issues and that may require extensive judicial management to expedite the action, keep costs reasonable, or promote judicial efficiency.” Fla. R. Civ. P. 1.201(a)(1). Subsection (2)(a) identifies the criteria to be considered by trial courts in deciding whether a case merits handling as a complex case, such as whether the action is likely to involve numerous pretrial motions raising difficult or novel legal issues or legal issues that are inextricably intertwined that will be time-consuming to resolve, or whether the case involves the management of a large number of separately represented parties. See Fla. R. Civ. P. 1.201(a)(2). The rule permits the parties to stipulate that the action is complex, without requiring a hearing before the court. See Fla. R. Civ. P. 1.201(a)(3). The rule also requires the court to conduct a case management conference within 60 days from the date of the order declaring the case complex, and the parties to file a case management report no less than 14 days before the case management conference. See Fla. R. Civ. P. 1.201(b). Following the case management conference, the court shall enter a case management order specifying the dates by which the parties shall complete all discovery, the briefing schedule, and a deadline for conducting alternative dispute resolution.

The full text of the Order adopting the amendments may be found at 2009 WL 1473978 (Fla. May 28, 2009).

Third District Affirms Class Action Settlement

Thu, 04 Jun 2009 13:45:22 GMT

In approving the statewide settlement, the court noted: "The goal of 'no fault' insurance was to reduce litigation, not to spread it virally throughout the State." The Third District went on to find that State Farm and Open MRI, the class plaintiff, "established that the class action lawsuit was a textbook case for certification." The Third District also determined that the settlement was fair and allows for the recovery of CPI adjustments as computed in a fair interpretation of the controlling statute. While noting that there was a marginal difference between the formula for calculation of the statutory CPI adjustments as set forth in the settlement and as set forth by the Fourth District in Progressive Auto Pro Insurance Co. v. One Stop Medical, Inc., 985 So. 2d 10 (Fla. 4th DCA 2008), the court found that the settlement formula "rounded up" to the nearest one-tenth of one percent, which counterbalances the cumulative and compounding adjustments applied by the Fourth District. The court also found that the payments to the class representative and attorneys for the plaintiffs were reasonable and fair.

Classified News: June 5, 2009

Fri, 05 Jun 2009 08:09:38 GMT

Will Climate Change Class Actions Be The New Tobacco and Asbestos Litigation?

Tue, 09 Jun 2009 16:33:49 GMT

According to The D&O Diary, climate change litigation poses a significant mass tort threat for oil, coal, electric and other utility companies. It also poses a securities class action risk for any public company with carbon outputs, including companies that own or operate vehicles, due to disclosures regarding the impact of their operations on climate change.

In addition, climate change litigation poses a risk for insurers that have issued directors and officers liability insurance policies to the companies mentioned above as well as insurers that have issued policies covering environmental risks associated with climate change. The National Association of Insurance Commissioners recently adopted a new disclosure requirement stating that insurers must disclose by May 1, 2010, "the financial risks they face from climate change, as well as the actions the companies are taking to respond to those risks."

The current political climate makes it more likely that the risk of climate change litigation will materialize. In April 2009, the United States Environmental Protection Agency issued a proposed finding that carbon dioxide, methane, nitrous oxide and other greenhouse gases may endanger public health or welfare. The finding proposes that greenhouse gases should be defined as "air pollutants" under the Clean Air Act. This finding reverses the position of the EPA taken under the Bush Administration that the EPA would not regulate greenhouse gas emissions under the Clean Air Act.

The United States House Energy and Commerce Committee released on May 21, 2009, the American Clean Energy and Security Act of 2009 ("ACES"). According to the Committee, ACES is "a comprehensive approach to America's energy policy that will create millions of new clean energy jobs, save consumers hundreds of billions of dollars in energy costs, enhance America's energy independence, and cut global warming pollution." A prior version of ACES had permitted anyone "who has suffered, or reasonably expects to suffer, a harm attributable, in whole or in part" to government inaction to file a lawsuit. The term "harm" was defined as "any effect of air pollution (including climate change), currently occurring or at risk of occurring."

A number of states have entered the climate change regulatory field as well. The Regional Greenhouse Gas Initiative went into effect in January 2009 in New York, Connecticut, Maine, Delaware, Massachusetts, Maryland, New Hampshire, Vermont, Rhode Island and New Jersey. The Western Climate Initiative plans to reduce greenhouse gas emissions by 2012 in the states of Arizona, California, Montana, New Mexico, Oregon, Utah, and Wyoming as well as four Canadian provinces.

Public companies and insurers alike should monitor the developments in this area closely.

CAFA’s “Event Or Occurrence” Exception To Mass Action Federal Jurisdiction Applies Only To A Single Event Or Occurrence

Wed, 10 Jun 2009 14:20:04 GMT

In denying the plaintiffs’ motion for remand, the Southern District of Florida in Galstaldi v. Sunvest Communities USA, LLC, 256 F.R.D. 673 (S.D. Fla. Feb. 17, 2009), confirmed that the Class Action Fairness Act’s “event or occurrence” exception to federal jurisdiction for mass actions applies only where a single event or occurrence is at issue.

In this case, all parties agreed that the action satisfied CAFA’s requirements for a mass action. Plaintiffs argued, however, that CAFA’s “event or occurrence” exception federal jurisdiction applied. Specifically, plaintiffs argued that all the damages arose out of Defendants fraudulent scheme related to the conversion of condominium units in a particular development in Orlando, Florida. The defendant countered that each such instance of fraud is a separate “event” and, as such, all the claims did not arise out of the same event as required for CAFA’s exception to federal jurisdiction to apply.

The district court agreed, holding that “[s]ales of condominiums to hundreds of individuals around the country over a period of one and one half years simply does not constitute ‘an event or occurrence.’” The court bolstered its reading of the plain language of the statute by looking to CAFA's legislative history.

District Court Erred In Denying Certification By Comparing RICO Claims To Title VII Claims

Wed, 10 Jun 2009 14:58:23 GMT

In addressing this case for a third time, the Eleventh Circuit in Williams v. Mohawk Industries, Inc., No. 08-13446 (11th Cir. May 28, 2009), held that the district court abused its discretion in denying class certification, primarily because the district court improperly analogized plaintiffs’ RICO claims to claims brought under Title VII.

The plaintiffs sought certification of a class seeking damages and injunctive relief against the defendant for alleged violations of state and federal RICO laws based on allegations that the defendant hired illegal aliens and thus depressed the wages of all legal hourly workers. The court first found error in the district court’s failure to find common issues of law and fact. According to the Eleventh Circuit, the RICO claims did not require “proof of individual act of disparate treatment as often is the case under Title VII.”

The court also reversed the district court’s decision in that the named plaintiffs’ claims were not typical of the class, holding that legal theory upon which relief was sought was the same for all class members.

The court remanded for the trial court to decide whether Rule 23(b)(3) predominance was satisfied because, according to the Eleventh Circuit, in deciding predominance, the district court simply repeated its error as to commonality.

Also of note, the court remanded for the district court to consider whether a Rule 23(b)(2) hybrid class could be certified as to plaintiffs’ claim for equitable relief.

Fair Debt Collection Practices Act Class Allowed To Proceed Despite Prospect Of De Minimis Recovery

Wed, 10 Jun 2009 15:17:25 GMT

In a case of first impression in this circuit, the Southern District of Florida in Hicks v. Client Services, Inc., 2009 WL 1591111 (S.D. Fla. June 1, 2009), wrestled with the question of whether a class action is a superior method of adjudication where recovery under the Fair Debt Collection Practices Act would be de minimis on a class wide basis, and significant if brought on an individual basis.

