Justia Class Action Opinion Summaries

This appeal stemmed from mass litigation between thousands of corn producers and an agricultural company (Syngenta). On one track, corn producers filed individual suits against Syngenta; on the second, other corn producers sued through class actions. The appellants were some of the corn producers who took the first track, filing individual actions. (the “Kellogg farmers.”) The Kellogg farmers alleged that their former attorneys had failed to disclose the benefits of participating as class members, resulting in excessive legal fees and exclusion from class proceedings. These allegations led the Kellogg farmers to sue the attorneys who had provided representation or otherwise assisted in these cases. The suit against the attorneys included claims of common-law fraud, violation of the Racketeer Influenced and Corrupt Practices Act (RICO) and Minnesota’s consumer-protection statutes, and breach of fiduciary duty. While this suit was pending in district court, Syngenta settled the class actions and thousands of individual suits, including those brought by the Kellogg farmers. The settlement led to the creation of two pools of payment by Syngenta: one pool for a newly created class consisting of all claimants, the other pool for those claimants’ attorneys. For this settlement, the district court allowed the Kellogg farmers to participate in the new class and to recover on an equal basis with all other claimants. The settlement eliminated any economic injury to the Kellogg farmers, so the district court dismissed the RICO and common-law fraud claims. The court not only dismissed these claims but also assessed monetary sanctions against the Kellogg farmers. The farmers appealed certain district court decisions, but finding that there was no reversible error or that it lacked jurisdiction to review certain decisions, the Tenth Circuit Court of Appeals affirmed. View "Kellogg, et al. v. Watts Guerra, et al." on Justia Law

In March 2012, First Solar, Inc. stockholders filed a class action lawsuit against the company alleging that it violated federal securities laws by making false or misleading public disclosures ("Smilovits Action"). National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) provided insurance coverage for the Smilovits Action under a 2011–12 $10 million “claims made” directors and officers insurance policy. While the Smilovits Action was pending, First Solar stockholders who opted out of the Smilovits Action filed what has been referred to as the Maverick Action. The Maverick Action alleged violations of the same federal securities laws as the Smilovits Action, as well as violations of Arizona statutes and claims for fraud and negligent misrepresentation. In this appeal the issue presented for the Delaware Supreme Court's review was whether the Smilovits securities class action, and a later Maverick follow-on action were related actions, such that the follow-on action was excluded from insurance coverage under later-issued policies. The Superior Court found that the follow-on action was “fundamentally identical” to the first-filed action and therefore excluded from coverage under the later-issued policies. The Supreme Court found that even though the court applied an incorrect standard to assess the relatedness of the two actions, judgment was affirmed nonetheless because under either the erroneous “fundamentally identical” standard or the correct relatedness standard defined by the policies, the later-issued insurance policies did not cover the follow-on action. View "First Solar, Inc. v. National Union First Insurance Company of Pittsburgh, PA" on Justia Law

The appellants were two of a group of plaintiffs who sued eBay and PayPal, challenging provisions in their respective user agreements. Plaintiffs’ second amended complaint alleged 23 causes of action, 13 against eBay, seven against PayPal, and three against both defendants. The trial court dismissed, without leave to amend, 20 of the causes of action, including 14 claims against eBay. Three causes of action proceeded: breach of contract against both defendants and violation of the covenant of good faith and fair dealing against eBay. More than three years later, the appellants opted out of the case against eBay, and voluntarily dismissed the two claims against it. Judgment of dismissal was entered against them.The appellants appealed, contending the trial court got it wrong as to 11 of the dismissed causes of action. The court of appeal affirmed, noting that this was the third appeal of the case. The trial court properly dismissed the claims and did not abuse its discretion in doing so without leave to amend. All of the alleged causes of action failed to state a claim. The court stated that “counsel for appellants has apparently been urging the same contentions for some nine years, all without success. This is enough.” View "George v. eBay, Inc." on Justia Law

