In 2013, Plaintiffs filed an action against the Boeing Company and Landau Associates (Landau) in a Washington state court alleging that from the 1960s to the present years Boeing released toxins into the groundwater around its facility in Auburn, Washington and that for over a decade Landau, Boeing’s environmental-remediation contractor, had been negligent in its investigation and remediation of the pollution. Based on these allegations, Plaintiffs asserted state law claims of negligence, nuisance, and trespass. Boeing removed the action to a federal district court based on diversity jurisdiction and the Class Action Fairness Act (CAFA). The district court remanded the case to state court, concluding (1) contrary to Boeing’s allegations, Landau was not fraudulently joined, and thus there was not complete diversity; and (2) Plaintiffs’ action came within the local single event exception to CAFA federal jurisdiction. The Ninth Circuit vacated and remanded, holding (1) the district court correctly determined that Boeing failed to show that Landau was fraudulently joined; but (2) Plaintiffs’ action does not come within the local single event exception to CAFA, and therefore, the district court has federal jurisdiction under CAFA. Remanded. View "Allen v. Boeing Co." on Justia Law

Appellants, Certain Underwriters at Lloyd’s, London, filed a motion to intervene in a class-action suit filed by Appellees, purchasers of surplus-lines insurance. Named as defendants were Arkansas surplus-lines-insurance brokers. According to Appellees, the defendants improperly placed contracts of insurance with persons who were not insurers approved by the Arkansas Insurance Commissioner. Appellants asserted that they had subscribed to multiple insurance policies issues to Appellees during the relevant time period and that they had significant interests in the suit because Appellees sought to void multiple insurance contracts to which Appellants subscribed as real parties in interest. Appellants also generally denied the allegation of the class-action complaint, including the allegation that the insurance contracts were voidable. The circuit court denied Appellants’ motion to intervene. The Supreme Court reversed, holding (1) the circuit court erred in ruling that Appellants were too amorphous to allow intervention; and (2) Appellants met the requirements of Ark. R. Civ. P. 24(a)(2), which must be demonstrated when a party seeks to intervene as a matter of right. View "Certain Underwriters at Lloyd's, London" on Justia Law

Plaintiffs are individuals and entities that purchased shares in the Kingate funds and continued to hold their shares until the 2008 exposure of the Bernie Madoff Ponzi scheme, resulting in loss most of the funds’ assets. A purported class action was filed against persons and entities affiliated with the funds. The district court dismissed, citing the Securities Litigation Uniform Standards Act of 1998 (SLUSA), 112 Stat. 3227, which bars certain state‐law‐based class actions alleging falsity in connection with transactions in six categories of “covered securities.” The Second Circuit vacated, noting the Supreme Court’s intervening ruling in Chadbourne & Parke LLP v. Troice, (2014). The alleged fraud in this case is “in connection with the purchase or sale of a covered security” and brings the case within SLUSA’s prohibition (assuming SLUSA’s 12 other elements are met). The state law claims that do not depend on false conduct are not within the scope of SLUSA, even if the complaint includes peripheral, inessential mentions of false conduct. Claims accusing the defendant of complicity in the false conduct that gives rise to liability are subject to SLUSA’s prohibition, while claims of false conduct in which the defendant is not alleged to have had any complicity are not. View "In re: Kingate Mgmt. Ltd. Litig." on Justia Law

Thirteen inmates in custody throughout the Arizona prison system brought a class action suit against senior officials in the Arizona Department of Corrections alleging that they were subjected to systemic Eighth Amendment violations. The district court certified a class consisting of 33,000 prisoners incarcerated in the Arizona prison system, concluding that the putative class and subclass of inmates satisfied the requirements of class certification set forth in Fed. R. Civ. P. 23. A panel of the Ninth Circuit affirmed, holding that the district court did not abuse its discretion in concluding that Plaintiffs satisfied Rule 23(a)(2). The panel subsequently voted to deny the petition for rehearing en banc. Judge Ikuta filed a dissent from the denial of rehearing en banc concurrently with this order, arguing that all members of this diverse class of prisoners did not have an Eighth Amendment claim, alone a common claim, and therefore the certification ran afoul of Wal-Mart Stores, Inc. v. Dukes, Lewis v. Casey, and the Supreme Court’s Eighth Amendment jurisprudence. View "Parsons v. Ryan" on Justia Law