Specifically, the FDCPA limits damages in class actions to the lesser of $500,000 or 1% of the defendant’s net worth. Thus, in this case, damages for each class member would range from $1.24 to $5.09. On the other hand, if an individual claim is brought, a plaintiff could recover $1,000 in statutory damages, plus actual damages and attorneys’ fees.

On this basis, the defendant argued that the class vehicle is not the superior method of adjudication. The district court recognized there is authority supporting both the plaintiffs and defendant’s positions. Nonetheless, the court was persuaded that the class action remained superior, apparently on the ground that most class members would not likely be aware of their rights or willing to pursue them.

Courts Weigh In On Evidentiary Standard For "Rigorous Analysis" Under Rule 23

Thu, 11 Jun 2009 14:39:11 GMT

Classified News: June 12, 2009

Fri, 12 Jun 2009 10:10:03 GMT

Eleventh Circuit Confirms That Jurisdiction Under CAFA Must Be Established Through Documents Provided By The Plaintiff

Tue, 16 Jun 2009 08:01:21 GMT

The defendant in Thomas v. Bank of America Corp., No. 09-11143 (11th Cir. June 12, 2009), removed the case to federal court asserting that, according to the affidavit it provided, the elements of a mass action under CAFA were satisfied.

The plaintiff moved to remand the case, arguing that the evidence did not support federal jurisdiction under CAFA. Both the district court and the Eleventh Circuit agreed, noting that the plaintiff’s filings--the only evidence from which jurisdiction can be established--were insufficient to establish CAFA jurisdiction.

Classified News: June 25, 2009

Thu, 25 Jun 2009 17:28:39 GMT

Class action lawsuit filed in federal court in Florida against Florida developer Ginn. The lawsuit alleges that the Ginn Development Company, LLC and Lubert-Adler Partners, LP created a false appearance of high demand for properties, artificially inflated the values of the properties, and misrepresented the amenities to be developed.

California homeowners have filed a class action against KB Home, Countrywide Financial, and LandSafe Appraisal Services, claiming that the companies conspired to artificially rig home appraisal values and sale prices. The plaintiffs claim that the defendants inflated home prices by $300 million in California alone.

Classified News: July 3, 2009

Fri, 03 Jul 2009 12:12:56 GMT

Northwestern Mutual Life Insurance Company has been sued in a $200 million class action lawsuit by former financial representatives of the firm. The plaintiffs claim that Northwestern Mutual denied them minimum wage and overtime pay.

A class action lawsuit has been filed against The Dannon Co, Inc. which accuses the company of mounting a massive advertising campaign to convince consumers to pay more for yogurt containing probiotic bacteria because of the product’s health benefits. The plaintiffs seek reimbursement for all purchases of Activia, Activia Light, and Dan Active, and the plaintiffs further demand that the company engage in a corrective advertising campaign.

A group of five public pension funds have won the right to lead a class action lawsuit against Bank of America for its acquisition of Merrill Lynch. Investors accuse Bank of America of misleading them regarding Merrill Lynch’s financial health prior to the deal even though it was clear that Merrill Lynch would suffer a $15.84 billion loss.

Stream Energy has been sued in a class action lawsuit accusing the company of running a pyramid scheme. In the pyramid scheme, new participants pay money to the people who recruit them, then hope to recoup their investment by recruiting others. The pyramid collapses when there are not enough new recruits.

Classified News: July 10, 2009

Fri, 10 Jul 2009 07:48:13 GMT

A class action lawsuit has been filed against Marquette Bank on allegations that the Bank violated the Electronic Funds Transfer Act by failing to disclose that non-members would be charged a fee for using an ATM. Under federal law, an electronic message on the screen has to disclose any fees.

The highest court in Massachusetts has ruled that customers have the right to pursue class action claims against businesses, overriding provisions in agreements which state that claims must be submitted to arbitration. Other states have invalidated provisions in software licenses, membership contracts, and credit card agreements which state that class action claims are barred.

Classified News: July 17, 2009

Fri, 17 Jul 2009 09:02:21 GMT

A federal judge granted class action status to a lawsuit which accuses a unit of Toys “R” Us, Inc. and five manufacturers of conspiring to fix prices on a variety of baby goods. Similar price-fixing allegations have been thrown out by federal judges in the wake of a 2007 U.S. Supreme Court decision which ruled that minimum pricing agreements between manufacturers and retailers were no longer inherently illegal.

Massachusetts residents have filed a class action lawsuit against the Massachusetts Turnpike Authority, claiming that motorists who paid Pike tolls were forced to pay for work on other untolled projects. The plaintiffs allege that it was unconstitutional to use $450 million in revenue to pay for the Big Dig.

Classified News: July 24, 2009

Fri, 24 Jul 2009 14:39:26 GMT

A California Superior Court Judge has allowed a class action lawsuit to proceed against DirecTV for allegedly imposing early termination fees of up to $480 on customers who canceled their service before the end of the contract term. The plaintiffs accuse DirecTV of not clearly disclosing its cancellation terms and fees.

Denny’s Restaurant faces a class action lawsuit due to allegedly unsafe levels of sodium found in the food served by the restaurant. The lawsuit seeks to force Denny’s to disclose the amount of salt in its meals.

“Round Two” Of Action Against FedEx For Failure To Pay Gap Time Again Fails Certification

Tue, 28 Jul 2009 11:04:40 GMT

Despite the plaintiffs’ attempt to narrow its claim, the Eleventh Circuit in Babineau v. Federal Express Corporation, No. 08-16227 (11th Cir. July 27, 2009), again affirmed the district court’s denial of class certification.

The plaintiffs claimed that FedEx failed to pay employees for time worked during breaks and before and after their regularly scheduled shifts—so-called “gap time.” According to both the district court and the Eleventh Circuit, individualized inquiries into whether and how long each employee worked without compensation would swamp any issues that were common to the class.

Classified News: July 30, 2009

Thu, 30 Jul 2009 18:46:50 GMT

Morton’s Restaurant Group, Inc. has settled a class action lawsuit alleging that waiters were forced to give up their tips to managers and were paid less than the minimum wage. Morton’s will record a $13.4 million charge related to the class action suit.

A Congressional committee has held hearings on the Obama administration’s proposal to ban arbitration clauses from credit card agreements as part of a wider push for consumer protections. Citing arbitration clauses, banks can request that lead plaintiffs in a class action suit go to arbitration individually.

Classified News: August 7, 2009

Fri, 07 Aug 2009 12:44:42 GMT

A Boston attorney has filed a class action lawsuit against Bank of America Home Mortgage and Wells Fargo Home Mortgage, alleging that the lenders knew or should have known that the loans could grow bigger over time and were unaffordable to borrowers. The suits are grounded on a 2008 Massachusetts Supreme Judicial Court decision in which the Court decided that lenders violated state law by writing loans that were almost certain to lead to default and foreclosure.

Plaintiff lawyers are seeking class action status for 57 federal cases being consolidated in Chicago and West Palm Beach against Ocwen Financial, one of the nation’s largest servicers of mortgages to consumers with low credit scores. The plaintiffs allege that Ocwen classified timely payments as late and then began foreclosure proceedings.