Edward Wrenn ("Edward") and David Wrenn ("David") petitioned the Alabama Supreme Court for a writ of mandamus to direct a circuit court to vacate an order requiring Edward and David to disclose their personal income-tax returns to plaintiff Jeffrey Wright, and to enter a protective order shielding the tax returns from production. Wright alleged he contracted with A-1 Exterminating Company, Inc. ("A-1 Exterminating"), for periodic termite treatments of his house. Over the course of several decades of treatments, Wright says, A-1 Exterminating used a "watered-down pesticide so weak that it may only kill ants and 'maybe' spiders." A-1 Exterminating allegedly concealed this practice from him. As a result, Wright contended his house was infected with and damaged by termites. Wright sued Edward, David, A-1 Exterminating, A-1 Insulating Company, Inc., and Wrenn Enterprises, Inc., alleging breach of warranty, breach of contract, negligence and wantonness. Wright sought to represent a class consisting of himself and other A-1 Exterminating customers allegedly harmed by defendants' actions. In support of his request to certify a class, Wright alleged that a "limited fund" existed that would support a class action under Rule 23(b)(1)(B), Ala. R. Civ. P. The Supreme Court held that for tax returns to be discoverable, they must be highly relevant, the litigant seeking their disclosure must show a compelling need for them, and their disclosure must be clearly required in the interests of justice, and that those standards have not been met in this case. Accordingly, the Court granted the petition and issued the writ to direct the trial court vacate its order requiring disclosure of the tax records. View "Ex parte Edward Wrenn & David Wrenn." on Justia Law

Southern Furniture Leasing, Inc. filed a putative class action against a group of less-than-truckload (“LTL”) freight carriers, all predecessors to or current subsidiaries of YRC, Inc. Southern Furniture alleged YRC “carried out a widespread and systematic practice of overcharging its customers by intentionally using inflated shipment weights when determining shipment prices.” YRC asked the Tenth Circuit to affirm on the alternate ground that Southern Furniture failed to allege Article III standing. The district court rejected YRC’s standing argument, and the Tenth Circuit agreed with its analysis. The district court granted YRC’s motion to dismiss on the grounds that Southern Furniture had only 180 days to contest the alleged overcharges under 49 U.S.C. 13710(a)(3)(B). To this, the Tenth Circuit concurred and affirmed. View "Southern Furniture Leasing v. YRC" on Justia Law

In 2005-2006, GM changed the dashboard used for GMT900 model cars from a multi-piece design to a single-piece design, which made the dashboard prone to cracking in two places. Plaintiffs, from 25 states, alleged that GMT900 vehicles produced in 2007-2014 contained a faulty, dangerous dashboard and that GM knew of the defective dashboards before GTM900 vehicles hit the market. The complaint contained no allegation that any of the plaintiffs have been hurt by the allegedly defective dashboards. The complaint, filed on behalf of a nationwide class, alleged fraudulent concealment, unjust enrichment, and violations of state consumer protection statutes and the Magnusson-Moss Warranty Act.The Sixth Circuit affirmed the dismissal of the case. At worst, Plaintiffs suffered only cosmetic damage and a potential reduced resale value from owning cars with cracked dashboards. Although the plaintiffs claimed that routine testing, customer complaints, and increased warranty claims alerted GM to the defective dashboards and accompanying danger, that is not enough to survive a motion to dismiss without specifics about how and when GM learned about the defect and its hazards, and concealed the allegedly dangerous defect from consumers. Even accepting that GM produced defective vehicles, under the common legal principles of the several states, the plaintiffs must show that GM had sufficient knowledge of the harmful defect to render its sales fraudulent. View "Smith v. General Motors LLC" on Justia Law

After a $3.3 billion “roll up” of minority-held units involving a merger between Enbridge, Inc. and Spectra Energy Partners L.P. (“SEP”), Paul Morris, a former SEP minority unitholder, lost standing to litigate an alleged $661 million derivative suit on behalf of SEP against its general partner, Spectra Energy Partners (DE) GP, LP (“SEP GP”). Morris repeated the derivative claim dismissal by filing a new class action complaint that alleged the Enbridge/SEP merger exchange ratio was unfair because SEP GP agreed to a merger that did not reflect the material value of his derivative claims. The Court of Chancery granted SEP GP’s motion to dismiss the new complaint for lack of standing. The court held that, to have standing to bring a post-merger claim, Morris had to allege a viable and material derivative claim that the buyer would not assert and provided no value for in the merger. Focusing on the materiality requirement, the court first discounted the $661 million recovery to $112 million to reflect the public unitholders’ beneficial interest in the derivative litigation recovery. The court then discounted the $112 million further to $28 million to reflect what the court estimated was a one in four chance of success in the litigation. After the discounting, the $28 million, less than 1% of the merger consideration, was immaterial to a $3.3 billion merger. On appeal, Morris argued the trial court should not have dismissed the plaintiff’s direct claims for lack of standing. After its review, the Delaware Supreme Court agreed with Morris finding that, on a motion to dismiss for lack of standing, he sufficiently pled a direct claim attacking the fairness of the merger itself for SEP GP’s failure to secure value for his pending derivative claims. The Court of Chancery’s judgment was reversed and the matter remanded for further proceedings. View "Morris v. Spectra Energy Partners" on Justia Law