A 1999 suit alleged that plaintiffs had been arrested on misdemeanor charges and were strip searched, without individualized suspicion, in violation of their federal and state constitutional rights. Nassau County conceded liability. The Second Circuit instructed the court to certify a class as to liability and to consider whether to certify a class as to damages. The district court certified both classes, granted summary judgment on liability, and held a bench trial on damages. In 2012, before the district court entered judgment, Nassau County moved to vacate the summary judgment and to dismiss the action based on the Supreme Court’s 2012 decision Florence v. Bd. of Chosen Freeholders, that “every detainee who will be admitted to the general population [of a jail] may be required to undergo a close visual inspection while undressed. The court granted the motion as to the federal claim, but determined that Florence did not warrant vacatur of the concession of liability with respect to the state claim, and awarded $11.5 million. While appeal was pending, Nassau County moved to stay enforcement pending appeal. The district court ruled that the obligation to deposit the funds with the court would be stayed for 180 days, or indefinitely, if Nassau County posted a bond. The Second Circuit stayed the requirement of deposit or bond. View "In re: Nassau Cnty Strip Search Cases" on Justia Law

Aaron’s stores sell and lease residential and office furniture, consumer electronics, and appliances. Byrd leased a laptop computer from Aspen, an Aaron’s franchisee. Although Byrd asserts that she made full payments, an Aspen agent came to repossess the laptop, claiming that the payments had not been made. The agent allegedly presented a screenshot of a poker website Byrd had visited as well as a picture of Byrd taken by the laptop’s camera. Aspen obtained the picture and screenshot through spyware named “PC Rental Agent” that can collect screenshots, keystrokes, and webcam images from the computer and its users. Between November 16, 2010 and December 20, 2010, the Byrds alleged that this spyware secretly accessed their laptop 347 times on 11 different days. According their putative class action, alleging violation of the Electronic Communications Privacy Act, 18 U.S.C. 2511, 895 customers had surveillance conducted through PC Rental Agent. Concluding that the proposed classes were not ascertainable, the district court denied class certification. The Third Circuit reversed. The court erred by: misstating the rule governing ascertainability; engrafting an “underinclusive” requirement; finding that an “overly broad” class was not ascertainable; and improperly applying precedent to the issue of whether “household members” could be ascertainable. View "Byrd v. Aaron's Inc" on Justia Law

In a putative securities class action, investors who purchased or acquired American Depository Shares (ADSs) of The Royal Bank of Scotland (RBS), alleged that RBS and several of its top executives made false and misleading statements that inflated the ADSsʹ prices, in violation of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), 78t(a), and Rule 10b‐5, 17 C.F.R. 240.10b‐5. RBS had experienced rapid growth by repackaging residential subprime mortgages and leveraged loans into residential mortgage backed securities, collateralized debt obligations, and collateralized loan obligations. The housing market bubble burst in 2006, mortgage delinquencies soared, and subprime assets lost much of their value. The district court dismissed and denied plaintiffsʹ motions for reconsideration, to alter or amend the judgment, and for leave to amend. The Second Circuit affirmed, finding that many of the statements at issue were “inactionable puffery.” In light of the total mix of information available to the reasonable investor, RBSʹs statements were not a basis for a securities fraud claim. View "IBEW Local Union v. Royal Bank of Scotland" on Justia Law