Classified News: August 16, 2009

Sun, 16 Aug 2009 16:03:05 GMT

A federal appeals court has affirmed a ruling which denied class action status to a lawsuit against Belo Corporation. The lawsuit accused Belo of intentionally overstating circulation figures for its news publication in order to charge advertisers more and to artificially inflate the value of the stock.

Sprint-Nextel has announced a settlement of $17.5 million in a class action lawsuit involving early termination fees in cell phone contracts. The lawsuit accused Sprint of overcharging $1.2 billion in early termination fees since 1999.

Eleventh Circuit Affirms Jurisdiction Over Foreign Class Members In Securities Class Action Settlement

Tue, 18 Aug 2009 11:46:35 GMT

The Eleventh Circuit in In re: CP Ships Ltd. Securities Litigation, No. 08-16334 (11th Cir. Aug. 13, 2009), rejected a challenge to a securities class action settlement where the objector argued that the court lacks subject matter jurisdiction over foreign class members.

According to the Court, the facial jurisdictional challenge fails because the substantial acts in furtherance of the fraud at issue were committed inside the United States. As such, the Court has jurisdiction over the foreign class members affected by the fraud under the Securities Exchange Act.

The Court also essentially summarily denied the objector’s challenge to the sufficiency of the notice and the fairness of the settlement.

Classified News: August 21, 2009

Fri, 21 Aug 2009 13:43:57 GMT

Wells Fargo has been sued over the slashing of home equity lines of credit. The plaintiff accuses the Bank of reducing credit lines based on flawed automated software which exaggerates the decline in property values. The plaintiff seeks class action status for the lawsuit.

Classified News: August 28, 2009

Fri, 28 Aug 2009 17:41:09 GMT

A lawsuit has been filed against Textron alleging that top management misled stockholders and painted an overly rosy picture of the company’s finances prior to the financial meltdown last year. The suit was filed in U.S. District Court in Rhode Island on behalf of current and former employees of Textron. The plaintiffs seek class action status for the lawsuit.

Microsoft and Yahoo have joined a group of opponents of a class action settlement that gives Google the right to digitize millions of books. The companies are members of the Open Book Alliance which is made up of nonprofits and libraries which oppose digitizing the books. Critics of the proposed class action settlement assert that the deal gives Google the ability to set prices for libraries once the books are scanned onto the internet.

Court Refuses To Certify Class Of Liberian Victims Of Human Rights Violations

Fri, 04 Sep 2009 16:08:28 GMT

Victims of human rights atrocities in Liberia sought to certify a class consisting of all such victims. The Southern District of Florida in Kpadeh v. Emmanuel, No. 09-20050-civ-Jordan, 2009 WL 2749828 (S.D. Fla. Aug. 25, 2009), held that individualized issues predominate given that each class member must demonstrate both that he or she was illegally tortured and the amount of damages to which he or she is entitled under the law.

The court recognized that at least two courts in other jurisdictions have certified similar classes, but found those cases unpersuasive as those courts failed to rigorously apply Rule 23’s requirements, as is necessary in the Eleventh Circuit.

Classified News: September 4, 2009

Fri, 04 Sep 2009 16:11:57 GMT

Toyota has been sued in a class action lawsuit for allegedly hiding evidence from plaintiffs in cases involving highway deaths and injuries. The class action case echoes the allegations in a lawsuit filed by a former Toyota attorney who accuses his former employer of concealing and destroying evidence that should have been provided to plaintiffs.

The EEOC has filed a lawsuit against UPS alleging that the company improperly fired a disabled employee. The employee took 12 months of medical leave due to multiple sclerosis, returned, and then left again due to complications from her medications. The EEOC alleges that UPS failed to accommodate the employee’s disability in violation of the American with Disabilities Act. The EEOC seeks class action status for the suit.

Adverse Inference Due To Spoliation of Evidence Applies in Class Actions

Thu, 10 Sep 2009 11:05:38 GMT

While determining whether to certify a class, the Southern District of Georgia recently sanctioned Defendants for spoliation of evidence and allowed a rebuttable adverse inference relating to documents destroyed by Defendants' agent. The Court, in Smith et al. v. Georgia Energy USA, LLC et al., --- F.R.D. ---, 2009 WL 2486896 (S.D.Ga. Aug. 10, 2009), agreed that Defendants should not be rewarded for destroying the evidence that would provide at least some of the answers to the allegedly individualized questions which Defendants claimed precluded class certification. The Court found that all five elements necessary to allow a rebuttable adverse inference that the missing evidence is harmful to the spoliator were present. First, the Court found that documents destroyed by Defendants' agent contained information that would have enabled Plaintiffs to locate other members of the clsas and determine their damages. Second, the Court agreed that the harm caused to Plaintiffs by the destruction of the evidence was highly prejudicial. Third, the Court found that the evidence was important to the case. Fourth, the testimony presented relating to the destruction of documents indicated that it was done in bad faith. Finally, the Court believed the Plaintiffs claim that the absence of the destroyed documents hampered their ability to obtain meaningful expert testimony related to damages in the case.

13th Annual National Institute on Class Actions

Fri, 11 Sep 2009 07:46:01 GMT

Presented by ABA Center for Continuing Legal Education

Friday, October 30, 2009
San Francisco, CA
8:00 AM – 5:00 PM PT

Friday, November 20, 2009
Washington, DC
8:00 AM – 5:00 PM ET

Each session will begin with the popular presentation by Professor John C. Coffee on new developments in class action litigation. Also on the agenda are programs that examine issues concerning arbitration and class action waivers, recent developments in the standards for certifying a class, and advice for both plaintiffs and defense counsel on settling class actions.

The session in San Francisco will include a program on the class action landscape in California courts, while the Washington, DC session will feature a roundtable discussion on current issues in class actions with three federal judges moderated by Professor Arthur R. Miller.

The event brochure, including a full description of the programs and the speakers, and registration information can be found on the ABA’s Web site at
http://www.abanet.org/cle/programs/n09cac1.html.

Classified News: September 11, 2009

Fri, 11 Sep 2009 16:12:45 GMT

A federal court has approved a $475 million settlement in a class action case involving Merrill Lynch. The lawsuit, led by the State Teachers Retirement System of Ohio, accused Merrill Lynch of artificially inflating its stock prices through risky investments connected to subprime mortgages.

Class Rep Who Benefited From Alleged Wrongdoing Deemed Inadequate In This ERISA Action

Fri, 18 Sep 2009 10:02:45 GMT

The Southern District of Florida in Almonor v. BankAtlantic Bancorp, Inc., No. 07-61862-civ (July 28, 2009), refused to certify a class alleging that BankAtlantic violated ERISA by inflating the value of its stock over the class period.

The court determined that the class representative was inadequate because she actually benefitted from the alleged wrongdoing. Specifically, the class rep elected to direct some of her withholdings into the BankAtlantic stock fund. However, prior to BankAtlantic’s revelation of the overstatement of its earnings—and the attendant plummeting in the stock value—the class rep sold all of her assets in the stock fund. Thus, unlike those class members whose portfolios took a loss because of the overstatement, the class rep benefited from the inflated stock value.

The court also noted that the class definition was overbroad because it included those who purchased stock after BankAtlantic disclosed the overstatement.

Classified News: September 18, 2009

Fri, 18 Sep 2009 17:55:28 GMT

Female employees at Sterling Jewelers are pursuing class action status for their claims of sex discrimination at the retail chain. The Arbitrator is currently considering whether women were paid $2 to $3 less per hour than men and whether women were offered fewer promotional opportunities. Sterling argues that the case cannot be certified as a class action because the women signed agreements in which they agreed to submit employment disputes to arbitration.