Plaintiff, a shareholder, filed a putative class action complaint against magicJack and eight individuals who were magicJack current or former directors. Plaintiff alleged that magicJack issued two proxy statements that contained material misrepresentations. The district court dismissed plaintiff's lawsuit because his claims were derivative in nature and he failed to plead that he made a demand on magicJack or that doing so would have been futile.The Eleventh Circuit held that federal courts should look to state law to decide the issue of whether a claim brought under a federal statute is direct or derivative. In this case, because magicJack is incorporated under the laws of Israel, Israeli law controls the court's analysis. However, even if the court applied Florida law, the result would be the same because the two bodies of law are consistent. The court held that plaintiff's claims are derivative in nature because he failed to allege that he suffered damages independent of the damages that magicJack (and all of its shareholders) suffered. Furthermore, plaintiff failed to plead that he personally suffered a special injury, distinct from that experienced by magicJack or its other shareholders. Finally, any recovery sought in the Second Amended Complaint would necessarily be for the benefit of magicJack and its shareholders. View "Freedman v. MajicJack Vocaltec Ltd." on Justia Law

In this class action complaint brought under the Delaware Uniform Fraudulent Transfer Act (DUFTA) alleging that Genworth Life Insurance Company (GLIC) engaged in both actual and constructive fraudulent transfers the Court of Chancery granted in part and denied in part GLIC's motion to dismiss, holding that Plaintiffs' attempts to reverse some of GLIC's dividends were time barred.Plaintiffs, a class of insureds who held long-term care insurance policies and insurance agents who alleged that they were entitled to commission payments for selling such payments, alleged that on the brink of its failure, GLIC's owners engaged in an intentional plan to syphon off GLIC's assets. In their class action complaint Plaintiffs asked the Court of Chancery to restore to GLIC the value of the assets that were syphoned away from 2012 to 2014. In response, Defendants filed a motion to dismiss. The Court of Chancery granted the motion in part and denied it in part, holding (1) any challenge to the $395 million in dividends GLIC paid from 2012 to 2014 was untimely under 6 Del. C. 1309; and (2) Plaintiffs had standing to bring this lawsuit. View "Burkhart v. Genworth Financial, Inc." on Justia Law

Beginning in 2001, Ford received complaints from F-Series vehicle purchasers, relating to the fuel tanks. The problems were clustered in certain regions. Ford suspected that unique qualities in regional fuel supplies, particularly excessive concentrations of biodiesel, were causing delamination. In 2007, Ford released an improved tank coating. Ford’s warranty claims decreased, but some reports of delamination persisted. By 2010, Ford believed that the cause was not biodiesel but was acids found in fuel samples from service stations near a dealer that encountered numerous delamination complaints. Coba purchased two 2006 F-350 dump trucks for his landscaping business. By 2009, both trucks exhibited delamination. Ford's dealership replaced the tanks and filters in both trucks at no cost to Coba. Coba continued to have the same problems, even after the warranties expired. Coba filed a class-action, asserting breach of Ford’s New Vehicle Limited Warranty (NVLW), violation of the New Jersey Consumer Fraud Act (NJCFA), and breach of the duty of good faith and fair dealing. The Third Circuit affirmed summary judgment in favor of Ford. The denial of class certification did not divest the district court of jurisdiction, although jurisdiction was predicated on the Class Action Fairness Act, 28 U.S.C. 1332(d).The NVLW, which covered defects in “materials or workmanship” did not extend to design defects, such as alleged by Coba, which also negated his breach of the implied covenant of good faith and fair dealing claims. The evidence of Ford’s knowledge of the alleged defect did not create a triable NJCFA issue. View "Coba v. Ford Motor Co." on Justia Law