Justia Class Action Opinion Summaries

Plaintiffs Yvonne Reid and Serena Wong sued defendants the City of San Diego (City) and the San Diego Tourism Marketing District (TMD) in a putative class action complaint, challenging what they allege is "an illegal hotel tax." The trial court sustained Defendants' demurrer without leave to amend on statute of limitations and other grounds. The Court of Appeal affirmed, concluding some of the causes of action were time-barred and the remainder failed to state facts constituting a cause of action. View "Reid v. City of San Diego" on Justia Law

Petitioner Apple, Inc. (Apple) is the defendant in a putative class action filed by plaintiffs and real parties in interest Anthony Shamrell and Daryl Rysdyk. In their operative complaint, plaintiffs alleged that Apple's iPhone 4, 4S, and 5 smartphones were sold with a defective power button that began to work intermittently or fail entirely during the life of the phones. Plaintiffs alleged Apple knew of the power button defects based on prerelease testing and postrelease field failure analyses, yet Apple began selling the phones and continued to sell the phones notwithstanding the defect. The trial court granted plaintiffs' motion for class certification but expressly refused to apply Sargon Enterprises, Inc. v. University of Southern California, 55 Cal.4th 747 (2012) to the declarations submitted by plaintiffs' experts. The trial court believed it was not required to assess the soundness of the experts' materials and methodologies at this stage of the litigation. The Court of Appeals determined that belief was in error, and a prejudicial error. “Sargon applies to expert opinion evidence submitted in connection with a motion for class certification. A trial court may consider only admissible expert opinion evidence on class certification, and there is only one standard for admissibility of expert opinion evidence in California. Sargon describes that standard.” The Court of Appeal directed the trial court to vacate its order granting plaintiffs' motion for class certification and reconsider the motion under the governing legal standards, including Sargon. View "Apple Inc. v. Superior Court" on Justia Law

Plaintiffs sued Dentsply, Cavitron's manufacturer and marketer, on behalf of California dentists who purchased the Cavitron ultrasonic scaler for use during oral surgical procedures, under the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200) and for breach of express warranty. Plaintiffs claim that the Directions for Use indicate Cavitrons can be used in “[p]eriodontal debridement for all types of periodontal diseases,” which by implication included oral surgery; in fact, they cannot because the device accumulates biofilm in its waterlines and is incapable of delivering sterile water during surgical procedures. Following a remand, the trial court certified the class, conducted a bench trial, and rejected all claims. The court of appeal affirmed, agreeing that plaintiffs, as licensed dentists, were well aware that biofilm forms in all dental waterlines and that Cavitrons do not produce sterile water. The evidence failed to establish that the class was likely to be misled. The weight of the evidence established that dental professionals did not understand the warranty that the Cavitron was suitable for use in “[p]eriodontal debridement for all types of periodontal diseases,” as a statement that the Cavitron delivered sterile water or water without biofilm. View "Patricia A. Murray Dental Corp. v. Dentsply International., Inc." on Justia Law

Objector-Appellant Dale Hefner appeals from the district court’s denial of his motion for settlement-related discovery, approval of the settlement agreement, and order regarding attorneys’ fees. This case concerns the settlement agreement and attorneys’ fees related to two separate shareholder derivative suits on behalf of SandRidge Energy Inc. (“SandRidge”) against its directors. The first of those actions was filed in federal district court in January 2013. The federal derivative suit alleged self-dealing, usurpation of corporate opportunities, and misappropriation by Tom Ward, SandRidge’s founding CEO, and entities affiliated with him. Hefner filed the second derivative suit was filed in Oklahoma state court in 2013. The director-defendants moved the state court to stay the action pending a resolution in the federal case, or in the alternative to dismiss the suit entirely. Hefner objected, and the state court stayed the action but denied the motion to dismiss. In 2014, the state court entered a stipulated and agreed to order granting SandRidge’s motion to stay. Then in 2015, the federal district court granted a preliminary approval of a partial settlement in the federal suit. Hefner (1) filed a contingent motion for attorneys’ fees and reimbursement of expenses, (2) objected to the settlement, and (3) requested additional settlement-related discovery. The district court denied Hefner’s motion for additional discovery and, after a hearing on the other matters, entered a final order and judgment approving the proposed partial settlement and denying the request for attorneys’ fees. While the appeal was pending before the Tenth Circuit, SandRidge filed for Chapter 11 bankruptcy. SandRidge gave notice of the bankruptcy court’s approval of the company’s plan of reorganization and filed a contemporaneous motion to dismiss the appeal as moot, contending that because company stock was cancelled as part of the bankruptcy, Hefner did not have standing to pursue a shareholder derivative claim; the relevant derivative claims were released and discharged as part of the reorganization, and the right to pursue derivative litigation vested in reorganized SandRidge. The Tenth Circuit agreed that Hefner's claims were moot, and finding no other reversible error, it appealed. View "Elliot v. Ward" on Justia Law