Tenet Healthcare, the owner of three Orange County hospitals, has agreed to pay $85 million to settle claims that nurses and other 12-hour shift employees were denied extra pay after changes in California law resulted in the employees being entitled to overtime wages. Approximately 23,000 current and former employees qualify for cash payment.

Clients of Neal Greenberg, a Boulder, Colorado based wealth manager, have filed a civil complaint after his firm, Agile Group, froze their accounts. The plaintiffs seek class action status and allege that Agile inappropriately placed their funds into high risk, unsuitable investments, which destroyed their retirement nest eggs.

Classified News: September 26, 2009

Sat, 26 Sep 2009 19:18:05 GMT

T-Mobile has been sued in a class action case for allegedly pushing customers towards paperless billing. The plaintiffs allege that adding a fee for paper bills constitutes a material modification of their contracts. In August 2009, T-Mobile began to charge a $1.50 monthly fee on all accounts that continued to receive a paper bill.

Facebook has agreed to shutdown its Beacon advertising system in order to settle a class action lawsuit. The lawsuit alleged that Facebook and its Beacon affiliates, like Blockbuster and Overstock.com, violated a number of laws, including the Electronic Communications Privacy Act, the Video Privacy Protection Act, the California Consumer Legal Remedies Act, and the California Computer Crime Law. Beacon was designed to broadcast back to a member’s facebook friends actions that the facebook member took on participating websites.

Residents in St. Petersburg, Florida Receive Class Status for Pollution Lawsuit

Fri, 02 Oct 2009 04:25:14 GMT

Residents of St. Petersburg, Florida filed a class action lawsuit against Raytheon Corporation alleging that the company knowingly polluted the Azalea neighborhood with industrial waste, lowering the residents' property values. The complaint also alleges that Raytheon engaged in a concerted effort to misrepresent and withhold information regarding the extent of the contamination. Judge Covington of the United States District Court for the Middle District of Florida granted the residents' motion for class certification this week, and according to news sources over 1,000 residents are eligible to join the class. Earlier this year, Raytheon predicted it would cost over $20 million just to clean up the plume of contaminants in the water beneath the neighborhood.

Classified News: October 6, 2009

Tue, 06 Oct 2009 18:56:38 GMT

Customers have sued AT&T and Apple over a glitch in the iPhone. The customers allege that they were led to believe that the iPhone had multimedia messaging services which included the ability to send and receive pictures. This service only became available at the end of September 2009 when many customers believed that the service would be available much earlier. The customers have filed suit in nine states. The suits seek to become class action cases against Apple and AT&T.

Are "Preliminary" Motions for Class Certification Allowed?

Wed, 07 Oct 2009 08:23:17 GMT

Are "preliminary" motions for class certification allowed? According to the the Middle District of George, the answer is "no". In Jones v. Bank of America Corporation, --- F.3d ---, 2009 WL 3161696 (M.D.Ga), the Court held that such a "preliminary" motion is procedurally improper and that the statute upon which Plaintiffs relied upon in their "preliminary" motion for class certification did "not even contain the word 'preliminary.'" The Court further noted that "neither the Federal Rules of Civil Procedure nor the Local Rules of this Court expressly provide for a 'preliminary' motion for class certification." Indeed, the Court pointed out that Plaintiffs themselves impliedly admitted the motion was premature with their request that judgment on the motion be deferred until after discovery. The motion was denied without prejudice "as premature" and the Court's order specifically noted that the denial had no impact on the ultimate issue of class certification.

Recent Decisions From Other Jurisdictions

Wed, 14 Oct 2009 14:05:44 GMT

Supreme Court Indicates that Requiring Defendant to Pay Costs of Class Notification Without a Hearing is a Denial of Due Process – In DTD Enterprises, Inc. v. Wells, No. 08-1407, 2009 WL 3255157 (U.S. Oct. 13, 2009), the United States Supreme Court denied a petition for writ of certiorari filed by DTD Enterprises, Inc., a commercial dating-referral service. DTD initially filed a contract action against one of its customers, Janice Wells, alleging that Wells refused to make certain payments due under her contract with DTD. Wells, in turn, brought a class action against DTD. The trial court certified the class and ordered DTD to bear all the costs of class notification because Wells could not afford to pay those costs herself.

Justice Kennedy, joined by Chief Justice Roberts and Justice Sotomayor, wrote a statement regarding the denial of certiorari. In the statement, Justice Kennedy acknowledged that the denial of certiorari was appropriate because (1) the petition was interlocutory, given that the New Jersey appellate courts had denied DTD leave to appeal the trial court’s actions, and (2) the action fell within the scope of an automatic stay entered when DTD filed for bankruptcy.

Nevertheless, Justice Kennedy expressed his concern that, “[t]o the extent that New Jersey law allows a trial court to impose the onerous costs of class notification on a defendant simply because of the relative wealth of the defendant and without any consideration of the underlying merits of the suit, a serious due process question is raised.” He further explained that, in such a situation, a defendant would have little hope of recovering its expenditures if the suit later proved meritless, and, thereby, would be denied a property interest. Finally, he opined, “there is considerable force to the argument that a hearing in which the trial court does not consider the underlying merits of the class-action suit is not consistent with due process because it is not sufficient, or appropriate, to protect the property interest at stake.”

Eight Circuit Holds that Class-Action Waiver in an Arbitration Agreement is Not Unconscionable – In Cicle v. Chase Bank USA, No. 08-1362, 2009 WL 3172157 (8th Cir. Oct. 6, 2009), Chase appealed from an order of the United States District Court for the Western District of Missouri denying its motion to compel arbitration of claims plaintiff Virginia Cicle brought in a class-action lawsuit, in which she alleged that Chase (1) imposed illegal penalties and (2) committed an unfair merchandising practice under the Missouri Merchandising Practices Act (MMPA) when it increased the interest rate on her credit card without giving her notice. Cicle’s amended Cardmember Agreement included a binding arbitration agreement that included, inter alia, a class-action waiver. The district court, applying Missouri law, found the class-action waiver unconscionable, thereby making the overall agreement substantively unconscionable. Because Cicle’s actual damages were small, the court found that Cicle and those similarly situated would have no effective remedy if the arbitration agreement were enforced without severing the waiver.

The United States Court of Appeals for the Eighth Circuit reversed, holding the class-action waiver was not unconscionable, because the arbitration agreement provided an exception to binding arbitration. Specifically, the agreement provided that Cicle could file her claim individually in small claims court, which, in the court’s opinion, would afford her “a practical remedy” – a relatively inexpensive, quick, and easy adjudication. The Eight Circuit also disagreed with the district court’s determination that the class-action waiver violated Missouri policy, as reflected in the MMPA, “to protect the public from deceptive merchandising practices.” The court noted that the Chase arbitration agreement limited neither Chase’s liabilities nor Cicle’s remedies under the MMPA. It thus reversed the district court’s ruling and remanded the case with instructions to enter an order granting Chase’s motion to compel arbitration.