A franchisee janitorial worker, on behalf of himself and other similarly situated individuals, filed a complaint against System4 LLC, a master franchisor, and NECCS, Inc., a regional subfranchisor, alleging, among other claims, breach of contract, misclassification as independent contractors in their franchise agreements, and rescission of the franchise agreements. The franchise agreements, signed only by Plaintiffs and NEECS, required the franchisees to arbitrate virtually all disputes. Defendants, citing the arbitration clause in the franchise agreement, moved to stay the court proceedings pending arbitration. The judge concluded that because System4 was not a nonsignatory to the agreements, Plaintiffs could proceed to litigate their claims against System4 in court. The Supreme Judicial Court reversed, holding that, by reason of equitable estoppel, System4 could compel Plaintiffs to arbitrate their substantive claims in accordance with the arbitration provision in Plaintiffs’ franchise agreements. Remanded. View "Machado v. System4 LLC" on Justia Law

From 1998 to 2012 Abbott marketed the anticonvulsant medication Depakote for applications that had not been FDA-approved (off-label uses). Physicians may prescribe drugs for off-label uses, but pharmaceutical companies are generally prohibited from marketing drugs for those same applications. Qui tam actions were filed under the False Claims Act. In 2009, Abbott disclosed in an SEC filing that the Department of Justice was investigating its marketing. Abbott pleaded guilty to illegally promoting Depakote from 2001 through 2006 and agreed to pay $1.6 billion to settle the criminal and qui tam actions. Employee benefits funds filed suit 15 months later, alleging that Abbott misrepresented Depakote’s safety and efficacy for off-label uses, paid kickbacks to physicians, established and funded intermediary entities to promote the drug for off-label uses, and concealed its role in these activities, in violation of the Racketeer Influenced and Corrupt Organizations Act. The district court dismissed, finding that the statute of limitations for the RICO claim began to run in 1998, when the funds initially reimbursed a prescription for off-label use. The court refused to toll the limitations period until the guilty plea, finding that Abbott’s concealment efforts were not designed to hinder potential lawsuits. The Seventh Circuit reversed, finding that dismissal was premature without an opportunity for discovery into when a reasonable fund should have known about its injuries from off-label marketing. View "Sidney Hillman Health Ctr. of Rochester v. Abbott Labs., Inc." on Justia Law

In 1996, a Florida District Court of Appeal approved certification of a class-action lawsuit originating in the Circuit Court of Dade County that encompassed an estimated 700,000 Floridians who brought state-law damages claims against the major American tobacco companies for medical conditions, including cancer, "caused by their addiction to cigarettes that contain nicotine." The Florida Supreme Court then decertified the class but held that the jury findings would nonetheless have "res judicata effect" in cases thereafter brought against one or more of the tobacco companies by a former class member. Here, a member of that now-decertified class, successfully advanced strict-liability and negligence claims that trace their roots to the pre-decertified class' jury findings. Over the defendants' objection, the District Court instructed the jury that "you must apply certain findings made by the [class action] court and they must carry the same weight they would have if you had listened to all the evidence and made those findings yourselves." When the jury found in favor of the plaintiff on both claims, the defendants renewed their motion for a judgment as a matter of law, contending, among other things, that federal law preempted the jury’s imposition of tort liability as based on the class-action jury findings. The District Court denied the motion, and the defendants appealed. The Eleventh Circuit reversed: "the State of Florida may ordinarily enforce duties on cigarette manufacturers in a bid to protect the health, safety, and welfare of its citizens. But it may not enforce a duty, as it has through the [class-action] jury findings, premised on the theory that all cigarettes are inherently defective and that every cigarette sale is an inherently negligent act. So our holding is narrow indeed: it is only these specific, sweeping bases for state tort liability that we conclude frustrate the full purposes and objectives of Congress. As a result, [plaintiff's class-action]-progeny strict-liability and negligence claims are preempted, and we must reverse the District Court’s denial of judgment as a matter of law." View "Graham v. R.J. Reynolds Tobacco Co." on Justia Law