Plaintiffs, holders of Petrobras equity, filed a class action against various defendants after the multinational oil and gas company was involved in money-laundering and kickback schemes. The district court certified two classes: the first asserting claims under the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq.; and the second asserting claims under the Securities Act of 1933,15 U.S.C. 77a et seq. The Second Circuit clarified the scope of the contested ascertainability doctrine and held that a class is ascertainable if it is defined using objective criteria that establish a membership with definite boundaries. That threshold requirement was met in this case. The court held that the district court committed legal error by finding that Federal Rule of Civil Procedure 23(b)(3)'s predominance requirement was satisfied without considering the need for individual Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010), inquiries regarding domestic transactions. Therefore, the court vacated this portion of the Certification Order. The court also held that the district court did not abuse its discretion by determining that the Exchange Act class met their burden under Basic Inc. v. Levinson, 485 U.S. 224 (1988), with a combination of direct and indirect evidence of market efficiency.  Accordingly, the court affirmed as to this issue. View "In re Petrobras Securities" on Justia Law

In these consolidated cases, shareholders of a publicly traded corporation (Plaintiffs) filed a complaint claiming that a merger transaction proposed by the board of directors would result in the effective sale of the corporation for an inadequate price. The superior court allowed Defendants’ motion to dismiss for failure to state a claim, concluding that the board owed no fiduciary duty directly to the shareholders and that the action was necessarily derivative. At issue on appeal was whether Plaintiffs must bring their claims against the members of the corporation’s board of directors as a derivative action on behalf of the corporation or may bring it directly on their own behalf. The Supreme Judicial Court affirmed, holding (1) the injury claimed by Plaintiffs, and the alleged wrong causing it, fit squarely within the framework of a derivative action; and (2) Plaintiffs’ claim was properly dismissed because they did not bring their claim as a derivative action. View "International Brotherhood of Electrical Workers Local No. 129 Benefit Fund v. Tucci" on Justia Law

Jani-King, the world’s largest commercial cleaning franchisor, classifies its franchisees as independent contractors. Its cleaning contracts are between Jani-King and the customer; the franchisee is not a party, but may elect to provide or not provide services under a contract. Jani-King exercises a significant amount of control over how franchisees operate and controls billing and accounting. Two Jani-King franchisees assert that they are misclassified and should be treated as employees. On behalf of a class of Jani-King franchisees in the Philadelphia area (approximately 300 franchisees), they sought unpaid wages under the Pennsylvania Wage Payment and Collection Law (WPCL), 43 Pa. Stat. 260.1–260.12. The Third Circuit affirmed certification of the class under Federal Rule of Civil Procedure 23(f). The misclassification claim can be made on a class-wide basis through common evidence, primarily the franchise agreement and manuals. Under Pennsylvania law, no special treatment is accorded to the franchise relationship. A franchisee may be an employee or an independent contractor depending on the nature of the franchise system controls. View "Williams v. Jani-King of Philadelphia Inc" on Justia Law

In 2012 Walgreens acquired a 45 percent equity stake in Alliance, plus an option to acquire the rest of Alliance’s equity for a mixture of cash and Walgreens stock. Walgreens later announced its intent to purchase the remainder of Alliance and engineer a reorganization whereby Walgreens would become a wholly-owned subsidiary of a new corporation, Walgreens Boots Alliance. Within two weeks after Walgreens filed a proxy statement seeking shareholder approval, a class action was filed; 18 days later, less than a week before the shareholder vote, the parties agreed to settle. The settlement required Walgreens to issue several requested disclosures and authorized class counsel to request $370,000 in attorneys’ fees, without opposition from Walgreens. The Seventh Circuit reversed approval of the settlement, calling the supplemental disclosures “a trivial addition to the extensive disclosures already made in the proxy statement.” “The oddity of this case is the absence of any indication that members of the class have an interest in challenging the reorganization.... The only concrete interest suggested … is an interest in attorneys’ fees.... Certainly class counsel, if one may judge from their performance in this litigation, can’t be trusted to represent the interests of the class.” View "Hays v. Berlau" on Justia Law

Caris Life Sciences, Inc. operated three business units: Caris Diagnostics, TargetNow and Casrisome. The Diagnostics unit was consistently profitable. TargetNow generated revenue but not profits, and Carisome was in the developmental stage. To secure financing for TargetNow and Carisome, Caris sold Caris Diagnostics to Miraca Holdings. The transaction was structured using a "spin/merge" structure: Caris transferred ownership of TargetNow and Carisome to a new subsidiary, then spun off that subsidiary to its stockholders. Owning only Caris Diagnostics, Caris merged with a wholly owned subsidiary of Miraca. Plaintiff Kurt Fox sued on behalf of a class of option holders of Caris. Fox alleged that Caris breached the terms of the Stock Incentive Plan because members of management as Plan Administrator, rather than the Board of Directors, determined how much the option holders would receive. Regardless of who made the determination, the $0.61 per share attributed to the spun off company was not a good faith determination, and resulted from an arbitrary and capricious process. The Court of Chancery found that fair market value was not determined, and the value received by the option holders was not determined in good faith and that the ultimate value per option was determined through a process that was "arbitrary and capricious." Caris appealed, arguing the Court of Chancery erred in arriving at its judgment. Finding no reversible error in the Court of Chancery's judgment, the Delaware Supreme Court affirmed. View "CDX Holdings, Inc. v. Fox" on Justia Law

William Burgess, a common stock shareholder of BancorpSouth, Inc., filed a shareholder derivative action after a Special Committee comprised of BancorpSouth directors and officers rejected his presuit demand. In that presuit demand and in his Shareholder Derivative Complaint, Burgess made various claims relating to alleged misrepresentations in company publications directed to shareholders following the 2008 economic downturn. Ultimately, the Circuit Court dismissed the action. Finding no reversible error in the Circuit Court's decision, the Supreme Court affirmed. View "Burgess v. Patterson" on Justia Law