Despite Parties’ Stipulation that CAFA Jurisdiction Was Satisfied, Second Circuit Remands Case to District Court for Consideration Whether All Rule 23 Requirements Were Met – In County of Nassau v. Hotels.com, 577 F.3d 89, (2d Cir. 2009), the United States Court of Appeals for the Second Circuit vacated the United States District Court for the Eastern District of New York’s order dismissing the plaintiff’s complaint for lack of subject matter jurisdiction. On behalf of New York local governments that impose taxes on occupants of hotel rooms, Nassau County, New York filed a class action against Hotels.com and other online hotel room resellers, alleging that the defendants had been underpaying local hotel taxes. The parties stipulated that the requirements of the Class Action Fairness Act were met. The defendants subsequently filed a motion to dismiss the class action complaint on grounds that the district court lacked jurisdiction over the action because Nassau County failed to allege that it exhausted its administrative remedies by complying with administrative processes for assessing and collecting taxes.

On appeal, the Second Circuit declined to address the exhaustion issue. Instead, sua sponte, the court raised the question of whether the complaint met the Rule 23 requirements for class certification, regardless of the fact that the parties had stipulated to jurisdiction under CAFA. The court explained there were substantial questions as to whether class certification would be appropriate in the action, because each class member’s cause of action was “unique,” considering that each local government imposed hotel taxes under its own tax laws. Given the “distinct possibility that questions common to the members of the class do not predominate over those affecting only individual members,” the Second Circuit remanded the case to the district court for determination of whether class certification was appropriate in the first instance.

Classified News: October 14, 2009

Wed, 14 Oct 2009 18:44:36 GMT

Yahoo has reached a settlement in the pay-per-click class action lawsuit. In that case, the plaintiffs allege that they contracted for targeted ad placement through two products and that Yahoo breached its contract with customers by allowing Yahoo ads to be displayed in spyware, domain name parking sites, and pop ups. The claims included breach of contract, unjust enrichment, misrepresentation, civil conspiracy, and unfair business practices. Yahoo has agreed to implement a new filtering option for ads and to make modifications to the way it handles disclosures and click fraud investigations.

Zipcar, Inc., a self-service car rental company that rents cars by the hour, has been sued for charging excessive fees to consumers. The plaintiffs seek to make the case a class action proceeding. The lawsuit was filed in federal court in Boston and alleges that there were a number of excessive fees charged to consumers including phone fees, late fees, and inactivity fees.

A federal judge has thrown out a class action lawsuit against Disney brought by three disabled persons who were upset they could not ride their personal segways in the Walt Disney World theme parks. The judge also rejected a proposed settlement which would have permitted Disney to continue banning the two wheeled segways in exchange for deploying four-wheeled scooters for disabled guests to use. The settlement also included paying the plaintiffs’ legal fees, and giving the plaintiffs $4,000 each towards future Disney vacations.

Court Dismisses Class Action Claims For Pro Se Plaintiffs’ Inability To Adequately Represent Class, Failure To Timely Serve A Defendant, And Failure To Move For Certification

Thu, 15 Oct 2009 09:16:31 GMT

In Crawley, the plaintiffs, who represented themselves pro se, asserted racial discrimination claims against two companies and the president of the board of directors for one of the companies. 2008 WL 4793650 at *1. The president of the board moved to dismiss. The plaintiffs retained counsel to represent them as to the motion to dismiss but otherwise proceeded pro se. The Court entered an order directing the plaintiffs to file proof of service on the defendants in accordance with Rule 4 of the Federal Rules of Civil Procedure. Id. at *2. The order warned that failure to comply with the order would result in dismissal of the lawsuit without further notice. Id. In addition, Local Rule 4.04(b) required the plaintiffs to file a motion for class certification within ninety days of filing the initial complaint. Id. The plaintiffs’ disregard of applicable rules is what ultimately led to the demise of their claims. When the plaintiffs failed to submit timely proof of service on one of the companies and failed to submit a timely motion for certification, the court dismissed the plaintiffs’ claims against the company. Id. The court also dismissed the claims against the president of the board because the complaint failed to sufficiently allege his personal involvement in the alleged discriminatory acts. Id. at *1, *3.

Can Plaintiffs Maintain A Class Action When They Identify A Potentially Viable Ground For Such Relief, But Plead Insufficient Facts To Satisfy The Requirements Of Rule 23?

Fri, 16 Oct 2009 09:51:34 GMT

Should The Court Stay Discovery During The Pendency Of A Motion To Dismiss Securities Class Action Fraud Claims Brought Pursuant To State Law?

Fri, 16 Oct 2009 09:52:41 GMT

In Koock v. Sugar & Felsenthal, LLP, No. 8:09-cv-609-T-17EAJ, 2009 WL 2579307 (M.D. Fla. Aug. 19, 2009), the plaintiffs filed a class action complaint alleging claims for negligence and negligent misrepresentation under Florida law. The plaintiffs contended, among other things, that the managing member of a securities fund “perpetrated a multi-million dollar Ponzi scheme” that defrauded hundreds of investors out of more than $130 million. 2009 WL 2579307, at *2. The plaintiffs also sued the firm that the managing member hired to prepare the private placement memorandum. The firm moved to dismiss the complaint for lack of personal jurisdiction and improper venue and subsequently moved to stay discovery. The defendants based their motion to stay on the Private Securities Litigation Fraud Act (the “PSLFA’s”) provision for the stay of discovery and other proceedings pending the resolution of a motion to dismiss.

The Court ruled that the PSLRA is limited to actions brought pursuant to federal securities laws. Because the plaintiffs solely alleged state law claims, the stay provision in PSLRA did not apply. The Court also declined to exercises its discretion and implement a discovery stay under Chudasama v. Mazda Motor Corp., 123 F.3d 1353 (11th Cir. 1997). The Court denied the defendants motion, concluding under Chudasama that the possibility that the defendants’ motion to dismiss would be granted did not outweigh “the harm produced by a discovery delay.” Koock, 2009 WL 2579307, at *3.

Northern District of Alabama Certifies Securities Class Action Against HealthSouth

Fri, 16 Oct 2009 09:53:27 GMT

In In re HealthSouth Corporation Securities Litigation, Nos. CV-03-BE-1500-S, CV-03-BE-1501-S, CV-03-BE-1502-S, 2009 WL 3152226 (N.D. Ala. Sept. 30, 2009), the Northern District of Alabama certified a class of HealthSouth bond purchasers, finding that the bondholders' claims under Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act represented a "prototypical securities class action," although the court excluded from the class definition for the Section 11 claim bondholders whose purchases were made before the registration statement at issue was filed. The court rejected the defendants' argument that the bondholders were not entitled to a presumption of reliance and therefore could not satisfy the predominance requirement of Rule 23(b)(3).

Supreme Court Denies Cert, But Kennedy Expresses Due Process Concerns Over Imposition Of Class Notice Costs On Defendant

Fri, 16 Oct 2009 11:01:58 GMT

Some members of the Court felt compelled in DTD Enterprises, Inc. v. Wells, No. 08-1407, 2009 WL 3255157 (Oct. 13, 2009), to note that the New Jersey court’s imposition of class notice costs on the defendant may result in a denial of due process where the determination was made entirely on the court’s finding that the plaintiff could not afford the cost, but the defendant could. The Court was also concerned that no consideration was given to the underlying merit of the suit. Nonetheless, the Court denied certiorari on the grounds that the order is interlocutory and the petitioner had filed for bankruptcy.

Classified News: October 20, 2009

Tue, 20 Oct 2009 10:18:02 GMT

Aerosmith will play a concert tonight in Hawaii to settle class action claims filed by disappointed fans who sued Aerosmith after it cancelled a 2007 concert in Hawaii. The fans alleged that the concert cancellation cost them between $500,000 and $3 million in travel and other expenses.

A class action lawsuit claiming $1 billion in damages has been filed against SoHo nightclub Greenhouse. The lawsuit alleges that the club denied access to people who were invited to the club to celebrate author Teri Woods' new book because of their race.

Classified News: October 21, 2009

Wed, 21 Oct 2009 08:51:32 GMT

On Monday, bank customers filed a putative class action in the Southern District of Florida against Bank of America, Wachovia, U.S. Bank, JPMorgan Chase and Citibank seeking restitution as well as actual and punitive damages resulting from the banks' overdraft fee policies. Lead plaintiffs' counsel Bruce Rogow commented in a press release that "[c]harging a $35 overdraft fee when a college student uses her debit card to buy a cup of coffee is unconscionable."

After an appellate decision finding that passenger fees charged by the Bridgeport Port Authority to ferry passengers since 1993 were unconstitutional, a putative class action lawsuit has been filed against the Bridgeport Port Authority by passengers seeking a refund of the passenger fees they paid.

Climate Change Class Action Liability On The Rise? Courts Disagree Over Standing Requirements In Climate Change Class Actions

Fri, 23 Oct 2009 08:59:51 GMT

This is a follow up to my June 9, 2009 post about climate change class actions. In that post, I discussed a study by Zurich-based reinsurer Swiss Re warning that climate change class actions "could be a significant issue" in the next couple of years and comparing climate change class actions to asbestos litigation. Swiss Re's predictions may be right.

In Comer v. Murphy Oil, --- F.3d ---, 2009 WL 3321493 (5th Cir. Oct. 16, 2009), the Fifth Circuit Court of Appeal held that property owners whose properties were damaged by Hurricane Katrina had standing to sue oil and energy companies based on allegations that those companies caused the emission of greenhouse gases that contributed to global warming, which in turn caused a rise in the sea levels and exacerbated the impact of Hurricane Katrina, thereby increasing the damage to the plaintiffs' properties. Specifically, the court reversed the trial court's decision granting the companies' motion to dismiss, holding that the property owners had properly alleged causes of action for public and private nuisance, trespass and negligence. The court rejected the companies' argument that the property owners could not establish standing because they could not show that their alleged injury was "fairly traceable" to the companies' actions. In so holding, the Fifth Circuit relied heavily on the United States Supreme Court's decision in Massachusetts v. EPA, 549 U.S. 497 (2007), stating that the Supreme Court in that case had "accepted as plausible the link between man-made greenhouse gases and global warming."

Interestingly, the Northern District of California decided just the opposite last month in Native Village of Kivalina v. ExxonMobil Corp., --- F. Supp. 2d ---, 2009 WL 3326113 (N.D. Cal. Sept. 30, 2009), when it dismissed a federal nuisance claim brought by residents of the City of Kivalina against oil, energy and utility companies, alleging that the companies contributed to global warming, which in turn caused Arctic sea ice to melt resulting in erosion requiring the residents to relocate their homes. The district court held that the nuisance claim was barred by the political question doctrine and that the property owners failed to establish standing because they conceded that they could not trace their alleged injuries to any single defendant. The court rejected the residents' argument that the court should apply the "contribution" approach to standing developed in Clean Water Act cases holding that plaintiffs had standing to sue if they could show, among other things, that a pollutant discharged by the defendant contributed to the plaintiffs' injuries. The court reasoned that unlike the Clean Water Act, there are "no federal standards limiting the discharge of greenhouse gases."

Last month, the Second Circuit held in Connecticut v. American Electric Power Company, Inc., --- F.3d ---, 2009 WL 2996729 (2d Cir. Sept. 21, 2009), that eight states had properly alleged parens patriae standing to bring their claims against several owners of power plants for "abatement of defendants' ongoing contributions to a public nuisance" due to their contribution "to elevated levels of carbon dioxide and global warming."

A recent article in National Underwriter discusses climate change insurance as a way of protecting against the increasing risk of climate change class actions.

Classified News: October 23, 2009

Fri, 23 Oct 2009 12:09:25 GMT

The law firm Coughlin Stoia Geller Rudman & Robbins LLP filed a putative securities class action on behalf of purchasers of Advanta Corp. Class A and/or Class B common stock between October 31, 2006 and November 27, 2007, alleging that Advanta issued materially false and misleading statements by failing to disclose the impact of the economic environment and credit trends on its business and failed to adequately and timely record losses for its impaired loans and customer delinquencies.

Union-based pension funds that filed a putative class action against Freddie Mac are challenging in court the company's position that "secrecy agreements" prohibit former employees from discussing with them the allegations that Freddie Mac executives defrauded investors by concealing the company's exposure to high-risk mortgages, its losses, and its inadequate capital position. Under the agreements, former employees are permitted to answer questions from government officials related to criminal cases or regulatory proceedings. But, barring a court order, the former employees are prohibited from talking with anyone involved in a civil lawsuit against the company.

Classified News: October 28, 2009

Wed, 28 Oct 2009 12:25:39 GMT

A federal judge is stepping in to end the stalemate in two class action lawsuits in state court against Louisiana Citizens Property Insurance Corp. The Magistrate Judge invited the Insurance Commissioner and the attorneys to convene in federal court. Because neither court has primacy over the other and because the rival cases have spawned appeals, no money has been distributed to policy holders from claims arising out of the 2005 hurricanes.

A California homeowner has filed a class action lawsuit against the Pulte Home Corporation, alleging that Pulte engaged in a fraudulent scheme to prop up sales and home prices through control of the sales process. The plaintiff alleges that Pulte’s business model provides one-stop-shopping for home buyers and that the company controls sales, financing, ancillary settlement services, and appraisals. The plaintiff alleges that Pulte lured unqualified buyers by promising them large discounts.

Classified News: November 5, 2009

Thu, 05 Nov 2009 18:01:04 GMT

Wal-Mart has agreed to pay up to $85 million to settle a class action lawsuit covering 39 class actions in several states. The workers alleged that Wal-Mart prohibited them from taking breaks, failed to pay overtime, or altered their time cards.

In Orange County, California, the toll road agencies have agreed to waive $41 million in commuter penalties and pay $1.4 million in restitution to settle a class action lawsuit brought on behalf of people who claimed they were charged excessive penalties for toll violations.

Adams Golf has settled a stockholder class action lawsuit filed in June 1999. The lawsuit involves allegations that Adams Golf’s initial public offering prospectus was false and misleading. The settlement provides for payment to the class of $16.5 million of which Adams Golf will contribute $5 million.

Classified News: November 13, 2009

Fri, 13 Nov 2009 18:12:04 GMT

Plaintiffs are attempting to sue Pfizer, Inc. in a class action case in which Pfizer allegedly concealed evidence that the epilepsy drug Neurotonin did not work for unapproved uses including nerve pain, migraines, and bipolar disorder.

Judges overseeing at least 23 auction rate class action cases have dismissed the cases in recent weeks. Auction rate securities were once peddled as safe by Wall Street. Brokerage firms are refusing to allow their customers to redeem their securities. Filing an arbitration case against the brokerage firm may be more promising than filing a class action suit.

Classified News: November 20, 2009

Fri, 20 Nov 2009 17:56:26 GMT

Marsh & McLennan, one of the world’s largest insurance brokers, has agreed to pay $435 million to settle class action shareholder lawsuits. The plaintiffs have alleged bid-rigging and price-fixing by the company’s insurance brokerage unit. Marsh & McLennan has not admitted wrongdoing.

Three shareholders have filed lawsuits against Burlington Northern Sante Fe Corporation after the company announced that it had agreed to be acquired by billionaire investor Warren Buffet. The plaintiffs, who seek class action status for their lawsuits, allege that Burlington’s management shortchanged stockholders, rushed into a deal for their own benefit, and failed to get the highest price.

Classified News: November 25, 2009

Wed, 25 Nov 2009 08:55:20 GMT

Class action lawsuits stemming from banks’ overdraft practices have sprung up across the United States. Complaints against eight banks—including Bank of America, Citibank, JP Morgan Chase, Wachovia, and Wells Fargo—are being consolidated into a single action in the U.S. District Court for the Southern District of Florida. The plaintiffs allege that banks are signing up customers for overdraft protection without their knowledge, realigning transactions to maximize fees, and giving debit card users no warnings when they are overdrawn.

Seven Philadelphia area health systems were sued in a class action case by employees who allege that they were forced to work during their lunch breaks and were not compensated for their work. Federal and state law requires that hourly workers be paid for all time they are working.

Classified News: December 3, 2009

Thu, 03 Dec 2009 18:43:35 GMT

Three retirees have filed a lawsuit seeking class action status against Verizon. The plaintiffs accuse Verizon of improperly transferring retirees out of Verizon’s pension plan when the companies spun off yellow pages publisher Idearc Inc. in 2006. Idearc has since gone into bankruptcy, and the retirees state that their benefits have been cut.

A class action lawsuit has been filed against Toyota to correct sudden unintended acceleration in Toyota and Lexus vehicles. Toyota has laid the blame on its floor mats and launched a recall of four million vehicles.

Classified News: December 11, 2009

Fri, 11 Dec 2009 10:45:14 GMT

The United States Government has agreed to pay $3.4 billion to settle the Indian Trust Fund lawsuit. The suit arose from a system dating back to 1887 when Congress divided tribal lands into parcels. The parcels were assigned to individual American Indians while the remaining parcels were sold. The Interior Department manages 56 million acres of Indian Trust land. The Government handles leases on the land and distributes revenue to the American Indians. In 2009, the Government collected $298 million for 384,000 accounts. In the class action suit, the plaintiffs accused the Government of mismanaging the funds. The plaintiffs allege that they are owed far more than what they had been paid. The settlement of the Indian Trust Fund lawsuit represents an end to one of the largest and most complicated class action lawsuits in U.S. history.

A lawsuit against AT&T has been certified as a class action. The plaintiffs allege that the company could not match the speeds promised in its DSL campaign.

A class action lawsuit has been filed against Denver-based Qwest for failing to live up to its “Price for Life” guarantee on high speed internet service. The plaintiff alleges that Qwest increased the cost of his broadband service even though he signed up for the “Price for Life” promotion.

The End of Objector Blackmail?

Tue, 15 Dec 2009 10:32:55 GMT

Brian Fitzpatrick, Assistant Professor of Law at Vanderbilt University Law School, recently published an article entitled “The End of Objector Blackmail?” focusing on class action objectors who try to blackmail class counsel by holding up settlements on appeal.

Article Abstract:
Courts and commentators have long been concerned with holdout problems in the law. This article focuses on a holdout problem in class action litigation known as objector “blackmail.” Objector blackmail occurs when individual class members delay the final resolution of class action settlements by filing meritless appeals in the hope of inducing class counsel to pay them a side settlement to drop their appeals. It is thought that class counsel pay these side settlements because they cannot receive their fee awards until all appeals from the settlement are resolved. Although several solutions to the blackmail problem have been proposed, both courts and commentators appear unaware that class counsel have quietly devised their own solution: class action settlement provisions (known as “quick-pay” provisions) that permit them to receive their fees even before appeals from the settlements are resolved. Drawing on an original data set of all class action settlements approved by federal judges in 2006, Fitzpatrick shows that over one-third of all settlements already have quick-pay provisions, including the vast majority of securities settlements. This article both brings to light quick-pay provisions and evaluates whether they are a better solution to the blackmail problem than those proposed by courts and commentators. Although quick-pay provisions can mitigate much of the blackmail threat without the collateral damage caused by other proposed solutions, the provisions have several serious limitations. Instead, Fitzpatrick proposes a new solution to the blackmail problem: an inalienability rule that prohibits objectors from settling appeals unless their settlements include a modification of the underlying class action settlement agreements.

View the article.

Classified News: December 18, 2009

Fri, 18 Dec 2009 17:21:14 GMT

Two units of AT&T, Inc. have been sued in class action cases where the plaintiffs allege that they were misclassified as exempt from hourly wage laws and did not receive the overtime pay they were due. One suit was filed against BellSouth Communications, Inc. in U.S. District Court in Atlanta. A similar suit was filed in federal court in San Francisco. Both suits seek $500 million in damages.

Three Massachusetts residents have filed a class action lawsuit against CVS. The plaintiffs accuse the drugstore chain of falsely claiming that its AirShield effervescent dietary supplement could prevent colds.

Eleventh Circuit Affirms Denial Of Certification Of Migrant Workers’ Wage Claims

Mon, 28 Dec 2009 08:49:40 GMT

In an unpublished opinion, the Eleventh Circuit refused to disturb the decision of the district court (N.D. Ga.) denying the plaintiffs’ motion to certify breach of contract claims and claims under the Migrant and Seasonable Agricultural Workers Protection Act. According to the Court, the lower court did not abuse its discretion in determining that individualized proof would be necessary as to each individual’s earnings and the time worke, thereby making certification improper under Rule 23(b)(3). The district court did certify a collective action under the Fair Labor Standards Act, though that decision was not the subject of this appeal. Luna v. Del Monte Fresh Produce (Se.), No. 09-12464 (11th Cir. Dec. 3, 2009).

Court Shoots Down Putative Class Asserting Novel Theories Of Market Share Liability And Failure To Warn

Mon, 28 Dec 2009 10:01:46 GMT

In Kelecseny v. Chevron, U.S.A., Inc., No. 08-61294-civ, 2009 WL 4262603 (S.D. Fla. Nov. 25, 2009), the plaintiff sought to certify a damages class and an injunctive relief class based on alleged damages resulting from the use of gasoline containing ethanol (so-called “E10”) in his boat.

In his damages class, the plaintiff relied on a market share theory of negligence, under which all gasoline makers who sell E10 in the state of Florida would be liable. The court determined that such a class fails almost all the Rule 23 factors, beginning with a finding that the class itself is not adequately ascertainable because the court would have to undertake individualized inquires as to whether the class members even used E10. Numerosity was not met for essentially the same reason.

On the typicality element, the court noted that it found no case in which market share liability had been applied in a class action. Applying that theory to an entire state—as the plaintiff sought here—was “untenable,” given that use of market share liability requires using the narrowest possible geographic market. The court also found problems with the predominance element based on individualized issues related to causation, comparative fault, and using the market share liability theory.

The plaintiff’s injunctive relief class, which sought that the gasoline makers be required to post warnings regarding the use of E10 in boats, fared no better. In reviewing Eleventh Circuit precedent, the court found it “impossible” for a class ever to be certified under a failure to warn scenario. According to the court, no plaintiff could have standing because, by the time of certification, he would necessarily be aware of the problem.

Defendants Successfully Persuade Appellate Court To Reverse Order Certifying Class

Tue, 29 Dec 2009 14:38:40 GMT

The defendants won on appeal by highlighting the individualized differences among the class members with respect to proof of liability and damages. When a customer would swipe his or her debit card at self-service gas pumps without entering a personal identification number, Hess Corporation (“Hess”) would obtain a preauthorization for the purchase from the customer’s bank. Some banks would place a hold on funds in a customer’s account for $50 or more as part of the preauthorization process.

The plaintiffs claimed that the holds would last for several days and sued for damages for caused by the lack of access to the restricted funds. The plaintiffs also sought injunctive and declaratory relief on the ground that Hess allegedly failed to provide adequate advance notice to its customers regarding the holds. The trial court certified a class, and the defendants appealed.

The defendants asserted on appeal that the individual issues predominated over the common issues because: (1) not all banks placed holds as a result of the preauthorization requests; (2) the lengths of the holds varied; (3) Hess’s alleged conduct in providing advanced notice regarding the holds was not the same toward each member of the putative class; and (4) and not all class members sustained damages.

The appellate court agreed and concluded that the trial court abused its discretion by certifying a class. The order was reversed, and the case was remanded for further proceedings.

Guessing The Amount In Controversy: Removing Defendants Can Only Hope They Are Right

Fri, 01 Jan 2010 13:56:54 GMT

In Lowery v. Alabama Power Company, 483 F.3d 1184 (11th Cir. 2007), the Eleventh Circuit interpreted the $5 million amount in controversy requirement in the Class Action Fairness Act, affirming the district court's decision to grant a motion for remand filed by a class of homeowners alleging that several companies caused personal injury and property damage by discharging pollutants into the air and groundwater. After being added as a defendant to the case in an amended complaint, one company attempted to remove the case to federal court, relying on allegations in the amended complaint concerning the number of plaintiffs and the type of harm they suffered, as well as specific damages allegations in a prior complaint. The company estimated that each of the 400 plaintiffs needed to seek only $12,500 to reach the $5 million amount in controversy and argued that $12,500 was a low estimate for the amount of damages claimed by each class member, in light of the nature of the claimed bodily injury and property damage. The court rejected this calculation, reasoning that "we fail to see how we can justify a conclusion that the per-plaintiff recovery will exceed even so low a total" and that to reach such a conclusion the court would have to "engage in impermissible speculation." The court concluded that the amended complaint alone--which did not allege a specific amount of damages--could not form the basis for removal.

A recent class action decision from the Southern District of Ohio illustrates the difficulty now facing post-Lowery defendants. Following the approach suggested in Lowery, the defendants in Curry v. Applebee's International, Inc., 2009 WL 4975274 (S.D. Ohio Nov. 17, 2009)--faced with a complaint that did not specifically allege the amount of damages sought by the plaintiff class of purchasers of menu items whose nutritional information was allegedly misrepresented--dutifully waited to receive evidence regarding the amount of damages claimed before attempting to remove the case. Upon receipt of interrogatory responses indicating that the plaintiff class was seeking the full value of the menu items purchased at an average value of $7 per item, the defendants attempted to remove the case. The court held that the defendants should have removed the case sooner, upon receipt of a settlement demand requesting compensation in the amount of 5% of the items sold at an average price of $7 per item, because the settlement demand should have indicated to the defendants that the plaintiff class was seeking recovery based upon the value of the menu items purchased. In a footnote, the court went one step farther, stating that because defendants had knowledge of their own sales figures related to the menu items at issue, the case may have been removable as soon as the complaint was filed.

Florida Court Decides Statutory Abatement Would Be Futile In Chinese Drywall Case

Fri, 01 Jan 2010 14:42:53 GMT

In Banner Supply Co. v. Harrell, 2009 WL 4927912 (Fla. 3d DCA Dec. 23, 2009), Florida's Third District Court of Appeal affirmed the trial court's ruling denying the defendant's motion to abate the proceedings pursuant to Chapter 558, Florida Statutes, which relates to litigation involving construction defects. The plaintiffs initially filed a class action lawsuit against the defendant for personal injury allegedly sustained due to alleged defective drywall imported from China. At the time they filed their initial complaint, the plaintiffs provided a Chapter 558 notice, but the personal injury claims in that complaint were not subject to Chapter 558. The plaintiffs later filed an amended complaint asserting a claim for property damage, and the defendant filed a motion to abate, arguing that the plaintiffs had not complied with the statutory requirements of notice and an opportunity to inspect under Chapter 558. The court held that abatement would have been futile because the required sixty days set forth in Chapter 558 had already passed by the time the hearing on the defendant's motion to abate was heard. The court did not reach the issue of whether Chapter 558 applied to the case.

Eleventh Circuit Finds Florida Law Unclear On Unconscionability Of Class Action Waivers In Wireless Service Agreements

Tue, 05 Jan 2010 16:00:56 GMT

In Pendergast v. Sprint Nextel Corporation, No. 09-10612, 2010 WL 6745 (11th Cir. Jan. 4, 2010), the Eleventh Circuit had before it the issue of whether the class action waiver in the plaintiff’s wireless service agreement is procedurally and substantively unconscionable or void for other reasons. Finding Florida law unclear on the issue, the Court certified the following questions to the Florida Supreme Court:

(1) Must Florida courts evaluate both procedural and substantive unconscionability simultaneously in a balancing or sliding scale approach, or may courts consider either procedural or substantive unconscion-ability independently and conclude their analysis if either one is lacking?

(2) Is the class action waiver provision in Plaintiff's contract with Sprint procedurally unconscionable under Florida law?

(3) Is the class action waiver provision in Plaintiff's contract with Sprint substantively unconscionable under Florida law?

(4) Is the class action waiver provision in Plaintiff's contract with Sprint void under Florida law for any other reason?

Classified News: January 13, 2010

Wed, 13 Jan 2010 18:28:30 GMT

A class action lawsuit has been filed by AT&T customers who use iPhones, Blackberrys, and Smart Phones to access the internet. The plaintiffs claim that they are being taxed illegally and should receive millions of dollars in refunds. The federal Internet Tax Freedom Act prevents state and local governments from imposing taxes on those who use their phones to surf the web. The plaintiffs allege that thousands of Floridians have been improperly billed.

Aurora Health Care, a Wisconsin healthcare provider, has been sued in a class action case by several plaintiffs who claim that the company violated their privacy when it disclosed their personal medical information in bankruptcy court. The plaintiffs are seeking $25,000 in damages for each person whose private information was revealed.

Classified News: January 23, 2010

Sat, 23 Jan 2010 07:18:12 GMT

A group of seventeen major networks and production studios, as well as talent agencies, settled a class action lawsuit filed against them by television writers alleging that the companies discriminated against the writers due to their age.

An Xbox user filed a class action lawsuit against Microsoft alleging that Microsoft wrongfully failed to provide the goods and services he paid for with "Microsoft Points," which allow Xbox users to purchase games and other downloadable media from the Xbox Live Marketplace.

Residents living near fraternities at University of California at Berkeley filed a class action lawsuit seeking to require the fraternities to have live-in adult supervisors to curb alleged alcohol abuse, littering and noise violations.

Classified News: January 31, 2010

Sun, 31 Jan 2010 19:30:26 GMT

Staples, Inc. will pay $42 million to settle a dozen class action lawsuits where the plaintiffs claimed that the company misclassified its assistant store managers as exempt from overtime to avoid paying extra wages. The settlement resolves claims dating back to 2002.